It is our pleasure to present the Thirty Fifth Annual Report on the business andoperations together with the Audited Financial Statements of your Company for the yearended March 31 2019.
SUMMARY OF FINANCIAL PERFORMANCE:
| || || ||(र in Crore) |
| || || || |
| ||FY2019 ||FY2018 ||Change (%) |
|Gross Sales ||8058.00 ||6270.36 ||28.5% |
|Revenue from Operations ||2096.95 ||1822.77 ||15.0% |
|Other Income ||13.29 ||26.67 ||(50.2)% |
|Income from Operations ||2110.23 ||1849.44 ||14.1% |
|Raw Materials Consumed ||1035.37 ||952.21 ||8.7% |
|Employee Benefit Expenses ||171.38 ||154.97 ||10.6% |
|Selling & Distribution Expenses ||284.89 ||215.87 ||32.0% |
|Depreciation ||42.44 ||40.90 ||3.8% |
|Finance Cost ||35.48 ||68.24 ||(48.0)% |
|Other Operating Expenses ||254.97 ||229.97 ||10.9% |
|Total Expenses ||1824.52 ||1662.16 ||9.8% |
|Profit Before Tax ||285.71 ||187.28 ||52.6% |
|Provision for Tax ||97.64 ||63.83 ||53.0% |
|Net Profit ||188.06 ||123.45 ||52.3% |
|Net Income Margin (%) ||9.0% ||6.8% || |
|Other Comprehensive Expenses / (Income) ||0.72 ||1.52 || |
|Total Comprehensive Income ||187.35 ||121.94 ||53.6% |
|Total Comprehensive Income Margin (%) ||8.9% ||6.7% || |
|Basic EPS (?) ||14.10 ||9.26 ||52.2% |
|Gross Profit ||1061.58 ||870.56 ||21.9% |
|Gross Margin (%) ||50.6% ||47.8% || |
|EBITDA ||349.23 ||267.43 ||30.6% |
|EBITDA Margin (%) ||16.7% ||14.7% || |
| || || || |
|Paid-up Equity Share Capital (Face Value of र2 each) ||2668 ||26.66 ||0.1% |
|Reserves & Surplus ||1288.26 ||1115.46 ||15.5% |
|Transfer to General Reserve ||- ||- ||- |
|Proposed Dividend and tax thereon ||19.30 ||16.07 ||20.6% |
|PERFORMANCE REVIEW: || || || |
|Revenue from Operations || || || |
|Volume (Million Cases) ||FY2019 ||FY2018 ||Change (%) |
|Prestige & Above ||6.12 ||5.05 ||21.3% |
|Regular & Others ||15.48 ||14.45 ||7.1% |
|Total Volume ||21.61 ||19.50 ||10.8% |
|Prestige & Above as % of Total ||28.3% ||25.9% || |
Total Revenue from Operations (Net) grew by 15.0%. IMFL volumes increased by 10.8%.This volume growth was led by a strong Prestige & Above category volume increase of21.3%. Volume growth was broad based across key states and key IMFL brands primarilydriven by the recent price increases and favourable policy changes. A significantlyimproved operating environment in Uttar Pradesh continued to drive a strong volume growthand market share increase in the state. Furthermore the recently launched brands such as8PM Premium Black whisky and 1965 - Spirit of Victory rum also started to make meaningfulcontribution to the overall volumes. Within a short span after launch 8PM Premium Blackhas gained encouraging traction with both consumers as well as the trade channels.
In value terms Prestige & Above brands contributed to about 49.7% of total IMFLsales value compared to 43.7% in FY2018.
IMFL sales value accounted for 79.6% of the total Revenue from Operations (net) of theCompany compared to 75.6% last year.
Gross Margin increased by 286 bps y-o-y to 50.6%. Despite the recent upward trend inraw material prices (both ENA and packaging materials) gross margins improvement wasdriven by a combination of price increases and premiumization.
EBITDA increased by 30.6% y-o-y with margins of 16.7% (up 200 bps Y-o-Y). This increasein EBITDA was driven by significantly improved Gross Margins. Selling & Distributionexpenses have been higher during the year compared to FY2018 as the Company has beenprogressively making marketing investments. Advertising & Sales Promotion (A&SP)expenses increased by 58.6% to र138.47 Crore compared to FY2018. During FY2019Advertising & Sales Promotion expenses as a % of the Company's IMFL revenues stood at8.3% compared with 6.3% for the last year. Higher A&SP spend has enabled the Companyto sustain the growth momentum.
