Your Directors hereby present their Annual Report together with the audited accountsof the Company for the financial year ended 31st March 2020.
1. PERFORMANCE OF THE COMPANY
Your Company's performance for the year ended 31st March 2020 is asfollows:
| || ||(Rs. Millions) |
|Particulars ||2019-20 ||2018-19 |
|Net Sales ||8343.63 ||8230.56 |
|Other Income* ||41.13 ||42.55 |
|Total Income ||8384.76 ||8273.11 |
|Operating Expenses ||7769.59 ||7589.44 |
|PBDIT ||615.17 ||683.67 |
|Depreciation ||188.35 ||167.73 |
|Interest ||17.68 ||0.94 |
|Profit Before Tax (PBT) ||409.14 ||515.00 |
|Taxes ||69.93 ||175.93 |
|Profit After Tax (PAT) ||339.21 ||339.07 |
|Other Comprehensive income ||(3.06) ||(0.50) |
|Total Comprehensive income ||336.15 ||338.57 |
*Includes other operating revenue
Net Sales for the year were 1 % higher than Prior Year with the Foods share of thebusiness increasing by 400 bps to 31 % of Total Revenues. The Foods business reached a newhigh of Rs.259 crore with a 15% growth over Prior Year driven by robust growth in Act IIReady to Cook Popcorn and Sundrop Peanut Butter supported by an aggressive new productroll out including Sweet Corn Extruded Breakfast Cereals Granola Cereals Choco Spreadsand Chocolate Confectionery. The steady growth of the Foods business reflects thecontinued solid progress being made by the Company to be amongst India's best performingmost respected Foods Companies. PBT was down 21% vs PY and PAT was flat vs PY.
1.2 Key Indicators
FY'20 Gross Margin was lower than PY by Rs.4 Crore with a Rs.12 Crore increase inFoods GM largely but not fully offsetting a Rs.16 crore reduction in Oils GM.
The Company is reaching the end of a five year period where losses in Edible Oils GMcould not be fully compensated by the growth in Foods GM because of the lower share of theFoods business. Accordingly we are therefore approaching the inflexion point where afast-growing Foods business will more than compensate for any potential losses in EdibleOils placing the Company on a path of steady virtuous growth in Revenues and Profits.
Given the continued strong cash flow of the Company relative to the limited ongoingCapital Expenditure of the Company your Directors are pleased to recommend a Dividend ofRs.3.00 per equity share of the face value of Rs.10/- each for the year ended March 31st2020 subject to the approval of the shareholders at the Annual General Meeting to be heldon 20th August 2020.
| || |
| ||2019-20 ||2018-19 |
|STATEMENT OF RETAINED EARNINGS || || |
|a) At the beginning of the year ||2902.53 ||2634.90 |
|b) Add: Profit for the year ||339.21 ||339.07 |
|c) Add: Other Comprehensive Income (net of tax) ||(3.06) ||(0.50) |
|d) Less: Dividends* ||58.77 ||58.42 |
|e) Less: Dividends Distribution ||12.52 ||12.52 |
|Tax || || |
|f) At the end of the year ||3167.39 ||2902.53 |
*Dividend given to Agro Tech ESOP Trust excluded of Rs.2.15 mm (Previous year Rs.2.51mm).
3. RESPONSIBILITY STATEMENT
The Directors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
In the last month of FY 2020 COVID-19 declared by the World Health Organization aglobal pandemic developed rapidly into a global crisis forcing governments to enforcelock-downs of all economic activity. The Ministry of Home Affairs vide order no. 40-3/2020-DM-I (A) dated March 24 2020 announced a nation-wide lockdown as a measure tocontain the spread of Covid-19. For the Company the focus immediately shifted to ensuringthe health and wellbeing of all employees and on minimizing disruption to the operationsof the Company. The Company immediately adopted a 'Work from Home' model for all itsoffice-based employees. Owing to the lockdown the manufacturing operation and supplychain was impacted in the second half of March 2020. However being in the manufacture offood products covered under essential supplies the Company has since then seen a steadyimprovement in the supply chain with increased regulator support and labour availability.The Company is closely monitoring the impact of the pandemic on all aspects of itsbusiness and is taking appropriate measures and ensuring full compliance with thedirectives issued by the Government in this regard. As a responsible member of thecommunities that it operates in the Company has contributed to various Covid-19 reliefprograms run by the Government and the Company has also contributed to the PMCares Fund tosupport the Government towards Covid-19 relief efforts. The Company is confident that itwill remain on track to join the ranks of "India's Best Performing Most RespectedFood Companies" supported by a strong balance sheet tight cost control initiativesstrong R&D model. A diversified foods portfolio as a result of continued innovationwill help in navigating the challenges presented by Covid-19.
