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Speciality Restaurants Ltd.

BSE: 534425 Sector: Services
NSE: SPECIALITY ISIN Code: INE247M01014
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VOLUME 142649
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OPEN 98.75
CLOSE 98.20
VOLUME 142649
52-Week high 114.25
52-Week low 35.00
P/E
Mkt Cap.(Rs cr) 452
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Speciality Restaurants Ltd. (SPECIALITY) - Director Report

Company director report

DIRECTORS' REPORT

To

The Members

Speciality Restaurants Limited

Your Directors hereby present the Twenty First Annual Report togetherwith the audited Financial Statements of the Company for the financial year ended March31 2020.

1. Financial Results ' In Millions

Particulars

Standalone

Consolidated

March 31 2020 March 31 2019 March 31 2020 March 31 2019
Revenue from operations 3577.9 3463.6 3577.9 3463.6
Other Income 99.6 94.6 102.7 94.6
Total Income 3677.5 3558.2 3680.6 3558.2
Earnings before Interest Depreciation Amortization and Tax 669.6 233.7 672.4 219.3
Less:
Finance Costs 211.5 0.0 211.4 0.0
Depreciation /Amortization/Impairment 574.9 287.0 574.9 287.0
Loss before exceptional item and tax (116.8) (53.3) (113.9) (67.8)
Share of loss in Joint venture company

-

(13) (02)
Loss before exceptional item and tax (116.8) (53.3) (115.2) (68.0)
Less: Exceptional item (273.8) (273.8) -
Loss before Tax (390.6) (53.3) (389.0) (68.0)
Less: Taxes Expenses / (credit)
Current Tax

-

9.0

-

9.0
Deferred Tax

-

-

-

-

Short provision for tax relating to prior years (9.0) 1.1 (9.0) 1.1
Loss for the year (381.6) (63.4) (380.0) (78.1)
Total other comprehensive (loss) / income (69) (45) (42) (53)
Total comprehensive loss for the period (388.5) (679) (384.2) (834)

2. Financial Performance and the state of Company's affairs

Your Company's performance for the financial year 2019-20 needs to beanalysed in the context of the economic and operating environment as under:

(i) Total Income of your Company for the year under review which was '3677.5 million as against ' 3558.2 million in the previous year registered a growth of3.35%.

(ii) The earnings before Depreciation Interest Tax and Amortization(EBDITA) which amounted to ' 669.6 million (18.21% of the revenue) as against ' 233.7million (6.57% of the revenue) in the previous year.

(iii) Total comprehensive loss for the year under review was ' (388.5)million as against ' (67.9) million in the previous year.

The detailed analysis on financial performance is included under theManagement Discussion and Analysis Report.

However it is to be noted that the performance of the Company duringMarch 2020 was impacted by the lockdown declared and closure of restaurants on account ofthe COVID - 19 pandemic.

During the year under review your Company opened seventeen (17)restaurants out of which twelve (12) are Company Owned Company Operated (COCO) while five(5) are Franchise Owned Company Operated (FOCO) and eight (8) confectionaries. At the endof financial year ended March 31 2020 your Company has 109 restaurants (including 26franchisees) and 31 confectionaries.

3. Dividend on Equity Shares

The Board of Directors of your Company (the "Board") afterconsidering the financial performance during the year under review has decided not torecommend any dividend for the year under review (previous year-Nil).

4. Employee Stock Option Scheme (ESOS)

During the year under review the Company has not granted any freshstock option to its employees. Details of the options granted under Employee Stock OptionScheme (ESOS) as also the disclosures in compliance with Section 62 of the Companies Act2013 as amended and the rules made thereunder ("Companies Act") and Rule 12 ofthe Companies (Share Capital and Debentures) Rules 2014 Securities and Exchange Board ofIndia (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999(the "SEBI Guidelines") and SEBI (Share Based Employee Benefits) Regulations2014 (the "SEBI Regulations") are given in Annexure A which forms part of thisreport.

Certificate from Statutory Auditors M/s. Singhi and Co. CharteredAccountants with regard to implementation of ESOS Scheme of the Company in compliancewith SEBI Regulations would be available for electronic inspection by the Members at theensuing annual general meeting.

