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Vidhi Specialty Food Ingredients Ltd.

BSE: 531717 Sector: Industrials
NSE: VIDHIING ISIN Code: INE632C01026
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VOLUME 1613
52-Week high 87.90
52-Week low 51.05
P/E 10.23
Mkt Cap.(Rs cr) 324
Buy Price 62.00
Buy Qty 1.00
Sell Price 65.65
Sell Qty 50.00
OPEN 65.65
CLOSE 64.80
VOLUME 1613
52-Week high 87.90
52-Week low 51.05
P/E 10.23
Mkt Cap.(Rs cr) 324
Buy Price 62.00
Buy Qty 1.00
Sell Price 65.65
Sell Qty 50.00

Vidhi Specialty Food Ingredients Ltd. (VIDHIING) - Director Report

Company director report

To

The Members

Vidhi Specialty Food Ingredients Limited

(Formerly known as ‘Vidhi Dyestuffs Manufacturing Limited')

Your Directors take pleasure in presenting the Twenty-Fifth Annual Report on thebusiness and operations of your Company together with the Audited Financial Statement forthe financial year ended March 31 2018.

1. Financial Summary or Highlights:

The Ministry of Corporate Affairs (‘MCA') on February 16 2015 notified theCompanies (Indian Accounting Standards)

Rules 2015. It states that Indian Accounting Standards (Ind AS) are applicable to theCompanies in a phased manner from April 1 2017 with a transition date of April 1 2016.Ind AS has replaced the previous Indian GAAP prescribed under section 133 of the CompaniesAct 2013 (including any statutory modification(s) or re-enactment or amendments thereof)(‘the Act') read with Rule 7 of the Companies (Accounts) Rules 2014. Ind AS isapplicable to your Company for the financial year commencing from April 1 2017. Thereconciliations and descriptions of the effect of the transition from previous GAAP to IndAS have been set out in Note No. 30 in the Notes to Accounts in the Financial Statements.The figures for the Financial Year ended March 31 2018 are also Ind AS compliant.

The financial highlights of the Company are as follows:

(Rs. in lakhs)
Particulars Current Year Previous Year
2017-18 2016-17
Total Income 21740.99 20767.15
Total Expenditure (excluding Depreciation) 19045.01 18181.11
Profit for the year before providing Depreciation 2695.98 2586.04
Less: Depreciation 249.50 225.87
Less: Exceptional Items Nil Nil
249.50 225.87
Profit before Tax 2446.48 2360.17
Less: Provision for Taxation
Current Year 851.68 785.54
Earlier Year 12.52 32.78
Deferred Tax 11.08 76.42
875.28 894.74
Profit after Tax 1571.21 1465.43
Add: Other Comprehensive Income 0.10 0.95
Total Comprehensive Income 1571.31 1466.38
Add: Profit brought forward from Previous Year 5377.77 4540.30
Total Profit in Balance Sheet 6949.08 6006.68
Appropriation:
Dividend Paid 399.56 399.56
Transfer to General Reserve 157.13 145.73
Dividend Distribution Tax 83.61 83.61
Balance Profit carried to Balance Sheet 6308.79 5377.77

2. Financial Performance Operations and State of the Company's affairs:

During the year under review Profit before Tax for the year was ` 2446.48 lakhsas against ` 2360.17 lakhs in the previous year.

Total Revenue from continuing operations for the year ended March 31 2018 aggregatedto ` 21700.24 lakhs as against ` 20685.03 lakhs achieved during the previous year.Profit after Tax from continuing operations for the year ended March 31 2018 was `1571.20 lakhs as against ` 1465.43 lakhs earned during the previous year.

The financial performance is discussed in detail in the Management Discussion andAnalysis Report which forms part of the Annual Report.

The Company has manufactured 3037.89 MT of food colours against 2514.05 MT in theprevious year. Your Directors assure to maintain the growth momentum in coming years andstrive for bright future of your Company.

