Your Directors have pleasure in presenting their report along with theaudited accounts of the Company for the year ended 31st March 2020.
1. Financial Results
The financial results as compared to the previous year are as under:-
| ||Year ended ||Year ended |
| ||31st March 2020 ||31st March 2019 |
|Revenue from operations ||50794 ||48362 |
|Profit before exceptional items and tax ||2721 ||4889 |
|Exceptional items ||- ||152 |
|Profit before tax ||2721 ||4737 |
|Tax expense ||279 ||1461 |
|Profit after tax ||2442 ||3276 |
|Retained Earnings - Opening Balance ||11923 ||9241 |
|Add/(Less) ||(612) ||(588) |
|Profit for the year ||2442 ||3276 |
|Other Comprehensive Income/(Expense) ||(210) ||(6) |
|Retained Earnings - Closing Balance ||13543 ||11923 |
2. Dividend Distribution Policy & Dividend
The Company has adopted Dividend Distribution Policy can be accessed onthe Company's website at http://www.dfmfoods.com/download/corporate/dividend-distribution- policy.pdf
Due to the COVID-19 pandemic and resulting economic uncertainties andto take care of future investments your Directors don't propose to recommend any dividendand retain the profits. The balance to the credit of Profit and Loss Account in theBalance Sheet would remain available for distribution if any in the future.
3. Transfer to Reserves
The Board of Directors has decided to retain the entire amount ofprofit for FY 2019-20 in the profit and loss account.
4. Company's Performance
Revenue from operations at H 50794 lakhs was higher than that of theprevious year by 5%. This was driven by 6.5% and 5% growth in volume and value termsrespectively. The second half of March saw an exacerbated slowdown due to the virusoutbreak resultant containment measures by various states and finally a nation-widelockdown. This had an adverse impact on our operations with breakage in supply linesshortage of manpower and disruptions in procurement/transport.
Profit before exceptional items and taxes (PBIT) at Rs 2721 lakhs waslower by 44.32 % than that of the previous year.
This was on account of significant increase in material prices hiringof senior management personnel expenses incurred to support government efforts towardsplastic waste management claims for expired products during lockdown due to Covid virusoutbreak and other one-time charges incurred during the year.
The details on operational review and the state of Company's affairsare provided in the Management's Discussion and Analysis Report forming part of thisAnnual Report.
5. Impact of COVID-19 on Performance
The ongoing COVID-19 crisis calls for the entire nation to fight as onecollective force COVID-19 pandemic has bought things to a halt and everybody includingus had an impact on the business environment beginning 2nd half of March 2020.Due to the lockdown our manufacturing operations got impacted. Our sales got impacted dueto markets not being open and the disruptions in the supply chain.
DFM is known for its empathy towards its stakeholders especially duringdifficult times. We used digital platforms towards building stronger relationships withour CFA distributors and dealers. The Company also interacted with CFA distributors anddealers across the country to assuage their fears and to update them of our actions toprotect their interests especially in these precarious times.
Financial Year 2020-21 has started on an uncertain note. It isdifficult to predict as to how the demand will pan out.
6. Acquisition of shares of the Company by AIGlobal Investments (Cyprus) PCC Ltd
Advent International through AI Global Investments (Cyprus) PCC Ltdsigned on September 9 2019 a definitive Share Purchase Agreements ("SPA) withthe erstwhile promoters to acquire a majority interest in the Company. Pursuant to theSPA an open offer was made to the shareholders. AI Global Investments (Cyprus) PCCLimited now holds 73.95% of the equity of the Company.
7. Change in Capital Structure
As on date the Authorized Share Capital of the Company isH150000000/- (Rupees Fifteen Crores Only) divided into 65000000 Equity Shares ofH2/- each and 2000000 Cumulative Convertible Preference Shares of H10/- each carryingdividend @10% per annum.
The Issued and Paid-up equity share Capital of the Company isH100216760 divided into 50108380 Equity Shares of face value of H2/- each as on 31stMarch 2020. Post 31st March 2020 the issued and paid up capital hasincreased to 50130880 Equity Shares of face value of H2/- each.
The Company's shares are listed with BSE Ltd. and National StockExchange of India Ltd.
8. Employees Stock Option Scheme
During the year 82500 options of face value of H2/- each got vested.22500 options of face value of H2/- each have been exercised during the year by theeligible employees.
The Certificate from the Auditors of the Company stating that theScheme has been implemented in accordance with the SEBI Guidelines and the resolutionpassed by the members would be placed at the website of the Company at www.dfmfoods.comfor inspection by members.