5. Audited Financial Statements

As per Regulation 34(2) of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (the "ListingRegulations") Audited Financial Statements (Standalone and Consolidated) for thefinancial year ended March 31 2020

i.e. Balance Sheet Statement of Profit and Loss and Cash FlowStatement are appended hereto.

There has been no material changes and commitments which affect thefinancial position of the Company subsequent to the close of the financial year endedMarch 31 2020 and till the date of this report except for the impact arising out ofCOVID-19 which is detailed in this Report.

6. Subsidiary

The Company has two wholly owned subsidiaries and two step downsubsidiaries as on March 31 2020. There has been no material change in the nature of thebusiness of the subsidiaries.

(i) Wholly Owned Subsidiaries:

a. Speciality Hospitality UK Limited was incorporated as a privatelimited company limited by shares (bearing company number 10927982) on August 22 2017registered with The Registrar of Companies for England and Wales having its registeredoffice at 134 Buckingham Palace Road London SW1W 9SA United Kingdom.

b. Speciality Hospitality US Inc. (bearing number - 803423900) wasincorporated on September 19 2019 which is registered

with Office of the Secretary of State of Texas having its registeredoffice at 6161 Savoy Drive Suite 1000 Houston TX 77036.

(ii) Step Down Subsidiaries:

a. Caterland Hospitality Ltd. was incorporated on July 18 2019 as aprivate limited company limited by shares (bearing

company number 12109778) registered with The Registrar of Companies forEngland and Wales having its registered office

at 134 Buckingham Palace Road London SW1W 9SA United Kingdom.

b. Foodland Ventures LLC was incorporated on October 7 2019 (bearingnumber - 803436901) which is registered with Office of the Secretary of State of Texashaving its registered office at 9894 Bissonnet Street Suit 638 Houston TX 77036.

During the year under review a Joint Venture Agreement dated July 242019 was entered into between Speciality Hospitality UK Limited a wholly owned subsidiary("WOS") of the Company and Homage Ventures LLP to setup own and operaterestaurant in London United Kingdom under Caterland Hospitality Ltd.

During the year under review a Joint Venture Agreement dated January10 2020 was entered into between Speciality Hospitality US Inc. a wholly ownedsubsidiary (WOS) of the Company and Associated Hospitality & Developers LLC to setupown and operate restaurants in United States of America under Foodland Ventures LLC.

The Consolidated Financial Statements of your Company its jointventure WOS and step down subsidiaries prepared in accordance with the relevantaccounting standards of the Institute of Chartered Accountants of India duly audited bythe Statutory Auditors form a part of the Annual Report and are reflected in theconsolidated accounts.

Pursuant to the provisions of Section 129(3) of the Companies Act astatement containing salient features of the financial statements of WOS and step downsubsidiaries in Form AOC-1 is attached to the Financial Statements of your Company.

7. Joint Venture

Your Company has a joint venture company Mainland China &Indigrill Restaurant LLC (erstwhile Mainland China Restaurant LLC) at Doha Qatar. TheConsolidated Financial Statements of your Company and its joint venture company preparedin accordance with the relevant accounting standards of the Institute of CharteredAccountants of India duly audited by the Statutory Auditors form a part of the AnnualReport and are reflected in the consolidated accounts.

The partners of the joint venture company in view of the lossesincurred discontinued operations of the Mainland China Restaurant with effect from May16 2017. The Company is in the process of voluntary liquidation of the joint ventureMainland China & Indigrill Restaurant LLC (erstwhile Mainland China Restaurant LLC) atDoha Qatar.

Pursuant to the provisions of Section 129(3) of the Companies Act astatement containing salient features of the financial statements of joint venture companyin Form AOC-1 is attached to the Financial Statements of your Company.

