Your Directors have pleasure in presenting the Twenty Third (23rd)Annual Report together with the Audited Standalone and Consolidated Financial Statementsfor the Financial Year ended March 31 2018 ("FY 2018").
A summary of the Company's financial performance in FY 2018 is asfollows:
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(Rs in Lakhs)
|Particulars || |
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|Sales & Other Income || |
|Profit before Interest Depreciation & Tax but after exceptional items || |
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|Less: Interest || |
|Less: Depreciation || |
|Profit / (Loss) before Tax || |
|Less: Provision for Taxation || |
|Profit / (Loss) after Tax || |
Results of Operations and the State of Company's Affairs
The highlights of the Company's performance for FY 2018 vis-a-visFY 2017 are as under: a) Revenue from operations increased by 17.1% to
Rs 298044 Lakhs b) EBITDA increased by 81% to Rs 44639.20 Lakhs c)Profit before Tax increased by 220.44% to Rs 31323.84 Lakhs d) Net Profit increased by206.9% to Rs 20640.48 Lakhs During the year there are no transfer to the GeneralReserves.
No material changes and commitments have occurred after the close ofthe Financial Year till the date of this Report which affect the financial position ofthe Company. The Company with two strong brands in its portfolio addressing different foodmarket segments and is in a sweet spot to leverage on the growth potential of foodservices segment in India.
During the year the Company identified key driving the strategicpillars of product and innovation value for money customer experience digital andtechnology while bringing cost optimization with a clear focus on sustainable growth.Company's emphasis on driving the key strategic pillars translated into healthy samestore sales growth YoY while setting the base for consistent growth in line with thepotential of the Quick Service Restaurant (QSR) space.
During the year the implementation of structural reforms mainly Goodsand Services Tax (GST) led to positive change for the organized Restaurant industry. Thelowering in rate of applicable GST to 5% allowed the Company to demonstrate its commitmentto deliver the best value proposition as the Company passed on the benefits of lower taxrate to the customers while taking a small calibrated price increase on few products topartially cover for the input credit loss. Domino's Pizza India ("DPI")continuously focused on Innovation for resonating with consumers' evolving tastes andmeeting their expectations. With the launch of All New Domino's'Domino's Pizza unveiled its most significant product refresh with an across the boardenhancement of its pizzas delighting consumers with the choicest taste and best quality.The 360-degree marketing campaign with the tagline Aapne Kaha HumneKiya'. The upgrade in core pizzas saw massive acceptance as reflected in newconsumer acquisition as well as increase in existing consumer's frequency. Furtherdiversifying its side product offering DPI launched three new formats of chickenproducts with international flavours.
The Company successfully added 24 Restaurants during the year.DPI's network spanned across 266 cities as on March 31 2018 as against 264 citiesas on March 31 2017. Seven (7) Restaurants were decommissioned during the year as theyfailed to deliver on the Company's expected ROI parameters. As of March 31 2018 theDPI network comprised 1134 Restaurants as against 1117 Restaurants as on March 31 2017.
At Dunkin' Donuts India ("DDI") a new focus was broughton beverage and donuts while food continued to be a strong play. The focused strategy ofenhancing core offerings driving efficiencies along with shutdown of unprofitable storesled to significant reduction in DDI losses. DDI has also experimented with smallerRestaurant size.
As an innovation DDI launched Value range of donuts and signaturedonuts including Chocotella White Choco Cheesecake Choco Symphony and Coffee Toffee.Shaken Iced Coffee Caramel Hazelnut Latte and Tiramisu Latte were among the new beverageslaunched during the year. On the food side Toasties (Chilli Cheese and Chicken) and BigJoy Mayo Burger were added to the menu. DDI drove Value for Money by introducing a rangeof donuts at Rs 49 and also introduced a Donut+Coffee combo at Rs 89 with the objective ofseeding the Donuts + Coffee habit.
DDI was cautious in its expansion strategy aligned to theCompany's overarching strategy of profitable growth. Five (5) new Restaurants wereopened in FY 2018 while 31 Restaurants were decommissioned. The total number of DDIRestaurants stood at 37 as on March 31 2018 as against 63 as on March 31 2017.
In the fourth quarter of FY 2018 the Company also commissioned itsstate-of-the-art facility in Greater Noida a prestigious accomplishment for the Companythat will give a better overall efficiency at the commissary level as well. The Commissarywill have manufacturing capacity for dough ball and for a couple of other lines as well.
During the year there was no change in the nature of the business ofthe Company.
The Board of Directors at its meeting held on May 08 2018 recommendedissue of bonus shares subject to the approval of members to the holders of equity sharesof the Company in the proportion of 1 (One) equity share of
Rs 10/- each fully paid up for every 1 (One) equity share of
Rs 10/- each fully paid up as on the record date fixed for thispurpose. The bonus shares will be issued by capitalisation of a part of the SecuritiesPremium Account.