5. CORPORATE GOVERNANCE
In terms of the Listing Regulations a report on Corporate Governance along withAuditors' Report on its compliance is annexed forming part of the Annual Report.
Additionally this contains compliance report signed by the CEO of the Company inconnection with compliance with the Code of Conduct and also CEO/ CFO Certification asrequired by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
In line with the requirements of Companies Act 2013 your Company has constituted theBoard Committees and has in place all the statutory Committees required under the law.Details of Board Committees along with their terms of reference composition and meetingsof the Board and Board Committees held during the year are provided in the CorporateGovernance Report.
6. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from members on the Annual Report and Accounts this report includesMD&A as appropriate so that duplication and overlap between the Directors' Report anda separate MD&A is avoided and the entire material is provided in a composite andcomprehensive document.
7. INDUSTRY STRUCTURE & DEVELOPMENTS
The rapid growth of the Food Industry continues particularly in the five categorieswhich your Company has chosen to compete in which today account for Rs.53000 crore andhave grown at a robust 15% per annum over the last 5 years.
The challenge in capturing a profitable share of growth of the Industry is to have abalanced portfolio which spans multiple price points and multiple segments enabling yourCompany to have scale across the supply chain - manufacturing transportation &warehousing and final distribution. Your Company believes that with the multi-productmulti-price point portfolio now in hand there is a wide runaway for growth which canenable the acquisition of consumers and therefore Volumes which are margin additive on asustainable basis.
8. OPPORTUNITIES AND THREATS
The continued growth of the Indian Foods market represents an enormous opportunity fora steady growth in Revenues and Profits.
The Company's powerful Foods portfolio allows representation today in 5 fast growingcategories - Ready to Cook Snacks Ready to Eat Snacks Spreads Breakfast Cereals andChocolate Confectionery. Your Director's believe that these categories are sufficient topower the Company into one of the strongest Food Companies in India.
The primary threat to your Company's P&L remains the significant contribution ofthe Edible Oils business. However over time this has been significantly reduced and inFY'20 the Foods business contributed to 31% of Sales and 40% of Gross Margin. We aretherefore steadily moving towards a situation where a dominant share of profits will comefrom our Foods business and the potential adverse impact of this threat is being steadilyreduced.
9. STATE OF THE COMPANY'S AFFAIRS
Your Company has registered a consistent growth of 14% CAGR in the Foods business overthe last 10 years through selective entry into fast growing categories. This growth is nowbeing further ramped up with 2 new categories added in the back half of FY'20 the impactof which is visible in the Q4 results of FY'20.
A Focus on consumer acquisition through a strong Value for Money proposition enabled bya low-cost Capital Expenditure and Operating Expenditure model means that your Company isable to deliver significantly superior products to competition at very competitive prices.This is visible in recent launches in breakfast cereals. In addition the unique model ofplant level innovation with intensive collaboration with R&D and Procurement withMarketing serving as the gatekeeper ensures a seamless flow of innovation creating anenormous runaway for growth as seen with the recent launches of Chocolates and Sweet Corn.
Your Company today has very strong positions in both Ready to Cook Snacks and Spreads.Similar positions are now being built in the Breakfast Cereals and ConfectioneryCategories with a c100% success rate in new product launches.
A near national 6 plant Supply Chain for Ready to Eat Snacks will serve as the backboneof a multi-product/ multi- price point model which enables the Company to offset therelatively smaller size of the business with a meaningful portfolio to support profitabledistribution expansion.
