Your Directors hereby present their 28th Annual Report together with theAudited Accounts of Modern Dairies Limited for the year ended 31st March 2020.
|FINANCIALS || |
Rs. in Lacs
| ||Year Ended ||Year Ended |
| ||31.03.2020 ||31.03.2019 |
|Net Sales and other Income ||76603 ||56069 |
|Operating Profit/Loss ||912 ||1153 |
|Finance Cost ||12 ||20 |
|Cash Profit/Loss ||900 ||1133 |
|Depreciation & Amortisation ||551 ||527 |
|Profit/Loss for the year ||349 ||606 |
During the year under review the Company achieved Net Sales and Other Income of Rs.76603 lacs as against Rs. 56069 lacs in the previous year and resulting into netprofit of Rs. 349 lacs against the net profit of Rs. 606 lacs in the previous year.
To achieve the Company's focus on sale of Fresh Dairy Products like Milk in SachetsFermented Dairy Products i.e. Dahi and Chach Cheese and Fresh Paneer in Modern Dairiesbrand your Company is putting in efforts to increase its share in the market. During thisyear with efforts and consistent quality and through expanded distribution the growthon sales has been encouraging.
This year the prices of milk have been high as compared to last year. The entireincrease in the price of milk could not be passed on to the customers. It is a matter ofsatisfaction to note that the Company's products are well accepted. The sales growth isencouraging and the company hopes to improve its performance in the times to come.
The company is still facing the uneconomical situation for manufacture of exportdependent product i.e. Casein which was non operational most of the time this year beingunviable due to low international prices of Casein.
The year has started with the outbreak of pandemic COVID-19. The first half of currentfiscal has posed uphill task for the economy in wake of COVID-19 and caused significantdisruption due to lockdown imposed. The Hotels restaurants Caterers and sweet shopsremained closed during lockdown.
Even as the lockdown was eased the volumes from this segment are far below normal. Asa result of this company's sales of Cheese and Pure Ghee were affected adversely. Thecurrent half year sale is Rs.35897.50 Lacs against last half yearly sales wasRs.36337.45 Lacs.
As the members are aware that the Company had filed a Special Leave Petition before theHon'ble Supreme Court against the decision dated 28th May 2010 of Punjab & HaryanaHigh Court with regard to the levy of milk cess under the Haryana Murrah Buffalo and otherAnimal Breed Act 2001. The said SLP was filed by the Company in the year 2010 andadmitted in the Supreme Court in 2012. The Hon'ble Supreme Court had granted interim stayupon payment of 50% of milk cess levied and demanded by Govt. of Haryana in favour of theCompany. In spite of the stay granted the Govt. of Haryana has been sending demand noticeto the Company. Demand notice at year end stands at Rs. 221.87 Crores on account of milkcess along with interest from the Company. The matter is pending before the Hon'bleSupreme Court of India.
PLEDGE OF PROMOTER SHAREHOLDING
The entire shareholding of promoter and promoter group aggregating to 10654779 sharesbeing 45.69 % of the entire share capital of the Company are pledged in favour of PunjabNational Bank and other consortium members.
STATUS OF COMPANY'S ACCOUNTS WITH LENDERS
The Company's accounts with lenders have been NPA for quite some time and State Bank ofIndia has already show cased its portion of loan in April 2018 and the said loan has beentaken over by Edelweiss Asset Reconstruction Company.
Punjab National Bank vide its letter dated 26.02.2019 had sanctioned an One TimeSettlement to the company for an amount of Rs.45.84 Crores for Fund Based and Rs.15.76Lacs for Non-Fund based. Against this Rs. 6 Crore was paid by the Company and hassubmitted its proposal for extension of the repayment period of the remaining amount. Thematter is pending before the Hon'ble High Court. Further the company is also taking up theissue with Canara Bank to find out a resolution in the account.
QUALITY FOOD SAFETY & ENVIRONMENT STANDARDS
The Company has impeccable record of following Good Management Practices (GMP) and GoodHygienic Pratices(GHP) . The Company's quality Management System was certified more than20 years ago by DNVGL Netherlands. The Company operations have the distinction ofcertification for ISO 9001:2015 ISO 14001:2015 Food Safety systems certification i.e.FSSC22000 V4.1.