Based on the Company's performance your Directors are pleased torecommend dividend of Rs 5/- (i.e. 50%) per equity share of Rs 10/- each for FY 2018amounting to Rs 3299.23 lakhs (excluding Dividend Distribution Tax of Rs 678.17 lakhs)subject to approval of members at the ensuing Annual General Meeting ("AGM") ofthe Company. The above referred dividend of Rs 5/- per equity share of
Rs 10/- each is recommended by the Board of Directors on the basis ofthe existing paid up share capital of the Company (pre bonus share capital). Upon approvalof issuance of Bonus shares the dividend payout (post bonus issue) will work out to Rs2.50/- per equity share of
Rs 10/- each.
The movement of the share capital during the year is as follows:
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(Amount in Rs )
|Particulars || |
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|At the beginning of the year i.e. as on April 01 2017 65949070 equity shares of Rs _10/- each || |
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|Stock Options allotted during the year under Domino's Employees Stock Option Plan 2007 and JFL Employees Stock Option Scheme 2011 35450 equity shares of Rs _10/- each || |
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|At the end of the year i.e. as on March 31 2018 65984520 equity shares of Rs _10/- each || |
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To facilitate the issuance of Bonus Shares and for requirements theBoard of Directors subject to the approval of the members approved the increase inAuthorized Capital of the Company to Rs 1500000000/- (Rupees Hundred Fifty Crore)divided into 150000000 (Fifteen Crore) equity shares of Rs 10/- each by creation ofadditional 70000000 (Seven Crore) equity shares of Rs 10/- ranking pari passu in all therespect with the existing shares of the Company. The increase in Authorised Capital wouldlead to consequential amendment in existing Capital Clause of the Memorandum ofAssociation of the Company.
Employees Stock Option Schemes
The Company has three (3) Employees Stock Option Schemes namely:Domino's Employees Stock Option Plan 2007 ("ESOP JFL Employees Stock OptionScheme 2011 ("ESOP JFL Employees Stock Option Scheme 2016 ("ESOP ESOP 2007:During FY 2018 6000 options were exercised Consequently all options outstanding underthe scheme have been exercised and no further grants were made. ESOP 2011: DuringFY 2018 33932 options were granted under the scheme to the employees of the CompanyFurther 179631 options were exercised during the year. ESOP 2016: During FY 201820947 options were granted under the scheme to the employees of the Company.
JFL Employees Welfare Trust ("ESOP Trust"): Trustacquired 380670 equity shares from secondary market for the purpose of implementationESOP 2011 and ESOP 2016. Out of this 151181 shares were transferred to the employeespursuant exercise of options.
No change in paid up capital is expected due to exercise of options asit is envisaged to transfer the equity shares held by ESOP Trust to the employees onexercise of options. The applicable disclosure under SEBI (Share Based Employee Benefits)Regulations 2014 (the "ESOP Regulations") as at March 31 2018 is uploaded onthe website of the Company (web link: http://www.jubilantfoodworks.com/investors/financial-information-2/).
There has been no material change in the ESOP 2007 ESOP 2011 &ESOP 2016 (collectively referred as "ESOP Schemes") of the Company and the ESOPSchemes are in compliance with the ESOP Regulations.
Certificates from Deloitte Haskins & Sells LLP CharteredAccountants Statutory Auditors with respect to the implementation of ESOP Schemes wouldbe placed before the members at the ensuing AGM and a copy of the same shall be availablefor inspection at the Registered Office & Corporate Office of the Company.
Subsidiary and Joint Venture
Jubilant FoodWorks Lanka (Private) Limited ("JFLPL")
During the year the wholly owned subsidiary Company launched 1 (one)new Domino's Pizza Restaurant taking its total Restaurant count to 24 (twenty four)as on March 31 2018 (23 Restaurant count as on March 31 2017). In line with DPI EveryDay Value proposition was also rolled out for Sri Lanka business. New pizzas and sideswere introduced in the menu to fuel excitement among the consumers.
A report on the performance and the financial position of JFLPL as perCompanies Act 2013 and Rules made thereunder (the "Act") is provided in FormAOC-1 attached to the Consolidated Financial Statements forming integral part of theAnnual Report.
Pursuant to the provisions of Section 136 of the Act separate auditedaccounts of JFLPL are available on the website of the Company atwww.jubilantfoodworks.com.
Jubilant Golden Harvest Limited
During the year under review the Company announced joint venture withGolden Harvest QSR Ltd. (Golden Harvest) part of Golden Harvest group of Bangladesh tolaunch Domino's Pizza Restaurants in Bangladesh. For the purpose of this jointventure a private limited Company Jubilant Golden Harvest Limited ("JGHL") wasincorporated. No investments were made in JGHL by the Company. Subsequent to investmentthe Company will be the majority shareholder with 51% of the total shareholding whileGolden Harvest will hold the balance 49%.
