Today's Top Gainer
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Your Directors hereby present their Annual Report, together with the audited accounts of the Company for the financial year ended 31st March, 2019.
1. PERFORMANCE OF THE COMPANY
Your Companys performance for the year ended 31st March, 2019 is as follows: ( Rs. Millions)
|Profit Before Tax (PBT)||515.00||489.33|
|Profit After Tax (PAT)||339.07||316.48|
|Other Comprehensive income||(0.50)||(0.03)|
|Total Comprehensive income||338.57||316.45|
*Includes other operating revenue
Net Sales for the year were 2 % higher than Prior Year with the Foods share of our business increasing by c300 basis points to 27% of the total business. The Foods business reached a new high of c Rs. 225 crore with a 14% growth over Prior Year driven by robust growth in
Act II Ready to Eat Snacks and Sundrop Peanut Butter supporting steady growth in the Act II Ready to Cook business. The steady growth of the Foods business reflects the continued solid progress being made by the Company to be amongst Indias best performing most respected Foods Companies. PBT was up 5% vs PY and PAT was up 7% vs PY.
1.2 Key Indicators
For FY19 the Gross Margin and A&P figures are not comparable with figures for FY18 due to the implementation of GST. Key indicators for FY19 other than GM and A&P figures have been summarized below: ( Rs. Millions)
|Profit Before Tax||6.3%||6.0%|
|Profit After Tax||4.1%||3.9%|
In FY19 the Company was able to successfully increase the Foods share of Revenues up to 27% and importantly the Foods share of Gross Margin reached a level of 33%. Simultaneously the Company successfully offset the margin compression that was seen on Edible Oils to continue to deliver profitable growth.
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. 2.50 per equity share of the face value of Rs. 10 each for the year ended March 31st, 2019 subject to the approval of the shareholders at the Annual General Meeting to be held on July 17th, 2019.
( Rs. Millions)
|STATEMENT OF RETAINED EARNINGS|
|a) At the beginning of the year||2,634.90||2,374.86|
|b) Add: Profit for the year||339.07||316.48|
|c) Add: Other Comprehensive||(0.50)||(0.03)|
|Income (net of tax)|
|e) Less: Dividends*||58.42||46.49|
|f) Less: Dividends Distribution Tax||12.52||9.92|
|g) At the end of the year||2,902.53||2,634.90|
*Dividend given to Agro Tech ESOP Trust excluded of Rs. 2.51mm
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. 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.
5. MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
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.
6. INDUSTRY STRUCTURE & DEVELOPMENTS
The Food Industry continues to see robust growth as a consequence of continued economic progress. We expect therefore that the Foods business which is the primary focus of your Company will continue to show strong momentum driven by new consumers entering these categories.
Key to capturing the benefits of this economic growth will be on the one hand distribution capabilities to reach out to consumers across the breadth of India and on the other a low cost structure in terms of Capital and Operating Costs. This will enable Companies to benefit from the scale of acquiring millions of consumers at the entry level while also using the scale to deliver innovation to improve Margin. The emergence of on line food aggregators and on line entertainment are developments which are redefining the servicing of consumption opportunities particularly at the top of the pyramid. Your Company recognizes the need to carefully monitor these as we decide where to make our investments for the future to ensure that we are able to leverage these developments to our advantage while minimizing the threats.
7. OPPORTUNITIES AND THREATS:
The continued growth of the Indian Foods market represents an enormous opportunity for a steady growth in Revenues and Profits.
To capture this opportunity, your Company has steadily built up a powerful portfolio including Ready to Cook Popcorn, Peanut Butter, Ready to Eat Popcorn, Tortilla Chips and Extruded Snacks all of which are registering steady growth enabling your Company to maintain a Foods Revenue CAGR of c 17% over the last decade. Going forward, the intention is to continue to grow the current businesses while accelerating growth through entry into new but related categories where we believe we have competitive advantage and a "right to win". The primary threat to your Companys P&L remains the significant contribution of the Edible Oils business. However, over time this has been significantly reduced and in FY19 the Foods business contributed to 27% of Sales and 33% of Gross Margin. We are therefore steadily moving towards a situation where a dominant share of profits will come from our Foods business and the potential adverse impact of this threat is being steadily reduced.
8. STATE OF THE COMPANYS AFFAIRS:
To take advantage of the steady growth of the countrys Food Business it has been important for your Company to build a cost effective supply chain both in terms of Manufacturing Capabilities and in terms of Retail Distribution which can support our growth ambitions. Today your Company has a manufacturing network of 5 plants across the country and retail distribution coverage of c 400,000 stores. Our Manufacturing Capabilities today include plants at Jhagadia, Kashipur, Unnao, Kothur and Mangaldai enabling us to reach out to significant parts of the country in a cost effective manner. The resultant significant in house manufacturing capabilities are also ensuring a steady flow of innovation as reflected in products such as Act II Caramel Bliss and Peanut Butter & Jelly. In addition the philosophy of in house manufacturing also means that with continued growth of the Foods business we can be confident of improved operating leverage translating into superior margins.
