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Tarai Foods Ltd.

BSE: 519285 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE906C01016
BSE 10:24 | 18 Feb 5.05 -0.26
(-4.90%)
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5.08

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NSE 05:30 | 01 Jan Tarai Foods Ltd
OPEN 5.08
PREVIOUS CLOSE 5.31
VOLUME 525
52-Week high 7.45
52-Week low 2.35
P/E
Mkt Cap.(Rs cr) 9
Buy Price 5.08
Buy Qty 100.00
Sell Price 5.05
Sell Qty 1958.00
OPEN 5.08
CLOSE 5.31
VOLUME 525
52-Week high 7.45
52-Week low 2.35
P/E
Mkt Cap.(Rs cr) 9
Buy Price 5.08
Buy Qty 100.00
Sell Price 5.05
Sell Qty 1958.00

Tarai Foods Ltd. (TARAIFOODS) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenng the 28 Annual Report together with theaudited statement of accounts of the Company for the year ended 31 March 2018.

1. Statement of Company A airs:

a. financial Results & Performance:

The performance of the Company for the financial year ended 31 March 2018 issummarized below:

financial Year ended 31 March 2018 financial Year ended 31 March 2017
Parcular s
(Rs. In Lacs) (Rs. In Lacs)
Gross Revenue 214.7 293.7
Less: Total Expenditure (235.5) (292.8)
Profit/(Loss) before Exceponal/ Extr aordinary
(20.8) 0.8
Items and Tax
-Exceponal It ems 7.06 -
-Extraordinary Items - 0.5
Profit/(Loss) before tax (13.7) 1.4
Tax Expenses - -
Profit/(Loss) for the period (13.7) 1.4
Other Comprehensive Income 0.6 -
Total Comprehensive Income for the Period (13.1) 1.4

The Company was in its twenty eighth year of operaons. During the year under reviewthe Gross revenue decreased to Rs. 214.7 Lacs as compared to Rs. 293.7 Lacs in theprevious year. Further the Company incurred a loss of Rs. 13.7 Lacs as compared to profitearned Rs. 1.4 Lacs during the previous year. The company focused its a enon only onproducon and sale of fresh Mushrooms and the directors are hopeful of be er performance inthe next year.

Adopon of Indian Accounng Standards ("IND AS")

The Company has adopted Indian Accounng Standards ("Ind AS") and accordinglythese financial statements have been prepared in accordance with the same as requiredunder secon 133 of the Companies Act 2013 read with rules made there under. The date oftransion to Ind AS is 1 April 2017.

These financial statements for the year ended 31 March 2018 are the Company's firstInd AS financial statements. The impact of transion has been accounted for in the openingreserves and the comparav the period gures have been reinstated accordingly.

Transfer to Reserves:

The company has not transferred any amount to Reserves of the Company during thefinancial year under review.

Dividend:

Your company has incurred losses during the year under review. Accordingly no dividendis recommended on the equity shares of the Company for the year ended 31 March 2018.

Material changes and commitments subsequent to the Balance sheet:

Mr. Ashwini Kumar Pandey (DIN: 08198711) was appointed as an Addional Dir ector incapacity on Independent Director to hold o ce for a period of 5 year upto 13 August 2023subject to the approval of shareholders in the ensuing Annual General Meeng of the Company. Further

Mr. M.S. Grewal (DIN: 06525633) resigned from the directorship of the Company with theect from 14 August 2018.

MANAGEMENT DISCUSSION & ANALYSIS REPORT REVIEW OF OPERATIONS DURING THE YEAR &FUTURE PLANS

(I) Industry structure and developments.

Mushroom farming is pracced in more than 100 countries and its producon is increasingat an annual rate of 6-7% presently. World producon of mushroom is over 27 million tons asper claims of Chinese Associaon of edible mushrooms. Indoor culv aon of mushrooms uliz esthe verc al space and is regarded as the highest protein producer per unit area and mealmost 100 mes more than the convenonal agriculture and animal husbandry. This high techhorcultur the venture has a promising scope to meet the food shortages without unduepressure on land. In India mushroom producon shot up from near 11000 tons in 1992 over120000 tons in 2012. India produces about 600 million tons of agricultural wasteannually and a major part of it are le out to decompose naturally or burnt in citu. Thiscan the ecv ely be uliz ed to produce highly nutriv the food unlike mushrooms and spentmushroom substrate can be converted into organic manure for eld crops. Mushroom growing ishighly labour oriented venture and two factors i.e availabilies of raw material andlabour make mushroom growing economically pro table in India.

