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Radico Khaitan Ltd.

BSE: 532497 Sector: Consumer
NSE: RADICO ISIN Code: INE944F01028
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NSE 15:59 | 15 Dec 268.70 -2.05
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OPEN

274.00

HIGH

276.00

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OPEN 272.60
PREVIOUS CLOSE 270.55
VOLUME 108681
52-Week high 309.60
52-Week low 105.95
P/E 39.60
Mkt Cap.(Rs cr) 3,588
Buy Price 0.00
Buy Qty 0.00
Sell Price 269.00
Sell Qty 336.00
OPEN 272.60
CLOSE 270.55
VOLUME 108681
52-Week high 309.60
52-Week low 105.95
P/E 39.60
Mkt Cap.(Rs cr) 3,588
Buy Price 0.00
Buy Qty 0.00
Sell Price 269.00
Sell Qty 336.00

Radico Khaitan Ltd. (RADICO) - Director Report

Company director report

Dear Members

It is our pleasure to present the Thirty Third Annual Report on the business andoperations together with the Audited Financial Statements of your Company for the yearended March 31 2017.

Summary of Financial Performance:

(Figures Rs. in Crore)

FY2017 FY2016
Revenue from Operations (Gross) 4867.95 4271.09
Other Income 19.65 38.87
Revenue from Operations (Net of Excise Duty) 1679.90 1651.82
Earnings before Interest Tax Depreciation & Amortization and Other Income (EBITDA) 210.79 186.12
Profit before Tax 109.68 98.72
Profit after Tax from continuing business 80.61 73.45
Total Comprehensive Income 79.28 71.84
Other Equity brought forward from last year 936..51 877.35
Profit available for appropriation - 165.66
Transfer to General Reserve - 50.00
Proposed Dividend and tax thereon 12.81 12.81
Other Equity carried forward 1003.28 936.51

Operations Review:

FY2017 was a volatile year marked by a number of industry related issues anduncertainties. In addition to the increase in duties & taxes and higher raw materialcosts without corresponding price increases industry faced the challenges due todemonetization state level prohibitions and national highway liquor ban. Theseuncontrollable events in succession led to the slowdown in the industry growthparticularly in the regular category volumes. The Company's total IMFL volumes increasedby 0.4% in comparison to the last year primarily driven by robust performance of thePrestige & Above category brands which grew by 7.9% y-o-y. As a percentage of totalIMFL volumes Prestige & Above brands contributed 26.0% compared to 24.2% in FY2016.Net Sales during FY2017 increased by 1.7% in comparison to FY2016.

Despite subdued sales we delivered a strong operating performance with EBITDAincreasing by 13.3% y-o-y with margins of 12.5%. This increase in EBITDA was afterabsorbing a 6.9% y-o-y increase in the ENA costs during the year. However given afavourable monsoon forecast ENA prices are expected to stabilise in the near term. EBITDAof Rs. 210.8 Crore during FY2017 included a non-cash profit of Rs. 0.8 Crore on account offoreign exchange fluctuation related to charge of Rs. 19.8 Crore in FY2016). Finance costduring the year declined by 5.2% to Rs. 80.4 Crore on account of repayment of borrowingsand reduction in interest rates.

Capital Structure and Liquidity:

Share Capital

As of March 31 2017 Radico Khaitan had an authorized equity share capital of Rs. 34Crore divided into 170000000 equity shares of Rs. 2 each. The Company also had anauthorized preference share capital of Rs. 60 Crore divided into 6000000 preferenceshares of Rs. 100 each. During the year under review there was no change in the Company'sissued subscribed and paid-up equity share capital. As of 31st March 2017 the Companyhad issued subscribed and paid-up equity share capital of Rs. 26.60 Crore divided into133038765 equity shares of Rs. 2 each.

During the year under review the Company granted 100000 stock options under theEmployees Stock Option Scheme 2006. These shares well vest with employees in next fouryears.

General Reserve

No amount has been transferred to the General Reserve out of the Company's profit ofRs. 79.28 Crore for the financial year ended March 31 2017.