Most of leading Multinational Food Companies in India have approved our operations assuitable for supplies of company's product to them.
The paid up equity capital as on March 31 2020 is Rs. 233589000/-.
In view of requirements of regular funds for operations your directors are unable torecommend any dividend for the Financial Year ended on March 312020.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) (Amendment) Regulations 2018 for continuation of aNon-Executive Director beyond the age of seventy five years consent of members by way ofSpecial Resolution is required. Mr. Bhupendra Nath Mathur Non-Executive IndependentDirector of the Company had attained the age of 75 years and had intimated his inabilityto continue as an Independent Director of the Company for his next tenure which was due on24th September 2019 due to his other interests and commitments. The boardplaced on record its appreciation for the valuable contribution and the services renderedby him during his tenure as an Independent Director.
Mr. Satish Kumar Kapoor (DIN: 00009122) was reappointed for second term of threeconsecutive years w.e.f. 24th September 2019 as a non-executive IndependentDirector of the Company.
Mr. Avtar Krishan Vashisht (DIN: 03323142) was re-appointed for second term of threeconsecutive years w.e.f. 24th September 2019 as a non-executive IndependentDirector of the Company.
In pursuance of Section 152 of the Companies Act 2013 at-least two-thirds of theDirectors (excluding Independent Directors) shall be subject to retirement by rotation.One-third of such Directors must retire from office at each AGM and a retiring director iseligible for re-appointment. Accordingly Mr. Ashwani Kumar Aggarwal Executive Director(DIN: 00486430) is liable to retire by rotation at this Annual General Meeting and beingeligible offers himself to be reappointed at this AGM.
Mr. Krishan Kumar Goyal (DIN: 00482035) Chairman & Managing Director of theCompany to be reappointed for a further period of five years w.e.f. 1st April2020 in terms of the provisions of Companies Act 2013.
Mr. Ashwani Kumar Aggarwal (DIN: 00486430) Executive Director of the Company to bere-appointed for a further period of three years w.e.f. 1st April 2020 interms of the provisions of Companies Act 2013.
The following are the Key Managerial Personnel of your Company in accordance with theprovisions of Section 2(51) 203 of the Companies Act 2013 read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014:
1. Mr. Krishan Kumar Goyal (Chairman and Managing Director)
2. Mr. Ashwani Kumar Aggarwal (Whole time Director)
3. Mr. Mukesh Sehgal (Chief Financial Officer)
4. Ms. Shruti Joshi (Company Secretary)
During the year under review five meetings of the Board of Directors were held. Thedetails of the meetings of the Board are furnished in the Corporate Governance Reportwhich is attached to this Report.
ANNUAL EVALUATION OF THE BOARD ITS COMMITTEES AND INDIVIDUAL DIRECTORS
In pursuance of Section 134 (3) (p) of the Companies Act 2013 read with rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Board of Directors carried out the performance evaluation of the Board as awhole its Committees and individual directors. The evaluation was carried out usingindividual questionnaires covering composition of Board conduct as per Company values& beliefs contribution towards development of strategy & business plan riskmanagement receipt of regular inputs and information codes & policies forstrengthening governance functioning performance & structure of Board Committeesskill set knowledge & expertise of Directors preparation & contribution at Boardmeetings leadership etc.
As part of the evaluation process the performance of Non Independent Directors theChairman and the Board was conducted by the Independent Directors. The performanceevaluation of the respective Committees and that of Independent and Non IndependentDirectors was done by the Board excluding the Director being evaluated.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 2013 read with the rules madethereunder and Regulation 25 (8) of the SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 that they meet the criteria of independenceas laid out in Subsection (6) of Section 149 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
BOARD DIVERSITY AND REMUNERATION POLICY
The Company has a policy for formation of the Board to have Executive Directors andIndependent Directors of diverse background to maintain the independence of the Board. Ason 31st March 2020 the Board consists of five members out of which two areExecutive Directors and three are independent directors.
The Board periodically evaluates the need for change in its composition and size.
We affirm that the remuneration paid to the Directors is as per the terms approved bythe Nomination and Remuneration Committee of the Company.
