Your Directors are pleased to present the 24th Annual Report and the AuditedAccounts of the Company for the year ended 31st March 2020.
The summarized financial performance (Standalone and Consolidated) of the Company:
| || |
(Rs. in Lakhs)
|Particulars || |
| ||FY 2019-20 ||FY 2018-19 ||FY 2019-20 ||FY 2018-19 |
|Total Income ||309233.50 ||304987.89 ||406641.51 ||391203.15 |
|Profit/(Loss) before Exceptional Items ||(1054.20) ||6096.62 ||(8602.57) ||551.96 |
|Share of loss in Associate Company and Joint Venture ||NA ||NA ||(4697.13) ||(2949.42) |
|Add/ (Less): Exceptional Items ||(29162.74) ||(1923.14) ||(8533.14) ||22.41 |
|Profit/(Loss) Before Tax ||(30216.94) ||4173.48 ||(21832.84) ||(2375.05) |
|Profit/(Loss) After Tax ||(30565.42) ||6053.10 ||(21650.28) ||(718.31) |
|Profit/(Loss) After Share of Associates and Minority Interest ||NA ||NA ||(21582.77) ||(638.75) |
Future Consumer Limited ("FCL"/"Company") is a next-generation Foodand HPC company focusing on emerging categories and value-added space. Your Company isbeing recognized as "next generation" FMCG company because of the extensive useof data that the Company has applied to understand the consumers and meet theirexpectations. Your Company is set out to create brands and mixes in the largely unbrandedfoods business while meeting the challenge of large established brands with differentiatedofferings in the HPC segments. Your Company has over the years successfully created aportfolio of differentiated products catering to a wide range of categories spanningacross food home care personal care and beauty.
During the year under review your Company focused on sustainable profitable growth.Your Company has emphasized on improving freshness index and increasing velocity byenhancing visibility on offtakes and better demand sensing and forecasting. Your Companyhas created a smarter product supply chain organization building synergies from back endto market.
The year of 2019-20 was a year of consolidation and introspection. Your Company getsprepared for a sustainable and profitable journey. Along with launching products/brands innew & exciting categories the Company also initiated the process of rationalizinglong tail of slow-moving low margin SKUs bringing focus to the core and high performingportfolio. Data remains FCL's key tool in this journey as we continue to build as asharper and an optimum portfolio. The Company has now begun its journey towardssustainable growth and efficient allocation of capital and resources. Your Companybelieves the consumer proximate nature of our business along with access to rich consumerdata on a real-time basis offers a unique advantage to the Company. Strong consumer dataanalytics is one of the key levers for the decision making in the entire value chain of abrand or category right from product development to increasing visibility on shelfpricing amongst other. This enables your Company in developing a much more scientific anddata led approach for its product portfolio leading to higher returns while conservingresources. Data will certainly act as a key differentiator for the Company as westrengthen our FMCG
At the back end your Company focused on vendor consolidation and re-negotiated termswith vendors. With the help of digital platforms like "Agribid" and"Vendex" the Company initiated sourcing raw material packing material etc.using the reverse auction mechanism. This enabled better terms of sourcing qualityproducts at a good value resulting in improvement in gross margins in key products &categories. Going forward your Company plans on integrating this tool with SAP functioncreating a much more seamless and efficient model of operations.
Your Company has expanded its distribution footprint to over 56.000 touchpoints. YourCompany currently distributes through 304 large format stores 1050 small-format stores.Distribution was affected by closure of 170 small stores. While the Company will continueto enhance its presence in the Big Bazaar Easy Day network it is also building acontrolled distribution model through Aadhaar and Nilgiris channels. Through Aadhaar yourCompany is building a rural distribution footprint which has a franchisee based program"Mitra" and has created a presence in over 3 states with 4 centers and hasenrolled over 160 Mitras. The rural markets are under penetrated and there is a hugeopportunity for the Company to expand its presence in existing locations and also build anetwork in new locations. The 100 year old heritage brand Nilgiris with over 116franchisee stores offers a strong distribution access to Southern Indian markets. TheCompany is focusing on building on this network and expanding its franchisee base. Furtherthe Company is also distributing its products through 3500 Canteen Stores Department(CSD). These channels offer an excellent last mile controlled distribution of Company'sproducts adding rich consumer insights to the data ecosystem.
Your Company has created and operates a robust sourcing ecosystem and has builtcapacities to manufacture products in-house as well as through subsidiaries jointventures and associate companies. The Integrated Food Park at Tumkur continues to enablethe Company in end-to-end food processing along the value chain from the farm to themarket.
Your Company continues to drive its innovation agenda. This year the Company enteredlarge mainstream categories including detergents biscuits potato chips & namkeens(salted snacks). Snacking and munching being a high engagement fast-moving category"Tasty Treat" revamped and strengthened its portfolio with newly launchedproducts. "Tasty Treat" launched innovative pack sizes and differentiatedvariants in the biscuit's category. Your Company has partnered with global snacking giantPladis for manufacturing the products ensuring high standards of quality and taste. Thebrand "Tasty Treat" further extended its portfolio within the potato chipscategory with 5 exciting new flavours.