During the year there has been no change in the DFM Foods EmployeeStock Option Plan-2014 of the Company
The applicable disclosures as stipulated under the SEBI Guidelines ason 31st March 2020 with regard to the DFM Foods Employee Stock Option Plan -2014 of the Company are available on the website of the Company at www.dfmfoods.com andlink for the same is http://www.dfmfoods.com/download/investors/ESOP%20disclosure%202020.pdf
Post 31st March 2020 Your Directors recommended and themembers approved a new scheme i.e. Employee Stock Appreciation Rights ("ESARs)plan namely 'DFM Employees Stock Appreciation Rights Plan 2020' ("ESAR 2020/"Plan) to cover the eligible employees of the
Company. 1087018 (Ten Lakh Eighty Seven thousand and eighteen) ESARshas been granted to the eligible employee(s) at such base price as determined by theNomination and Remuneration Committee which would not be less than the face value of theequity share of the Company as on the date of grant.
9. Subsidiaries Joint Ventures and AssociateCompanies
The Company does not have any subsidiary Joint Ventures or AssociateCompany. However the Company is a subsidiary of AI Global Investments (Cyprus) PCCLimited.
10. Material Changes and Commitment affecting theFinancial Position
There has been no change in the nature of business of the Companyduring the year. There has been no material changes and commitments affecting thefinancial position of the Company which occurred between the end of the financial year towhich the financial statements relate and the date of this Report.
11. Directors Responsibility Statement
Your Directors state:
That in the preparation of the annual accounts for the year ended 31stMarch 2020 the applicable accounting standards have been followed and there are nomaterial departures from the same:
a) That the Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at 31stMarch 2020 and of the profit of the Company for the year ended on that date;
b) That the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
c) That the Directors have prepared the annual accounts on a goingconcern basis;
d) That the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and
e) That the Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.
12. Directors and Key Managerial Personnel (KMP)
The Company's Board comprises seven members. On 22ndJanuary 2020 Mr. Lagan Shastri was appointed as an additional Director and as theManaging Director and Chief Executive Officer (KMP) of the Company subject to theapproval of the Members. As per Section 161 of the Companies Act Mr. Lagan being anAdditional Director holds office up to the date of the ensuing Annual General Meeting(AGM) and is eligible to be appointed as a Director of the Company. The resolution seekingMr. Lagan's appointment has been included in the Notice of the AGM together with his briefdetails.
Mr. Hemant Madhusudan Nerurkar Mr. Anil Kumar Chanana and Ms. DipaliHemant Sheth were appointed as additional Non-Executive Independent Directors on 14thJanuary 2020 and are proposed to be appointed as Non-Executive Independent Directors ofthe Company at the ensuing AGM whose offices are not liable to retire by rotation.Resolutions seeking shareholders' approval are included in the Notice of the ensuingAnnual General Meeting.
Mr. Sahil Dilip Dalal Mr. Manu Anand and Mr. V. L. Rajesh are theother Non-Executive Non-Independent Directors who were appointed on 14thJanuary 2020 and are proposed to be appointed as Directors liable to retire by rotationat the ensuing AGM. Resolutions seeking shareholders' approval are included in the Noticeof the ensuring Annual General Meeting.
Effective 14th January 2020 the Board of Directors havebeen reconstituted.
Since all of your Directors are additional Directors and/or IndependentDirectors none of the Directors is liable to retire by rotation at the ensuing AGM.
Mr. Sandeep Singhal resigned from the Board w.e.f. 13thJanuary 2020 and other Directors Mr. Rohan Jain Mr. Pradeep Dinodia Mr. Sarat ChandraNanda Mr. Mohit Satyanand and Ms. Hiroo Mirchandani resigned from the Board w.e.f. 14thJanuary 2020. Mr. Mohit Jain stepped down as Chairman on 14th January 2020and also stepped down as Managing Director w.e.f. 22nd January 2020. The Boardplaces on record its gratitude and appreciation to all the Directors for their guidance tothe Company during their tenure as a Director.
In terms of Section 203 of the Act the Company has the following KeyManagerial Personnel:
1. Mr. Lagan Shastri MD & CEO
2. Mr. Davinder Dogra CFO
3. Mr. Raju Singh Tomer CS
Mr. Lagan Shastri who was appointed as the Managing Director and CEOthis year.
13. Board of Directors and Meetings
The Directors are reputed professionals with diverse functionalexpertise industry experience educational qualifications and gender mix relevant tofulfilling the Company's objectives and strategic goals. Brief particulars and expertiseof directors seeking appointment together with their other directorships and committeememberships have been given in the annexure to the Notice of the AGM in accordance withthe requirements of the Listing Regulations and Secretarial Standards.
