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Megastar Foods Ltd.

BSE: 541352 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE00EM01016
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NSE 05:30 | 01 Jan Megastar Foods Ltd
OPEN 73.00
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VOLUME 4000
52-Week high 89.95
52-Week low 37.40
P/E 36.42
Mkt Cap.(Rs cr) 89
Buy Price 72.00
Buy Qty 2000.00
Sell Price 90.00
Sell Qty 2000.00
OPEN 73.00
CLOSE 89.95
VOLUME 4000
52-Week high 89.95
52-Week low 37.40
P/E 36.42
Mkt Cap.(Rs cr) 89
Buy Price 72.00
Buy Qty 2000.00
Sell Price 90.00
Sell Qty 2000.00

Megastar Foods Ltd. (MEGASTARFOODS) - Director Report

Company director report

The Directors are pleased to present the 7th Annual Report on the businessand operations of the Company together with the Audited Accounts for the financial yearended March 31 2018.

GENERAL OUTLOOK OF INDUSTRY AND ECONOMY

Our Company is having state of the art modern machinery at its wheat processing plantin Punjab India with an installed capacity of 81000 MT per year. It has been ourconstant endeavour at all the levels to ensure processing of wheat with qualityundertaking testing and exploring new possibilities by our team of highly skilled people.It has been our hallmark in our organization to strictly follow the Good ManufacturingPractices (GMP) Good Laboratory Practices (GLP) to ensure the high standards of foodsafety quality & hygiene. At present we are catering primarily to MNC's in India andalso exporting some of our products to United Nations Organization Europe United States& Middle East.

Our company's main aim is to maintain and deepen relationships with our customers towhich we can serve successfully by providing them a point of difference adding value andultimately providing profitable growth for both parties. Our customers are supported by ahighly skilled enthusiastic can-do culture team throughout the whole business. Ourendeavour is to maintain an efficiently sound business in order to provide a securedfuture to our fellow employees while stressing on the continual improvement of our highlyranked products for a constantly enhanced customer satisfaction.

For the financial year ended on March 31 2018 the company has earned a net profit ofRs. 130.49 Lacs as compared to the net profit of Rs. 104.50 Lacs for the previous yearended on March 31 2017.

FINANCIAL PERFORMANCE

The financial position of the company for the financial year ended on March 31 2018 issummarised below:

2017-18 2016-17
Revenue from Operations 10294.06 9768.59
Other Income 4.36 7.66
Total Revenue 10298.42 9776.25
Profit Before Tax Depreciation and Finance Cost and extraordinary items 498.97 434.64
Finance Cost (266.34) (233.45)
Depreciation and Amortization expenses (86.59) (71.75)
Prior period expenses 0.00 (1.07)
Profit before Tax 146.04 128.37
Tax (15.55) (23.87)
Profit After Tax 130.49 104.50
Earning Per Share
Basic 2.16 1.75
Diluted 2.16 1.75

OPERATIONS

The company's operations are managed by a highly qualified and dedicated team ofprofessionals. Under the abled guidance of the professional team Company successfullymaintained its operation amidst disruptions caused by the implementation of revolutionaryeconomic changes such as GST. It is pertinent to inform until the month of November 2017there was certain lack of clarity about the taxability of branded and non-branded productas there was an ambiguity in the definition of branded and non-branded products whichhampered the sales of the Company.

Despite the tough challenges the revenue from Sales for the Company increased from Rs.9768.59 lakh in the previous year to Rs. 10294.06 lakh during the financial year ended onMarch 31 2018.

DIVIDEND

Your Directors have decided to plough back the earnings in the growth of business andfor this reason have decided to not to recommend any Dividend for the year under review.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report for the year under review which also coversthe performance of the company is presented in a separate section and forms a part of thisAnnual Report.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance andis in compliance with the Corporate Governance Regulations as laid out in the Securities& Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. Although the shares of the company were listed on May 24 2018 i.e.after the closure of the financial year 2017-18 a report on Corporate Governance has beensubmitted by the company as a part of this report.

INDUSTRIAL RELATIONS

Industrial relations and work atmosphere remained cordial throughout the year withsustained communication and engagement with workforce through various forums.

CREDIT RATING

The Company enjoys a credit rating provided by CRISIL BB/Stable which is assured to besubstantially improved on the basis of current results.

