DIRECTORS' REPORT AND MANAGEMENT DISCUSSION & ANALYSIS The following report should be read in conjunction with the audited financial statements and notes for the year ended March 31, 2015 and the audited financial statements and notes for the year ended March 31, 2014. This report contains forward looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Company's strategy for growth, market position, expenditures, and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company's actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Company - In General Synonymous with the fine taste of India in its absolute authentic form, the sole objective of Kohinoor Foods Limited, since its inception, has been to make the world experience the true Indian flavour. The Company offers an extensive range that caters to consumers' need in all parts of the world - a wide variety of Basmati Rice, Ready to Eat Curries & Meals, Readymade Gravies, Cooking Pastes, Chutney's, Spices and Seasonings to Frozen Breads, Ghee, Snacks & Paneer (Indian Cottage Cheese), healthy grains, edible oils. Today, the most powerful brand of the Company "Kohinoor" is a household name in the countries like USA, UK, UAE, Canada, Australia, Singapore, Japan, Mauritius & Middle Eastern, European countries . As of now, the brand 'Kohinoor' is known in more than 60 countries worldwide. Your Directors presents the 26th Annual Report and the Audited Annual Accounts of the Company for the Financial Year ended 31st March, 2015. Financial Overview The financial highlights for the year ending 31st March, 2015 are as under: Operations: For the financial year under review 2014-15, the Company's Export sales stood at INR 8,867 million as against INR 9,437 million in previous year whereas the Domestic Sales stood at INR 2,704 million as against INR 3,187 million in the last financial year. The contribution made by Rice to the Company's business is INR 10,289 million as against Rs.11,080 million in the last financial year, while the Food Business also contributed INR 769 million as against INR 732 million in the previous year, a marginal growth over last year The year saw decline in Basmati rice exports from India both in value and volume terms mainly due to surplus supply and lower international demand especially from Iran, which is the biggest importer of Indian Basmati Rice. Also political instability in countries such as Iraq, Syria & Yemen contributed to the decline of Indian export of basmati rice. In addition, many importing countries of Basmati rice held back Indian Rice imported earlier and are now disposing that inventory instead of ordering new quantities. Also the Basmati Rice exporters had to bear high cost of Processing of Paddy and lower realization. Major highlights during the financial year being: • Our Basmati Rice exports grew by 22% in volume Terms and 12% in value terms. • Impressive growth in the volume of Basmati Rice in the markets of United Kingdom, Iran, United Arab Emirates, Sri Lanka, Bangladesh, Hong Kong, Israel, Qatar & Reunion. • The private label business of Basmati Rice grew on the back of acquiring new clients & more buying from existing customers. New clients include from countries such as Brazil, Portugal, Bosnia & Herzegovina, Iran, Saudi Arabia & Paraguay etc. The Company focussed on spreading its foot prints across the globe and reaching out to new customers. • In Saudi Arabia, our Private Label business has recorded a robust growth. • Basmati Rice exports to Iran and United Kingdom recorded significant growth at 36% & 74% respectively • We have recorded phenomenal growth in both value and volume terms in export of Basmati Rice to our JV Company M/s Al Dahra Kohinoor LLC (Abu Dhabi) EXPORT MARKETS Export- Basmati Rice This year, in the Export of Basmati Rice, the Company did the business of around INR 7,158 million as against INR 7,083 million in the previous financial year. The Company did business in more than 60 countries this year and recorded a growth of 22% in volume in comparison to the last year business. Export- Processed Food This year the export of processed food products of Kohinoor recorded a modest growth with revenues of INR 769 million as against INR 732 million in the previous year. Because of the restructuring of US operations & and low business revenue from one of our major client of Private Label in South Africa; the overall business momentum was hampered that resulted in slower growth. Subsidiaries/Joint Venture UAE Operations In the last financial year (2013-14) Kohinoor Foods Limited entered into a Joint Venture with Al Dahra (Abu Dhabi) that seeks to establish robust frame work for Rice & other agro products between India & UAE and to provide long-term sustainable food security to the people of UAE. Through this JV we will be able to gain enhanced marketing & trading access for our rice products across the Arabian Gulf & Middle East Region. Consequently your Company will disinvest from the earlier JV Company M/s Rich Rice Raisers Factory LLC (Dubai) pursuant to the agreement with Al-Dahra. As per the terms of this agreement a rice processing mill & storage facility is being created and the construction work is in progress. As we aware that Rich Rice Raisers Factory LLC, (RRR) is a joint venture Company having KFL holding of 25% in equity. This Joint Venture Company was formed in the year 2000 to promote our products and also to trade in other commodities. However at the time of formation of Al Dahra Kohinoor in Abu Dhabi it was decided that RRR will discontinue its business and Al Dahra Kohinoor will look after the rice business in UAE. The joint venture