Your Directors have pleasure in presenting their 11th Annual Report on business and operations along with the Audited financial statements and the Auditor's report of the Company for the financial year ended March 31 2019.
|Amount in Rs. Crore|
|Particulars||Coffee Day Enterprises Limited||Coffee Day Enterprises Limited||Coffee Day Global Limited||Coffee Day Global Limited|
|FY 19||FY 18||FY 19||FY 18|
|Net Operational Revenue||4264||3788||1814||1777|
|Profit Before Tax||213||225||65||65|
|Profit attributable to the Owners||128||106||41||37|
During the fiscal year ended March 31 2019 consolidated gross revenue grew by 13% driven by impetus from Coffee & Multimodal Logistics. The revenue in coffee business contributed a growth of 6%. Consolidated Profit after tax attributable to owners is Rs.128/- crore for the year 2019 compared to Profit of Rs.106/-crore for the previous year. A detailed performance analysis is provided in the Management Discussion and Analysis segment which is annexed to this report.
STATE OF THE COMPANY'S AFFAIRS
The state of the Company affairs forms an integral part of Management Discussion & Analysis Report.
The Board of Directors of the Company has not recommended any dividend for the FY 2018-19.
TRANSFER TO RESERVES
In accordance to the provisions of Section 134(3)0) of the Companies Act 2013 (hereinafter the Act) the Company has not proposed any amount to transfer to the General reserves of the Company for the FY 2018-19.
The Company has not accepted any Deposits under Section 73 and Chapter V of the Act and the rules made thereunder.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of the loans guarantees and investments are provided in the notes to the audited financial statements annexed with the Annual report.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As on March 31 2019 the Company has 46 subsidiaries (including indirect subsidiaries) 3 Associate Companies and 3 Joint Ventures. The details of the Companies which are yet to commence operations and which have been liquidated or sold during the year are mentioned in Form AOC-1 which is attached as an Annexure to the Consolidated Financial Statements. A statement containing the salient features of the financial statements of Subsidiaries Associate Companies or Joint Ventures are mentioned specifically in the same annexure as mentioned above. In accordance with Section 136(1) of the Act the financial statements of the subsidiaries companies are available on the Company's official website post approval of the members.
In line with Regulation 24 and Regulation 46(2)(h) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter the Listing Regulations) the Company has formulated a detailed policy for determining `material' subsidiaries and the said policy is available at the Company's official website and may be accessed at the link: http://www.coffeeday.com/PDF/MATERIAL-SUBSIDIARIES.pdf
MANAGEMENT DISCUSSION & ANALYSIS REPORT
As stated in Regulation 34(2)(e) of the Listing Regulations the Annual report shall contain a detailed report on Management Discussion & Analysis which is hereto attached with the Annual report in Annexure-1.
The report on Corporate Governance along with a Certificate from the Practicing Company Secretary regarding proper compliance of Corporate Governance pursuant to the requirements of Schedule V of the Listing Regulations forms an integral part of the Annual Report stated in Annexure-2.
DIVIDEND DISTRIBUTION POLICY
In accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations 2016 the Board of the Company has adopted Dividend Distribution policy in their meeting held on May 18 2017 which aims at marking the right balance between the quantum of dividend paid to its shareholders and the amount of profit retained for its commercial requirements. The said policy is hoisted in the website of the Company.
The Company recognises and embraces the importance of diverse Board in its success. We believe that a truly diverse board will leverage differences in thought perspective knowledge industry experience that will help us retain our competitive strength. The Company has evaluated the policy with a purpose to ensure adequate diversity in Board of Directors which enables them to function efficiently and foster differentiated thought processes at the back of varied industrial and management expertise. The Board recognises the importance of a diverse composition and has therefore adopted a Board Diversity Policy. The policy is made available at the Company's official website via link: http://www.coffeeday.com/PDF/BOARD%20 DIVERSITY%20POLICY.pdf
BOARD EVALUATION AND POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In accordance with Section 178(3) of the Companies Act 2013 the Nomination and Remuneration Committee has specified the criteria and manner for effective evaluation of performance of `Board' its `Committees' and `Individual Directors' carried out either by the Board by the Nomination and Remuneration Committee or by an independent external agency and reviewed its implementation and compliance.