SAFETY HEALTH AND ENVIRONMENT

The Company continues to demonstrate strong commitment to safety health andenvironment which have been adopted as core organizational values. The Company assuressafety and facilities in accordance with statutory and regulatory requirements. Employeesare continuously made aware of hazards / risks associated with their job and theirknowledge and skills are updated through requisite training to meet any emergency. Medicaland occupational check-ups of employees and eco-friendly activities are promoted. TheCompany does not produce any kind of hazardous waste.

FINANCE

Increase in sales implementation of the GST and elongated working capital cycle duringthe year are the major causes for an increased finance cost during the year. The financecost for the year ended on March 31 2018 was Rs. 266.34 lakhs. The Company managed toprocure enough lines of credit to ensure a smooth flow of operations. The free reserve ofthe Company as on 31st March 2018 decreased from Rs. 143.05 lakhs to 137.93lakhs.

During the financial year ended on March 31 2018 an amount of Rs. 125.37 lakhs wasutilised out of the reserves towards the issue of bonus shares of the Company.

GOODS AND SERVICE TAX

Goods and Service Tax (GST) Act came into effect from July 1 2017 through theimplementation of One Hundred and First Amendment of the Constitution of India. The taxreplaced existing multiple cascading taxes levied by the Central and State Governments.

Your Company has successfully implemented and migrated to GST followed by the changesacross various departments/operations of the Company.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As at the end of the financial year 2017-18 the company had 3 directors on the Board

1. Mr. Vikas Goel Managing Director

2. Mr. Vikas Gupta Director

3. Mr. Avinash Goel Director

Mr. Avinash Goel resigned from the office of Director of the company w.e.f. 31.03.2018and Mr. Mudit Goyal was appointed as an Additional Director of the company w.e.f.31.03.2018.

Mr. Vijay Sharma was appointed as the Chief Financial Officer w.e.f. 31.03.2018 and Ms.Neharika Sodhi was appointed as the Company Secretary of the company w.e.f. 27.11.2017.Both of them hold the positions of Key Managerial Personnel of the company as per Section203 of the Companies Act 2013.

Further after the end of the financial year under review Mr. Prabhat Kumar Mr. AmitMittal and Ms. Savita Bansal were appointed as Non-Executive Independent Directors of theCompany on April 04 2018. The independent Directors are entitled to hold office for aterm of 5 years and are not liable to retire by rotation.

At the ensuing 7th Annual General Meeting of the company Mr. Vikas Gupta isliable to retire by rotation and being eligible offers himself for re-appointment. TheBoard recommends his re-appointment at the ensuing Annual General Meeting.

None of the Directors of your Company is disqualified under the provisions of Section164(2)(a) and (b) of the Companies Act 2013. During the period under review none of theNon- Executive Directors of the Company had any pecuniary relationship or transactionswith the Company. Further none of the Non-Executive Directors of the company have anyshareholding in the company.

The details of the Directors being recommended for appointment / re-appointment arecontained in the Notice convening the forthcoming Annual General Meeting of the Company.

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Companies Act 2013 read with the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 hereinafter referredto as ‘Listing Regulations' and based on the recommendations of its Nomination andRemuneration Committee the Board has adopted a Nomination and Remuneration Policy whichis attached as Annexure-A.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has no Subsidiary Joint Venture or Associate Company.

PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company during the financialyear 2017-18 with related parties as defined under Section 188 of the Companies Act2013 and rules made there under were in the ordinary course of business and on arm'slength basis. Further no material related party transactions were entered during the

Financial Year under review by your Company.

Accordingly disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 is notrequired.

RELATED PARTY TRANSACTION POLICY

As per the applicable provisions of Listing Regulations to the company subsequent tothe listing of its shares the Company has adopted a policy to deal with related partytransactions as approved by the Board of Directors. The policy is available on thecompany's website www.megastarfoods.com at the weblinkhttp://megastarfoods.com/assets/pdf/Policy-on-related-party-transactions.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management andAdministration) Rules 2014 the extract of Annual Return in Form MGT-9 is attached as Annexure-B.

MEETINGS OF THE BOARD

During the financial year 2017-18 the Board of Directors met fourteen (14) times viz.on 4th April 2017 27th April 2017 2nd May 2017 1stJune 2017 28th July 2017 21st September 2017 25thSeptember 2017 26th October 2017 14th December 2017 15thJanuary 2018 20th January 2018 17th February 2018 23th March2018 31st March 2018 in accordance with the provisions of the Companies Act2013 and rules made there under.