with Al-Dahra has been successful and in its first year of the operation, the export of Rice to our Joint Venture Company has been very encouraging and we hope to export significant quantity in the next financial year. U.K Operations: Indo European Foods Limited (IEFL) The principal activity of the Company during the year was processing and marketing of rice and food products. The Company showed a commendable growth in sales by 4.1 million GBP (20.27%) to 24.5 million GBP in the year, 2015 (20.4 million GBP in the year 2014), reflecting the management's efforts to maintain continuing growth in turnover. The Company made a net profit of 32,051 GBP. The Company will continue to concentrate on profitable growth and the management is upbeat about the performance in terms of sales and profitability will show an improvement in next year. The highlights of the achievement of UK operations are given below. Efficiency in supply chain-Increase in volumes successfully achieved. Company met its target of 98.5% delivery target to its key UK retail customers. Team at Felixstowe takes great pride in being instrumental in sustaining growth through various cost reduction and optimisation of processes while working hand in hand with the sales team in meeting corporate targets. IEFL operations has been commended on this achievement by all retailers. Investment in People- IEFL has also made strides in investing in various training programs for factory staffs and invested in making systems and processes more agronomical for the entire staff. Trainings such as Food Safety & Hygiene, Food Handling and Health and safety processes allowed to achieve better operational efficiency by reducing wastage, increasing quality of our products and reduction in health hazards and accidents. These programs also boosted staff moral and motivation which is a key achievement in becoming a preferred employer for new recruits. BRC Audit - IEFL has been awarded the highly sought after "Grade A" by the British Retail Consortium (BRC). The Felixstowe factory meets the criteria of global standard for food safety and is equipped to supply all major international retailers. Forward Thinking - Company has made great strides in the ground work for installation of 5,000 Mt Grain Silos at the premises which will lead to more efficient product storage and a better control on supply chain from raw material stage to finished goods. Approvals have now been granted and these will be installed by next year. Furthermore, rice milling has increased significantly by 34% and the company has received permission from the local council to mill the rice 24 hours a day, 7 days a week. Focus on Food Products - In order to drive further penetration of the Kohinoor brand into the competitive UK landscape, IEFL is focusing more on food products which will help elevate our status as a preferred supplier of World Foods with a wider range of product. This year the company has increased the distribution of Kohinoor Cooking Sauces & Kohinoor Namkeens in Tesco and ASDA respectively. The number of food containers being imported has increased by 65% Overall, this year IEFL had a satisfactory performance with roll out of new products and its existing products making headways into new accounts in major multiples, food services and the airline supply business. USA Operations Kohinoor Foods USA Inc. Kohinoor Foods USA Inc., a wholly owned subsidiary based in New Jersey, that caters to the US and the Canada market. The Company has explored the possibilities to strengthen/restructure of its Wholly Owned Subsidiary based at New Jersey (USA) to reduce its operational cost and to increase the marketability of our KOHINOOR brand as well as other brands registered in USA, by virtue of resolution passed by the Board of Directors in their meeting held on 13th August, 2014. The Company has initiated certain changes/restructuring in our business model in USA to: Reduce fixed cost Reduce operational cost Increase business volume in USA To improve the financial position of WOS by reducing debt and interest burden. On account of restructuring of the business model the focus of the Company was more on recovery of old dues, disposal of stock etc. The turnover of the Company this year has been $ 11.35 million and loss of $ 2.47 Million mostly on account of writing off of old unrecoverable dues and old stocks. The highlight of the performance of USA operation are given below. Through this subsidiary the Company has demonstrated its presence in both the Ethnic & the Mainstream segment of the business. It caters to over 3,000 ethnic stores across the US markets besides Kohinoor brand is widely available in the main stream supermarkets as well. To refocus and re-align the marketing and operational goals we have under-taken restructuring and re-organizing our business activities to serve our customers & stake holders in an efficient and productive way. On the back of these initiatives, we hope to increase the Top-line revenues and look for improved performance in future. The brand 'Kohinoor' is well known in US and under our new strategy we plan to increase the width and the depth of distribution across US & Canada markets to further improve the visibility & strengthen the brand. Besides, Kohinoor Foods USA Inc. aims to keep a close eye on consumer's food preferences and buying behaviour and introduce new products to stay ahead in the competition. Ethnic food in United States has traditionally meant Mexican and Chinese. However, the Indian foods and related food products are now the hottest trend today. The modern day life and the rigors that tag along, leave