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Apex Frozen Foods Ltd.

BSE: 540692 Sector: Others
NSE: APEX ISIN Code: INE346W01013
BSE 00:00 | 15 Nov 314.05 -13.25
(-4.05%)
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330.75

HIGH

336.75

LOW

307.00

NSE 00:00 | 15 Nov 313.50 -14.10
(-4.30%)
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HIGH

336.90

LOW

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OPEN 330.75
PREVIOUS CLOSE 327.30
VOLUME 101583
52-Week high 399.00
52-Week low 190.10
P/E 19.63
Mkt Cap.(Rs cr) 981
Buy Price 315.00
Buy Qty 283.00
Sell Price 316.00
Sell Qty 100.00
OPEN 330.75
CLOSE 327.30
VOLUME 101583
52-Week high 399.00
52-Week low 190.10
P/E 19.63
Mkt Cap.(Rs cr) 981
Buy Price 315.00
Buy Qty 283.00
Sell Price 316.00
Sell Qty 100.00

Apex Frozen Foods Ltd. (APEX) - Director Report

Company director report

To

The Members

Your directors have pleasure in presenting the 6th Annual Report together with theAudited

Financial Statements for the Financial Year ended 31st March 2018.

Financial results

The performance of the company for the financial year ended 31st March 2018 issummarized below:

(Rs. in lakhs)
Particulars 2017-18 2016-17*
Revenue from operations 99863.40 69869.50
Other income 1987.43 1056.52
Profit before interest Depreciation & Tax 12848.62 5353.79
Interest 869.96 1122.02
Depreciation 865.24 627.17
Profit before Tax 11255.33 3743.64
Curent Tax 4331.86 1297.81
Deferred Tax (986.58) (66.85)
Total Tax Expenses 3345.28 1230.95
Net Profit/(Loss) for the period after tax 7910.05 2512.68
Earnings per share 28.02 10.47

The company has adopted Indian Accounting Standards (IND AS) w.e.f. 1st April 2017with a transition date of 1st April 2016 accordingly results for the yearended 31st March 2018 have been prepared in accordance with Ind. AS prescribedunder Section 133 of the Companies Act 2013. Previous period figures have been restatedas per Ind. AS to make them comparable.

Overview of financial performance

During the year Your company has registered turnover of Rs.99863.40 Croresregistering an impressive growth of 42.92 % over the previous year turnover of Rs.69869.50Crores. The Profit after tax isRs.7910.05 Lakhs for the FY 2017-18 ascompared to Rs.2512.68 Lakhs for the FY 2016-17. No material changes andcommitments have occurred after the close of the financial year till the date of thisreport.

Revenue growth was achieved by steady growth in volumes of shrimp due to the increasein demand of value-added products from the customers aided by enhanced pre processingcapacity.

Outlook for the current year

The company is having increased orders book confident to grow at a steady phasecompared to earlier years and management is in the process of enhancing its productionbase to meet the orders. With the proceeds of initial public offers company is setting upa new processing plant at Raagampeta East Godavari district with a total capacity of 20000MPTA including 5000 MPTA for VAP (cooked breaded and par fried shrimp) alongwith 5000 MT of cold storage facility. Our outlook for Fiscal 2019continues to remain positive given India's competitive positioning as Seafood exporter.Additionally at the company's level the strategic initiative taken by the managementwill see us adding new capacities new products like Ready-to-Eat category as well asforay into newer markets and thereby aid the growth in revenues and profitability.

Dividend

The board has recommended a dividend of Rs.2.00 per Equity Share of Rs.10.00/- each(20% of face value) for the year ended March 31 2018. This payment is subject to yourapproval at the ensuing Annual General Meeting of the company.

Transfer of unclaimed dividend to investor education and protection fund

The provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno unclaimed dividend in the previous years.

Material changes and commitments

There were no material changes and commitments affecting the financial position of thecompany that have occurred between the end of the financial year 2017-18 of the companyand the date of the report.

Transfer to reserves

During the year under review no amount has transferred to general reserve.

Fixed deposits

Your company has not accepted any fixed deposits and as such no principal or interestwas outstanding as on the date of the Balance sheet.

Share capital

The authorised share capital of the company as on date of balance sheet isRs.360000000/- divided into Rs.36000000 equity shares of Rs.10/- each.