PARTICULARS OF LOANS/ ADVANCES/ INVESTMENTS MADE DURING THE FINANCIAL YEAR

Particulars of loans guarantees investments and securities provided during thefinancial year under review covered under the provisions of Section 186 of the CompaniesAct 2013 have been provided in the Financial Statements which forms part of the AnnualReport. (Please refer Note Nos. 5 9 of the Financial Statements)

RESERVES

Entire amount of Net Profit of Rs. 130.49 Lakhs has been transferred to Profit and LossSurplus account which appears under the head "Reserves and Surplus." No amounthas been transferred to any other reserves.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANYFROM THE END OF FINANCIAL YEAR AND TILL THE DATE OF THIS REPORT

After the closure of the financial year on March 31 2018 the equity shares of thecompany were successfully listed on the SME Exchange of BSE Limited w.e.f May 24 2018.

Further except as disclosed elsewhere in this Board's Report no material changes andcommitments which could affect the Company's financial position have occurred since theclose of the financial year i.e. March 31 2018 till the date of this Board's Report.Further it is hereby confirmed that there has been no change in the nature of business ofthe Company during the financial year 2017-18.

SUSTAINABILITY INITIATIVE

Your Company is conscious of its responsibility towards preservation of naturalresources and continuously takes initiatives to reduce consumption of electricity andwater.

RISK MANAGEMENT

The primary objective of risk management is to protect the Company against risks to thevalue of the business its capital and its continuity. In order to achieve the objectiveand for better governance the Company has adopted a formal Risk Management Policy. ThePolicy sets out key risk areas - financial risks (including risk to assets) legislativeand regulatory risks environmental risks (including natural disasters) operational risks(markets production technology etc.) risks relating to employment and manpower andindividual large transactional risks.

The Chairman-cum-Managing Director of the company identifies and proposes action inrespect of all risks through his Management team as and when any are perceived or foreseenor inherent in operations; analyses these and then recommend it to Audit Committee forits review and further mitigation measures.

BOARD EVALUATION

The provisions of the Companies Act 2013 and the Listing Regulations in respect ofthe performance evaluation of the Individual Directors Committees and the Board as awhole became applicable to the company subsequent to its listing on May 24 2018 i.e.after the closure of the financial year.

The necessary measure towards the performance evaluation shall be adopted by thecompany for the on-going financial year.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the year.

SHARE CAPITAL

During the financial year ended on March 31 2018 the authorised share capital of thecompany was increased form Rs. 6.00 Crores to Rs. 15.00 crores with the approval of themembers. The company has issued and allotted 1253700 fully paid up equity shares of Rs.10/- each on Bonus Issue basis during the financial year under review.

As at the end of the financial year 2017-18 the authorised share capital of thecompany was Rs. 150000000/- comprising of 15000000 equity shares of Rs. 10/- eachand the issued subscribed and paid up shares capital amounted to Rs. 99037000/-comprising of 9903700 equity shares of Rs. 10/- each.

Further during the financial year 207-18 there were no instances of right issue ofshares issue of shares with differential voting rights private placement/ preferentialissue of shares Sweat Equity Issue Employee Stock Option or buy back of shares.

DEPOSITS

The Company has neither accepted nor renewed any fixed deposits from the public or theMembers within the meaning of Section 73 of the Companies Act 2013 read with Chapter Vof the Companies Act 2013 and the Companies Acceptance of Deposits) Rules 2014 duringthe financial year 2017-18 and as such no amount of principal or interest on depositsfrom public or the Members was outstanding as of the Balance Sheet date.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL

There are no significant and/or material orders passed by the Regulator(s) or Court(s)or Tribunal(s) impacting the going concern status of the Company and its businessoperations in near future.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The provision of Listing Regulations regarding the development of a FamiliarisationProgramme for the Independent Directors became applicable to the company after the closureof the financial year 2017-18.

The company has already established a Familiarisation Programme for IndependentDirectors in respect of their roles rights & responsibilities nature of the industryin which Company operates business model of the Company and related matters. The same isavailable on the website of the company www.megastarfoods.com.