8. Awards and Recognition

Your Company's brand initiatives have been recognized and appreciatedacross forums. During the year under review your Company has won the following awards:

Name & Place of Restaurant Awards Won
Sigree Anna Nagar Chennai Rocheston - Distinguished Restaurant
Oh! Calcutta Gurgaon Best Regional Cuisine Award by Eazydiner Foodie Awards
Riyasat Kolkata Best Progressive Indian - Casual Dining (Times food and night life awards)
Riyasat Kolkata Best Indian By The Telegraph
BARishh Kolkata Best Debutant Lounge By The Telegraph
Cafe Mezzuna Kolkata Best Italian in Premium Dine In by The Telegraph
Cafe Mezzuna Kolkata Best Italian in Premium Dine In (Times food and night life awards)
Mainland China Pune Best Chinese - (Times food and night life awards)

9. Directors and Key Managerial Personnel

(i) Directors

Your Company has eight (8) Directors comprising four (4) Independentand four (4) Executive Directors.

(ii) Independent Directors

In terms of the definition of 'Independent Directors' as prescribedunder Regulation 16(1)(b) of the Listing Regulations and Section 149(6) of the CompaniesAct the Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act to the effect that each of them meet the criteria ofindependence laid down in Section 149(6) of the Companies Act and Regulation 16(1) of theListing Regulations and they are not aware of any circumstance or situation which existsor is anticipated that could impair or impact their ability to discharge their dutieswith an objective independent judgement and without any external influence as requiredunder Regulation 25 of Listing Regulations. There has been no change in the circumstancesaffecting their status as independent directors of the Company.

The following Non-Executive Directors are Independent Directors of theCompany:

1. Mr. Dushyant Mehta

2. Mr. Ullal Ravindra Bhat

3. Mr. Rakesh Pandey

4. Dr. Anita Bandyopadhyay (appointed with effect from February 32020)

In terms of Section 150 of the Companies Act read with Rule 6 of theCompanies (Appointment and Qualification of Directors) Rules 2014 Independent Directorsof the Company have confirmed that they have registered themselves with the databankmaintained by The Indian Institute of Corporate Affairs.

(iii) Woman Director

Mrs. Suchhanda Chatterjee is a Director of the Company since theincorporation of the Company. Accordingly the requirements of the provisions of Section149 of the Companies Act and Regulation 17(1) of the Listing Regulations have beencomplied with by the Company.

In terms of Regulation 17 of Listing Regulations at least 50% of theBoard should comprise of non-executive independent directors with at least one womandirector. In order to comply with the requirement the Board appointed Dr. AnitaBandyopadhyay (DIN: 08672071) as an Additional Non-Executive Independent Director of theCompany for a term of five years with effect from February 3 2020 subject to theapproval of the Members.

(iv) Managing Director and Whole-time Directors

Mr. Anjan Chatterjee has been serving as the Managing Director of theCompany since December 2007. He has been appointed as the Chairman of the Board ofDirectors with effect from September 11 2017.

Mrs. Suchhanda Chatterjee has been serving as the Whole-time Directorof the Company since July 2010.

Mr. Indranil Chatterjee Whole-time Director (designated as Director -Commercial Operations) was designated and appointed as Deputy Managing Director of theCompany with effect from February 3 2020 to February 2 2023 subject to the approval ofthe Members of the Company.

Mr. Avik Chatterjee was appointed as Whole-time Director (designated asExecutive Director - Innovation and New Formats) of the Company for a period of threeyears with effect from February 3 2020 to February 2 2023 subject to the approval ofMembers of the Company.

Further details about the directors seeking appointment in the ensuingAnnual General Meeting are annexed to the Notice which is being sent to the Members alongwith the Annual Report.

(v) Re-appointment of Director Suchhanda Chatterjee (DIN: 00226893)

In accordance with the provisions of the Companies Act and the Articlesof Association of the Company Mrs. Suchhanda Chatterjee (DIN: 00226893) Director of theCompany retires by rotation at the ensuing annual general meeting and being eligibleoffers herself for re-appointment.

Anjan Chatterjee (DIN: 00200443)

The Board of Directors of the Company at their meeting held on July 232020 subject to the approval of the Members in the ensuing annual general meeting of theCompany approved the re-appointment of Mr. Anjan Chatterjee as Managing Director of theCompany for a period of three years with effect from December 27 2020.

