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Tarai Foods Ltd.

BSE: 519285 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE906C01016
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VOLUME 21
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OPEN 6.33
CLOSE 6.33
VOLUME 21
52-Week high 9.68
52-Week low 2.88
P/E
Mkt Cap.(Rs cr) 11
Buy Price 0.00
Buy Qty 0.00
Sell Price 6.33
Sell Qty 229.00

Tarai Foods Ltd. (TARAIFOODS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 26th Annual Report togetherwith the audited statement of accounts of the Company for the year ended 31stMarch 2016.

1. Statement of Company Affairs:

a. Financial Results & Performance:

The performance of the Company for the financial year ended 31st March 2016is summarized below:

Particulars Financial Year ended 31st March 2016 (Rs. In Lacs) Financial Year ended 31st March 2015 (Rs. In Lacs)
Gross Revenue 196 211
Operating Profit before Interest Financial Charges and Depreciation 5 (13)
Less: Interest and Finance Charges 0.21 0.07
Profit/(Loss) before Depreciation 5 (13)
Less: Depreciation 15 49
Profit/(Loss) for the year (10) (62)
Exceptional items (0) (10)
Net Profit/(Loss) for the year (10) (72)
Less: Provision for Tax 0.00 0.00
Add: Extra Ordinary Income (net of tax expense) 0.00 1084
Net Profit/(Loss) after Taxation (10) 1012

The Company was in its twenty sixth year of operations. During the year under reviewthe Gross revenue decreased to Rs. 196 Lacs as compared to Rs. 211 Lacs in the previousyear. Further the Company incurred a Loss after taxation of Rs. 10 Lacs as compared to aloss of Rs. 72 lacs (excluding extra ordinary income) during the previous year. Thecompany focused its attention only on production and sale of fresh Mushrooms and thedirectors are hopeful of better performance in the next year.

Transfer to Reserves:

The company has not transferred any amount to Reserves of the Company during thefinancial year under review.

Dividend:

Your company has incurred losses during the year under review. Accordingly no dividendis recommended on the equity shares of the Company for the year ended 31stMarch 2016.

Material changes and commitments subsequent to the Balance sheet:

There were no material changes affecting the Financial Position of the company whichoccurred between the end of the financial year and the date of the board report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT REVIEW OF OPERATIONS DURING THE YEAR &FUTURE PLANS

(i) Industry structure and developments.

The global frozen foods market is in a state of moderate yet constant expansion.Frozen foods are high on the convenience quotient and hence the adoption of frozen foodswill continue to be observed in areas where urbanization is gathering pace. The marketresearch report on the global frozen food market takes a granular look at the manyinfluencing factors that are steering the growth. The report is a result of qualitativeand quantitative research techniques that aim to drill down to the exact factors that are-driving growth and creating new opportunities for growth. Mushroom farming is practiced inmore than 100 countries and its production is increasing at an annual rate of 6-7%presently. World production of mushroom is over 25 million tons as per claims of ChineseAssociation of edible mushrooms. Indoor cultivation of mushrooms utilizes the verticalspace and is regarded as the highest protein producer per unit area and time - almost 100times more than the conventional agriculture and animal husbandry. This high techhorticulture venture has a promising scope to meet the food shortages without unduepressure on land . In India mushroom production shot up from near 5000 tons in 1992 over1 lac tons in 2010. India produces about 600 million tons of agricultural waste annuallyand a major part of it are left out to decompose naturally for burnt in citu. Thiscan effectively be utilized to produce highly nutritive food unlike mushrooms and spentmushroom substrate can be converted into organic manure for field crops. Mushroom growingis highly labour oriented venture and two factors i.e availability of raw material andlabour make mushroom growing economically profitable in India.

On the export front also for the first time during 1994 India not only figured in theUS imports but emerged as the IInd largest exporter of the canned mushrooms replacingTaiwan. Now a few commercial mushroom units are exporting canned mushrooms to theAmericans European and other countries regularly

(ii) Opportunities and Threats.

Opportunities

Foods and vegetables - fast growing sector

Fruits and vegetables are one of the most important and fast growing sub-sectors of thefood processing industry. Over the last few years there has been a positive growth inready-to-serve beverages fruit juices and pulps dehydrated and frozen fruits andvegetable products tomato products pickles convenience veg spice pastes processedmushrooms and curried vegetables. The demand has increased because of the factors likeconsumption by nuclear families working women students and single employees stayingalone. There are abundant opportunities in expanding the export market because of goodinternational demand for certain fruits and vegetable products. The Indian food processingindustry is primarily export oriented. India's geographical situation gives it the uniqueadvantage of connectivity to Europe the Middle East Japan Singapore Thailand Malaysiaand Korea.

