To the Members
Your Directors are pleased to present the Forty-third Annual Report and AuditedAccounts of the Company for the financial year ended March 31 2017.
1. FINANCIAL HIGHLIGHTS
The summarised financial results for the year ended March 31 2017 and for the previousyear ended March 31 2016 are as follows: -
|Particulars ||2016-17 ||2015-16 |
|Revenue from Operations / Net Sales ||29317.05 ||27173.44 |
|Profit before interest depreciation and tax ||455.67 ||886.24 |
|Profit before exceptional item and tax ||17.95 ||419.23 |
|Profit before tax ||17.95 ||419.23 |
|Tax expense || || |
|-Current Tax ||4.45 ||94.00 |
|-Deferred Tax ||11.26 ||128.34 |
|Profit after tax ||2.24 ||196.88 |
|EPS (face value of Rs.10/- each) || || |
|-Basic & Diluted ||0.02 ||1.77 |
The Company achieved gross turnover of Rs 29317.05 Lacs and posted net profit aftertax of Rs.2.24 Lacs for the financial year ended on 31st March 2017 as againstgross turnover of Rs. 27173.44 Lacs and posted net profit after tax of Rs.196.88 Lacs inthe previous financial year.
2. STATE OF COMPANY AFFAIRS AND FUTURE OUTLOOK
In the current financial year the company continues to focus on growth of its brandedbusiness and is confident that the consumer business will continue its steady growthwhich is in line with our medium to long term strategy. The flagship brand where thecompany is seeing a growing leadership position is:
Oleev - olive oils and healthy oils
Other than that the Company developed the following value added products: Rizolo- India'sFinest - Rice Bran Oil Miller - Canola Oil with low absorption technology
Olivana Wellness - massage oils.
Whilst Rizolo and Miller have a direct fit in the edible oil stable Olivana Wellnessis the company's foray into the personal care segment of FMCG. With the launch of the newbrands of packaged edible oils the focus is slowly tilting more towards enhancing valuethrough well branded consumer focused products. The Company is also creating niche brandsin edible oils and blended oils which have various health benefits and thereby commandinga premium in the marketplace.
By increasing its foothold across all major distribution platforms like wholesalemodern retail ecommerce etc. the Company is poised to strengthen its brand presenceacross the country. The Company has launched its largest advertisement campaign until nowto strengthen its brand presence and improving brand recall.
In the years to come Modi Naturals visualizes itself as a major contributor to theIndian FMCG sector and primarily the branded edible oil industry.
3. CHANGE IN NATURE OF BUSINESS IF ANY
Your Company is engaged in the business of edible oils processing and fast movingconsumer goods. There was no change in the nature of business of your company during theyear.
However in order to enlarge its area of operation and facilitate growth opportunitiesof new business proposals which have good future prospects and potentials to increase theshareholders' return the Company has altered the main object clause of its Memorandum ofAssociation so as to enable it to inter-alia carry on the business of all typesdescriptions tastes uses and packs of consumer food items their by-productsingredients and derivatives.
These additional Objects may conveniently and advantageously be combined with theexisting businesses of the Company.
Approval of shareholders was obtained through postal ballot on March 29 2017 for aboveamendment in the main object clause of the Memorandum of Association.
No dividend is proposed for the financial year ended March 31 2017.
5. TRANSFER TO RESERVES
No amount is proposed to be transferred to reserves.
6. SHARE CAPITAL
The paid up Equity Share Capital of the Company as at March 31 2017 stood Rs.111179340. During the year under review the Company has not issued shares withdifferential voting rights nor has granted any stock options or sweat equity. As on March31 2017 none of the Directors of the Company hold any instruments convertible intoequity shares of the Company.
7. ALLOTMENT OF CONVERTIBLE WARRANTS
During the year on 19 January 2017 the companypursuant to the approval given by themembers of the Company at their Extraordinary General Meeting held on 9 January2017issued and allotted 1538463 warrants on preferential basis to persons other thanpromoters. The said warrants carry an option / entitlement to subscribe to equivalentnumber of Equity Shares of Rs. 10/- each at a future date not exceeding 18 (eighteen)months from the date of issue of such warrants at a price of Rs. 130/- which includes apremium of Rs. 120/- per share determined in accordance with Regulation 76 of the SEBI(Issue of Capital & Disclosure Requirements) Regulations 2009.