In home care a crowded category your Company has launched India's firstfashion-forward fabric care brand "Voom" in liquid detergents and powderdetergent categories. The mix was created by partnering in the innovation process withleading global industry suppliers. The Brand "Voom" has received strong tractionin the modern trade channels. "Voom" has gained a member penetration of 21% withover 74% brand stickiness in Future Retail Limited stores. We are encouraged by theresults and the Company will expand the product portfolio to bring consumers newer andmore innovative products in the detergent space. The brand "Voom" and"Kara" (wet wipes) won the award for "Product of the Year 2020"world's largest consumer-voted award for product innovation in respective productcategories.
The joint venture partnership with global dairy nutrition company Fonterra establishedlast year continues to build scale and has launched five product categories with three inthe pipeline. This partnership follows an asset-light model to contain capital investmentand is focused on product development and marketing. Similarly the Hain Future NaturalProducts Private Limited is slowly and steadily building scale. This joint venture hasalready launched the brand "Sensible Portions" and "Terra". The jointventure has also initiated manufacturing at the food park facility. Your Company exitedthe joint venture Mibelle Future Consumer Products A.G. which was set up with Swiss basedMibelle A. G. a division of Migros Group which had launched the brand "SwissTempelle". Given the market dynamics of the personal care category and Company'sfocus on building its own portfolio the joint venture partners have mutually agreed toexit this brand and discontinue the joint venture. With an aim of further simplifying itsorganization structure your Company also plans to merge five manufacturing entities intoits wholly owned subsidiary FCL Tradevest Private Limited subject to necessary approvals.
During the year under review your Company has recorded revenue from operations ofRs.404033.02 Lakhs as against revenue from operations of Rs.388064.97 Lakhsregistering year over year growth of 4.1%. EBITDA of the Company reduced by 49% fromRs.11543.59 Lakhs in the previous year to Rs.5902.23 Lakhs during the year under review.The loss after tax attributable to the Company increased from Rs.718.31 Lakhs in FY19 toRs.21650.28 Lakhs in FY20 primarily on account of expected credit loss recorded on tradereceivables incremental losses from joint ventures Fonterra Future Dairy Private Limitedand Hain Future Natural Products Private Limited which the Company entered in FY 19 andare still in early build up phase and one time impairment costs of Rs.8533.14 lakhsrecognised on Goodwill and Brands during the year.
Save and expect those mentioned in this Report there were no material changes andcommitments affecting the financial position of the Company between end of financial yearunder review and date of this Report.
The year 2019-20 has been a challenging year with economic activity in India slowingsubstantially in 2019 with the deceleration most pronounced in the manufacturing andagriculture sectors muted consumption drove largely by macro-economic factors.The yearended with significant disruptions due to the impact of COVID-19. The entire Country wentinto lockdown as mandated by the Government authorities. This significantly impacted theentire value chain with increased challenges on both the demand and supply side. India andthe world continue to be in the grasp of the global pandemic. India's burgeoningcoronavirus cases resulted in it being amongst the top 10 Countries in the world with anincreasing count of infections. While the Government has undertaken stringent containmentmeasures the trajectory and severity of this pandemic are yet to be known. However theentire economy has seen an unprecedented slowdown. Given the uncertainty of thisdisruption near-term visibility is difficult to ascertain.
Your Company strongly believes the medium to long term consumption opportunity in Indiaremains intact. Your Company is built on strong fundamentals and the Company will tidethrough these challenging times. Your Company will continue its journey of sustainableprofitable growth. Sustainable profitability achievement free cash flow are the keymantras for the Company going forward. Your Company is focusing on various marginexpansion initiatives such as selling price optimization vendor consolidation betterterms of trade higher utilization of capacities amongst others.
Your Company will continue to grow its portfolio of Food and Home and Personal Careproducts. Key brands including "Golden Harvest" "Tasty Treat""Karmiq" "Desi Atta Company" "Mother Earth""Voom" "Cleanmate" and "Caremate" will continue to driveCompany's volume and value growth. Decision making will be driven by data analyticsincluding customer buying habits brand stickiness category penetration amongst other.Your Company aims at increasing its penetration in the consumers shopping basket acrosscategories. While the Company will explore opportunities in new generation categories theprime focus will be on expanding and enhancing the existing portfolio with strong focus onincreasing gross margins across food home and personal care categories.
Your Company will not only leverage Future Retail's retail muscle to expand itsdistribution reach but also build Nilgiris Aadhaar into strong distribution channels. TheCompany believes that there is immense opportunity to further grow these channels ofdistribution in the select markets and also identifying new locations to establishpresence. Nigiris and Aadhaar channels allow the Company to build a ControlledDistribution across categories and brands where Company is present. Controlleddistribution assists the Company in building a rich data eco-system which shall act as akey differentiator in the industry. The Company recently entered into a long termpartnership agreement with Amazon for expanding Company's online footprint. The Companyhas not even scratched the surface of this channel and will focus on understanding thenuances and suitably catering the requirements of the online customer.
The fiscal 2021 had begun with disruptions across the value chain due to the on-goingCOVID-19 pandemic. This disruption further stressed on the need of efficient capitalallocation and cash conservation which has further become of paramount important. Whilethe near term looks bleak the Company is gearing itself to strongly overcome these hardtimes. The Company strongly believes in the medium to long term consumption opportunity inIndia. The way forward for FCL is to optimize its costs drive synergies and judiciouslyallocate resources conserve cash and improve liquidity thereby enhancing stakeholdervalue.
