Hindustan Foods Ltd Directors Report.

TO THE MEMBERS OF HINDUSTAN FOODS LIMITED

Your Directors are pleased to present Thirty Fourth Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended 31st March, 2019.

FINANCIAL RESULTS

Rs. in Lacs

2018-19 2017-18
Total Revenue 23772.52 13998.28
Profit for the year before Finance charges and depreciation 2099.03 1118.26
Less: Finance charges 394.79 131.25
Profit before depreciation 1704.24 987.01
Less: Depreciation 313.24 121.68
Profit/(Loss) for the year after Finance charges and depreciation / before tax for the year 1391.00 865.33
Less: Provision for Tax - - -
Current Tax 25842 55.30
Deferred Tax 112.55 213.39
Mat Credit Entitlement of earlier year - (30.89)
Profit for the year after Tax 1020.03 627.53
Other Comprehensive Income (8.09) (2.74)
Total Comprehensive Income 1011.94 624.79

The Company did not transfer any amounts to the general reserve during the year.

YEAR IN RETROSPECT

The financial year 2018-19 saw your Company strengthening its existing businesses and customers while building new capabilities and new relationships. The year under review saw a record financial performance with your Company reporting a turnover of Rs.237.72 crores for the year under review as compared to Rs. 139.98 crores during the previous year, a growth of nearly 70%. Its profit after tax of Rs.10.20 crores for the year under review was also 60% more than the Rs. 6.27 crores in the previous year.

In this year, your Company decided to venture into the beverages segment and through the strategic partnership with ATC Beverages, Mysuru, which manufactures a variety of juices and carbonated drinks. Your Directors are confident that this will be an exciting venture which will add substantially to your Companys growth in the coming years.

The merger of the Hyderabad unit has enabled your Company to deepen its ties with HUL through a dedicated unit to manufacture detergents powders and has also given an opportunity to kick start a Rs. 150 crore expansion at Hyderabad which is expected to start commercial production from November, 2019. Your directors have ensured that this acquisition was EPS accretive to your Company and given the massive expansion are confident that this unit will become the largest factory for your company.

The first phase of the Coimbatore project was executed without any budget over-runs. Your Company has successfully ramped up the production at its green-field project in Coimbatore for packing of tea and other beverages. Your directors are confident that with the current round of expansion underway at this site, this factory will be one of the largest tea packing facilities in the country.

Your directors are pleased to inform you that your Company has been able to build a robust pipeline of projects in this past year, which will ensure continued growth of your Company for the next couple of years.

SHARE CAPITAL

During the year, the Shareholders by way of postal Ballot had passed the necessary Resolutions for giving effect for Increasing the Authorized Share Capital of the Company from Rs. 15,00,00,000 (Rupees Fifteen Crores Only) to Rs. 21,50,00,000/- (Rupees Twenty One Crores Fifty Lacs Only) divided into 1,95,00,000 (One Crores Ninety Five Lacs) Equity Shares of Rs. 10/- each and 2,00,000 (Two Lakhs) 9% Redeemable Preference shares of Rs. 100/- each and to issue and allot 5,00,000 (Five Lacs) Equity shares of Rs.10/- each to the promoters on a preferential basis on 17th July, 2018.

Your Company has allotted 5,00,000 (Five Lacs) Equity shares of Rs.10/- each at a premium of Rs.290/- to the promoters/promoter group on preferential basis on 27th July, 2018. Consequently, the Issued, Subscribed and Paid-up Share Capital of your Company as on 31st March, 2019 stands increased to Rs. 13,49,25,000/- divided into 1,34,92,500 (One Crores Thirty Four lacs Ninety Two Thousand Five Hundred) Equity Shares of Rs.10/- each. The equity shares issued during the year rank pari- passu with the existing Equity Shares of your Company.

Your Companys Board in its meeting held on 27th February, 2019 further proposed to increase the Authorised Share Capital of the Company from Rs. 21,50,00,000/- (Rupees Twenty One Crores Fifty Lacs only) to Rs. 24.00. 00.000/- (Rupees Twenty Four Crores only) divided into 2.20.00. 000 (Two Crores Twenty Lacs) Equity Shares of Rs. 10/- each and 2.00. 000 (Two Lakhs) 9% Redeemable Preference shares of Rs. 100/- each and Issue and allotment of Warrants convertible into Equity Shares

Your Company has obtained the necessary approvals from the Shareholders of the Company by way passing of the Resolution by way of postal Ballot on 5th April, 2019. Subsequently on 18th April, 2019, your Board of Directors has allotted 27,77,779 Convertible warrants on Private Placement basis to Non-Promoters. The Share warrants are convertible into Equity Shares of Rs. 10/- each at a premium of Rs.350/- per equity. The tenure of the warrants is for 18 months from the date of its allotment. Rs.25,00,00,110/- has been raised which is 25% of the consideration, has been collected upfront from the holders of the warrants in accordance with the provisions of Regulation 164 (1) of Chapter V of Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, payable against each Warrants.