SECRETARIAL AUDIT

The provisions of Section 204 of the Companies Act 2013 regarding Secretarial Auditwere not applicable to the company during the financial year ended on March 31 2018.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS & OUTGO

The required information on conservation of energy technology absorption and foreignexchange earnings and outgo as stipulated in the Companies Act 2013 is attached as Annexure-C.

HUMAN RESOURCES AND EMPLOYEE RELATIONS

There is an on-going emphasis on building a progressive Human Resources culture withinthe Organisation. Structured initiatives to nurture talent and create a workingenvironment that fosters motivation team-work and result orientation continue to beaddressed. Productivity level continued to be subject to continuous monitoring. Employeestrength as on March 31 2018 was 71 as compared to 54 in the previous year.

DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate and commensurate with the size scale andcomplexity of its operation. The internal controls are tested for adequacy efficiency andeffectiveness through audits by the in- house internal audit department and theobservations corrective and preventative actions are reviewed by the management and Auditcommittee of the Board of Directors.

During financial year under review no material or serious observation has beenreceived from the Internal Auditors of the Company for inadequacy or ineffectiveness ofsuch controls.

VIGIL MECHANISM POLICY

The Company has in place a Vigil Mechanism/Whistle Blower Policy in terms ofprovisions of Section 178(9) of the Companies Act 2013 read with Rule 7 of the Companies(Meetings of Board and its powers) Rules 2014 which was approved by the Board ofDirectors on 4th April 2018. The Company's personnel have direct access to thechairman of the Audit Committee to report concerns about unethical behaviour (actual orsuspected) frauds and other grievances. No personnel of the Company have been deniedaccess to the Audit Committee. Adequate safeguards are being provided againstvictimization of whistle blowers availing of such mechanism.

Whistle Blower Policy of the Company is hosted on the website of the Company at theweblink http://megastarfoods.com/vigil-mechanism.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has zero tolerance policy in case of sexual harassment at workplace and iscommitted to provide a healthy environment to each and every employee of the Company. TheCompany has in place ‘Policy for

Prevention and Redressal of Sexual Harassment' in line with the requirements ofSexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013 (hereinafter referred "as the said act") and Rules made there under. As perthe provisions of Section 4 of the said Act the Board of Directors has constituted theInternal

Complaints Committee (‘ICC') at the Registered Office Works to deal with theComplaints received by the Company pertaining to gender discrimination and sexualharassment at workplace.

Further as per the provisions of Section 21 & 22 of the said Act the Report onthe details of the number of cases filed under Sexual Harassment and their disposal forthe financial year under review is as under:

Sr. No. No. of cases pending as on the beginning of the financial year under review No. of complaints filed during the financial year under review No. of cases pending as on the end of the financial year under review
1. NIL NIL NIL

SECRETARIAL STANDARDS

The Company has duly complied with the applicable Secretarial Standards on Meeting ofBoard of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of CompanySecretaries of India (ICSI).

DIRECTOR'S RESPONSIBILITY STATEMENT

In terms of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 theBoard of Directors hereby confirms that: a. In the preparation of the annual accounts theapplicable accounting standards have been followed along with proper explanation relatingto material departures; b. Such accounting policies have been selected and appliedconsistently and the Directors have made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atMarch 31st 2018 and of the Profit and Loss of the Company for the year endedon that date; c. Proper and sufficient care has been taken 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.The annual accounts of the Company have been prepared on a going concern basis;

e. Internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; f.Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

ALTERATION OF MEMORANDUM OF ASSOCIATION AND ADOPTION OF NEW ARTICLES OF ASSOCIATION

During the financial year under review the company has carried out amendments to theMemorandum of Association and has also adopted an Altered Set of Articles of Associationof the company. The said alterations and amendments were carried out with the approval ofthe members of the company and in compliance with the applicable provisions of companiesAct 2013.

COMMITTEES OF BOARD OF DIRECTORS

1. Audit Committee

The company has constituted an Audit Committee ("Audit Committee") vide BoardResolution dated April 04 2018 as per the applicable provisions of the Section 177 ofthe Companies Act 2013 and also to comply with

Listing Regulations applicable upon listing of the Company's Equity shares on SMEplatform of BSE. The composition of the Audit Committee is as under:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the Audit Committee.Since the committee was constitutes after the closure of the financial year no meeting ofthe committee was held during the financial year ended March 31 2018. The scope andfunction of the Audit Committee and its terms of reference shall include the following:

A. Tenure: The Audit Committee shall continue to be in function as a committee ofthe Board until otherwise resolved by the Board to carry out the functions of the AuditCommittee as approved by the Board.

