Galaxy Cloud Kitchens Ltd Directors Report.
The Members of
Galaxy Cloud Kitchens Limited
(Formerly known as Galaxy Entertainment Corporation Limited)
Your Directors take pleasure in presenting the Thirty Seventh Annual Report of Galaxy Cloud Kitchens Limited on the business and operations of the Company along with audited financial statements for the financial year ended March 31, 2019.
The Companys financial performance for the year ended March 31, 2019 is as below:
|(र in thousands)|
|Particulars||Year ended 31.03.2019||Year Ended 31.03.2018|
|Revenue from operations||7,18,675.34||4,05,243.23|
|Operating and other expenses||7,66,879.91||4,59,772.67|
|Profit before Interest, Depreciation and Tax||(1,74,719.36)||(98,158.41)|
|Less : Depreciation||14,053.54||10,080.78|
|Profit/(Loss) before tax||(1,91,821.91)||(1,20,352.73)|
|Less Provision for Tax||-||-|
|Profit/(Loss) after Tax||(1,91,821.91)||(1,20,352.73)|
Review of performance of the Company
During the year under review, Your Company had earned revenue from operations (Gross) of र718,675.34 thousands. The Loss before finance cost, depreciation and amortization was of र(172,129.77) thousands (-24.32% of total revenue) as against (98,158.41) thousands (-23.07% of total revenue) in the previous year. The operating Loss after tax reduced to र(191,821.91) thousand (-26.49% to revenue) as against र(120,352.73) thousands (-28.29% of revenue) in the previous year, showing a positive trend. The Company is targeting to achieve break even in current financial year.
The Company operates Cloud Kitchens in Mumbai, Pune, Bengaluru, Hyderabad and Kolkata and are planning to open two more cloud kitchens at Ludhiyana and Faridabad. Cloud Kitchens are mainly engaged in manufacturing of fresh foods ranging from fresh bakery, desserts, hot meals, cold meals to home meal convenience foods and ready to eat products. Currently the Company does private label for renowned players in retail industry and caters to QSR companies having PAN India presence, currently Company is operating in B2B model and soon planning go into B2C model also.
The Board of Directors of the Company have not recommended any dividend on equity shares in respect of the financial year 201819. Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("Listing Regulations") with regard to formulation of Dividend Distribution Policy are not applicable to our Company.
Transfer to Reserve
The Company has not transferred any amount to reserves during the year and hence no information as per the provisions of Section 134 (3) (j) of the Companies Act, 2013 ("the Act") has been furnished.
Pursuant to the approval granted by the shareholders at their Extra Ordinary General Meeting of the Company held on January 18, 2019, the Authorised Share Capital of the Company has been increased from र40,00,00,000/- (Rupees Forty Crore) divided into 4,00,00,000 (Four Crore) Equity shares of र10/- (Rupee Ten) each to र50,00,00,000/- (Rupees Fifty Crores) divided into 5,00,00,000 (Five Crore) Equity shares of र10/- (Rupees Ten) each.
The Issued, Subscribed and Paidup Share Capital of the Company as on March 31, 2019 was र38,58,26,030/- divided into 3,85,82,603 equity shares of र10/- each.
Issue and allotment of Equity shares on preferential basis
During the year under review, the Committee of Directors of the Company at their meeting held on February 12, 2019 had issued and allotted 1,12,00,000 Equity shares of र10/- each at a premium of र11/- per share fully paidup on preferential allotment basis to Investors.
Conversion of Compulsorily Convertible Debentures (CCDs) into Equity shares
The Company had made allotment of 9,88,744 CCDs having face value of र100/- each on January 2, 2018 on preferential basis to Central Departmental Stores Private Limited, promoter group Company, Which shall be converted into equity shares within the period of 18 months in one or more tranches. During the year under review, the Committee of Directors at their meeting held on April 3, 2018 had issued and allotted 21,53,233 Equity shares of र10/- each pursuant to conversion of 4,52,179 CCDs out of 98,87,44 CCDs at a conversion price of र21/- each fully paid.
Allotment of Compulsorily Convertible Debentures (CCDs) on preferential basis
The Committee of Directors of the Company at their meeting held on February 12, 2019 had issued and allotted 38,00,000 CCDs having face value of र30/- each fully paidup to Future Enterprises Limited, promoter Company, on preferential allotment basis, which shall be converted into 38,00,000 Equity Shares of र10/- each at a premium of र20/- per equity share within 18 months from the date of allotment in one or more tranches.