In terms of the provisions of Schedule V of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended ("SEBI Listing Regulations")details about unclaimed shares in suspense account as on 31st March 2020 areas under:
|Description ||No. of Shareholders ||No. of Shares |
|Aggregate number of shareholders and outstanding shares in the suspense account as on 1st April 2019 ||1 ||600 |
|Description ||No. of Shareholders ||No. of Shares |
|Aggregate number of shareholders who approached the Company for transfer from suspense account upto 31st March 2020 ||- ||- |
|Number of shareholders to whom shares were transferredfrom suspense account upto 31st March 2020 ||- ||- |
|Aggregate number of shareholders and outstanding shares in the suspense account as on 31st March 2020 ||1 ||600 |
The Company has opened separate suspense account with Central Depository Services(India) Limited and has credited the said unclaimed shares to this suspense account. Thevoting rights in respect of shares maintained under the suspense account shall remainfrozen till the rightful owner makes any claim over such shares.
TRANSFER TO RESERVES
Your Directors do not propose to transfer any amount to reserves.
Your Directors have not recommended any dividend on equity shares in respect of thefinancial year 2019-20 in view of conserving the funds for envisaged businessrequirements.
In terms of the provisions of Regulation 43A of SEBI Listing Regulations the Companyhas adopted a Dividend Distribution Policy. The Dividend Distribution Policy is annexed tothis Report as Annexure I and is also available on the website of the Company - https://futureconsumer.in/investors.aspx#policies-code
SCHEME OF ARRANGEMENT
During the year under review the Board of Directors of the Company had approvedacquisition of business undertaking of Athena Life Sciences Private Limited("Athena") by way of demerger of the said business undertaking pursuant to theScheme of Arrangement between the Company Athena and their respective shareholders andcreditors ("Scheme") with effect from appointed date as mentioned under theScheme i.e 1st April 2019.
The Scheme has been filed with Hon'ble National Company Law Tribunal Mumbai Bench("NCLT") under the provisions of Section 230 to 232 and other applicableprovisions of the Companies Act 2013 and rules made there under. The NCLT has admittedthe Scheme and the Shareholders meeting for seeking approval of the Scheme is scheduled on6th August 2020.
Further the Board of Directors of the Company had also granted 'in principle' approvalfor consolidation of few subsidiary companies by way of amalgamation of viz. AffluenceFood Processors Private Limited Genoa Rice Mills Private Limited Avante Snack FoodsPrivate Limited FCEL Food Processors Limited and Future Consumer Products Limited("Transferee Companies") with FCL Tradevest Private Limited a wholly ownedsubsidiary of the Company. FCL Tradevest Private Limited is in the process of filing thesaid Scheme with Hon'ble National Company Law Tribunal Mumbai Bench.
The Hon'ble NCLT had on 25th July 2019 approved the Scheme for Reductionof Share Capital of Company by way of utilization of an amount of Rs.2869040797 out ofthe amount of Rs.3142782392 standing to the credit of the Securities Premium Accountof the Company as on 31st December 2017 for writing off the AccumulatedLosses to the tune of Rs.2869040797 appearing in the books of account of the Companyas on 31st December 2017.
INCREASE IN SHARE CAPITAL
During the year under review your Company has issued and allotted in aggregate647000 equity shares of the Company to eligible employees on exercise of options grantedunder Employees Stock Option Scheme(s) formulated by the Company.
Consequent to the aforesaid the issued subscribed and paid- up capital of the Companyincreased from 1920462680 equity shares of Rs.6/- each to 1921109680 equity sharesof Rs.6/- each.
ISSUE OF CONVERTIBLE SECURITIES
During the year under review your Company has issued and allotted 6962 and 21000Compulsorily Convertible Debentures ("CCDs") having face value of Rs.100000/-each to Verlinvest SA and International Finance Corporation respectively (collectivelyreferred as "Investors") on preferential allotment basis. The CCDs carry acoupon of 4% p.a. compounded on a quarterly basis. The CCDs shall automatically andcompulsorily be converted into equity shares at a conversion price of Rs.45.02 per equityshare on the earlier of occurrence of following events.
a) Investors electing to convert the CCDs into equity shares and
b) the date that is 18 months from the date of issue of CCDs. The Investors are alsoentitled to such number of equity shares equivalent to the amount of coupons remainingunpaid if any at a conversion price of Rs.45.02 for each equity share.