3. Change in the nature of business if any:

The Company is engaged in the business of manufacturing and trading in syntheticfood colours and chemicals. There was no change in nature of business activity during theyear.

4. Dividend:

Your Directors are pleased to recommend a finaldividend of ` 0.20/- (Twenty PaisaOnly) per equity share of ` 1/- each fully paid up (i.e. 20%) for the financial year endedMarch 31 2018. The total outflow on dividend account will be` 99.89 lakhs (excludingDividend Distribution Tax).

The dividend payment is subject to the approval of the Members at the ensuing AnnualGeneral Meeting (‘AGM') and be paid to the Members whose names appear in the Registerof Members/Beneficial Holders as on Record Date/Book Closure Date fixed for the saidpurpose.

The dividend if declared at the AGM would be paid/dispatched within thirty days fromthe date of declaration of dividend to those persons or their mandates: l whosenames appear as beneficialowners as at the end of the business hours on Friday September21 2018 in the list of the Beneficial Owners to be obtained from the Depositories i.e.National Securities Depository Limited [NSDL] and Central Depository Services (India)Limited [CDSL] in respect of the shares held in electronic/dematerialized mode; and lwhose names appear as Members in the Register of Members of the Company as on FridaySeptember 21 2018 after giving effect to valid share transfers in physical forms lodgedwith the Company/Registrar & Share Transfer Agent in respect of the shares held inphysical mode.

In line with our focus on enhancing shareholder returns and in view of the Company'sstrong cash generation and positive growth momentum the Board of Directors decided todistribute profits to its Members and accordingly the Board of Directors had declaredinterim dividends during the financial year 2017-18 as per details given below:

Type of Dividend Date of Board Meeting Rate of Dividend Per share Dividend Total Outflow*
1st Interim Dividend 25.09.2017 20% per share `0.20/- per share ` 99.89 lakhs
2nd Interim Dividend 24.11.2017 20% per share `0.20/- per share ` 99.89 lakhs
3rd Interim Dividend 14.02.2018 20% per share `0.20/- per share ` 99.89 lakhs

*excluding Dividend Distribution Tax paid by the Company

Total dividend payout for the financial year 2017-18 is ` 0.80/- per equityshare of ` 1/- each against ` 0.80/- per equity share for previous year.

Further the details of unclaimed dividend and due dates for transfer of unclaimeddividend to IEPF account has been given in Notes to the Notice calling Twenty-Fifth AGM.

5. Reserves:

The Board during the year under review has transferred `157.13 lakhs (PY `145.73lakhs) to General Reserves.

6. Directors and Key Managerial Personnel:

As on the date of this Report your Company has 8 (Eight) Directors consisting of 4(Four) Independent Directors. 2 (Two) are Executive Directors and 2 (Two) areNon-Executive Directors including a Woman Director.

In pursuance of the provisions of Section 152(6) of the Act and Articles of Associationof the Company Mr. Mihir B. Manek (DIN: 00650613) retires by rotation from the Board inthe ensuing AGM and being eligible for re-appointment has offered himself forre-appointment. The Board of Directors recommends his re-appointment to the Members of theCompany.

During the year under review Mr. Chetan P. Bavishi (DIN: 01978410) Independent &Non-Executive Director has resigned from the Board of Directors of the Company witheffect from June 13 2018 due to personal commitments and other pre-occupations.The Board of Directors places on record their appreciation for the valuable contributionsmade by Mr. Chetan P. Bavishi (DIN: 01978410).

On the recommendation of the Nomination and Remuneration Committee the Board ofDirectors in their meeting held on Monday September 25 2017 has re-appointment Mr. BipinM. Manek (DIN: 00416441) as the Chairman and Managing

Director of the Company w.e.f. November 1 2017 for a further period of five financialyears i.e. till October 31 2022. The said re-appointment was made subject to the approvalof the Members. The approval of the Members was received at an Extra-ordinary GeneralMeeting of the Company held on Thursday March 29 2018.