Macro-economic as well as industry specific (FMCG and Packaged Food) indications pointto enduring buoyancy in the domestic market while the international geographies in whichyour Company operates are likely to be stable as well.

Changing demographics (young higher disposable income experimental urbanizationwillingness to spend) further fuelled by trends like a greater awareness of health andnutrition on one hand and more hedonism (especially the new 'affluent' generation) israpidly enlarging the opportunity.

Frozen Finger Chips:

The market of processed potato products is growing at the rate of 15% to 20% per annum.The estimates of trade sources and sector studies indicate a market share of about 30% ofpotato based products in total 2400 crores snack food market.

Domestic Market:

The Frozen French fries market in India is in a nascent stage but is growing at a rateof about 25% per year. The percent organized market for frozen French- fries in India isestimated at over 3500 tonns/annum mostly contributed by imported French Fires. Theestimated domestic production of French fries is about 500 MT.

Mushrooms:

Development trends of Mushroom industry is based on the increasing consumerconsciousness and demand for nutritious quality and organic products in domestic andinternational market. Increasing interest in protection of environment from the industrialpollution and environment friendly progress in mushroom production and processingtechnologies resulting in tremendous growth in the productivity and production ofmushrooms.

Strength:-

Mushrooms are grown seasonally as well as state-of-art environment controlled Crop roomin the commercial units. It is highly labour oriented venture and labour availability isno constraint in the vicinity of Tarai Foods and two factors that is availabilityof raw materials and labour make mushroom growing economically profitable in this region.Moreover Tarai foods Ltd. Rudrapur is located in the bowl of raw materials likeWheat Straw Sugar cane Bagasse & Chicken Manure required for composting. Besidesthe moderate climate of the Tarai region is well suited to mushroom production astemperature does not as high alike other parts of the country.

Awareness about food and medicinal values of mushrooms increasing quantitative use ofmushrooms in the country thus creating better market for a product like fresh andprocessed mushrooms. There is increasing market for post harvest products like pickles orsoup powder of mushrooms.

Threats

• Uncontrolled price structure

When there is a glut in the market the price of certain food items falls downconsiderably but as the demand increases or there is shortage of those food items in themarket the price rises up with a vast variation. Thus there is always an uncertainty inmarket prices of most of the food items which reduces the amount of net profit and thisdiscourages the manufacturers/ producers of these food items. This problem gets aggravatedduring peak production months also because there is no minimum support price from theGovt.

High transportation charges:

Although agro and animal wastes are available in plenty in India but theiravailability are not evenly distributed. Due to diversified climate and topography ofland different kinds of crops are raised in different parts of the Country andproduction/ manufacture have to pay heavy transport charges. The hike in diesel/petrolprices from time to time aggravates this problem.

Commercial rate of electricity tariff:

Similarly both small and big production/ manufacture have to pay electricity chargesat commercial rate although mushroom farming is an agricultural activity. It has beenhighlighted by the concerned scientific community during scientific gatherings seminarsmeetings etc. many times but no relief has been given. This has led to high cost ofproduction due to increased capital as well as recurring expenditure on production/manufacturing affecting its competitiveness in world markets.

Competition: eg -Availability of canned Chinese mushroom at lower price.

• High cost of energy tariff for year round production though the mushrooms havebeen included as one of the agricultural crops.

• Unorganized production and sale particularly by seasonal farmers resulting inglut in market during winter months. This results in price cut in the period.

• Lack of modern facilities to produce quality compost casing material spawn andprocessed products. TFL is going to improve its facilities in this regard.

To address these risks the Company has a single point source supplier of Frozen/IQF(Individually Quick Frozen products to the customers as per their requirements with highquality products at a lower cost. Though the competition is fierce the goodwill and thequality of the products offered by the Company are great plus factors and the Companyexpects to overcome the competition. The Company had expanded its product line bothhorizontally as well as vertically.

(iii) Segment wise & Product-wise performance:

The Company operates in a single segment. The product wise performance is as under:

Processed Foods

Fresh Mushrooms

Frozen Sweet Corn Mushroom Spawn

Product-wise performance Sale of Finished Goods

Description

Current Year

Previous Year

Qty. (in MTs) Value (in Rs. In lacs) Qty. (in MTs) Value (in Rs. In Lacs)
Fresh Mushrooms 144.99 182.60 153.65 177.77
Frozen Sweet Corn 0.98 0.48 10.63 04.79
Mushroom Spawn 8.37 10.46 8.73 05.45

The company has completely diversified in Mushroom growing in artificially controlledtemperature setting. It has been successful in creating capacities of Y ton a day forMushroom and is hopeful of expanding it to 1 ton a day in near future.

