Jubilant Foodworks Ltd Directors Report.
Your Directors have pleasure in presenting the Twenty Second (22nd) Annual Report, together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2017 ("FY 2017").
Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") with effect from April 1, 2016 (transition date being April 1, 2015). Accordingly, financial statements for the year ended March 31, 2016 and March 31, 2017 have been prepared in accordance with the recognition and measurement principles laid down in the Ind AS 34 "Interim Financial Reporting" prescribed under Section
133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting standards generally accepted in India.
|( Rs. in Lakhs)|
|FY 2017||FY 2016||FY 2017||FY 2016|
|Sales & Other Income||256,055.47||242,153.78||259,813.14||244,954.70|
|Profit before Interest, Depreciation & Tax but after exceptional items||24,890.39||28,310.02||24,370.37||27,526.02|
|Profit / (Loss) before Tax||9,775.14||15,883.13||8,827.15||14,701.56|
|Less: Provision for Taxation||3,049.69||5,220.79||3,049.69||5,012.56|
|Profit / (Loss) after Tax||6,725.45||10,662.34||5,777.46||9,689.00|
Results of Operations and the State of Companys Affairs
The highlights of the Companys performance for FY 2017 are as under:
a) Revenue from operations increased by 5.6% to Rs. 254,607 lakhs
b) EBITDA decreased by 9.3% to Rs. 24,659 lakhs
c) Profit before Tax decreased by 38.5% to Rs. 9,775 lakhs
d) Net Profit decreased by 36.9% to Rs. 6,725 lakhs
During the year, there are no transfer to the General Reserves. No material changes and commitments have occurred after the close of the financial year till the date of this Report, which affect the financial position
FY 2017 was a year of designing and implementing strategy for driving the Companys evolution to the next phase of profitablegrowth. During FY 2017, the Company continued to focus on optimum network expansion and driving technology platform to enhance the customer experience and improving operational efficiency. The Company invested and implemented initiatives to deliver long-term growth for its business, while closely managing the short-term events which influence performance.
While the economic growth momentum was temporarily impacted with demonetization during the year, the Company sustained its focus on the cost rationalisation and improving efficiencies.
Dominos Pizza and Dunkin Donuts Restaurant network expansion was focused on alignment with the Return on Investment norms of the Company and the external operating environment. The Company increased its reach amongst relevant consumers by entry of Dominos Pizza in the State of Nagaland. During FY 2017, Dominos Pizza India entered
29 new cities which takes the spread to a total of 1,117 Restaurants in 264 cities. The total number of Dunkin Donuts Restaurant stands at 63 in 16 cities as on March 31, 2017. With the focus on improving profitability, few restaurants that failed to deliver the Companys expected
ROI parameters were decommissioned during the year.
With the launch of Burger Pizza, the Company aimed to grow its share in the all day, individual consumption occasion and further grow its share in the chained Indian Food Service
Industry. Burger Pizza and Pizza Mania Extremes were among the two most innovative products launched targeted to delight consumers, met with good response and achieved the internal launch objectives.
Dunkin Donuts India ("DDI") on the other hand, continued its efforts to strengthen its position in the sweet spot between the QSR and the Caf markets.
Continuous and renewed efforts were made to improve beverage and donut sales and bringing value offerings to food range. A number of product launches were made to cater rapidly evolving consumer taste and preferences such as Big Joy Burger, Munchkins, Eggless Donuts Cakes and DunkyDoos
a new range of donuts for the young guests. The range of
Big Joy Burger was extremely popular with the consumers.
During the year, there was no change in the nature of the business of the Company.
Based on the Companys performance, your Directors are pleased to recommend dividend of Rs. 2.50/- (i.e. 25%) per equity share of Rs. 10/- each fully paid up for FY 2017 amounting to Rs. 1,648.73 lakhs (excluding Dividend Distribution Tax of Rs. 335.64 lakhs), subject to approval of members at the ensuing Annual General Meeting ("AGM") of the Company.
The movement of the share capital during the year is as follows:
|Particulars||Equity Share Capital (in Rs. )|
|At the beginning of the year i.e. as on April 1, 2016||657,951,060|
|Stock Options allotted during the year :|
|- Dominos Employees Stock Option Plan,||876,640|
|2007 (87,664 equity shares of Rs. 10 each)|
|- JFL Employees Stock Option Scheme,||663,000|
|2011 (66,300 equity shares of Rs. 10 each)|
|At the end of the year i.e. as on||659,490,700|
|March 31, 2017|
Employees Stock Option Schemes
In order to motivate, incentivize and reward employees, the Company instituted various Employees Stock Option Schemes from time to time. The Company has three (3)
Employees Stock Option Schemes namely:
Dominos Employees Stock Option Plan, 2007 ("ESOP 2007")
JFL Employees Stock Option Scheme, 2011 ("ESOP 2011")
JFL Employees Stock Option Scheme, 2016 ("ESOP 2016")
The Company implemented ESOP 2016, which was approved by the members through Postal Ballot dated November 02, 2016. The total number of options granted under ESOP 2016 shall not exceed 350,000 (Three Lakh Fifty Thousand). Each option when exercised shall be converted into 1 (one) fully paid up equity share of the Company.
