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Parag Milk Foods Ltd.

BSE: 539889 Sector: Agri and agri inputs
BSE 00:00 | 20 Jul 280.65 -3.65






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OPEN 283.70
VOLUME 66498
52-Week high 414.95
52-Week low 220.65
P/E 30.08
Mkt Cap.(Rs cr) 2,361
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 283.70
CLOSE 284.30
VOLUME 66498
52-Week high 414.95
52-Week low 220.65
P/E 30.08
Mkt Cap.(Rs cr) 2,361
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Parag Milk Foods Ltd. (PARAGMILK) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twenty Fifth Annual Report on the businessand operations of your Company together with the Audited Financial Statements for the yearended March 31 2017.


The comparable financial performance of the Company (Standalone & Consolidated) forthe Financial year 2016-2017 is summarized as under:

(` In Million)
Particulars Standalone Consolidated
FY 2016-2017 FY 2015-2016 FY 2016-2017 FY 2015-2016
Total Revenue 17078.09 16243.85 17417.26 16467.49
Earnings before interest Depreciation and Tax 1078.26 1503.87 1191.51 1497.49
Less :- Depreciation 472.63 317.25 489.63 333.88
Less:- Interest 328.06 487.15 332.76 495.72
Profit before Tax 277.57 699.47 369.12 667.89
Less:- Tax expenses (16.46) 174.38 4.02 194.71
Profit After Tax (PAT) 100.19 525.09 171.26 473.18
Balance brought forward from previous year 1247.80 1068.56 1086.70 959.38
Less:- Appropriations
a) Transfer to Debenture Redemption reserve (4.50) (4.50) (4.50) (4.50)
b) Bonus share issued - (341.35) - (341.35)
c) Minority Interest - - - -
Balance carried forward to Balance-Sheet 1343.49 1247.80 1253.46 1086.70
Earnings per Share
- Basic 1.22 8.01 2.08 7.22
- Diluted 1.22 8.01 2.08 7.22


In the current economic environment despite demonetisation and subdued rural demandwhere in business had slowed down your company achieved a sales growth of 5.14% duringthe year; your Company registered a total income of ` 17078.09 Million in the FinancialYear 2016 -2017 as compared to ` 16243.85 Million of the previous year. The Company hasmade Profit before tax (PBT) of ` 277.57 Million on standalone basis for the year underreview as compared to ` 699.47 Million for the previous year the decrease was mainly onaccount of increase in raw material prices which the Company was partially able to pass tothe customers.


Your Directors are pleased to recommend a dividend at a

` 0.50 per equity share of face value of ` 10/- (i.e. 5%) out of the profits of thefinancial year ended March 31 2017 on 84114582 of ` 10/- each fully paid up equityshares if approved by the members in the ensuing Annual General Meeting.

During the year under review your Company transferred a sum of ` 4.50 Million to theDebenture Redemption Reserve.

During the year under review no amount from profit was transferred to General Reserve.


Your Company is a leading manufacturer and marketer of dairy-based branded foodproducts in India commencing business in 1992 with collection of milk and distribution ofmilk.

Your Company's focus is now in transforming itself into a "Dairy FMCGCompany" with focus on "Health and Nutrition" and this will bethrough a multi brand strategy. Your Company's integrated business model gives it a strongedge over dairy companies with diverse manufacturing capabilities of products likecheese ghee fresh milk whey proteins paneer curd yoghurt milk powder and dairybased beverages targeting a wide range of consumer groups through several brands under theflagship brands "GOWARDHAN" "GO" "TOPP UP" " MILKRICH" and "PRIDE OF COWS"

Your Company's focus has been product innovations and towards that effect we expandedour cheese slice range last year with flavours like Piri Piri chutney cheese Kachha AamSchezwan and Acchari and other product categories like Pre-mix with Go Easy Shake andrelaunched our dairy whitener under Milk Rich brand name

Continuing our endeavour of strengthening our brand communication we launched the newcommunication for Ghee with the theme of "Pyar ka Rang Sunhera" with thephilosophy of owning the golden colour of cow ghee. The high point of the campaign was theMother's Day video which created new records in terms of viewership.

Gowardhan Ghee has for the 2nd year in succession been awarded the most trusted brandin ghee category with "Brand Trust" and has infact moved 132 notches upin the overall ranking of brands across categories.