The Securities and Exchange Board of India (‘SEBI') has vide its Notification No.SEBI/LAD-NRO/GN/2018/10 dated May 9 2018 issued the SEBI (Listing Obligations andDisclosure Requirements) (Amendment) Regulations 2018 (‘the Amendment Regulations')which brought amendments in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (‘the Listing Regulations'). The Amendment Regulations insertedRegulation 17(1A) 17(6)(ca) and 17(6)(e) in the Listing Regulations to be effective fromApril 1 2019. According to the Amendment Regulation 17(1A) a person who has attained theage of seventy five years can be appointed or continue as a Non-Executive Director of anylisted entity only after the approval of the Members by way of a Special Resolution isobtained. Mr. Vijay Atre (DIN: 00416853) and Mr. Prafulchandra Shah (DIN: 00417022) havealready attained the age of seventy five years. Thus in order to comply with the aboveamendment Special Resolutions are proposed in the ensuing AGM for Mr. Vijay Atre (DIN:00416853) and Mr. Prafulchandra Shah (DIN: 00417022) to continue to hold the office of aNon-Executive Director and an Independent Non-Executive Director of the Companyrespectively on existing terms and conditions.

Further according to the Amendment Regulation 17(6)(ca) approval of the Members byway of a Special Resolution shall be obtained every year in which the annual remunerationpayable to a single Non-Executive Director exceeds fifty per cent of the total annualremuneration payable to all the Non-Executive Directors giving details of theremuneration thereof.

Since payment of remuneration to Mr. Vijay Atre (DIN: 00416853) as a Non-ExecutiveDirector is more than fifty per cent of the total annual remuneration payable to all theNon-Executive Directors in order to comply with this amendment and continue to pay him aremuneration on his existing scale during the financial year 2019-20 a Special Resolutionis proposed in the ensuing AGM.

According to the Amendment Regulation 17(6)(e) if the aggregate annual remunerationpayable to more than one Executive Director who is a Promoter or is a Member of thePromoter Group exceeds 5% of the net profits of the Company calculated as per Section 198of the Act then approval of the Members by way of a Special Resolution is required. Suchapproval of the Members under this provision shall be valid only till the expiry of theterm of such Director. The approval of the Members by way of a Special Resolution isrequired since the Company has more than one Promoter Executive Director i.e. Mr. BipinM. Manek (DIN: 00416441) and Mr. Mihir B. Manek (DIN: 00650613) and remuneration paid tothem is in excess of 5% of the net profits of the Company calculated as per Section 198 ofthe Act even though the annual remuneration payable to the Executive Directors is withinthe limit of 5% and 10% as specified u/s 197(1) of the Act.

The Board recommends the aforesaid re-appointment and continuation as the Directors ofthe Company. The Board also recommends the approval for payment of aggregate annualremuneration to the Promoter-Executive Directors/Members of the Promoter Group exceeding5% of the net profits of the Company and the payment of aggregate annual remuneration toMr. Vijay K. Atre (DIN: 00416853) as a Non-Executive Director of the Company whichexceeds fifty per cent of the total annual remuneration payable to all the Non-ExecutiveDirectors.

The Company has received declarations from all the Independent Directors of the Companypursuant to the provisions of Section 149(7) of the Act stating that they meet thecriteria of independence as provided under the Act and the Listing Regulations and thatthey are not disqualified to become Directors under the Act; and in the opinion of theBoard of Directors all the Independent Directors fulfill the criteria of independence asprovided under the Act read with the Listing

Regulations and that they are independent of the Management.

Further at the time of the appointment of an Independent Director the Company issuesa formal letter of appointment outlining his role function duties and responsibilities.The format of the letter of appointment is available on our website at http://www.vidhifoodcolour.com/financials.php?m=52

Brief resume and other details of the Director proposed to be re-appointed andDirectors seeking approval for continuation of holding the office as the Non-ExecutiveDirectors at the AGM as stipulated under the Listing Regulations and SecretarialStandard-2 has been furnished separately in the Notice convening the AGM read with theAnnexure thereto forming part of this Report.