The overall current year's realizations in Frozen Vegetable category are low comparedto the previous year but this is a temporary phase caused by adverse liquidity conditionand the Company hopes to overcome these in the current year's working and continue withthe increasing trends.

(iv) Outlook:

Food Processing Industry is of enormous significance for India's development because ofthe vital linkages and synergies that it promotes between the two pillars of the economynamely Industry and Agriculture. The growth potential of this sector is enormous and it isexpected that the food production will double in the next 5 years and the consumption ofvalue added food products will also grow at a fast pace. This growth of the FoodProcessing Industry will be of immense benefits to the economy raising agriculturalyields meeting productivity creating employment and raising the standard of very largenumber of people throughout the Country specially in the rural areas. Economicliberalization and rising consumer prosperity is opening up new opportunities fordiversification in food processing sector.

The nature of the Indian food processing market and the experiences of successfulIndian and MNC players indicate that this sector will grow substantially in future becauseof the following reasons :

1. Effective distribution network and supply chain

2. Product range that is customized to suit local market requirements.

3. Superior processing technology

4. Brand building and marketing

Management is consistently keeping close watch on the changing market scenario and thebusiness strategy is reviewed regularly for achieving a consistent growth by meeting thetough international competition successfully.

(v) Risks and concerns: Every business has inherent risks involved in itoperations which may be either external or internal. The external factors are marketcompetition availability of cheaper substitute products Government policies regardingpower tariffs and ongoing political and economic changes in the importing Country. TheCompany may not have much control over such factors; however it is important to addressthese risks & concerns to mitigate their overall impact on the business. Formal riskassessment and Management approach along with the regular monitoring mechanism in theCompany ensures that these risks are duly addressed and well managed. High focus on safetyof plant its premises and people continuity and proactive Management of related businessenvironment are essential for the risk management in the overall supply chain and businessin general.

(vi) Internal control systems and their adequacy.

The Company has an adequate system of internal controls to ensure that all activitiesare monitored and controlled as well as transactions are authorized recorded and reportedcorrectly. The Company ensures adherence to all internal control policies and proceduresas well as compliance with all regulatory guidelines which are supplemented by internalaudit regularly.

The Audit Committee of the Board meets on quarterly basis and reviews the internalcontrol systems as well as financial statements.

(vii) Discussion on financial performance with respect to operational performance:

The Company has diversified its operations into Mushroom growing in artificiallycontrolled temperature setting and offers a wide range Frozen and IQF (Individually QuickFrozen) product range of peas fruits/ vegetables as per the requirements of thecustomers meeting strict quality & hygiene standards. The Company is a single pointsource of supplier of Frozen IQF products to the customers as per their requirements.

(viii) Material developments in Human Resources / Industrial Relations front includingnumber of people employed

The Company lays due emphasis on sound Human Resource Management practices andappraisal systems with focus on cordial employee relations to ensure higher level ofproductivity and operational efficiency. Adequate efforts have been made to strengthen anddevelop its human resources as a key strength through continuous training inputs andfocused development plan. As on 31st March 2016 the total numbers of permanent employeesin the Company were 9.

The belief that 'great people create great organizations' has been at the core of theCompany's approach to its people. We continued to make significant investments fortraining in the areas of marketing excellence customer service and building capabilitiesfor organized retail trade.

b. Key Changes during the year:

1. Changes in the Nature of business: NIL

2. Changes during the year in Directors and KMP:

Dr. RamPyare Singh was Re-appointed as Whole time director of the Company for a periodof 5 years w.e.f. 01st July 2015 and Mr. Gurprit Singh Sandhu resigned fromthe post of Managing Director & re-designated as Director of the Company w.e.f. 04thMarch 2016.

In accordance with the provisions of Section 152 of the Companies Act 2013 Mrs. KiranSandhu retires by rotation at the ensuing Annual General Meeting of the Company and beingeligible offers herself for the re-appointment.

3. Changes in the Subsidiaries Joint Venture and Associate Company: The Company didnot make any subsidiaries Joint Ventures and Associate Company during the financial yearunder review

4. Details of the order passed by the Regulators/ Courts/ Tribunals: No order has beenpassed by the regulators courts or tribunals impacting the going concern status andcompany's operation in future.

