Your Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended March 31, 2022.
1. PERFORMANCE OF THE COMPANY
Your Companys performance for the year ended March 31, 2022 is as follows:
|Profit before Tax & exceptional item||332.77||419.53|
|Profit Before Tax (PBT)||352.88||419.53|
|Profit After Tax (PAT)||260.81||303.02|
|Other Comprehensive income #||0.27||7.66|
|Total Comprehensive income||261.08||310.68|
*Includes other operating revenue
# Net of taxes
The Strategic Foods business of ATFL continued to show strong volume driven Revenue Growth of 15% closing the year with over Rs 400 crore of Net Sales, though margins weakened due to significant commodity price increases. The improved competitiveness of the Premium Edible Oils business as a result of price corrections in FY21 meant that the Company was able to arrest a multi-year decline in Oils Gross Margin. And lastly your Company further reduced the revenue exposure to commodity fluctuations with the franchising of the Crystal brand effective November, 2021.
1.2 Key Indicators
FY22 Gross Margin was lower than PY by Rs10 Crore, with a Rs13 Crore decrease in Foods GM partly offset by a Rs3 crore increase in Edible Oils GM.
With a 15 year Revenue CAGR in the Foods business of 19% Your Company is clearly on track to be amongst Indias Best Performing Most Respected Food Companies. A diverse portfolio of products in 5 fast growing Food categories and superior value propositions combined with a moderate A&P model means that strong growth is clearly sustainable driven by powerful inhouse manufacturing capabilities, best in class distribution network and a robust flow of innovation.
Given the continued strong cash flow of the Company relative to the limited ongoing Capital Expenditure of the Company, your Directors are pleased to recommend a Dividend of Rs 3/- per equity share of the face value of Rs 10/- each for the year ended March 31, 2022 subject to the approval of the shareholders at the Annual General Meeting to be held on June 29, 2022.
STATEMENT OF RETAINED EARNINGS (RsMillions)
|a) At the beginning of the year||3,407.13||3,167.39|
|b) Add: Profit for the year||260.81||303.02|
|c) Add: Other Comprehensive|
|Income (net of tax)||0.27||7.66|
|d) Less: Dividends*||71.43||70.94|
|e) At the end of the year||3,596.78||3,407.13|
* Dividend given to Agro Tech ESOP Trust excluded of
Rs 1.68 mm (Previous year Rs 2.16 mm).
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as ‘Listing Regulations), the Company adopted a Dividend Distribution Policy vide its Board meeting held on 22nd July, 2021 in terms of the requirements of the Listing Regulations. The Policy is available on the Companys website at https:/ /www.atfoods.com/pdf/code-of-conduct/ DividendDistributionPolicy.pdf.
3. RESPONSIBILITY STATEMENT
The Directors confirm that :
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) they 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 the financial year and of the profit and loss of the Company for that period;
(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) they have prepared the annual accounts on a going concern basis; (e) they have 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
4. COVID- 19/Ukraine War
FY22 was the second year of Covid-19 and Your Company continued to navigate the pandemic in a manner that supported the safety of employees while undertaking the tasks required to support the Companys strategic growth objectives. When required activities of vulnerable groups were restricted at the Factories and Field Sales and market working curtailed in the field to minimize risk to employees. Both the Corporate Office at Gurugram and the Registered Office at Secunderabad have been largely closed and employees encouraged to Work from Home. The last 2 years have seen significant supply chain challenges which the Company has successfully navigated to ensure continued strong growth in the Foods business. The war in Ukraine starting February, 2022 has further escalated uncertainties in the supply chain. However, your Company is confident that it will be able to navigate these new challenges and remain on track to join the ranks of Indias Best Performing Most Respected Food Companies with an increasingly diversified portfolio designed to mitigate risks and ensure a consistent and strong performance.
5. CORPORATE GOVERNANCE
In terms of the Listing Regulations, a report on Corporate Governance along with Auditors Report on its compliance is annexed, forming part of the Annual Report.
Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In line with the requirements of Companies Act, 2013, your Company has constituted the Board Committees and has in place all the statutory Committees required under the law.
Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report.
6. MANAGEMENT DISCUSSION & ANALYSIS REPORT
Based on feedback from members on the Annual Report and Accounts, this report includes MD&A as appropriate so that duplication and overlap between the Directors Report and a separate MD&A is avoided and the entire material is provided in a composite and comprehensive document.
7. INDUSTRY STRUCTURE & DEVELOPMENTS
Continued and increasing involvement by consumers with Packaged Foods means that the Food Industry is likely to demonstrate strong growth in the coming years. Key to securing a profitable slice of this pie will however be broad based manufacturing capabilities with a steady flow of innovation both of which will remain a focus for Your Company.
FY22 continued to see significant disruption of the traditional trade by investments in the ecommerce space providing as well an opportunity for newer and smaller players in the Food industry. With the gradual lifting of restrictions and reduced fear we are steadily seeing a more normal behavior and increased stability at a channel level with the right balance between traditional trade, brick and mortar stores and the online space. The powerful distribution network that Your Company has built with a retail coverage of 440,000 stores will remain a significant moat to support our product portfolio in the categories of choice.
8. OPPORTUNITIES AND THREATS
The continued growth of the Indian Foods market represents an enormous opportunity for a steady growth in Revenues and Profits for Your Company. The Companys powerful Foods portfolio allows representation today in 5 fast growing categories –Ready to Cook Snacks, Ready to Eat Snacks, Spreads, Breakfast Cereals and Chocolates. Your Directors believe that these categories are sufficient to power the Company into one of the strongest Food Companies in India.
The primary threat to your Companys P&L has been the significant contribution of the Edible Oils business. Over time however this has been significantly reduced and in FY22 the Foods business contributed to 44% of Sales and 56% of Gross Margin.
9. STATE OF THE COMPANYS AFFAIRS
Your Company has registered a consistent growth of 19% (CAGR) in the Foods business over the last 15 years through selective entry into fast growing categories. With a continued focus on consumer acquisition through a strong Value for Money proposition, your Company is able to deliver significantly superior products to competition at very competitive prices. This has enabled the Company to significantly expand the product portfolio including the launches in FY22 of Ready to Cook Pasta & Noodle Kits and Peanut Centre Chocolates.
In FY22 the Ready to Cook category successfully crossed the Rs250 crore mark in Revenues. Increased competitive activity hindered the growth of the Spreads category but all other categories registered strong growth with necessary actions being taken on the Spreads business.
The Company was successfully able to leverage in FY22 the high-quality Distribution Network in place with a coverage of 440,000 stores to enhance the distribution of its portfolio. Media spends however saw some moderation to help manage the significant commodity inflation the Company experienced during the year.
Your Company purchased land adjacent to two of its existing facilities during the year – at Kothur in Telangana and at Dhaka in Bangladesh. The land parcels will enable the Company to increase the storage capabilities for Raw Materials/expand Production Space and thereby improve efficiencies in the supply chain and support Growth.
10. PRODUCT CATEGORIES
10.1Ready to Cook Snacks:
Revenues from the Ready to Cook Snacks business increased by 17% in FY22 driven by a 14% Volume growth with enhanced Pricing on the premium ranges of Popcorn and Sweet Corn. The Company also introduced a range of Mini Meal Kits including Pasta and Noodles with Prepared Sauces. These have been very well received in the market and the Company will leverage the considerable expertise built in the development of the Popcorn category to expand the Meal Kits category.
10.2Ready to Eat Snacks:
Revenues from the RTE Snacks business were higher than PY by 20% driven largely by Volume Growth in the RTE Popcorn category where the Company saw reduced competitive intensity. With 100% of low cashring SKUs of RTE Snacks now being shipped directly from the factories the focus is now on ensuring the right combination of Full Truck Load Product Mix with Distance from the Plants. FY23 will also see the addition of Extruded Panned products which will further help to improve the P&L of this category.