The paid up share capital of the company as on date of balance sheet isRs.312500000/- divided into Rs.31250000 equity shares of Rs.10/- each.

(a) Initial public offering (IPO)

During the financial year 2017-18 your company entered into the securities marketthrough Initial Public Offering (IPO). The Public Issue comprised of fresh issue of 7250000Equity shares of Rs.10/- each at a premium of Rs.165/- per share aggregating toRs.126.87 crores and offer for sale by promoters Mr. Karuturi Satyanarayana Murthy andMrs. Karuturi Padmavathi of 725000 equity shares each.

Equity shares of the company are listed on BSE Limited (BSE) and National StockExchange of India Limited (NSE) and are regularly traded on both the exchanges w.e.f.04.09.2017.

Further the status of the utilization of the proceeds of the IPO up to 31st March 2018and division thereon are as under:-

Particulars Amount Amount
(Rs. in Lakhs) (Rs. in Lakhs)
Net Proceeds from IPO (A) 12687.50
Funds actually utilised up to 31st March 2018
1. Public Issue Expenses 912.02
2. Shrimp Processing Unit at G. Ragampeta Land Investment 747.40
3. Shrimp Processing Unit at G. Ragampeta-Further Capital Expenditure 1985.22
4. Funds Utilised for General Corporate Purpose 3171.88
Total (B) 6816.51
Fund unutilised as at 31st March 2018 (C)= (A)-(B) 5870.99

(b) Change in the capital structure of the company

During the year your company has allotted 7250000 equity shares of Rs.10/- each at apremium of Rs.165/- per share by way of Initial Public Offering (IPO). Therefore the paidup share capital of the company has been increased from Rs.24.00 crores to Rs.31.25crores.

(c) Status of shares

As the members are aware the company's shares are compulsorily tradable in electronicform. As on March 31 2018 99.99% of the company's total paid up capital representing31249990 shares are in de-materialized form.

(d) Other shares

Your company has not issued any equity shares with differential rights sweat equityshares employee stock options and did not purchase its own shares. Hence there is noinformation to be provided as required under Rule 4(4) Rule 8(13) Rule 12(9) and Rule16(4) of the Companies (Share Capital and Debentures) Rules 2014 and Section 62 of thecompanies Act 2013 respectively.

Details of appointment of directors and key managerial personnel (KMP):

During the year under review there was no change in the composition ofboard.

In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Company Mr. K Subrahmanya Chowdary Executive Director ofthe company will retire by rotation at the ensuing annual general meeting and beingeligible has offered himself for re-appointment. The board recommends his re-appointment.

Board meetings:

The board met nine (9) times during the financial year. The meeting details areprovided in the corporate governance report that forms part of this annual report. Themaximum interval between any two meetings did not exceed 120 days as prescribed under thecompanies Act 2013.

Committees of the board Audit committee

The audit committee was constituted pursuant to the board meeting held on 27.01.2017.The scope and function of the audit committee is in accordance with Section 177 of theCompanies Act 2013. The members of the audit committee are:

Mr. D. Venkata Subba Raju - Chairman
Mr. D. Chandra Sekhar Raju - Member
Mr. K. Subramanya Chowdary - Member

None of the recommendations made by the audit committee were rejected by the board.During the year under review the audit committee has met 4 times.

The details of the committees of the board viz. audit committee

Nomination and remuneration committee CSR committee and Stakeholders relationshipcommittee are reported in the Report on corporate governance which forms part of theBoard's report.

Meeting of independent directors

The details of the separate meeting of the independent directors are reported in thereport on corporate governance which forms part of the board's report.

Statement on declaration given by independent directors under sub-section (6) ofsection 149

The independent directors have submitted their disclosures to the board that theyfulfil all the requirements as stipulated in Section 149 of the Companies Act 2013 so asto qualify themselves to be appointed as Independent Directors under the provisions of theCompanies Act 2013 and the relevant rules.

Familiarization programme for independent directors

All new independent directors (IDs) inducted into the board are presented with anoverview of the company's business operations products organization structures and aboutthe board constitution and its procedures. A policy on familiarization program for IDs hasalso been adopted by the company. Policy for familiarisation of Independent directors withthe company are available at www.apexfrozenfoods.in.