most people with very little time for themselves. A need of healthy vegetarian food and growing awareness of the relationship between diet and health has driven consumer to look at food that has made the Indian convenience food most popular in USA markets. The trend has been steadily evolving over the past decade. Our success can be measured by the fact we are available in coveted retail chains like Target, Kroger, Wal-mart, Wegmans, Big Lots and many more and also in Canadian supermarkets such as Metro, Loblaw's, Wal-mart in Canada FOOD BUSINESS: 'Food Division' has grown substantially from year on year basis from 2011-12 to 2014-15; from a turn-over of INR 350 Mn to the tune of INR 769 Mn. The division has grown with diversification of product categories from single category of Ready to Eat products to multiple categories like Edible Oil, Diary (Paneer & Ghee), Snacks & Savories, Dry Fruits and instant mixes. During the year (2014-15) Kohinoor Processed & Packaged Food recorded a business of Rs. 769 Mn as against Rs. 732 Mn in the previous year. A modest growth on account of lower sales to USA and discontinuation of certain categories such as Biscuits, Instant Mixes & Pickles. However we added new product categories such as Rice Bran Oil & Healthy range of Quinoa based Products to expand our bouquet of product portfolio. Bulk of Kohinoor's processed food business to the extent of 70% is contributed by the clients of Private Label; so in the event of any issue with the major client has direct bearing on our Revenues. However we expect to notch up some good numbers in the next financial year through some exciting product launches, increased Distribution Network and acquire new customers in new markets. Highlights (2014-15) - Ready to Eat (ambient) segment of products achieved the sales of INR 615 Mn in financial year 2014-15 as compared to INR 553 Mn achieved in last financial year, a growth of 11%. New Category of Products were successfully launched such as - Rice Bran Oil (RBO) - In the first year its operation Rice Bran Oil has achieved the revenues of INR 35 Mn in financial year 2014-15 and we plan to double the revenues in the next financial year - Expanded to New Category of Products for our Private Label Business such as Healthy Range of Microwaveable Products like-Brown Rice with Red Quinoa Brown Rice with Chia Multigrain These new categories were developed and processed for Coles (a reputed Retail Chain of Australia) and were well received and appreciated by the consumers. We certainly believe that these products will grow bigger in next financial year 2015-16. Proposed Product Launches in 2015-16 -"Green Grown" range of 100% certified Organic & Healthy products, catering to the demands of organic food for the world. Green Grown would offer more than 100 Organic/healthy/certified products including whole cereals, pulses, spices (whole and ground), Ready to Eat Products, healthy grains, edible oils, rice (basmati and sona masoori) and other range of 100% natural / healthy / organic products. -In our Private Label business of Coles (Australia), one of the reputed Retail Chains, we plan to introduce Ready to Eat- Pasta & Black Rice. It is envisaged that these categories in coming times will garner bigger volumes. - In addition we are also working closely with 'Traders Joe's, one of the leading Retail Chain in US for Quinoa based breakfast cereal project. Industry Overview Food Processing Industry The Indian market offers a huge potential for the food processing industry - more so because of the fact that it promotes two main growing factors of our Indian Economy - Industry & Agriculture. During the last one decade, India moved from a position of scarcity to surplus in Food. Given the trade in production of food commodities, the Food Processing Industry in India is on an assured track of growth and profitability. It is expected to attract phenomenal investment in capital, human, technological and financial areas. A reason why the Food Processing Industry sector in India has been accorded high priority by the Government of India, with a number of fiscal relief and incentives, to encourage commercialization and value addition. As per a study conducted by McKinsey and Confederation of Indian Industry (CII), the turnover of the total food market is approximately Rs.250,000 Crores, out of which value-added food products comprise Rs.80,000 Crores. Basmati Rice Like any other commodity business, Basmati Rice is a category which is little complex and widely unorganized. With an industry estimated consumption of around 1.5 million tonnes of Basmati Rice in India, this is one category which has grown significantly over the years and slated to grow further in times to come. Though majorly unorganized, but year on year this category is experiencing good number of conversions from unbranded to branded packaged Basmati Rice in terms of consumptions in India. This is mainly due to introduction of branded and package basmati rice in many retail outlets. India's growing middle class has augmented the domestic demand of branded rice. Moreover, introduction of modern food retail formats has also propelled the packaged food market, facilitating the availability, visibility and accessibility of branded products. The domestic branded market in India is expected to grow in double digits as compared to single digit growth for unbranded rice. Eating rice is common habit in most of the Indian households and it is usually a part of one of the 3 meals cooked every day. Geographically, the consumption of Basmati is higher in the Northern & Western part of the country while