B. Meetings of the Committee: The committee shall meet at least four times in ayear and not more than 120 days shall elapse between any two meetings. The quorum for themeeting shall be either two members or one third of the members of the committeewhichever is higher but there shall be presence of minimum two Independent members at eachmeeting.

C. Role and Powers: The Role of Audit Committee together with its powers as Part Cof Schedule II of SEBI Listing Regulation 2015 and Companies Act 2013 shall be as under:

1. Oversight of the listed entity's financial reporting process and the disclosure ofits financial information to ensure that the financial statement is correct sufficientand credible;

2. Recommendation for appointment remuneration and terms of appointment of auditors ofthe listed entity;

3. Approval of payment to statutory auditors for any other services rendered by thestatutory auditors;

4. Reviewing with the management the annual financial statements and auditor's reportthereon before submission to the board for approval;

5. Reviewing with the management the half yearly financial statements beforesubmission to the board for approval with particular reference to;

matters required to be included in the director's responsibility statement to beincluded in the board's report in terms of clause (c) of sub-section (3) of Section 134 ofthe Companies Act 2013;

changes if any in accounting policies and practices and reasons for the same;

major accounting entries involving estimates based on the exercise of judgment bymanagement; significant adjustments made in the financial statements arising out of auditfindings; compliance with listing and other legal requirements relating to financialstatements; disclosure of any related party transactions; modified opinion(s) in the draftaudit report;

6. Reviewing with the management the statement of uses / application of funds raisedthrough an issue (public issue rights issue preferential issue etc.) the statement offunds utilized for purposes other than those stated in the offer document / prospectus /notice and the report submitted by the monitoring agency monitoring the utilization ofproceeds of a public or rights issue and making appropriate recommendations to the boardto take up steps in this matter;

7. Reviewing and monitoring the auditor's independence and performance andeffectiveness of audit process;

8. Approval or any subsequent modification of transactions of the listed entity withrelated parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the listed entity wherever it is necessary;11. Evaluation of internal financial controls and risk management systems;

12. Reviewing with the management performance of statutory and internal auditorsadequacy of the internal control systems; 13. Reviewing the adequacy of internal auditfunction if any including the structure of the internal audit department staffing andseniority of the official heading the department reporting structure coverage andfrequency of internal audit; 14. Discussion with internal auditors of any significantfindings and follow up there on;

15. The Audit Committee may call for the comments of the auditors about internalcontrol systems the scope of audit including the observations of the auditors and reviewof financial statement before their submission to the Board and may also discuss anyrelated issues with the internal and statutory auditors and the management of the company.16. Discussing with the statutory auditors before the audit commences about the natureand scope of audit as well as post-audit discussion to ascertain any area of concern; 17.Reviewing the findings of any internal investigations by the internal auditors intomatters where there is suspected fraud or irregularity or a failure of internal controlsystems of a material nature and reporting the matter to the board; 18. Discussion withstatutory auditors before the audit commences about the nature and scope of audit as wellas post-audit discussion to ascertain any area of concern; 19. The Audit Committee shallhave authority to investigate into any matter in relation to the items specified insection 177(4) of Companies Act 2013 or referred to it by the Board. 20. To look into thereasons for substantial defaults in the payment to the depositors debenture holdersshareholders (in case of non-payment of declared dividends) and creditors; 21. To reviewthe functioning of the whistle blower mechanism;

22. Approving the appointment of the Chief Financial Officer (i.e. the whole timefinance director or any other person heading the finance function) after assessing thequalifications experience and background etc. of the candidate; and; 23. Auditcommittee shall oversee the vigil mechanism.

24. Audit Committee will facilitate KMP/auditor(s) of the Company to be heard in itsmeetings.

25. Carrying out any other function as is mentioned in the terms of reference of theaudit committee or containing into SEBI Listing Regulations 2015.