Details of the number of meetings of the Board of Directors and Committees andattendance at the meetings have been furnished in the Report on Corporate Governance.

Following persons are designated as Key Managerial Personnel (KMP):

• Mr . Bipin M. Manek (DIN: 00416441) Chairman and Managing Director

• Mr . Mitesh D. Manek Chief Financial Officer

• Ms. Kalika V. Dabholkar Company Secretary and Compliance Officer

7. Board Evaluation:

The Board of Directors is committed to continued improvement in its effectiveness.Accordingly the Board participated in the annual formal evaluation of its performance.This was designed to ensure amongst other things that the Board its Committees and eachDirector continue to contribute effectively. As per Section 134(3)(p) of the Act astatement indicating the manner in which formal annual evaluation was made by the Board oftheir performance and that of its Committees and individual Directors has to be furnishedto the shareholders as part of the Board's Report. Further the Independent Directors aspart of their mandate under Schedule IV of the

Act need to make an evaluation of performance of the constituents of the Board apartfrom their self evaluation. Under this process a structured questionnaire was preparedafter taking into consideration inputs received from the Directors setting out parametersof evaluation; the questionnaire for evaluation are to be filled in consolidated anddiscussed with the Chairman. The evaluation by the Independent Directors has beenundertaken at their meeting held on August 16 2017. The Board of Directors undertookevaluation of Independent Directors at their meeting held on February 14 2018 and placedon its record that the Independent Directors have the requisite qualification expertiseand track record for performing their duties as envisaged under the Law and they addvalue in the decision making process of the Board.

The criteria for evaluation of performance of Directors the Board as a whole and theBoard's Committee are summarized in the table given below:

Evaluation of Evaluation by Criteria
Non-Independent Director (Executive) Independent Directors Transparency Leadership (business and people) Governance and Communication
Non-Independent Director (Non-Executive) Independent Directors Preparedness Participation Value addition Governance and Communication
Independent Director All other Board Members Preparedness Participation Value addition Governance and Communication
Chairman Independent Directors Meeting dynamics Leadership (business and people) Governance and Communication
Committees Board Members Composition Process and Dynamics
Board as a whole Independent Directors Composition Process and Dynamics

8. Board Familiarization Programmes:

At the time of appointment of a new Director through the induction process he/sheis familiarized with the Company the Director's roles rights responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany etc. Detailed presentations are made before the Board Members at the Board andits Committee

Meetings covering various areas including business strategy financial performance andforecast compliances/regulatory updates audit reports risk assessment and mitigationindustry roles rights responsibilities of Independent Directors etc.

Familiarization Programmes for Independent Directors:

The Familiarization Programme aims to provide insights into the Company to enablethe Independent Directors to understand its business in depth and contribute significantlyto the Company. All Independent Directors attended the orientation and familiarizationprogrammes held during the financial year 2017-18.

The details of training and familiarization programmes are available on our website at http://www.vidhifoodcolour.com/financial/code_policies/familiarisation_programe_for_independent_director.pdf

9. Policy on the Directors' appointment and remuneration:

The Company's Policy on the Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of Directorsand other matters as provided under Section 178 of the Act is annexed to this Report asthe Nomination & Remuneration Policy and appended as Annexure A to thisReport.

10. Number of meetings of the Board of Directors:

The Board of Directors met 7 (Seven) times during the Financial Year under review.The intervening gap between any two meetings was not more than 120 days as prescribedunder the Act. Details of the dates of Board Meetings and the attendance of the Directorsat the Board Meetings are provided separately in the Report on Corporate Governance.

11. Audit Committee:

The Audit Committee of the Company consists of the following Directors as on thedate of this Report:

Name Designation Category
Mr. Nirenbhai D. Desai (DIN: 01978382) Chairman Non-Executive Independent
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive Independent
Mr. Mihir B. Manek (DIN: 00650613) Member Executive

*resigned from the Board of Directors of the Company with effect from June13 2018. Thus he ceased to be the Member of the Audit Committee.