During FY 2017, 10,272 options were granted under ESOP 2011 and 14,528 options were granted under ESOP 2016. The applicable disclosure under SEBI (Share Based Employee Benefits) Regulations, 2014 (the "ESOP Regulations") as at March 31, 2017 is uploaded on the website of the Company (Web link: http://www.jubilantfoodworks.com/investors/ financial-information-2/) Further, ESOP 2007, ESOP 2011 & ESOP 2016 (collectively referred as "ESOP Schemes") of the Company are in compliance with the ESOP Regulations.
Certificates from S. R. Batliboi & Co. LLP, Chartered
Accountants, Statutory Auditors, with respect to the implementation of ESOP Schemes would be placed before the members at the ensuing AGM and a copy of the same shall be available for inspection at the Registered Office & Corporate Office of the Company.
Operations of Subsidiary
Jubilant FoodWorks Lanka (Private) Limited ("JFLPL")
During the year, the subsidiary Company launched 3 (three) new Dominos Pizza Restaurant, taking its total Restaurant count to 23 (Twenty Three) as on March 31, 2017 (20
Restaurant count as on March 31, 2016). Through steady expansion of the restaurant network, new restaurants were launched in Kalutara, Kotahena and Boralesgamuwa, marking
Dominos Pizza foray in these cities.
In addition to providingconsumerswithdifferentiated and innovative choices, the menu was revamped during the year and now it is catering completely to the Sri Lankan taste. Through ongoing aggressive marketing communication and promotion strategy together with enhancement of operational service level, JFLPL aimed to reach out to more consumers and generate brand loyalty. A report on the performance and the financial position of JFLPL, as per Companies Act, 2013 and rules made thereunder (the "Act") is provided in Form AOC 1 attached to the Consolidated Financial Statements forming integral part of the Annual Report.
Pursuant to the provisions of Section 136 of the Act, separate audited accounts of JFLPL, are available on the website of the Company at www.jubilantfoodworks.com.
During FY 2017, there were no companies which became/ ceased to exist as Subsidiary, Joint Venture or Associate of the Company.
Extracts of Annual Return
The extracts of Annual Return as required under the Act in Form MGT - 9 is annexed herewith as Annexure "A" forming integral part of this Report.
Directors and Key Managerial Personnel
In terms of Articles of Association of the Company and provisions of the Act, Mr. Shyam S. Bhartia, Director of the Company, is liable to retire by rotation at the ensuing AGM and being eligible, offer himself for re-appointment. The Board of Directors recommend his re-appointment for the consideration of the members of the Company at the ensuing AGM. During the year, Mr. Sachin Sharma was appointed as President & Chief Financial Officer and Key Managerial Personnel of the Company with effect from September 3, 2016.
Mr. Ajay Kaul, CEO cum Wholetime Director and Key
Managerial Personnel of the Company resigned from the services of the Company with effect from close of the business hours of March 31, 2017. The Board placed on record their deep sense of appreciation for the significant contribution made by him during his tenure towards the stupendous growth of the Company.
Based on the recommendations of the Nomination,
Remuneration and Compensation Committee ("NRC"),
Boards approval and subject to members approval in ensuing AGM:-
1) Mr. Pratik Pota was appointed as CEO and Wholetime Director of the Company with effect from April 1, 2017;
2) Mr. Berjis Desai was appointed as an Additional Director (Independent) of the Company with effectfrom May 29, 2017; and
3) Mr. Shamit Bhartia and Ms. Aashti Bhartia were appointed as Additional Directors (Non-Executive) of the Company with effect from May 29, 2017.
The Company has received notices under Section 160 of the Act together with requisite deposit from members proposing appointment of above mentioned Directors of the Company.
The Company has received necessary declaration from each
Independent Director under Section 149(7) of the Act that he/ she meets the criteria of independence laid down in the Act and SEBI (Listing Obligations and Disclosures Requirements), Regulations 2015 ("Listing Regulations").