During the Financial Year 2019-20 the Board of Directors of theCompany met 8 (Eight) times. The details of the meetings and the attendance of theDirectors are mentioned in the Corporate Governance Report.
Pursuant to the requirements of Schedule IV to the Companies Act 2013and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate Meeting of the Independent Directors of the Company was also held on 10thFebruary 2020 without the presence of Non-Independent Directors.
14. Independent Directors' Declaration
All the Independent Directors on the Board have given a declaration oftheir independence to the Company as required under Section 149(6) of the Act andRegulation 16(1)(b) of the Securities and Exchange Board of India (listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations). In theopinion of the Board all the Independent Directors possess the attributes of integrityexpertise and experience including the proficiency required to be Independent Directors ofthe Company fulfil the conditions of independence as specified in the Act and the SEBIListing Regulations and are independent of the management and have also complied with theCode for Independent Directors as prescribed in Schedule IV of the Act.
In terms of Regulation 25(8) of the Listing Regulations theIndependent Directors have confirmed that they are not aware of any circumstance orsituation which exists or may be reasonably anticipated that could impair or impact theirability to discharge their duties.
Based on the confirmation / disclosures received from the Directorsthe following Non-Executive Directors are Independent as on 31st March 2020:
1) Mr. Hemant Madhusudan Nerurkar
2) Mr. Anil Kumar Chanana
3) Ms. Dipali Hemant Sheth
The other details for the Independent Directors are provided in theNotice of AGM and Report on Corporate Governance.
15. Committees of the Board
The Board has re-constituted Committees as per the requirements of theCompanies Act 2013 and SEBI (LODR) Regulations. These Committees are:
i. Audit Committee
ii. Nomination and Remuneration Committee (Compensation Committee)
iii. Corporate Social Responsibility Committee
iv. Stakeholders' Relationship Committee and
v. Operations Committee
The composition terms of reference number of meetings held andbusiness transacted by the Committees is given in the Corporate Governance Report.
16. Policy on Directors appointment and Remuneration Policy
In adherence of Section 178(1) of the Companies Act 201 3 the Boardof Directors of the Company in its Meeting held on 10th February 2020 amendedthe policy on Directors appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedu/s 178(3) based on the recommendations of the Nomination and Remuneration Committee(Compensation Committee). The broad parameters covered under the Policy are CompanyPhilosophy Guiding Principles Nomination of Directors Remuneration of DirectorsNomination and Remuneration of the Key Managerial Personnel Key-Executives and SeniorManagement and the Remuneration of Other Employees.
The Company's Policy relating to appointment of Directors payment ofManagerial remuneration Directors' qualifications positive attributes independence ofDirectors and other related matters as provided under Section 178(3) of the Companies Act2013 is furnished in Annexure - 1 and forms part of this Report. The Policy is alsoavailable in the Investor Relations on the website of the Company and can be accessed atthe weblink: http://www. dfmfoods.com/download/corporate/Nomination%20and%20Remuneration%20Policy%20DFM.pdf
The details of familiarization programme for Independent Directors withthe Company are put up on the website of the Company at the weblink http://www.dfmfoods.com/download/corporate/Familiarization-Programme-for- FY-19-20.pdf
17. Performance Evaluation of the Board its Committees and IndividualDirectors
The Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("SEBI LODR) contain evaluation of theperformance of:
(i) the Board as a whole
(ii) Individual directors (including Independent Directors andChairperson) and
(iii) various Committees of the Board.
The Board of Directors is required to carry out an annual evaluation ofits own performance Board Committees and Individual Directors pursuant to the provisionsof the Companies Act 2013 and Regulation 17(10) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
However all the Directors have been appointed in the month of January2020 and therefore Section 134(3)(p) of the Act read with rule 8(4) of Companies(Accounts) Rules 2014 pertaining to formal annual evaluation of the Board and itsCommittees is not applicable to your Company for the financial year 2019-20.
18. Internal Financial Control System
The Directors have laid down internal financial controls to be followedby the Company for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and the completeness of the accountingrecords and the timely preparation of reliable financial information.
The Audit Committee evaluates the internal financial control systemperiodically and no reportable material weaknesses in the design or operation wereobserved during the year.
Internal Auditors periodically audit the adequacy and effectiveness ofthe internal controls laid down by the management and suggest improvements. The audit planis approved by the Audit Committee which regularly reviews the compliance to this plan.
The Company's internal control systems are commensurate with the natureof its business the size and complexity of its operations.
