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SdF Industries Ltd.

BSE: 507518 Sector: Consumer
NSE: N.A. ISIN Code: INE543D01015
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SdF Industries Ltd. (SDFINDUSTIRES) - Director Report

Company director report

2014-2015

Dear Shareholders

Your Directors have pleasure in presenting their 25th Annual Report on the business andoperations of the Company and the accounts for the Financial Year ended March 31 st 2015.

FINANCIAL HIGHLIGHTS:

Company's financial performance for the year under review along with previous year'sfigures are given hereunder:

Particulars As on 31.03.2015 As on 31.03.2014
(Rs. Lakhs) (Rs. Lakhs)
Profit before Depreciation &Tax 180.05 83.86
Less: Depreciation 21.40 19.40
Profit before Tax 158.65 64.46
Less Provision for Tax 0 0
Net Profit for the year 158.65 64.46

COMPANY PERFORMANCE

The year has been an adverse year for liquor companies particularly in Kerala. TheGovernment had announced step by step prohibition and as first step closed all bars otherthan of 'Five Star Hotels'. However your company having diversified into job workbusiness could wither this adverse market contraction. In fact the company could achieve146% increase in net profit this year thanks to cost cutting and efficiency drive. TheDirectors are happy that the company is progressing from a heavy loss making company to aprofit making one. This year the company has made a net profit of Rs. 158.65 lakhs againstRs. 64.46 lakhs during the last year.

The liquor industry is susceptible to heavy government involvement both in productionand sales. Hence a cautious approach is required on future forecast.

RESERVES

Due to accumulated losses the company is unable to transfer any amount to itsReserves.

DIVIDEND

The company has been a loss making one from inception and being a BIFR referred unitis prohibited to declare dividend while under reference and without the permission of Hon.BIFR.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

There is no amount required to be transferred to Investor Education and Protection Fundin accordance with the relevant provisions of the Companies Act 1956 and rules madethereunder.

SHARE CAPITAL

The paid up Equity Share Capital as on 31 st March 2015 wasRs. 116873000. Duringthe year under review the Company has not issued any shares.

EXTRACT OF ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and administration) Rules 2014 is furnished in AnnexureNo.1 and is attached to this Report.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the year under review 5 Meetings of the Board of Directors 4 Meetings of theAudit Committee 1 Meeting of the Nomination and Remuneration Committee and 13 Meetings ofthe Stakeholders Relationship Committee were held. Further details of the same have beenremunerated in the Corporate Governance Report annexed herewith.

DIRECTORS'RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed;

(b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis; and

(e) The internal financial controls to be followed by the company were laid down andsuch internal financial controls were adequate and were operating effectively.

(f) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THECOMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.

There have been no frauds reported by the Auditors pursuant to Section 143(12) of theCompanies Act 2013.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to quaiify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.

NOMINATION AND REMUNERATION POLICY OF DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHEREMPLOYEES

In adherence of section 178(1) of the Companies Act 2013 the Board of Directors ofthe Company approved a policy on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under section 178(3) based on the recommendations of theNomination and Remuneration Committee.

The Company's Policy relating to appointment of Directors Directors' qualificationspositive attributes independence of Directors and other related matters as provided underSection 178(3) of the Companies Act 2013 is furnished in Annexure No.2- and forms part ofthis Report.

AUDITORS

STATUTORY AUDITORS

M/s. Varma & Varma (Firm Registration No. FRN:004532S) Chartered Accountants havebeen appointed as statutory auditors of the company at the last Annual General Meetingheld on 29 September 2014 for a period of three years subject to ratification by membersat every subsequent Annual General Meeting. Therefore ratification of appointment ofStatutory Auditors is being sought from the members of the Company at the ensuing AGM.

SECRETARIALAUDITORS

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed Mr. V.S. Subhash M.Com LLB FCS M/s. JMACS Associates to undertakethe Secretarial Audit of the Company for the year ended 31st March 2015. The SecretarialAudit Report is annexed as Annexure 3.

With reference to the observations made by the Secretarial Auditor in his report theDirectors wish to state that the company has appointed a Woman Director on 29.05.2015. Thecompany being a sick company has not appointed a whole time Company Secretary and due totight financial position the company has not been paid the listing fees due to the StockExchanges. Once the position improves necessary steps would be taken for appointment ofwhole time Company Secretary and listing fees due to the Stock Exchanges will be paid.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013:

There were no loans guarantees or investments made by the Company under section 186 ofthe Companies Act 2013 during the period under review and hence the said provision is notapplicable.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All transactions entered into during the financial year 31st March 2015 with RelatedParties as defined under the Companies Act and Clause 49 of the Listing Agreement were inthe ordinary course of business and on an arm's length basis. During the year the Companyhad not entered into any transaction referred to in Section 188 of the Compank s Act withrelated parties which could be considered material under the Listing Agreement.Accordingly the disclosure of Related Party Transactions as required under Section 134(3)of the Companies Act in Form AOC-2 is not applicable. Attention of Members is drawn to thedisclosures of transactions with related parties set out in Notes to Accounts - Note 24forming part of the financial statements. However it is to be noted that this venture isadvantageous to your company as it contributes profitability.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO

The information pertaining to conservation of energy technology absorption ForeignExchange Earnings and outgo as required under section 134 (3) (m) of the Companies Act2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014 is furnished in Annexure- 4 and is attached to this report.