Your Company's focus on Cheese category continues and towards that endeavour welaunched a new campaign with 5 new films with Celebrity Vir Das with focus on thenew flavours of Cheese Slice.

"Cheese Lover's Day" is one more property that we have created andstarted owning the same with specific campaign led by social media and print which hashelped in enrolling newer consumers to the category of cheese.

Our distribution expansion continues as per plan with 4 new depot locations being addedand super stockists upto 120 catering to over 3000 distributors who in turn cater to morethan 2.5 lakh outlets directly.

Your company's Route to Market strategy is further strengthened with beverages businessfocus on point of consumption outlets and expansion of Horeca segment at a rapid pace.

During the year your company has also expanded distribution of fresh milk in upcountryTamil Nadu market.

Our manufacturing facilities are being further strengthened with capacity expansion inCheese and Paneer as per plan in Manchar.

Your Company's building new capabilities and robust pipeline of innovations resulted innew launches in the form of "GO Easy Shake" "GO CheeseSlice" in new flavours suited for Indian palate and "Milk Rich"and other innovative products coupled with leading edge route to market strategy whilebuilding brand differentiation and relevance.

Export Market

Your Company has presence in the international markets like UAE Singapore OmanKuwait Mauritius New Zealand Australia

Congo Seychelles Iraq. Company has extensive Cheese demand from international marketand supplying bulk Cheese to Philippines Sri Lanka UAE and Bangladesh. During the yearthe Company's Export of consumer products increased by 79 % as compared to the year 2015– 16. The total export sale for financial year was ` 568 Million against ` 318Million last year.

Company has participated in Overseas Exhibitions Gulfood 2017 and Food Moscow in year2016 -17. Your company has extended its market in new Territories including USA QatarSaudi Arabia etc.

Future Prospects

The distribution expansion focus now shifts to building cold chain distribution in top100 cities with focus on Paneer and Cheese.

The distribution capabilities are being further enhanced with roll out of SFA (Salesforce automation) and DMS (Distribution management system) which will help with real timedata on secondary sales.

This coupled with our association with a consulting firm "Vector Consulting"will help build supply chain and logistics capabilities at the back end and distributioncapabilities in the front end. This project is specifically based on the concept of"Theory of Constraints" and will help in driving efficiencies in the entiresystem.

With our core objective of building our business around "Health & Nutrition"we are working on new horizon categories like sports nutrition where your company islaunching "Avvatar" whey powder.

Along with this we are working on launching protein powders for the mass and wheydrinks as well.

One more category where your company wants to focus is the fruit drink market but witha differentiated product offering. Your company is entering this market with a new brand"Slurp" which is a mango fruit based beverage with a dash of milk.

Our marketing approach towards brand building with 360-degree approach continues withfocus on digital medium and that's the new way of working for your company and it isyielding results reflected in the brand health scores that we track on our brands.

The above initiatives being dovetailed with focus on operational efficiencies beingbuilt at plant level marketing initiatives to build brands and focus on qualitydistribution expansion and capability building of the sales team would help build theconsumer business with accelerated pace.


The Paid Up Capital of the Company as on March 31 2017 stood at ` 841145820/-. YourCompany had during the year raised

` 3000 Million through fresh issue of 136.99 Million equity shares. The Company hasnot issued shares with differential voting rights nor has granted any stock options orsweat equity during the year under review. None of the Directors of the Company holdinstruments convertible into equity shares of the Company.


The Company had instituted the ESOP Trust in the name of" Parag Milk FoodsEmployees Stock Option Trust" and the "Parag Milk Foods Limited- Employee StockOption Scheme 2015" (ESOS 2015) in April 2015 pursuant to resolutions dated February27 2015 and April 21 2015 passed by the Board of Directors and the resolutions datedApril 3 2015 and May 16 2015 passed by the Shareholders. The ESOS 2015 is compliant withthe SEBI (Share Based Employee Benefits) Regulations 2014 and the relevant provisions ofthe Companies Act 2013 along with the Rules made thereunder including any amendments madethere to or notifications thereof.