Due to the ongoing debt reduction finance costs have decreased significantly. Financecost for the year declined by 48.0% y-o-y from र68.24 Crore to र35.48 Crore.
Total Comprehensive Income
Total Comprehensive Income increased by 53.6% due to improved EBITDA margins andreduced finance costs.
CAPITAL STRUCTURE LIQUIDITY AND RETURN RATIOS:
As of March 312019 Radico Khaitan had an authorized equity share capital of र34Crore divided into 170000000 equity shares of र2 each. The Company also had anauthorized preference share capital of र60 Crore divided into 6000000 preferenceshares of र100 each. As of March 31 2019 the Company had issued subscribed andpaid-up equity share capital of र26.68 Crore divided into 133409265 equity shares ofर2 each.
During the year under review the Company has allotted 102000 equity shares onexercise of stock options under the Employees Stock Option Scheme 2006 to the eligibleemployees. During the year under review the Company granted no stock options under theEmployees Stock Option Scheme 2006.
Your Directors do not propose to transfer any amount to General Reserve and the entireamount of the profit for the year ended March 312019 forms part of retained earnings.
As on March 31 2019 Total Debt was र337.02 Crore Cash & Bank Balances wereर17.67 Crore resulting in Net Debt of र319.35 Crore (vs. र569.70 Crore as on March31 2018). Gross Debt consists of र301.60 Crore of Working Capital loans and र35.42Crore of Long-Term loans. Net Debt reduction was र250.34 Crore during FY2019. As aresult of ongoing debt reduction the Company debt to equity ratio improved from 0.52x atthe end of FY2018 to 0.26x at the end of FY2019.
As on March 31 2019 the Company had trade receivables balance of र641.75 Crore (up1.9% y-o-y) inventories of र359.71 Crore (up 15.7% y-o-y) and trade payables ofर244.84 Crore (up 14.3%) resulting in working capital balance of र756.63 Crore (up4.1% y-o-y). On gross sales basis working capital turnover was 34 days in FY2019 comparedto 42 days in FY2018.
Return on Average Equity (ROE) expanded from 11.2% in FY2018 to 15.2% in FY2019. Thisexpansion in ROE was primarily due to significantly improved net profit. During FY2019Return on Average Capital Employed (ROCE) increased from 12.7% to 18.1%. ROCE expansionwas attributed to significantly improved earnings coupled with debt reduction.
ROE = Total Comprehensive Income/Average Shareholder Equity ROCE = Earnings BeforeInterest & Tax (EBIT)/Average Capital Employed Capital Employed = Shareholder Equity +Total Debt
CAPITAL MARKET RATINGS :
Radico Khaitan's long-term and short-term credit facilities are rated by CARE Ratings.The Company's long-term credit facilities are rated CARE AA- (Double A Minus) andshort-term credit facilities are rated CARE A1+ (A One Plus).
CARE AA rated instruments are considered to have high degree of safety regarding timelyservicing of financial obligations. Such instruments carry very low credit risk. CARE A1rated instruments are considered to have very strong degree of safety regarding timelypayment of financial obligations. Such instruments carry lowest credit risk. Modifiers(+/-) reflect the comparative standing within the category.
During the year under review there was no change in Board of Directors.
During FY2018 the Board of Directors met four times on May 3 2018 July 24 2018October 24 2018 and January 23 2019. The gap between any two consecutive meetings of theBoard of Directors of the Company was not more than 1 20 days. The details regardingcomposition number of Board Meetings held and attendance of the directors during FY2019are set out in the Corporate Governance Report which forms part of this Annual Report.
MEETING OF INDEPENDENT DIRECTORS:
The Independent Directors of the Company met separately on January 23 2019 without thepresence of the Non-Independent Directors and the members of management. The meeting wasconducted informally to enable the Independent Directors to discuss matters pertaining tothe Company's affairs and put forth their combined views to the Board of Directors of theCompany. In accordance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") following matters were inter-aliadiscussed in the meeting:
1) Review of the performance of Non-Independent Directors and the Board as a whole;
2) Review of the performance of the Chairperson of the Company taking into account theviews of Executive Directors and Non-Executive Directors;
3) Assess the quality quantity and timelines of flow of information between theCompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties
DECLARATION BY INDEPENDENT DIRECTORS:
The Company has received declarations under Section 149(6) of the Companies Act 2013from all Independent Directors that they meet the criteria of independence as laid downunder Section 149(6) of the Companies Act 2013 and the Listing Regulations. The Companykeeps a policy of transparency and arm's length while dealing with its IndependentDirectors. No transaction was entered with Independent Directors during the year whichcould have any material pecuniary relationship with them. Apart from sitting fee no otherremuneration was paid to any of the Independent Directors.