An amount equivalent to 50% of the price i.e. Rs.130/- per Warrant aggregating to1000.00 Lakhs has been received on allotment of the Warrants and the balance amount of Rs.1000.00 Lakh shall be payable by the Warrant Holders while exercising their options tosubscribe for equity shares.
On full conversion the number of Equity Shares will increase from 11117934 to12656397.The Company has sufficient authorized capital to cover the allotment of theseshares.
8. DEPOSITS FROM PUBLIC
During the year your Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 and there is no outstanding amount of deposits at the end of thefinancial year.
9. ADOPTION OF NEW MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION
The Ministry of Corporate Affairs (MCA) notified most of the sections of the CompaniesAct 2013 (the Act') which replace the provisions of the Companies Act 1956. TheMCA also notified the rules pertaining to the further notified sections. In order to bringthe Memorandum of Association (MOA) and Articles of Association (AOA) of the Company inline with the provisions of the Act the Company recommended that the members adopt acomprehensive new set of the Memorandum and Articles of Association of the Company insubstitution of and to the exclusion of the existing MOA and AOA. The resolutions toadopt the new MOA and AOA were passed by requisite majority by the members of the Companythrough a postal ballot on March 29 2017.
10. EXTRACT OF ANNUAL RETURN
As provided under Sections 134(3) (a) and 92(3) of the Companies Act 2013 and Rule12(1) of the Companies (Management and Administration) Rules 2014 an extract of theannual Return in Form MGT-9 is appended as"Annexure-1" which forms partof this report.
11. NUMBER OF BOARD MEETINGS AND ITS COMMITTEES
Nine (9) meetings of the Board of Directors of the Company were conducted during thefinancial year. The details of board and its committees meetings are provided under theCorporate Governance Report which forms part of the Annual Report.
12. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Details of Loans Guarantees and Investments made by the company during the year whichare covered under Section 186 of the Companies Act 2013 is provided in the Note no. 14and 19 to the Financial Statements.
13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company during the financialyear with related parties were on arm's length basis in the ordinary course of thebusiness and are in compliance with the applicable provisions of the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. All relatedparty transactions were placed before the Audit Committee and also for the Board approvalwherever required.
There were no materially significant related party transactions made by the Companywith Promoters Key Managerial Personnel or other designated persons which may havepotential conflict with interest of the Company at large.There are no transactions thatare required to be reported in Form AOC2 hence said form does not form part of thisreport. However the details of related party transactions are provided in Note no. 35 tothe Financial Statements in accordance with the Accounting Standards.
14. AUDITORS AND AUDITORS' REPORT
The current auditors viz K. K. Jain & Co. Chartered Accountants (FirmRegistration No. 002465N) were re-appointed by the members at their annual general meetingheld on 19 August 2014 to hold the office of auditor from the conclusion of the 40thannual general meeting till the conclusion of this 43rd annual general meeting.
Under Section 139 of the Act and the rules framed thereunder it is mandatory to rotatethe statutory auditors on completion of the maximum term permitted under the said section.The Board of Directors at its meeting held on 11 August 2017 based on the recommendationof the Audit Committee has recommended the appointment of Kashyap & Co. CharteredAccountants (Firm Registration No. 011355C) as the statutory auditors of the Company inplace of the existing statutory auditors K. K. Jain & Co. Chartered Accountantswhose terms expires at the ensuing annual general meeting to hold office for a period of5 (five) consecutive years from the conclusion of forthcoming 43rd Annual General Meetingof the Company scheduled to be held in the year 2017 till the conclusion of 48th AnnualGeneral Meeting to be held in the year 2022 subject to approval of the members of thecompany at the forthcoming 43rd annual general meeting.
Kashyap & Co Chartered Accountants have consented to the said appointment andconfirmed that their appointment if made would be within the limits specified undersection 141(3) (g) of the Act and that they are not disqualified to be appointed asstatutory auditors in terms of section 143 of the Act.
The first year of audit will be of the financial statements for the year ending March31 2018.
The Auditors' Report is annexed hereto and forms part of the Annual Report. There areno qualifications made by the Auditors in their Report which requires any explanation fromthe Board of Directors of the Company. The Notes to Accounts referred to in the Auditors'Report are self-explanatory and do not call for any further comments.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Deepak Bansal& Associates Company Secretaries to undertake theSecretarial Audit of the Company for the financial year ended March 31 2017. TheSecretarial Audit Report is annexed herewith as "Annexure 2".