Further the Audit Committee shall mandatorily review the following:

a) Management discussion and analysis of financial condition and results of operations;b) Statement of significant related party transactions (as defined by the auditcommittee)submitted by management; c) Management letters / letters of internal controlweaknesses issued by the statutory auditors; d) Internal audit reports relating tointernal control weaknesses; and e) The appointment removal and terms of remuneration ofthe chief internal auditor shall be subject to review by the audit committee. f) Statementof deviations: Quarterly statement of deviation(s) including report of monitoring agencyif applicable submitted to stock exchange(s) in terms of Regulation 32(1). Annualstatement of funds utilized for purposes other than those stated in the offerdocument/prospectus/notice in terms of Regulation 32(7).

2. Nomination And Remuneration Committee

The Company has constituted the Nomination and Remuneration Committee as per Regulation19 of Listing Regulation vide Resolution dated April 04 2018. The Nomination andRemuneration Committee comprise the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mrs. Savita Bansal Member Non-Executive Independent Director

The Company Secretary of our Company shall act as a Secretary to the Nomination andRemuneration Committee. Since the committee was constitutes after the closure of thefinancial year no meeting of the committee was held during the financial year ended March31 2018. The scope and function of the Committee and its terms of reference shall includethe following:

A. Tenure: The Nomination and Remuneration Committee shall continue to be infunction as a committee of the Board until otherwise resolved by the Board.

B. Meetings: The committee shall meet as and when the need arises for review ofManagerial Remuneration. The quorum for the meeting shall be one third of the totalstrength of the committee or two members whichever is higher. The Chairperson of thenomination and remuneration committee may be present at the annual general meeting toanswer the shareholders queries; however it shall be up to the chairperson to decide whoshall answer the queries.

C. Role of Terms of Reference:

Identify persons who are qualified to become directors and may be appointed in seniormanagement in accordance with the criteria laid down recommend to the Board theirappointment and removal and shall carry out evaluation of every director's performance;

Formulate the criteria for determining the qualifications positive attributes andindependence of a director and recommend to the Board a policy relating to theremuneration for directors KMPs and other employees;

Formulation of criteria for evaluation of performance of independent directors and theboard of directors; Devising a policy on diversity of board of directors; Whether toextend or continue the term of appointment of the independent director on the basis ofthe report of performance evaluation of independent directors;

Determine our Company's policy on specific remuneration package for the ManagingDirector / Executive

Director including pension rights;

Decide the salary allowances perquisites bonuses notice period severance fees andincrement of Executive Directors;

Define and implement the Performance Linked Incentive Scheme (including ESOP of theCompany) and evaluate the performance and determine the amount of incentive of theExecutive Directors for that purpose. Decide the amount of Commission payable to the Wholetime Directors;

Review and suggest revision of the total remuneration package of the ExecutiveDirectors keeping in view the performance of the Company standards prevailing in theindustry statutory guidelines etc; and To formulate and administer the Employee StockOption Scheme.

3. Stakeholders Relationship Committee

The Company has formed the Stakeholders Relationship Committee as per Regulation 20 ofListing Regulation vide Resolution dated April 04 2018. The constituted StakeholdersRelationship Committee comprises the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the StakeholdersRelationship Committee Since the committee was constitutes after the closure of thefinancial year no meeting of the committee was held during the financial year ended March31 2018. The scope and function of the Stakeholders Relationship Committee and its termsof reference shall include the following:

A. Tenure: The Stakeholders Relationship Committee shall continue to be in functionas a committee of the

Board until otherwise resolved by the Board to carry out the functions of theStakeholders Relationship Committee as approved by the Board.

B. Meetings: The Stakeholders Relationship Committee shall meet at least four timesa year with maximum interval of four months between two meetings and shall report to theBoard on a quarterly basis regarding the status of redressal of complaints received fromthe shareholders of the Company. The quorum shall be two members present.

C. Terms of Reference: Redressal of shareholders' and investors' complaintsincluding and in respect of:

Allotment transfer of shares including transmission splitting of shares changingjoint holding into single holding and vice versa issue of duplicate shares in lieu ofthose torn destroyed lost or defaced or where the space at back for recording transfershave been fully utilized. Issue of duplicate certificates and new certificates onsplit/consolidation/renewal etc.;

Review the process and mechanism of redressal of Shareholders' /Investor's grievanceand suggest measures of improving the system of redressal of Shareholders' /Investors'grievances.