culturally, its consumption is quite high in the Punjabi & Gujarati families. With the view of serving the best to their customers & employees, Basmati consumption is also higher in well recognized hotels & large institutions. The consumption of branded packaged Basmati Rice is also being driven by the modern retail that allows every consumer to select what they want. Ambient - Ready Meals Ready Meals, is a category which is gaining popularity globally though still at a growing stage; but the factors that has so far contributed to sales of Ready Meals have been increasing consumer base of working people who have less time to spend on cooking, Eating out of home becoming a common phenomena on weekends, growth of Modern trade, the Convenience of making exotic vegetarian & non-vegetarian dishes in just a few minutes, etc. As this category grows, an Innovative value addition to products with Health & Nutrition is expected to become an important aspect of it. Frozen Food - Ready Meals Though Frozen Food as a category constitutes many products, majority of it being the frozen unprocessed non-vegetarian food, but within this segment vegetarian Frozen Ready Meals, snacks too is growing at significant rate. The factors that contribute to the growth of this category is very similar to that of Ambient Ready Meals like growing consumer base of working people who have less time to spend on cooking, Eating out of home becoming a common phenomena every week & on weekend, Growth of Modern trade, the Convenience of making exotic Vegetarian dishes in just a few minutes, etc. Risks & Concerns Macro-economic factors like recession, subdued demand and political uncertainty may affect the business of the Company and the industry at large as well. The Company is aware that uncertainties in business offer opportunities as well as downside risks and thus has identified and put in place mitigation tools for the same. Some key risk areas are: Procurement risk: Adequate availability of key raw materials at the right prices is crucial for the Company. Being a generic natural product with low yield concentrated in a small region of the World, production of Basmati depends on the vagaries of nature. Therefore, any disruption in the supply due to a natural or other calamity or violent changes in the cost structure could adversely affect the Company's ability to reach its consumers with the right value proposition. However, we are ready with plans that might help us at such times. However, the Company's long term relationship with farmers built on trust ensures constant supply and thus over the years it has not faced any procurement problems. Also, adequacy of irrigation facilities in the Basmati producing regions mitigates these uncertainties. High working capital requirement: Basmati rice requires to be aged for 9-12 months before selling, leading to huge working capital requirements. This results in low ROCE for the industry. Combating this risk, efficient working capital management system has been set in place by the Company and cash flow is monitored on daily basis. Intense competition from unorganized sector: Another characteristic of this industry is the presence of unorganized sector offering basmati in loose unbranded form which intensifies competition. The Company is moving towards branded products and has invested significantly in building strong brands which helps differentiate their product. Dividend Your Directors do not recommend any dividend for the financial year 2014-15. Re-Appointment / Appointment of Directors In accordance with the provisions of the Companies Act, 2013, Mr. Gurnam Arora (holding DIN - 00010731), Director retires by rotation at the ensuing Annual General Meeting and being eligible offer himself for reappointment. Your Directors recommend his reappointment. Pursuant to Clause 49(II) (A) (1) of the Listing Agreement and Section 149 of the Companies Act, 2013 a Women Director Ms. Madhu Vij (holding DIN - 00025006), was appointed as an Additional Director by the Board at its meeting held on 31st March, 2015, to comply with the requirements. According to the provisions of Section 161 of the Companies Act, 2013, she holds the office up to the date of this Annual General Meeting, be and is hereby appointed as a Non-Executive Independent Director of the Company, pursuant to provision of section 149 of the Companies Act, 2013, not subject to retirement by rotation, to hold office for a term of 5 (Five) consecutive years commencing from the date of her appointment as an additional director i.e. 31st March, 2015 up to March 30th, 2020. Ms. Madhu Vij, Non-Executive Director of the Company, has given a declaration to the Board that she meets the criteria of independence as provided under section 149(6) of the Act. In the opinion of the Board, the director fulfil the conditions specified in the Act and the Rules framed thereunder for appointment as an Independent Director and she is independent of the management. The Nomination Committee has recommended the appointment of these directors as Independent Directors from 31st March, 2015 upto March 30, 2020. The Appointment and Remunerations of Mr. Jugal Kishore Arora, Mr. Satnam Arora and Mr. Gurnam Arora had been approved by the Shareholders in the Annual General Meeting of the Company held on 27the September, 2012 for the period of Five years. The Company has obtained the approval of the Central Government for payment of remuneration subject to the limit as specified in the letter dated 23rd September, 2013 for the period of Three Years from 1st October, 2012 to 30th September, 2015 and accordingly the Company has given the