The Company continued to focus on improving the quality of the distribution network. InFY'20 the number of active distributors increased further to 1100 customers significantlyimproving the robustness of the network. This is also reflected in the continued stronggrowth of the Foods business on the back of a solid coverage of c 400000 stores.
In FY'20 the task of rebuilding the Unnao plant (which caught fire in November 2018)and building of the plant at Chittoor was largely completed. Both plants are expected tocommence commercial production in FY'21 and with this the Company will have a total of 6plants for Ready to Eat Snacks which will enable profitable expansion of our DistributionNetwork. Work on the 7th plant at Kolkatta will start once we believe theMangaldai (Assam) plant is effectively leveraged for supplying to Eastern India.
The Company is also effectively leveraging the plant near Dhaka for improvingpenetration in Bangladesh and well placed to benefit from the continued economic growth ofan important neighbour of India.
10. PRODUCT CATEGORIES
10.1 Ready to Cook Snacks:
Revenues from the Ready to Cook Snacks business increased by 17% in FY'20 drivenentirely by Volume
Growth. Introduction of Sweet Corn enhanced the total category growth by 160 bps withthe Popcorn business growing by 15% in Revenues. The entry into the Sweet Corn categoryhas been very well received and the Company expects it to be a significant contributor inthe future.
10.2 Ready to Eat Snacks:
Revenues from the RTE Snacks business increased by only 7% with the Category impactedmost by the lockdown in March 2020 along with supply side issues on Tortilla Chips (basedentirely on third party suppliers post the fire at the Unnao plant). Ready to Eat Popcorndelivered strong growth with a more modest performance in Extruded Snacks.
Revenues from the Spreads business increased by 17% driven largely by a 14% growth inthe base Peanut Butter business supplemented by an additional 243 bps growth by the launchof Sundrop Cocoa Nut Choco Spread. The launch of Choco Spreads reflects the Company'sgrowing capabilities in Food processing which makes possible SKU's at extremely attractiveprice points enabling in turn the acceleration of category growth and the building of aprofitable business with minimal investments. Given the task required on Choco Spreadsthe Company pushed back the launch of additional Nut Butters to FY'21.
10.4 Breakfast Cereals:
In FY'20 the Company entered both the Extruded Cereals and the Muesli/Granolacategories with the launch of Sundrop Popz and Sundrop Nutrify. Both products have beenextremely well received and are significantly better than competitive offerings besidesbeing available at very competitive prices.
10.5 Chocolate Confectionery
In FY'20 the Company entered the Count Line segment of Chocolate Confectionery withthe launch of Sundrop Duo. The entry was made through a Coconut centered offering whichwas a significant unmet consumer need in the Indian market. The product has been extremelywell received and the Company is now proceeding to scale up packaging capacities to beable to fully leverage the successful launch of this product in a segment ignored by allthe existing players.
10.6 Edible Oils:
In FY'20 the Company focused on arresting the 3% decline in Sundrop Edible OilsVolumes which was witnessed in FY'19. This was partly achieved with a decline of 1% inVolume translating into a 2% decline in Revenues.
Revenues for the Crystal brand were also lower by 6% (Volumes 10% lower) than PYreflecting the impact of a very soft first half of the year.
We will continue to manage the Edible Oils category with minimal investments whichenable us to support strong growth of the Foods business.
11. RESEARCH QUALITY & INNOVATION (RQI)
The unique Innovation Model created by the Company has enabled an unprecedented levelof new product launches with near 100% success. The model relies heavily on plant levelinnovation in intensive collaboration with the R&D and Procurement teams. WithMarketing serving as a strong gatekeeper this has led to the successful launches of SweetCorn Choco Spreads Breakfast Cereals and Chocolate Confectionery all in a single year.
Innovation will continue to be the driver of growth for your Company and we will makeinvestments which ensure that we deliver to consumers products which address unmetconsumer needs.
12. CONSERVATION OF ENERGY ABSORPTION TECHNOLOGY FOREIGN EXCHANGE AND EMPLOYEEPARTICULARS
A Statement giving details of conservation of energy technology absorption and foreignexchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts)Rules 2014 is attached as Annexure A and forms part of this report.