10.3Spreads & Dips:
Revenues from the Spreads business decreased by 2% as a consequence of low volume growth in Peanut
Butter and price reductions in select SKUs to bring back Volume Growth and gain the benefits of Operating Leverage at the Companys plant at Jhagadia. The results of the actions are already visible in Modern Trade and E-Commerce where pricing realignment take less time to be implemented. In Traditional Trade as well competitive presence is beginning to wane and the Company expects to deliver the strong growth in FY23.
Post the disruption caused by the 2nd Wave of Covid-19 the Company saw steady QOQ growth in this category as it seeks to build a profitable presence in the Rs 3,500 crore Breakfast Cereals category. Focus is on distribution expansion and trial generation of the Companys products which offer exceptional quality with outstanding value.
The Company saw continued strong growth in the Coconut Duo Chocolate product driven by the Rs. 10 offering. FY23 also saw the commencement of testing of a Peanut Duo Variant which has also been extremely well received. Focus is now on increasing capacity with doubling of capacity planned in Q1, FY23 and then doubling again in Q3, FY23. The Company expects the category to be a sizeable and profitable contributor to the total Foods business going forward.
10.6Premium Edible Oils/Staples:
The Companys new price premiums have been well accepted which is visible in the Volume Performance of FY22. Work is now underway to assess how to use this Category to contribute not only in financial terms to the P&L but as well in operational terms in the development of the Foods business.
10.7Mass Edible Oils/Staples:
The Company further reduced the exposure to revenue fluctuations due to this category with the franchising of Crystal effective November, 2021. Going forward the Company will further evaluate options in this business.
11. RESEARCH, QUALITY & INNOVATION (RQI)
Innovation remains the driver of growth for your Company and we continue to make investments which ensure that we deliver to consumers products which address unmet consumer needs.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A Statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure A and forms part of this report.
13. HUMAN RESOURCES / INDUSTRIAL RELATIONS
Engaged Employees are critical to the success of your Company. In FY22, your Company successfully achieved an Engagement Score of 78%. The continuing strong momentum in the Company driven by solid Foods growth and Innovation has helped to achieve this level.
Your Company will continue to ensure that we have a highly engaged and productive organization to deliver against our vision of being amongst "Indias Best Performing Most Respected Food Companies"
14. KEY FINANCIAL RATIOS
The details of significant changes in the key financial ratios are as follows:
|(i) Debtors Turnover Ratio||15.73||15.95||(1.4%)|
|(ii) Interest Coverage Ratio||15.56||24.64||(36.9%)|
|(iii) Current Ratio||1.96||2.34||(16.3%)|
|(iv) Inventory Turnover Ratio||4.52||6.22||(27.3%)|
15. RETURN ON NET WORTH
The Return on Net worth as compared to the immediately previous financial year is as follows:
|(i) Return on Net Worth||5.67%||6.98%|
16. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 thereunder in respect of the top ten employees in terms of remuneration drawn and employees who were in receipt of remuneration aggregating Rs1.02 crores or more or were employed for part of the year and were in receipt of remuneration aggregating Rs8.50 lakhs per month or more during the financial year ending March 31, 2022 is provided in the Annexure B forming part of this Report.
17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
18. PARTICULARS OF CONTRACTS WITH RELATED PARTIES
All contracts or arrangements or transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract or arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions, Companies Act, 2013 and Listing Regulations. Form AOC-2 containing the note on the aforesaid related party transactions is enclosed as Annexure C and forms part of this Report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website.: https://www.atfoods.com/pdf/ c o d e - o f - c o n d u c t / p o l i c y _ d e a l i n g _related_party_transactions.pdf The related party disclosures, including detail of transaction with Promoter group, form part of the financial statements provided in this Annual Report.
19. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on July 25, 2012 had approved "Agro Tech Employee Stock Option Plan" ("Plan"). The Plan was further modified vide special resolution in the Annual General Meeting held on July 24, 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("SEBI Regulations"). The Plan is further amended and approved by the Nomination and Remuneration Committee in its meeting held on April 28, 2022 to the extent to align it with the mandatory provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI Regulations") and other applicable provisions for the time being in force. The Plan is administered by Agro Tech ESOP Trust ("Trust") under the supervision of the Nomination and Remuneration Committee of the Board of Directors of the Company ("Committee"). The Plan is in compliance with the provisions of SEBI Regulations. Further details of the Plan are available on the website of the Company at www.atfoods.com
20. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Spend on the Companys Corporate Social Responsibility Program "Poshan" had to be curtailed due to closure of Anganwadi centers as a consequence of Covid-19.
For FY21-22, the total amount required to be spent under CSR during the year was Rs 94,45,000/- which is 2% of average net profits of the Company during the three immediately preceding financial years as required under section 135 of the Companies Act, 2013 and relevant rules thereunder. The Company has transferred the required CSR amount of Rs94,45,000/-to the Prime Ministers National Relief Fund in the month of March, 2022. The unspent CSR amount of
Rs 95,84,450/- for FY20-21 was also transferred by the Company to Prime Ministers National Relief Fund in the month of September 2021.
As per Companies Act, 2013 as amended by Companies (Amendment), Act, 2017, 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 crore or more during the immediately preceding financial year will be required to constitute a CSR Committee of the Board of Directors comprising three or more directors, at least one of whom will be an Independent Director. Aligning with the guidelines, the Company has constituted a CSR Committee comprising of Lt. Gen. D.B.Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani and Mr. James Patrick Kinnerk as its Members. The Committee is responsible for formulating and monitoring the CSR Policy of the Company. The CSR Policy of the Company, as approved by the Board of Directors is available on the Companys Website: https://www.atfoods.com/pdf/code-of-conduct/ ATFL%20CSR%20POLICY.pdf The Annual Report on CSR activities is annexed here with as Annexure D and forms part of this Report.
21. RISK MANAGEMENT POLICY
The Company has formulated and adopted a revised Risk Management Policy which has been approved and adopted by the Board at the Board Meeting held on October 21, 2021 pursuant to SEBI (LODR) (Second Amendment) Regulations, 2021, which requires top one thousand listed Companies (based on market capitalization of every financial year) to formulate and disclose a Risk Management Policy. The testing in accordance with the laid down policy is being carried out periodically. The Senior Management has been having regular Meetings for reassessing the risk environment and necessary steps are being taken to effectively mitigate the identified risks. A Risk Management Committee also has been constituted with a Committee of the Directors and senior management to address issues which may threaten the existence of the company.
22. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The Vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on October 17, 2014. This Whistle Blower Policy of the Company provides opportunities to employees to access in good faith, to the Management, concerns (in certain cases to the Audit Committee) in case they observe unethical or improper practices (not necessarily a violation of law) in the Company and to secure those employees from unfair termination and unfair prejudicial employment practices. The policy has also been uploaded on the website of the Company : https://www.atfoods.com/pdf/code-of-conduct/Whistle%20Blower%20Policy.pdf
23. INFORMATION SYSTEMS
Your Company continues to focus on the use of technology and automation to drive productivity to work efficiently with our Customers & Suppliers while making available to our Employees robust information to ensure best in class analysis of the business and identification of opportunities to improve shareholder return.
24. FINANCE AND ACCOUNTS
24.1 Internal Controls
The Company has a robust system of internal controls commensurate with the size and nature of its operations, to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, prevention, and detection of fraud and error, accuracy and completeness of accounting records, timely preparation of reliable financial information and adherence to the Companys policies, procedures and statutory obligations.
Your Company has established standard operating procedures for smooth and efficient operations in addition to ensuring internal controls. Your Company has also documented:
• A comprehensive Code of Conduct for the Board Members and employees of your Company
• An Employee Handbook
• Whistle Blower Policy defined to provide channel of communication without fear
• Comprehensive frame work for Risk Management, and
• CEO/CFO Certification for Financial Reporting Controls to the Board The Company has appointed M/s. Grant Thornton Bharat LLP as Internal Auditors to ensure adequacy of internal control systems and make recommendations there to. Audit reports are circulated to management, which takes prompt action as necessary.