remunerations to its directors within the limit as approved by the Central Government. Now the Company wants to renew the remuneration payable to the Managerial Personnel on the same terms and conditions as approved by the shareholder in their Annual General Meeting held on 27th September, 2012 for the period of further two years starting from 1st October, 2015, subject to the overall limit as approved by the Central Government. Your Directors recommend this resolution for approval of the members. Re-Appointment / Appointment of Key Managerial Personnel (KMP) Mr. Prabhat Kumar was working as Vice President Banking of Company and also handling Finance functions of the Company. Pursuant to provisions of Section 2(51) and Section 203 of Companies Act, 2013 and as per Clause 49 of the Listing Agreement Mr. Prabhat Kumar is designated as Chief Financial Officer (CFO) of the Company w.e.f. 13th August, 2014, on the terms and condition as recommended by the Committees and as approved by the Board of Directors." The Company has intimated to the Ministry of Company Affairs by filing MR-1 within the stipulated time. Subsidiary, Joint Ventures and Associate Companies In accordance with section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all of its subsidiaries, which form part of the Annual Report. The statement provides the details of performance, financial positions of each of the subsidiaries. However, the Company has no material subsidiary in accordance with the provisions of clause 49 of the Listing Agreement. During the year the Board of Directors of the Company had reviewed the affairs of the subsidiaries and a statement containing the salient features of the financial statement of our subsidiaries and Joint Venture in the prescribed format AOC-1 is enclosed as Part I and Part II of Annexure A to the consolidated financial statement and hence not repeated here for the sake of brevity. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries, are available on our website www.kohinoorfoods.in/investor These documents will also be available for inspection during business hours at our corporate office. Further the Policy for determining material subsidiaries as approved by the Board may be accessed on the Company's website at the link: www.kohinoorfoods.in/investor Internal Control System The Company has in place adequate internal control systems, commensurate with its size and nature of business and complexity of its operations designed to provide a reasonable degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguard for assets, internal control over financial reporting and compliance with applicable laws and regulations. Internal audit function evaluates the adequacy of, and compliance with policies, plans, regulatory and statutory requirements. The Internal Auditors directly report to the Board's Audit Committee, thus ensuring the independence of the process. It also evaluates and suggests improvement in effectiveness of risk management, controls and governance process. The Audit committee and Board provides necessary oversight and directions to the Internal audit function and periodically reviews the findings and ensures corrective measures are taken. In the opinion of the management and the internal auditors, there exists adequate safeguard against fraud and negligence within the Company. Our Offices as well as the manufacturing facilities endorse the highest health, safety, security and environmental standards Listing at Stock Exchange The Equity Shares of the Company are listed with BSE Limited and National Stock Exchange of India Ltd. The annual listing fee for the year 2015-16 has been paid to the Exchanges. Corporate Governance Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as stipulated by the Stock Exchanges. Pursuant to clause 49 of the Listing Agreement, a report on the Corporate Governance , Certificate regarding Compliance, Secretarial Audit Report and Managing Director and CFO certification along with the Auditors Certificate have been made part of the Annual Report. Auditors M/s Rajender Kumar Singal & Associates LLP, Chartered Accountants, New Delhi, Statutory Auditors of the Company, holds office till the ensuing Annual General Meeting and are eligible for re-appointment. They have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits and they are not disqualified for re-appointment. The Board pursuant to the provisions of Section 139, 142 and other applicable provisions of the Companies Act, 2013 and on the recommendation of the Audit Committee has considered the appointment of M/s Rajender Kumar Singal & Associates LLP, Chartered Accountants, New Delhi (Firm Registration No. 016379N), as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting to the conclusion of next Annual General Meeting. Auditors Report The Company has received the Auditors Report duly signed by M/s Rajender Kumar Singal & Associates LLP, Chartered Accountants, New Delhi, and took note of the same. Further as mentioned in the Auditors Report, attention is drawn to Note No. 11(c) & 38(a)(i) to the financial statements, the board discussed the contention of the Auditor and is of the view that the losses incurred by the Wholly Owned Subsidiary is not going to affect the Company's investment in long run. Further as per advice received from legal experts and on the basis of merit of the case, there is a high probability that the income tax order will be set aside and the demand will be quashed. Accordingly, management is of the view that no provision in respect of the above demand is required to be made in the books of accounts. Cost Auditors The Cost Auditor