The ESOS 2015 is administered by the ESOP Trust 227000 Equity shares were allotted tothe ESOP Trust on September

3 2015. The Options were granted to the eligible employees pursuant to the Nomination& Remuneration Committee meeting on September 04 2015. The Nomination &Remuneration Committee on June 24 2016 approved vesting of the options in accordance withthe ESOS 2015 and conditions of grant based on the Company's performance during thefinancial year 2015-2016 and subject to the continued employment of the eligible employeestill September 032016 and that the right to exercise would extinguish on September 032018. Details required to be provided under section 62 of the Companies Act 2013 and Rule12(9) of Companies (Share Capital and Debenture Rules 2014) and SEBI (Share BasedEmployee Benefits) Regulations 2014 are set out in the Annexure - II tothis report


There are no material changes and commitments affecting the financial position of theCompany which have occurred subsequent to close of the financial year and the date of thisreport


Your Company has significantly enhanced the capacity built up by way of capitalexpenditure in plant and machinery at Manchar and Palamaner plant from time to time. TheCompany has made additions amounting to ` 588.39 Million as on March 31 2017 as againstadditions of ` 891.26 Million as on March 31 2016 in the Gross block of Fixed Assets forthe year ended March 31 2017.


Pursuant to clause (c) of sub-section (3) of Section 134 of the Companies Act 2013the Directors hereby confirm that;

(a) in the preparation of the annual accounts for the financial year ended March 312017 the applicable accounting standards have been followed along with proper explanationrelating to material departures;

(b) the directors had 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 at the end of the financial year and ofthe profit and loss of the company for the year ended March 31 2017.

(c) the directors 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) the directors had prepared the annual accounts for the financial year ended March31 2017 on a going concern basis; and

(e) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


Pursuant to the provisions of the Companies Act 2013 read with the Rules issuedthereunder Regulation 17 (10) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (hereinafter referred to as "ListingRegulations") a structured questionnaire was prepared after taking into considerationthe various aspects of the Board's functioning composition of the Board and itsCommittees culture execution and performance of specific duties obligations andgovernance.

The performance evaluation of the Board its Committees Independent DirectorsChairman and Individual Directors was conducted and the same was based on questionnaireand feedback from all the Directors on the Board as a Whole its Committees andself-evaluation.

Based on the Questionnaire and feedback the performance of every Director wasevaluated by the Nomination and Remuneration Committee (NRC). The Board of Directorsexpressed their satisfaction with the evaluation process.

A separate meeting of the Independent Directors ("Annual ID Meeting) was convenedon March 20 2017 which reviewed the performance of the Board (as a whole) thenon-independent director and the Chairman. Post the Annual ID Meeting the Collectivefeedback of each of the Independent Directors was discussed by the Chairperson of NRC withthe Board covering performance of the Board as a whole performance of the non-independentdirectors and performance of the Chairman.


The Consolidated Financial Statements of the Company are prepared in accordance withrelevant Indian Accounting Standards issued by the Institute of Chartered Accountants ofIndia and forms an integral part of this Report.

Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 a statement containing salient features of the financialstatements of Subsidiaries/Associate Companies/Joint Ventures is given in Annexure-I inForm AOC-1 and forms an integral part of this Report.


As on March 31 2017 the Company has one Wholly Owned Subsidiary called BhagyalaxmiDairy Farms Private Limited (BDFPL) which is located at Manchar Pune District BDFPL whichis fully automated cow farm housing over 2000 Holstein breed cows with superior qualityyield. BDFPL was established with the aim to educate farmers about best practice ofbreeding feeding animal management and improving productivity.

The total revenue was ` 517.98 Million in FY 16-17 in comparison to ` 442.05 Million inFY 15-16 projecting a rise by 17.2% Company made profit with a PAT of ` 71.05 Million forFY 16-17 in comparison to a loss in the previous year.

Bhagyalaxmi produces "Farm- to- Home" premium milk under the brandname of "Pride of Cows" (POC). The farm is equipped with the finestinternational technology for feeding milking and processing being fully automatedwithout any human intervention ensuring quality and safe milk. POC is premium milkfresh untouched unadulterated milk catering to three cities Mumbai Pune and Surat.

Bhagyalaxmi Bioscience Division has introduced certified organic fertilizers throughthe commercialization of cow manure and cow urine into value added products. Bhagyalaxmihas launched the following products during the year under review.:

1. MicroRich - Organic slurry released as a by-product from the Biogas plantwhich is 100% organic and natural and rich in plant nutrients increases resistanceagainst pests & diseases.