On the export front also for the first me during 1994 India not only gured in the USimports but emerged as the II largest exporter of the canned mushrooms replacing Taiwan.Now a few commercial mushroom units are exporng c anned mushrooms to the AmericansEuropean and other countries regularly

(ii) Opportunies Strength and Threats

Opportuni es

Macro-economic as well as industry specific indicaons point to enduring buoyancy in thedomesc market while the internaonal geographies

in which your Company operates are likely to be stable as well.

Changing demographics (young higher disposable income experimental urbanizaonwillingness to spend) further fuelled by trends like a greater awareness of health andnutrion on one hand and more hedonism (especially the new 'a uent' generaon) is rapidlyenlarging the opportunity.

Development trends of Mushroom industry is based on the increasing consumerconsciousness and demand for nutrious quality and organic products in domesc andinternaonal market. Increasing interest in protecon of environment from the industrialpolluon and environment friendly progress in mushroom producon and processing technologiesresulng in tremendous growth in the producvity and producon of mushrooms.

Strength:-

Mushrooms are grown seasonally as well as state-of-art environment controlled Crop roomin the commercial units. It is highly labour oriented venture and labour availability isno constraint in the vicinity of Tarai Foods and two factors that is availabiliesof raw materials and labour make mushroom growing economically pro table in this region.Moreover

Tarai foods Ltd. Rudrapur is located in the bowl of raw materials likeWheat Straw Sugar cane Bagasse & Chicken Manure required for composng. Besidesthe moderate climate of the Tarai region is well suited to mushroom producon astemperature does not as high alike other parts of the country.

Awareness about food and medicinal values of mushrooms increasing quant av the use ofmushrooms in the country thus creang be er market for a product like fresh and processedmushrooms. There is increasing market for post harvest products like pickles or souppowder of mushrooms.

Threats

??Uncontrolled price structure

When there is a glut in the market the price of certain food items falls downconsiderably but as the demand increases or there is shortage of those food items in themarket the price rises up with a vast variaon. Thus there is always an uncertainty inmarket prices of most of the food items which reduces the amount of net profit and thisdiscourages the manufacturers/ producers of this food items. This problem gets aggravatedduring peak producon months also because there is no minimum support price from the Govt.

??High transportatton charges:

Although agro and animal wastes are available in plenty in India but theiravailability are not evenly distributed. Due to diversi ed climate and topography of landdi erent kinds of crops are raised in di erent parts of the Country and producon/manufacture have to pay heavy transport charges. The hike in diesel/petrol prices from meto me aggravates this problem.

??Compeutton: eg -Availability of canned Chinese mushroom at lower price.

??Unorganized producon and sale parcularly by seasonal farmers resulng in glut inmarket during winter months. This results in price cut in

the period.

??Lack of modern facilies to produce quality compost casing material and spawn TFL isgoing to improve its facilies in this regard.

(iii) Segment wise & Product-wise performance:

The Company operates in a single segment. The product wise performance is as under:

? Fresh Mushrooms ?Mushroom Spawn Compost for Mushroom

 

Product-wise performance
Sale of Finished Goods

 

Descripon

Current Year 2017-18

Previous Year 2016-17

Qty. (in MTs) Value (in Rs. In lacs) Qty. (in MTs) Value (in Rs. In Lacs)
Fresh Mushrooms 170.57 193.87 239.11 282.1
Mushroom Spawn 5.94 7.44 4.16 5.12
Compost for Mushroom

87.57

2.92

-

-

The company has completely diversi ed in Mushroom growing under ar ciallycontrolled condions. It has been successful in creang

capacies of ton a day for Mushroom and is hopeful of expanding it to 1 ton a day innear future.