Further during the year under review your Company has also issued and allotted 7000warrants having face value of Rs.1000000/- each to Illusie Produkt Private Limitedbeing a member of the Promoter group of the Company ("Illusie") on preferentialallotment basis upon receipt of Rs.17.50 Crore from Illusie towards 25% of the totalconsideration price for the warrants. The warrants may be exercised by Illusie at any timebefore expiry of 18 months from the date of allotment of warrants. Upon such exercise andon payment of balance 75% of the total consideration amount by Illusie the warrants shallbe converted into equity shares at a conversion price of Rs.45.02 per equity share.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
As at 31st March 2020 your Company had following Subsidiary and JointVenture companies:
|Sr. No. ||Name of the company ||Category |
|i. ||Aadhaar Wholesale Trading and Distribution Limited ||Subsidiary |
|2. ||Affluence Food Processors Private Limited ||Subsidiary of FCL Tradevest |
|3. ||Appu Nutritions Private Limited ||Subsidiary of NDFPL |
|4. ||Aussee Oats India Limited (formerly known as Aussee Oats India Private Limited) ||Subsidiary of FCL Tradevest |
|5. ||Aussee Oats Milling (Private) Limited ||Subsidiary |
|6. ||Avante Snack Foods Private Limited ||Subsidiary of FCL Tradevest (with effect from 18th March 2020) |
|7. ||Bloom Foods and Beverages Private Limited ||Subsidiary |
|8 ||Delect Spices and Herbs Private Limited ||Subsidiary of FCL Tradevest (with effect from 18th July 2019) |
|9. ||FCEL Food Processors Limited ||Subsidiary |
|10. ||FCEL Overseas FZCO ||Subsidiary |
|11 ||FCL Tradevest Private Limited ("FCL Tradevest") ||Subsidiary |
|12. ||Future Consumer Products Limited ||Subsidiary |
|13. ||Future Food and Products Limited ||Subsidiary of FCL Tradevest |
|14. ||Future Food Processing Limited (formerly known as Future Food Processing Private Limited) ||Subsidiary of FCL Tradevest |
|15. ||Fonterra Future Dairy Private Limited ||Joint Venture |
|16. ||Genoa Rice Mills Private Limited ||Subsidiary of FCL Tradevest (with effect from 27th September 2019) |
|17. ||Hain Future Natural Products Private Limited ||Joint Venture |
|18. ||Integrated Food Park Limited (formerly known as Integrated Food Park Private Limited) ||Subsidiary of FCL Tradevest |
|19. ||Mibelle Future Consumer Products A.G. ||Joint Venture |
|20. ||MNS Foods Limited (formerly known as MNS Foods Private Limited) ||Subsidiary of FCL Tradevest |
|21. ||Nilgiris Franchise Limited (formerly known as Nilgiris Franchise Private Limited) ||Subsidiary of NDFPL |
|22. ||Nilgiri's Mechanised Bakery Private Limited ||Subsidiary of NDFPL |
|23. ||Sublime Foods Limited (formerly known as Sublime Foods Private Limited) ||Subsidiary of FCL Tradevest |
|24. ||The Nilgiri Dairy Farm Private Limited ("NDFPL") ||Subsidiary |
During the year under review:
a) Your Company has acquired balance stake of 10% in Future Consumer Products Limited("FCPL") by way of purchase of equity shares from the remaining shareholder(s)of FCPL. Consequent to the said acquisition FCPL has now become a wholly owned subsidiaryof the Company.
b) FCL Tradevest Private Limited a wholly owned subsidiary of the Company ("FCLTradevest") has acquired 50% stake in Genoa Rice Mills Private Limited("Genoa") from the joint venture partner LT Foods Limited. Consequent to thesame Genoa has become a wholly owned subsidiary of FCL Tradevest and step-down subsidiaryof the Company. Further FCL Tradevest has made an additional investment in Delect Spicesand Herbs Private Limited ("Delect"). Consequent to the said investment Delecthas become a subsidiary of FCL Tradevest and step-down subsidiary of the Company.
c) FCL Tradevest has acquired 67.03% stake in Avante Snack Foods Private Limited("Avante") from Sublime Foods Limited. Consequent to the same Avante has becomea subsidiary of FCL Tradevest and step-down subsidiary of the Company.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of financial statements of Subsidiaries and Joint Venturecompanies in Form AOC-1 is attached separately to this Annual Report.
The performance financial position and contribution of each of the Subsidiaries andJoint Venture companies to the performance of the Company is provided under ManagementDiscussion and Analysis Report which is presented separately and forms part of thisReport.
The policy for determining material subsidiaries as approved by the Board of Directorsof the Company is available on the website of the Company https://futureconsumer.in//investors.aspx#policies-code
As on 31st March 2020 FCL Tradevest Private Limited and Bloom Foods andBeverages Private Limited have been identified as material subsidiary of the Company asper the thresholds laid down under the aforesaid policy.
New recipe of co
In accordance to the provisions of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein standalone and the consolidated financialstatements of the Company and the audited financial statements of each of the subsidiarycompanies have been placed on the website of the Company - www.futureconsumer.in .
The audited financial statements in respect of each subsidiary company shall also bekept open for inspection at the Registered Office of the Company during working hours fora period of 21 days before the date of ensuing Annual General Meeting. The aforesaiddocuments relating to subsidiary companies can be made available to any Member interestedin obtaining the same upon a request in that regards made to the Company.
Pursuant to the Companies (Indian Accounting Standards) Rules 2015 ("INDAS") notified by the Ministry of Corporate Affairs the Company has adopted theIndian Accounting Standards with effect from 1st April 2016. Accordingly theStandalone and Consolidated Financial Statements of the Company and its subsidiaries forthe year ended 31st March 2020 have been prepared in accordance with IND AS.
The audited Consolidated Financial Statements prepared in accordance with IND AS areprovided in this Annual Report.