Annual evaluation of board performance and performance of its committees and ofdirectors

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the board has carried out the annualperformance evaluation of its own performance the directors individually as well as theevaluation of the working of its audit and other committees.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the directors covering various aspects of the board's functioning such as adequacyof the composition of the board and its committees board culture execution andperformance of specific duties obligations and governance.

A separate exercise was carried out to evaluate the performance of individual directorsincluding the Chairman of the board who were evaluated on parameters such as level ofengagement and contribution independence of judgments safeguarding the interest of thecompany and its minority shareholders etc. The performance evaluation of the independentdirectors was carried out by the entire board. The performance evaluation of the Chairmanand the Non Independent directors was carried out by the Independent directors who alsoreviewed the performance of the Secretarial Department. The directors expressed theirsatisfaction with the evaluation process.

Policy on director's and key managerial personnel appointment & remuneration:

Your company adopted the policy on Director's Appointment & Remuneration. Theobjective of the policy is to ensure that Executive Directors and other employees aresufficiently compensated for their performance. The policy seeks to provide criteria fordetermining qualifications positive attributes and independence of a director and alsorecommend a policy relating to the remuneration for the directors and key managerialpersonnel. Policy is available at www.apexfrozenfoods.in.

Vigil mechanism / whistle blower policy

The company has a whistle blower policy framed to deal with instance of fraud andmismanagement if any. The details of the Policy are explained in the Corporate GovernanceReport and also posted on the website of the company and the web link ishttp://apexfrozenfoods.in/wp-content/uploads/2017/11/Apex_ Whistle-Blower-Policy.pdf

Risk management policy

Risk management is embedded in your company's operating framework. Your companybelieves that managing risks helps in maximizing returns. The company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating risks and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee. Interms of the requirement of Section 134(3)(n) of the Companies Act 2013 the company hasdeveloped and implemented the Risk Management Policy. The details of the Policy isavailable on the company's weblink is www.apexfrozenfoods.in

Related party transactions

There are no transactions with related parties which falls under the scope of section188 of the Companies Act 2013.

The policy on Related Party Transactions as approved by the board is uploaded on thewebsite of the company and the web link is www.apexfrozenfoods.in

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 year under review and hence the said provision are notapplicable.

Directors responsibility statement

Pursuant to Section 134 (5) of the Companies Act 2013 your Directors confirm that tothe best of their knowledge and belief and according to the information and explanationobtained by them:

I. In the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

II. Such accounting policies as mentioned in the notes to the financial statementshave been selected and applied consistently and judgments and estimates that arereasonable and prudent made so as to give a true and fair view of the state of affairs ofthe company at the end of the financial year 2017-18 and of the profit or loss of thecompany for that period;

III. Proper and sufficientcare has been taken 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;

IV. The annual accounts for the year 2017-18 have been prepared on a going concernbasis.

V. That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.

VI. That systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.

Information about subsidiary/ Joint ventures/Associate companies

Your company don't have any subsidiary or joint ventures or associate company. It isnot a subsidiary or joint venture or associate to any other company.

Management discussion and analysis report

The management discussion and analysis as required by the Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 isincorporated herein by reference and forms an integral part of this report as AnnexureVI.

Extract of annual return

Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies(Management and Administration) Rules 2014 the details forming part of the extract ofthe Annual Return in form MGT 9 is annexed herewith as ‘Annexure I' to thisreport.

Corporate governance report

Your company's philosophy on Corporate Governance sets the goal of achieving thehighest level of transparency with integrity in all its dealings with its stakeholdersincluding shareholders employees lenders and others. A report on Corporate Governancealong with a certificate from M/s A.S. Ram Kumar and Associates company secretariesregarding the compliance of conditions of Corporate Governance as stipulated under theSEBI (LODR) Listing Regulations forms part of the Annual Report as Annexure-II.

Auditors

a) Statutory auditors

The shareholders of the company at their Annual General Meeting held on 30thSeptember 2014 have appointed M/s. Boda Ramam & Co. Chartered AccountantsKakinada (Firm Reg No. 005383S) as Statutory Auditors of the company for a period of 5years subject to ratification by the members at every annual general meeting. The boardrecommends their appointment for ratification ensuing annual general meeting.

b) Internal auditors

The board of directors at their meeting held on 14.11.2017 have reappointed M/sPraturi & Sriram Chartered Accountants Hyderabad as the internal auditors of yourcompany. The internal auditors had submitted their reports.