The Board of Directors of Radico Khaitan is committed to transparency in assessing theperformance of Directors. In accordance with the Companies Act 2013 and Rules madethereunder Schedule - IV of the Act and Regulation 4(2)(f) of the Listing RegulationsRadico Khaitan has framed a policy for the formal annual evaluation of the performance ofthe Board Committees and individual Directors. The Company has put in place a robustframework for evaluation of the Board its Committees the Chairman and IndividualDirectors and the governance processes that support the Board's functioning. Thisframework covers specific criteria and the grounds on which all Directors in theirindividual capacity are evaluated. The key criteria for performance evaluation of theBoard and its Committees include aspects such as composition and structure effectivenessof board processes information and functioning.
The criteria for performance evaluation of the individual Directors include aspectssuch professional conduct competency contribution to the Board and Committee meetingsand other measures. The criteria for performance evaluation of the committees of the Boardincludes aspects such as the composition of committees effectiveness of committeemeetings. The performance evaluation of the Independent directors was done by the entireBoard excluding the director being evaluated. The performance evaluation of the Chairmanand the Non-Independent directors was carried out by the Independent directors. The Boardof Directors expressed their satisfaction with the evaluation process.
POLICY ON NOMINATION REMUNERATION AND BOARD DIVERSITY:
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members as wellas diversity of the Board. Radico Khaitan recognizes the benefits and importance of havinga diverse Board of Directors in terms of skill set and experience. The Company has anoptimum mix of executive and non-executive independent directors and woman director. Thedetail of the policy is explained in the Corporate Governance Report and full policy isalso available on the Company's website at the following link:http://www.radicokhaitan.com/ investor-relations/
ROLES AND RESPONSIBILITIES OF BOARD MEMBERS:
The Company has a clearly laid out policy defining the structure and role of the BoardMembers. The Company has an Executive Chairman and Managing Director presently Dr LalitKhaitan a Managing Director currently Mr. Abhishek Khaitan and an optimum combination ofExecutive and Non-Executive Promoter/ Independent Directors. The duties of the BoardMembers including Independent Directors have been elaborated in the Listing RegulationsSection 166 of the Companies Act 2013 and Schedule IV of the said Act. There is a clearsegregation of responsibility and authority amongst the Board Members.
RISK MANAGEMENT POLICY:
Radico Khaitan's business is exposed to a variety of risks which are inherent to aliquor manufacturing company in India. In this volatile uncertain and complex operatingenvironment only companies that manage their risk effectively can sustain. Riskmanagement is embedded in Radico Khaitan's corporate strategies and operating frameworkand the risk framework helps the Company meet its objectives by aligning operatingcontrols with the corporate mission and vision. The Company has in place comprehensiverisk assessment and minimization procedures integrated across all operations and entailsthe recording monitoring and controlling enterprise risks and addressing them timely andcomprehensively. The risks are reviewed by the Audit Committee and the Board from time totime and new risks are identified based on new business initiatives and the same areassessed minimisation framework and controls are designed and appropriately implemented.
The failure of information Technology (IT) systems due to malicious attacks and/ornon-compliance with data privacy laws can potentially lead to financial loss businessdisruption and/or damage to the Company's reputation. Radico Khaitan has in place a dataprotection policy. It also maintains a cyber security infrastructure. The Company usesstandardised backup tools service and procedures to ensure that information and data arestored at two or more diverse locations.
INSURANCE OF FIXED ASSETS:
Your Company has adequately insured all its properties including Plant and MachineryBuilding and Stocks.
AWARDS AND RECOGNITION:
During the year Radico Khaitan received a number of awards for its leading brands.These awards are a testament to the Company's innovation and quality of products. In theMonde Selection Quality Awards 2019 following brands of Radico Khaitan received GOLDawards:
1965 Spirit of Victory Premium XXX Rum
8PM Premium Black Whisky
Magic Moments Verve Orange Flavoured Premium Vodka
Magic Moments Verve Green Apple Flavoured Premium Vodka
Magic Moments Verve Premium Vodka
Morpheus Blue Premium Brandy
Whytehall Rare Premium Brandy
EMPLOYEE STOCK OPTION SCHEME:
Radico Khaitan's employee stock option scheme was implemented to provide the employeeswith an opportunity to share in the growth of the Company and to reinforce long termcommitment. As on 31st March 2019 a total of 264500 stock options are outstanding.