RISK MANAGEMENT POLICY

The Company has a structured risk management policy. The Risk management process isdesigned to safeguard the organisation from various risks through adequate and timelyactions. It is designed to anticipate evaluate and mitigate risks in order to minimizeits impact on the business. The potential risks are inventorised and integrated with themanagement process such that they receive the necessary consideration during decisionmaking. It is dealt with in greater details in the management discussion and analysissection.

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES

The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.

ANNUAL PERFORMANCE EVALUATION

In accordance with the criteria suggested by The Nomination and Remuneration Committeethe Board of Directors evaluated the performance of the Board having regard to variouscriteria such as Board composition Board processes Board dynamics etc. The IndependentDirectors at their separate meetings also evaluated the performance of non-independentdirectors and the Board as a whole based on various criteria. The performance of eachindependent Director was evaluated by the entire board of directors on various parameterslike engagement leadership analysis decision making communication governance etc. TheBoard and the Independent Directors were of the unanimous view that performance of theBoard of Directors as a whole was satisfactory.

The performances of all the Committees were evaluated by the Board having regard tovarious criteria such as committee composition committee processes committee dynamicsetc. The Board was of the unanimous view that all the committees were performing theirfunctions satisfactorily.

CHANGE IN THE NATURE OF BUSINESS IF ANY

There was no change in the nature of business of the Company during the financial yearended 31st March 2015.

DIRECTORS

At the Annual General Meeting of the Company held on 29th September 2914 the Membershad approved the appointment of Mr. M.P. Gopalakrishnan & Mr. N. Muralidhar Nair asIndependent Directors for a term of five years.

Pursuant to the provisions of section 152 of the Companies Act 2013 Mr. K. ViswamohanMenon (holding DIN:00666339) is due to retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

The Board of Directors has appointed Ms. Ramakanth Pai Smitha (holding DIN: 07183913)as an Additional Director with effect from 29th May 2015. She will holds office up to theensuing Annual General Meeting of the Company and being eligible offers herself forreappointment. Notice under Section 160 of the Act has been received by the Company froma Member signifying his intention to propose the candidature of Ms. Ramakanth Pai Smithaas an Independent Director of the Company for a period of five years. Accordinglynecessary resolution proposing the appointment of Ms. Ramakanth Pai Smitha as anIndependent Director of the Company has been included in the Agenda of the Noticeconvening the Annual General Meeting for the approval of the members.

SUBSIDIARIES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary or Associate Company.

FIXED DEPOSITS

The Company has neither accepted nor renewed any deposits during the year under review.There was no deposit remaining unpaid or unclaimed as at the end of the year.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE

There is no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and company's operation in future.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

In the opinion of the Board the existing internal control framework is adequate andcommensurate to the size and nature of the business of the Company.

PARTICULARS OF EMPLOYEES AND REMUNERATION

The requisite details relating to ratio of remuneration percentage increase inremuneration etc. as stipulated under Section 197(12) and Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed as Annexure- 5 to this Report.

The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 does not apply to the Company as there were no employeeswho are in receipt of remuneration in the aggregate at the rate of not less thanRs.6000000/- if employed throughout the year or Rs.500000/- per month if employed forpart of the year.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors of the Company comprises five Membersnamely Mr. K.V. Mohan Menon Mr. M.P. Gopalakrishnan Mr. K. Rajkumar Mr. N. MuralidharNair & Ms. R. Smitha out of which three of them are Independent Directors. Mr. M.P.Gopalakrishnan an Independent Director is the Chairperson of the Audit Committee.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to theDirectors and employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policyprovides for adequate safeguards against victimization of employees who avail of themechanism and also provides for direct access to the Chairman of the Audit Committee. Itis affirmed that no personnel of the Company has been denied access to the AuditCommittee.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.

The Company has been employing women employees in various cadres within the factorypremises. The Company has in place an Anti -harassment policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. Internal Complaint Committee has been setup to redress complaintsreceived regularly. There was no complaint received from any employee during the financialyear 2014-15 and hence no complaint is outstanding as on 31.03.2015 for redressal.

MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE

The Management Discussion and Analysis Report and the Report on Corporate Governanceas required under Clause 49 of the Listing Agreement forms part of the Annual Report.

ACKNOWLEDGMENTS:

The Board of Directors express their appreciation for the contribution made by theemployees customers and bankers for the support extended by them during the year underreview. We also would like to thank our bottling partners for their faith in us withcontinued patronage.

For and on behalf of the Board
Palakkad K. V. Viswamohan Menon
14.08.2015 Chairman & Whole time Director
(DIN: 00666339)