SHIFTING OF REGISTERED OFFICE:

Your Companys Registered Office is shifted from the State of Goa to the State of Maharashtra i.e from Dempo House, Campal, Panaji, Goa 403001 to Office No. 03, Level 2, Centrium, Phoenix Market City, 15, Lal Bahadur Shastri Road, Kurla, Mumbai, Maharashtra 400070.

Your Company has received the approval and a Certificate of Registration of Regional Directors order for change of state from Ministry of Corporate Affairs on 20th October, 2018.

SCHEME OF ARRANGEMENT

Your Company, by an order dated 1st February, 2019 of the Honble National Company Law Tribunal, Mumbai, Maharashtra Bench, on 14th March, 2019 had convened the Meeting of the Equity Shareholders and the Preference Shareholders for the approval of the Scheme of arrangement where under the Contract Manufacturing (Hyderabad) Business of Avalon Cosmetics Private Limited will be demerged into the Company. The final order of the Honble National Company Law Tribunal, Mumbai, Maharashtra Bench is awaited in the said Scheme of Arrangement.

DIVIDEND

To conserve resources and in order to strengthen the Companys financials, your Directors do not recommend any dividend for the year under review.

LISTING INFORMATION

The equity shares of your Company are listed on BSE Limited (BSE). The listing fees for the year 2018-2019 have been paid to BSE.

ACCREDITATION

The Company continues to enjoy Food Safety System Certification 22000 accreditation made by SGS United Kingdom Ltd.

PUBLIC DEPOSITS

Your Company has not accepted any deposits from public / members under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the year under review. Your Company does not have any unpaid/ unclaimed deposits as on 31st March, 2019.

Your Company does not have any subsidiary, Associate and Joint Venture Companies during the financial year ended 31st March, 2019.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and based on the information and representations received from the operating management, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

(a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with the proper explanation relating to material departures;

(b) that such accounting policies as mentioned in Notes to the annual accounts have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and of the profit of the Company for the year ended on that date;

(c) that proper and sufficient care has been taken 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) that the annual accounts have been prepared on a going concern basis;

(e) that proper internal financial controls are in place and that the internal financial controls are adequate and are operating effectively;

(f) that proper systems to ensure compliance with the provisions of all applicable laws are in place and that such systems are adequate and operating effectively.

MANAGEMENT AND KEY MANAGERIAL PERSONNEL DIRECTORS

Change in Directorate

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Nikhil Vora (DIN: 05014606) retires by rotation at the forthcoming Annual General Meeting. Being eligible, Mr. Nikhil Vora offers himself for re-appointment. Your Board has recommended his re-appointment.

Your Board, in its meetings held on 25th January, 2019 and 18th April, 2019, based on the recommendation of Nomination and Remuneration Committee of your Company, appointed Mr. Neeraj Chandra (DIN: 00444694) as an Additional Director, Independent Director with effect from 25th January, 2019 and Mr. Sarvjit Singh Bedi (DIN: 07710419), as an Additional Director, Non-Executive with effect from 18th April, 2019. Your Board also noted the Resignation of Mr. Rajesh Dempo, NonExecutive Director, from the Board with effect from 16th April, 2019.

Your Board, in its meeting held on 09th August, 2019, based on the recommendation of Nomination and Remuneration Committee of your Company, appointed Mr. Sandeep Mehta (DIN: 00031380) as an Additional Director, Independent Director with effect from 9th August, 2019.

Pursuant to Section 161 of the Companies Act, 2013 all the Additional Directors will vacate the office at the ensuing Annual General Meeting of your Company. Your Board has recommended for their reappointment. Being eligible, all the Directors have offered themselves to be appointed as the Directors of your Company.

Mr. Sudin Usgaonkar (DIN: 00326964), Independent Director of your Company, who was appointed on 27th September, 2014 for a term of 5 years upto the conclusion of the ensuing Annual General Meeting to be held in 2019, did not offer his candidature for re-appointment by the Shareholders for 2nd Term in the ensuing Annual General Meeting. Consequently he will ceased to be the Director with effect from the ensuing Annual General Meeting to be held on 26th September, 2019. The Board appreciates on record for Mr. Sudin Usgaonkars contribution in the guidance and expertise knowledge towards the goal of the Company, during his tenure as an Independent Director.

Brief resume of the directors proposed for re-appointment together with other relevant details form part of the Notice of the ensuing Annual General Meeting.

KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. Sameer R. Kothari, Managing Director, Mrs. Beena M. Mahambrey, Company Secretary and Mr. Kedarnath Swain, Chief Financial Officer, are the Key Managerial Personnel of the Company.

Your Board appointed Mr. Bankim Purohit as a Company Secretary and Compliance Officer and Key Managerial Personnel w.e.f. 19 th April, 2019, at their meeting held on 18th April, 2019 in place of Mrs. Beena M. Mahambrey, who resigned as a Company Secretary of your Company w.e.f. 18th April, 2019.

INDEPENDENT DIRECTORS DECLARATION

The Company has received declarations pursuant to Section 149(7) of the Companies Act, 2013, from the Independent Directors of the Company viz., Mr. Shashi Kumar Kalathil, Adv. Sudin M. Usgaonkar, Ms. Honey Vazirani, Mr. Neeraj Chandra and Mr. Sandeep Mehta, confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Regulation 16 of the SEBI Listing Regulations in respect of their position as an Independent Director" of Hindustan Foods Limited.

MEETINGS OF THE BOARD OF DIRECTORS

A minimum of four Board meetings are held annually. Additional Board meetings are convened by giving appropriate notice to address the Companys specific needs. In case of business exigencies or urgency of matters, resolutions are passed by circulation.

During the year under review, seven Board meetings were held, the details of which are given in the Corporate Governance Report which forms part of this Annual Report.

The intervening gap between two consecutive meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

SEPARATE MEETING OF INDEPENDENT DIRECTORS

Pursuant to Schedule IV of the Companies Act, 2013, the Independent Directors of the Company shall hold at least one meeting in a year without attendance of non-independent directors and members of the Management. Accordingly, independent directors of your Company met on 22nd May, 2019. All the independent directors were present for the meeting.

AUDIT COMMITTEE

During the year under review, the Audit Committee comprised of Mr. Shashi K. Kalathil who serves as the Chairman of the Committee, Mr. Ganesh T. Argekar and Ms. Honey Vazirani as the other members. The terms of reference etc., number of meetings of the Audit Committee is provided in Corporate Governance Report which forms part of this Annual Report.

All the recommendations made by the Audit Committee during the financial year under review were accepted by the Board.

NOMINATION AND REMUNERATION COMMITTEE

The composition, terms of reference etc. of the Nomination and Remuneration Committee is provided in Corporate Governance Report which forms part of this Annual Report.

The Committee has formulated a Nomination and Remuneration Policy and the same has been uploaded on the website of the Company at www.hindustanfoodslimited.com.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The composition, terms of reference etc of the Stakeholders Relationship Committee is provided in Corporate Governance Report which forms part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

As required under the Companies Act, 2013 a CSR committee of the Board was constituted on 24th May, 2018 to formulate and recommend to the Board CSR Policy indicating Companys CSR activities which need to be undertaken. The Committee has discussed formulated the CSR Policy and recommended to the Board and the same has been uploaded on the Companys website www.hindustanfoodslimited.com.

Composition of CSR Committee is as under:

Sr.No. Name of the Director Chairman/Member
1. Mr. Sameer Kothari Chairman
2. Mr. Ganesh Argekar Member
3. Mr. Shashi Kalathil Member

One meeting of the Committee was held during the financial year ended 31st March, 2019 on 24th May, 2018.

Based on the recommendation of the CSR Committee for the amount of expenditure to be incurred on the CSR activities, your Board and the Management of your Company had contributed towards the activities and the report on the activities undertaken during the year is annexed to the Boards Report as Annexure IV.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and regulation 17(10) of the Listing Regulations, your Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Statutory Committees.

Based on various criteria, the performance of the Board, various Board Committees, Chairman and Individual Directors (including Independent Directors) was found to be satisfactory.

INTERNAL CONTROL SYSTEM

The Board has laid down Internal Financial Controls within the meaning of the explanation to section 134 (5) (e) (IFC") of the Companies Act, 2013. The Board believes the Company has sound IFC commensurate with the nature and size of its business. Business is however dynamic. The Board is seized of the fact that IFC are not static and are in fact a fluid set of tools which evolve over time as the business, technology and fraud environment changes in response to competition, industry practices, legislation, regulation and current economic conditions. There will therefore be gaps in the IFC as Business evolves. The Company has a process in place to continuously identify such gaps and implement newer and or improved controls wherever the effect of such gaps would have a material effect on the Companys operations.

STATUTORY AUDITORS

As per the requirements of Section 139(2) of the Companies Act, 2013 (the Act), M/s. MSKA & Associates, Chartered Accountants (Registration No. 105047W) were appointed as statutory auditors for a period of 5 years at the 32nd Annual General Meeting held on 27th September, 2017.

As per notification issued by the Ministry of Corporate Affairs dated 7th May, 2018, ratification of the statutory auditors at the Annual General Meeting is not required.