(vi) Key Managerial Personnel

Mr. Anjan Chatterjee Chairman & Managing Director; Mrs. SuchhandaChatterjee Whole-time Director; Mr. Indranil Chatterjee Whole-time Director; Mr. RajeshKumar Mohta Executive Director-Finance and CFO and Mr. Avinash Kinhikar CompanySecretary & Legal Head are the Key Managerial Personnel of the Company as per theprovisions of the Companies Act.

(vii) Evaluation of Performance of the Directors Board and Committeesof the Board

Pursuant to the applicable provisions of the Companies Act the ListingRegulations and SEBI Guidance Note on Board Evaluation the Board has carried out anannual evaluation of its own performance the performance of its directors as well asevaluation of its committees.

The manner in which the formal annual evaluation of the directorscommittees of the Board and the Board as a whole is disclosed in the report on CorporateGovernance which forms part of the Annual Report.

(viii) Policy on Directors' appointment remuneration and other details

The Company's policy relating to remuneration of directors keymanagerial personnel and other employees as stipulated in Section 178 (3) of the CompaniesAct has been disclosed in the Corporate Governance report which forms part of thisreport.

(ix) Number of Board Meetings

The Board of Directors met six (6) times during the financial yearended March 31 2020 and the intervening gap between the meetings did not exceed theperiod prescribed under Companies Act. Detailed information on the meetings of the Boardis included in the report on Corporate Governance which forms part of this Annual Report.

The separate Independent Director's meeting scheduled on March 31 2020was rescheduled to June 29 2020 due to outbreak of COVID-19 pandemic. This meeting wasconducted through video conferencing without the presence of Non-Independent Directors andmembers of the management in compliance with Regulation 25 (3) of the Listing Regulationsand Schedule IV of the Companies Act.

Besides the above several committee meetings of the Board were heldduring the financial year ended March 31 2020 the detailed information of which isincluded in the report on Corporate Governance.

10. Share Capital

The Paid-up Equity Share Capital of the Company as on March 31 2020was ' 469576570/-. During the year under review there was no change in the issuedsubscribed and paid-up share capital of the Company.

11. Related Party Transactions

All the related party contracts arrangements and transactions duringthe year under review were entered in the ordinary course of business and on arm's lengthbasis. There were no materially significant related party contracts arrangements andtransactions entered during the year by your Company. Accordingly the disclosure ofrelated party transactions in Form AOC-2 is not provided.

All related party contracts arrangements and transactions werepresented to the Audit Committee for review and approval. Prior omnibus approval grantedby the Audit Committee of the Company for the related party transactions which areforeseen and repetitive in nature were reviewed by the Committee on quarterly basis.

The Policy on Materiality of Related Party Transactions and also ondealing with related party transactions as approved by the Board is uploaded on theCompany's website at the following web linkhttp://www.speciality.co.in/pdf/policies/POLICY ON MATERIALITY OF RELATED PARTYTRANSACTIONS AND ALSO ON DEALING WITH RELATED PARTY TRANSACTIONS.pdf.

The details of the transactions with related parties are provided inthe accompanying financial statements.

12. Report on Corporate Governance

The report on Corporate Governance as stipulated under Regulation 34(3)read with para C of Schedule V to the Listing Regulations forms part of the Annual Report.The requisite certificate from the practising company secretaries confirming compliancewith the conditions of Corporate Governance as stipulated under the Listing Regulations isattached to report on Corporate Governance.

13. Management Discussion and Analysis Report

As stipulated under Regulation 34(2) of the Listing RegulationsManagement Discussion and Analysis Report for the financial year under review is providedin a separate section forming part of this report.

14. Composition of Audit Committee

The details relating to the composition of the Audit Committee areprovided in the Report on Corporate Governance which forms part of this report.

15. Corporate Social Responsibility

In terms of Section 135 of the Companies Act the Board has constituteda Corporate Social Responsibility Committee ("CSR Committee") under theChairmanship of an Independent Director_of the Company. The CSR Committee of the Board hasformulated a CSR Policy which has been uploaded on the website of the Company athttp://www.speciality.co.in/pdf/policies/CORPORATE SOCIAL RESPONSIBILITY POLICY.pdf.

The Annual Report on CSR activities as prescribed under Section 135 ofthe Companies Act is annexed as Annexure B which forms part of this report.