Management is consistently keeping close watch on the changing market scenario and thebusiness strategy is reviewed regularly for achieving a

consistent growth by meeng the tough compeon successfully.

(iv) Risks and concerns:

Every business has inherent risks involved in it operaons which may be either externalor internal. The external factors are market compeon

availability of cheaper substut the products Government policies regarding ongoingpolic al and economic changes in the imporng Country. The

Company may not have much control over such factors; however it is important to addressthese risks & concerns to mig ate their overall impact on the business. Formal riskassessment and Management approach along with the regular monitoring mechanism in theCompany ensures that these risks are duly addressed and well managed. High focus on safetyof plant its premises and people connuity and proacv the Management of related businessenvironment are essenal for the risk management in the overall supply chain and businessin general.

(v) Internal control systems and their adequacy.

The Company has an adequate system of internal controls to ensure that all acvies aremonitored and controlled as well as transacons are authorized recorded and reportedcorrectly. The Company ensures adherence to all internal control policies and proceduresas well as compliance with all regulatory guidelines which are supplemented by internalaudit regularly.

The Audit Commi ee of the Board meets on quarterly basis and reviews the internalcontrol systems as well as financial statements.

(vi) Discussion on financial performance with respect to operaonal performance:

The Company has diversi ed its operaons into Mushroom growing in ar cially controlledtemperature seng and o ers spawn and compost

to mushroom growers.

(viii) Material developments in Human Resources / Industrial Relaons fr ont includingnumber of people employed

The Company lays due emphasis on sound Human Resource Management pracces and appraisalsystems with focus on cordial employee relaons to ensure higher level of producvity andoperaonal the ciency. Adequate the orts have been made to strengthen and develop its humanresources as a key strength through connuous training inputs and focused development plan.As on 31st March 2018 the total numbers of permanent employees in the Company were 12(Twelve).

The belief that 'great people create great organizaons' has been at the core of theCompany's approach to its people. We connued to make

signi cant investments for training in the areas of markeng excellence customerservice and building capabilies for organized retail trade.

b. Key Changes during the year:

1. Changes in the Nature of business: NIL

2. Changes during the year in Directors and KMP: NIL

3. Changes in the Subsidiaries Joint Venture and Associate Company:The Company did not make any subsidiaries Joint Ventures and Associate Company during thefinancial year under review.

4. Details of the order passed by the Regulators/ Courts/ Tribunals: Noorder has been passed by the regulators courts or tribunals impacng the going concernstatus and company's operaon in future.

2. Directors:

The Board of Directors of the Company is duly constut ed. During the year under reviewno director resigned from the directorship of the

Company.

a. Composion and Meengs of the Board:

The Board Comprises of Mr. G.S Sandhu Ms. Kiran Sandhu Mr. Ram Pyare Singh Mr.Ganesh Kumar Mr. Melvinder Singh Garewal and Mr.

st

Hakam Singh Saini as on 31 March 2018. The meengs of Board of directors were duly heldfour mes on 30/05/2017 14/08/2017 14/11/2017 and 13/02/2018 in respect of which propernoces were given and the proceedings were properly recorded and the maximum me gap between2 board meengs is as per the provisions of the Companies Act 2013 readwith SEBI (LisngObligaons & Disclosure Requirement) regulaons 2015. The details of the directors whoa ended the meengs are given separately in the Corporate Governance report annexedseparately. The Board has adopted all the recommendaons of Audit Commi ee.

b. Composion and Mee ng of Audit Commi ee:

The Audit Commi ee is duly constut ed. The Audit Commi ee comprises of Mr. GaneshKumar Ms. Kiran Sandhu Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as themembers of the Commi ee. The Audit Commi ee duly met Four (4) mes on 30/05/201714/08/2017 14/11/2017 and 13/02/2018 during the financial year. The details of theMembers who a ended the meengs are given separately in the Corporate Governance reportannexed separately.

c. Composion and Mee ng of Nomina on and R emuneraon Commi ee:

The Nominaon and R emuneraon Commi ee comprises of Mr. Ganesh kumar Mr. MelvinderSingh Garewal Mr. Hakam Singh Saini and Ms. Kiran Sandhu as the members of the Commi ee.There was no Nominaon and R emuneraon Commi ee meeng during the y ear under review.

d. Composion and mee ng of St akeholders Relaonship Committ ee:

The Stakeholders Relaonship Commi ee comprises of Mr. Ganesh Kumar Mr. Melvinder SinghGarewal Mr. Hakam Singh Saini and Ms.