2. Directors:

The Board of Directors of the Company is duly constituted. During the year under reviewno director resigned from the directorship of the Company.

a. Composition and Meetings of the Board:

The Board Comprises of Mr. G.S Sandhu Ms. Kiran Sandhu Mr. Ram Pyare Singh Mr. VijayJolly Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as on 31st March2016. The Board of Directors duly met Six times on 30/05/2015 14/08/2015 14/11/201513/02/2016 04/03/2016 and 29/03/2016 in respect of which meetings proper notices weregiven and the proceedings were properly recorded. The details of the directors whoattended the meetings are given separately in the Corporate Governance report annexedseparately. The Board has adopted all the recommendations of Audit Committee.

b. Composition and Meeting of Audit Committee:

The Audit Committee is duly constituted. The Audit Committee comprises of Mr. VijayJolly Ms. Kiran Sandhu Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as themembers of the Committee. The Audit Committee duly met Four (4) times on 30/05/201514/08/2015 14/11/2015 and 13/02/2016 during the financial year. The details of theMembers who attended the meetings are given separately in the Corporate Governance reportannexed separately.

c. Composition and Meeting of Nomination and Remuneration Committee:

The Nomination and Remuneration Committee comprises of Mr. Vijay Jolly Mr. MelvinderSingh Garewal and Mr. Hakam Singh Saini as the members of the Committee. The Nominationand Remuneration Committee duly met twice (2) on 14/08/2015 and 04/03/2016 during thefinancial year. The details of the Members who attended the meetings are given separatelyin the Corporate Governance report annexed separately.

d. Composition and meeting of Stakeholders Relationship Committee:

The Stakeholders Relationship Committee comprises of Mr. Vijay Jolly Ms. Kiran SandhuMr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as the members of the Committee. TheStakeholders Relationship Committee duly met once on 29/03/2016 during the financial year.The details of the Members who attended the meetings are given separately in the CorporateGovernance report annexed separately.

e. Declaration by Independent Directors and their meeting:

The Company has received the requisite declarations under section 149(7) of theCompanies Act 2013 from each of the Independent directors in the start of the FinancialYear stating that they meet the criteria of independence as mentioned under Section 149(6)of the Act.

During the year under review the Independent Directors of the Company met once on14/11/2015.

Training of Independent Directors:

The Company had provided suitable training to all the independent directors of theCompany to familiarize them with the Company their roles rights responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany etc.

f. Policy on Director's appointment and remuneration:

The current policy is to have an appropriate mix of executive & non-executive andindependent directors to maintain the independence of the board and separate it'sfunctions of governance and management. The policy of the Company on Directors appointmentand remuneration including the criteria for determining the qualifications positiveattributes independence of a Director and other matters as provided under Section 178(3)of the Companies Act 2013 is as per the terms laid down in the Nomination &Remuneration policy of the Company. The Nomination & remuneration Policy of theCompany is annexed as Annexure-1.

3. Auditors:

a. Statutory Audit:

M/s Rattan Anil & Co. Chartered Accountants A-90 Gali No. 6 1stFloor Madhu Vihar Market PatparGanj Bus Depot. Delhi were appointed as StatutoryAuditors of the Company for a period of 5 years in the 25th Annual GeneralMeeting. Their appointment was subject to ratification by the members at every AnnualGeneral Meeting. The shareholders at the ensuing Annual General Meeting will consider theratification of the appointment of the Statutory Auditors for the financial Year 2016-17.

Board's explanation and Comments:

Auditor's Responsibility Statement read with Clause 12 on Note 22: The Company hasbeen repairing the plant on regular basis depending on the liquidity position as per theneed of an hour Extensive repairs are made to the plant & machinery every year. TheCompany has also filed a case with the High Court on Insurance Company towards this claim.

Auditor's Responsibility Statement read with Clause 9 on Note 22: The Company hadentered into settlement with secured lenders and part payments have already been made tothese lenders as per the terms of the settlements in the earlier years. Although thesesecured lenders have already revoked the sanctioned settlement. But the company hasapproached them again and is hopeful to clear the default as per the negotiatedsettlement. As per the discussion on the settlement the interest are not payable to themon the original liability and the current provision of interest due to the secured lendersalong with Principal amount due to them at Rs. 2.40 Crs. (after taking into considerationthe payment made towards the negotiated settlement) as per Books of Accounts is more thanthe settlement amount discussed with these lenders and in view of this there is no freshprovision of interest made for the year under review in the Books of Accounts. Completedetails have been provided in the clause 09 on note 22 which is self-explanatory.

Auditor's Responsibility Statement read with Clause 10 on Note 22: The Company hasapproached the secured lenders for resettlement. A payment of Rs. 1 cr. was made inearlier years to the secured lenders towards the negotiated settlement which stand revokedas on date. On fully settling the dues of these secured lenders as per the settlement thecompany will be able to come out of the negative networth and also revive its operationsfully. The company has also diversified in the field of Mushroom growing it inartificially controlled temperature and is hopeful of revival of its operations fully.