The Internal Auditors of the Company report directly to the Audit Committee. Allthe recommendations of the Audit Committee were accepted by the Board of Directors. Briefdescription of terms of reference and other relevant details of the Audit Committee havebeen furnished in the Report on Corporate Governance.

12. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee of the Company comprises of the followingDirectors as on the date of this Report:

Name Designation Category
Mr. Nirenbhai D. Desai (DIN: 01978382) Chairman Non-Executive Independent
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive Independent
Mrs. Pravina B Manek (DIN: 00416533) Member Non-Executive Promoter

*resigned from the Board of Directors of the Company with effect from June13 2018. Thus he ceased to be the Member of the Nomination and Remuneration Committee.

Brief description of terms of reference and other relevant details of theNomination and Remuneration Committee have been furnished in the Report on CorporateGovernance.

13. Stakeholders' Relationship Committee:

The Stakeholders' Relationship Committee of the Company comprises of the followingDirectors as on the date of this Report:

Name Designation Category
Mrs. Pravina B. Manek (DIN: 00416533) Chairperson Non-Executive Promoter
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive Independent

*resigned from the Board of Directors of the Company with effect from June13 2018. Thus he ceased to be the Member of the Stakeholders' Relationship Committee.

Brief description of terms of reference and other relevant details of theStakeholders' Relationship Committee have been furnished in the Report on CorporateGovernance.

14. CSR Committee:

The constitution composition quorum requirements terms of reference rolepowers rights obligations of Corporate Social Responsibility Committee (‘CSRCommittee') are in conformity with the provisions of Section 135 and all other applicableprovisions of the Act read with the Companies (Corporate Social Responsibility Policy)Rules 2014 and all other applicable rules made under the Act.

The CSR Committee comprises of the following Directors as on the date of this Report:

Name Designation Category
Mr. Prafulchandra A. Shah (DIN: 00417022) Chairman Non-Executive Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive Independent
Mr. Nirenbhai D. Desai (DIN: 01978382) Member Non-Executive Independent
Mr. Rahul C. Berde (DIN: 06981981) Member Non-Executive Independent

*resigned from the Board of Directors of the Company with effect from June13 2018. Thus he ceased to be the Member of the Corporate Social ResponsibilityCommittee.

During the financial year under review the Committee met twice on August 16 2017and February 14 2018.

Brief description of terms of reference of the Committee inter-alia includes:

• formulate and recommend to the Board of Directors (Board) a Corporate SocialResponsibility (CSR) Policy which shall indicate the activities to be undertaken by theCompany as specified in Schedule VII of the Act;

• approve CSR activities;

• recommend to the Board the amount of expenditure to be incurred on the CSRactivities;

• monitor the CSR Policy of the Company from time to time;

• institute a transparent monitoring mechanism for implementation of the CSRprojects or programs or activities undertaken by the Company; and

• carry out any other functions as authorized by the Board from time to time or asenforced by statutory/regulatory authorities.

CSR Policy development and implementation:

The CSR Policy is available on the Company's website at: http://www.vidhifoodcolour.com/financial/code_policies/csr_policy.pdf

Annual Report on CSR activities as required under the Companies (CorporateSocial Responsibility Policy) Rules 2014 has been appended as Annexure B tothis Report.

15. Vigil Mechanism:

The Company has a ‘Whistle Blower Policy'/‘Vigil Mechanism' in place. Theobjective of the Vigil Mechanism is to provide the employees Directors customerscontractors and other stakeholders of/in the Company an impartial and fair avenue to raiseconcerns and seek their redressal in line with the Company's commitment to the highestpossible standards of ethical moral and legal business conduct and fair dealings with allits stakeholders and constituents and its commitment to open communication channels. TheCompany is also committed to provide requisite safeguards for the protection of thepersons who raise such concerns from reprisals or victimization for whistle blowing ingood faith. The Board of Directors affirms and confirmsthat no personnel have been deniedaccess to the Audit Committee. The Policy contains the provision for direct access to theChairman of the Audit Committee in appropriate or exceptional cases.