Term Loan and Working Capital

During the year net debt reduced by Rs. 162 Crore which is(compared to a non-cash inline with the Company's ongoing deleveraging strategy. As of March 31 2017 Total Debtwas Rs. 799.0 Crore while Cash & Cash Equivalents were Rs. 14.1 Croreresulting in Net Debt of Rs. 785.0 Crore (vs. Rs. 947.0 Crore as on March 312016). Total Debt consists of Rs. 550.9 Crore of Working Capital loans and Rs. 248.1 Croreof Long Term loans. During FY2017the Company reduced the Long Term ECBs from $41.4million to $25.2 million. Working Capital loans increased during the same period due toseasonality impact. As on March 31 2017 Company had a conservative leverage withDebt/Equity ratio of 0.78x (1.00x as on March 2016) and Net Debt/EBITDA of 3.72x (vs.5.09x as on March 2016).

Capital Market Ratings:

Radico Khaitan's long term and short term credit facilities are rated by CARE Ratings.The Company's long term credit facilities are rated CARE A (Single A; stable outlook) andshort term credit facilities are rated CARE A1 (A One). CARE A rated instruments areconsidered to have adequate degree of safety regarding timely servicing of financialobligations. Such instruments carry low credit risk. CARE A1 rated instruments areconsidered to have very strong degree of safety regarding timely payment of financialobligations. Such instruments carry lowest credit risk.

Directors:

During the year under review there was no change in directors.

Board Meetings:

During FY2017 the Board of Directors met five times on 10th May 2016 25thMay 2016 17th August 2016 4th November 2016 and 10thFebruary 2017. The gap between any two consecutive meetings of the Board of Directors ofthe Company was not more than 120 days. The details regarding composition number of BoardMeetings held and attendance of the directors during FY2017 are set out in the CorporateGovernance Report as annexed with this report.

Meeting of Independent Directors:

The Independent Directors of the Company met separately on 10th February2017 without the presence of the Non-Independent Directors and the members of management.The meeting was conducted informally to enable the Independent Directors to discussmatters pertaining to the Company's affairs and put forth their combined views to theBoard of Directors of the Company. In accordance with the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") followingmatters were inter-alia discussed in the meeting:

1) Review of the performance of Non-Independent Directors and the Board as a whole;

2) Review of the performance of the Chairperson of the Company taking into account theviews of Executive Directors and Non-Executive Directors;

3) Assess the quality quantity and timelines of flow of information between theCompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.

Declaration by Independent Directors:

The Company has received declarations under Section 149 (6) of the Companies Act 2013from all Independent Directors that they meet the criteria of independence as laid downunder Section 149(6) of the Companies Act 2013 and the Listing Regulations. The Companykeeps a policy of transparency and arm's length while dealing with its IndependentDirectors. No transaction was entered with Independent Directors in the year which couldhave any material pecuniary relationship with them. Apart from sitting fee no otherremuneration was given to any of the Independent Directors.

Board Evaluation:

In accordance with the Companies Act 2013 and Rules made thereunder Schedule –IV of the Act and SEBI Regulation 4(2)(f) of the Listing Regulations Radico Khaitan hasframed a policy for the formal annual evaluation of the performance of the BoardCommittees and individual Directors. The Company has in place a comprehensive andstructured questionnaire for evaluation of the Board and its Committees Board compositionand its structure effectiveness functioning and information availability.

This questionnaire also covers specific criteria and the grounds on which all Directorsin their individual capacity are evaluated.

The performance evaluation of the Independent directors was done by the entire Boardexcluding the director being evaluated. The performance evaluation of the Chairman and theNon-Independent directors was carried out by the Independent directors. The Board ofDirectors expressed their satisfaction with the evaluation process.

Policy on Nomination Remuneration and Board Diversity:

The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members as wellas diversity of the Board. We at

Radico Khaitan recognize the benefits and importance of having a diverse Board ofDirectors in terms of skill set and experience. The Company has an optimum mix ofexecutive and non-executive independent directors and woman director. The detail of thepolicy is explained in the Corporate Governance Report.

Roles and Responsibilities of Board Members:

The Company has a clearly laid out policy defining the structure and role of the BoardMembers. The Company has an Executive Chairman and Managing Director – presently Dr.Lalit Khaitan a Managing Director – currently Mr. Abhishek Khaitan and an optimumcombination of Executive and Non-Executive Promoter/Independent Directors. The duties ofthe Board Members including Independent Directors have been elaborated in the ListingRegulations Section 166 of the Companies Act 2013 and Schedule IV of the said Act. Thereis a clear segregation of responsibility and authority amongst the Board Members.