Change in name of the Company
During the year under review, the name of the Company has been changed from Galaxy Entertainment Corporation Limited to Galaxy Cloud Kitchen Limited w.e.f. February 4, 2019.
The Company has robust internal control systems and procedures commensurate with its nature of business which meets the following objectives:
providing assurance regarding the effectiveness and efficiency of operations;
efficient use and safeguarding of resources;
compliance with policies, procedures, applicable laws and regulations; and
transactions being accurately recorded and promptly reported.
The Company continues to have periodical audits conducted of all its functions and activities to ensure that systems and procedures are followed across all areas.
The Audit Committee of Board of Directors of the Company regularly reviews the adequacy of internal control systems through such audits. The Internal Auditor reports directly to the Audit Committee.
The Company also has a budgetary control system to monitor expenditure against approved budgets on an ongoing basis.
Internal Financial Controls
The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Statutory Auditors and the Internal Auditors of the Company on the inefficiency or inadequacy of such controls.
The Board of Directors of the Company has formulated a Risk Management Policy which aims at minimizing the risk and enhancing the value and reviews the elements of risks with regard to the business.
The risk management approach is based on a clear understanding of the variety of risks that the organization faces, disciplined risk monitoring and measurement and continuous risk assessment and mitigation measures.
Cash Flow Statement
In conformity with the provisions of Regulation 34 of Listing Regulations, Cash Flow Statement for the year ended March 31, 2019 has been provided in the Annual Report and which forms part of this report.
Subsidiaries and Associates
The Company is not a holding Company in terms of Section 2 (46) of the Act. There are no subsidiary, associate or joint venture Companies within the meaning of Section 2(6) of the Act. Hence, Form AOC-1 pursuant to provisions of Section 129(3) of the Act, is not provided in this report.
Particulars of Employees and other additional information
The ratio of the remuneration of each Key Managerial Personal (KMP) to the median of employees remuneration as per section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 forms part of the Boards Report under (Annexure A).
None of the employees are drawing remuneration as per the ceiling stipulated in terms of Rule 5 (2) (ii) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Extract of Annual Return
In terms of provisions of Section 92 and 134(3)(a) of the Act, an extract of the Annual Return for the financial year ended March 31, 2019 is annexed in this report as (Annexure B) and a copy of the same is also placed at the website of the Company and shall be available at www.galaxycloudkitchens.in.
The Company recognizes and embraces the importance of a diverse board in success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experiences, cultural and geographical background, age, ethnicity, race and gender, which will help us to retain our competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity. The Board Diversity Policy is available on our website www.galaxycloudkitchens.in.
Additional details on Board diversity are available in the Corporate Governance report that forms part of this Annual Report.
Secretarial Auditor and Secretarial Audit Report
Pursuant to Section 179 and 204 of the Act and rules made thereunder, M/s. Nidhi Bajaj & Associates, Practising Company Secretary (Membership No. 28907/Certificate of Practice No. 14596) was appointed as a Secretarial Auditor to conduct the secretarial audit of the Company for the financial year 2018-19, in the manner as stated above in forgoing provision.
The Secretarial Audit Report for the financial year 2018-19 is appended as (Annexure C) which forms part of this Report. The said Secretarial Auditors Report does not contain any qualifications, reservations or adverse remarks.
Cost records and Cost audit
Maintenance of cost records and requirements of cost audit as prescribed under Section 148(1) of the Act, are not applicable for the business activities carried out by the Company.
Our corporate governance practices are reflection of our value system encompassing our culture, policies and relationships with our stakeholders. Integrity and transparency are key to our corporate governance practices to ensure that we gain and retain the trust of our stakeholders at all times.
As per Regulation 34 (3) read with Schedule V of the Listing Regulations, the auditors certificate on corporate governance is enclosed as (Annexure D) to the Boards report. The auditors certificate for financial year 2018-19 does not contain any qualification, reservation or adverse remark.
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of Listing Regulations, the Management Discussion and Analysis for the year ended March 31,2019 is set out in this Annual Report.
Disclosures related to Board, Committees, Policies and number of Board meetings Meetings
The Board of Directors met five (5) times during the financial year in accordance with the provisions of the Act and rules made there under. All the Directors actively participated in the meetings and provided their valuable inputs on the matters brought before the Board of Directors from time to time.