2. Agrifeed - prepared from pure cow dung -increases the moisture storagecapacity of the soil and makes the soil smooth & healthy reduces cost offertilization useful for all kinds of crops improves soil fertility & soilproductivity safe for soil micro flora.

3. Goldmine - produced by co-composting high-grade phosphate rock with organicwaste.

4. Nutricane - Helps to improve the production and productivity of the sugarcanecrop. Improves water and nutrients uptake reduces the use of chemical fertilizers

In compliance with Section 129 of the Companies Act 129 of the Companies Act 2013 andRule 8(1) of the Companies (Accounts) Rules 2014 the Board's Report has been prepared onstandalone financial statements and a report on performance and financial position of itssubsidiary company is included in the financial statements


Your Board currently comprises of 8 Directors including 5 Independent Directors 2Executive Directors and 1 Non- Executive Director. Independent Directors provide theirdeclaration both at the time of appointment and annually confirming that they meet thecriteria of independence as prescribed under Sec 149 and 152 of Companies Act 2013.

Pursuant to Sections 196 197 198 and Schedule V of the Companies Act 2013shareholders' approval by special resolution is sought at this AGM for revision ofremuneration of Mr. Devendra Shah Chairman and Mr. Pritam Shah Managing Director of theCompany pursuant to schedule V as amended of the Companies Act 2013.

In accordance with Section 152 of the Companies Act 2013 and the Articles ofAssociation Mr. Devendra Shah Chairman of the Company retires by rotation at theforthcoming Annual General Meeting and being eligible offers himself for re-appointment.The Board recommends his re-appointment for consideration of the Members of the Company atthe ensuing Annual General Meeting.

All Independent Directors have given declarations that they meet the Criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation 16of the Listing Regulations.

The Following continue to be the "Key Managerial Personnel" pursuant to theprovisions of section 203 of the Companies Act 2013.

Mr. Devendra Shah as Chairman and Whole Time Director

Mr. Pritam Shah as the Managing Director

Mr. Bharat Kedia as Chief Financial Officer

Ms. Rachana A. Sanganeria as Company Secretary and Compliance Officer


The Company recognizes that risk is an integral component of business and is committedto managing the risk in a proactive and effective manner.

The Company recognises the importance of maintaining a good system of risk managementand internal controls to safeguard shareholders' investment and the Company's assets. TheBoard acknowledges its overall responsibility for reviewing the adequacy and integrity ofthe Company's system of risk management and internal control identifying principal risksand establishing an appropriate control environment and framework to manage risks andevaluating the Company's operational effectiveness and efficiency. Pursuant to section 134(3) (n) of the Companies Act 2013 the Company has in place an Enterprise Risk Managementpolicy.

1. To ensure that all the current and future material risk exposures of the Company areidentified assessed quantified appropriately mitigated minimized and managed i.e. toensure adequate systems for risk management.

2. To establish a framework for the company's risk management process and to ensure itsimplementation.

3. To enable compliance with appropriate regulations wherever applicable through theadoption of best practices.

4. To assure business growth with financial stability.

5. Safeguard the Company's property interests and interest of all stakeholders.

6. Evolve the culture processes and structures that are directed towards the effectivemanagement of potential opportunities and adverse effects which the business andoperations of the Company are exposed to.

7. Balance between the cost of managing risk and the anticipated benefits.

8. To create awareness among the employees to assess risks on a continuous basis &develop risk mitigation plans in the interest of the Company.

9 Provide a system for setting of priorities when there are competing demands onlimited resources.

The objective of this policy is also to manage the risks involved in all activities ofthe Company to maximize opportunities and minimize adversity. This policy is intended toassist in decision making processes that will minimize potential losses improve themanagement of uncertainty and the approach to new opportunities thereby helping theCompany to achieve its objectives.

Pursuant to Section 134(5)(e) of The Companies Act 2013 the Company has in place anelaborate internal control system commensurate with the size and nature of its businessand size and complexity of its operations. The primary objective of the Internal controlsystems comprising of policies and procedures are designed to ensure reliability offinancial reporting timely feedback on achievement of operational and strategic goalscompliance with policies procedure applicable laws and regulations to ensure properauthorization and accounting of transactions as also for safeguarding and protectingCompany's assets and that all assets and resources are acquired economically usedefficiently & adequately protected and to prevent any revenue leakage and losses tothe Company against loss. Pursuant to Section 138 of the Companies Act 2013 the Companyhas appointed M/s. KPMG (in India) as Internal Auditors of the Company The internalauditors' reports are periodically reviewed by the management and the Audit Committee andnecessary corrective actions are taken from time to time The Audit Committee submits itsperiodical report to the Board about the measures taken for mitigation of Risk in theorganization.