Point No. (vii) (a) to the Annexure to the Auditor's Report: The Company hasdefaulted in depositing the dues with the Provident Fund Authorities due to the adversefinancial condition but it has already started making the payment to clear the ProvidentFund dues. The company is hopeful to clear the entire dues in the near future.

The company has outstanding dues of around Rs. 8.37 Lacs towards the sales tax demand.The company has taken up the steps to approach the relevant authorities (including filingof appeal) for cancellation of demand of Rs. 5.11 Lacs. Rest of the Sales Tax demand ofRs. 3.26 Lacs has not been paid due to adverse liquidity position. The Company is hopefulto clear the dues soon.

Other points are self-explanatory as given in various clauses on Note 22.

b. Secretarial Audit:

The Board has appointed M/s Santosh Ku. Pradhan Practising Company Secretary as theSecretarial Auditor for the Financial Year 2015-16. The secretarial audit report asrequired under section 204 of the Companies Act 2013 is annexed as Annexure 2 andforms part of this report.

Board's explanation and Comments:

The Company has tried on roll services of a Company Secretary as Key ManagerialPersonnel. However since the company is going through sever liquidity crunch it isdifficult to persuade the applicants to work on a reasonable salary. However the companyis committed to employ Company secretary in near future.

4. Annual Return:

The extract of Annual return as provided under sub-section (3) of Section 92 is annexedas Annexure 3 and forms part of this report.

5. Vigil Mechanism: (Whistle Blower Policy)

A Vigil Mechanism / Whistle Blower Policy pursuant to the provisions of Section 177(9)of the Companies Act 2013 was approved by the Board. The vigil mechanism shall providefor adequate safeguards against victimization of employees and directors who avail of thevigil mechanism and also provide for direct access to the Chairperson of the AuditCommittee in exceptional cases.

Mr. Manjit Singh Plant manager was appointed as the Vigilance Officer to hear thegrievances of the employees with any person in the company and take steps to resolve theissues amicably and report the same to the Managing Director of the Company and offencesof serious nature may be brought to the attention Mr. Vijay Jolly Chairman of the AuditCommittee of the Company who shall after hearing the concerned person award appropriatepunishment to the offender.

6. Deposits:

During the year under review your company has not accepted any public deposits interms of the provisions of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposit) Rules 2014.

7. Loans Guarantees or investments:

The Company has not given any loan or provided any Guarantees and has not made anyinvestments during the financial year under review.

8. Contracts and arrangements with related parties:

The particulars of Contracts and arrangements with related parties referred to in subsection (1) of Section 188 in AOC-2 is annexed as Annexure-4 and forms part of thisreport.

9. Corporate Social Responsibility:

The provisions of Corporate Social Responsibility are not applicable on the Company.

10. Risk Management Policy:

Every business has inherent risks involved in it operations which may be eitherexternal or internal. The external factors are market competition availability of cheapersubstitute products Government policies regarding power tariffs and ongoing political andeconomic changes in the importing Country. The Company may not have much control over suchfactors; however it is important to address these risks & concerns to mitigate theiroverall impact on the business. Formal risk assessment and Management approach along withthe regular monitoring mechanism in the Company ensures that these risks are dulyaddressed and well managed. High focus on safety of plant its premises and peoplecontinuity and proactive Management of related business environment are essential for therisk management in the overall supply chain and business in general.

11. Internal Financial controls:

The Company has an adequate system of internal controls to ensure that all activitiesare monitored and controlled as well as transactions are authorized recorded and reportedcorrectly. The Company ensures adherence to all internal control policies and proceduresas well as compliance with all regulatory guidelines which are supplemented by internalaudit regularly.

The Audit Committee of the Board meets on quarterly basis and reviews the internalcontrol systems as well as financial statements.

12. Share Capital:

The Company has only one kind of Shares i.e. Equity shares with same voting rights. TheCompany has not issued any sweat equity shares during the financial year under review. TheCompany has not issued any further shares during the financial year under review. Furtherduring the year under review the Company has not made any offer to buy back its shares.

Further during the year under review 1140000 partly paid up equity shares wereconverted into fully paid up equity shares against the adjustment of loans advanced by Mr.G.S. Sandhu in earlier years.

13. Particulars of Employees:

Information in accordance with the provisions of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed as Annexure 5 and forms part of this report.