Our goal is to have a 7 plant structure operational in India which we believe will offer us the ability to reach out to most markets in India in a cost effective manner. Our 6th plant is to come up at Chittoor, Andhra Pradesh for which significant civil work has already been completed. However, your Company deferred the startup of the facility in order to take advantage of available Capital subsidies in the state, approval for which was received in January 2019. We are therefore now working on capital purchases and expect that over the next 12 months this plant will become operational. In January 2019, your Company also received approval from the West Bengal Government for conversion of land for industrial use, for a plot of land purchased by us near Kolkata for our 7th plant and we will be initiating work on this in the coming year.
In addition to the 5 plant network mentioned above in FY19 your Company initiated commercial production at the plant in Dhaka, Bangladesh. Over time this plant will replace goods currently being imported into Bangladesh enabling us to offer improved value to consumers in Bangladesh and setting the foundation for a solid business in a fast growing neighbor of India.
FY19 saw an unfortunate incident of fire at our Unnao Foods facility. The plant was fully insured and we have already received a part of our claim from the insurer. We are now working on rebuilding the plant which we expect will be done in FY20.
In terms of Distribution, the powerful retail distribution network that we have built up with a retail coverage of c 400,000 stores means that we have the ability to deliver profitable growth since retailing is critical to selling value added products with the promise of higher margin. In FY19 we added approx. 100 Distributors to our FY18 base of 925 Distributors. Importantly this network is being increasingly strengthened because of our larger portfolio making the sales infrastructure less dependent on Company Subsidies and Company investment in Feet on Street. Going forward, this will be a significant competitive advantage since the cost of building a national distribution network is going to increase disproportionately with higher labor costs and therefore become a powerful advantage for those Companies that have already built a sustainable distribution network.
The task of laying out the infrastructure to become one of Indias Best Performing Most Respected Foods Companies is a continuous one. However, we believe that we are well placed today both in terms of Manufacturing & Distribution. An increasing share of our output will now come from Brownfield projects making the task much easier in implementation terms. Simultaneously the larger product portfolio now means that we go to new Distributors with the promise of immediate profitability again making the task easier and feasible at a lower cost than we have incurred for the initial ramp up of Distribution.
9. PRODUCT CATEGORIES
9.1 Ready to Cook Snacks:
Revenues from the RTC Snacks business increased by 5% during FY19 with a Volume Growth of 3% as our investments behind the business were lower as a result of Gross Margin compression on the Oils business. We believe that with continued focus on Demonstration and Display and expansion of the Act II brand into related RTC categories this growth rate will be significantly accelerated.
9.2 Ready to Eat Snacks:
Revenues from the RTE Snacks business increased by 63% driven by an 83% increase in Volumes. All 3 categories of RTE Popcorn, Extruded Snacks and Tortilla Chips performed well and contributed to the growth, though the highest growth was in the area of RTE Popcorn where we have the greatest competitive advantage. This category will remain critical to us in the long term since it offers the greatest expansion of profitability for our Distributor Partners and naturally forces widespread retail coverage expansion on the back of which we are able to drive products such as Ready to Cook Snacks & Spreads.
Revenues from the Peanut Butter business increased by 21% with a Volume growth of 33%. Whilst this segment saw significant competitive activity our in house manufacturing capabilities which resulted in a competitive cost structure and high levels of innovation enabled us to maintain clear leadership. In FY20 we expect to widen our product offerings within this category with the introduction of other Nut Butters and Chocolate Spreads.
9.4 Edible Oils:
In FY19, Revenues from the Sundrop Edible Oils business were 4% lower than PY with Volumes lower by 5% reflecting the Price & Margin compression at the top end of the market. Revenues for the Crystal brand were however 10% higher (Volumes 2% lower) than PY reflecting the impact of imposition of import duties on the lower end of the Edible Oils market. We will continue to manage the Edible Oils category with minimal investments which enable us to support strong growth of the Foods business.
10. RESEARCH, QUALITY & INNOVATION (RQI)
The focus on in house manufacturing and resultant flow of information and unlocking of possibilities including network effects, has meant that FY19 was a year in which the Company was able to advance significantly in terms of portfolio diversification. Some of these products have already been launched such as Peanut Butter & Jelly, Premium Caramel Bliss variants, "Better for You" variants in Peanut Butter and Ready to Eat Cereal Snacks.
Innovation will continue to be the driver of growth for your Company and we will make investments which ensure that we deliver to consumers products which meet their changing needs.
11. CONSERVATION OF ENERGY, ABSORPTION, TECHNOLOGY, FOREIGN EXCHANGE AND
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 and forms part of this report.