Risk Management Policy:

In this volatile uncertain and complex operating environment only companies thatmanage their risk effectively can sustain. Risk management is embedded in Radico Khaitan'scorporate strategies and operating framework. The Company has in place comprehensive riskassessment and minimization procedures integrated across all operations and entails therecording monitoring and controlling enterprise risks and addressing them timely andcomprehensively. The risks are reviewed by the Audit Committee and the

Board from time to time and new risks are identified based on new business initiativesand the same are assessed minimisation framework and controls are designed andappropriately implemented.

Insurance of Fixed Assets:

Your Company has adequately insured all its properties including Plant and MachineryBuilding and Stocks.

Awards and Recognition:

During the year Radico Khaitan received numerous awards for its leading brands. Theseawards are a testament to the Company's innovation and quality of products. In the MondeSelection Quality Awards 2017 Magic Moments Remix Flavoured Vodka Peach and MorpheusBrandy received the International High Quality Trophy. This Trophy is awarded for productswhich have reached a high quality level i.e. Grand Gold or Gold over three consecutiveyears.

Award Details:

Name of the Brand Monde Selection Quality Awards
2017
Magic Moments Remix Lemongrass & Ginger Flavoured Vodka Grand Gold
Magic Moments Remix Peach Flavoured Vodka Grand Gold
Regal Talon Rare Generation Whisky Gold
Rampur Indian Single Malt Whisky Gold
Morpheus Brandy Gold
Magic Moments Vodka Gold
Magic Moments Remix Green Apple Flavoured Vodka Gold
Magic Moments Remix Orange Flavoured Vodka Gold
Magic Moments Remix Lemon Flavoured Vodka Gold
Magic Moments Remix Chocolate Flavoured Vodka Gold
Magic Moments Remix Raspberry Flavoured Vodka Gold
M2 Verve Super Premium Vodka Gold
M2 Verve Magic Moments Green Apple Premium Flavoured Vodka Gold
M2 Verve Magic Moments Orange Premium Flavoured Vodka Gold
Pluton Bay Rum Silver
Magic Moments Electra Appletini Silver
Magic Moments Electra Agent Orange Silver
Magic Moments Electra Mojito Silver
Magic Moments Electra Cosmopolitan Bronze

Employee Stock Option Scheme:

Radico Khaitan's employee stock option scheme was implemented to provide the employeeswith an opportunity to share in the growth of the Company and to reinforce long termcommitment. The Compensation Committee at its meetings held on 02.03.2017 granted100000 stock options to the eligible employees as per the Employees Stock OptionScheme 2006. The particulars of the options as required by SEBI (employee stock optionscheme and employee purchase scheme) Guidelines 1999 are appended as Annexure – Aand forms part of this report.

Dividend:

The Company has a dividend policy that balances the dual objective of appropriatelyrewarding its shareholders and retaining capital to support future growth. Your Directorsare pleased to recommend a dividend of Rs. 0.80 per equity share or 40% on face value ofRs. 2.00 each for the year ended March 31 2017.

The total dividend payout for the financial year will be Rs. 12.81 Crore including adividend distribution tax of Rs. 2.17 Crore. This consistent dividend payout is todemonstrate our commitment towards our shareholders. The dividend is subject to approvalof shareholders at the Annual General Meeting on 29th September 2017 and willbe paid to the shareholders whose names appear in the Register of Members as on the dateof book closure i.e. 23.9.2017 to 29.9.2017.

Dematerialisation:

During the year 79870 shares of the Company constituting 0.06% of the issued andsubscribed Share Capital of the Company were dematerialised. Around 98.13% of the sharesof the Company have now been dematerialized as on March 31 2017. Your Directors wouldrequest all the members who have not yet converted their holdings into dematerializedform to do so thereby facilitating trading of their shares. As per SEBI guidelines it ismandatory that the shares of a company are in dematerialized form for trading.

Public Deposits:

During the year under review your Company has neither invited nor accepted any fixeddeposits from the public within the meaning of Section 73 of the Companies Act 2013 readwith the Companies (acceptance of Deposits) Rules 2014.