14. Energy Conservation. Technology Absorption and Foreign Exchange Earnings and Outgo:

Information in accordance with the provisions of Section 134 of the Companies Act2013 read with the Companies (Accounts) Rules 2014 regarding conservation of energytechnology absorption and Foreign exchange earning & outgo of the Company were givenas per Annexure 6 to this report.

15. Corporate Governance report:

A Comprehensive report on Corporate Governance as stipulated under Regulation 34(3) ofthe SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 is attachedto this report.

Your Company has obtained a certificate from the Statutory Auditor regarding thecompliance of conditions of Corporate Governance as stipulated under Schedule V (E)theSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 and the same isannexed.

16. Formal Annual Evaluation of Board of its own performance and that of its Committeesand Directors:

Our Company has prescribed required parameters to evaluate the performance of the Boardand it's committees. It is always recognized that the Board comprises appropriatelyqualified and professional people with broad range of experience.

17. Disclosure under the Sexual Harassment of Women at workplace (Prevention.Prohibition and Redressal) Act. 2013:

The details are as follows:

1. Number of Complaints of Sexual Harassment received in the year: Nil

2. Number of Complaints disposed during the year: N.A

3. No. of cases pending for more than ninety days:Nil

4. No. of workshops or awareness programme against Sexual harassment carried out: Nil

5. Nature of action taken by the employee or District officer: N.A

18. Directors1 Responsibility Statement:

Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to the Directors' Responsibility Statement it is hereby confirmed that:

1. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

2. 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;

3. 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

4. The Directors had prepared the annual accounts on a 'going concern' basis; and

5. The directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

6. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

APPRECIATION:

We wish to convey our sincere thanks to the Shareholders and various agencies of theCentral Government State Governments Financial Institutions Company's Banker andBusiness Associates for their continued cooperation extended to the Company. We also wishto record our deep appreciation of the contribution made by the employees at all levels.

By Order of the Board Tarai Foods Limited
Place: New Delhi Sd/
Date: 28.07.2016 Mr. G.S. Sandhu
Chairman
DIN: 00053527
Address: 118 Madan Lal Block
Asian Games Village
New Delhi- 110049.

REMUNERATION POLICY

Effective from 1st October 2014.

(I) Criteria for Determining Qualifications Positive Attributes & Independence ofDirector:

1. Qualifications of Independent Director:

An Independent director shall possess appropriate skills experience and knowledge inone or more fields of finance law management sales marketing administrationresearch corporate governance operations or other disciplines related to the company'sbusiness.

2. Positive attributes of Independent Directors:

An independent director shall be a person of integrity who possesses relevantexpertise and experience and who shall uphold ethical standards of integrity and probity;act objectively and constructively; exercise his responsibilities in a bona-fide manner inthe interest of the company; devote sufficient time and attention to his professionalobligations for informed and balanced decision making; and assist the company inimplementing the best corporate governance practices.

3. Independence of Independent Directors:

An Independent director should meet the requirements of the Companies Act 2013 andClause 49 of the Listing Agreement concerning independence of directors.

(II) Remuneration Policy for Directors Key Managerial Personnel and other employeesGeneral:

a) The remuneration / compensation / commission etc. to the Whole-time DirectorKMP and Senior Management Personnel will be determined by the Committee and recommended tothe Board for approval. The remuneration / compensation / commission etc. shall be subjectto the prior/post approval of the shareholders of the Company and Central Governmentwherever required.

b) The remuneration and commission to be paid to the Whole-time Director shall bein accordance with the percentage / slabs / conditions paid down in the Articles ofAssociation of the Company and as per the provisions of the Act.

c) Increments to the existing remuneration/ compensation structure may berecommended by the Committee to the Board which should be within the slabs approved by theShareholders in the case of Whole-time Director.

d) Where any insurance is taken by the Company on behalf of its Whole-timeDirector Chief Executive Officer Chief Financial Officer the Company Secretary and anyother employees for indemnifying them against any liability the premium paid on suchinsurance shall not be treated as part of the remuneration payable to any such personnel.Provided that if such person is proved to be guilty the premium paid on such insuranceshall be treated as part of the remuneration.

Remuneration to Whole-time / Executive / Managing Director KMP and Senior ManagementPersonnel:

a) Fixed pay:

The Whole-time Director/ KMP and Senior Management Personnel shall be eligible for amonthly remuneration as may be approved by the Board on the recommendation of theCommittee. The breakup of the pay scale and quantum of perquisites including employer'scontribution to P.F pension scheme medical expenses club fees etc. shall be decided andapproved by the Board/ the Person authorized by the Board on the recommendation of theCommittee and approved by the shareholders and Central Government wherever required.

b) Minimum Remuneration:

If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Whole-time Director in accordance with theprovisions of Schedule V of the Act and if it is not able to comply with such provisionswith the previous approval of the Central Government.

c) Provisions for excess remuneration:

If any Whole-time Director draws or receives directly or indirectly by way ofremuneration any such sums in excess of the limits prescribed under the Act or without theprior sanction of the Central Government where required he / she shall refund such sumsto the Company and until such sum is refunded hold it in trust for the Company. TheCompany shall not waive recovery of such sum refundable to it unless permitted by theCentral Government.