19. Audit Committee
The Audit Committee comprises of Independent Directors namely Mr. AnilKumar Chanana as Chairman Mr. Hemant Madhusudan Nerurkar Mr. Sahil Dalal and Ms. DipaliSheth as members. The terms of reference of the Committee are included in the CorporateGovernance Report which is a part of this report.
The Board accepted the recommendations of the Audit Committee whenevermade by the Committee during the year.
20. Corporate Governance
The Company has complied with the corporate governance requirementsunder the Companies Act 2013 and Listing Regulations. A separate section on CorporateGovernance along with a certificate from the Statutory Auditor confirming compliance isannexed and forms part of this report.
21. Auditors and Auditors' Report
A. Statutory Auditor
As per provisions of Section 139(1) of the Companies Act 2013 theCompany has appointed M/s. Deloitte Haskins & Sells (Firm Registration No. 015125N)Chartered Accountant as Statutory Auditors for a period of 5 (Five) years in the AGM ofthe Company held on 6th August 2018.
M/s. Deloitte Haskins & Sells has furnished a certificate of theireligibility and consent under section 139 and 141 of the Act and the Companies (Audit andAuditors) Rules 2014 for their continuance as the Auditors of the Company for the FY2020-21. In terms of the Listing Regulations the Auditors have confirmed that they hold avalid certificate issued by the Peer Review Board of the ICAI.
B. Statutory Auditors' Report
The Auditors' Report on the financial statement of the Company for theyear forms part of the Annual Report.
The Statutory Auditors' Report for FY 2019-20 on the financialstatement of the Company forms part of this Annual Report. The report does not contain anyqualifications reservations or adverse remarks or disclaimer.
C. Details in respect of frauds reported by auditors
There were no instances of fraud reported by the auditors.
D. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013read with corresponding Rules framed thereunder Mrs. Sunita Mathur were appointed as theSecretarial Auditors of the Company to carry out the secretarial audit for the year ending31st March 2020.
In terms of Section 204 of the Companies Act 2013 and Regulation 24Aof the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aSecretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexedwith this Report as Annexure-2. There are no qualifications reservations or adverseremarks made by Secretarial Auditors in their Report.
E. Cost Auditors
Provisions of Section 148 of the Companies Act 2013 read with Rulesmade under Companies (Cost
Account and Audit) Rules 2014 were not applicable on the Company.Hence Company has not appointed any Cost Auditor during the year.
22. Risk Management
To grow business and create value for the organization we need toidentify risks and robust plans to mitigate them. At DFM the Board continually evaluatesthe risks faced by the Company which could affect its business operations or threaten itsexistence.
Our strong Governance and business structure with stakeholder interestat the core makes us cognizant of risks that our business faces and have beencontinuously investing in augmenting.
A structured risk management system permits the management to takecalibrated risks which provides a holistic view of the business wherein risks areidentified in a structured manner from Top down to Bottom up approach. Purpose of riskmanagement system is to minimize adverse impact and to leverage market opportunitieseffectively and efficiently which helps to sustain and enhance short-term and long-termcompetitive advantage to the Company.
The type of risks and risk mitigation in detail has been provided inthe Management's Discussion and Analysis Report forming part of this Annual Report.
23. Vigil Mechanism - Whistle Blower Policy
The Company promotes ethical behaviour in all its business activitiesand has put in place a mechanism for reporting illegal or unethical behaviour. The Companyhas a Vigil mechanism and Whistle blower policy under which the employees are free toreport violations of applicable laws and regulations and the Code of Conduct. Employeesmay also report to the Chairman of the Audit Committee.
24. Particulars of loans and guarantees givensecurities provided and investments made
The Company has neither given any loans or guarantees nor provided anysecurities covered under the provisions of Section 186 of the Companies Act 2013.
25. Related Party Transactions
All related party transactions entered into by the Company during thefinancial year with related parties were in the normal course of business and on an arm'slength basis. During the year the Company had not entered into any transaction withrelated parties which could be considered material in accordance with the policy of theCompany on materiality of related party transactions. Prior omnibus approval is obtainedfor related party transactions which are of repetitive nature and entered in the ordinarycourse of business and at arm's length. All related party transactions are placed beforethe Audit Committee for review and approval.
The policy on materiality of related party transactions and dealingwith related party transactions as approved by the Board may be accessed on the Company'swebsite at the link: http://www.dfmfoods.com/download/corporate/policy-on-related-party-transactions-and-materiality-of- related-party-transactions.pdf
Your Directors draw attention of the members to Note 31 to thefinancial statement which sets out related party disclosures.