Subsidiaries and Joint Ventures:

During the year under review the Company has no subsidiary company. Radico Khaitan hasone joint venture namely Radico NV Distilleries Maharashtra Limited. The Company has 36%stake in the said

JV. In terms of the Section129 (3) financial results of

Radico NV are consolidated with the accounts of the Company.

Those Shareholders who are interested in obtaining a copy of the audited annualaccounts of the Joint Venture company may write to the Company.

In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financialstatement of the Joint Venture Company is set out in the prescribed formAOC – 1 is attached herewith as a separate Annexure – A-II.

Transfer to Investor Education & Protection Fund:

Section 124 of the Companies Act 2013 mandates that company should transfer dividendthat has been unclaimed for a period of seven years from the unpaid dividend account tothe Investor Education and Protection Fund (IEPF). To ensure maximum disbursement ofunclaimed dividend the Company sends reminders to the concerned investors beforetransfer of dividend to IEPF. Unclaimed dividend has been transferred to IEPF as per belowtable:

(Amount in Rs.)
Financial Year Date of Declaration of Dividend Total Dividend Unclaimed Dividend as on 31-3-2016 Due Date of Transfer to IEPF account
FY2002 16.07.2002 38579176.00 730556.00 22.08.2009
FY2003 19.07.2003 34721258.40 914312.00 24.08.2010
FY2004 17.07.2004 38579176.00 973284.00 22.08.2011
FY2005 16.11.2005 42437093.60 983341.00 21.12.2012
FY2006 25.09.2006 48223970.00 1135840.00 30.10.2013
FY2007 26.09.2007 51231109.50 922432.00 05.11.2014
FY2008 30.09.2008 51231109.50 1065509.00 16.10.2015
FY2009 15.09.2009 30738665.70 699978.00 07.10.2016

Key Managerial Personnel:

There has been no change in Key Managerial Personnel during the year under review.

Remuneration of the Directors and Employees:

Your Company's approach is to have performance based compensation culture to attractand retain high quality talent. The remuneration policy therefore is market-led andtakes into account the competitive circumstance of the business so as to attract andretain quality talent and leverage performance significantly.

The remuneration payable to each executive Director is based on the remunerationstructure as determined by the Board and is revised from time to time depending uponindividual contribution the Company's performance and the provisions of the CompaniesAct 2013.

Particulars of Employees:

In accordance with the provisions of Section 197(12) of the Companies Act 2013 readwith Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel Rules) 2014 the names and other particulars of employees are to be set out inthe Directors' Report as an addendum thereto. During FY2017 2 (two) persons employedthroughout the year were in receipt of remuneration of Rs. 120 lakh per annum or more and2 (two) persons employed part of the year received salary more than the prescribed limit.During FY2017 the Company had a total of 1124 employees as per Annexure B.

The above annexure is not being sent along with this Report to the Members of theCompany in line with the provision of Section 136 of the Companies Act 2013. Members whoare interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The aforesaid

Annexure is also available for inspection by Members at the registered Office of theCompany 21 days before the 33rd Annual general meeting and up to the date ofthe ensuing Annual General meeting during the business hours on working days.

None of the employees listed in the said annexure is a relative of any Director of theCompany. None of the employees hold (by himself or along with his spouse and dependentchildren) more than two percent of the equity shares of the Company.

The information required under Section 197 (12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended March 31 2017 is given in Annexure– B to this Report.

The Business Responsibility Reporting as required by Section 134 (5) of the CompaniesAct 2013 is not applicable to your Company for the financial year ending March 31 2017.

Audit Report:

The observations made in the Auditors Report as enclosed with this Report areself-explanatory and therefore do not call for any further comments under Section 134 ofthe Companies Act 2013.

Statutory Auditor:

M/s. BGJC & Associates LLP Chartered Accountants are the Statutory Auditors of theCompany for a period of five years with effect from 11.7.2016. M/s. BGJC & AssociatesLLP have confirmed to the Company that they are not disqualified under section 141 of theCompanies Act 2013 or any other applicable provisions for the time being in force andare eligible for being appointed as statutory auditors of the Company.

M/s. BGJC & Associates LLP have also confirmed to the Company that theirappointment if made would be within the limits prescribed under the Companies Act 2013.

