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Sunil Agro Foods Ltd.

BSE: 530953 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE224D01012
BSE 00:00 | 22 May 24.30 1.05
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NSE 05:30 | 01 Jan Sunil Agro Foods Ltd
OPEN 24.30
PREVIOUS CLOSE 23.25
VOLUME 10
52-Week high 33.40
52-Week low 16.00
P/E 11.91
Mkt Cap.(Rs cr) 7
Buy Price 22.20
Buy Qty 290.00
Sell Price 24.40
Sell Qty 10.00
OPEN 24.30
CLOSE 23.25
VOLUME 10
52-Week high 33.40
52-Week low 16.00
P/E 11.91
Mkt Cap.(Rs cr) 7
Buy Price 22.20
Buy Qty 290.00
Sell Price 24.40
Sell Qty 10.00

Sunil Agro Foods Ltd. (SUNILAGROFOODS) - Director Report

Company director report

Your Board of Directors has pleasure in presenting the Thirty First (31st) AnnualReport together with the Audited Financial Statements for the financial year ended 31stMarch 2019.

1. FINANCIAL RESULTS : (Rs. in Lakhs)
Particulars For the year ended March 31 2019 For the year ended March 31 2018
Total Income 13646.22 14305.00
Less: Expenditure 13164.13 13838.93
Profit before Interest and Depreciation 482.09 466.07
Less: Interest 231.89 263.39
Less: Depreciation 161.68 112.32
Profit Before Taxation 88.52 90.36
Less: Provision for Taxation 41.27 23.94
Profit After Taxation 47.25 66.42
Less: Other Comprehensive Income
Items that will not be reclassified to profit or loss 1.75 1.84
Items that will be reclassified to profit or loss 0 0.25
Total Comprehensive Income 45.50 64.33

2. STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK:

Your Company continued to perform well during the year under report under certainchallenges and hurdles. Overall business improved satisfactorily with better resourceoptimization and more effective controls. The Company's expansion program completed inprevious year increased the production capacity although the Company will take some timeto stabilize the total production in the upcoming months. During the year under reviewyour Company has faced lot of challenges due to higher Minimum Support Price. Your Companyhas shown significant growth and registered higher turnover in manufacturing segment;however there was no turnover from trading segment during the year. Further higherdepreciation provision resulted in decrease in profit of the Company.

Your Company has also installed Flour Silos and started the uniform mixing of flour andnow the Company is in the process of installing Whole Wheat Silos in the coming months.

The Shareholders may note that there is decrease in the revenues from Sales andServices to Rs. 13646.22 Lakhs in the current year as compared to Rs. 14305.00 Lakhs inthe previous year due to reasons as mentioned above. Profit has decreased to Rs. 88.52Lakhs in the current year compared to Rs. 90.36 Lakhs in the previous year.

Your Company has been facing competition from other players in the same space. Immenseexperience of the operating team at the factory helped the Company to achieve betterperformance. Rationalization of various inputs expenditures and other resource allocationhas been continuously followed.

3. MANAGEMENT DISCUSSION AND ANALYSIS:

a. Industry outlook and developments:

The food processing industry is one of the largest industries in India in terms ofproduction consumption and exports. In India the food sector has emerged as ahigh-growth and high-profit sector due to its immense potential for value additionparticularly within the food processing industry. The Government of India has beeninstrumental in the growth and development of the food processing industry. The Governmentthrough the Ministry of Food Processing Industries (MoFPI) is making all efforts toencourage investments in the business. This sector is among the few that serves as a vitallink between the agriculture and industrial segments of the economy. A thrust to the foodprocessing sector implies significant development of the agriculture sector and ensuresvalue addition to it.

b. Business Overview:

The Company has achieved a turnover of Rs. 13493.86 Lakhs (previous year Rs. 14213.07Lakhs) for the financial year ended 31.03.2019 with a net profit of Rs. 45.49 Lakhs(previous year Rs. 64.33 Lakhs).

c. Opportunities: As stated earlier your Company has completed its expansion whichresulted in increase in production and is looking to commission Silos for blending andbulk supply of whole wheat flour.

d. No risk is expected during this year. e. Outlook:

The Company will strive for Better Values.

f. Internal Control System:

The Company has effective control system commensurate with its operations. The Companyhas internal audit system through outside agency with qualified Chartered Accountantcarries out the audit based on a planned program. The audit also reviews the adequacy andeffectiveness of the internal control system and the follow up action taken pursuant toaudit observation. g. Human Resource Development: The Company conducts regular trainingprograms both internally and externally for Employees at all levels to improve the skillsand overall development. Employees' relations at all the levels continue to remaincordial.