13. HUMAN RESOURCES/INDUSTRIAL RELATIONS
Engaged Employees are critical to the success of your Company. In FY'20 your Companysuccessfully achieved an Engagement Score of 79%. The continuing strong momentum in theCompany driven by solid Foods growth and Innovation has helped to achieve this level.
Your Company will continue to ensure that we have a highly engaged and productiveorganization to deliver against our vision of being amongst "India's Best PerformingMost Respected Food Companies"
14. KEY FINANCIAL RATIOS
The details of significant changes in the key financial ratios are as follows:
| ||2019-20 ||2018-19 ||% Variance |
|(i) Debtors Turnover ||10.73 ||12.58 ||-14.71% |
|(ii) Interest Coverage Ratio ||24.13 ||548.87 ||-95.60% |
|(iii) Current Ratio ||2.74 ||2.82 ||-2.84% |
15. RETURN ON NET WORTH
The Return on Net worth as compared to the immediately previous financial year is asfollows:
| ||2019-20 ||2018-19 |
|(i) Return on Net Worth ||8.32% ||9.02% |
16. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(2) of the
Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016thereunder in respect of the top ten employees in terms of remuneration drawn andemployees who were in receipt of remuneration aggregating '1.02 crores or more or wereemployed for part of the year and were in receipt of remuneration aggregating '8.50 lakhsper month or more during the financial year ending 31st March 2020 is providedin the Annexure B forming part of this Report.
17. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.
18. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during thefinancial year with related parties were in the ordinary course of business and on anarm's length basis. During the year the Company had not entered into any contract orarrangement or transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactionsCompanies Act 2013 and Listing Regulations. Form AOC-2 containing the note on theaforesaid related party transactions is enclosed as Annexure C and forms part ofthis Report.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website.:http://www.atfoods.com/ templates /hometpl/pdf/other info/policy dealing related partytransactions.pdf The related party disclosures including detail of transaction withPromoter group form part of the financial statements provided in this Annual Report.
19. EMPLOYEE STOCK OPTION PLAN
The Company vide special resolution in the Annual General Meeting of the Company heldon 25th July 2012 had approved "Agro Tech Employee Stock Option Plan"("Plan"). The Plan was further modified vide special resolution in the AnnualGeneral Meeting held on 24th July 2015 to align it with the provisions of SEBI(Share Based Employee Benefits) Regulations 2014 ("SEBI Regulations") and otherapplicable provisions for the time being in force. The Plan is administered by Agro TechESOP Trust ("Trust") under the supervision of the Nomination and RemunerationCommittee of the Board of Directors of the Company ("Committee"). The Plan is incompliance with the provisions of SEBI Regulations and there has been no material changein the Plan during the year. Further details of the Plan are available on the website ofthe Company at www.atfoods.com.
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has continued to drive the Corporate Social Responsibility program underPoshan where we provide Peanut Butter to under nourished children. Major focus area forimplementation of this program is Bharuch district in Gujarat where our Peanut Butterfactory is situated. Apart from Gujarat the program is also under implementation inDelhi Hyderabad Kashipur and Kolkata where our offices and factories are located. ForFY20 a total number of 44584 children covered during the program an increase of 33%when compared to the last year coverage with a consequent increase in supply of PeanutButter by 42%. Your Company has also contributed Rs.200000 to the Government ofTelengana to provide CCTVs to improve the safety measures for women employees attendingwork at Kothur Industrial Area. Responding to the Prime Minister's call for contributionsto PMCARES Fund in view of the Covid-19 Pandemic Your Company contributed Rs.2000000.Overall the CSR spends during the year amount to Rs.6862235 an increase by 50% whencompared to the previous year spending. This spending comes to about 1.41% of average PBTfor the last three years which is slightly less than mandatory requirement of 2%. With theincreasing spends year on year we are progressing towards this goal.