Kiran Sandhu as the members of the Commi ee. There was no Stakeholders Relaonship Commiee during the year under review.

e. Declaraon by Independen t Directors and their meeng:

The Company has received the requisite declaraons under secon 149(7) of the CompaniesAct 2013 from each of the Independent directors in the start of the financial Year stangthat they meet the criteria of independence as menoned under Secon 149(6) of the Act.During the year under review the Independent Directors of the Company met once on13/02/2018.

Training of Independent Directors:

The Company had provided suitable training to all the independent directors of theCompany to familiarize them with the Company their roles rights responsibilies in theCompany nature of the industry in which the Company operates business model of theCompany etc. f. Policy on Director's appointment and remuneraon:

The current policy is to have an appropriate mix of execuv the & non-execuv the andindependent directors to maintain the independence of the board and separate its funconsof governance and management. The policy of the Company on Directors appointment andremuneraon including the criteria for determining the quali caons posiv the aribut esindependence of a Director and other ma ers as provided under Secon 178(3) of theCompanies Act 2013 is as per the terms laid down in the Nominaon & Remuneraon policyof the Company. The Nominaon & remuneraon Policy of the Company is annexed as Annexure-1.

3. Auditors: a. Statutory Audit:

M/s Ra an Anil & Co. Chartered Accountants A-90 Gali No. 6 1 Floor Madhu ViharMarket Patparganj Bus Depot. Delhi were appointed as

Statutory Auditors of the Company for a period of 5 years in the 24 Annual GeneralMeeng ll the conclusion of 29 Annual General Meeng of the Company to be held in the year2019. However they had expressed their unwillingness to connue to act as StatutoryAuditors of the company from the forthcoming Annual General Meeng of the Company. M/s.Sunil Vashisht & Co. Chartered Accountant (FRN: 005016N) having o ce situated at R-8South Extension Part 2 New Delhi- 110049is proposed to be appointed as the StatutoryAuditors of the Company to hold the o ce for a period of 5 years in the ensuing AnnualGeneral Meeng of the Company. Further the Company has received a wri en consent from M/s.Sunil Vashisht & Co. Chartered Accountant (FRN: 005016N) to act as the StatutoryAuditor and Cer c ate from the Auditors to the the ect that their appointment if madewould be in accordance with the provisions of Secon 141 of the Companies Act 2013.

Reporng of frauds by auditors:

During the year under review the auditors has not reported to the Board undersub-secon (12) of secon 143 of the Companies Act 2013 any instances of fraud commied against the Company by its o cers or employees the details of which would need to bemenoned in the Board's report.

Board's explanaon and Comments:

Auditor's Responsibility Statement read with Clause 12 on Note 21: The Company hasbeen repairing the plant on regular basis depending on the liquidity posion as per theneed of the hour. Extensive repairs are made to the plant & machinery every year. TheCompany has also led a case with the High Court on Insurance Company towards this claim.However the esma te of the damage and repairs cannot be done unless all the insulaon fromthe walls windows floor etc. is removed.

Auditor's Responsibility Statement read with Clause 9 on Note 21: Interest onsecured term loans (IDBI Bank and IFCI Ltd.) with the secured lenders have not beenprovided for in the books of accounts as the company has entered into negoa ted selemen twith the Secured Lenders financial Instuons in 2009-10. The Company made a payment of Rs.1 crore towards the said selemen t in earlier years as part of the selemen t but defaultedin the payment of further instalments. Both of the secured lenders have revoked the negoated selemen t but the company has approached them again for reselemen t of the ma er andis hopeful of selemen t in the near future. Current provision of interest of Rs. 28.99 crsdue to the secured lenders along with Principal amount of Rs. 3.40 crs as per Books ofAccounts is more than the selemen t amount discussed with these lenders and in view ofthis there is no fresh provision of interest made for the year under review in the Booksof Accounts.