Non-receipt of share certificate(s) non-receipt of declared dividends non-receipt ofinterest/dividend warrants non-receipt of annual report and any othergrievance/complaints with Company or any officer of the Company arising out in dischargeof his duties. Oversee the performance of the Registrar & Share Transfer Agent andalso review and take note of complaints directly received and resolved them. Oversee theimplementation and compliance of the Code of Conduct adopted by the Company for preventionof Insider Trading for Listed Companies as specified in the Securities & ExchangeBoard of India (Prohibition of insider Trading) Regulations 2015 as amended from time totime. Any other power specifically assigned by the Board of Directors of the Company fromtime to time by way of resolution passed by it in a duly conducted Meeting and Carryingout any other function contained in the equity listing agreements as and when amended fromtime to time.

4. Corporate Social Responsibility Committee

The Company has formed Corporate Social Responsibility (CSR) Committee pursuant to theprovisions of Section 135 of the Companies Act 2013 vide Resolution dated April 042018. Corporate Social Responsibility Committee comprising the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive-Independent Director
Mr. Amit Mittal Member Non-Executive-Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the Corporate SocialResponsibility Committee. Since the committee was constitutes after the closure of thefinancial year no meeting of the committee was held during the financial year ended March31 2018. The scope and function of the Committee and its terms of reference shall includethe following:

a. To formulate and recommend to the Board a CSR policy which shall indicate theactivities to be undertaken by the Company as per the Companies Act 2013; b. Toreview and recommend the amount of expenditure to be incurred on the activities to beundertaken by the company; c. To monitor the CSR policy of the Company from time totime; d. Any other matter as the CSR Committee may deem appropriate after approvalof the Board of Directors or as may be directed by the Board of Directors from time totime.

The provisions of Section 135 of the Companies Act 2013 regarding the Corporate SocialResponsibility Policy are not applicable to the Company as Company has formed the CSRCommittee on voluntary basis.

STATUTORY AUDITOR AND THEIR REPORT

M/s Avnish Sharma & Associates (Firm Regn. No.009398N) Chartered AccountantsChandigarh were appointed as Statutory Auditors of the Company at the 3rdAnnual General Meeting held on 30th September 2014 for a term of fiveconsecutive years.

The Auditors' Report being self-explanatory requires no comments from the Directors.Further there are no reservations qualifications adverse remarks or Modified opinion inthe Audit Reports issued by them in respect of Financial Statements of the Company for theFinancial Year 2017-18.

HUMAN RESOURCES DEVELOPMENT

It is a proud statement in itself that your Company continues to be an Employer ofchoice for a host of workforce.

Value based HR programs unleashed by the Company from time to time have enabled thecompany's HR team to contribute substantially to the overall growth of the Company. Inorder to keep pace with the ever evolving demands of the existing business and the gamutof activities in Digital space HR has been placing tremendous focus on capabilitybuilding in newer areas with an objective to predict diagnose and take actions that willimprove business performance. Further discussion on this subject is included in theManagement Discussion and Analysis Report forming part of this report.

PARTICULARS OF EMPLOYEES

The disclosure as per Section 197 of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is notapplicable to the company as the shares of the company were listed after the closure ofthe financial year under review.

REPORTING OF FRAUDS

There has been no frauds reported by the Auditors under sub section (12) of Section143 of the Companies Act 2013(including amendments) during the financial year underreview to the Board of Directors and hence as such there is nothing to report by theBoard under Section 134(3)(ca) of the Companies Act 2013.

COST AUDIT

As per the provisions of Section 148 read with the Cost Audit Rules the provisionsregarding Cost Audit is not applicable to the Company.

ACKNOWLEDGEMENT

Employee relations throughout the Company were harmonious. The Board wishes to place onrecord its appreciation to all employees in the Company for their sustained efforts andimmense contribution to the good levels of performance and growth that the Company hasachieved during the financial year under review.

Your Directors also place on record their sincere thanks and appreciation for thecontinuing support and assistance received from the financial institutions banksGovernment as well as non government authorities customers vendors and members duringthe financial year under review.

Date: 02.08.2018
Place: Chandigarh
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
MEGASTAR FOODS LIMITED
SD/- SD/-
Vikas Goel Vikas Gupta
Chairman-cum-Managing Director Whole Time Director
(DIN: 05122585) (DIN: 05123386)