The Board meets at regular intervals to discuss and decide on Company's businesspolicies and strategy apart from other Board businesses. A notice of the Board Meeting iscirculated well in advance with the agenda which includes the detailed annexure/ notes tobe discussed to enable the Board to take an informed decision. The Board met four timesduring the year the details of which are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013 and the Listing Regulations.


The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee (NRC)

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee (CSR)

5. Finance Committee

The details of the Committees along with the composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.


The Company had come out with an IPO and was listed in May 2016wherein the Company hadraised ` 3000 million. As per the terms set out in the prospectus filed with the Registrarof Companies Pune the Company proposed to utilise the net proceeds to meet (i) thecapital expenditure requirement in relation to expansion and modernisation of existingmanufacturing facilities of the Company at Manchar and Palamaner and improving themarketing/distribution infrastructure for both Manchar and Palamaner plant (ii) to investin the wholly owned Subsidiary of the Company Bhagyalaxmi Dairy Farms Pvt. Ltd forfinancing the capital expenditure requirements in relation to the expansion andmodernisation of the Bhagyalaxmi Dairy Farms (iii) to make partial repayment of theWorking Capital Consortium Loan of ` 1000 Million which has been repaid as on March 312017 and (iv) for General corporate purposes.

Please refer note 44 to the notes to accounts to financial statements as annexed to thereport for details in relation to utilisation of IPO proceeds.

The unutilized amount of the issue as at March 31 2017 has been temporarily beendeployed in fixed deposits with banks.


The Sales Tax Authorities had pursuant to section 64 of MVAT Act conducted aninvestigation at the offices of M/s. Parag Milk Foods Limited ("the Company") atthe Registered office at Pune Company‘s Plant at Manchar and the Corporate Office atNariman Point. The Sales Tax Authorities have conducted inspection starting from financialyear 2012-2013 and identified some transactions in relation to the consignment agent whichwere made by the Company for interstate transfer of goods and suggested the Company toreclassify the said transactions of goods under local sales.

The Company has provided the fullest co-operation to the Department to complete theenquiry and provided the information sought by them. The Company had filed revised returnsand agreed to pay the additional tax liability on reclassification as suggested by theauthorities. There was no implication on the continued operations of the Company as aresult of this visit.

There are no significant and material orders passed by the Regulators/ Courts thatwould impact the going concern status of the Company and its future operations.


The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is furnished in Annexure-Vand is attached to this Report.


The particulars of Investments Loans Guarantees covered under the Provision Section186 of the Companies Act 2013 read with rules made thereunder are given in the Note No.14 20 and 31 of Standalone Financial Statements..


The Company is committed to good corporate governance and has consistently maintainedits organizational culture as a remarkable confluence of high standards of professionalismand building shareholder equity with principles of fairness integrity and ethics.

The Board of Directors of the Company have from time to time framed and approvedvarious Policies as required by the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations. These Policies and Codes are reviewed by the Boardand are updated if required. Some of the key policies adopted by the Company are asfollows:

1. Policy on Determination of materiality of events/ information
2. Code of Conduct for Board Members and Senior
Management Personnel
3. Policy on Preservation and Archival of Documents
4. Prevention of Insider Trading Policy
5. Whistle Blower Policy
6. Policy on Related Party Transactions
7. Policy on Materiality of Subsidiaries
8. Policy on Nomination & Remuneration
9. Policy on Board Diversity
10. Policy on Familiarisation Programme of Independent Directors
11. Corporate Social Responsibility Policy
12. Policy on Prevention of Sexual harassment policy

The above mentioned policies are also available on the website of the


All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 and the Rules made thereunder are not attracted. Thusdisclosure in form AOC-2 in terms of Section 134 of the Companies Act 2013 is notrequired. Further there are no material related party transactions during the year underreview with the Promoters Directors or Key Managerial Personnel. The Company has propersystems for the purpose of identification and monitoring of such Related PartyTransactions.

All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval was obtained on a yearly basis for transactions whichare of repetitive nature. Transactions entered into pursuant to omnibus approval areplaced before the Audit Committee and the Board for review and approval on a quarterlybasis.