Vigil Mechanism cum Whistle Blower Policy is available on the Company's website at: http://www.vidhifoodcolour.com/financial/code_policies/vigil_mechanism.pdf

16. Audit Report: a) Statutory Audit Report:

The Company has received a modified opinion in the Auditors' Report for thefinancial year 2017-18 which read as under:

The Provision for gratuity as required Benefits" has not been made incurrent year. The perIndAS19-"Employee impact of same cannot be ascertained inabsence of audit evidence (Actuarial Report) which constitutes a departure from the Ind AS19 "Employee Benefits". Consequently the employee cost and short term &long term provisions are understated profit for the year and other equity are overstated.

The Management's reply to the above audit observation is as follows:

The Management of the Company is in the process of obtaining actuarial valuation reportto adopt Ind AS 19. The Management is of the opinion that the provisions related toemployee benefits made in the financial statement are adequate. Thus the impact ofunderstatement of employee cost and short term & long term provisions and theconsequential overstatement of profit for the year and other equity would be minimal.Comments given in Annexure to the Auditors' Report are self explanatory.

b) Secretarial Audit Report:

The Board of Directors had appointed M/s. Hemanshu Kapadia & Associates CompanySecretaries (FCS: 3477 and C.P. No.: 2285) to conduct Secretarial Audit forthe financial year 2017-18. The Secretarial Audit Report for the financial year endedMarch 31 2018 is appended asAnnexure C to this Report.

The Secretarial Audit Report dated August 10 2018 contains two observations. Theobservations of the Secretarial Auditors and the reply of the Management for the same areas under:

Sr. Secretarial Auditors' Observation Reply from the Management
No.
1 There was a minor delay in transferring the amount of 1st interim dividend declared for the financial year 2017-18 in the Scheduled Bank. The delay in transferring the amount was on account of system upgradation carried out by the Corporation Bank with whom the Company opened the Bank Account. Hence there was a minor delay.
2 The Company has not uploaded e-Form IEPF- 2 pertaining to details of Unclaimed & Unpaid Dividend amounts as on the date of the AGM held for the financialyear 2016-17 with ROC/MCA within the stipulated time. The Company is in the process of reconciliation of the Statement of Unpaid/Unclaimed Dividend amounts received by the Bank and the Registrar & Share Transfer Agents (R & TA) since there was a difference in the amounts reported by both of them. On completion of reconciliation the Company shall file the e-Form IEPF with ROC/MCA.

17. Auditors:

a) Statutory Auditors:

On the recommendation of the Audit Committee and the Board the Members in theirTwenty-Fourth Annual General Meeting has appointed M/s. JMR & Associates CharteredAccountants Mumbai (Firm Registration No: 106912W) (‘JMR') as the Statutory Auditorsof the Company for a period of five consecutive years from the conclusion of theTwenty-Fourth AGM of the Company till the conclusion of the Twenty-Ninth AGM to be heldfor the financial year 2021-22. In view of provisions of proviso to Section 139(1) of theAct the said appointment was made subject to ratification of their appointment insubsequent AGMs. Pursuant to the Companies (Amendment) Act 2017 the said proviso wasomitted with effect from May 7 2018. In view of the same no ratification of appointmentof Auditors will be required every year. However as at the time of appointment i.e. asat the Twenty-Fourth AGM it was decided to ratify appointment of the Statutory Auditorsin subsequent AGMs. Accordingly it is recommended to ratify their appointment in this AGMfor their remaining tenure and payment of remuneration.