The report of the Statutory Auditors along with notes to Schedules is enclosed to thisreport. The observations made in the Auditors' Report are self-explanatory and thereforedo not call for any further comments. The

Auditor's Report does not contain any qualification reservation or adverse remark.

Cost Auditor:

As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company has been carrying out audit of cost recordsrelating to Industrial Alcohol every year.

The Board of Directors on the recommendation of audit committee has appointed Mr.S.N. Balasubramanian Cost Accountants as cost auditor to audit the cost accounts of theCompany for the financial year 2018 at a remuneration of Rs. 1 lac plus service tax asapplicable and reimbursement of out of pocket expenses. As required under the CompaniesAct 2013 a resolution seeking member's approval for the remuneration payable to the CostAuditor forms part of the Notice convening the Annual General Meeting.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the

Company has appointed M/s. TVA & Co. LLP a firm of Company Secretaries in Practice(C.P. No. 5253) to undertake the Secretarial Audit of the Company. The

Secretarial Audit Report is included as Annexure - C and forms an integral part of thisReport. There is no secretarial audit qualification

Particulars of Loans Guarantees or Investment by the Company under Section 186 of theCompanies Act 2013:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements.

Vigil Mechanism:

Pursuant to the requirement of section 177 (9) & (10) of the Companies Act 2013Radico Khaitan has adopted a Vigil Mechanism which allows employees of the Company canraise their concerns relating to fraud malpractice or any other activity or event whichis against the interest of the Company or society as a whole. Details of complaintsreceived and the action taken are reviewed by the Audit Committee. The functioning of theVigil Mechanism is reviewed by the Audit Committee from time to time. The Vigil MechanismPolicy has been uploaded on the website of the Company at www.radicokhaitan.com.

Archival Policy:

Pursuant to the Listing Regulations and in line with Radico Khaitan's Policy onDetermination of Materiality of Events the Company shall disclose all such events to theStock Exchanges and such disclosures shall be hosted on the website of the Company for aperiod of 5 years and thereafter the same shall be archived so as to be available forretrieval for a further period of three years by storing the same on suitable media.Thereafter the said information documents records may be destroyed as per the policy onpreservation of documents.

Related Party Transactions:

All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 are not attracted. Thus disclosure in form AOC-2 is notrequired. Further there are no material related party transactions during the year underreview with the Promoters directors or Key Managerial Personnel. The Company hasdeveloped a Related Party Transactions framework through Standard Operating Procedures forthe purpose of identification and monitoring of such transactions.

All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval was obtained on a quarterly basis for transactionswhich are of repetitive nature. Transactions entered into pursuant to omnibus approval areaudited by the Legal & Compliance

Department and a statement giving details of all Related Party Transactions are placedbefore the Audit Committee and Board for fortheyearunderreview. review and approval on aquarterly basis.

The policy on Related Party Transactions as amended and approved by the Board ofDirectors has been uploaded on the website of the Company. The web-link of the same hasbeen provided in the Corporate Governance Report. None of the directors has any pecuniaryrelationship of transactions vis--vis the Company.

Environmental Protection Measures Taken by the Company:

In view of the corporate responsibility on Environmental Protection the Company hasadopted a number fieldof measures to improve in the environment safety and health.Measures like standard operating procedures training programmes for all levels ofemployees regarding resource conservation housekeeping Green Belt development and onsiteemergency plan have been taken. Sustainable living is a part of long-term businessstrategy and your Company continuously strives to reduce our environmental footprintwhile enhancing the livelihood of millions of people across our product value chain.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:

As per Section 134 (3) (m) read with the Companies (Accounts Rules) 2014 the relevantinformation and data is given at Annexure – D.

Corporate Social Responsibilities (CSR):

CSR at Radico Khaitan is creating sustainable programs that actively contribute to andsupport the social and economic development of the society. The Company is committed toeradicating hunger poverty and malnutrition promoting health care including preventivehealth care and ensuring environmental sustainability. As part of its CSR programmes theCompany partners with the community and addresses issues of water and sanitationeducation health and skill-building. Radico Khaitan also promotes and encouragesresponsible drinking through engaging with employees taking preventative actioneducation & raising awareness and bringing communities on board to address localchallenges at their root. Composition of the Committee:

1. Dr. Lalit Khaitan Chairman
2. Mr. K.P. Singh Member
3. Mr. Ashutosh Patra Member
4. Ms. Shailja Devi Member

TheCompany'sprojectsareinaccordancewithSchedule

VII of the Companies Act 2013 and the Company's CSR policy. The Report on CSRactivities as required under Companies (Corporate Social Responsibility Policy) Rules2014 is set out as Annexure - E forming part of this Report.