The policy on Related Party Transactions as approved by the Board of Directors has beenuploaded on the website of the Company viz


Parag Milk Foods has been leveraging the Information Technology and IT enabled servicesfor business process automation and transformation across various functions internal andexternal stakeholders. Modern Technology is used at every stage to give advantage toBusiness by process of exchange of information in a faster and safer way.

Information Technology is used for collection the Milk even at Remote village level anddata is updated on Real Time basis to Central System which is used for planning purpose.Production is managed through Programmable Logic controllers which are used to control andMonitor the process flow giving the correct information of right mix helping inmaintaining quality of the products.

Enterprise Resource Planning System is used to control and monitor all the Businesstransactions. Sales Force Automation and Distributor Management System are also used tomanage the Sales Force and provide better visibility of the Market to Management.

Parag Milk Foods Limited is Progressing in a planned manner to promote more usage ofsystem and automating the processes and thus processing towards paperless movement andenabling Greener Future.


Your company always believed in and worked towards "inclusive growth'- improvingthe quality of life of the people we touch and in the communities where we operate. TheCSR committee was constituted by the Board of Directors of the Company at its meeting heldon June 23 2014 and re-constituted on May 26 2015 July 28 2015 and November 09 2017.

The CSR Committee of the Board of Directors of the Company Consists of 3 Members viz.

1. Mr. B.M. Vyas- Non-Executive Director - Chairman

2. Mr Devendra Shah-Executive Chairman - Member

3. Ms. Radhika Pereira-Independent Director - Member

4. Mr. Narendra Ambani - Independent Director - Member was appointed in Board Meetingheld on November 09 2017.

The following CSR Activities have been conducted during: 2016-17.

( ` In Million)
1. A brief outline of the Company's CSR Policy including overview of Projects or programs proposed to be undertaken and a reference to the web-link to the CSR Policy and projects or programs and the Composition of CSR Committee. CSR Policy is available for inspection by Members of the Company
2. Average net profit of the Company for last three financial years 399.26
3. Prescribed CSR expenditure (two percent of the amount mentioned in item 2 above) 7.99
4. Details of CSR spent during the financial year. 12.38
5. Total amount to be spent for the financial year 7.99


CSR Projected or Activity Identified Sector in which the projects is covered Project of Program Amount outlay (Budget) project or wise ` ( In Mn) Amount spent on the projects of programs (` In Mn) Cumulative Expenditure up to the Reporting period i.e. FY 16-17 ` ( In Mn) Amount spend direct or through implementing agency
1. Designing & construction of toilets women rehabilitation & empowerment adding Advasi children students weaker section senior citizen providing medical & educational help sanitation health programcommunity development etc Health Care education. empowerment of women Maharashtra 11.50 11.50 11.50 Through Gurukrupa Vikas Sanstha a non- profit voluntary organisation
2. Medical camp organized at Manchar Health Care Maharashtra 0.88 0.88 0.88 Direct


The Management Discussion and Analysis Report on the operations of the Company asrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isprovided in a separate section and forms an integral part of this Report.


As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the Practicing CompanySecretary confirming compliance forms an integral part of this Report


The information required under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure III.


During the year under review the Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) thereof for the time being in force); The Company has neither accepted norrenewed any deposits during the year ended March 31 2017.


The Company has not bought back any of its securities during the year ended March 312017.


Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 (including any statutory modification(s)amendment(s) / re-enactment thereof for the time being in force) is furnished in an AnnexureIV which forms part of this Report.

Particulars of employee's remuneration as required under section 197(12) of theCompanies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 are not attached with thisreport since there was no employee who was in receipt of remuneration in excess ofaggregate of ` 12 million during the year if employed throughout the financial year of `0.85 million per month in the aggregate if employed for part of the year.

No commission was paid during the year to the Managing Director/Whole Time Directorfrom the Company or from its subsidiary company.

Indian Accounting Standards (Ind AS)

The Company has adopted Indian Accounting Standards (Ind AS) with effect form 1stApril 2017 pursuant to Ministry of Corporate affairs notification of the Companies(Indian Accounting Standards) Rules 2015.


There are no qualifications reservations or adverse remarks made by the Auditors intheir report.


