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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 32nd Annual Report of theCompany together with the Audited Balance Sheet as at 31st March 2018 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 2018 as compared to the previous financial year are as under:-

(Rs in Lakhs)

Particulars 2017-18 2016-17
Net Sales / Income 6849.36 6778.37
Profit Before Depreciation Interest exceptional items & Tax 163.28 197.47
Less: Depreciation 27.44 25.44
Less: Interest and Finance Charges 55.74 37.45
Less: Exceptional Items 0.30 -
Profit Before Tax 79.80 134.58
Less: Tax Expenses:
-Current Tax 19.04 18.33
-Income Tax for earlier years 1.77 -
-Deferred Tax (12.32) 20.41
Profit after Tax 71.31 95.84

Profit after Tax 71.31 95.84

INDIAN ACCOUNTING STANDARDS:

The Ministry of Corporate Affairs vide its notification dated February 16 2015notified the Indian Accounting Standards (Ind AS) applicable to certain classes ofCompanies. Ind AS has replaced the existing Indian GAAP prescribed under section 133 ofthe Companies Act 2013 read with rule 7 of the Companies (Accounts) Rules 2014. For theCompany Ind AS is applicable from April 1 2017 with a transition date of April 1 2016.

The reconciliations and descriptions of the effect of the transition from IGAAP to IndAS have been provided in the notes to accounts.

INDIAN ECONOMY AND INDUSTRY AT A GLANCE

The past Financial years have been marked with some major economic reforms likeimplementation of Goods and Services Tax (GST) and demonetization but the Indian economycontinued to grow well in the context of declining growth across the major globaleconomies. After registering GDP growth of over 7 per cent for the third year insuccession in 2016-17 the Indian economy is headed for somewhat slower growth estimatedto be 6.5 per cent in 2017- 18. It was largely because of pre-GST jitters and lingeringeffects of demonetization. Even with the lower growth for 2017-18 the average GDP growthfor the period from 2014-15 to 2017-18 was 7.3 per cent which is the highest among themajor economies of the world.

The Indian food industry is poised for huge growth increasing its contribution toworld food trade every year. In India the food sector has emerged as a high-growth andhigh-profit sector due to its immense potential for value addition. A steadily improvingoutlook for business in India means that the Food

industry as well is recovering from a sluggish phase into a phase of more steady andsustained growth. Demand for processed food is robust and it is growing handsomely.

The agriculture sector is the backbone of our Indian economy which provides the basicingredients to mankind and providing raw material for rapid industrialization sectordevelopment. During 2017-18 crop year food grain production is estimated at 279.51million tonnes and wheat production in the country is estimated at 111.52 MT and 98.61MT respectively in the same period.

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 31305.29 MT of flour (AttaMaida Suji Bran and Wheat) as against 31263.51 MT in previous Financial Year.Similarly your Company has been able to achieve sales volume of 31252.69 MT of flour(Atta Maida Suji Bran and Wheat) as against 30967.20 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. India is expected to be self-sufficient in pulses in the coming fewyears due to concerted efforts of scientists to get early-maturing varieties of pulses andthe increase in minimum support price.

SHARE CAPITAL

The paid up Equity Capital as on March 31 2018 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

During the year six (6) Board Meetings and five (5) Audit Committee meetings wereconvened and held. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013. The details of the Board Meeting are provided inthe Corporate Governance Report.

MEETINGS OF INDEPENDENT DIRECTORS

During the year under review meeting of Independent Directors was held on 9thFebruary 2018 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

The composition and terms of reference of the Audit Committee Nomination andRemuneration Committee and Stakeholders Relationship Committee have been furnished in theCorporate Governance Report forming part of this Annual Report. There has been no instancewhere the Board has not accepted the recommendations of the Audit Committee and Nominationand Remuneration Committee.

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:

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 2018and 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 Deewani are Independent Directors on the Board of your Company.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.

FAMILIARIZATION PROGRAMME UNDER TAKEN FOR INDEPENDENT DIRECTORS

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 the weblink:

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 Mr. Sanjay Kumar Baid a Company Secretary in Practice to undertake theSecretarial Audit 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 anyunder ambit of Section 186 of the Companies Act 2013.

Details of Investments covered under the provisions of Section 186 of the Companiesgiven in the notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

All related party transactions are entered on arm's length basis in the ordinarycourse c are in compliance with the applicable provisions of the Companies Act 2013.There are significant related party transactions made by the Company with PromotersDirectors K Personnel or other designated persons which may have a potential conflictwith the Company at large. Accordingly no transactions are being reported in Form AOC-2in te 134 of the Act read with Rule 8 of the Companies (Accounts) Rules 2014. Howeverth< transactions with the Related Party are provided in the Company's financialstatements with the Accounting Standards.

All Related Party Transactions are presented to the Audit Committee and the Board. Omhas been obtained for the transactions which are foreseen and repetitive in nature. A srelated party transactions is presented before the Audit Committee on a quarterly basisnature value and terms and conditions of the transactions.

A policy on 'Related Party Transactions' has been devised by the Company which may bethe Company's website at the web link

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 recommend athe Financial Year 207-18.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANC AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeoutgo as stipulated in section 134 (3) (m) of the Act and rules framed there under is me

(A) Steps taken toward Conservation of energy:

• We have replaced several light fittings with LED based lighting. This will reducsignificantly.

• We are taking good care of Motors and compressors so that they are never over hecurrent.

• Damaged Power factor capacitors have been replaced

(B) Steps taken toward Technical Absorption:

• We have invited expert millers and company representative from BUHLER Indiasupplier to improve our systems. We have significantly improved our lab processe

Hygiene in the production facility has been ramped up. Preventive maintenance hassignificantly 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's functioning such as adequacy of thecomposition of the Board and its Committees Board culture execution and performance ofspecific duties 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 re-appointment. In view of his considerable experienceyour Directors recommend his reappointment as Director of the company.

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 have reported that thesame are adequate and commensurate with the size of the Company and nature of itsbusiness.

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 marked Annexure- 3 and forms part of thisreport.

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.

CORPORATE GOVERNANCE

The Company has complied with the corporate governance requirements as stipulated underthe Listing Obligations and Disclosures Requirements formulated by Securities and ExchangeBoard of India (SEBI). A separate section on corporate governance along with acertificate from the auditors confirming the compliance is annexed and forms part of theAnnual 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 Date: 15th June 2018 Mahabir Prasad Jain

Managing Director DIN: 00498001

Avishek Jain

Director and CFO DIN: 01383018