On February 11,2019, the Independent Directors held a separate meeting in compliance with the requirements of Schedule IV of the Act and the provisions of Listing Regulations. The meeting details are provided in the Corporate Governance Report that forms part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed in Act. Details of Committees of the Company along with their terms of reference, composition and meetings held during the year, are provided in the Corporate Governance Report, which forms part of this Annual Report.
Matter related to Directors and Key Managerial Personnel Directors
The Board had judicious combination of Executive, Non-Executive and Independent Directors to maintain the independence of the Board and separate its functions of governance and management. As of March 31, 2019, the Board of Directors of the Company consists of Mr. Arvind Agrawal, Managing Director, Mr. Rajneesh Agarwal, Ms. Udita Jhunjhunwala and Mr. Sharad Rustagi, Independent Directors, Mr. Sunil Biyani and Mr. Swapnil Kothari, Non-Executive Directors.
There was no change in the composition of Board of Directors apart from appointment of Mr. Arvind Agrawal, as Managing Director of the Company with effect from November 3, 2018.
During the year under review, Mr. Tanuj Agarwal, resigned as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. February 28, 2019, and Mr. Atul Joshi has been appointed as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. March 1,2019.
The Composition, terms of reference, powers and roles of Audit Committee of the Company are disclosed in the Corporate Governance Report, which forms part of this Annual Report. There were no instances where the Board did not accept the recommendations of the Audit Committee.
Nomination, Remuneration and Compensation Committee
A Nomination, Remuneration and Compensation Committee is in existence in accordance with the provisions of sub-section (1) of Section 178 of the Act. Kindly refer section on Corporate Governance, which is forming part of this report, under head Nomination, Remuneration and Compensation Committee for matters relating to constitution, meetings, functions of the Committee and the remuneration policy formulated by this Committee.
Policy on Directors Appointment and Remuneration
The current policy is to have an appropriate mix of Executive, Non-Executive and Independent Directors to maintain the independence of the Board and separate its function of governance and management
The policy of the Company on Directors appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a Director and other matters, as required under sub-section (3) of Section 178 of the Act is available on our website at www.galaxycloudkitchens.in Declaration by Independent Directors
The Company has received necessary declaration from each Independent Directors that he/she meets the criteria of independence laid down in Section 149(6) of the Act, and Regulation 25 of Listing Regulations.
Pursuant to the provisions of the Act, the Board has carried out an annual evaluation of performance of its own, the Committees and Individual Directors thereof.
At the meeting of the Board, all the relevant factors that are material for evaluating the performance of the Committees and of the Board were discussed in detail.
A separate exercise was carried out to evaluate the performance of Individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders, etc. The performance evaluation of the Independent Directors was carried out by the entire Board except the Independent Director being evaluated. The performance evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.
Moreover, further detail regarding skill, expertise and competencies of Directors are disclosed in the Corporate Governance Report which forms part of this Annual Report.
Listing on Stock Exchange
The Companys shares are listed on BSE Limited.
The Company has entered into necessary agreements with the Central Depository Services (India) Limited (CDSL) and National Securities Depository Limited (NSDL) for availing the Depository services.
Directors Responsibility statement
In terms of Section 134(5) of the Act, in relation to the audited financial statements of the Company for the year ended March 31, 2019, it is hereby confirmed that:
i. In preparation of the annual accounts for the financial year, the applicable accounting standards have been followed and there are no material departures, wherever applicable;
ii. such accounting policies have been selected and applied 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 as at March 31, 2019 and of the loss of the Company for the year ended on that date
iii. proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and operating effectively;
vi. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
During the year under review, the Company has complied with Secretarial Standards on meetings of the Board of Directors ("SS- 1") and on General Meetings ("SS-2") as amended and issued by the Institute of Company Secretaries of India. The Company has devised proper system to ensure compliance with the provisions and is in compliance with the same.
Auditors and Auditor s Report
Under Section 139 of the Act and the rules made thereunder, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the provisions of the Act,
M/s. S A R A & Associates, Chartered Accountants (Firm Registration No. 120927W), hold office till conclusion of 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 under the Act and they are not disqualified for re-appointment.
The Auditors Report on the financial statements for the financial year ended March 31, 2019 does not contain any qualification, observation, emphasis of matter of adverse remark and doesnt contain any instances of fraud as mentioned under Section 143 of the Act. The Auditors Report is enclosed with the financial statements as a part of this Annual Report.
Corporate Social Responsibility
The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable to Company.