The detailed policy in compliance with Section 178(3) of the Act read along with Regulation 19 of the Listing Regulations has been approved by the Board of Directors of the Company and is made accessible at the Company's official website at the following link: http://www.coffeeday.com/PDF/NOMINATION%20&%20 REMUNERATION%20POLICY.pdf.
APPOINTMENT/ RESIGNATION/ REAPPOINTMENT OF BOARD OF DIRECTORS
There has been a change in the Composition wherein Mr. M.D.Mallya Independent Director of the Company had expired on November 25 2018. The Board expressed their heartfelt condolences to his family and a deep appreciation towards his services and his valuable contributions towards the progress of the Company.
Mrs. Sulakshana Raghavan was appointed as Additional Non-Executive Independent Director in the Board on March 05 2019 subject to approval by the members in this Annual General meeting
Mr. S. V. Ranganath & Mr. Albert Hieronimus Independent Directors of our Company were appointed for the first term in the Board meeting held on 09.01.2015 for a period of 5 years and their term will end on 16.01.2020 in this connection the Board has proposed Mr. S.V.Ranganath's re-appointment for a further term of 5 years on the board of the Company subject to the approval of shareholders.
Mrs. Malavika Hegde shall retire by rotation at the ensuing Annual General meeting and is eligible for re-appointment.
DIRECTOR'S RESPONSIBILITY STATEMENT
In Compliance with section 134(5) of the Companies Act 2013 the Board of Directors hereby confirms the following:
(a) In the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;
(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) The Directors had prepared the annual accounts on a going concern basis; and
(e) The Company is responsible for establishing and maintain adequate and effective internal financial controls with regard to it business operations and in the preparation and presentation of the financial statements in particular the assertions on the internal financial controls in accordance with broader criteria established by the Company.
Towards the above objective the Directors have laid down the internal controls based on the internal controls framework established by the Company which in all material respects were operating effectively as at March 31 2019.
(f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate. The Company has substantially complied with material provisions of such acts and regulations as are relevant for its operations. No material or significant non compliances were reported or identified during the year.
DECLARATION BY INDEPENDENT DIRECTORS
All the Independent Directors have given their declarations stating that they meet the criteria of independence as laid down under Section 149(6) of the Act read with Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board they fulfil the conditions of independence as specified in the Act and the Listing Regulations and are independent of the management.
COMMITTEES OF THE BOARD
The Company has four main Committees of the Board i.e.:
(a.) Audit Committee
(b.) Nomination and Remuneration Committee and
(c.) Stakeholder's Relationship Committee.
(d.) Corporate Social Responsibility.
The detailed information on each of these committees including its composition functioning and number of meetings are disclosed in the Corporate Governance report annexed with the Annual report of the Company.
MEETINGS OF THE BOARD
During FY 2018-19 the meetings of the Board of Directors were held Nine (9) times. Details of these meetings and other Committee/General meetings are given in the report on Corporate Governance Report attached with the Annual report.
PARTICULARS OF CONTRACTS/ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions that were entered into during the FY 2018-19 were on an arm's length basis and in the ordinary course of business. There were no materially significant Related Party Transactions made by the Company during the year that required shareholders' approval under Regulation 23 of the Listing Regulations.
Prior omnibus approval from the Audit Committee is obtained for transactions which are repetitive in nature. Further disclosures are made to the Committee on a quarterly basis. None of the transactions entered into with related parties' falls under the scope of Section 188(1) of the Act and hence there is no such requirement to enclose `Form AOC-2' pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014.
The Company has adopted a Policy for dealing with Related Party Transactions and is made available on the Company's official website via web link: http://www.coffeeday.com/PDF/RPT%20POLICY.pdf
Material changes and commitment - if any affecting the financial position of the Company from the end of the financial year till the date of this Report:
There has been no material change and commitment affecting the financial performance of the Company which has occurred from the end of the financial year of the Company to which the financial statements relate and the date of this Report except to sale of shares held as an investment in Mindtree by the Company subsidiaries along with the promoter and there was an Investment in Subsidiary by the Company and Company's Material Subsidiary Coffee Day Global Limited for 51% by Incorporation of New Company Coffee Day Consultancy Services P Ltd towards expansion of F&G business the remaining 49% is held by Impact HD japan.