The Audit Committee of the Board meets periodically to review the performance as reported by Auditors. The Internal and External Auditors also attend the meetings and convey their views on the adequacy of internal control systems as well as financial disclosures. The Audit Committee also issues directives and/or recommendations for enhancement in scope and coverage of specific areas, wherever felt necessary.
24.2. Cautionary Statement
Statements in this Directors Report and Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.
With a Foods Turnover in excess of Rs 400 crore and a proven 15 year CAGR of 19% your Company is clearly well positioned to be a major player in the Foods industry in India. This proposition is further strengthened by a strong portfolio and a powerful retail distribution network which will ensure that with a relentless pursuit of Revenue and Margin goals on the Foods business, your Company will become a significant player in the Indian Foods Industry and join the ranks of Indias Best Performing Most Respected Food Companies.
In accordance with the provisions of Article 143 of the Articles of Association of the Company, in so far as it is not inconsistent with the relevant provisions of the Companies Act, 2013, Mr. James Patrick Kinnerk retires by rotation and being eligible, offers himself for re-appointment. A brief profile of Mr. James Patrick Kinnerk is given in the notice of the 35th Annual General Meeting.
During the year, Ms. Denise Lynn Hansen had resigned as Director of the Company. The Directors placed on record their appreciation of the valuable services rendered and wise counsel given by Ms. Denise Lynn Hansen during her tenure of Office as Director. Mr. Pedro Labayen de Inza is being appointed as an Additional Director of the Company pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and Article 130 of the Articles of Association of the Company.
He holds office up to the date of the ensuing Annual General Meeting. Notice together with the deposit, as required under Section 160 of the Companies Act, 2013 has been received from a Member proposing the appointment of Mr. Pedro Labayen de Inza as Director of the Company at the Annual General Meeting. The Nomination and remuneration committee has recommended the appointment of Mr. Pedro Labayen de Inza as a Director of the Company.
A brief profile of Mr. Pedro Labayen de Inza is given in the notice of the 35th Annual General Meeting. All the Independent Directors of the Company have also given a confirmation to the Company as provided under Section 149(6) of the Companies Act, 2013 and Regulation 25(8) of SEBI (LODR) Regulations, 2015 that: a. they are persons of integrity and possess relevant expertise and experience; b. i. they are or were not a promoter of the Company or its holding, subsidiary or associate Company or member of the promoter group of the company; ii. they are not related to promoters or other directors in the Company, its holding, subsidiary or associate Company; c. they do not have or had any pecuniary transaction or relationship other than remuneration as such director or having transaction not exceeding ten percent of their total income or such amount as may be prescribed with the company, its holding, subsidiary or associate Company, or their promoters, or directors, during the three immediately preceding financial years or during the current financial year; d. none of their relatives-(i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the three immediately preceding financial years or during the current financial year: Provided that the relative may hold security or interest in the company of face value not exceeding Rs fifty lakh or two per cent of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed; (ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the three immediately preceding financial years or during the current financial year; (iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the three immediately preceding financial years or during the current financial year; or (iv) has or had any other pecuniary transaction or relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two percent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may prescribed from time to time, whichever is lower, singly or in combination with the transactions referred to in sub-clause(i), (ii) or (iii) during the three immediately preceding financial years or during the current financial year. e. neither they nor any of their relatives–(i) hold or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate Company in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed; (ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which they were proposed to be appointed, of—(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or (B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to ten percent or more of the gross turnover of such firm; (iii) held together with any relatives two percent or more of the total voting power of the Company; or (iv) is a Chief Executive or director, by whatever name called, of any non-profit organization that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds two percent or more of the total voting power of the Company; (v) is a material supplier, service provider or customer or a lessor or lessee of the Company; f. they are not a non-independent director of any other company on the board of which any non-independent director of the Company is an independent director. g. they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. h. they possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations or other disciplines related to the companys business. i. they have complied with the requirement of sub-rule (1) and sub-rule (2) of Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014 with regard to inclusion of their names and/or renewal thereof, in the Independent Directors data bank maintained with Indian Institute of Corporate Affairs (IICA).