The Company is in the process of identifying bigger projects in Healthcare &Education so the unspent amount will be spent together with the current year eligiblespend.

Significant and Material

Regulators or Courts:

There has been no significant passed by the Regulators or Courts that would impact thegoing concern status of the Company and its future operations.

Safety & Wellbeing of Women:

Gender equality and women safety is a very important part of Radico Khaitan's humanresource policies. The Company has zero tolerance for sexual harassment at workplace andhas adopted a Policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder for preventionand redressal of complaints of sexual harassment at workplace. During the year underreview there were no sexual harassment cases reported to the Company.

Directors' Responsibility Statement:

To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section 134 (3)(c) of the Companies Act 2013. i) that in the preparation of the Annual Accounts for theyear ended March 31 2017 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any; ii) the board hadselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31

2017 and of the profit of the Company for the year ended on that date; iii) that theDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; iv)the annual accounts have been prepared on a going concern basis; v) that the Directors hadlaid down internal financial controls to be followed by the Company and that such internalfinancial controls are adequate and were operating effectively; and vi) that the Directorshad devised proper systems to ensure compliance with the provisions of all applicable lawsand that such systems were Orders adequate and operating effectively. Passed bythe

Extract of Annual Return:

Pursuant to Section 92 (3) of the Companies Act 2013and material order and Rule 12 (1)of the Companies (Management and Administration) Rules 2014 the extract of the AnnualReturn is provided in Annexure - F.

Management Discussion and Analysis:

Management Discussion and Analysis Report as required under the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and forms part of this report.

Corporate Governance Report:

Report on Corporate Governance along with the certificate of M/s. TVA & Co. LLPconfirming compliance of conditions of Corporate

Governance as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report.

Internal Financial Controls:

Internal Financial Controls are an integrated part of the risk management processaddressing financial and financial reporting risks. The internal financial controls havebeen documented digitised and embedded in the business process.

Assurance on the effectiveness of internal financial controls is obtained throughmanagement reviews controls self assessment continuous monitoring by functional expertsas well as testing of the internal financial control systems by the internal auditorsduring the course of their audits. We believe that these systems provide reasonableassurance that our internal financial controls are designed effectively and are operatingas intended.

Audit Committee:

As on date the Audit Committee comprises of three (3) Independent Non-executiveDirectors. The members of the Audit Committee are Mr. Sarvesh Srivastava (Chairman of theCommittee) Dr. Raghupati Singhania and Mr. Ashutosh Patra. All Members of the

Audit Committee are financially expertise in the fields of finance taxationeconomics industry and risk.

The Audit Committee invites the Chairman & Managing Director Managing DirectorChief

Financial Officer and the Company Secretary Statutory

Auditor(s) and Internal Auditor and Cost Auditors to attend the meetings of the AuditCommittee. The Company Secretary acts as Secretary to the Committee. The minutes of eachAudit Committee meeting are placed and discussed at the next meeting of the Board.

Acknowledgements:

Your Directors would like to express their sincere appreciation to the investors andbankers for their continued support during the year. Your Directors extend their sinceregratitude to all the Regulatory Authorities such as SEBI Stock Exchanges and otherCentral & State Government authorities and agencies Registrars for their guidance andsupport. The Board also appreciates the support and co-operation your

Company has been receiving from its supply chain partners and others associated withthe Company as its trading partners. Your Company looks upon them as partners in itsprogress and has shared with them the rewards of growth.

Your Directors place on record their deep appreciation to employees at all levels fortheir efforts dedication and commitment. Their enthusiasm and hard work has enabled theCompany to be at the forefront of the industry. We also take this opportunity to thank allour valued customers who have appreciated our products.

For & on behalf of the Board
Sd/-
Place: New Delhi Dr. Lalit Khaitan
Date: 26.07.2017 Chairman & Managing Director
DIN - 00238222