CHANGE IN NATURE OF BUSINESS
There has been no change in the nature of business of the Company.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO
The information on conservation on energy technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 is provided in Annexure-3 to this Annual report.
a) Statutory Auditors:
The Company had appointed B S R & Associates for a period of Five years in the Annual general Meeting held on September 27 2018
The requirement to place the matter relating to appointment of Auditors for ratification by members at every AGM is done away by the Companies Amendment Act 2017 vide notification dated May 07 2018. Accordingly no resolution is proposed for ratification of appointment of Auditors who were appointed in the Annual general Meeting held on September 27 2018.
b) Secretarial Auditor:
In accordance with Section 204 of the Act and the rules made there under the Company has appointed M/s HRB & Co. to undertake the Secretarial Audit of the Company for the financial year ended March 31 2019. The Secretarial Audit report issued in this regard is attached as Annexure-4.
c) Cost Auditor:
In terms of the provisions of Section 148 of the Act the appointment of the Cost Auditors does not apply to the Company.
d) Internal Auditor:
Pursuant to the provisions of Section 138 of the Act read with the Companies (Accounts) Rules 2014 the Company has appointed M/s A B S & Co. Chartered Accountants as Internal Auditors of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURTS/REGULATORS
Mr. V.G. Siddhartha had received a order u/s. 281B of Income Tax Act 1961 dt. February 13 2019 provisionally attaching shares of Coffee day Enterprises Limited held in DP account with Way 2 wealth Brokers Pvt. Limited of Mr. V.G. Siddhartha to safeguard the interest of the Revenue
in respect of likely future tax and penalty obligations in respect of open assessments of the Promoter. The Company would like to clarify that in response to notices u/s 148 & 153A of the Income tax the Promoter has filed required revised returns and discharged all the tax liability along with the revised returns in respect of search & seizure conducted during September 2017. Further there is no undisputed tax liability for the Promoter
SALE OF MINDTREE INVESTMENT
The Company Coffee Day Trading Limited (Subsidiary of the Company) and Mr. V.G. Siddhartha (Promoter of the Company) have sold their entire stake in Mindtree Ltd to Larsen & Toubro Limited for a Net consideration of Rs.3206 crore. The proceeds were used to pare down the Coffee Day Group's debts.
ISSUANCE OF NON-CONVERTIBLE DEBENTURES FOR THE FY 2018-19
The Company had during the Financial year 2018-19 sought shareholders' approval in the Annual general Meeting for issuance of NCD's for an amount not exceeding Rs.300 crore. On March 22 2019 the Board of Directors at its meeting issued NCD's for an amount of Rs.200 crore to Identifiable Investors and on October 29 2018 the Board of Directors at its meeting issued NCD's for an amount of Rs.100 crore for the purpose of restructuring its existing debts.
EXTRACT OF ANNUAL RETURN
An extract of the Annual return has been annexed to the Board's Report in compliance with Section 92 of the Companies Act 2013 read with applicable rules made thereunder annexed as Annexure-5 to this Report.
BUSINESS RESPONSIBILITY REPORT
In compliance with the Regulation 34(2)(f) of the Listing Regulations the Business Responsibility Report forms the part of this Annual Report as Annexure-6.
The Company complies with all Secretarial Standards issued by Institute of Company Secretaries of India.
INTERNAL FINANCIAL CONTROL (IFC) AND ITS ADEQUACY
The internal controls of the Company operate through well documented standard policies and guidelines. The Company has adequate internal financial control procedures commensurate with its size and nature of business which helps in ensuring orderly and efficient conduct of its business. This system provides a reasonable assurance of financial and operational information complying with applicable statutes safeguarding of assets of the Company prevention and detection of frauds accuracy and completeness of accounting records and ensuring compliance with corporate policies.
All the significant internal audit observations and management actions thereon are reported to Audit Committee on a quarterly basis. The Audit Committee reviews the operations and assesses the adequacy of the actions proposed as well as monitors their implementation. The internal auditors conduct a quarterly follow-up for implementation of all audit recommendations and the status report is presented to the Audit Committee regularly.