12. HUMAN RESOURCES / INDUSTRIAL RELATIONS
Engaged Employees are critical to the success of your Company. In FY19 your Company successfully achieved an Engagement Score of 79%. 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"
13. KEY FINANCIAL RATIOS
The details of significant changes in the key financial ratios are as follows:
|(i) Debtors Turnover||12.58||18.14||-30.63%|
|(ii) Interest Coverage|
|(iii) Current Ratio||2.82||2.22||26.91%|
14. 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||9.02%||9.31%|
15. 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 Rs. 1.02 crores or more or were employed for part of the year and were in receipt of remuneration aggregating Rs. 8.50 lakhs per month or more during the financial year ending 31st March, 2019 is provided in the Annexure forming part of this Report.
16. PARTICULARS OF LOANS, GUARANTEES OR
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.
17. 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 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.:http://www.atfoods.com/ t e m p l a t e s / h o m e _ t p l / p d f / o t h e r _ i n f o / policy_dealing_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.
18. EMPLOYEE STOCK OPTION PLAN
The Company, vide special resolution in the Annual General Meeting of the Company held on 25th July 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 24th July 2015 to align it with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 ("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 and there has been no material change in the Plan during the year. Further details of the Plan are available on the website of the Company at www.atfoods.com.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has continued to drive the Corporate Social Responsibility program under Poshan where we provide Peanut Butter to under nourished children. Major focus area for implementation of this program is Bharuch district in Gujarat, where our Peanut Butter factory is situated. Apart from Gujarat, the program is also under implementation in Delhi, Hyderabad, Kashipur and Kolkata where our offices and factories are located. Anganwadi operations have got stabilized and spending behind the program this year has significantly increased by about 184% over the previous year. Spending for the year behind the program remained lower than the 2% of average Net
Profit of last three financial years to be spent behind CSR activities but with the increasing spends year on year, we are progressing towards this goal.
As per the 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 Lt. Gen. D B Singh as Chairman, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor, Ms. Veena Gidwani, Ms. Denise Lynn Dahl, Ms. Jill Ann Rahman and Mr. Hendrik Gerhardus Myburgh@ 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:http:/ /www.atfoods.com/templates/home_tpl/pdf/ other_info/ATFL%20CSR%20POLICY.pdf. The program Poshan also received the 2014 South Asia Platinum SABRE Award for Corporate Social Responsibility.
@ Mr. Hendrik Gerhardus Myburgh resigned as Member on 6th December, 2018.
20. RISK MANAGEMENT POLICY
The Company has formulated and adopted risk assessment and minimization framework which has been adopted by the Board at the Board Meeting held on 1st May 2006. The Company has framed a risk management policy and 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.
21. WHISTLE BLOWER POLICY (VIGIL MECHANISM)
The vigil mechanism under Whistle Blower Policy has been approved by the Board of Directors on 17th October, 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:http://www.atfoods.com/templates/ home_tpl/pdf/other_info/ATFL_WB%20Policy %20final.pdf
22. 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.
23. FINANCE AND ACCOUNTS
23.1 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 framework for Risk Management, and
CEO/CFO Certification for Financial Reporting Controls to the Board The Company has appointed Internal Auditors to ensure adequacy of internal control systems and make recommendations thereto. 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.
23.2. 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.
Your Company is rapidly approaching an inflexion point where the natural profitable growth in the Foods business will more than offset risks in the Edible Oils business creating a P&L where tight control on costs can enable the improved margin to flow through to the bottom line. We believe that the category choices that we have made and the relentless pursuit of the Revenue and Margin goals on the Foods business will ensure that we 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, Ms. Jill Ann Rahman retires by rotation and being eligible, offers herself for reappointment. A brief profile of Ms. Jill Ann Rahman is given in the notice of the 32nd Annual General Meeting.
Mr. Hendrik Gerhardus Myburgh has resigned as Director of the Company. The Directors place on record their appreciation of the valuable services rendered and wise counsel given by Mr. Hendrik Gerhardus Myburgh during his tenure of Office as Director.
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 per cent of their total income or such amount as may be prescribed with the company, its holding, subsidiary or associate Company, or their
Foods Limited promoters, or directors, during the two 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 two 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 fifty lakh rupees 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 two 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 two 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 per cent 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 two 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 per cent or more of the gross turnover of such firm; (iii) held together with any relatives two per cent 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 organisation 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 per cent 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.
The Companies Act, 2013 provides for appointment of Independent Directors. Section 149(10) and (11) of the Act provides that Independent Directors shall hold office for a term of up to five consecutive years on the Board of a Company, but shall be eligible for reappointment on passing of a special resolution by the company. However no Independent Director shall be eligible for more than two consecutive terms of five years. The Act also specifies that the provisions of retirement by rotation as defined under Section 152 (6) and (7) shall not apply to such Independent Directors.