16. Vigil Mechanism / Whistle Blower Policy

In pursuance of the provisions of Sections 177(9) and 177(10) of theCompanies Act a vigil mechanism for directors and employees to report genuine concernshas been established. The Vigil Mechanism Policy has been uploaded on the website of theCompany at http://www.speciality.co.in/pdf/policies/VIGIL_MECHANISM_POLICY.pdf.

17. Risk Management

The Audit Committee is responsible for reviewing the risk managementplan and ensuring its effectiveness. The Audit Committee has additional oversight in theareas of internal financial and risk management systems. Other details including detailspertaining to various risks faced by your Company and also development and implementationof risk management policy is provided in a separate section forming part of the AnnualReport.

18. Particulars of loans guarantees or investments

Disclosure on particulars relating to loans guarantees or investmentsmade during the financial year ended March 31 2020 under Section 186 of the Companies Actis given in the notes to the Financial Statements.

19. Consolidated Financial Statement

The Consolidated Financial Statement of the Company its joint venturecompany wholly owned subsidiaries and step down subsidiaries for the financial year2019-20 are prepared in accordance with the accounting principles generally accepted inIndia including the accounting standards specified under Section 133 of the Companies Actread with Rule 7 of the Companies (Accounts) Rules 2014 form part of the Annual Reportand are reflected in the Consolidated Financial Statement of the Company.

The Company prepared its financial statements in accordance withInd-AS including accounting standard read with Section 133 of the Companies Act notifiedunder the Companies (Accounting Standard) Rules 2006.

In accordance with third proviso of Section 136(1) of the CompaniesAct the Annual Report of the Company containing therein its standalone and theconsolidated financial statements has been placed on the website of the Companywww.speciality.co.in. Further financial statements of WOS has also been placed on thewebsite of the Company i.e. www.speciality.co.in.

20. Internal Financial Controls System and their adequacy

Your Company has laid down adequate internal financial controls systemthrough requisite policies and procedures which commensurate with its size and the natureof its operations. Such controls are operating effectively to ensure accuracy andcompleteness of the accounting records the timely preparation of reliable financialinformation along with the orderly and efficient conduct of business.

In addition during financial year 2019-20 as required under Section143 of the Companies Act the statutory auditors have evaluated and expressed an opinionon the Company's internal financial controls over financial reporting based on an audit.In their opinion the Company has in all material respects adequate internal financialcontrols over financial reporting and such internal financial controls over financialreporting were operating effectively as on March 31 2020.

Details of internal controls system are given in the ManagementDiscussion and Analysis Report which forms part of this Annual Report.

21. Auditors and Audit Reports

(i) Statutory Auditors and their report

At the twentieth annual general meeting held on August 23 2019 theMembers approved appointment of M/s. Singhi & Co. Chartered Accountants (FirmRegistration No. 302049E) as Statutory Auditors of the Company (the "StatutoryAuditors") to hold office for a period of five years from the conclusion of thatannual general meeting till the conclusion of the twenty fifth annual general meeting tobe held in the year 2024. The Statutory Auditors' Report for FY 2019-20 on the financialstatement of the Company forms part of this Annual Report. The report does not contain anyqualifications reservations or adverse remarks or disclaimer. The Statutory Auditors ofthe Company have not reported any fraud as specified in Section 143(12) of the CompaniesAct.

(ii) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Boardhas appointed M/s. GMJ & Associates a firm of Company Secretaries in practice toconduct the secretarial audit of your Company for the financial year ended March 31 2020.The Secretarial Audit Report for the financial year ended March 31 2020 is annexed asAnnexure C which forms part of this Report. The Secretarial Audit Report does not containany qualification reservation or adverse remark.

22. Compliance with Secretarial Standards on Board Meetings and GeneralMeetings

The Company has complied with the Secretarial Standards issued by theInstitute of Company Secretaries of India on Board Meetings and General Meetings.

23. Particulars of Employees

The ratio of remuneration of each director to the median employee'sremuneration and other details in terms of Section 197 of the Companies Act read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are annexed as Annexure D which forms part of this report.

