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Fortune Foods Ltd.

BSE: 519187 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE712V01018
BSE 05:30 | 01 Jan Fortune Foods Ltd
NSE 05:30 | 01 Jan Fortune Foods Ltd

Fortune Foods Ltd. (FORTUNEFOODS) - Director Report

Company director report

FORTUNE FOODS LIMITED ANNUAL REPORT 2007-2008 DIRECTOR'S REPORT Dear Shareholders, Your Directors have great pleasure in presenting the 19th Annual Report together with the Audited Balance Sheet and Profit & Loss Account of Fortune Foods Ltd., for the year ended 31st March 2008. PERFORMANCE OF THE COMPANY Your Company's performance is summarized below: FINANCIAL RESULTS: (Rs. In Lacs) Particulars Year ended Year ended 31.03.2008 31.03.2007 Sales & Other Income 1288 2,799 Profit before tax and appropriations 247 692 Profit after tax 199 647 Earning per share 4.57 14.85 Cash Earning per share 5.66 15.89 PERFORMANCE Sales of the Company forthe year ended March 31, 2008 were Rs. 1449.67 lacs low by 31.94% over the previous year. The earning per share and cash earning per shares that was negative during last year has improved substantially and stand at Rs. 4.57 and Rs. 5.66 Respectively. This year is a turn around year for the Company. The Company has started operations for M/s. Parle International Ltd., Mumbai in full swing. The products i.e. 'Frooti' Mango Drink & 'Appy Fizz' Apple Carbonated Drink in pet bottles has received tremendous response from the market. SICK COMPANY: During the year, the Company has settled all its dues alongwith interest under 'One Tin Te Settlement Scheme' with Business Co-Operative Bank and now it is a debt free Company. The Company has come out of purview of BIFR as per the proceedings of hearing held on 28th November 2007 at 11.00 am from BIFR. Operations have also improved during the last two years. DIVIDEND: Due to carry forward looses and the Company hitherto being a sick Company, your Directors express their inability to recommend any dividend for the year under review. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: Management discussion and Analysis Report, as required under the Listing Agreement with Stock Exchange, is enclosed as Annexure. LISTING AT STOCK EXCHANGE: The equity shares of the company are listed on the Bombay Stock Exchange Limited, Mumbai and Madhya Pradesh Stock Exchange, Indore. The annual listing fees of Bombay Stock Exchange for the year 2008-09 have been paid to the exchange. DISCLOSURE OF PARTICULARS: As required by the Companies Act (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, the relevant information is given hereunder; Conservation of Energy: The Company's operations involve very low energy consumption, and wherever possible measures have already been implemented for conserving energy. Technology Absorption: No Technology has been imported during the year. Foreign Exchange Earnings and Outgo: Foreign Exchange Earnings : Nil Foreign Exchange Outgo : Nil FIXED DEPOSITS: The Company has not invited/received any fixed deposits during the year. DIRECTOR'S RESPONSIBILITY STATEMENT: In terms of Section 217 [2AA] of the Companies Act, 1956, your Directors confirm that: * In the preparation of the Annual Accounts, the applicable Accounting Standards had been followed, alongwith proper explanation relating to the material departures, wherever applicable. * 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 or loss of the Company for that period. * The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and necessary checks and balances are in place for preventing and detecting fraud and other irregularities. * The Directors had prepared the Annual Accounts on a Going Concern Basis. CORPORATE GOVERNANCE: Though Clause 49 of the Listing Agreement became applicable to the Company in past, your Company has started following the said clause from 15th April 2007. A brief report on the Corporate Governance is enclosed and forms part of this report. Your Company will continue to practice good governance as set out under Clause 49 of the Listing Agreement of the Stock Exchanges. In addition to the basic governance issues, the Board lays a strong emphasis on transparency, accountability and integrity. RESEARCH & DEVELOPMENT: The R & D department of the Company has been arduously working to provide quality and value for money to the customers in keeping with market trends. AUDITORS: M/s. Shrikant L. Jajoo -&, Company, Chartered Accountants, Nasik, retire as auditors of the Company at the conclusion of the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office for the Auditors, if re-appointed. PARTICULARS OF EMPLOYEES: The Information required u/s. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are not applicable to the Company as the Company has not employed any employee, particulars of whom is required to be given. SAFETY, ENVIRONMENTAL CONTROL AND PROTECTION: The Company has taken all the necessary steps for safety and environmental control and protection at the plant. DEPOSITORY SERVICES: The Company's Equity Shares are still to be admitted to the depository mechanism of the National Securities Depository Limited (NSDL) and also the Central Depository Services Limited (CDSL). Necessary steps are being taken to admit the same with both the depositories. AUDITOR'S REPORT: Notes on -Accounts and other observations made in the Auditor's Report are self-explanatory and therefore do not call for any further comments under Section 217(3) of the Companies Act, 1956, except item No. 7(ix) in Auditor's Report regarding Sales Tax Liability