PARTICULARS OF LOANS GRANTED GUARANTEE PROVIDED AND INVESTMENTS MADE PURSUANT TO THEPROVISIONS OF SECTION 186 OF THE COMPANIES ACT 2013
Details of loans granted guarantees provided and investments made by the Company underthe provisions of Section 186 of the Companies Act 2013 are provided in the Notes toStandalone Financial Statements of the Company forming part of this Annual Report.
RELATED PARTY TRANSACTIONS
The Company has formulated policy on materiality of related party transactions anddealing with related party transactions ("RPT Policy") in accordance to theprovisions of Companies Act 2013 and SEBI Listing Regulations. The RPT Policy isavailable on the website of the Company- https://futureconsumer.in/investors.aspx#policies-code
All transactions with related parties are placed before the Audit Committee for reviewand approval. Prior omnibus approval is obtained for transactions with related partieswhich are repetitive in nature.
All transactions entered into with related parties during the financial year underreview were in the ordinary course of business and on an arm's length basis. Thedisclosure in respect of material contracts or arrangements with related parties asrequired under Section 134(3)(h) of the Companies Act 2013 is made in Form AOC-2 which isannexed to this Report as Annexure II.
INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROLS
Your Company has an adequate system of internal controls that is commensurate with thenature of our business and the size and complexity of our operations. Your Company hasadopted policies and procedures covering all financial and operating functions. Thesecontrols have been designed to provide reasonable assurance over:
Effectiveness and efficiency of operations
Prevention and detection of frauds and errors
Safeguarding of assets from unauthorised use or losses
Compliance with applicable laws and regulations
Accuracy and completeness of accounting records
Timely preparation of reliable financial information
The current system of internal financial controls in the Company is aligned with therequirements of the applicable laws and is in line with the globally accepted risk-basedframework issued by the Committee of Sponsoring Organisations (COSO) of the TreadwayCommission.
Your Company has an internal audit function which is supported by dedicated outsourcedteam from KPMG. The internal audit plan is approved by the Audit Committee at thebeginning of every year. Every quarter the Audit Committee is presented with key controlissues and the actions taken on issues highlighted in the previous reports.
The Audit Committee deliberates with the management considers the systems as laiddown and meets the internal auditors and statutory auditors to ascertain their views onthe internal financial control systems. The Internal Auditors assist in setting industrybenchmarks and help us drive and implement best industry practice within our organization.
Based on the assessment carried out by the Company the internal financial controlswere adequate and effective and no reportable material weakness or significantdeficiencies in the design or operation of internal financial controls were observedduring the financial year ended 31st March 2020.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of provisions of the Companies Act 2013 Mr. K K Rathi and Mr. NarendraBaheti Directors of the Company are liable to retire from the Board of the Company byrotation at the forthcoming Annual General Meeting ("AGM") and being eligiblehave offered themselves for re-appointment.
The Board of Directors of the Company ("Board") on recommendation of theNomination and Remuneration/ Compensation Committee ("Committee") had appointedMs. Neelam Chhiber as an Additional Independent Women Director of the Company with effectfrom 25th June 2020. In terms of provisions of Section 161 of the CompaniesAct 2013 Ms. Neelam Chhiber shall hold office as such upto the date of forthcoming AGM.The Board had also approved appointment of Ms. Neelam Chhiber as an Independent Directorof the Company with effect from 25th June 2020 for a period of five yearssubject to approval of the shareholders of the Company.
Pursuant to the provisions of Section 160 of the Companies Act 2013 the Company hasreceived a notice from a Member proposing the candidature of Ms. Neelam Chhiber for theoffice of Director at the forthcoming AGM. The Company has received declaration from Ms.Neelam Chhiber confirming that she meets the criteria of independence as provided undersub-section (6) of Section 149 of the Companies Act 2013 and Regulation 16(1) (b) of theSEBI Listing Regulations.
The Notice convening forthcoming AGM includes the proposal for appointment/re-appointment of the aforesaid Directors. A brief resume of the Directors seekingappointment/re-appointment at the forthcoming AGM and other details as required to bedisclosed in terms of Regulation 36(3) of the SEBI Listing Regulations and SecretarialStandard on General Meetings ("SS-2") forms part of the Notice calling the AGM.
As on 31st March 2020 none of the Directors are disqualified forappointment/re-appointment under Section 164 of the Companies Act 2013.
The Company has received individual declarations from following Independent Director(s)of the Company stating that they meet the criteria of independence as provided undersub-section (6) of Section 149 of the Companies Act 2013 and Regulation 16(1) (b) of theSEBI Listing Regulations:
a) Mr. G. N. Bajpai
b) Mr. Harminder Sahni
c) Mr. Adhiraj Harish
In terms of Regulation 25(8) of the SEBI Listing Regulations the IndependentDirector(s) have confirmed that they are not aware of any circumstance or situation whichexists or may be anticipated that could impair or impact their ability to discharge theirduties.
During the year under review Ms. Neha Bagaria resigned as an Independent Director ofthe Company with effect from 28th March 2020 due to increase in her otherprofessional activities and she was unable to give time and participate as member of theBoard. The Board wish to place on record their appreciation for contributions made by Ms.Neha Bagaria during her tenure as a member of the Board of Directors of the Company.
During the year under review Mr. Ravin Mody resigned as the Chief Financial Officer ofthe Company with effect from 31st January 2020. The Board of Directors wish toplace on record their appreciation for the contributions made by Mr. Ravin Mody during histenure of employment with the Company.