As required under SEBI (Share Based Employee Benefits) Regulations 2014 the auditorshave issued a certificate that the share based incentives have been implemented incompliance with the resolution passed at the AGM.
The Company has a dividend policy that balances the dual objective of appropriatelyrewarding its shareholders and retaining capital to support future growth. Your Directorsare pleased to recommend a dividend of र1.20 per equity share or 60% on face value ofर2.00 each for the year ended March 31 2019. The total dividend payout for thefinancial year will be र19.30 Crore including a dividend distribution tax of र3.29Crore. This higher dividend payout is to demonstrate our commitment towards ourshareholders. The dividend is subject to approval of shareholders at the Annual GeneralMeeting on September 26 2019 and will be paid to the shareholders whose names appear inthe Register of Members as on the date of book closure.
During the year 462244 shares of the Company constituting 0.35% of the issued andsubscribed Share Capital of the
Company were dematerialised. As on March 312019 98.81% of the shares of the Companyhave been dematerialized. Your Directors would request all the members who have not yetconverted their holdings into dematerialized form to do so thereby facilitating tradingof their shares. As per SEBI guidelines it is mandatory that the shares of a company arein dematerialized form for trading.
During the year under review your Company has neither invited nor accepted any fixeddeposits from the public within the meaning of Section 73 of the Companies Act 2013 readwith the Companies (acceptance of Deposits) Rules 2014.
SUBSIDIARIES AND JOINT VENTURES:
During the year under review the Company has no subsidiary. Radico Khaitan has onejoint venture namely Radico NV Distilleries Maharashtra Limited ("RNV"). TheCompany has 36% stake in the said joint venture. In terms of the Section129 (3) financialresults of RNV are consolidated with the accounts of the Company. In terms of the section129 (3) of the Companies Act 2013 the salient features of the financial statement of thejoint venture company is set out in the prescribed form AOC - 1 and is attached herewithas a separate Annexure - A.
CONSOLIDATION OF ACCOUNTS:
In compliance with Section 129 (3) of the Companies Act 2013 the annual accounts ofRNV are consolidated with the Company accounts and form part of this report.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND:
Section 124 of the Companies Act 2013 mandates that a company should transferdividend that has been unclaimed for a period of seven years from the unpaid dividendaccount to the Investor Education and Protection Fund (IEPF). To ensure maximumdisbursement of unclaimed dividend the Company sends reminders to the concernedinvestors before transfer of dividend to IEPF. Unclaimed dividend has been transferred toIEPF as per below table:
|Financial Year ||Date of Declaration of Dividend ||Total Dividend ||Unclaimed Dividend ||Date of Transfer to IEPF account |
|FY2002 ||16.07.2002 ||38579176.00 ||730556.00 ||22.08.2009 |
|FY2003 ||19.07.2003 ||34721258.40 ||914312.00 ||24.08.2010 |
|FY2004 ||17.07.2004 ||38579176.00 ||973284.00 ||22.08.2011 |
|FY2005 ||16.11.2005 ||42437093.60 ||983341.00 ||21.12.2012 |
|FY2006 ||25.09.2006 ||48223970.00 ||1135840.00 ||30.10.2013 |
|FY2007 ||26.09.2007 ||51231109.50 ||922432.00 ||05.11.2014 |
|FY2008 ||30.09.2008 ||51231109.50 ||1065509.00 ||16.10.2015 |
|FY2009 ||15.09.2009 ||30738665.70 ||699978.00 ||07.10.2016 |
|FY2010 ||09.09.2010 ||79300632.60 ||1620668.00 ||26.10.2017 |
|FY2011 ||09.09.2011 ||92853567.80 ||1630738.00 ||24.09.2018 |
KEY MANAGERIAL PERSONNEL:
There has been no change in Key Managerial Personnel during the year under review.