The Statutory Auditor M/s Haribhakti & Co LLP Chartered Accountants Pune (FirmRegistration No. 103523W / W100048) who hold office till the conclusion of the ensuingAnnual General Meeting and on recommendation of the Audit Committee and Board arerecommended for re–appointment to hold office from the conclusion of this AnnualGeneral Meeting until the conclusion of Annual General Meeting of the Company for FY2019-2020 subject to ratification by members at every Annual General Meeting. The Companyhas received under Section 139(1) of the Companies Act 2013 and the Rules framedthereunder a certificate of their eligibility and consent for re-appointment.


M/s Harshad Deshpande & Associates Cost Accountants were appointed as the costauditors of the Company for the year ended March 31 2016. On recommendation of the AuditCommittee the Board of Directors propose the appointment of M/s. Harshad Deshpande &Associate Cost Accountant as the Cost Auditors of the Company for the Financial Year 2017-2018. The Cost Auditors have confirmed that they are not disqualified for suchre-appointment within the meaning of Section 148 of the Companies Act 2013.


In terms of Section 204 of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. N.L. Bhatia & Associates a firm of Company Secretaries in Practice asthe Secretarial Auditor to undertake the secretarial audit for the financial year2017-18.

The Secretarial Audit Report for the financial year ended March 31 2017 is set out inthe Annexure VI to this report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

None of the Auditors of the Company have reported any fraud as specified under thesecond proviso of Section 143 (12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force).


The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.


Your Company and its Board of Directors would like to express their sincereappreciation for the assistance support and cooperation received from Governmentregulatory authorities stakeholders vendors financial institutions banks investorscustomers service providers and members during the year. Your Company takes pride in itshighly motivated employees workers staff and wishes to place on record its deep sense ofappreciation for their committed services and best contribution towards growth and successof your Company





Place: Mumbai Date: May 29 2017

Annexure - I

Form AOC-1

(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014) Statement containing salient features of the financialstatement of subsidiaries/associate companies/joint ventures.


(Amount in Million)
Particulars Details
Name of the subsidiary Bhagyalaxmi Dairy Farms Private Limited April 01 2016 to March 31 2017
Reporting period for the subsidiary concerned if different from the holding company's reporting period
Reporting currency and Exchange rate as on the last date of the relevant Indian Rupees
Financial year in the case of foreign subsidiaries
Share capital 57.85
Reserves & surplus 432.77
Total assets 606.77
Total Liabilities 116.15
Investments Nil
Turnover 517.98
Profit before taxation 91.53
Provision for taxation 20.48
Profit after taxation 71.05
Proposed Dividend Nil
% of shareholding 100.00%
Place : Mumbai
Date: May 29 2017

For and on behalf of the Board of Directors

Devendra Shah Pritam Shah
Director Director

Annexure - II

Details required to be provided under section 62 of the Companies Act 2013 and Rule12(9) of Companies (Share Capital and Debenture Rules 2014) and SEBI (Share BasedEmployee Benefits) Regulations 2014)

Description Shares/Options
1 Shares allotted to ESOP Trust 227000
2 Options forfeited during the year 27800
3 Options granted as on March 31 2017 199200
4 Options vested 126927
5 Options exercised Nil
6 The total number of shares arising as a result of exercise of option granted (net of cancelled options) 126927
7 Options outstanding at the end of the year 72273
8 Exercise price ` 250
9 Variation of terms of options -
10 Money realised by exercise of options -
11 Money realised by exercise of options -
12 Total number of options in force 126927
13 Employee wise details of options vested to -
1. Key managerial personnel 10250

2. Any other employee who receives a grant of options in any one year of optionamounting to five -percent or more of options granted during the year

3. Identified employees who were granted option during any one year equal to orexceeding one -percent of the issued capital (excluding outstanding warrants andconversion) of the Company at the time of grant..