Remuneration to Non Executive Directors/Independent Directors:

NEDs/Independent Directors shall not be paid sitting fees for any meeting of the boardor committee thereof attended by them as members. The company has no stock options plansand no payment by way of commission bonus pension incentives etc. shall be made.

Annexure- 4

FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub section (1) of section 188 of theCompanies Act 2013 including certain arms length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arm's length basis.

Particulars Details
a) Name (s) of the related party & nature of relationship N.A
b) Nature of contracts/arrangements/transaction N.A
c) Duration of the contracts/arrangements/transaction N.A
d) Salient terms of the contracts or arrangements or transaction including the value if any N.A
e) Justification for entering into such contracts or arrangements or transactions' N.A
f) Date of approval by the Board N.A
g) Amount paid as advances if any N.A
h) Date on which the special resolution was passed in General meeting as required under first proviso to section 188 N.A

2. Details of contracts or arrangements or transactions at Arm's length basis.

Particulars Details
a) Name (s) of the related party & nature of relationship NIL
b) Nature of contracts/arrangements/transaction NIL
c) Duration of the contracts/arrangements/transaction NIL
d) salient terms of the contracts or arrangements or transaction including the value if any NIL
e) Date of approval by the Board NIL
f) Amount paid as advances if any NIL

Annexure- 5

FORM NO. AOC -2

A. The information required under Section 197 of the Act read with rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

1. The ratio of the remuneration of each Director to the median remuneration of theemployees of the Company for the year 2015-16:

Name of the Directors Designation Ratio
1. Gurprit Singh Sandhu Director N.A
2. Kiran Sandhu Director N.A
3. Vijay Jolly Director N.A
4. Rampyare Singh Whole Time Director N.A
5. Malvinder Singh Garewal Director N.A
6. Hakam Singh Director N.A

2. The percentage increase in remuneration of each director chief executive officerchief financial officer company secretary in the financial year:

Name of the Directors Designation Remuneration paid during 2014-15 (Rs. In lacs) Remuneration paid during 2015-16 (Rs. In lacs) Increase
1 Gurprit Singh Sandhu Managing Director N.A N.A No Increase
2 Kiran Sandhu Director N.A N.A No Increase
3 Vijay Jolly Director N.A N.A No Increase
4 Rampyare Singh Whole Time Director N.A N.A No Increase
5 Malvinder Singh Garewal Director N.A N.A No Increase
6. Hakam Singh Director N.A N.A No Increase

3. The percentage increase in the median remuneration of employees in the financialyear:

There is no increase in the median remuneration of employees in the financial year.

4. The number of permanent employees on the rolls of company: 9

5. The explanation on the relationship between average increase in remuneration andcompany performance:

There was no change in the remuneration of employees. The revenue of the company wentdown from Rs. 211.13 lacs to Rs. 196.41 lacs by 6.97% as compared to last year. Furtherthe company made loss of Rs. 9.88 lacs during the year.

6. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:

In the financial year 2015-16 revenue of the company registered an decrease of 6.97%as compared to last year. However the Company continued to make losses. There is noincrease in the salary of Executive Directors and other KMP's in the financial year2015-16 over the financial year 2014-15.

7. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year and percentageincrease over decrease in the market quotations of the shares of the Company in comparisonto the rate at which the Company came out with the last public offer:

Particulars As at March 31 2016 As at March 31 2015 Variation (In %)
Closing rate of Share at BSE (Rs.) 2.8 1.2 133.33%
Market Capitalization (Rs. in crore) 4.30 1.72 150%
Price Earnings ratio (40.0) 0.17 Negative

8. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:

There is no increase in the average increase in percentile of salaries of employeesother than managerial personnel in 2015-16. There is no percentage increase in themanagerial remuneration for the year 2015-16.