With reference to the provisions of Section 136(1) of the Companies Act 2013information required under Section 197(2) read with rule 5(1) does not form part of thisreport however no employees were employed throughout the Financial Year or part thereofdrawing remuneration pursuant to the provision of 197(2) read with rule 5(2).
In pursuance of Section 177 of the Companies Act 2013 read with the rules madethereunder and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has duly constituted the Audit Committee consisting of 2Non-Executive and 1 Executive Director with the majority being Independent Directorsincluding the Chairman of the Committee.
The terms of reference of Audit Committee are as mentioned in Section 177 of theCompanies Act 2013 and part C of Schedule II of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The relevant details of Audit Committee havebeen given in the Corporate Governance Report forming part of this Annual Report.
The Audit Committee of your Company comprises of the following Directors:
1. Prof. Satish Kapoor-Chairman
2. Mr. A.K. Vashisht-Member
3. Mr. A.K. Aggarwal-Member
Further in terms of Section 177 (8) of the Act it is stated that there were no suchinstances where the Board of Directors have not accepted the recommendations of the AuditCommittee during the year 2019-20.
Pursuant to Section 139 and 142 and other applicable provisions of Companies Act 2013if any and the rules framed thereunder M/s. Aaryaa & Associates CharteredAccountants (Registration No. 015935N) were re-appointed as Statutory Auditors of theCompany at 27th Annual General Meeting for a period of three years till theconclusion of the 30th Annual General Meeting to be held in the year 2022 at aremuneration mutually agreed between the Board of Directors of the Company and theStatutory Auditors.
Pursuant to Section 148 and other applicable provisions of Companies Act 2013 if anyand the rules framed thereunderthe Board of Directors have approved the appointment andremuneration of M/s. Aggarwal Vimal & Associates as Cost Auditors of the Company toconduct the cost audit for the year 202021 on the recommendations of the Audit Committeesubject to the ratification of the remuneration by the shareholders.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with rulesmade thereunder the Board of Directors had appointed M/s. B.K. Gupta & AssociatesCompany Secretaries as Secretarial Auditor of the Company for the financial year 2019-20for conducting the Secretarial Audit as required under the provisions of Companies Act2013.
The Secretarial Audit Report issued by M/s. B.K. Gupta & Associates CompanySecretaries in Form MR-3 for the Financial Year ended 31st March 2020 isannexed herewith as Annexure A' to this report.
The Statutory Auditors of the Company M/s. Aaryaa & Associates CharteredAccountants have submitted the Auditor's Report which has observation on StandaloneFinancial Statements for the period ended March 312020.
Director's remuneration is not admissible as prescribed in Sec-197 of companies Act2013 except in accordance with the provision of Schedule V and if it is not able to complywith such provisions the prior approval of lenders is required.
The Company is not eligible to pay director remuneration for non-compliance ofconditions prescribed in Schedule V of the Companies Act 2013. During the year thecompany has given the director remuneration to Mr. Krishan Kumar Goyal (Chairman &Managing Director) amounting to Rs. 1250000 and Mr. Ashwani Kumar Aggarwal (ExecutiveDirector) amounting to Rs. 2691540.
Apart from the managerial remuneration for the year ended 31st March 2020as mentioned above the company has paid director remuneration of Rs. 11211242 till 31stMarch 2019 without complying the provisions of Schedule V of the companies Act 2013.
The company has paid Managerial Remuneration amounting to Rs.3941540/- to directorsfor which the company is yet to receive approval from the competent authority/agency.Management undertakes that in case the approval is not received from the competentauthority/agency they shall refund the remuneration paid to them by the company.Profitability of the company shall affect to the same extent.
Secretarial Auditors' Qualification in Secretarial Audit Report
1. The Company is a Active-Non Compliant Company as Chief Financial Officer is notappointed by Company.
2. The Company also not Complied with Section 197 of Companies Act 2013 in respect ofremuneration paid to Managerial Personnel of the Company.
The Company is under process to ratify this noncompliance.