4. MATERIAL CHANGES AND COMMITMENTS:

There were no material changes and commitments which occurred affecting the financialposition of the Company between 31st March 2019 and the date on which this report hasbeen signed.

5. CHANGE IN THE NATURE OF BUSINESS: There were no changes in the nature ofbusiness during the year under review as prescribed in Rule 8(ii) of the Companies(Accounts) Rules 2014.

6. DIVIDEND:

Your Directors are pleased to recommend dividend of Re. 0.50 per Equity Share of theface value Rs. 10/- (5%) which is provided for in the accounts absorbing a sum of Rs.1501450/- subject to the approval of Shareholders in the ensuing Annual General Meeting.

7. RESERVES:

The Board has not proposed to transfer any amount to its reserves.

8. SHARE CAPITAL:

The paid up Equity Share Capital as on 31st March 2019 was Rs. 300.29 Lakhs. Duringthe financial year under review the Company has not issued shares with differentialvoting rights nor granted Stock Options nor Sweat Equity.

9. CAPITAL INVESTMENTS

Capital Investments during the financial year 2018-19 was at Rs. 536.50 Lakhs (Net ofcapital work-in-progress and capital advances).

10. CORPORATE SOCIAL RESPONSIBILITY:

Since the Company does not meet the criteria for the applicability of Section 135 ofthe Companies Act read with the Companies (Accounts) Rules 2015 this clause is notapplicable.

11. RISK MANAGEMENT:

The Company has formulated a Risk Management Policy and a mechanism to inform the Boardabout risk assessment and mitigation procedures. The Company also undertakes periodicalreview to ensure that executive management controls risks by means of a properly designedframework.

12. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy for vigil mechanism pursuant to the provisionsof Sections 177(9) and (10) of the Companies Act 2013 and as per Regulation 4(2)(d)(iv)of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 which isavailable on website of the Company at http://sunilagro.in/wp-content/uploads/2019/08/whistle-blower-policy.pdf and there were no cases reported during lastyear.

13. INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THESUBSIDIARIES / ASSOCIATES/ JV:

The Company does not have any Subsidiary Joint Venture or Associate Company.

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In terms of the provisions of the Companies Act 2013 and the Articles of Associationof the Company Mrs. Pinky Jain (holding DIN: 03636974) Non-Executive Director retiresby rotation at the forthcoming Annual General Meeting and is eligible for re-appointment.

Ms. Garima Garg is the Company Secretary and Compliance Officer (KMP) of the Company.

Mr. Shailesh Siroya resigned from the Board of Directors w.e.f 12th November 2018 tocomply with the Regulation 16 of SEBI (LODR) Regulations 2015. Further in terms ofSection 149(10) of the Companies Act 2013 the Board in its Meeting held on 28th January2019 on the recommendation of the Nomination and Remuneration Committee has appointedMrs. Sarika Bhandari (DIN: 07140112) as an Additional and Independent Director for termfor a period of 5 years for a term up to 27th January 2024 subject to the approval ofShareholders and the same has been included as one of the agenda items in the Noticeconvening the Annual General Meeting. Board received a declaration that Mrs. SarikaBhandari meets the criteria of independence as provided under Section 149(6) of theCompanies Act 2013 ("the Act").