Auditor's Responsibility Statement read with Clause 10 on Note 21: The Company hasapproached the secured lenders for reselemen t and payment of Rs. 2 05 70000/- was madein earlier years to these secured lenders towards the negoa ted selemen t which standrevoked as on date. On fully seling the dues of these secured lenders as per the selement the company will be able to come out of the negav the networth and also revive itsoperaons fully. The company has also diversi ed in the eld of Mushroom growing it in arcially controlled temperature and is hopeful of revival of its operaons fully.

Other points are self-explanatory as given in various clauses on Note 21.

b. Secretarial Audit:

The Board has appointed M/s Santosh Kumar Pradhan Praccing Company Secretary as theSecretarial Auditor for the financial Year 2017-18.

The secretarial audit report as required under secon 204 of the Companies Act 2013 isannexed as Annexure 2 and forms part of this report.

Board's explanaon and Comments:

The Company has tried on roll services of a Company Secretary as Key ManagerialPersonnel. However since the company is going through sever liquidity crunch it is dicult to persuade the applicants to work on a reasonable salary. However the company iscommi ed to employ Company secretary in near future. c. Disclosure about Cost Audit:

The provisions of the cost audit and maintenance of cost records as specified bythe Central Government under sub-secon (1) of secon 148 of the Companies Act 2013 is notapplicable on the Company and accordingly such accounts and records are not required to bemade and maintained.

4. Annual Return:

The extract of Annual return as provided under sub-secon (3) of Secon 92 is annexed as Annexure3 and forms part of this report.

5. Vigil Mechanism: (Whistle Blower Policy)

A Vigil Mechanism / Whistle Blower Policy pursuant to the provisions of Secon177(9) of the Companies Act 2013 w as approved by the Board. The vigil mechanism shallprovide for adequate safeguards against vicmiz aon of employ ees and directors who availof the vigil mechanism and also provide for direct access to the Chairperson of the AuditCommi ee in exceponal c ases.

Mr. Manjeet Singh Plant manager was appointed as the Vigilance Officer to hear thegrievances of the employees with any person in the company and take steps to resolve theissues amicably and report the same to the Managing Director of the Company and o ences ofserious nature may be brought to the a enon Mr. Ganesh Kumar Chairman of the Audit Commiee of the Company who shall a er hearing the concerned person award appropriate punishmentto the o ender.

6. Deposits:

During the year under review your company has not accepted any public deposits interms of the provisions of Secon 73 of the Companies

Act 2013 read with the Companies (Acceptance of Deposit) Rules 2014.

7. Loans Guarantees or investments:

The Company has not given any loan or provided any Guarantees and has not made anyinvestments during the financial year under review.

8. Contracts and arrangements with related pares:

The Company has not entered into any contracts and arrangements with related paresreferred to in sub secon (1) of Secon 188 of the

Companies Act 2013 and hence the Form AOC-2 is not required to be annexed.

9. Corporate Social Responsibility:

The provisions of Corporate Social Responsibility are not applicable on the Company.

10. Risk Management Policy:

Every business has inherent risks involved in it operaons which may be either externalor internal. The external factors are market compeon availability of cheaper substut theproducts Government policies regarding power tari s and ongoing polic al and economicchanges in the imporng Country. The Company may not have much control over such factors;however it is important to address these risks & concerns to mig ate their overallimpact on the business. Formal risk assessment and Management approach along with theregular monitoring mechanism in the Company ensures that these risks are duly addressedand well managed. High focus on safety of plant its premises and people connuity andproacv the Management of related business environment are essenal f or the risk managementin the overall supply chain and business in general.

11. Internal financial controls:

The Company has an adequate system of internal controls to ensure that all acvies arthe monitored and controlled as well as transacons ar the authorized recorded andreported correctly. The Company ensures adherence to all internal control policies andprocedures as well as compliance with all regulatory guidelines which are supplemented byinternal audit regularly.

The Audit Commi ee of the Board meets on quarterly basis and reviews the internalcontrol systems as well as financial statements.