For and on behalf of the Board of Directors
Devendra Shah
Place : Mumbai
Date: May 29 2017

Annexure III

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988

The information pertaining to conversation of energy technology absorption ForeignExchange Earnings and outgo as required under Section 135 (3)(m) of the Companies Act2013 read with Rule 8 (3) of the Companies (Accounts) Rules 2014. A. Conservation ofEnergy

Since the company is engaged in processing of milk the consumption of energy per unitis not significant hence total energy consumption during the year is given in the Form Aas below :-

Power and Fuel Consumption Total Units
1 Electricity Consumption (Total No. of Units) 20676940
2 Own Generator through T.G. Set (Units) 3881248
3 D.G Unit 126826
4 Diesel / SKO consumed (LTR) 42458
5 Furnace Oil Consumed (LTR) 226296
6 Coal (Kg) 25558957

B. Research and Development (R&D)

Your Company R&D team's core focus is to deliver significantly superior and newinnovations in the products improvising the processes for enhancing product qualitystability and food safety. Ongoing value engineering of the products and packagingbuilding healthier product portfolio catering to the health and nutrition intake of theconsumers is pursued by the Company. More importance will be given on product/ processdevelopment/ innovation to bring down cost without compromising on product quality and toachieve international standards in quality and taste ensuring regulatory compliance.

C. Foreign Exchange Earnings and Outgo

Particulars regarding Foreign Exchange Earnings and Outgo are as follows:-

Particulars 2016-17 2015-16
CIF Value of Imports
Packaging Material and Consumables 41.91 32.07
Raw materials 193.28 140.97
Trade goods 7.05 9.11
Capital goods(including CWIP) 45.97 52.94
Foreign Exchange Outgo
Foreign Travel 3.05 2.51
Sales Promotion _ 0.33
Finance cost 63.67 49.06
Office expenses _ 0.71
Fees & Subscription 0.34 0.01
Bank Charges – 3.84 0.10
Professional Fees 18.07 14.89
Foreign Exchange Earnings
Export of goods on F. O. B. basis 568.22 318.09

D. Technology Absorption

Your Company has been a pro-active investor when it comes to technological enhancement.It has helped the Company improve its operational/technical efficiency. Last year of yourCompany was marked by the factories supporting and delivering continuously in order tomeet business objectives by ensuring timely launch of new products. This was in additionto catering to the regular production of the existing products under brands available inthe market.

Your Company has collaborated with an Australian dairy and food consulting Company forthe launch of its latest product- Avvatar 100% Whey Protein. The consulting company isowned and directed by internationally renowned dairy technology expert Mr. Ken Thomas.Vital inputs provided by the consulting company has helped Parag in the field ofmanufacturing and market development and also has been beneficial in setting up the wheyplant devising the product formulation and also in improving the nutritional facts forAvvatar in order to create a unique product offering for the Indian market.

Paneer manufactured and/or sold by your Company is by virtue of the imported and fullyautomated technology received on an ongoing basis from the German collaborators.Technology transfer shall be an ongoing process for Parag and not a one-time exercise forthe Company to remain competitive throughout and offer high quality and value for moneyproducts to the consumers.

For and on behalf of the Board of Directors

Devendra Shah


Place : Mumbai

Date: May 29 2017

Annexure IV

Disclosure in Board's Report a per the provisions of Section 197 of the Companies Act2013 read with Rule (5) (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (as amended)

Name Designation Disclosure Details
Name of the Directors Category Ratio
1. The ratio if the remuneration of each Director to the median remuneration of the employees of the Company for the financial year Mr. Devendra Shah Executive Chairman- Whole time Director 113.51
Mr. Pritam Shah Managing Director 111.89
Mr. B.M. Vyas Non-Executive Director 50.31
2. The percentage increase in remuneration of each Director Chief Financial Officer and Company Secretary during the financial year Name of the Directors Category % Increase in remuneration
Mr. Devendra Shah Executive Chairman- 75.00 %
Whole time Director
Mr. Pritam Shah Managing Director 81.58%
Mr. B.M. Vyas Non-Executive Director 0.86%
Mr. Bharat Kedia Chief Financial Officer -8.68%
Ms. Rachana Company Secretary & -9.44%
Sanganeria Compliance Officer

3. The percentage increase in the median The median percentage increase in the medianremuneration of employees in remuneration of employees in the financial the financial yearis 10.12% year

4. Number of permanent employees on the There were 1622 permanent employees of ParagMilk Foods Limited as on rolls of the Company March 31 2017

5. The average annual increase excluding the For the employees other than managerialpersonnel who were in employment managerial personnel in the financial year in FY2016-2017 the average increase is 12.24%. 2016-2017. Average decrease for managerialpersonnel is 8.81%.

6. Afirmation that the remuneration is as per yes the Remuneration Policy of theCompany

For and on behalf of the Board of Directors

Devendra Shah


Place : Mumbai

Date: May 29 2017