Brief resume of Mrs. Sarika Bhandari is attached to the Notice of the Annual GeneralMeeting. Further the Board in its Meeting held on 29th May 2019 based on therecommendation of the Nomination and Remuneration Committee has appointed Mr. Akshat Jain(DIN: 08424334) as an Additional and Whole Time Director for term for a period of 3 yearsfor a term up to 31st May 2022 subject to the approval of Shareholders and the same hasbeen included as one of the agenda items in the Notice convening the Annual GeneralMeeting. Brief resume of Mr. Akshat Jain is attached to the Notice of the Annual GeneralMeeting.

15. BOARD MEETINGS:

The Meetings of the Board are held at regular intervals with a time gap of not morethan 120 days between two consecutive Meetings. During the period under review Four (4)Board Meetings were held on 23rd May 2018 30th July 2018 12th November 2018 and 28thJanuary 2019. The Agenda of the Meeting is circulated to the Directors in advance.Minutes of the Meetings of the Board of Directors are circulated amongst the Members ofthe Board for their perusal. The details of other Committee Meetings during the financialyear 2018-19 are given in the Corporate Governance Report.

16. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:

A separate Report on Corporate Governance in terms of Regulation 34 of the Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred as "Listing regulations") along with a Certificatefrom a Practising Company Secretary regarding compliance to the Conditions stipulatedunder Chapter IV of the Listing Regulations is annexed as Annexure - I.

17. ANNUAL BOARD EVALUATION:

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has established an annual performance evaluation of its own performance itsCommittee's and the Directors individually. The manner of evaluation has been explained inthe Corporate Governance Report. Further the Independent Directors at their exclusivemeeting held during the year reviewed the performance of the Board its Chairman andNon-Executive Directors and other items as stipulated under the Listing Regulations.

18. DIRECTORS' RESPONSIBILITY STATEMENT:

In pursuance of Section 134 (5) of the Companies Act 2013 the Directors herebyconfirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating 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 that period;

(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 on a going concern basis;

(e) 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

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

19. INTERNAL FINANCIAL CONTROL:

The Company continued to maintain high standards of internal control designed toprovide adequate assurance on the efficiency of operations and security of its assets. Theadequacy and effectiveness of the internal control across various activities as well ascompliance with laid-down systems and policies are comprehensively and frequentlymonitored by your Company's management at all levels of the organization. The AuditCommittee which meets at-least four times a year actively reviews internal controlsystems as well as financial disclosures with adequate participation inputs from theStatutory Internal and Corporate Secretarial Auditors.

20. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS:

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of Independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of the ListingRegulations.

21. EXTRACT OF ANNUAL RETURN:

As required pursuant to Section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of Annual Return inMGT-9 is annexed as Annexure – II as a part of this Annual Report.

22. DEPOSITS:

Your Company has not invited/accepted/renewed any deposits from the public as definedunder the provisions of Companies Act 2013 and accordingly there were no deposits whichwere due for repayment on or before 31st March 2019.

23. RELATED PARTY TRANSACTIONS:

The particulars of contracts or arrangements with related parties referred to inSection 188(1) of the Companies Act 2013 for the Financial Year 2018-19 in the prescribedformat AOC 2 is enclosed as Annexure – III as a part of this Annual Report.

24. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN OR SECURITY PROVIDEDBY THE COMPANY:

The Company has duly complied with the provisions of Section 186 of the Companies Act2013 and it has taken:

Secured Loans: Rs. 6392298/-
Unsecured Loans: Rs. 25459464/-
Current/Non-Current Investments: Rs. 671350/-
Guarantees: Nil

Securities Extended: Secured by the certain immovable properties of the Companyhypothecation by way of first charge on company's stock book debts plant and machineryvehicles and term loan repayable within 3 years in equal monthly installments.

25. AUDITORS:

Messrs GRV & PK Chartered Accountants Bangalore (Firm Registration No. 008099S)were appointed in the Annual General Meeting held on 21st September 2017 for aconsecutive term of five years from the conclusion of 29th Annual General Meeting till theConclusion of 34th Annual General Meeting.

Remuneration Details (2018-19):
In Rs
Statutory Audit 200000/-
Taxation Audit Fee -
Limited Review Fee 48100/-
Total 248100/-

The Statutory Auditors have observed below material weaknesses in the Auditor's Report:a) The Company does not have appropriate control system over cash handling as so manypayments at factory are made in cash this could potentially result in unauthorised cashpayments resulting in fraudulent transactions. b) The Company did not have an appropriateinternal control system for obtaining external balance confirmation on periodic basis.This could potentially result in inaccurate assets and liabilities disclosed in the booksof accounts.