None of the independent Directors will retire at the ensuing Annual General Meeting.
26. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2021-2022 on the following dates:
|1. April 29, 2021|
|2. July 22, 2021|
|3. October 21, 2021|
|4. January 20, 2022|
27. AUDIT COMMITTEE
The Companys Audit Committee presently comprises of five Directors, all are non-executive and Independent Directors. This is in compliance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Lt.Gen. D. B. Singh, an Independent Director, is the Chairman of the Committee while Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
28. CRITERIA FOR REMUNERATING DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The performance of the Companys Key Managerial Personnel, Whole time Director and Employees is measured on the progress being made on the strategic vision of the Company and Profitability. Progress against the strategic vision of the Company is measured by continued improvement in Gross Margin and share of the Foods business in the total Net Sales of the Company. Profitability is measured using Profit After Tax as a single measure.
The details as required under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being provided as an Annexure B to this Report.
29. EVALUATION OF THE BOARD
The Company has formulated a Remuneration Policy in line with the requirements of the Companies Act, 2013. The performance evaluation of independent directors is done by the entire Board of Directors (excluding the director being evaluated). On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent directors. The annual evaluation of the Board is done at three levels as (i) Board as a whole; (ii) Committees of the Board and (iii) Individual Directors and Chairperson.
A detailed Questionnaire is circulated to all individual directors. The Directors are evaluated on the basis of the following performance evaluation criteria namely knowledge and competency, fulfillment of functions, ability to function as a team, initiative, availability and attendance, commitment, contribution and Integrity. The Additional criteria for Independent directors are independence, independent views and judgment. The remuneration/commission to Non-Executive and Independent Directors shall be fixed as per the provisions contained under Companies Act, 2013. The Non-Executive Independent Director may receive remuneration by way of fees for attending each meeting of Board or Committee thereof, provided that the amount of such fees shall not exceed Rs1,00,000/-
(Rs One lakh only) per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
For Independent Women Directors, the sitting fee paid is not less than the sitting fee payable to other directors.
Commission may be paid within the monetary ceiling limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act. An Independent Director shall not be entitled to any stock options of the Company.
Copy of the Nomination and Remuneration policy is annexed here with as Annexure E and forms part of this Report and is also uploaded on the website of the Company: https://www.atfoods.com/pdf/code-of-c o n d u c t / N o m i n a t i o n % 2 0 a n d % 20Remuneration%20Policy.pdf
30. TRAINING OF INDEPENDENT DIRECTORS
Every new Independent Director of the Board attends an orientation. To familiarize the new inductees with the strategy, operations, business and functions of your Company, the Senior Management make presentations to the inductees about the Companys strategy, operations and products. The Company also encourages and supports its Directors to update themselves with the rapidly changing regulatory environment. Also, at the time of appointment of independent directors, the Company issues a formal letter of appointment describing their roles, functions, duties and responsibilities as a Director. During the year, the Company has sponsored independent Directors for attending an online orientation programme conducted by National Institute of Securities Markets (NISM) on role of the Board, regulatory perspective on role & responsibilities of Directors etc. More details about familiarization Programme are uploaded on Companys website: https://www.atfoods.com/pdf/ other-information/familiarisation_programme_ independent_directors.pdf
M/s Deloitte Haskins & Sells LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company by the shareholders at the 32nd Annual General Meeting held on July 17, 2019, to hold office from the conclusion of the 32nd Annual General Meeting till the conclusion of the 37th Annual General Meeting.
The Report given by the Auditors M/s Deloitte Haskins & Sells LLP, Chartered Accountants on the financial statements of the Company for financial year 2021- 22 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143(12) of the Companies Act, 2013 and hence, no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013.
