DIRECTORS' REPORT TO THE MEMBERS Your Company's Directors are pleased to present 43rd Annual Report along with Audited Statement of Accounts for the financial year ended March 31, 2015. 2. RESULTS OF OPERATIONS As per the Standalone Financials for year ended on March 31, 2015 the turnover of the Company is Rs 360.76 crores as compared to Rs.304.92 crores for the year ended on March 31, 2014. The Company made a profit before tax of Rs.15.70 crores during the year ended March 31, 2015 against the profit before tax of Rs.5.76 crores during the year ended on March 31, 2014.The Company's exports during the year was Rs.229.40 crores (Rs.217.21 crores) and domestic sale was Rs.131.36 crores (Rs.87.71 crores). This translates into a ratio of 63.59% to 36.41 % (71.23% to 28.77%) between exports and domestic sales. As per the Consolidated Financials for year ended on March 31, 2015 the turnover of the Company is Rs 360.76 crores as compared to Rs.305.10 crores for the year ended on March 31, 2014. The Company made a profit before tax of Rs.15.49 crores during the year ended March 31, 2015 against the profit before tax of Rs.5.92 crores during the year ended on March 31, 2014. 3. COMPANY'S PERFORMANCE The company achieved a growth in the sales because of major spurt in domestic sales and higher value addition on special quality products processed for key Japanese and European buyers. The company has an ongoing capacity expansion program by up gradation and expansion of the capacities. The commissioning of the new spray drying plant has been delayed due to unforeseen technical issues which are being resolved by the project consultants. The plant is now expected to be commissioned before end of the current financial year 4. MANAGEMENT DISCUSSION AND ANALYSIS REPORT. (i). Overview of Food Processing industry in India. • Food processing industry is a sunrise industry of Indian Economy. • Present processing level of 3-4% is very low. • Recent government policy aims to increase processing levels to 20-25% over a period of 10 years. • Targets under " VISION 2015" for Food Processing Industry. > Increase level of processing of perishables from existing level of 4 % to 20%. > Increase in value addition from 20% to 35%. > Triple the size of food processing industry from USD 70 billion to USD 210 billion. > Doubling India's share in global food trade to 3%. (ii). Strategies of the company. • Operational efficiency by utilizing existing infrastructure. • Enhancing quality standards. • Adapting new technologies to meet customer requirements. • Creating, establishing and enhancing presence in newer markets. • New Product Development. • Desrisking (iii) Processing Operations The Company presently operates from seven (7) processing units strategically located near the fruit and vegetable growing areas at Chittor (Andhra Pradesh), Valsad (Gujarat), Nasik (Maharashtra) and Mumbai. (iv) Cautionary Statement: The statements made and figures given in the various sections of "Management Discussion and Analysis" are keeping in mind the company's objectives, estimates and expectations. The actual results may differ from those expected depending upon the economic conditions, changes in Government regulations, tax regimes and other external and internal factors. 5. DIVIDEND Your Directors have recommended a dividend of Rs 2.50 (i.e. 25%) per equity share (last year Rs 1.80 per equity share) for the financial year ended March 31, 2015. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. 6. TRANSFER TO RESERVES The Company proposes to transfer Rs 4.00 crores to the general reserves out of the amount available for appropriation and an amount of Rs 12.42 crores are proposed to be retained in the profit and loss account. 7. FIXED DEPOSITS During the year under review, your Company did not accept any new deposits within the meaning of provisions of Chapter V- (Acceptance of Deposits by Companies) as per the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. The deposits of Rs 2.75 crores accepted prior to 01-04-2014, are outstanding as on the date of the balance sheet which will be repaid on or before the due date of its maturity. 8. DIRECTORS AND KEY MANAGERIAL PERSONNEL The Board pursuant to the provisions of Section 149 and 152 of the Companies Act 2013 and subject to the approval of shareholders in the ensuing Annual General Meeting has appointed Mr. Divakar Gavaskar, Mr. Vinod Kumar Beswal and Mrs. Kamlini Maniar as Independent Directors of the Company for a period of three years. All Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Board of Directors has on the recommendation of the Nomination and Remuneration Committee reappointed Mr. Utsav Dhupelia as Managing Director of the Company for a period of 3 years with effect February 15, 2015. Mr. Nirmit Ved, Nominee Director Exim Bank ceased from the Board of Directors of the Company with effect from December 08, 2014.The Board placed on record its appreciation for the contributions made by Mr. Nirmit Ved during the tenure of office. In accordance with the provisions of the Act, Mr. Milan Dalal retires by rotation and is eligible for re-appointment. During the year under review, the Company has designated Mr. Moloy Saha, Chief Financial Officer as KMPs as per the definition under section 2(51) and section 203 of the Act. 9. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134 (5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that; • In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. • we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year ended March 31, 2015 and of the profit of the Company for that year. • we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. • we have prepared the Annual Accounts on a going concern basis. • we have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively. • we have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 10. BOARD EVALUATION The board of directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirement as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49") The Board and Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meeting like preparedness on the issue to be discussed, meaningful and constructive contribution and inputs in meetings. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. In a separate meeting of Independent Director, performance of non Independent directors, performance of the board as whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non executive directors.. 11. NUMBER OF MEETINGS OF THE BOARD Four meeting of the board were held during the year. For details of the meeting of the board, please refer to the corporate governance report, which forms part of this report. 12. AUDIT COMMITTEE The details pertaining to the composition of audit committee are included in the Corporate Governance Report, which forms part of this report. 13. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION AND OTHER DETAILS The Company's policy on director's appointment and remuneration and other matters provided in Section 178 (3) of the Act has been disclosed in the corporate governance report, which forms part of the Director's Report. 14. INTERNAL FINANCIAL CONTROL The Company has in place internal financial control systems, commensurate with size and complexity of its operations to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. 15. RISK MANAGEMENT The Company has constituted a Risk management committee which has been entrusted with responsibility to assist the Board in overseeing the Company's risk management process and control, setting strategic plans and objectives for risk management, review the Company's risk appetite and strategy relating to key risk including market risk, product risk. The Company has adopted a risk management policy in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing agreement. The Board takes responsibility for the overall process of risk management in the organisation. 16. VOLUNTARY DELISTING OF COMPANY'S EQUITY SHARES FROM THE PUNE STOCK EXCHANGE LIMITED In terms of the circular issued by the Securities Exchange Board of India (SEBI) dated May 30, 2012, the Pune Stock Exchange Limited (PSE), exercised the option of voluntary de-recognition and exit as a Stock Exchange, consequent to the turnover target not attained post issuance of the aforesaid circular. SEBI allowed the exit of PSE w.e.f 13-04-2015. As a consequence all listed companies on Pune Stock Exchange were ceased to be listed on PSE. 17. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Accounting Standards (AS-21) on Consolidated Financial Statements read with AS-23 on Accounting for investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report 18. SUBSIDIARY COMPANIES During the year under review, M/s FNI Asia PTE Ltd, a company incorporated in Singapore became Company's wholly owned subsidiary and M/s. Dravya Finance Limited and M/s. Asim Exports International Limited w.e.f March 31, 2015, ceased to be subsidiaries of the Company and became associate companies. Pursuant to provisions of Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rule, 2014, the statement containing salient features of the financial statements of the Company's Subsidiaries and Associates in Form AOC-1 is attached to the financial statements. 19. AUDITORS Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, B.S. Mehta & Co, Chartered Accountants, were appointed as statutory auditors of the company from the conclusion of the forty second annual general meeting of the Company held on 22-09-2014 till the conclusion of the forty fifth AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. 20. SECRETARIAL AUDITORS The Board had appointed Mr. J.Y. Gupte, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure I to this report 21. AUDITOR'S REPORT AND SECRETARIAL AUDITORS REPORT The auditor's report and secretarial auditor's report does not contain any qualifications, reservations or adverse remarks. 22. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THE FINANCIAL YEAR AND DATE OF REPORT There have been no material changes and commitments affecting financial position between end of the financial year and the date of the report. 23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators/ Courts which would impact the going concern status of the Company and its future operations. 24. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013. (Please refer to note 12, 13 and 15 to the Standalone Financial Statements). 25. CORPORATE GOVERNANCE As per clause 49 of the listing agreement entered into with the stock exchange, corporate governance report with practicing Company Secretary certificate thereon is attached, which forms part of this report. 26. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large and hence, enclosing of Form AOC-2 is not required. All related party transactions are placed before the Audit committee as also the Board for approval. Prior omnibus approval of the Audit committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related party transactions is placed before the Audit committee and the Board of Directors for their approval on a quarterly basis. The Company has developed a policy on Related Party Transactions as approved by the Board. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. 27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure II to this report. 28. PARTICULARS OF EMPLOYEES The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 are given below: ii. The percentage increase in remuneration of each director, chief financial officer, Company Secretary, if any, in the financial year: Chief Financial officer: 3.40%, Managing Director: 100% Company Secretary: NIL iii. The percentage increase in the median remuneration of employees in the financial year: 7.7% iv. There were 269 permanent employees on the rolls of the Company as on March 31, 2015. v. The explanation on the relationship between average increase in remuneration and Company performance: The profit after tax for the financial year ended March 31, 2015 increased by 146.59 % whereas the increase in median remuneration was 7.7%. The average increase in median remuneration was in line with the increase of salary in the industry. viii. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comprasion with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: The Average increase in the remuneration of all employees was 4.12% in F.Y. 2015. The average increase in remuneration of managerial personnel (i.e. managing director) was at 100% w.e.f. 14-02-2015 as per schedule V of the Companies Act, 2013 The average increase in the remuneration of both, the managerial and non managerial personnel was determined based on the overall performance of the Company. Further the remuneration of the managerial personnel is based on the remuneration policy as recommended by the Nomination & Remuneration Committee and approved by the Board of Directors. x. The key parameters for any variable component of remuneration availed by the director: There are no variable component of remuneration availed by the directors except the Managing Director which is a part of his remuneration package and the same is based on the recommendations of the Nomination and Remuneration Committee. xi. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: During the year from 01-04-2014 till 14-02-2015, the Executive Vice President (Operations Western Region) and Chief Financial officer received the remuneration in excess of Managing Director who is highest paid director. The ratio of remuneration is 103.74% and 93.40% respectively which is calculated considering the remuneration for the said period. xii. Affirmation that the remuneration is as per the remuneration policy of the Company: The Company remuneration policy is based on industry standards, competent and experience of the employee. Individual pay is determined by the performance of the individuals. The Company affirms that remuneration is as per the remuneration policy of the Company xiii. There are no employees falling within the purview of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014. 29. EXTRACT OF ANNUAL RETURN As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure III in the prescribed Form MGT-9, which forms part of this report. 30. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure IV of this report in the format prescribed in the Companies (Corporate Social responsibility Policy) Rules 2014. 31. DISCLOSURE ON SEXUAL HARASSMENT OF WOMAN AT WORKPLACE The Company has set up an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of woman employees at workplace. There was no case of sexual harassment reported during the year under review. 32. UNCLAIMED DIVIDEND As per the provisions of Section 205C of the Companies Act, 1956, unclaimed dividend amounting to Rs 0.45 lakhs for the F.Y. 2006-07 was transferred to Investor Education and Protection Fund on April 06, 2015. Further, the unclaimed dividend in respect of F.Y 2007-08 must be claimed by shareholders by February 28, 2016 failing which it will be transferred to the Investor Education and Protection Fund within a period of 30 days from the said date. In terms of the said section, no claim would lie against the Company or Investor Education and Protection Fund after the transfer. 33. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: • Issue of equity shares with differential rights as to dividend, voting or otherwise. • Issue of shares (including sweet equity shares) to employees of the Company under any scheme. 34. ACKNOWLEDGEMENT Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the banks, customers and members during the year under review. Your Directors also wish to place on record their sense of appreciation for the committed services by the Company's executives, staff and workers. By Order of the Board For FOODS AND INNS LIMITED B.C. DALAL CHAIRMAN (DIN: 00061492) Place : Mumbai, date : August 13, 2015 |