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UFM Industries Ltd.

BSE: 531610 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE832E01010
BSE 05:30 | 01 Jan UFM Industries Ltd
NSE 05:30 | 01 Jan UFM Industries Ltd

UFM Industries Ltd. (UFMINDS) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the 33rdAnnual Report of theCompany together with the Audited Balance Sheet as at 31st March 2019 and the Statementof Profit & Loss for the year ended on that date.

financial performance

The highlights of the financial performance of the Company for the financial year ended31st March 2019 as compared to the previous financial year are as under:- Lakhs)

Your Directors have pleasure in presenting the 33 An Balance Sheet as at 31st March2019 and the Statements

financial performance

The highlights of the financial performance of the Com compared to the previousfinancial year are as under:

Particulars 2018-19 2017-18
Net Sales / Income 8256.97 6849.36
Profit Before Depreciation Interest exceptional items & Tax 239.91 162.68
Less: Depreciation 26.66 27.44
Less: Interest and Finance Charges 65.36 55.74
Add: Exceptional Items - 0.30
Profit Before Tax 147.89 79.80
Less: Tax Expenses:
-Current Tax 21.84 19.04
-Income Tax for earlier years - 1.77
-Deferred Tax 19.77 (12.32)
Profit after Tax 106.28 71.31

Indian economy and industry at a glance

In FY 2018-19 the Indian economy began its journey of recovery from the temporarydisruption caused due to demonetization and Goods and Services Tax and retained theposition of the fastest growing economy and continued to be the fastest growing majoreconomy in the world with the growth rate of approximately 7.5%.Today we live in anincreasingly uncertain world. The global economy is witnessing a whirlwind of events withsignificant implications for economies and businesses across the world. Volatility is atan all-time high with an impending Brexit and rise of protectionist tendencies in severaladvanced and emerging markets.

Although India is on a solid growth track the new wave of globalization presents manyopportunities and challenges that would require the attention of policy experts industryleaders academics and citizens alike.

Growth in the agriculture sector is expected to moderate as the Gross Value Added (GVA)at basic prices for the sector is estimated at 2.7% for 2018-19 on a high base of 5% in2017-18. The Indian Meteorological Department has indicated that monsoons will not beabnormal in India during this year and this would assist in growth of the farming sector.

The agriculture sector is the backbone of our Indian economy which provides the basicingredients to mankind and providing raw material for rapid industrialization sectordevelopment. The Government of India has introduced several projects to assist theagriculture sector. The Pradhanmantri Gram Sinchai Yojana aims to irrigate the field ofevery farmer and improving water use efficiency to achieve the motto 'Per Drop More Crop'.Overall the scheme ensures improved access to irrigation. In 2018-19 Government of Indiais targeting foodgrain production of 285.2 million tonnes.

With 20 agri-climatic regions all 15 major climates in the world exist in India. Thecountry also possesses 46 of the 60 soil types in the world. India is the largest producerof spices pulses milk tea cashew and jute; and the second largest producer of wheatrice fruits and vegetables sugarcane cotton and oilseeds. Further India is second inglobal production of fruits and vegetables and is the largest producer of mango andbanana.

The Indian food industry is poised for huge growth increasing its contribution toworld food trade every year due to its immense potential for value addition particularlywithin the food processing industry. The Indian food and grocery market is the world'ssixth largest with retail contributing 70 per cent of the sales.

OPPORTUNITIES & THREATS RISKS AND CONCERNS

The Indian food industry is still at a nascent stage and we expect it to record solidgrowth rates for several years to come. This represents a significant opportunity for yourCompany. With continued economic progress we expect to see strong robust growth in theFood Industry and we believe we are well poised to capture our share of this growth in aprofitable manner. On the product side we see the emergence of consumers seeking bothhealthy and premium indulgence options and by ensuring that our portfolio includesofferings which address these consumers we are well placed to seize this opportunity. Atthe same time there will also still exists a huge opportunity in consumption amongst theemerging Indian Middle Class at a base consumption level seeking a broader variety intheir existing food regimen in an affordable manner.

The Company has evolved a risk management framework to identify assess and mitigatethe key risk factors of the business. The Board of the Company is kept informed about therisk management of the Company.