which is qualified; suitable explanation for the same is as follows: The Company has not paid deferral Sales Tax in the year 2007-2008 as per Sales Tax NPV discounted payable scheme. Hence Rs.23 Cr. Expenses has been reversal in the Balance Sheet 2007-2008 the company has to pay Rs.2.51 Cr. And Rs. 3.24 Cr. As income has been shown more as the reversal of Sales Tax Benefits in the Balance Sheet as on 31St March 2008. From 1st November 2007 onwards P2P Agreement converted to Jobwork for the major client Parle Agro Pvt. Ltd. hence sales figures has gone down with addition of Jobwork charges but without effecting profitability. ACKNOWLEDGMENT AND APPRECIATION: The Directors take this opportunity to thank the Company's shareholders, customers, suppliers, bankers and distributors for the support they have given to the Company and the confidence which they have reposed in its management and the employees for the commitment and dedication shown by them. The Directors look forward to their continued support and understanding in the years to come. On behalf of the Board of Directors Nashik For: FORTUNE FOODS LIMITED Date Naresh Gupta Chairman and Director DMANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENT: The issue of manufacturing and processing of seasonal and perishable agro based products such as fruits and vegetables is globally important and especially crucial for the ever-growing population in a developing country like India. Agriculture has been the mainstay of Indian civilization for over many years. Even today, it is the pivotal part of the Indian economy, accounting for about 30% of the GDP and involving about 68% of the total population of the country. In India, an increasing population with an improved standard of living and consumers' demands for processed and packed vegetables and fruits are ever increasing. In order to achieve target GDP of 8-9%, constant development in agricultural sector has become a necessity. Five percent growth in agricultural sector annually can only be achieved by the growth of agriculture based industries. The recent boom of the organized retail sector and adoption of mall cultures not only in metros but by tier II and tier III cities will necessarily increase demand of packed food in the years to come. According to the market survey retail organized sector is growing. very fast and entry of big corporate houses like Spencer, Subhiksha, Godrej, ITC Ltd., Reliace Group and Bharti Walmart joint venture etc. will further add fuel to the growth of the organized retail market as even Taluka places are also covered for branded / packaged groceries, vegetables, drinks etc. OUTLOOK ON OPPORTUNITY: The increasing demand for bottled drinks and canned foods is a great opportunity for the Company. This will also ensure higher capacity utilization of the Company's facilities resulting in higher sales and higher profits. The Company has started operations for M/s. Parle International Ltd., Mumbai in full swing. The products i.e. 'Frooti' Mango Drink & 'Appy Fizz' Apple Carbonated Drink in pet bottles have received tremendous response from the market. OUTLOOK ON THREATS, RISKS AND CONCERNS: Advent of more efficient packing system, and increase in the cost of materials used is likely to affect the profitability of the Company. New entrants in the market are likely to reduce the Company's market share and ultimately profitability. Any change in the experienced key management personnel is likely to affect the prospects of the Company. Being an agro based industry; vagaries of nature have an impact on the business of the Company. In order to overcome these possible risks, the Company is developing new technologies in packing and is in discussion with number of other brand owners. The development of organized retail in India and the demand for packed food abroad will help the Company to overcome the possible threats. The Company has a fool proof human resource policy in place which ensures that all key management personnel will continue with the Company. Semi- skilled and un-skilled workers are available in the area and therefore any turnover in this category will not affect either operations or the profitability of the Company. INTERNAL CONTROL SYSTEM AND ADEQUACY: The Company has adequate system of internal controls to see that all the assets are safeguarded and are productive. Checks and balances are in place to ensure that transactions are adequately authorized and reported correctly. The internal audit department of the Company conducts audit of various departments to ensure that internal controls are in place. FINANCIAL PERFORMANCE: For the year under review the Company has recorded sales of Rs. 1449.67 lacs, 31.94% lower than the previous year because we have converted business of Parle Agro from 2P to 3P basis from 1St November 2007 (Job work) The Company has turned around and made a profit (EBIDTA) of Rs.246.65 lacs. HUMAN RESOURCES: The Company's human resource continues to be the invaluable asset and it has remained as committed as ever and produced commendable results. Quality and quick delivery are the hallmark of team performance. Employee relations are very cordial. CAUTIONARY STATEMENT: Statement in the 'Management Discussion and Analysis describing the Company's objectives, estimates, expectations or projections may be 'forward looking statement' within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could affect the Company's operation include Government Regulations, patent laws, tax regimes, economic developments, litigation and other allied factors.