The Company's management has assessed the effectiveness of the internal control over financial reporting for the year ended March 31 2019 and based on the assessment; believe that the system is working effectively. The Statutory Auditors have issued a report on the adequacy and effectiveness of the internal control systems over financial reporting.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
As per the requirements laid down under Section 177(9) of the Act and Regulation 22 of the Listing Regulations the Company has established the Whistle blower Policy which encourages Directors and employees to bring to the Company's attention instances of unethical behaviour actual or suspected incidents of fraud or violation of the Company's Code of Conduct that could adversely impact on Company's operations and business. The Policy provides that the Company investigates such incidents when reported in an impartial manner and takes appropriate action to ensure that requisite standards of professional and ethical conduct are always upheld. The practice of the Whistle blower Policy is overseen by the Audit Committee and no employee has been denied access to the Committee.
The Whistle Blower Policy is available on the Company's official website and may be accessed through web link: http://www.coffeeday.com/PDF/CDEL-Whistle- Blower-Policy.pdf
PARTICULARS OF EMPLOYEES
As stated in provisions of Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended from time to time a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules which includes the name of top 10 employees in terms of remuneration forms part of this annual report. Pursuant to the provisions of Section 136(1) of the Act the Board report is being sent to the shareholders including the said statement.
Disclosure pertaining to the remuneration as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in Annexure-7.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules 2014 and on the recommendations of the CSR Committee comprising of Mr. S.V. Ranganath as the Chairman and Mr. V.G. Siddhartha and Mrs. Malavika Hegde as Members the CSR policy is adopted and approved by the Board of the Company. The said policy has been hosted on the Company's website and is available on the link: http://www.coffeeday.com/PDF/CSR-Policy-CDEL.pdf.
It lays down the purpose of formulation of the policy areas of focus composition of Committee and CSR budget.
In commitment to keep in line with the Green Initiative and going beyond to it electronic copy of the Notice of 11th Annual General Meeting of the Company are sent to all Members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their e-mail addresses physical copies are sent through the permitted mode.
PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules made thereunder. The Policy aims to promote a healthy work environment and to provide protection to employees at workplace and redress complaints of sexual harassment and related matters thereto. The Company has also constituted an Internal Complaints Committee known as the Prevention of Sexual Harassment (POSH) Committee to enquire into complaints of sexual harassment and recommend appropriate action.
During FY 2018-19 the Company has not received any complaints on sexual harassment.
BOARD'S RESPONSE ON AUDITORS QUALIFICATION RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE
1. For FY 2018-19 there are no qualifications reservations or adverse remarks made by the Statutory Auditors in their report. However the report by Practicing Company Secretary in the Secretarial Audit report of the Company had a qualification on the below aspect.
The prior intimation to stock exchange pursuant to Regulation 29(2) of the SEBI (LODR) Regulations 2015 about the meeting of the Board of Directors in which the proposal for fund raising by way of debt issue was considered was not given within the prescribed timelines.
The Board has taken note of the same. It is one of the technical mistakes and the company has taken action to avoid such technical mistakes.
RISK MANAGEMENT AND ASSESSMENT
The Company is exposed to various risks considering the diversified parameters according to the different business sectors of the Company such as coffee business technology park business logistics business financial services business and resort business. The Audit Committee oversights the area of financial risks and controls. Major risks identified by the business and functions are systematically addressed through mitigating actions on continuing basis. The Company has incorporated sustainability in the process which helps the Board to align potential exposures with the risk appetite and highlight risks associated with chosen strategies.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12)
There was no instance of fraud during the year under review which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of the Act and the rules made thereunder.
None of the Directors of your Company are disqualified as per provisions of Section 164(2) of the Companies Act 2013. Your Directors have made necessary disclosures as required under various provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015.
a) Buy back of securities:
In accordance with Section 68 of the Act the Company has not bought back any of its securities during the year.
b) Sweat Equity:
The Company has not issued any Sweat Equity Shares under the provisions of Section 54 of the Act.
c) Bonus Shares:
In terms of Section 63 of the Act the Company had not issued Bonus Shares during the year under review.
d) Employee Stock Option Plan:
Pursuant to the provisions of Section 62 of the Act the Company has not provided any Stock Option to the Employees of the Company.
The Directors would like to express their gratitude towards the Company's employees customers Banks and institutions investors and academic partners for their continuous support. They also thank the concerned government departments and agencies for their co-operation. The Directors appreciate and value the contribution made by every member of the `Coffee Day' family.
|Date: May 24 2019|
|For Coffee Day Enterprises Limited|
|V. G. Siddhartha||Malavika Hegde|
|Chairman & Managing Director||Director|