FORTUNE FOODS LIMITED
ANNUAL REPORT 2007-2008
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
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
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.
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.
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
Conservation of Energy:
The Company's operations involve very low energy consumption, and wherever
possible measures have already been implemented for conserving energy.
No Technology has been imported during the year.
Foreign Exchange Earnings and Outgo:
Foreign Exchange Earnings : Nil
Foreign Exchange Outgo : Nil
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
* 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.
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.
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.
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
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
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
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.
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
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.
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.