The information in respect of employees of the Company requiredpursuant to Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 will be provided upon request. In terms of Section 136 of theCompanies Act the report and accounts are being sent to the Members and others entitledthereto excluding the aforesaid annexure. Any shareholder interested in obtaining a copyof the same may write to the Company Secretary.

24. Statutory Disclosures

(i) Conservation of Energy Technology Absorption and Foreign Exchangeand Outgo

1. Conservation of Energy

The disclosures required as per the provisions of Section 134(3)(m) ofthe Companies Act 2013 read with Rule 8(3)(A) of the Companies (Accounts) Rules 2014regarding Conservation of Energy is detailed below:

The Company values the significance of conservation of energy andremain conscious about the environmental impact of its business operations andcontinuously strives to improve energy efficiency through various initiatives. During theyear the Company continued to undertake a variety of energy conservation measures acrossall its restaurants making continuous efforts for judicious use of energy at all levelsof operations by utilizing energy efficient system and processes.

(a) The steps taken or impact on conservation of energy

• Installed energy efficient LED lights in all restaurants;

• Installed energy management system in 25 restaurants; and

• Installed energy saving sensors in the AC System of 25restaurants.

(b) The steps taken by the Company for utilizing alternate sources ofenergy

The Company has a installed 20KW solar power plant at the MainlandChina Restaurant at Greater Kailash (GK—II) at New Delhi which is presently underrenovation.

(c) The capital investment on energy conservation equipments

The Company made one time capital investment of ' 5.12 million onenergy management system during financial year 2016-17 and 2017-18. The Company duringfinancial year 2019-20 spent ' 1.80 million in order to maintain energy management system.

2. Technology Absorption

The activities of the Company are not covered under the disclosurerequired as per the provisions of Section 134(3)(m) of the Companies Act read with Rule8(3)(B) of the Companies (Accounts) Rules 2014 regarding technology absorption. TheCompany continues to adopt and use the latest technologies to improve the efficiency andeffectiveness of its business operations.

3. Foreign Exchange Earnings and Outgo

The disclosure required as per the provisions of Section 134(3)(m) ofthe Companies Act read with Rule 8(3)(C) the Companies (Accounts) Rules 2014 regardingforeign exchange earned in terms of actual inflows and foreign exchange outgo during theyear under review in terms of actual outflows are given below:

' in millions

Foreign Exchange Earnings and Outgo FY 2019-20 FY 2018-19
Foreign Exchange Earned in terms of actual inflows 12.11 14.3
Foreign Exchange Outgo in terms of actual outflows 2.1 3.1

(ii) Prevention of Sexual Harassment:

Your Company has zero tolerance for sexual harassment at its workplaceand has adopted a policy on prevention prohibition and redressal of sexual harassment atthe workplace 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 constituted Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013and has complied with the provisions relating to the constitution of Internal ComplaintsCommittee and no complaint has been received during the year under review.

(iii) No stock options were granted to the directors of your Companyduring the year under review

(iv) Additional information and details as specified in Rule 8(5) ofthe Companies (Accounts) Rules 2014 are included in the Directors' Report.

25. General Disclosures

Your Directors state that no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:

(i) Details relating to deposits covered under Chapter V of theCompanies Act.

(ii) Issue of equity shares with differential rights as to dividendvoting or otherwise.

(iii) Issue of shares including sweat equity shares to employees of theCompany under any scheme save and except Employee Stock Options Scheme referred to in thisReport.

(iv) Neither the Managing Director nor the Whole-time Directors of theCompany received any remuneration or commission from the subsidiary Companies.

(v) No significant or material orders were passed by the regulators orcourts or tribunals which impact the going concern status and Company's operations infuture.

26. Credit Ratings:

The credit ratings obtained by the Company along with any revisionthereto has been disclosed in the Corporate Governance Report which forms part of thisreport.

27. Extracts of Annual Return

Pursuant to Sections 134(3)(a) and 92(3) of the Companies Act read withRule 12 of the Companies (Management and Administration) Rules 2014 the extracts ofAnnual Return as at March 31 2020 is annexed as Annexure E which forms part of thisreport.