Act and the Companies (Audit JMR has furnished and Auditors) Rules 2014 andconfirmed certificate their eligibility in terms of the provisions of Section 141 and allother applicable provisions of the Act read with the applicable Rules thereto.

b) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board had appointed M/s. HemanshuKapadia & Associates Practicing Company Secretaries (FCS: 3477 and C.P. No.: 2285)to undertake the Secretarial Audit of the Company for the financial year 2018-19 and issueSecretarial Audit Report as required under the Act.

c) Internal Auditors:

Pursuant to the provisions of Section 138 of the Act read with Rule 13 of Companies(Accounts) Rules 2014 and on the basis of the recommendation of Audit Committee theBoard of Directors in their meeting held on May 23 2018 had appointed M/s. Rahul Gondhiya& Associates Chartered Accountants Mumbai (Firm Registration Number: 133649W) as theInternal Auditors of the Company for the financial year ended March 31 2019.

18. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:

The information as per Section 134(3)(m) of the Act read with the Companies(Accounts) Rules 2014 with respect to Conservation of Energy Technology Absorption &Foreign Exchange Earnings and Outgo are given in Annexure D to this Report.

19. Managerial Remuneration and Particulars of Employees:

Disclosures pertaining to remuneration and other details as required under section197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are appended as Annexure E to this Report.

20. Extract of Annual Return:

In accordance with Section 134(3)(a) read with Section 92(3) of the Act an extractof the Annual Return in Form MGT-9 is placed on the website of the Company and same can bedownloaded by clicking on the following link: http://www.vidhifoodcolour.com/financial/MGT-9_201718.pdf

21. Share Capital & Listing of Securities:

During the financial year under review the Company has not issued:

• any equity shares with differential rights as to dividend voting or otherwise;

• any equity shares (including sweat equity shares) to employees of the Companyunder any scheme;

• any sweat equity shares.

The Company's equity shares are listed on Ahmedabad Stock Exchange Limited (ASE)*BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE). The stock code of theCompany at ASE* is 65175 BSE is 531717 and the symbol for NSE is VIDHIING.

*The equity shares of the Company are listed on ASE - A-2 Kamdhenu ComplexOpposite Sahajanand College 120 Feet Ring Rd Panjara Pol Ambawadi AhmedabadGujarat-380 015. However ASE has applied to the SEBI on July 11 2014 for surrender toexit as Stock Exchange. On April 2 2018 the SEBI has passed an Exit Order in respect ofASE.

22. Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the financial year under review asstipulated under regulation 34 of the Listing Regulations is set out in a separate Sectionforming part of this Report.

23. Corporate Governance:

The Company is adhering to good corporate governance practices in every sphere ofits operations. The Company has taken adequate steps to comply with the applicableprovisions of Corporate Governance as stipulated under the Listing Regulations. A separateReport on Corporate Governance is enclosed as a part of this Report along with theCertificate from the Practicing Company Secretary.

24. Directors' Responsibility Statement:

As stipulated under section 134(3)(c) read with Section 134(5) of the Act yourDirectors hereby state and confirm that:

a) in the preparation of the annual accounts for the financial year ended on March 312018 the applicable accounting standards have been followed and that there are nomaterial departures from the same except the provision for gratuity has not beenmade as per Ind AS 19 "Employee Benefits";

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended on March 312018 and of the profit and loss of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

e) they have laid down internal financial controls for the Company and such internalfinancial controls are adequate and operating effectively during the financial year endedMarch 31 2018; and

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively during thefinancial year ended March 31 2018.

25. Particulars of Contracts and arrangements with related parties:

During the financial year under review the Company has not entered into anycontracts/arrangements/transactions with related parties which could be consideredmaterial in accordance with the Company's Policy on materiality of related partytransactions. All contracts/arrangements/transactions entered into by the Company duringthe financial year under review with related parties were in the ordinary course ofbusiness and on an arm's length basis. Accordingly the disclosure of related partytransactions to be provided under section 134(3)(h) of the Act in Form AOC-2 is notapplicable.

The details of transactions entered into with related parties as per AccountingStandards are disclosed in the Note No. 26 of the Financial Statement.

The Company's Policy on Materiality of related party transactions and dealing withrelated party transactions is available on the Company's website at: http://www.vidhifoodcolour.com/financial/code_policies/policy_on_related_party_transactions.pdf

26. Particulars of loans given investments made guarantees given and securitiesprovided:

The Company has not given any loan except loan to employees or given guarantee orprovided securities as covered under section 186 of the Act. Further the Company has notmade any fresh investment falling within the meaning of Section 186 of the Act.