PERFORMANCE AND OPERATIONS REVIEW

During the year under review your Company manufactured 36435.49 MT of flour (AttaMaida Suji Bran) as against 31788.57 MT in previous Financial Year. Similarly yourCompany has been able to achieve sales volume of 36059.99 MT of flour (Atta Maida SujiBran and Wheat) as against 31888.51 MT in previous Financial Year.

PRODUCTION AND COST DEVELOPMENTS

During the year under review your company has been pursing with bulk consumers likebiscuit noodles and bakery segments to make contract agreements. However we are hopefulof positive result in the next financial year. This will enable us to ramp up production.Logistics is becoming a major cost factor and we have to constantly change our strategy tominimize this cost.

OUTLOOK

In the coming years India is expected to achieve the ambitious goal of doubling farmincome. Increased investment activities such as irrigation facilities warehousing andcold storage in agricultural infrastructure are likely to generate better momentum.Furthermore the growing use of genetically modified crops will likely improve the yieldfor Indian farmers.

Going forward the adoption of food safety and quality assurance mechanisms such asTotal Quality Management (TQM) including ISO 9000 ISO 22000 Hazard Analysis and CriticalControl Points (HACCP) Good Manufacturing Practices (GMP) and Good Hygienic Practices(GHP) by the food processing industry will offer several benefits

SHARE CAPITAL

The paid up Equity Capital as on March 31 2019 was Rs. 59326000/-. During the yearunder review the Company has neither issued any shares with differential voting rightsnor granted stock options or sweat equity shares.

EXTRACT OF ANNUAL RETURN

In terms of requirement of section 134 (3) (a) of the Companies Act 2013 the extractof the Annual return in form MGT-9 is annexed herewith and marked Annexure-1.

MEETINGS OF THE BOARD

The Board meets at regular intervals to discuss and decide on the policies andstrategies with respect to the business of the Company apart from normal business. TheBoard generally meets at least once in every quarter to review the Quarterly results.Additional meetings are held as and when necessary.

All the meetings are scheduled well in advance and notices are sent to all theDirectors at their address registered with the Company. The agenda of the meeting arebacked by necessary supporting information and documents to enable the Board to takeinformed decisions. Agenda also includes minutes of the meetings of all the BoardCommittees for the information of the Board. Additional agenda items in the form of"Other Business" are included with the permission of the Chairman. Draftsminutes of the proceedings of the Board/ Committee Meetings are circulated in advance andcomments if any received from the Directors are incorporated in the minutes inconsultation with the Chairman. The Board periodically reviews compliance reports of alllaws applicable to the Company. Information about major events/items is placed before theBoard and approval of the Board is taken on all such matters wherever such approval isrequired. Senior executives of the Company are invited as and when required to provideadditional inputs or clarifications required on agenda items being discussed in the BoardMeeting.

During the yearfive (5) Board Meetings of the Company were convened and held on 30thMay 2018 15th June 2018 14th August 2018 15th November2018 and 14th February 2019. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.

The Attendance at the Board Meetings during the financial year 2018-19 and at theprevious Annual General Meeting is as under:

Name of Director No. of Board Meeting Attended Last AGM Attended
Mr. Mahabir Prasad Jain 4 Yes
Mr. Avishek Jain 4 Yes
Mrs. Tara Rani Jain 5 Yes
Mr. Deepak Ladia 5 No
Mr. Poonam Chand Deedwania 5 Yes

MEETINGS OF INDEPENDENT DIRECTORS

During the year under review meeting of Independent Directors was held on 14thFebruary 2019 wherein the performance of the Non-Independent Directors and the Board as awhole was reviewed. The Independent Directors at their meeting also inter alia assessedthe quality quantity and timeliness of flow of information between the Company managementand the Board of Directors of the Company.

COMMITTEES OF THE BOARD

Currently the Board has three Committees: Audit Committee Nomination and RemunerationCommittee and Stakeholders Relationship Committee. The terms of reference of theseCommittees are determined by the Board and subject to be reviewed from time to time.Meetings of each of these Committees are convened by the respective Chairman of theCommittee who also informs the Board about the summary of discussions held in theCommittee Meetings.

a. Audit Committee

The Audit Committee met 5 (five) times during the Financial year 2018-19. The AuditCommittee's composition meets the requirements of Section 177 of the Companies Act 2013and SEBI Regulations. The Members of the Audit Committee possess financial/ accountingexpertise/ exposure. The meetings were held on 30th May 2018 15thJune 2018 14th August 2018 15th November 2018 and 14thFebruary 2019. All the members of the Committee attended the meeting.