M/s Cheena and Associates, appointed as Cost Accountants of the Company for the year 2014-15 has completed the audit of the cost record of the Company. The Board pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 and Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), on the recommendation of the Audit Committee has approved the appointment of M/s Cheena & Associates, Cost Accountant Firm to conduct the audit of the cost records of the Company for the financial year ending on March 31, 2016 and remuneration to be paid subject to rectification by shareholders. Secretarial Audit The Board of Directors pursuant to the Provision of Section 205 of the Companies Act, 2013, has appointed M/s Vinod Aggarwal Associates, Company Secretary Firm, to conduct Secretarial Audit of the Company for the Financial Year 20152016. Secretarial Audit Report The Secretarial Auditor M/s Vinod Aggarwal and Associates, Company Secretaries, appointed for the year 2014-15 has completed the secretarial audit of the Company. The Secretarial Audit Report as received from the Practicing Company Secretary is annexed to the Annual Report. As per the Secretarial Audit Report the Company has complied with all the applicable acts, laws, rules and regulations. Internal Auditor The terms of M/s SPMG & Co., Chartered Accountants, New Delhi, who was reappointed as an Internal Auditor of the Company for the Financial Year 2014-15 expired on 31st March, 2015. Your Directors have approved their reappointment in the Board Meeting dated 28th May, 2015, for the financial year 2015-16. Fixed Deposits Your Company has not accepted any deposit from Public during the year under review. Share Capital of the Company The paid up Share Capital of the Company is amounting to Rs. 35,24,15,300/- comprising of 3,52,41,530 equity shares of Rs. 10/- each. Board Meetings The Board is headed by an executive Chairman. As on 31 March 2015, the Board of Directors consisted of Nine Directors, including Chairman, Joint Managing Directors, Woman Director, Independent Director and others. There were five (5) Board Meetings held during the year 2014-15 and the gap between two meetings did not exceed 120 day. Audit Committee Meetings During the year under review, the Audit Committee met Four (4) times i.e. on 29th May, 2014, 13th August, 2014, 13th November, 2014 and 9th February, 2015 and the maximum time gap between any two consecutive meetings did not exceed 120 Days. The minutes of the meetings of the Audit Committee are noted by the Board. Nomination and Remuneration Committee The Board of Directors of the Company at their meeting held on 29th May, 2014, have approved the change in nomenclature of the Remuneration Committee to Nomination and Remuneration Committee and have revised their role. The recommendation of the Nomination and Remuneration Committee, the Board has formulated a Nomination and Remuneration Policy for selection and appointment of Directors, Senior Management and their remuneration. Whistle Blower Policy/Vigil mechanism The Company adopted its Whistle Blower Policy on 13th August 2014, more specifically required as per clause 49 of the Listing Agreement. The Whistle Blower Policy/Vigil Mechanism provides a mechanism for the director/employee to report violations, without fear of victimisation of any unethical behavior, suspected or actual fraud, violation of the Code of Conduct etc. which are detrimental to the organisation's interest. The said Policy is placed on the Company's website www.kohinoorfoods.in/investor Risk Management The Company has adopted several strategies for Risk Management to mitigate risks and uncertainties. Controls have been put in place to quickly and systematically identify, prioritise, monitor and mitigate such risks on a constant basis. This is a realtime and ever-evolving area, given the dynamic nature of the environment. The Company has devised its risk management policy to ensure that the Company has an appropriate and effective Risk management system with appropriate Policies and process which carries out Risk assessment and ensures that Risk mitigation plans are in place. In addition, all the key risks get continuously deliberated and discussed at the Group Executive Committee level as well as the Business Unit level. The said Policy is placed on the Company's website www.kohinoorfoods.in/investor Particulars of Loan given, Investment made, Guarantees given and Securities provided Particulars of loans given, investments made, guarantees given and securities provided under section 186 of the Companies Act, 2013 are provided in the notes of standalone Financials statement. STATUS OF PENDING LITIGATIONS BEFORE VARIOUS COURT /AUTHORITIES 1. The Company has preferred an appeal before the Income Tax Appellate Tribunal, New Delhi against the impugned Income Tax Assessment Order in respect of Assessment Years 2002-03 to 2008-09 in which additional income tax of Rs. 63.32 Cr ( Pr. Yr. 63.32 Cr) alongwith interest Rs. 31.55 Cr. (Pr. Yr.