On the recommendation of the Audit Committee and the Board of Directors the Members intheir Extra-ordinary General Meeting held on Thursday March 29 2018 has approvedacquisition of 100% shareholding in Arjun Food Colorants Manufacturing Private Limited aCompany promoted by the Promoters of the Company. As on March 31 2018 the

Company does not have any investments.

27. Risk Management:

The Company is exposed to inherent uncertainties owing to the sector in which itoperates. A key factor in determining a Company's capacity to create sustainable value isthe risks that the Company is willing to take (at strategic and operational levels) andits ability to manage them effectively. Many risks exist in a Company's operatingenvironment and they emerge on a regular basis. The Company's Risk Management processfocuses on ensuring that these risks are identified timely basis and addressed.

The Audit Committee oversees enterprise risk management Framework to ensure executionof decided strategies with focus on action and monitoring risks arising out of unintendedconsequences of decisions or actions and related to performance operations complianceincidents processes systems and transactions are managed appropriately. The Companybelieves that the overall risk exposure of present and future risks remains within riskcapacity.

28. Internal Financial Controls with reference to the Financial Statement:

The Company has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.

The Company has in place adequate internal financial controls with reference tofinancial statements. The Company's internal control systems including internal financialcontrols are commensurate with the nature of its business and the size and complexity ofits operations and same are adequate and operating effectively. These systems areperiodically tested and no reportable material weakness in the design or operation wasobserved. The Audit Committee reviews adequacy and effectiveness of the Company's internalcontrol system including internal financial controls.

29. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:

Your Company has always believed in providing a safe and harassment-free workplace forevery individual working in the Company. The Company has complied with the applicableprovisions of the aforesaid Act including constitution of the Internal ComplaintsCommittee. The Company has in place an Anti-Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees (permanent contractual temporary and trainees) arecovered under this Policy. The Policy is gender neutral.

We are pleased to inform you that no complaints pertaining to sexual harassment werereceived during the Financial Year 2017-18.

30. Insurance:

The Company has taken insurance to the extent Management felt appropriate tocover the risks to its employees property plant and equipment buildings and otherassets and third parties.

31. Secretarial Standards:

The Company has complied with all the applicable secretarial standards issued byThe Institute of Company Secretaries of India and notified by the Central Government.

32. Cost Records:

As per Section 148(1) of the Act read with the Companies (Cost Records and Audit)Rules 2014 the maintenance of cost records is not mandated for the products manufacturedby the Company.

33. Other Disclosures/Reporting:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no events/ instances/transactions occurred on these itemsduring the year under review:

a) Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report;

b) Details about Subsidiary Company/Associate Company as the Company does not have anySubsidiary Company/ Associate Company;

c) Details relating to deposits covered under Chapter V of the Act;

d) Details of payment of remuneration or commission to Managing Director or JointManaging Director of the Company from any of its Subsidiary Company since the Company doesnot have any Subsidiary Company;

e) Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Act);

f) Significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future; and

g) Details in respect of frauds reported by Auditors under section 143(12) other thanthose which are reportable to the Central Government as there were no such fraudsreported by the Auditors.

34. Acknowledgements:

Your Board wish to place on record their appreciation and acknowledge with gratitudethe support and co-operation extended by the Government Authorities Bankers CustomersEmployees and Members during the year under review and look forward to their continuedsupport.

By Order of the Board of Directors
For Vidhi Specialty Food Ingredients Limited
(Formerly known as ‘Vidhi Dyestuffs Manufacturing Limited')
Sd/-
Date: August 10 2018 Bipin M. Manek
Place: Mumbai Chairman & Managing Director
(DIN: 00416441)
Address: Flat No.12 Somerset House
Off. Bhulabhai Desai Road
Warden Road Mumbai – 400 026