28. Directors' Responsibility Statement The Directors confirm that:

(i) in the preparation of the annual accounts for the year ended March31 2020 the applicable accounting standards have been followed and no materialdepartures have been made from the same;

(ii) they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of the affairs of the Company at the end of thefinancial year ended March 31 2020 and of the loss of the Company for that period;

(iii) they 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) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls for the Company andsuch internal financial controls are adequate and operating effectively; and

(vi) they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

29. Utilisation of net proceeds from the Initial Public Offering("Issue")

Pursuant to the approval of the Members of the Company obtained throughpostal ballot on November 27 2015 the objects of the issue as disclosed in the prospectusdated May 22 2012 issued by the Company for its issue were varied. In terms of variationthe Company had proposed to utilise the balance unutilised amount of ' 578.5 million as onMarch 31 2015 towards development of new restaurants or conversion of existingrestaurants under new formats in various locations across the country depending uponvarious factors such as the customer's preference competition suitable locationselection of suitable premises at an affordable rent etc. in the financial years2015-18.

The Company had utilized ' 355.4 million upto March 31 2018 out of thebalance unutilized amount of ' 578.5 million towards the new objects relating to thebusiness of the Company approved by the Members on November 27 2015

The approval of Members was received through postal ballot on March 242018 for variation in terms of the contract or objects of the issue to utilise thebalance amount towards development of new restaurants or conversion of existingrestaurants under new formats for further period of three (3) years with effect from April1 2018

The initial public offer (IPO) proceeds raised as per the prospectusdated May 22 2012 have been fully utilized during the year review for the purposes asstated in the prospectus issued for the IPO.

30. Acknowledgement

Your Directors would like to express their appreciation for theassistance and co-operation received from the banks government authorities customersvendors and members during the year under review.

Your Directors also wish to place on record their appreciation for thecommitted services by the executives staff and employees of the Company.

Annual Report on Corporate Social Responsibility Activities

Pursuant to the provisions of Section 135 of the Companies Act 2013read with Companies (Corporate Social Responsibility Policy) Rules 2014. A brief summaryof initiative taken during the financial year 2019-20 is given below:-

1 A brief outline of the Company's CSR Policy including overview of projects or programs proposed to be undertaken and a reference to web-link to the CSR Policy and Projects or programs A brief outline of the Companies CSR Policy: The Company has framed the CSR Policy to identify and support initiatives aimed at:
(i) eradicating hunger poverty and malnutrition promoting health care and sanitation and improving the quality of life and economic well being of individuals;
(ii) training providing and supporting educational needs of the underprivileged segments of society; and
(iii) such other activities as may be permissible under Schedule VII of the Companies Act 2013 and the relevant rules.
The Board of Directors of the Company have already framed the Corporate Social Responsibility Policy based on the recommendation of CSR Committee and the same has been displayed on the Company's website at the following weblink:
http://www.speciality.co.in/pdf/policies/CORPORATE SOCIAL RESPONSIBILITY POLICY.pdf
In view of the inadequacy of profits as per the provisions of the Companies Act 2013 no amount was available to be contributed by the Company towards CSR activities for the Financial Year 2019-20.
2 Composition of the CSR Committee The composition of the CSR Committee is as under:-
Mr. Dushyant Mehta-Chairman
Mrs. Suchhanda Chatterjee-Member
Mr. Ullal R. Bhat-Member
3 Average Net Profits of the Company for the past three financial years. Nil
4 Prescribed CSR expenditure (Two Percent of the amount as in item 3 above). Nil
5 Details of CSR spent during the financial year 2019-20.
(i) Total amount to be spent for the financial year 2019-20. Nil
(ii) Amount un-spent if any. Not applicable
(iii) Manner in which the amount spent during the financial year 2019-20. Not applicable
6 In case the Company has failed to spend the two per cent of the average net profits of the last three financial years or any part thereof the Company shall provide the reasons for not spending in its Board Report. Not applicable
7 A responsibility of the CSR Committee that the implementation The CSR Committee confirms that the implementation and
and monitoring of CSR Policy is in compliance with CSR monitoring of CSR Policy is in compliance with the CSR Objectives
objectives and Policy of the Company. and Policy of the Company.

.