A brief profile and other details
Secretarial Standard-2 and Listing Regulations, of Directors proposed to be appointed/re-appointed are annexed to the notice convening AGM.
Particulars of Employees, Directors & Key Managerial Personnel
The details of Employees, Directors and Key Managerial Personnel as required under Section 197 of the Act read with Companies (Appointment and Remuneration) Rules, 2014 is annexed herewith as Annexure "B" forming integral part of this Report.
Loans, Guarantees and Investments
Particulars of loans, guarantees and investments made under the provisions of Section 186 of the Act have been disclosed in Note 4 of the notes to the Standalone Financial Statements forming integral part of the Annual Report.
Related Party Transactions
All contracts, arrangements and transactions entered by the Company during FY 2017 were in the ordinary course of business and on arms length basis. During the year, the Company had not entered into any contract, arrangement and transaction with related parties which could be considered material in accordance with the Companys Policy on materiality and dealing with related party transactions (the "policy") and accordingly the disclosure of Related Party Transactions in Form AOC 2 is not applicable. The Policy as approved by the Board is uploaded on the website of the Company (Web link: http://www.jubilantfoodworks.com/ investors/policies/).
Related Party disclosures have been disclosed in Note 32 of the notes to the Standalone Financial Statements forming integral part of Annual Report.
Auditors and Auditors Report
As per Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the term of S. R. Batliboi & Co. LLP (ICAI Regn. No. 301003E/E300005), Chartered Accountants, as the Statutory Auditors of the Company expires at the conclusion of the ensuing AGM of the Company. The Board place on record its appreciation for the ethical standards and quality maintained by S. R. Batliboi & Co. LLP as the Statutory
Auditors of the Company.
On the recommendation of the Audit Committee, the Board recommended the appointment of M/s Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Regn. No. 117366W/ W-100018), as the Statutory Auditors of the Company for an initial term of five (5) years. Accordingly, a resolution, proposing appointment of M/s Deloitte Haskins & Sells
LLP, Chartered Accountants, as the Statutory Auditors of the Company from the conclusion of 22nd AGM till the conclusion of 27th AGM of the Company, forms part of the Notice of the 22nd AGM of the Company.
The Company has received the consent & eligibility certificate from M/s Deloitte Haskins & Sells LLP, Chartered Accountants under Section 139(1) and 141 of the Act and that the appointment, if made, shall be in accordance with the requiredundertheAct, applicable provisions of the Act and rules framed thereunder. The Auditors Report read together with Annexure referred to in the Auditors Report does not contain any qualification, reservation, adverse remark or disclaimers. During the year under review, the Statutory Auditors have not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
The Board appointed M/s Chandrasekaran Associates,
Practicing Company Secretaries to conduct Secretarial Audit for FY 2017. The Secretarial Audit Report for the Financial
Year ended March 31, 2017 is annexed herewith as Annexure "C" forming integral part of this report. The said report is self-explanatory and does not contain any qualification, reservation, adverse remark or disclaimers.
The detailed Risk Review is provided in the Management Discussion & Analysis section forming integral part of the Annual Report.
Internal Financial Control
The Company has in place adequate internal financial controls with reference to Financial Statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report for the year under review, in terms of Regulation 34 of the Listing Regulations is presented in a separate section, forming integral part of the Annual Report.
Dividend Distribution Policy
Pursuant to Regulation 43A of Listing Regulations, the Board of Directors of the Company approved the Dividend Distribution Policy of the Company ("the Policy") which provides the guidance for declaration of dividend and its pay-out by the Company. The Policy is uploaded on the website of the Company (Web link: http://www.jubilantfoodworks. com/investors/policies/) and is provided in the Corporate Governance Report forming integral part of the Annual Report.
Business Responsibility Report
Regulation 34 of Listing Regulations mandates inclusion of the Business Responsibility Report ("BRR") as part of the Annual Report for top five hundred (500) listed entities based on market capitalization as on March 31 of every financial year. In compliance with Listing Regulations, BRR is annexed as
Annexure "D" forming integral part of this Report.
Corporate Social Responsibility
In terms of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014 as amended ("CSR Rules"), the Board of Directors have approved a Corporate Social Responsibility Policy (CSR Policy) that strives towards welfare and sustainable development of the different segments of the community, specifically deprived and underprivileged segment.
Your Company believes in making lasting impact towards creating a just, equitable, humane and sustainable society.
The Company endeavors to continuously make focused efforts to evolve and ramp up the CSR activities in both social and environmental spheres improving the quality of life of the people in the society through its CSR endeavors.
The Annual Report on CSR is annexed as Annexure "E" forming integral part of this Report.