The Company recognises that risk is an internal and unavoidable component of businessand is committed to managing the risk in a proactive and efficient manner. The Company hasformulated Risk Management Policy to identify and then manage threats / risks that couldhave impact on the goals and objectives of the Company.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
Your Company is committed to highest standards of ethical moral and legal businessconduct. Accordingly the Board of Directors have formulated Vigil Mechanism/WhistleBlower Policy which provides a robust framework for dealing with genuine concerns andgrievances. Your Company has an ethics hotline which can be used by employees Directorssuppliers dealers etc. to report any violations to the Code of Conduct. Specificallyemployees can raise concerns regarding any discrimination harassment victimization anyother unfair practice being adopted against them or any instances of fraud by or againstyour Company. During financial year 2019-20 no complaints were received.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
MDL (Modern Dairies Limited) has aligned its current system of internal financialcontrol with the requirement of Companies Act 2013.
MDL's internal controls commensurate with its size and nature of its operations. Thesehave been designed to provide reasonable assurance with regard to recording and providingreliable financial and operational information complying with applicable statutessafeguarding assets from unauthorized use executing transactions with properauthorization and ensuring compliance of corporate policies.
The management assessed the effectiveness of the Company's internal control overfinancial reporting (as defined in Regulation 17 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015) as of 31st March 2020. Theassessment involved selfreview and external audit.
M/s. Aaryaa & Associates Chartered Accountants the Statutory Auditors of MDL hasaudited the financial statements included in this annual report and has issued anattestation report on our internal control over financial reporting (as defined in Section143).
The Audit Committee reviews reports submitted by the management and audit reportssubmitted by internal auditors and Statutory Auditors. Suggestions for improvement areconsidered and the Audit Committee follows up on corrective action.
Based on its evaluations (as defined in Section 177 of Companies Act 2013 andRegulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015) the Audit Committee has concluded that as of 31st March 2020 theinternal financial controls were adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no adverse material changes or commitments occurring after 31stMarch 2020 which may affect the financial position of the Company.
The Company has neither accepted nor invited any deposit from the public and hencedirectives issued by Reserve Bank of India and the provisions of Chapter V (Acceptance ofdeposits by Companies) of the Companies Act 2013 and rules framed there under are notapplicable for the year.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments if any covered under the provisions of Section 186of the Companies Act 2013 form part of the notes to the financial statements.
RELATED PARTY TRANSACTIONS
All contracts or arrangements entered into by the Company with Related Parties havebeen done at an arm's length and are in the ordinary course of business. Related Partydisclosures as per AS-18 have been provided in the Notes to the Financial Statements.During financial year 2019-20 your company has not entered into anycontract/arrangement/transaction with related parties which could be consideredmaterial' in accordance with its Policy on Materiality of Related PartyTransactions. Thus there are no transactions required to be reported in Form AOC-2.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS
A separate report on Corporate Governance & Management Discussion & Analysis isattached to this report.
EXTRACT OF ANNUAL RETURN
In compliance with Section 92(3) Section 134 (3) (a) and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of the annual return in Form No.MGT-9 is annexed as ANNEXURE B with this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption foreign exchangeearnings and outgo as per Section 134(3)(m) of the Companies Act 2013 read with Rule 8of the Companies (Accounts) Rules 2014 is given in the ANNEXURE C and forms partof this report.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future. DISCLOSUREUNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION PROHIBITION &REDRESSAL) ACT 2013
Your Company has in place a policy on Prevention of Sexual Harassment at workplace.This policy is in line with the requirements of The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013. All employees whetherpermanent contractual temporary and trainees are covered under this Policy.
As per the said Policy an Internal Complaints Committee is also in place to redresscomplaints received regarding sexual harassment. No complaints were received duringfinancial year 2019-20.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is compliant with the applicable Secretarial Standards (SS) viz. SS-1 &SS-2 on Meetings of the Board of Directors and General Meetings respectively.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 your Directors confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2020 and of the profitof the Company for the year;
(c) they have 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) the annual accounts are prepared on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Your Directors wish to place on record their sincere appreciation for the continuedsupport from its business associates and stakeholders of the Company.
|By order of the Board of Directors || |
| ||For Modern Dairies Limited |
| ||Krishan Kumar Goyal |
|Place: Chandigarh ||Chairman & Managing Director |
|Dated: 12th November ||2020 DIN: 00482035 |