The Audit Committee comprises of the following members:

Name Mr. Deepak Ladia Category Non-Executive Independent Designation Chairman
Mr. Poonam Chand Deedwania Non- Executive Independent Member
Mrs. Tara Rani Jain Non-Executive Non - Independent Member

Audit Committee meetings are attended by the Chief Finance Officer of the Company andRepresentatives of Statutory Auditors. The Company Secretary acts as the Secretary of theAudit Committee.

There has been no instance where the Board has not accepted the recommendations of theAudit Committee and Nomination and Remuneration Committee.

b. Nomination and Remuneration Committee

The Nomination and Remuneration Committee determines on behalf of the Board andshareholders as per agreed terms of reference the Company's policy on specificremuneration packages for Executive Directors Key Managerial Personnel and otheremployees. The Chairman of the Committee is an Independent Director and the Members of theCommittee are Non - Executive Directors.

The Nomination and Remuneration Committee met on 30th May 2018 during thefinancial year 2018-19. All the members of the Committee attended the meeting.

The composition of the Nomination and Remuneration Committee as at 31st March 2019 isas under:

Name of the Member Mr. Deepak Ladia Category Non-Executive Independent Designation Chairman
Mr. Poonam Chand Deedwania Non- Executive Independent Member
Mrs. Tara Rani Jain Non-Executive Non - Independent Member

c. Stakeholders' Relationship Committee

In compliance with the provisions of Section 178 of the Companies Act 2013 and theSEBI Regulations the Board has constituted "Stakeholders' RelationshipCommittee".

The Committee's responsibility is to oversee Share Transfers and addressing to andredressal of shareholders' grievances etc. The Committee also evaluates performance andservice standards of the Registrar and Share Transfer Agents of the Company.

During the Financial Year 2018-19 no meeting of Stakeholders Relationship Committeewas held.

The Composition of the Stakeholders Relationship Committee is given below:

Name of the Member Category Designation
Mr. Deepak Ladia Non-Executive Independent Chairman
Mr. Poonam Chand Deedwania Non- Executive Independent Member
Mrs. Tara Rani Jain Non-Executive Non - Independent Member

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has formed a Whistle Blower Policy/ Vigil Mechanism as required underSection 177 of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements)Regulations 2015. A Vigil (Whistle Blower) mechanism provides a channel tothe employees and Directors to report to the management concerns about unethical behavioractual or suspected fraud or violation of the Codes of conduct or policy. The mechanismprovides for adequate safeguards against victimization of employees and Directors to availof the mechanism and also provide for direct access to the Chairman of the Audit Committeein exceptional cases. The said policy may be referred toat the Company's website at theweb link:http://ufmindl.weebly.com/ uploads/8/7/1/1/8711000/whistle blower policy.pdf

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDSENIOR MANAGEMENT EMPLOYEES

The Board has framed a Remuneration Policy for selection appointment and remunerationof Directors Key Managerial Personnel and Senior Management Employees. The remunerationpolicy aims to enable the company to attract retain and motivate highly qualified membersfor the Board and at other executive levels. The remuneration policy seeks to enable theCompany to provide a well-balanced and performance- related compensation package takinginto account shareholders' interests industry standards and relevant Indian corporateregulations. The details on the same are given in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to requirement of Section 134 (3) (c) read with section 134 (5) of theCompanies Act 2013 the Directors hereby confirm and state that:

• In the preparation of Annual Accounts the applicable Accounting Standards havebeen followed along with the proper explanation relating to material departures if any.

• The Directors have selected such accounting policies and have applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2019and of the profit of the Company for the year under review.

• The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

• The Directors have prepared the annual accounts ongoing concern basis.

• The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

• The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013. Mr. DeepakLadia and Mr. Poonam Chand Deedwania are Independent Directors on the Board of yourCompany. In the opinion of the Board and as confirmed by these Directors they fulfil theconditions specified in section 149 of the Act and the Rules made thereunder about theirstatus as Independent Director of the Company.