As per the Companies Act 201 3 as amended by Companies (Amendment) Act 2017 allCompanies having net worth of Rs.500 crore or more or turnover of Rs.1000 crore or moreor a net profit of Rs.5 crore or more during the immediately preceding financial year willbe required to constitute a CSR Committee of the Board of Directors comprising three ormore directors at least one of whom will be an Independent Director. Aligning with theguidelines the Company has constituted a CSR Committee comprising of Lt. Gen. D B Singhas Chairman Mr. Sanjaya Kulkarni Mr. Narendra Ambwani Mr. Arun Bewoor Ms. VeenaGidwani Ms. Denise Lynn Hansen and Ms. Jill Ann Rahman as its Members. The Committee isresponsible for formulating and monitoring the CSR Policy of the Company. The CSR Policyof the Company as approved by the Board of Directors is available on the Company'sWebsite: http:/www.atfoods.com/templates/home tpl/pdf/ other info/ATFI%20CSR%20POIICY.pdfThe program Poshan also received the 2014 South Asia Platinum SABRE Award for CorporateSocial Responsibility.
The Annual Report on CSR activities is annexed herewith as Annexure D and formspart of this Report.
21. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization framework whichhas been adopted by the Board at the Board Meeting held on 1st May 2006. TheCompany has framed a risk management policy and testing in accordance with the laid downpolicy is being carried out periodically. The Senior Management has been having regularMeetings for reassessing the risk environment and necessary steps are being taken toeffectively mitigate the identified risks. A Risk Management Committee also has beenconstituted with a Committee of the Directors and senior management to address issueswhich may threaten the existence of the company.
22. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by the Board ofDirectors on 17th October 2014. This Whistle Blower Policy of the Company providesopportunities to employees to access in good faith to the Management concerns (incertain cases to the Audit Committee) in case they observe unethical or improper practices(not necessarily a violation of law) in the Company and to secure those employees fromunfair termination and unfair prejudicial employment practices. The policy has also beenuploaded on the website of the Company : http://www.atfoods.com/templates/ hometpl/pdf/other info/ATFL WB%20Policv %20final.pdf
23. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation to driveproductivity to work efficiently with our Customers & Suppliers while making availableto our Employees robust information to ensure best in class analysis of the business andidentification of opportunities to improve shareholder return.
24. FINANCE AND ACCOUNTS
24.1 Internal Controls
The Company has a robust system of internal controls commensurate with the size andnature of its operations to ensure orderly and efficient conduct of business. Thesecontrols ensure safeguarding of assets prevention and detection of fraud and erroraccuracy and completeness of accounting records timely preparation of reliable financialinformation and adherence to the Company's policies procedures and statutory obligations.
Your Company has established standard operating procedures for smooth and efficientoperations in addition to ensuring internal controls. Your Company has also documented:
a comprehensive Code of Conduct for the Board Members and employees of yourCompany
An Employee Handbook
Whistle Blower Policy defined to provide channel of communication without fear
Comprehensive framework for Risk Management and
CEO/CFO Certification for Financial Reporting Controls to the Board
The Company has appointed M/s. Grant Thornton India LLP as Internal Auditors to ensureadequacy of internal control systems and make recommendations thereto. Audit reports arecirculated to management which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the performance asreported by Auditors. The Internal and External Auditors also attend the meetings andconvey their views on the adequacy of internal control systems as well as financialdisclosures. The Audit Committee also issues directives and/or recommendations forenhancement in scope and coverage of specific areas wherever felt necessary.
24.2. Cautionary Statement
Statements in this Directors' Report and Management Discussion and Analysis describingthe Company's objectives projections estimates and expectations may constitute"forward looking statements" within the meaning of applicable laws andregulations. Actual results may differ materially from those either expressed or implied.
Your Company is rapidly approaching an inflexion point where the natural profitablegrowth in the Foods business will more than offset risks in the Edible Oils businesscreating a P&L where tight control on costs can enable the improved margin to flowthrough to the bottom line. We believe that the category choices that we have made and therelentless pursuit of the Revenue and Margin goals on the Foods business will ensure thatwe will become a significant player in the Indian Foods Industry and join the ranks ofIndia's Best Performing Most Respected Food Companies. Infrastructure to supportquadrupling of the Foods business and therefore doubling total Revenue of the Company. TheCompany has acquired land near Kolkata for the 7th plant in India and a 100%Subsidiary is operational in Bangladesh to address a rapidly growing market with apopulation of 165 MM people.