The Board has appointed Mr. Rajnikant Sabnavis as the Chief Executive Officer of theCompany with effect from 1st February 2020 and Mr. Sailesh Kedawat as ChiefFinancial Officer of the Company with effect from 10th April 2020.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met 6 (Six) times during the financial year 2019-20. The detailsof composition of the Board and its meetings held during the year under review and theattendance of the Directors at those meetings is provided in the Corporate GovernanceReport which forms part of this Annual Report.
As on 31st March 2020 the composition of Audit Committee has been asunder:
a. Mr. G. N. Bajpai
b. Mr. Harminder Sahni
c. Mr. K K Rathi
d. Mr. Adhiraj Harish
During the year under review all the recommendations made by the Audit Committee wereaccepted by the Board.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
As on 31st March 2020 the composition of Corporate Social ResponsibilityCommittee has been as under:
a. Mr. Kishore Biyani
b. Ms. Ashni Biyani
c. Mr. Harminder Sahni
PERFORMANCE EVALUATION OF BOARD
A formal evaluation of performance ofthe Board its Committees the Chairman and thatof the individual Directors was carried out for the financial year 2019-20. The evaluationprocess was carried out through a web based application in terms of a structuredquestionnaire in accordance to the Guidance Note on Board Evaluation issued by Securitiesand Exchange Board of India.
The evaluation of Individual Directors was done taking into consideration thecontributions made by each Director as a member at the respective meetings in pursuit ofthe purpose and goals participation at the meetings independent views and judgementinitiative ownership of value building.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe Committee members on the basis of the criteria such as the composition of Committeeseffectiveness of Committee meetings information shared and participation of members. Inrespect of evaluation for performance of the Board the parameters inter aliacomprised of key areas such as Board composition competency of Directors diversityfrequency of Board and Committee meetings information sharing and disclosures made to theBoard and its Committees. The responses received on evaluation of the Board and itsCommittees and that of the individual Directors were shared with the Chairman.
The overall performance evaluation process for functioning of Board and its Committeeswas based on discussions amongst the Board Members Committee Members and responses sharedby each Member. The Board found that there was considerable value and richness in thediscussions and deliberations and has agreed for possible continuous improvisation andeffectiveness in functioning of the Board and Committees.
A report on Corporate Governance together with Auditors' Certificate as required underRegulation 34 of SEBI Listing Regulations forms part of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report as required under Regulation 34 of SEBIListing Regulations is presented separately and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
A report in terms of Regulation 34 of the SEBI Listing Regulations on the businessresponsibility initiatives taken by the Company is presented separately and forms part ofthis Annual Report.
VIGIL MECHANISM AND WHISTLE BLOWER POLICY
The Company has established a Vigil Mechanism and Whistle Blower Policy to provide aframework for promoting responsible and secure whistle blowing and to provide a channel tothe employee(s) Directors and other stakeholders to report to the management concernsabout unethical behavior actual or suspected fraud or violation of the code of conduct orpolicy/ies of the Company. The details of said vigil mechanism is given in CorporateGovernance Report which forms part of this Annual Report.
NOMINATION AND REMUNERATION POLICY
In terms of requirements prescribed under Section 178 ofthe Companies Act 2013 theCompany has framed a Nomination and Remuneration Policy for appointment and remunerationof the Directors Key Managerial Personnel and Senior Management (the "Policy").
The purpose of this Policy is to establish and govern the procedure as applicable interalia in respect to the following:
a) To evaluate the performance of the members of the Board.
b) To ensure remuneration to Directors Key Managerial Personnel and Senior Managementinvolves a balance between fixed and incentive pay reflecting short and long termperformance objectives appropriate to the working of the Company and its goals.
c) To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.
The Policy is available on the website of the Company-https://futureconsumer.in/investors.aspx#policies-code and is annexed to this Report asAnnexure III.
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
The Company has constituted a Corporate Social Responsibility Committee ("CSRCommittee") in accordance with Section 135 of the Companies Act 2013. The Board ofDirectors of the Company have based on recommendations made by the CSR Committeeformulated and approved Corporate Social Responsibility Policy ("CSR Policy")for the Company. The CSR Policy is available on the website of the Company - https://futureconsumer.in/investors.aspx#policies-code.
The salient features of CSR Policy inter-alia comprises of framing of guidelinesto make Corporate Social Responsibility ("CSR") a key business process forsustainable development of the society to directly/indirectly undertake projects/programmes which will enhance the quality of life and economic well-being of thecommunities in and around our operations and society and to generate goodwill andrecognition among all stakeholders of the Company.
The disclosure as per Rule 9 of Companies (Corporate Social Responsibility Policy)Rules 2014 is made in prescribed form which is annexed to this Report as Annexure IV.
RISK MANAGEMENT POLICY AND INTERNAL ADEQUACY
Your Company has Enterprise Risk Management ("ERM") Policy in place. The aimof this policy is not only to eliminate risks but to also assist Company's personnel tomanage the risks involved concerning the business and to achieve maximum opportunities andminimize adverse consequences.
The ERM Policy involves:
Identifying and taking opportunities to improve performance as well as takingactions to avoid or reduce the chances of adverse consequences;
A systematic process that can be used when making decisions to improve theeffectiveness and efficiency of performance;
Effective communication; and
Accountability in decision making.