9. Comparison of remuneration of each of the Key Managerial Personnel against theperformance of the Company

The % of the remuneration of each KMP to the Profit after Tax (PAT) is given below:

Name of the Directors Designation Percentage as PAT
1. Gurprit Singh Sandhu Director N.A
2.. Rampyare Singh Whole Time Director N.A
3. Rampyare Singh Chief Financial Officer N.A

10. The key parameters for any variable component of remuneration availed by thedirectors: N.A

11. The ratio of the remuneration of the highest paid Director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid Directorduring the year: N.A

12. Affirmation that the remuneration is as per the remuneration policy of the company:N.A

B. The information required under Section 197 of the Act read with rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenbelow:

A. Employed throughout the financial year was in receipt of remuneration for that yearwhich in the aggregate was not less than Rs. 6000000/-:Nil

Name of Empl oyees Designa tion Remuneration (Rs.) Nature of employment (Contractual or otherwise) Qualifica tion and Experien ce Date of Commence -ment of employme nt Age Last employ ment before joining the Company % of Equity shares held by such employ ee Whether any such employee is a relative of any director or manager of the Company
N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A

B. Employed for part of the Financial year was in receipt of remuneration for any partof that year at a rate which in the aggregate was not less than Rs. 500000/- permonth:

Name of Empl oyees Designa tion Remuneration (Rs.) Nature of employment (Contractual or otherwise) Qualifica tion and Experien ce Date of Commence -ment of employme nt Age Last employ ment before joining the Company % of Equity shares held by such employ ee Whether any such employee is a relative of any director or manager of the Company
N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A

C. Employed throughout the financial year or part thereof was in receipt ofremuneration in that year which in the aggregate or as the case may be at a rate whichin the aggregate is in excess of that drawn by the managing director or whole timedirector or manager and holds by himself or along with his spouse and dependent childrennot less than 2% of the equity shares of the Company:

Name of Empl oyees Designa tion Remuneration (Rs.) Nature of employment (Contractual or otherwise) Qualifica tion and Experien ce Date of Commence -ment of employme nt Age Last employ ment before joining the Company % of Equity shares held by such employ ee Whether any such employee is a relative of any director or manager of the Company
N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A

Annexure- 6

Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo required under the Companies (Accounts) Rules 2014

I. Conservation of Energy:

Sustainability at Tarai involves the awareness that a greener healthier planet is thebest legacy we can leave for our future generations and for our business. The Company hasembedded a policy of reduce reuse and recycle across all its processes. Company'stechnical staff and engineers are trained to identify energy-saving opportunities andconsistent efforts to improve performances have resulted in considerable reduction in theuse of energy and natural resources .Your Company has taken appropriate measures forenvironment protection by adopting green and clean technologies.

A few initiatives taken by your Company towards energy conservation during the yearunder review:

• Switch off utility machines during off times.

• Rain water harvesting continues to be a focused activity at our manufacturingplants.

• Use of electrical equipment's with high energy efficiency and lowanti-environment emissions.

• Office lights are switched off during lunch time and immediately after theoffice hours.

• The curtains are kept raised so that natural light is used.

• The laptop & computer monitors are programmed to go to sleep mode when notin use.

• Use of high masks light of 250w to CFL of 85 W.

• We have been able to achieve a higher level of operational efficiency ofutilities such as Heating Ventilation and Air Conditioning (HVAC) systems by scrappingand replacing the old floor mounted HVAC with a more efficient roof mounted HVAC.

II. Technology absorption adaptation and innovation:

(i) The efforts made towards technology absorption:

Validation of a formulation for compost preparation was carried out in the year 2015.Formulation chosen for the composting consisted of wheat straw Chicken manure(80 %) Gypsum (9.5 %) Urea (1%) and Cotton seed cake (2%). Validated recent formulation gavesignificantly higher yield comparing earlier formulation. The present formulation iscomparatively cost effective also. Application of validated formulation is presently goingon.

The company has not imported any technology in the last few years and hence matterspertaining to the technology absorption adaptation and innovation are not applicable tothe company.

The imported technology currently used is quite old around 17-20 years old for whichthe company has retained key technical staffs that have been trained by earlier technicalcollaborator and have adapted the technology well.

(ii) The expenditure incurred on Research and Development:

Our company is involved in manufacturing business for which the employees carry onnecessary research on the job for improving the existing processes and procedures. Sinceit is an integral part of our continuous effort to improve our services no research anddevelopment expenditure is separately allocated.

III. Foreign Exchange Earnings & Outgo

The particulars regarding earnings and outgo in Foreign Exchange for the year 2015-16are given below.

Particulars Current Year (Rs.) Previous Year (Rs.)
Foreign Exchange Earning NIL NIL
Foreign Exchange Outgo NIL NIL

 

By Order of the Board
Tarai Foods Limited
Sd/-
Mr. G.S. Sandhu
Chairman
DIN: 00053527
Address: 118 Madan Lal Block
Place: New Delhi Asian Games Village
Date: 28.07.2016 New Delhi- 110049.