Board's Response:

a) The Company will ensure to non-occurrence of such events and comply with theprovisions in future.

b) Independent firm of Chartered Accountants who have been appointed as InternalAuditors of the Company periodically checks the internal control system.

26. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr. Vijayakrishna KT Bangalore Practising Company Secretary to undertakethe Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed asAnnexure – IV to this Report.

27. PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5(1) and (2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014Details/Disclosures of Ratio of Remuneration to each Director to the median employee'sremuneration is annexed as Annexure – V to this report.

Further the statement showing details in respect of employees of the Company are givenin the Annexure – V forming part of the Report.

28. LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the financial year2018-2019 to BSE Limited where the Company's Shares are listed.

29. MATERIAL ORDER PASSED BY ANY COURT OR REGULATOR OR TRIBUNALS IMPACTING GOINGCONCERN STATUS OF COMPANY:

No order was passed by any court or regulator or tribunal during the year under reviewwhich impacts going concern status of the Company.

30. COMPOSITION OF AUDIT COMMITTEE NOMINATION AND REMUNERATION COMMITTEE &STAKEHOLDERS RELATIONSHIP COMMITTEE

Following are the composition of various Committees:

i) Composition of Audit Committee:

1. Mr. AVS Murthy Chairman
2. Mrs. Sarika Bhandari Member
3. Mr. Pramod Kumar S Member

ii) Composition of Nomination and Remuneration Committee:

1. Mrs. Sarika Bhandari Chairman
2. Mr. AVS Murthy Member
2. Ms. Pinky Jain Member

iii) Composition of Stakeholders' Relationship Committee:

1. Mr. AVS Murthy Chairman
2. Mrs. Sarika Bhandari Member
2. Ms. Pinky Jain Member

31. CONSERVATION OF ENERGY RESEARCH & DEVELOPMENT TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGE OUTGO:

(A) Conservation of Energy:

1. Energy Conservation measures taken:

The Company has a system to monitor consumption of energy and all efforts forconservation of energy wherever possible are made and have installed Solar Energy lightsin the plant. Energy efficient electric Tubes have been installed to save energy. TheCompany has also installed energy efficient meters controlling waste of power.

2. Additional investments and proposal being implemented for reduction andconsumption of energy and the impact of the same in the cost of production of goods.

3. Energy Audit done

Investment was made in machinery designed for low energy consumption and such machinerywas in operation in the period under review.

(B) Technology Absorption:

The Company is committed to maintaining its standard and high quality of its productionand is constantly engaged in efforts to confer to the guaranteed customer satisfaction.

(C) Foreign Exchange Earnings and Outgo:

The Company expended Rs. 1293326/- in foreign exchange during the year under reviewand the Company's earnings in foreign currency is Nil during the year under review.

32. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

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. The following is a summary of sexualharassment complaints received and disposed-off during the financial year 2018-19:

No of complaints received: NIL No of complaints disposed: NIL No. of complaintspending: NIL

33. ACKNOWLEDGEMENTS:

The Directors place on record their appreciation for valuable contribution made byemployees at all levels active support and encouragement received from Government ofIndia Government of Karnataka Company's Bankers Customers Principals BusinessAssociates and other Acquaintances. Your Directors recognize the continued supportextended by all the Shareholders and gratefully acknowledge with a firm belief that thesupport and trust will continue in the future also.

For and Behalf of the Board of Directors
Place : Bengaluru SHANTILAL BANSILAL PRAMOD KUMAR S
Date : 29.05.2019 Managing Director Chief Executive
DIN: 00719808 Officer & Director
No. 10 Kamal Nivas DIN: 00719828
Srikantaiah Layout No. 10 Kamal Nivas
Crescent Cross Road Srikantaiah Layout
Bengaluru – 560 001 Crescent Cross Road
Bengaluru – 560 001