Risk Management Committee meeting is held once in every six months wherein all thecritical risks along with current mitigation plans identified during the period arepresented to the Board. This ensures all the critical risks are covered and suitablemitigation plans are in place or needs to be implemented to overcome /avoid the risk toensure controls are operating effectively. The Audit Committee has additional oversight inthe areas of financial risk and controls.
AUDITORS AND AUDITORS' REPORT
M/s. S R B C & CO LLP Chartered Accountants have been appointed as the StatutoryAuditors of the Company for a period of five years at the 21st Annual GeneralMeeting of the Company held on 29th August 2017.
The notes on financial statements referred to in the Auditors Report areself-explanatory and do not call for any further comments and explanations. The Auditors'Report does not contain any qualification reservation or adverse remark. No instances offraud have been reported by the Statutory Auditors of the Company under Section 143(12) ofthe Companies Act 2013.
SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
The Company has appointed M/s. Sanjay Dholakia & Associates Company Secretaries toconduct Secretarial Audit of the Company for the financial year 2019-20 in terms oftheprovisions of Section 204 of the Companies Act 2013. The Secretarial Audit Report isannexed to this Report as Annexure V. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
Your Company has not been accepting any deposits from the public and hence there are nounpaid/unclaimed deposits or any instance of default in repayment thereof.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as on 31st March 2020 in Form MGT 9 in termsof provisions of Section 92(3) of the Companies Act 2013 read with Rules thereto isavailable on website of the Company https://futureconsumer.in/investors.aspx#financials-id
PARTICULARS OF EMPLOYEES
Disclosure with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Companies Act 2013 read with Rule 5(1) ofthe Companies(Appointment and
Remuneration of Managerial Personnel) Rules 2014 are provided under Annexure VI whichis annexed to this Report.
In terms of the provisions of first proviso to Section 136(1) of the Companies Act2013 the statement containing particulars of top ten employees and the employees drawingremuneration in excess of limits prescribed under Section 197 of the Companies Act 2013read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is excluded from the Annual Report being sent to the Members ofthe Company and will be available for inspection by the Members upto the date offorthcoming Annual General Meeting. If any Member is interested in obtaining a copythereof or inspecting the same such Member may write to the Company Secretary and thesame shall be provided. The full Annual Report including aforesaid information is beingsent electronically to all those members who have registered their email addresses and isalso available on the website of the Company and Stock Exchanges.
In view outbreak of COVID-19 pandemic and in compliance with circulars issued by theMinistry of Corporate Affairs ("MCA") viz. General Circular No. 14/2020 datedApril 8 2020 read with General Circular No. 17/2020 dated April 13 2020 and GeneralCircular No. 20/2020 dated May 5 2020 (collectively referred to as "MCACirculars") and Circular No. SEBI/HO/CFD/CMD1/ CIR/P/2020/79 dated 12thMay 2020 issued by the Securities and Exchange Board of India Notice of AGM along withthe Annual Report 2019-20 is being sent only through electronic mode to those Memberswhose email addresses are registered with the Company/ Depositories. Members may note thatthe Notice of AGM and Annual Report 2019-20 will also be available on the Company'swebsite www.futureconsumer.in website of the Stock Exchanges i.e. BSE Limited andNational Stock Exchange of India Limited at www.bseindia.com and www.nseindia.comrespectively and on the website of NSDL https://www.evoting. nsdl.com
PARTICULARS OF EMPLOYEE STOCK OPTION PLAN
Pursuant to the approval of the Shareholders the Company has formulated followingemployee stock option schemes:
a) FVIL Employees Stock Option Plan-2011 ("FVIL ESOP- 2011")
b) Future Consumer Enterprise Limited - Employee Stock Option Plan 2014 ("FCELESOP - 2014")
The aforesaid Employee Stock Option Plans are in compliance with SEBI (Share BasedEmployee Benefits) Regulations 2014 as amended from time to time ("SEBI EmployeeBenefits Regulations") and there have been no material changes to these Plans duringthe financial year under review.
The details of options granted and exercised under FVIL ESOP-2011 and FCEL ESOP-2014and other disclosures as required under SEBI Employee Benefits Regulations are availableon the website of the Company https://futureconsumer.in/investors.aspx#statutory-documentsand are also provided in Annexure VII which is annexed to this Report.
MAINTENANCE OF COST RECORDS
Your Company is not required to maintain cost records as specified by the CentralGovernment under sub-section (1) of Section 148 of the Companies Act 2013 and accordinglysuch accounts and records have not been maintained by the Company.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION EXPENDITURE ON RESEARCH ANDDEVELOPMENT FOREIGN EXCHANGE EARNINGS AND OUTGO ETC.
The Company in its regular course of business is vigilant to conserve the resources andcontinuously implements measures required to save energy.
The Company's initiative towards Energy and Carbon Policy sets forth guidelines towardslow carbon transformation through energy efficiency and sourcing energy from alternativeand renewable sources. The Company's Environment Management Systems ("EMS") helpthem in identifying and assessing environmental risks preventing and mitigating theenvironmental impact caused due to its operations and products. The Company monitors itsenvironmental performance against key performance indicators and works towards increasingmanufacturing efficiency wastage reduction and enhancing capacity utilization.