REMUNERATION OF THE DIRECTORS AND EMPLOYEES:
Your Company's approach is to have performance-based compensation culture to attractand retain high quality talent. The remuneration policy therefore is market-led andtakes into account the competitive nature of the business so as to attract and retainquality talent and leverage performance significantly. The remuneration payable to eachExecutive Director is based on the remuneration structure as determined by the Board andis revised from time to time depending upon individual contribution the Company'sperformance and the provisions of the Companies Act 2013.
PARTICULAR OF EMPLOYEES AND REMUNERATION:
In terms of the first proviso to Section 136 of the Act the Reports and Accounts arebeing sent to the shareholders excluding the information required under Rule 5 (2) and (3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Anyshareholder interested in obtaining the same may write to the Company Secretary at theRegistered Office of the Company on any working day of the Company up to the date of the35th Annual General Meeting.
The statement containing information as required under the provisions of Section197(12) of the Act read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in Annexure - B and forms part of this Report.
The observations made in the Auditors Report as enclosed with this Report areself-explanatory and therefore do not call for any further comments under Section 134 ofthe Companies Act 2013.
M/s. BGJC & Associates LLP Chartered Accountants are the Statutory Auditors of theCompany for a period of five years with effect from July 11 2016. M/s. BGJC &Associates LLP have confirmed to the Company that they are not disqualified under Section141 of the Companies Act 2013 or any other applicable provisions for the time being inforce and are eligible for being appointed as statutory auditors of the Company. M/s. BGJC& Associates LLP have also confirmed to the Company that their appointment is withinthe limits prescribed under the Companies Act 2013.
The report of the Statutory Auditors along with notes to Schedules is enclosed to thisannual report. The observations made in the Auditors' Report are self-explanatory andtherefore do not call for any further comments. The Auditor's Report does not contain anyqualification reservation or adverse remark.
As per the requirement of the Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Company has been carrying out audit of cost recordsrelating to Industrial Alcohol every year.
The Board of Directors on the recommendation of audit committee has appointed Mr. R.Krishnan Cost Accountants as the cost auditor to audit the cost accounts of the Companyfor the financial year 2020 at a remuneration of र1.10 Lakhs plus applicable governmenttaxes (e.g. GST) and reimbursement of out of pocket expenses. As required under theCompanies Act 2013 a resolution seeking member's approval for the remuneration payableto the Cost Auditor forms part of the Notice convening the Annual General Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed Mr. Tanuj Vohra Partner at M/s. TVA & Co. LLPCompany Secretaries a firm of Company Secretaries in Practice (C.P. No. 5253) toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is includedas Annexure - C and forms an integral part of this Report. There is no secretarial auditqualification for the year under review.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENT BY THE COMPANY UNDER SECTION 186 OF THECOMPANIES ACT 2013:
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements.
Pursuant to the requirement of Section 177 (9) & (10) of the Companies Act 2013Radico Khaitan has in place a robust vigil mechanism and has adopted a whistle blowerpolicy which allows employees of the Company to raise their concerns relating to fraudmalpractice or any other activity or event which is against the interest of the Company orsociety as a whole. All cases reported as part of whistle-blower mechanism are taken totheir logical conclusion within a reasonable timeframe. Details of complaints received andthe action taken are reviewed by the Audit Committee. The functioning of the VigilMechanism is reviewed by the Audit Committee from time to time. The Vigil Mechanism Policyhas been uploaded on the website of the Company at http://www.radicokhaitan.com/investor-relations/.
REPORTING OF FRAUDS:
There was no instance of a fraud during the year under review which required thestatutory auditor to report to the Audit Committee or the Board under section 18 (12) ofthe Companies Act 2013 and rules made thereunder.
Pursuant to the Listing Regulations and in line with Radico Khaitan's Policy onDetermination of Materiality of Events the Company shall disclose all such events to theStock Exchanges and such disclosures shall be hosted on the website of the Company for aperiod of 5 years and thereafter the same shall be archived so as to be available forretrieval for a further period of three years by storing the same on suitable media.Thereafter the said information documents records may be destroyed as per the Company'spolicy on preservation of documents.
RELATED PARTY TRANSACTIONS:
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 are not attracted. Thus disclosure in form AOC-2 is notrequired. Further there are no material related party transactions during the year underreview with the promoters directors or key managerial personnel. The Company hasdeveloped a Related Party Transactions framework through Standard Operating Procedures forthe purpose of identification and monitoring of such transactions.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for approval. Omnibus approval was obtained on a quarterly basis for transactionswhich are of repetitive nature. Transactions entered into pursuant to omnibus approval areaudited by the Legal & Compliance Department and a statement giving details of allRelated Party Transactions are placed before the Audit Committee and the Board for reviewand approval on a quarterly basis.