FAMILIARIZATIONPROGRAMMEUNDERTAKENFORINDEPENDENTDIRECTORS

In order to enable the Independent Directors to perform their duties optimally theBoard has devised a familiarization programme for the Independent Directors to familiarisethem with the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company etc. They areperiodically updated about the development which takes place in the Company. TheIndependent Directors have been issued Letter of Appointment setting out in detail theterms of appointment duties responsibilities and commitments etc. The familiarizationprogram is available on the Company's website under theweblink:http://ufmindl.weebly.com/uploads/8/7/1/1/8711000/ familiarization programme.pdf

AUDITORS & AUDITORS' REPORT

M/s. P. A. Agarwal & Co. Chartered Accountants (Firm Registration no. 327316E)Statutory Auditors of the Company have been appointed by the members at the Thirty FirstAnnual General Meeting and shall hold office for a period of 5 years from the date of suchmeeting held on 26th September 2017.

The notes to the accounts referred to in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Ms. Sushma Jain a Company Secretary in Practice to undertake the SecretarialAudit of the Company. The Secretarial Audit Report is annexed herewith markedAnnexure-2.The report is self-explanatory and do not call for any further comments.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the year under review your company has not given any loan or guarantee to anyperson falling under ambit of Section 186 of the Companies Act 2013.

Details of Investments covered under the provisions of Section 186 of the CompaniesAct 2013 are given in the notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

All related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013. There are no materially significant related party transactions made by theCompany with Promoters Directors Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of the Company at large.Accordingly no transactions are being reported in Form AOC-2 in terms of Section 134 ofthe Act read with Rule 8 of the Companies (Accounts) Rules 2014. However the details ofthe transactions with the Related Party are provided in the Company's financial statementsin accordance with the Accounting Standards.

All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval has been obtained for the transactions which are foreseen and repetitivein nature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions.

A policy on 'Related Party Transactions' has been devised by the Company which may bereferred to at the Company's website at the web linkhttp://ufmindl.weebly.com/uploads/8/7/1/1/8711000/ related party policy.pdf

RESERVES

During the year under review no amount was transferred to reserves.

DIVIDEND

In order to conserve resources for future operations your Directors do not recommendany dividend for the Financial Year 2018-19.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated in section 134 (3) (m) of the Act and rules framed thereunder is mentioned below:

(A) Steps taken toward Conservation of energy:

• We have replaced several light fittings with LED based lighting. This willreduce lighting cost significantly.

• We are taking good care of Motors and compressors so that they are never overheated with high current.

• Damaged Power factor capacitors have been replaced.

(B) Steps taken toward Technical Absorption:

• We have invited expert millers and company representative from BUHLER India ourmachinery supplier to improve our systems. We have significantly improved our labprocesses and systems. Hygiene in the production facility has been ramped up. Preventivemaintenance has significantly reduced sudden breakdown causing production loss.

(C) Foreign Exchange Earnings And Outgo

During the period under review there was no Foreign Exchange Earnings and Outgo.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out the annual evaluation of its own performance its Committees andDirectors individually. A structured questionnaire was prepared after circulating thedraft forms covering various aspects of the Board'sfunctioning such as adequacy of thecomposition of the Board andits Committees Board culture execution and performance ofspecificduties obligations and governance.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.

The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.

The Directors expressed their satisfaction over the evaluation process and resultsthereof.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Companies Act 2013 and in terms of the Memorandumand Articles of Association of the Company Mr. Avishek Jain will retire by rotation andbeing eligible offers himself for reappointment. In view of his considerable experienceyour Directors recommend his re-appointment as Director of the company.

There has not been any appointment/ retirement/ resignationof Key Managerial Personnelduring the financial year ended 31stMarch 2019.

HOLDING SUBSIDIARY ASSOCIATE AND JOINT VENTURE

The Company does not have any Holding Subsidiary Associate and Joint Venture.

DEPOSITS

During the year under report the Company has not accepted any deposits from public orfrom any of the Directors of the Company or their relatives falling under ambit of Section73 of the Companies Act 2013.

CHANGES IMPACTING GOING CONCERN STATUS AND COMPANY'S OPERATIONS

During the year under review there have been no material orders passed by theRegulators/Courts impacting materially the going concern status or future operations ofthe Company.

There were no material changes and commitments affecting the financial position of theCompany during the period under review.

ADEQUACY OF INTERNAL FINANCIAL CONTROL

Internal Control Systems are designed to ensure the reliability of financial and otherrecord and accountability of executive action to the management's authorization. TheStatutory Auditors have evaluated the system of internal controls of the Company and havereported that the same are adequate and commensurate with the size of the Company andnature of its business.