In accordance with the provisions of Article 143 of the Articles of Association of theCompany in so far as it is not inconsistent with the relevant provisions of the CompaniesAct 2013 Ms. Denise Lynn Hansen retires by rotation and being eligible offers herselffor re-appointment. A brief profile of Ms. Denise Lynn
Hansen is given in the notice of the 33rd Annual General Meeting.
All the Independent Directors of the Company have also given a confirmation to theCompany as provided under Section 149(6) of the Companies Act 2013 and Regulation 25 (8)of SeBI (LODR) Regulations 2015 that:
a. they are persons of integrity and possess relevant expertise and experience;
b. i. they are or were not a promoter of the
Company or its holding subsidiary or associate Company or member of the promoter groupof the company;
ii. they are not related to promoters or other directors in the Company its holdingsubsidiary or associate Company;
c. they do not have or had any pecuniary transaction or relationship other thanremuneration as such director or having transaction not exceeding ten per cent of theirtotal income or such amount as may be prescribed with the company its holding subsidiaryor associate Company or their promoters or directors during the two immediatelypreceding financial years or during the current financial year;
d. none of their relatives -
(i) is holding any security of or interest in the company its holding subsidiary orassociate company during the two immediately preceding financial years or during thecurrent financial year:
Provided that the relative may hold security or interest in the company of face valuenot exceeding fifty lakh rupees or two per cent of the paid-up capital of the company itsholding subsidiary or associate company or such higher sum as may be prescribed;
(ii) is indebted to the company its holding subsidiary or associate company or theirpromoters or directors in excess of such amount as may be prescribed during the twoimmediately preceding financial years or during the current financial year;
(iii) has given a guarantee or provided any security in connection with theindebtedness of any third person to the company its holding subsidiary or associatecompany or their promoters or directors of such holding company for such amount as maybe prescribed during the two immediately preceding financial years or during the currentfinancial year; or
(iv) has or had any other pecuniary transaction or relationship with the company itsholding subsidiary or associate company or their promoters or directors amounting totwo per cent or more of its gross turnover or total income or fifty lakh rupees or suchhigher amount as may prescribed from time to time whichever is lower singly or incombination with the transactions referred to in sub-clause (i) (ii) or (iii) during thetwo immediately preceding financial years or during the current financial year.
e. neither they nor any of their relatives -
(i) hold or has held the position of a key managerial personnel or is or has beenemployee of the Company or its holding subsidiary or associate Company in any of thethree financial years immediately preceding the financial year in which they were proposedto be appointed;
(ii) is or has been an employee or proprietor or a partner in any of the threefinancial years immediately preceding the financial year in which they were proposed to beappointed of-
(A) a firm of auditors or company secretaries in practice or cost auditors of theCompany or its holding subsidiary or associate Company; or
(B) any legal or a consulting firm that has or had any transaction with the Companyits holding subsidiary or associate Company amounting to ten per cent or more of thegross turnover of such firm;
(iii) held together with any relatives two per cent or more of the total voting powerof the Company; or
(iv) is a Chief Executive or director by whatever name called of any non-profitorganization that receives twenty-five per cent or more of its receipts from the Companyany of its promoters directors or its holding subsidiary or associate Company or thatholds two per cent or more of the total voting power of the Company;
(v) is a material supplier service provider or customer or a lessor or lessee of theCompany;
f. they are not a non-independent director of any other company on the board of whichany nonindependent director of the Company is an independent director.
g. they are not aware of any circumstance or situation which exist or may bereasonably anticipated that could impair or impact their ability to discharge theirduties with an objective independent judgment and without any external influence.
h. they possess appropriate skills experience and knowledge in one or more fields offinance law management sales marketing administration research corporategovernance technical operations or other disciplines related to the company's business.
Lt. Gen. D B Singh Mr. Sanjaya Kulkarni Mr. Narendra Ambwani Mr. Arun Bewoor and Ms.Veena Gidwani were re-appointed as non-executive and Independent Directors by theshareholders' at the 32nd Annual General Meeting held on 17th July2019 for a second consecutive term of five years till 16th July 2024 notliable to retire by rotation.