32. COST AUDIT
The Company is required to maintain the cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained by the Company. An Audit of the Cost Accounts maintained by the Company is also conducted by a Cost Auditor appointed by the Board subject to the approval of Shareholders.
33. SECRETARIAL AUDIT
M/s. Tumuluru & Company, Company Secretaries Firm has been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (LODR) Regulations, 2015 and also to provide the Secretarial Compliance Report for the financial year 2021-22. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure F to this Directors Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
34. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the Companys expansion of distribution and display of your Companys products. At the end of FY22 the number of sales staff on the rolls of the Company were 379.
Your Companys wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd continues to scale up production as we expand our business in a neighboring emerging market with strong growth potential. Your Company will also be working towards leveraging your Companys wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited at an opportune time basis the economic developments in that market. During the year, the Board of Directors reviewed the affairs of the subsidiary Companies. The Company has published the audited consolidated financial statements for the financial year 2021-22 and the same forms part of this Annual Report. This Annual Report does not contain the financial statements of our subsidiaries. The statements highlighting the summary of the financial performance of the subsidiaries in the prescribed format is annexed as Annexure G to this Report. The audited financial statements and related information of subsidiaries are available for inspection electronically and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Company is also available on the website of your Company. https:/ /www.atfoods.com/annual-reports.aspx
35. ANNUAL RETURN
A copy of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 and Rule12 of the Companies (Management & Administration) Rules, 2014 prepared as on March 31, 2022 shall be placed on the website of the Company and the same is available in the Companys website: https:// www.atfoods.com/investors-information.aspx
36. BUSINESS RESPONSIBILITY REPORT
SEBI (LODR) (Fifth Amendment) Regulations, 2019 notified on December 26, 2019 mandated inclusion of Business Responsibility Report (BRR) as part of the Annual Report for top 1000 listed entities based on market capitalization. In compliance with the Regulation, the BRR for FY 2021-22 is provided as part of this Annual Report.
Your Directors state that no disclosures or reporting are being made in respect of the following items as there were no applicable transactions or events on these items during the year under review: a. Details relating to deposits covered under Chapter V of the Act. b. Issue of equity shares with differential rights as to dividend, voting or otherwise. c. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except under the ESOP scheme referred to in this Report. d. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries. e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future. f. The Company has complied with the provisions relating to constitution of Internal Complaints Committee and no cases reported or filed during the year pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. g. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013. h. Pursuant to Section 124 and Section 125 of the Companies Act 2013 read with IEPFA (Accounting, Audit, Transfer and Refund) Rules 2016 and any amendment thereof, as may be applicable, an amount of Rs446,238/-which remained unpaid / unclaimed dividends pertaining to FY13-14 was transferred to Investor Education and Protection Fund on September 14, 2021. i. During the year, the Company has transferred 8434 unclaimed shares to IEPF account on October 11, 2021. The detailed list of unclaimed shares transferred to IEPF Authority is available in the Companys website www.atfoods.com j. Pursuant to Section 124 and Section 125 of the Companies Act 2013 read with IEPFA (Accounting, Audit, Transfer and Refund) Rules 2016 and any amendment thereof, as may be applicable, an amount of Rs 467,946/- (as on March 31, 2022) of unpaid/unclaimed dividends pertaining to FY 14-15 will be transferred to Investor Education and Protection Fund within the prescribed timelines.
K. Except as disclosed elsewhere in the Report, there have been no material changes and commitments made between the end of the financial year of the Company and the date of this Report. There has been no change in the nature of business of the Company during the year. l. No application was made during the year and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) as at the end of the financial year. m. No instance of the valuation was required for one time settlement and no valuation was done while taking the loan from the Banks or Financial Institutions.
The Board places on record their appreciation for the contribution of its customers, employees, distributors, co-packers, suppliers and all other stakeholders towards performance of the Company during the year under review.
|On Behalf of the Board|
|Sachin Gopal||Lt. Gen. D.B. Singh|
|Managing Director & CEO||Director|
|DIN 07439079||DIN 00239637|
|Place : Gurugram|
|Date : April 28, 2022|