-Rs.31.55 Cr.) has been demanded. Subsequently, Company has deposited Rs. 13.50 Cr. "Under Protest" against the aforesaid demand. Subsequently, during the last year, Hon'ble ITAT, New Delhi has passed its order on 21st July 2014 against the above appeal and has granted significant relief by deleting the addition of more than Rs. 110 Cr out of the total addition of Rs. 185 Cr. In view of the substantial material place on the record, Hon'ble ITAT has remanded back certain issues to the Assessing Officer for fresh adjudication. As per the partial appeal order effect received from the Dept., the tax demand and interest demand stand reduced to Rs.30.23 Cr and Rs.24.83 Cr. respectively. Against the above ITAT order, appeal filed by the Income Tax Dept. has been dismissed by Hon'ble Delhi High Court whereas Company's appeal filed before Hon'ble Delhi High Court is pending to be heard. The Company has preferred another appeal before the Income Tax Appellate Tribunal, New Delhi against the impugned Income Tax Assessment Order in respect of Assessment Years 2009-10 in which income tax of Rs. 17.90 Cr., along with interest Rs. 10.54 Cr. has been demanded. The Company has also filed objections before the Dispute Resolution Panel, New Delhi against the draft assessment order passed by the Income Tax Dept. in respect of Assessment Years 2011-12. The tax effect of the additions made is estimated at Rs. 26.89 Cr. As per the advice received from legal experts and on the basis of merit of the case, there is a high probability that the aforesaid impugned orders will be set aside and the demand will be deleted. Accordingly, management is of the view that no provision in respect of the above demand is required to be made in the books of accounts. 2. The Company has filed a suit for declaration, and mandatory injunction against the Reserve Bank of India and Punjab National Bank before the Hon'ble High Court, New Delhi for loss of Rs. 27.49 Cr. arising out of forex derivative transactions. However recently the Company and PNB have entered into a mutual agreement to resolve the pending Derivative matter under which the company will pay an agreed lump sum amout of Rs. 25.00 crores, in respect of disputed liability and will jointly withdraw the case in due course. 3. The Board of Trustee of the port of Mumbai has filed a money suit for recovery of Rs. 9.64 Cr. towards alleged outstanding demurrage charges against which the Company has filed its counter claim of Rs. 10.88 Cr. towards the financial losses, interest on the investment, refund of the license fees, refund of the demurrage charges, compensation and damages etc. 4. There are few more cases which are pending before the various authorities and the same has been duly disclosed under Notes to the Account. Conservation of Energy, Research and Development, Technology Absorption, Foreign Exchange Earning and Outgo The particulars as prescribed in sub-section (3) of section 134 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014 are enclosed as Annexure B to this Report. Extract of Annual Return In accordance with Section 134(3)(a) of the Companies Act,2013, the extract of the annual return in Form No. MGT - 9 and is enclosed as Annexure C to this Report. Information regarding Employees Information as per Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rule 2014 read with Companies (Particulars of Employee) Rules 1975, the names and other particulars of Employees are given as under: I) Name of the Employees, Designation/Nature of Duties, Gross Remuneration, Qualification, Age, Total Experience (in years), Date of Commencement of Employment, the percentage of Equity Shares held, employed throughout the year and in receipt of remuneration of Rs. 60,00,000/- or more per annum are as under. a) Shri Jugal Kishore Arora, Whole time Director designated as Chairman, Rs. 96,00,000/-, Graduate, 72 years, 29 years and he is the promoter of the Company, 17.15% of total Equity. b) Shri Satnam Arora, designated as Joint Managing Director, Rs. 1,14,52,455/-, Post Graduate, 66 years, 29 years and he is the promoter of the Company, 15.26% of total equity. c) Shri Gurnam Arora, designated as Joint Managing Director, Rs. 1,15,82,043/-, Graduate, 65 years, 29 years and he is the promoter of the Company, 17.31% of total equity. ii) Employed part of the year and in receipt of remuneration of Rs. 5,00,000/- or more per month during any part of the year under consideration.: Nil Disclosers as required under section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of management Personnel) Rules, 2014, is annexed as annexure D to this report. Management's Discussion and Analysis Report Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. Directors' Responsibility Statement Pursuant to section 134(5) of The Companies Act, 2013, the Directors confirm that: a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating material departures; b) The Directors had 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 the financial year and of the profit and loss of the Company for that period; c) The Directors had 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; d) ) The Directors had prepared the annual accounts on a going concern basis; e) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively and f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Awards & Recognitions Kohinoor Foods is no stranger to Awards & Recognitions. Since its inception, the company has been earning awards and recognition like consumer validated Super Brand Award (thrice in series), Reader's Digest Most Trusted Brand award (4 times in a row), Power Brand Award, Guinness Book of World Record (for making World's Largest Biryani), National award for Export Excellence, Brand Equity Award & many APEDA awards. Corporate Social Responsibility As per Companies Act, 2013, all companies having net worth of Rs 500 Crore or more, or turnover of Rs.1,000 Crore or more or a net profit of Rs. 5.00 Crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) Committee of Board of Directors comprising three or more directors, at least one of whom should be an Independent Director and such Company shall spend 2% of the average net profits of the Company's profit immediately preceding financial year. Accordingly a detailed CSR Policy was framed by the Company with the approvals of the CSR Committee and Board taken on 29th May, 2014. The Policy, inter alia, covers the following: . Philosophy • Scope . List of CSR activities • Modalities of execution of projects/programmes • Implementation through CSR Cell • Monitoring assessment of projects/programmes CSR Policy gives an overview of the projects or programmes which are proposed to be undertaken by the Company in the coming years. 