Particulars of Contracts and arrangements made with related parties
During the year under review, all transactions entered into by the Company with related parties as defined under the Act and the Listing Regulations, were in the ordinary course of business and on an arms length basis.
Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature with related parties. A statement of all such related party transactions was presented before the Audit Committee on periodic and need basis for its review and approval.
There were no materially significant transactions with the related parties during the financial year which were in conflict with the interest of the Company. Disclosure of transactions with related parties (including entity belonging to the Promoter/Promoter Group which hold(s) 10% or more shareholding in the Company) as required under Listing Regulations and the applicable Accounting Standards have been given in the Notes forming part of the financial statement.
During the year under review, the Company has not entered into any material related party transactions, as defined under the RPT policy of the Company. Accordingly, the disclosure in respect of contracts or arrangement with related parties, as required under Section 134(3) of the Act in Form AOC-2 is not applicable.
Disclosure relating to equity shares with differential rights
The Company has not issued any equity shares with differential rights during the year under review and hence no information as per provisions of Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished.
Disclosure relating to Employee Stock Option Scheme and Employee Stock Purchase Scheme
The Company has not issued or granted any Employee Stock Option Scheme and Employee Stock Purchase Scheme during the year under review and hence no information as per provisions of Rule 12 of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished.
Disclosure relating to sweat equity shares
The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished.
Disclosures in respect of voting rights not directly exercised by employees
There are no shares held by trustees for the benefit of employees and hence no disclosure under Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014 has been furnished.
Disclosure of Orders passed by Regulators or Courts or Tribunal
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.
Energy, Technology Absorption and Foreign Exchange
Information required under Section 134 (3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo are enclosed as (Annexure E) to the Boards report.
Declaration by Managing Director
As per Regulation 34(3) read with Schedule V of the Listing Regulations, declaration stating that the members of board of Directors and senior management personnel have affirmed compliance with the code of conduct of board of Directors and senior management is enclosed as (Annexure F).
Deposits from Public
During the year under review, your Company neither accepted any deposits nor there were any amounts outstanding at the beginning of the year which were classified as Deposits in terms of Section 73 of the Act read with the Companies (Acceptance of Deposit) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.
Disclosures under Section 134(3)(l) of the Companies Act, 2013
Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position, have occurred between the end of the financial year of the Company and date of this report.
Particulars of Loans, Guarantees or Investments under section 186 of the Act
Details of loans, Guarantees and Investments covered under the provisions of Section 186 of the Act form part of the Notes to the Financial Statements provided in this Annual Report.
Prevention of Sexual Harassment Policy
The Company has in place a prevention of Sexual Harassment Policy in line with the requirements of the sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. We follow a gender-neutral approach in handling complaints of sexual harassment and we are compliant with law of the Land. We have also constituted an internal Committee to consider and address sexual harassment complaints in accordance with the Sexual Harassment of Women at Workplace (prevention, prohibition and Redressal) Act, 2013. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. During the year 2018-19, no complaints were received by the Company related to sexual harassment.
Electronic copies of the Annual report 2018-19 of 37th AGM are sent to all members whose email addresses are registered with the Company/depository participant(s). For members who have not registered their email addresses, physical copies are sent in the permitted mode.
The Company has established a vigil mechanism to provide a framework of promoting responsible and secure whistle blower mechanism and to provide a channel to the employee(s) and Directors to report to the management, concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or policy/ies of the Company, as adopted, framed or revised from time to time. The mechanism provides for adequate safeguards against victimisation of employees and Directors to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases.
The Company has formulated and disseminated a Vigil Mechanism and Whistle Blower Policy for employees and Directors of the Company to report genuine concerns that could have serious impact on the operations and performance of the business of the Company. This Policy is in compliance with the provisions of the Act and the regulations of the Listing Regulations.
Furthermore, the policy outlining this mechanism is approved and revised by the Board of Directors from time to time.
Detection of Fraud
During the year under review, No Fraud has been reported by the auditors viz. statutory and secretarial auditors to the Audit Committee or the Board in terms of Section 143(12) of the Act.
The Board appreciates and places on record the contribution made by the employees during the year under review. The Board also places on record their appreciation of the support of all stakeholders particularly shareholders, customers, bankers, suppliers and business partners.
|For and behalf of the Board of Directors|
|Arvind Agrawal||Sharad Rustagi|
|Place: Mumbai||Managing Director||Director|
|Date: May 24, 2019||DIN: 02268683||DIN: 07232913|