The internal control systems are reviewed by the top Management and by the AuditCommittee of the Board and proper follow up action ensured wherever required.

INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

The information required under Section 197 (12) read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 along with a statementcontaining particulars of employees as required under Section 197 of Companies Act 2013read with Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith and markedAnnexure- 3 and forms part ofthis report.

POLICY ON PREVENTION OF SEXUAL HARASSMENT

The Company has adopted a 'Policy on Prevention of Sexual Harassment' as per the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013("Sexual Harassment Act"). We affirm that adequate access has been provided toany complainants who wish to register a complaint under the policy. No complaint wasreceived during the year.

NON-APPLICABILITY OF CORPORATE GOVERNANCE PROVISIONS OF SEBI(LISTING OBLIGATIONS ANDDISCLOSURE REQUIREMENTS) REGULATIONS2015:

Pursuant to the provisions of Regulation 15(2) of SEBI (Listing ObligationsandDisclosure Requirements) Regulations 2015 compliance with the provisions 17 to27 andclauses (b) to (i) of sub-regulation 46 and Para C D and E of Schedule V ofthe CorporateGovernance are not applicable to the Companies having paid upequity share capital notexceeding Rs. 10 Crore and Net Worth not exceedingRs. 25 Crore as on the last day ofprevious financial year or on theCompanies listed on SME Exchange.

In view of above as per the latest Audited Financial Statements of the Company asatMarch 31 2019 the paid-up Equity Share Capital and the Net Worth of theCompany does notexceed the respective threshold limit of Rs. 10 Crore and Rs. 25Crore as aforesaid; hencecompliance with the aforementioned provisions of theCorporate Governance are notapplicable to the Company

CODE OF CONDUCT

In pursuance of the SEBI Regulations the Board has approved the 'Code of Conduct forBoard of Directors and Senior Management' and same has been posted on the Company'swebsite www.ufmindl.weebly.com. The Directors and Senior Management personnel haveaffirmed compliance with the provisions of above Code of Conduct. The declaration by theManaging Director to this effect is also attached to this Report.

CHIEF EXECUTIVE OFFICER (CEO) /CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

As required under Regulation 17(8) of the Listing Obligations and DisclosuresRequirements formulated by Securities and Exchange Board of India (SEBI) the CEO/CFOcertification has been submitted to the Board and a copy thereof is contained in thisAnnual Report.

HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS

The Company recognizes the need for continuous growth and development of its employeesin order to provide greater job satisfaction and also to equip them to meet growingorganizational challenges.

During the year under review there has not been any material change in humanresources industrial relations and number of people employed.

GREEN INITIATIVES IN CORPORATE GOVERNANCE

Ministry of Corporate Affairs has permitted Companies to send copies of Annual reportNotices etc. electronically to the email IDs of shareholders. Your Company has arrangedto send the soft copies of these documents to the registered email IDs of theshareholders wherever applicable. In case any shareholder would like to receive physicalcopies of these documents the same shall be forwarded upon receipt of written request inthis respect.

CAUTIONARY STATEMENT

Statements in this report describing the Company's objectives expectations orpredictions may be forward looking within the meaning of applicable securities laws andregulations. Actual results may differ materially from those expressed in the statement.Important factors that could influence the Company's operations include global anddomestic demand and supply conditions affecting selling prices of finished goods inputavailability and prices changes in Government regulations tax laws economicdevelopments within the country and other incidental factors. The Company assumes noresponsibility to publicly amend modify or revise any forward-looking statements on thebasis of any subsequent developments events or information.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their deep sense of gratitude to theBanks Central and State Governments and their departments and the Local AuthoritiesCustomers Vendors Business partners/ associates and Stock Exchanges for their continuedguidance and support.

Your Directors would also like to place on record their sincere appreciation for thecommitment dedication and hard work put in by every member of the Company and recognizetheir contribution towards Company's achievements. Your Directors express their gratitudeto the shareholders of the Company for reposing their confidence and trust in theManagement of the Company.

For and on behalf of the Board of Directors
Place : Silchar Mahabir Prasad Jain Avishek Jain
Date : 14th August 2019 Managing Director Director
DIN: 00498001 DIN: 01383018