The Policy on Related Party Transactions as amended and approved by the Board ofDirectors has been uploaded on the website of the Company. The web-link of the same hasbeen provided in the Corporate Governance Report. None of the directors has any pecuniaryrelationship of transactions vis-avis the Company.
ENVIRONMENTAL PROTECTION MEASURES TAKEN BY THE COMPANY:
In view of the corporate responsibility on environmental protection the Company hasadopted a number of measures for improvement in the field of environment safety andhealth. Measures such as standard operating procedures training programmes for all levelsof employees regarding resource conservation housekeeping Green Belt development andonsite emergency plan have been taken. Sustainable living is a part of long-term businessstrategy and your Company continuously strives to reduce our environmental footprintwhile enhancing the livelihood of people across our product value chain.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
As per Section 134 (3) (m) read with the Companies (Accounts Rules) 2014 the relevantinformation and data is given in Annexure - D and forms part of this Report.
CORPORATE SOCIAL RESPONSIBILITIES (CSR):
CSR at Radico Khaitan is creating sustainable programs that actively contribute to andsupport the social and economic development of the society. The Company is committed tocommunity development enhancing livelihood promoting education and health care includingpreventive health care and ensuring environmental sustainability. As part of its CSRprogrammes the Company partners with the community and addresses issues of water andsanitation education health and skill-development. Radico Khaitan also promotes andencourages responsible drinking through engaging with employees taking preventativeaction education and raising awareness and bringing communities on board to address localchallenges at their root. The CSR policy of the company is available on the Company'swebsite.
Composition of the CSR Committee as on August 8 2019
|1. ||Dr. Lalit Khaitan ||Chairman |
|2. ||Mr. Abhishek Khaitan ||Member |
|3. ||Mr. K.P. Singh ||Member |
|4. ||Ms. Sushmita Singha* ||Member |
* Appointed with effect from April 12019
The Company's projects are in accordance with Schedule VII of the Companies Act 2013and the Company's CSR Policy. The Report on CSR activities as required under Companies(Corporate Social Responsibility Policy) Rules 2014 is set out as Annexure - E formingpart of this Report.
Radico Khaitan is in the process of identifying larger projects in healthcare andeducation so the unspent amount of र104.57 Lakhs will be spent together with the currentyear's eligible spend.
Kiran Devi Khaitan Memorial Charitable Trust:
Kiran Devi Khaitan Memorial Charitable Trust was established for social welfareactivities in the year 2011. Since its inception the trust has fostered a sustainableculture of development in the areas of healthcare promotion of education eradication ofhunger rural development art and culture across the state of
Uttar Pradesh. The CSR committee has proposed to incur CSR expenditure through the saidtrust from April 12019 and also directly wherever needed.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
There has been no significant and material order passed by the Regulators or Courtsthat would impact the going concern status of the Company and its future operations.
On December 24 2018 the Central Pollution Control Board (CPCB) issued a letterdirecting the closure of the Rampur plant of the Company which was later kept on abeyancetill January 2 2019 and reconfirmed on February 18 2019. After consideringrepresentations made by the Company CPCB vide its letter dated May 17 2019 revoked itsclosure directions but restricted the capacity of molasses pant of the Company from 200KLD to 77 KLD and levied Environment Compensation of र1.46 Crore. Later freshinspections were made and CPCB vide its letter dated August 6 2019 pursuant to theCompany's representation/request dated June 14 2019 allowed the Company to restore thecapacity of its molasses plant from 77 KLD to 200 KLD and found the Company compliant withthe additional requirements for its Zero Liquid Discharge (ZLD) system. However in theirletter dated August 6 2019 the CPCB has levied an additional Environmental Compensationof र5.83 Crore apart from र1.46 Crore already paid by the Company. Radico Khaitan istaking suitable steps in this regard.
SAFETY & WELLBEING OF WOMEN:
Gender equality and women safety is a very important part of Radico Khaitan's humanresource policies. The Company has zero tolerance for sexual harassment at workplace andhas adopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder for preventionand redressal of complaints of sexual harassment at workplace.
The Company has endeavoured to encourage women professionals by creating properpolicies to tackle issues relating to safe and proper working conditions and create andmaintain a healthy and conducive work environment that is free from discrimination. Allcomplaints received were attended on time with no pending complaint at the end of theyear.