Extracts of Annual Return
The extracts of Annual Return as required under the Act in Form MGT - 9is annexed herewith as Annexure "A" forming integral part of this Report.
Directors and Key Managerial Personnel
In terms of Articles of Association of the Company and provisions ofthe Act Mr. Hari S. Bhartia Director of the Company is liable to retire by rotation atthe ensuing AGM and being eligible offer himself for re-appointment. The Board ofDirectors recommend his re-appointment for the consideration of the members of the Companyat the ensuing AGM.
A brief profile and other details as required under the ActSecretarial Standard-2 and Listing Regulations of the director proposed to be re-appointedis annexed to the Notice convening the AGM.
During the year Mr. Sachin Sharma President & Chief FinancialOfficer and Key Managerial Personnel of the Company resigned from the Company with effectfrom July 22 2017.
Mr. Prakash C. Bisht was appointed as EVP & Chief Financial Officerand Key Managerial Personnel of the Company with effect from January 19 2018. He is aChartered Accountant with over three decades of experience in the area of FinancialReporting Financial Planning & Analysis M&A transactions Fund raisingCorporate Structuring IT solution implementation and Commercial Operations.
Particulars of Employees Directors & Key Managerial Personnel
The details of Employees Directors and Key Managerial Personnel asrequired under Section 197 of the Act read with Companies (Appointment and Remuneration)Rules 2014 is annexed herewith asAnnexure "B" forming integral part ofthis Report.
Loans Guarantees and Investments
Particulars of loans guarantees and investments made under theprovisions of Section 186 of the Act have been disclosed in Note 04 to the StandaloneFinancial Statements forming integral part of the Annual Report.
Related Party Transactions
All contracts arrangements and transactions entered by the Companyduring FY 2018 with related parties were in the ordinary course of business and on arm'slength basis and were approved by the Audit Committee. During the year the Company hadnot entered into any materially significant transaction with related parties as defined inthe Company's Policy on materiality and dealing with related party transactions (the"policy"). Accordingly the disclosure of Related Party Transactions in Form AOC2 is not applicable.
Related Party disclosures have been disclosed in Note 33 to theStandalone Financial Statements forming integral part of the Annual Report.
Auditors and Auditor's Report
Deloitte Haskins & Sells LLP Chartered Accountants (ICAI Regn. No.117366W/W-100018) (Deloitte) were appointed as Statutory Auditors of the Company to holdoffice from the conclusion of 22nd AGM until the conclusion of 27th AGM of the Companysubject to ratification by the members at every intervening AGM.
The Board of Directors has recommended ratification of appointment ofDeloitte as Statutory Auditors to the members of the Company.
The Auditors' Report read together with Annexure referred to inthe Auditors' Report do not contain any qualification reservation adverse remark ordisclaimers. During the year under review the Statutory Auditors have not reported anymatter under Section 143 (12) of the Act therefore no detail is required to be disclosedunder Section 134 (3)(ca) of the Act.
The Secretarial Audit Report for the Financial Year ended March 312018 received from Chandrasekaran Associates Secretarial Auditors of the Company isannexed herewith as Annexure "C" forming integral part of this report.The said report is self-explanatory and does not contain any qualification reservationadverse remark or disclaimers.
The detailed Risk Review is provided in the Management Discussion &Analysis section forming integral part of the Annual Report.
Internal Financial Control
The Company has in place adequate internal financial controls withreference to Financial Statements. During the year such controls were tested and noreportable material weakness in the design or operations were observed.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year underreview in terms of Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ("Listing Regulations") is presented in aseparate section forming integral part of the Annual Report.
Business Responsibility Report
Regulation 34 of Listing Regulations mandates inclusion of the BusinessResponsibility Report ("BRR") as part of the Annual Report for top five hundred(500) listed entities based on market capitalization as on March 31 of every FinancialYear. In compliance with Listing Regulations BRR is annexed as Annexure "D"forming integral part of this Report.
Corporate Social Responsibility
In terms of Section 135 of the Act read with the Companies (CorporateSocial Responsibility) Rules 2014 as amended ("CSR Rules") the Board ofDirectors have approved a Corporate Social Responsibility Policy ("CSR Policy")that strives towards welfare and sustainable development of the different segments of thecommunity specifically the deprived and underprivileged segment.
The Annual Report on CSR is annexed as Annexure "E"forming integral part of this Report.
The Corporate Governance philosophy of the Company is driven by theinterest of stakeholders and business needs of the organization. The Company continues tobe compliant with the requirements of Corporate Governance as enshrined in ListingRegulations. In terms of Regulation 27 of Listing Regulations the Corporate GovernanceReport is annexed as Annexure "F" forming integral part of this Report.