26. Corporate Social Responsibility (CSR)
Your Company has consistently contributed towards the welfare of thecommunity. As a company we always keep social good first. We truly believe that it is ourmoral responsibility to do good for the society and profits would follow. Over the yearswe have been focusing on children the future of the nation and serve the society.
The Company has adopted a CSR Policy which can be accessed at thefollowing web link http://www.dfmfoods. com/download/corporate/CSR-Policy.pdf
The Company has spent above 2% of the average net profits of theCompany during the three immediately preceding financial years. The details are providedin the Annual Report on CSR activities attached as Annexure -3.
27. Extract of Annual Return
As per the requirements of Section 92(3) of the Companies Act and Rulesframed thereunder the extract of the Annual Return of the Company for the FY 2019-20 isprovided in Annexure - 4. The same is available on the website of the Company at thefollowing web link http://www.dfmfoods. com/download/investors/Extract%20of%20Annual%20Return%20MGT-9%20for%20FY%202019-20.pdf
28. Particulars of Remuneration of Directors / KMP/ Employees
The particulars of remuneration under Section 197(12) of the CompaniesAct 2013 and Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are attached as Annexure - 5 and Annexure - 5A.
29. Significant and Material Orders passed by theRegulators or Courts
There are no significant or material orders passed by any RegulatorsCourts or Tribunals against the Company which could impact the going concern status andCompany's operations in future.
30. Disclosure as per The Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013
Your Directors state that during the year under review there were nocomplaints received pursuant to the Sexual Harassment of Women at Workplace (Prevention
Prohibition and Redressal) Act 2013.
The Company has constituted Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and complied with other provisions of the said Act.
31. Human Resources & Employee Relations
The Company considers its people as its biggest strength and hasconsistently invested in creating a working environment that empowers people to exploretheir potentials and raise the bar constantly.
We are focused towards enhancing the technical and managerial skills ofemployees through continuous training and development to attract retain who are qualifiedand experienced with the right mix of technical and behavioral leaders of tomorrow. Ithelps the employees to adapt to changes in the environment and equip them with skillsneeded to navigate challenges in the short term and long term. We have also instituted thebest appraisal systems to motivate our employees.
The HR department also develops and monitors employee managementstrategies and related policies. As an organization we continue to grow and provide ouremployees with opportunities and learning experiences to excel in their professional aswell as personal lives.
We ensure that there is full adherence to the Code of Ethics and fairbusiness practices. DFM is an equal opportunity employer and employees are evaluatedsolely on the basis of their qualification and performance. We provide equal opportunityin all aspects of employment including retirement training work conditions careerprogression etc. that reconfirms our commitment that equal employment opportunity iscomponent of our growth and competitiveness. Further Company is committed to maintaininga workplace where each employees privacy personal dignity and safety is respected andprotected from any inappropriate behaviour or unorderly misconduct.
The relationships with employees have been cordial and operations atthe factory uninterrupted. Measures for safety of employees welfare and developmentcontinue to receive top priorities.
32. Disclosure Requirements
a. As per Listing Regulations the Corporate Governance Report with theSecretarial Auditors' Certificate thereon and the Management Discussion and Analysis areattached which forms part of this report.
b. As per Regulation 34 of the Listing Regulations a BusinessResponsibility Report is attached and is a part of this Annual Report.
c. The Company has devised proper systems to ensure compliance with theprovisions of all applicable
Secretarial Standards issued by the Institute of Company Secretaries ofIndia and that such systems are adequate and operating effectively.
33. Deposits from Public
During the year your Company did not accept any public deposits underChapter V of the Companies Act 2013.
34. Particulars of Energy Conservation Technology Absorption ForeignExchange Earnings and Outgo [Pursuant to Companies (Accounts) Rules 2014]
The particulars relating to energy conservation technology absorptionforeign exchange earnings and outgo are provided in Annexure - 6 to this Report.
35. Environment Health and Safety
Responsible manufacturing is the core of our business practice. Oursustainable journey has been fuelled by our efficient set of systems and implementationstrategy. Considering Environment Health and Safety as top-most
priority we strive to provide a safe and healthier work environmentfor our workforce
36. Credit Rating
Care Rating Ltd (Care) has assigned CARE A; Stable Single A; Outlook:Stable for long-term facilities and CARE-A1 for short term facilities.
Your Directors wish to express their grateful appreciation for theco-operation and continued support received from customers vendors investorsshareholders banks regulatory authorities and the society at large during the year.
| ||On behalf of the Board |
|Place: Mumbai ||Hemant Madhusudan Nerurkar |
|Dated: 19th June 2020 ||Chairman |