BUSINESS RESPONSIBILITY REPORT:
The Business Responsibility Report for FY2019 as stipulated under Regulation 34(2)(f)of the Listing Regulations is annexed is a separate report and forms part of this AnnualReport.
EXTRACT OF ANNUAL RETURN:
Pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of the Companies(Management and Administration) Rules 2014 the extract of the Annual Return is providedin Annexure - F.
MANAGEMENT DISCUSSION AND ANALYSIS:
Management Discussion and Analysis Report as required under the Listing Regulations isprovided as a separate report and forms part of this Annual Report.
CORPORATE GOVERNANCE REPORT:
Report on Corporate Governance along with the certificate from Mr. Tanuj Vohra Partnerat M/s. TVA & Co. LLP Company Secretaries confirming compliance with conditions ofcorporate governance as stipulated under the Listing Regulations forms part of theAnnual Report.
INTERNAL FINANCIAL CONTROLS:
The Board of Directors of the Company has devised systems policies procedures andframeworks which are currently operational within the Company for ensuring the orderlyand efficient conduct of its business which includes adherence to policies safeguardingits assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records and timely preparation of reliable financial information.
The internal financial controls have been documented digitised and embedded in thebusiness process. Assurance on the effectiveness of internal financial controls isobtained through management reviews controls self-assessment continuous monitoring byfunctional experts as well as testing of the internal financial control systems by theinternal auditors during the course of their audits. We believe that these systems providereasonable assurance that our internal financial controls are designed effectively and areoperating as intended.
COMMITTEES OF THE BOARD:
As on March 31 2019 the Board has the following eight committees. A detailed note onthe composition of the Board and its committees is provided in the Corporate GovernanceReport.
1) Audit Committee
2) Stakeholders Relationship Committee
3) Nomination and Remuneration Committee
4) Corporate Social Responsibility (CSR) Committee
5) ESOP Compensation Committee
6) Risk Management Committee
7) Committee of Directors
8) Committee of Independent Directors
As on date the Audit Committee comprises of three (3) Independent Non-executiveDirectors. The members of the Audit Committee are Mr. Sarvesh Srivastava (Chairman of theCommittee) Dr. Raghupati Singhania and Mr. Ashutosh Patra. All Members of the AuditCommittee are qualified in finance and bring in expertise in the fields of financetaxation economics industry and risk.
The Audit Committee invites the Chairman & Managing Director Managing DirectorChief Financial Officer Company Secretary Statutory Auditor(s) and Internal Auditor andCost Auditors to attend the meetings of the Audit Committee. The Company Secretary acts asSecretary to the Committee. The minutes of each Audit Committee meeting are placed anddiscussed at the next meeting of the Board.
STATEMENT ON COMPLIANCE OF SECRETARIAL STANDARDS:
Radico Khaitan has complied with all the applicable Secretarial Standards during FY2019and have a team of different auditors to assist and audit all the Secretarial Compliancesapplicable to the Company.
DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of knowledge and belief and according to the information and explanationsobtained by them your Directors make the following statement in terms of Section 134 (3)(c) of the Companies Act 2013.
i) In the preparation of the Annual Accounts for the year ended March 31 2019 theapplicable accounting standards have been followed along with proper explanation relatingto material departures if any;
ii) The Board has selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312019 and of the profit ofthe Company for the year ended on that date;
iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
iv) The annual accounts have been prepared on a going concern basis;
v) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
vi) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Your Directors take this opportunity to express their sincere appreciation to all theemployees for their commitment and contribution to the success of the Company. Theirenthusiasm and hard work has enabled the Company to be at the forefront of the industry.We also take this opportunity to thank all our valued customers who have appreciated andcherished our products.
The Board would like to convey their sincere gratitude to the investors and bankers fortheir continued support during the year. Your Directors further take this opportunity toacknowledge the support and assistance extended by the Regulatory Authorities such asSEBI Stock Exchanges and other Central & State Government authorities and agenciesand Registrars. The Board also appreciates the support and co-operation your Company hasbeen receiving from its supply chain partners and others associated with the Company asits trading partners. Your Company looks upon them as partners in its progress and hasshared with them the rewards of growth.
| ||For & on behalf of the Board |
| ||Sd/- |
| ||Dr. Lalit Khaitan |
|Place: New Delhi ||Chairman & Managing Director |
|Date: August 8 2019 ||DIN - 00238222 |