Hence none of the independent Directors will retire at the ensuing Annual GeneralMeeting.
26. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year2019-2020 on the following dates:
1. 24th April 2019
2. 16th July 2019
3. 23rd October 2019
4. 22nd January 2020
27. AUDIT COMMITTEE
The Company's Audit Committee presently comprises of six Directors all except one arenon-executive and Independent Directors. This is in compliance with Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Lt. Gen.D.B. Singh an Independent Director is the Chairman of the Committee while Mr. SanjayaKulkarni Mr.Narendra Ambwani Mr. Arun Bewoor Ms. Denise Lynn Hansen and Ms. VeenaGidwani are its Members. The Charter of the Committee is in line with the requirements ofSection 177 of the Companies Act 2013 and the relevant clauses of the ListingRegulations.
28. CRITERIA FOR REMUNERATING DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Company's Key Managerial Personnel Whole time Director andEmployees is measured on the progress being made on the strategic vision of the Companyand Profitability. Progress against the strategic vision of the Company is measured bycontinued improvement in Gross Margin and share of the Foods business in the total NetSales of the Company. Profitability is measured using Profit After Tax as a singlemeasure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is being provided as an Annexure B to thisReport.
29. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of theCompanies Act 2013. The performance evaluation of independent directors is done by theentire Board of Directors (excluding the director being evaluated). On the basis of thereport of performance evaluation it shall be determined whether to extend or continue theterm of appointment of the independent directors.
The annual evaluation of the Board is done at three levels as (i) Board as a whole;(ii) Committees of the Board and (iii) Individual Directors and Chairperson. A detailedQuestionnaire is circulated to all individual directors. The Directors are evaluated onthe basis of the following performance evaluation criteria namely knowledge andcompetency fulfillment of functions ability to function as a team initiativeavailability and attendance commitment contribution and Integrity. The Additionalcriteria for Independent directors are independence independent views and judgment.
The remuneration/commission to Non-Executive and Independent Directors shall be fixedas per the provisions contained under Companies Act 2013. The Non- Executive/IndependentDirector may receive remuneration by way of fees for attending each meeting of Board orCommittee thereof provided that the amount of such fees shall not exceed Rs.100000/-(Rs.one lakh only) per meeting of the Board or Committee or such amount as may beprescribed by the Central Government from time to time.
For Independent Women Directors the sitting fee paid is not less than the sitting feepayable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholderssubject to the limit not exceeding 1% of the profits of the Company computed as per theapplicable provisions of the Act.
An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed herewith as Annexure E andforms part of this Report and is also uploaded on the website of the Companyhttp://.atfoods.com/templates/home tpl/ pdf/other info/Nomination%20and%20Remuneration%20Policv.pdf
30. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize thenew inductees with the strategy operations business and functions of your Company theSenior Management make presentations to the inductees about the Company's strategyoperations and products.
The Company also encourages and supports its Directors to update themselves with therapidly changing regulatory environment. Also at the time of appointment of independentdirectors the Company issues a formal letter of appointment describing their rolesfunctions duties and responsibilities as a Director. The appointment letters issued toindependent directors are uploaded on the websitehttp://www.atfoods.com/templates/hometpl/pdf/other info/terms conditions appointmentindependent directors.pdf
M/s Deloitte Haskins & Sells LLP Chartered Accountants were appointed as theStatutory Auditors of the Company by the shareholders' at the 32nd AnnualGeneral Meeting held on 17th July 2019 to hold office from the conclusion ofthe 32nd Annual General Meeting till the conclusion of the 37thAnnual General Meeting.
The Report given by the Auditors M/s Deloitte Haskins & Sells LLP CharteredAccountants on the financial statements of the Company for financial year 201920 is partof the Annual Report. There has been no qualification reservation or adverse remark ordisclaimer in their Report. During the year under review the Auditors had not reportedany matter under Section 143(12) of the Companies Act 2013 and hence no detail isrequired to be disclosed under Section 134(3)(ca) of the Companies Act 2013.