The Corporate Governance philosophy of the Company is driven by the interest of stakeholders and business needs of the organization. The Company continues to be compliant with the requirements of Corporate Governance as enshrined in Listing Regulations. In terms of Regulation 27 of Listing Regulations, the Corporate Governance Report along with certificate received from M/s Chandrasekaran Associates,
Practising Company Secretaries certifying compliance with the conditions of Corporate Governance is annexed as
Annexure "F" forming integral part of this Report.
The Corporate Governance Report, inter-alia, contains the following disclosures:
b) Composition of Sustainability and Corporate Social Responsibility Committee
c) Whistle Blower Policy (Vigil Mechanism)
d) Appointment & Remuneration Policy
e) Performance Evaluation criteria of the Board, its Committees & individual Directors
Transfer to Investor Education and Protection Fund (IEPF)
Pursuant to applicable provisions of the Act read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules 2016, the Company has transferred unclaimed and unpaid share application money received at the time of initial public of the Company in 2010 to the IEPF established by the offer Central Government.
Pursuant to the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013, the Company has adopted a policy on prevention of sexual harassment at workplace.
The Company is committed towards promoting the work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment irrespective of their gender, race, social class, caste, creed, religion, place of origin, sexual orientation, disability or economic status. During the Calendar year, the Company has not received any complaint.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
A) Conservation of Energy
The Company is committed to take the effective measures to conserve energy and drive energy in its operations. Accordingly, the Company undertook some cost-effective energy-efficiency initiatives across all its Restaurants and Supply Chain Centres ("SCC").
i) The steps taken or impact on conservation of energy
Installation of energy efficient all restaurants and SCC. Installation of Energy Management System in 434 (approx.) restaurants. Installation of Energy Saving Sensors in the AC System of 394 (approx.) restaurants.
ii) The steps taken by the Company for utilizing alternate sources of energy in few restaurants
Conversion of Liquefied Petroleum Gas Fuel into Piped Natural Gas for Ovens installed. Introduction of cycles for delivery on trial basis. Introduction of Compressed Natural Gas Scooters on trial basis. Evaluation of lithium battery operated E-bikes on trial basis.
iii) The capital investment on energy conservation equipment
|( Rs. in Lakhs)|
|Installation of Energy Management System||17.37|
|Installation of AC Energy Saver System||25.93|
|Investment in power efficient LED Lights||126.79|
|in certain restaurants & SCC|
B) Technology Absorption
All steps taken towards Energy Conservation are the result of technology absorption, however, there is no specific information to be furnished in this regard.
C) Foreign Exchange Earnings & Outgo
Information pertaining to Foreign Exchange Earnings & Outgo is as under:-
( Rs. in Lakhs)
|Particulars||FY 2017||FY 2016|
|Foreign Exchange Earnings||-||-|
|Export of Goods (FOB value basis)||-||-|
|CIF Value of Imports|
|Raw Materials & Components||151.74||198.21|
|Store & Spares||4.08||-|
|Expenditure in Foreign|
|Currency (Accrual Basis)|
|Store Opening Fees||388.78||551.38|
Directors Responsibility Statement Your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards had 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 the end of the financial year and of the profit of the Company for that period;
c) they have had taken proper and 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;
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
Based on the framework of internal financial controls including the financial reporting and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and the reviews performed by the management, the Board is of the opinion that the Companys internal financial controls are adequate and effective during the FY 2017.
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.
Other Statutory Disclosures
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
a) Details relating to deposits covered under Chapter V of the Act.
b) Issue of equity shares with differential rights as to dividend, voting or otherwise.
c) Issue of shares (including sweat equity shares) to employees of the Company under any Scheme save and except ESOP Schemes referred to in this Report.
d) The Wholetime Director of the Company doesnt receive any remuneration or commission from its subsidiary oftheCompanyat Company.
e) No significant Regulators/Courts/Tribunals which impact the going care for concern status and Companys operations in future.
YourDirectorstakethisopportunitytothankandacknowledge with gratitude the cooperation and assistance received from Dominos International, Dunkin Donuts International,
Government and Regulatory Authorities, Business Partners, Bankers, Members and other Stakeholders. Also, the Board places on record its appreciation for the enthusiastic, cooperation, hard work, dedication and commitment of the employees at all levels.
Your Directors would also like to appreciate the confidence and loyalty displayed by the guests, whom the Company always strive to serve better.
For and on behalf of the Board of Directors
|Shyam S. Bhartia||Hari S. Bhartia|
|Chairman & Director||Co-Chairman & Director|
|DIN No. 00010484||DIN No. 00010499|
|Date: May 29, 2017|