C) Secretarial auditors

The board has appointed M/s. A.S Ram Kumar and Associates Company Secretaries inpractice to carry the secretarial audit under the provisions of section 204 of theCompanies Act 2013 for the financial year 2017-18. The report of the secretarial auditoris annexed to this report as Annexure - III.

Explanation to secretarial auditor's observation: Extract of observation

Delay in submission of monitoring agency report along with the statement of deviation/variation on utilization of IPO proceeds with stock exchanges for the quarter ended 30thSeptember 2017 31st December 2017 and 31st March 2018 as required under Regulation 32 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Regulation 16of SEBI (Issue Of Capital And Disclosure Requirements) Regulations 2009.

Explanation:

Submission of monitoring agency reports got delayed due to delay in getting thereports from monitoring agency. Delay in submission of statement of Deviation/ variationon utilization of IPO proceeds was unintentional inadvertent and without any malafideintention and we undertakes to comply in time henceforth.

Auditors report

The observations made in the Auditors' Report are self explanatory and therefore donot call for any further comments u/s 134 of the Companies Act 2013.

Comments on auditor report

There are no adverse comments by the auditor in the audit report and hence comments byBoard of Directors of the company on auditor report are not required.

Prevention of sexual harassment policy:

The company's policy on prevention of sexual harassment of women provides for theprotection of women employees at the workplace and for prevention and redressal of suchcomplaints. An Internal Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporary)are covered under this policy. The company has not received any complaint on sexualharassment during the year.

Corporate social responsibility (CSR):

The Annual Report on CSR activities in terms of the requirements of companies(Corporate Social Responsibility Policy) Rules 2014 is annexed as Annexure - IVwhich forms part of this Report.The Company has a Corporate Social Responsibility Policyand the same has been posted on the website of the company at http://apexfrozenfoods.in/wp-content/uploads/2017/11/Apex_CSR-Policy.pdf

Conservation of energy:

I. The steps taken or impact on conservation of energy:

a. Voltage frequency drives have been installed in machinery there by 20% power savinghas been done.

b. Lighting in the processing unit and cold storage have been changed to LED from tubelights.

II. The steps taken by the company for utilizing alternate sources of energy:

Solar water heaters have been installed in place of electrical heaters. Solar securityfencing has been done in place of electrical fencing.

III. The capital investment on energy conservation equipments; NIL

Technology absorption: Not applicable foreign exchange earnings and outgo:

Foreign exchange earnings and outgo (Rs. in Lakhs)
Particulars Year ended 31.03.2018 Year ended 31.03.2017
Earnings in Foreign Exchange 91439.80 63280.42
Foreign Exchange Outgo 3669.62 2487.86

Particulars of employees

The information required under Section 197 of the Act and the Rules made thereunder inrespect of employees of the company has been disclosed in ‘Annexure V'.

Internal control systems & their adequacy

The board has adoptedpoliciesandproceduresforensuringtheorderlyandefficientconduct ofits business including adherence to the company's policies safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of the accountingrecords and timely preparation of reliable financial disclosures.

Maintenance of cost records

The maintenance of cost records has not been specified by the Central Government undersub-section (1) of Section 148 of the Act in respect of the business activities carriedon by the company.

Significant and material orders passed by the regulators or courts

There are no significant or material orders passed by the Regulators / Courts whichwould impact the going concern status of the company and its future operations.

Human resources

Your company considers its Human Resources as the key to achieve its objectives.Keeping this in view your company takes utmost care to attract and retain qualityemployees. The employees are sufficiently empowered and such work environment propels themto achieve higher levels of performance. The unflinching commitment of the employees isthe driving force behind the company's vision. Your company appreciates the spirit of itsdedicated employees.

Acknowledgements

Your directors take this opportunity to express their sincere appreciation to theshareholders customers bankers suppliers and other business associates for theexcellent support and cooperation extended by them.

Your directors gratefully acknowledge the ongoing co-operation and support provided bythe Central and State Governments Stock Exchanges SEBI RBI and other Regulatory Bodies.

For and by order of the Board of Directors
Sd/- Sd/-
K Subrahmanya Chowdary K Satyanarayana Murthy
Place: Panasapadu Kakinada Whole Time Director Managing Director
Date: 13.08.2018 DIN 03619259 DIN 05107525