12. Share Capital:

The Company has only one kind of Shares i.e. Equity shares with same vong rights. TheCompany has not issued any sweat equity shares during the financial year under review. TheCompany has not issued any further shares during the financial year under review. Furtherduring the year under review the Company has not made any o er to buy back its shares.

13. Parcular s of Employees:

Informaon in accordance with the provisions of Secon 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and

Remuneraon of Managerial Personnel) Rules 2014 is annexed as Annexure 4 andforms part of this report.

14. Energy Conservaon Technology Absorpon and Foreign Exchange Earnings and Outgo:

Informaon in accordance with the provisions of Secon 134 of the Companies Act 2013read with the Companies (Accounts) Rules 2014 regarding conservaon of energy technologyabsorpon and Foreign exchange earning & outgo of the Company were given as per Annexure5 to this report.

15. Corporate Governance report:

A Comprehensive report on Corporate Governance as spula ted under Regulaon 34(3) of theSEBI (Lisng Obligaons & Disclosure

Requirements) Regulaons 2015 is a ached to this report.

Your Company has obtained a cer c ate from the Statutory Auditor regarding thecompliance of condions of Corporate Governance as

spula ted under Schedule V (E) the SEBI (Lisng Obligaons & Disclosure Requirements)Regulaons 2015 and the same is annexed.

16. Formal Annual Evaluaon of Board of its own performance and that of its Commiueesand Directors:

Our Company has prescribed required parameters to evaluate the performance of the Boardand it's commi ees. It is always recognized that the

Board comprises appropriately qualified and professional people with broad range ofexperience.

17. Disclosure under the Sexual Harassment of Women at workplace (Prevenon Prohibionand Redressal) Act 2013:

The details are as follows:

1. Number of Complaints of Sexual Harassment received in the year: Nil

2. Number of Complaints disposed during the year: N.A

3. No. of cases pending for more than ninety days: Nil

4. No. of workshops or awareness programme against Sexual harassment carried out: Nil

5. Nature of acon taken by the employee or District o cer: N.A

The Company is in the process of constung Internal Complaints Commi ee under SexualHarassment of Women at Workplace (Prevenon Prohibion and Redressal) Act 2013. TheInternal Complaints Commi ee will provide adequate safeguard against Sexual HarassmentComplaints and will provide direct access to the Chairperson of the Internal ComplaintsCommi ee. It will take steps to resolve the issues and a er hearing the concerned personaward appropriate punishment to the o ender.

18. Disclosure under Secretarial Standard-1 (SS-1):

Adherence by a Company to the Secretarial Standards is mandatory as per Sub-secon (10)of Secon 118 of Companies Act 2013. As per the disclosure requirement of para (9) ofSecretarial Standard-1 (SS-1) the Company complies with the provisions of applicableSecretarial Standards in respect of the convening of the Board & General Meengs.

19. Directors' Responsibility Statement:

Pursuant to the requirement under Secon 134(5) of the Companies Act 2013 with respectto the Directors' Responsibility Statement it is hereby con rmed that: 1. in thepreparaon of the annual accounts the applicable accounng standards had been followedalong with proper explanaon relang to material departures;

2. The Directors had selected such accounng policies and applied them consistently andmade judgments and esma tes that are reasonable and prudent so as to give a true and fairview of the state of a airs of the Company at the end of the financial year and of theprofit and loss of the Company for that period;

3. The Directors had taken proper and su cient care for the maintenance of adequateaccounng records in accordance with the provisions of this Act for safeguarding the assetsof the Company and for prevenng and detecng fraud and other irregularies

4. The Directors had prepared the annual accounts on a 'going concern' basis; and

5. The directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operang the ecvely.

6. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operang the ecv ely.

APPRECIATION:

We wish to convey our sincere thanks to the Shareholders and various agencies of theCentral Government State Governments financial Instuons Company's Banker and BusinessAssociates for their connued cooperaon extended to the Company. We also wish to record ourdeep appreciaon of the contribuon made by the employees at all levels.

By Order of the Board
Tarai Foods Limited
Place : Rudrapur
Date : 14.08.2018 Sd/-
Mr. G.S. Sandhu
Chairman
DIN: 00053527
Address: 118 Madan Lal Block
Asian Games Village
New Delhi- 110049.