2. The composition of the CSR Committee A Committee of the directors, titled 'Corporate Social Responsibility Committee', was constituted by the Board in its meeting held on 29th May, 2014 with the following members: Mr. Sandeep Kohli Mr. Maharaj Kishan Trisal Mr. Satnam Arora Mr. Gurnam Arora As the Average net Profit/(Loss) of the Company for last three financial years prior to 2014-15 comes to Rs.29.69 crores, average net loss and therefore the company is not required to spend any amount as prescribed for CSR expenditure. Although the company is not statutorily required to expend 2% of the average net profit (INR) of the last three financial years, being average net loss. However the company voluntarily spent an amount of Rs. 18.38 lakhs in the last financial year on this account by doing various CSR activities. Kohinoor envisions to improve lives in communities we live around, protect workplace rights, respect people, support missions that help people have a better life, provide good jobs, world class quality products and a healthy environment to all of us around. At Workplace, Kohinoor Foods maintains high standards for fair and dignified treatment of all the people who work for our company. For all of its employees, it is not just a place to work, but like another home and everybody in is like a big family, closely bonded with each other. Kohinoor Foods also believes that a company is as good as the people who work for it - their combined talents; skills, knowledge, experience and passion make a company what it is. Hence, company's continuous goal is to inspire and motivate its people to hone their talents, increase their knowledge & skills and achieve extraordinary results at their workplace. In this endeavor we have offered subsidized meals to our employees at a very nominal cost. The company also considers it as its responsibility to support the community that we live in. Kohinoor Foods supports 'Maitri' an NGO working for widows on Vrindavan to make difference in their lives. It supported CEQUIN (Centre for Equity & Inclusion), a non-profit organization working towards the empowerment of marginalized and excluded sections of the population especially the women. Due to unprecedented floods in Jammu & Kashmir, Kohinoor Foods, supplied Ready to Eat Processed Food products to the victims of that region and helped them to normalcy. In addition we also supported the needy girl child's education at Himalayan School Society, Dehradun and also to Rotary South end Charitable Trust towards Saving Lives, to contribute positively to the society. Being environmentally conscious company and as part of Go Green campaign, we have put up water treatment plant in our rice factory (Murthal), where treated water is used for watering the lawn, garden and irrigate the fields. Adherence to global human rights standards, No minor labour, Fair trade practices, complete Medical facilities for its people, Safe & sound working environment are the things that Kohinoor Foods take utmost care about. The CSR Policy may be accessed on the Company's website at the link : www.kohinoorfoods.in/investor Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has in place a Sexual Harassment Policy in compliance with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Sexual Harassment Committee, has been set up to redress complaints received regarding sexual harassment. The Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Declaration by Independent Directors The Company has received necessary declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. Board Evaluation In accordance with Clause 49 of the Listing Agreement, it is mandatory that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Corporate Governance Report section in the Annual Report. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee. None of the Independent Directors are due for re-appointment. Training of Independent Directors The Company Secretary of the company conducted a details training programmes to provide/update the changes in the Listing Agreement/Companies Act and other relevant act to the Independent Directors. Further, the Company issues a formal letter of appointment to Independent Directors outlining their roles, responsibilities, functions and duties as an Independent Director. The format of the letter of appointment is available on the Company's website at the link: www.kohinoorfoods.in/investor 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: 1 .Details relating to deposits covered under Chapter V of the Act. 2. Details relating to transfer in reserve. 3. Issue of equity shares with differential rights as to dividend, voting or otherwise. 4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Acknowledgment Your Directors acknowledge with gratitude, the commitment and dedication of the employees at all levels that has contributed to the growth and success of the Company. Your Directors also put on record their appreciation and thanks to the Authorities and millions of consumers who have reposed faith in the products of your Company. For and on Behalf of the Board Sd/- Jugal Kishore Arora Chairman Place : Faridabad date : August 13th, 2015 |