The business activities of the Company are not specific to any technology requirements.In the course of operations processes are formed and implemented to achieve operationalefficiencies in the Company and also at its subsidiaries which assist in maintainingproduct quality and cost control.
In respect of the manufacturing units of the Company and its subsidiaries the briefparticulars in respect of various steps and initiatives taken regarding conservation ofenergy and technology absorption are as under:
(A) Conservation of Energy
The energy utilization in each manufacturing unit is being monitored regularly in orderto achieve effective conservation of energy. The significant energy conservation measuresunder taken during the year under review were as under:
(i) the steps taken or impact on conservation of energy:
Facilities at India Food Park Tumkur are instrumental in saving energy eachfacility took stretched target of 25% optimization in electrical energy. Each facilityimplemented TPM lean manufacturing to optimize the energy and achieved more than settarget.
The overall energy optimized at India Food Park is 0.50 GJ/Ton of productionagainst target of 0.70 GJ/Ton of production. Realization of 29% less consumption for FY2019-20.
Controlled shut down of freezer rooms resulted in savings of 450 kwh/ day atF&V facility.
Rationalization in capacity utilization of freezer and movement of man andmaterials in the freezer room restricted temperature increase.
Light circuit modification for auto power cut-off through installation of limitswitches at cold chambers has resulted in savings of 115 kwh/ month.
Effective utilization of steam from boiler by regular monitoring of briquetteconsumption to steam generation and water consumption to steam generation.
Auto power factor correction (APFC) resulted in savings of 850 kwh/month.
PNG is used as fuel for boiler operation and oven operations by most offacilities at India Food Park.
Dedicated chimney has been installed for 125 and 250 KVA DG sets which willhelp on effective stack monitoring and there by result less power diesel consumption.
CRS -condensate recovery system has been installed at F&V boiler andresulted in 3440 KL of water savings.
(ii) the steps taken by the Company for utilizing alternate sources of energy:
India Food Park at Tumkur has installed 3MW solar power generating units by third partyand solar power caters 45% of overall electricity consumption for Food Park.
(iii) the capital investment on energy conservation equipments:
The total capital investment on energy conservation equipment FY 2019-20 across all thebusiness verticals of the Company and its subsidiaries is approximately Rs.36.50 lakhs.
(B) Technology absorption
In the India Food Park at Tumkur LPG is replaced by PNG thereby reducing GHGemissions. Various programs are undertaken like environment monitoring tree planationproviding storm water drains for new buildings utilizing more amount of treated water forlandscaping gardening there by conserve raw water implementation of TPM and leanmanufacturing resulted in energy savings small initiatives like switching of lights whennot use ACs using public transport.
The Company's water stewardship policy encourages water conservation efforts whilemonitoring measuring and reporting progress against key performance indicators andcomplying with the local regulations. The overall water consumption is 0.90 KL/ton ofproduction against target of 1.25 KL/ton production and there by optimized 25% of waterusage basis FY 2018-19.
(C) Foreign exchange earnings and outgo
The details in respect of Foreign Exchange earnings/ outgo for the year under reviewis provided below:
Foreign Exchange Earnings: Rs.514.94 Lakhs
|Particulars ||Amount (Rs. In Lakhs) |
|Interest Income ||428.82 |
|Sale of Goods ||72.02 |
|Reimbursement of Expenses ||14.10 |
|Total ||514.94 |
|Foreign Exchange Outgo: Rs.8951.6 ||Rs.lakhs |
|Particulars ||Amount (Rs. In Lakhs) |
|Purchases ||8761.90 |
|Retainership Fees ||8.49 |
|Royalty Fees ||144.68 |
|Sitting Fees ||2.50 |
|Professional Fees ||34.09 |
|Total ||8951.66 |
1. The Company has not issued any equity shares with differential rights as todividend voting or otherwise.
2. The Managing Director and Executive Director have not received any commission fromthe Company nor any remuneration in the form of salary/perquisites from any of itssubsidiary companies.
3. There are no significant/material orders passed by the regulators/courts/tribunalsduring the year under review which would otherwise impact the going concern status of yourCompany and its future operations.
4. The Company has complied with the provisions regarding the constitution of theInternal Complaints Committee ("ICC") in terms of Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and Rules thereto. To buildawareness among the employees the Company has been conducting inductions/refresherprogrammes in the organisation on a continuous basis. During the year under review therewere no reported instances of cases filed pursuant to Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.
5. The Company has complied with Secretarial Standards issued by the Institute ofCompany Secretaries of India and notified by the Ministry of Corporate Affairs.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 with respectto Directors' Responsibility Statement it is hereby confirmed that:
a. in the preparation of the annual accounts for the financial year ended 31stMarch 2020 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2020 and ofthe profit or loss of the Company for that period;
c. the Directors have taken proper and sufficient care 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;
d. the Directors have prepared the annual accounts for the financial year ended 31stMarch 2020 on a going concern basis;
e. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
f. the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors would like to thank and place on record their appreciation for thesupport and co-operation provided to your Company by its Shareholders Future Groupentities and in particular regulatory authorities and its bankers. Your Directors wouldalso like to place on record their appreciation for the efforts put in by employees of theCompany during the year under review.
On behalf of the Board of Directors
Date: 10th July 2020