Lt. Gen. D B Singh, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani were appointed as non-executive and Independent Directors by the shareholders at the 27th Annual General Meeting held on July 17, 2014, for a consecutive term of five years till July 2019, not liable to retire by rotation.
On 24th April, 2019, the Nomination and Remuneration Committee recommended and Board of Directors accorded their consent for the re-appointment of Lt. Gen. D B Singh, Mr. Sanjaya Kulkarni, Mr. Narendra Ambwani, Mr. Arun Bewoor and Ms. Veena Gidwani as non-executive and Independent Directors for one more consecutive term of 5 years not liable to retire by rotation, subject to the Shareholders approval. A brief profile of all the above Directors is given in the notice of the 32nd Annual General Meeting.
25. MEETINGS OF THE BOARD
The Board of Directors met 4 times during the period April to March in the year 2018-2019 on the following dates:
1. 25th April, 2018
2. 26th July, 2018
3. 24th October, 2018
4. 22nd January, 2019
26. AUDIT COMMITTEE
The Companys Audit Committee presently comprises of six Directors, all except one 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, Ms. Denise Lynn Dahl and Ms. Veena Gidwani are its Members. The Charter of the Committee is in line with the requirements of Section 177 of the Companies Act, 2013 and the relevant clauses of the Listing Regulations.
27. 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 to this Report.
28. 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 Rs. 1,00,000/-(Rupees 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 as part of this Report and is also uploaded on the website of the Company,http:// www.atfoods.com/templates/home_tpl/pdf/ other_info/Nomination%20and%20Remuneration %20Policy.pdf
29. 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. The appointment letters issued to independent directors is uploaded on the website,http://www.atfoods.com/templates/ h o m e _ t p l / p d f / o t h e r _ i n f o / terms_conditions_appointment_independent_directors.pdf
As per the provisions of Section 139 (2)(b) of the Companies Act, 2013, no audit firm shall be eligible for appointment/reappointment for more than two terms of five consecutive years. Accordingly, M/s B S R & Associates LLP, has completed its term as per Section 139 (2)(b) and shall not be eligible for reappointment as auditor.
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, are recommended for appointment as the Statutory Auditors of the Company to hold office from the conclusion of the 32nd Annual General Meeting to the conclusion of the 37th Annual General Meeting in place of M/s. B S R & Associates LLP, retiring auditors who were not eligible to be reappointed. The Company has received a certificate from M/s.Deloitte Haskins & Sells LLP to the effect that their appointment, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014. The Company has received a certificate from M/s. Deloitte Haskins & Sells LLP to the effect that they are not disqualified to be appointed and to act as Auditors in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013 and Companies (Audit and Audit Rules), 2014.
The Report given by the existing Auditors, M/s. B S R & Associates LLP., Chartered Accountants on the financial statements of the Company for financial year 2018-19 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.
31. 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.
32. SECRETARIAL AUDIT
M/s. Tumuluru & Company, Company Secretaries, have 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 for the financial year 2018-19. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure to this Directors Report. The Secretarial Audit Report does not contain any qualification or adverse remarks.
33. SUBSIDIARY COMPANIES
Your subsidiary, Sundrop Foods India Private Limited has continued to perform the role of aiding the expansion of distribution and display of your products. At the end of FY19 the number of sales staff on the rolls of the Company were 424.
Your companys wholly owned subsidiary Agro Tech Foods (Bangladesh) Pvt. Ltd has commenced production in FY18. This has enabled the Company to build scale in Bangladesh and benefit from the economic growth of a neighboring emerging market. Your Company will also be working towards leveraging your Companys wholly-owned subsidiary Sundrop Foods Lanka (Private) Limited and seek to establish a local low cost production model which will enable us to benefit from the growth of our neighboring countries.
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 2018-19 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 to this Report. The audited financial statements and related information of subsidiaries are available for inspection during business hours at our registered office and will be provided to any shareholder on demand. The separate audited financial statements in respect of each subsidiary Companies is also available on the website of your Company. http://www.atfoods.com/ investor-relations/annual-reports.html.
34. ANNUAL RETURN
An extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management & Administration) Rules, 2014 prepared as on 31st March, 2019 is attached as an Annexure to this Directors 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:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. 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.
4. The Managing Director of the Company does not 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 Companys operations in future.
6. 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.
7. During the year, your Company has not accepted any public deposits under Chapter V of Companies Act, 2013.
8. In terms of provisions of Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, Rs.4,30,813.25/- (as on 31st March, 2019) of unpaid /unclaimed dividends will be transferred to Investor Education and Protection Fund.
9. During the year the Company has transferred 7,657 unclaimed shares to IEPF account on 30th October, 2018. The detailed list of unclaimed shares transferred to IEPF Authority is available in the Companys website www.atfoods.com
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|
Dt: 24th April, 2019