32. COST AUDIT
The Company is required to maintain the cost records as specified by the CentralGovernment under Section 148 (1) of the Companies Act 2013 and accordingly such accountsand records are made and maintained by the Company. An Audit of the Cost Accountsmaintained by the Company is also conducted by a Cost Auditor appointed by the Boardsubject to the approval of Shareholders.
33. SECRETARIAL AUDIT
M/s. Tumuluru & Company Company Secretaries Firm has been appointed to conduct theSecretarial Audit of the Company as required under the provisions of Section 204 of theCompanies Act 2013 and Rule 9 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 and Regulation 24A of the SEBI (LODR) Regulations 2015and also to provide the Secretarial Compliance Report for the financial year 2019-20. Copyof the Secretarial Audit Report in Form MR-3 is given as an Annexure F to thisDirector's Report. The Secretarial Audit Report does not contain any qualification oradverse remarks.
34. SUBSIDIARY COMPANIES
Your subsidiary Sundrop Foods India Private Limited has continued to perform the roleof aiding the expansion of distribution and display of your products. At the end of FY'20the number of sales staff on the rolls of the Company were 460.
Your company's wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd hascommenced production in FY'18. This has enabled the Company to build scale in Bangladeshand benefit from the economic growth of a neighboring emerging market. Your Company willalso be working towards leveraging your Company's wholly-owned subsidiary Sundrop FoodsLanka (Private) Limited and seek to establish a local low-cost production model which willenable us to benefit from the growth of our neighboring countries.
During the year the Board of Directors reviewed the affairs of the subsidiaryCompanies. The Company has published the audited consolidated financial statements for thefinancial year 2019-20 and the same forms part of this Annual Report. This Annual Reportdoes not contain the financial statements of our subsidiaries. The statements highlightingthe summary of the financial performance of the subsidiaries in the prescribed format isannexed as Annexure G to this Report. The audited financial statements and relatedinformation of subsidiaries are available for inspection electronically and will beprovided to any shareholder on demand. The separate audited financial statements inrespect of each subsidiary Companies is also available on the website of your Company.http://www.atfoods.com/investor-relations/annual- reports.html.
35. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of theCompanies Act 2013 and Rule 12 of the Companies (Management & Administration) Rules2014 prepared as on 31st March 2020 is attached as an Annexure H tothis Directors' Report.
36. BUSINESS RESPONSIBILITY REPORT
SEBI (LODR) (Fifth Amendment) Regulations 2019 notified on 26th December2019 mandated inclusion of Business Responsibility Report (BRR) as part of the AnnualReport for top 1000 listed entities based on market capitalization. In compliance with theRegulation the BRR is provided as part of this Annual Report.
Your Directors state that no disclosures or reporting are being made in respect of thefollowing items as there were no applicable transactions or events on these items duringthe year under review:
a. Details relating to deposits covered under Chapter V of the Act.
b. Issue of equity shares with differential rights as to dividend voting or otherwise.
c. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except under the ESOP scheme referred to in this Report.
d. The Managing Director of the Company does not receive any remuneration or commissionfrom any of its subsidiaries.
e. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
f. The Company has complied with the provisions relating to constitution of InternalComplaints Committee and no cases reported or filed during the year pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
g. During the year your Company has not accepted any public deposits under Chapter Vof Companies Act 2013.
h. In terms of provisions of Investor Education and Protection Fund (Awareness andProtection of Investors) Rules 2001 Rs.497466/- (as on 31st March 2020) ofunpaid /unclaimed dividends will be transferred to Investor Education and Protection Fund.
i. During the year the Company has transferred 8776 unclaimed shares to IEPF accounton 22nd November 2019. The detailed list of unclaimed shares transferred toIEPF Authority is available in the Company's website www.atfoods.com
The Board places on record their appreciation for the contribution of its customersemployees distributors co-packers suppliers and all other stakeholders towardsperformance of the Company during the year under review.
|On Behalf of the Board |
|Sachin Gopal ||Lt. Gen. D.B. Singh |
|Managing Director & CEO ||Director |
|DIN 07439079 ||DIN 00239637 |
|Place : Gurugram || |
|Date : 28th May 2020 || |