The Secretarial Audit Report has no qualification reservation or adverse remarks andit is self-explanatory. Thus there is no need to give any further explanation or commentby the Board.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the Board at its meeting held on August 11 2017 on the AuditCommittee's recommendations and subject to approval by the Central Government recommendsthe appointment of M/s. Manisha & Associates Cost Auditors (Firm RegistrationNumber-000321) to audit the cost accounts of the Company for the financial year endingMarch 31 2018 at a remuneration of Rs. 60000/- plus taxand out of pocket expenses.Resolution seeking Member's ratification for the remuneration payable to M/s. Manisha& Associates Cost Auditor is included at Item No.4 of the Notice convening the AnnualGeneral Meeting.
The company is in process to file the Cost Audit Report for the financial year 2016-17to the Central Government within the stipulated time. (i.e. within 180 days from the endof reporting year)
15. MATERIAL CHANGES AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes affecting the financial position of the Company.
16. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The Particulars with regard to Conservation of Energy Technology Absorption andForeign Exchange Earnings & Outgo are given below:
A. Conservation of energy: i) Steps taken or impact on conservation of energy: ii)The steps taken by the company for utilizing alternate sources of energy Your Company hastaken adequate measures to ensure optimum use of all equipments so as to conserve energy.iii) Capital Investment on energy conservation equipments: Nil
B. Technology absorption adaption and innovation:
The company strives continuously to upgrade its technology adopted in all itsoperations.
C. Foreign exchange earnings and outgo a) Earnings Rs. 11624342 b) Outgo Rs. 512104
17. DETAILS OF SUBSIDIARY JOINT VENTURE OR ASSOCIATES
The Company does not have any Subsidiary/Joint Venture/Associate Company.
18. RISK MANAGEMENT
The Risk Management Policy of the company enables the company to proactively take careof the internal and external risks of the company and ensures smooth business operations.
The company's risk management policy ensures that all its material and compliance riskexposures are properly covered and the company's business growth and financial stabilityis assured.
Necessary information is provided under Management Discussion and Analysis Report whichforms part of the Annual Report.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
During the year under review there was no change in Directors and Key ManagerialPersonnel of your company.
During the year Mr. Akshay Modi was reappointed as Whole Time Director of the Companyfor a further period of 3 years effective from December 15 2016 on the terms andconditions as approved by the members of the Company at their 42nd AnnualGeneral Meeting held on 29 September 2016. Mr. Akshay Modi shall be liable to retire byrotation pursuant to the provisions of Section 152 of the Companies Act 2013.
In terms of Section(s) 149 152 and all other applicable provisions of the CompaniesAct 2013 for the purpose of determining the directors liable to retire by rotation theIndependent Directors are not included in the total number of directors of the Company.Accordingly Ms. Aditi Gupta Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible seeks reappointment. The Board has consideredthat the presence of Ms. Aditi Gupta as Directors on the Board would be of immense benefitto the Company and has decided to recommend her reappointment for the approval of membersof the Company at the ensuing annual general meeting of the company.
A brief resume of the Directors being appointed/ re-appointed are furnished below thenotice of the ensuing AGM.
Key Managerial Personnel
Pursuant to provisions of Section 203 of the Companies Act 2013 Mr. Anil ModiChairman & Managing Director Mr. Akshay Modi Executive Director Mr. Pradeep KapoorChief Financial Officer and Mr. Ankit Agarwal Company Secretary are the Key ManagerialPersonnel of the Company.
20. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL
There are no significant material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future. HoweverMembers attention is drawn to the statement on contingent liabilities commitments in thenotes forming part of the Financial Statements.
21. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY
The Company has adequate Internal Financial Controls consistent with the nature ofbusiness and size of the operations to effectively provide for safety of its assetsreliability of financial transactions with adequate checks and balances adherence toapplicable statues accounting policies approval procedures and to ensure optimum use ofavailable resources. These systems are reviewed and improved on a regular basis. It has acomprehensive budgetary control system to monitor revenue and expenditure against approvedbudget on an ongoing basis.
The Internal Auditor the Audit Committee as well as the Board of Directors conductfrom time to time an evaluation of the adequacy and effectiveness of the system ofinternal controls for financial reporting with respect to financial statements. Details ofinternal financial controls and its adequacy are included in the Management Discussion andAnalysis Report which forms part of the Annual Report.
Neither the Statutory Auditors nor the Secretarial Auditors have brought to the noticeof the Audit Committee or the Board of Directors or the Central Government the occurrenceor brewing of any fraud in the Company.
23. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
24. DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.
Disclosures of the ratio of the remuneration of each director to the median employee'sremuneration and such other details as required under Section 197(12) read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isprovided as "Annexure-3" and forms part of the Directors' Report.
The details of remuneration paid to the directors including executive directors of theCompany are given in Form MGT-9 forming part of the Directors Report.
25. PARTICULARS OF EMPLOYEES
There was no employee during the year drawing remuneration exceeding the limits asprescribed under Rule 5(2) of the (Appointment and Remuneration of Managerial Personnel)Rules 2014. Hence the information under Rule 5(2) & 5(3) is not applicable.
Your Company aims to be a preferred employer in the industry and remains committed todeveloping its employees to meet the current and future challenges of the business.
27. CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and Senior Management Personnel in the course of day to day businessoperations of the Company. The Code has been posted on the Company's website(www.modinaturals.com).
The Chairman & Managing Directors' declaration regarding compliance with ModiNaturals' Code of Conduct for Board Members and Senior Management' is attached to theCorporate Governance Report.
28. CORPORATE GOVERNANCE
Your Company has complied with the requirements and disclosures that have to be madeunder the Code of Corporate Governance as required under Regulation 27(2) of the SEBI(Listing Obligations and Disclosures Requirements) Regulations 2015. Pursuant toSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 ("SEBI Listing Regulations") the Company has executed UniformListing Agreement(s) with the Stock Exchange(s).
As a listed company your company is required to comply with the Listing Agreemententered into with the Stock Exchange. A report on Corporate Governance along with acertificate of compliance from the Statutory Auditors forms part of this Annual Report.
29. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY
The provisions of the Companies Act 2013 relating to Corporate Social Responsibilityare not applicable on the Company.
30. ANNUAL EVALUATION OF BOARD COMMITTEES & DIRECTORS' PERFORMANCE
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Audit Nomination & Remuneration and otherCommittees. The manner in which the evaluation has been carried out has been explainedhereunder.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.
In a separate meeting of independent Directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasreviewed taking into account the views of executive directors and non-executive directorsof the company.
Declaration from Independent Directors
The Company has received necessary declaration from each independent director underSection 149 (7) of the Companies Act 2013 that he meets the meet the criteria ofindependence laid down in Section 149(6) of the Act and regulation 25 of the ListingRegulations.
31. REMUNERATION POLICY
The Nomination and Remuneration Committee recommends the appointment of Directorsbased on their qualifications professional experience positive attributes viewpointsskills and area of expertise and independence. The Company follows a policy onremuneration of Directors and Senior Management employees details of the same are givenin the Corporate Governance Report. The Remuneration Policy has been posted on theCompany's website (www.modinaturals.com).
32. WHISTLE BLOWER POLICY (VIGILMECHANISM)
Your Company has established a whistle blower policy/vigil mechanism for the Directorsemployees of the company to report genuine concerns calling the attention of the AuditCommittee to some wrong doing occurring within an organization. Your Company has alsoprovided adequate safeguards against victimization of whistleblowers who express theirconcerns against such wrongdoings occurring in the organization. The Company has alsoprovided direct access to the chairman of the Audit Committee in exceptionalcircumstances.
During the year there were no instances of unethical behaviour fraud or violation ofthe company's code of conduct or ethics policy and no personnel have been denied access tothe audit committee. The details of establishment of such mechanism are disclosed on thewebsite of the Company viz. (www.modinaturals.com).
33. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013
Your company did not come across any complaints by any employee during the year underreview relating to the sexual harassment.
34. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the board of directors to thebest of their knowledge and ability confirm that: i. in the preparation of the annualaccounts for the financial year ended March 31 2017 the applicable accounting standardshave been followed and there are no material departures; ii. the directors had selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit of the Company for thatperiod; iii. the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;iv. the directors have prepared the annual accounts on a going concern basis; v. thedirectors have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; vi. the directorshave devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
The Board of Directors take this opportunity to thank all its Shareholders valuedcustomers banks Government and Statutory Authorities Investors and the Stock Exchangefor their continued support to the Company. Your Directors also wish to place on recordtheir deep sense of appreciation for the committed services by your Company's employees.Your Directors acknowledge with gratitude the encouragement and support extended by ourvalued Shareholders and the Promoters of the Company.
| ||On behalf of the Board of Directors |
| ||Sd/- |
| ||Anil Modi |
| ||Chairman and Managing Director |
| ||DIN No.:00187078 |
|New Delhi 04 September 2017 || |