The Corporate Governance Report inter-alia contains the followingdisclosures: a) Details of Board & Committee Meetings; b) Composition ofSustainability and Corporate Social Responsibility Committee; c) Details of Whistle BlowerPolicy (Vigil Mechanism); d) Dividend Distribution Policy; e) Appointment &Remuneration Policy; f) Performance Evaluation criteria of the Board its Committees &individual Directors.
Pursuant to the provisions of The Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 the Company has adopted apolicy on prevention of sexual harassment at workplace. The Company is committed towardspromoting the work environment that ensures every employee is treated with dignity andrespect and afforded equitable treatment irrespective of their gender race social classcaste creed religion place of origin sexual orientation disability or economicstatus.
During the Calendar year the Company received 1 (one) complaint whichwas suitably addressed.
Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo
A) Conservation of Energy
The Company is committed to take effective measures to conserve energyand drive energy efficiency in its operations and also continuously making efforts onincreasing use of renewable energy and enhancing waste management to reduce the carbonfootprint. The Company also strives to focus on technologies processes and improvementsthat matter for the environment. Accordingly the Company undertook some cost-effectiveenergy-efficiency initiatives across its Restaurants and Supply Chain Centres("SCC").
i) The steps taken or impact on conservation of energy_Installation of energy efficient LED Lights in all Restaurants and SCC.
Installation of Energy Management System in 425 (approx.) Restaurants.
Installation of Energy Saving Sensors in the AC System of 388 (approx.)Restaurants. Solar Power plant at Nagpur Kolkata and Mumbai SCCs. Efforts are on toinstall plants at Greater Noida SCC.
Onsite Sewage Treatment Plant at Greater Noida SCC to treat 100% of thewaste water generated.
ii) The steps taken by the Company for utilizing alternate sourcesof energy in few Restaurants
Conversion of Liquefied Petroleum Gas Fuel into Piped Natural Gas forOvens installed. iii) The capital investment on energy conservation equipment:
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|Particulars || |
|Replacement of old AC with || |
|Inverter AC's || |
(B) Technology Absorption
All steps taken towards Energy Conservation are the result oftechnology absorption however there is no specific information to be furnished in thisregard.
(C) Foreign Exchange Earnings & Outgo
Information pertaining to Foreign Exchange Earnings & Outgo is asunder:-
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|Particulars || |
|Foreign Exchange Earnings || || |
|Export of Goods (FOB value basis) || |
|Total Inflow || |
|CIF Value of Imports (Actuals) || || |
|Raw Materials & Components || |
|Store & Spares || |
|Capital Goods || |
|Expenditure in Foreign Currency || || |
|(Actuals) || || |
|Foreign Travel || |
|Franchisee Fees || |
|Store Opening Fees || |
|Total Outflow || |
Directors Responsibility Statement
Your Directors state that: a) in the preparation of the annualaccounts the applicable accounting standards had been followed along with properexplanation relating to material departures; b) they have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the Financial Year and of the profit of the Company for that period;c) they have had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; d)they have prepared the annual accounts on a going concern basis; e) they have laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively; and Based on the framework ofinternal financial controls including the financial reporting and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and the reviews performed by the management the Board is of theopinion that the Company's internal financial controls are adequate and effectiveduring the FY 2018. f) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Other Statutory Disclosures
Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review: a) No deposits have been accepted by the Company during the year fromthe public. The Company had no outstanding unpaid or unclaimed public deposits at thebegining and end of financial year 2017-18. b) No equity shares were issued withdifferential rights as to dividend voting or otherwise. c) Issue of shares (includingsweat equity shares) to employees of the Company under any Scheme save and except ESOPSchemes referred to in this Report. d) The Wholetime Director of the Company doesn'treceive any remuneration or commission from its subsidiary Company. e) No significant ormaterial orders were passed by the Regulators/Courts/Tribunals which impact the goingconcern status and Company's operations in future. The Company has complied with theapplicable Secretarial Standards on Meetings of the Board of Directors and on
General Meetings issued by the Institute of Company Secretaries ofIndia.
Your Directors take this opportunity to thank and acknowledge withgratitude the cooperation and assistance received from Domino's InternationalDunkin' Donuts International Government and Regulatory Authorities BusinessPartners Bankers Members and other Stakeholders. Also the Board places on record itsappreciation for the enthusiastic co-operation hard work dedication and commitment ofthe employees at all levels. Your Directors would also like to appreciate the confidenceand loyalty displayed by the guests whom the Company always strive to serve better.
For and on behalf of the Board of Directors
Shyam S. Bhartia Hari S. Bhartia
Chairman & Director Co-Chairman & Director DIN No. 00010484 DINNo. 00010499 Place: Noida Date: May 08 2018 (Figures have been rounded off for thepurpose of reporting)