STATUTORY AUDITORS OBSERVATIONS

The notes on financial statements referred to in the Auditors Report are self-explanatory and therefore, do not call for any further explanations or comments.

There are no qualifications, reservations or adverse remarks or disclaimer made in the Auditors Report which requires any clarification or explanation.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules thereunder, the Board of Directors of Your Company has appointed CS Sadashiv V. Shet, Practicing Company Secretary to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended 31st March, 2019 forms a part of this Annual Report as Annexure V. The same is self explanatory and requires no comments.

ANNUAL SECRETARIAL COMPLIANCE REPORT

Pursuant to Regulation 24 (A) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, the Independent Secretarial Auditor had undertaken an audit for the Financial Year 2018-19 for the SEBIcompliances. The Annual Secretarial Compliance Report has been submitted to the Stock Exchange within 60 days of the end of the Financial Year.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has established a Vigil Mechanism / Whistle blower Policy for the employees to report their genuine concerns or grievances and the same has been posted on the Companys website www.hindustanfoodslimited.com.

The Audit Committee of the Company oversees the Vigil Mechanism. RISK MANAGEMENT

Your Company follows well-established and detailed risk assessment and minimization procedures, which are periodically reviewed by the Board. Your Company has in place a business risk management framework for identifying risks and opportunities that may have a bearing on the organizations objectives, assessing them in terms of likelihood and magnitude of impact and determining a response strategy.

The Senior Management assists the Board in its oversight of the Companys management of key risks, including strategic and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks under the aegis of the overall business risk management framework.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

There were no loans, guarantees and investments made by your Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable.

RELATED PARTY TRANSACTIONS

The transactions entered with related parties for the year under review were on arms length basis and in the ordinary course of business. All the transactions with Related Parties are placed before the Audit Committee as also the Board for approval. Prior Omnibus approval of the Audit Committee and Board is obtained for the transactions which are foreseeable and a repetitive of nature. The transactions entered into pursuant to the approvals so granted are subjected to audit and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors on a quarterly basis. Further, there were no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. Accordingly, no transactions are required to be reported in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014.

As required under Regulation 23(1) of the Listing Regulations, 2015, your Company has formulated a policy on dealing with Related Party Transactions. The Policy has been uploaded on the Companys website: www.hindustanfoodslimited.com.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of your Company and its future operations.

MATERIAL CHANGES BETWEEN THE DATE OF THE BOARD REPORT AND END OF FINANCIAL YEAR:

There have been no material changes and commitments, if any, affecting the financial position of your Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required under Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors Report for the year ended 31st March, 2019 is given in a separate Annexure to this Report as Annexure III.

The Annexure in pursuance to the Rule 5 (2) of the Companies (Appointment and Remuneration) Rules, 2014, is not being sent along with this Report to the Members of the Company in line with the provisions of Section 136 of the Companies Act, 2013. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by the Members at the Registered Office of the Company, 21 days before the 34th Annual General Meeting and up to the date of the ensuing Annual General Meeting during the business hours on working days.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, required to be disclosed by Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are provided in the Annexure - II to this Report.

ANNUAL RETURN

Annual Return of the Company has been placed on the Companys website www.hindustanfoodslimited.com.

DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made there under, your Company has formulated an internal Policy on Sexual Harassment at Workplace (Prevention, Prohibition and Redressal).

The policy aims at educating employees on conduct that constitutes sexual harassment, ways and means to prevent occurrence of any such incident, and the mechanism for dealing with such incident in the unlikely event of its occurrence.

The ICC is responsible for redressal of complaints related to sexual harassment of women at the workplace in accordance with procedures, regulations and guidelines provided in the Policy.

During the year under review there were no complaints referred to the ICC.

COMPLIANCE WITH SECRETARIAL STANDARDS

Your Company is in compliance with the applicable Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under Section 118 (10) of the Companies Act, 2013.

CORPORATE GOVERNANCE

It has been the endeavour of your Company to follow and implement best practices in corporate governance, in letter and spirit. The following forms part of this Annual Report:

(i) Declaration regarding compliance of Code of Conduct by Board Members and Senior Management Personnel;

(ii) Management Discussion and Analysis;

(iii) Report on Corporate Governance and;

(iv) Practicing Company Secretary Certificate regarding compliance of conditions of corporate governance.

APPRECIATION AND ACKNOWLEDGEMENT

Your Directors would like to express their appreciation for the assistance and co-operation received from the Government authorities, banks, customers, business associates and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of the Board of Directors
SAMEER R. KOTHARI GANESH T. ARGEKAR
Managing Director Executive Director
DIN : 01361343 DIN : 06865379
Mumbai
9th August, 2019