Jubilant Foodworks Ltd Management Discussions.
Management Discussion & Analysis
FY 2017 will be remembered as a momentous year in the annals of the Indian economy, for constitutional amendment approved by Lok Sabha for the Goods and Services Tax (GST) making way for uniform indirect tax regime in the country and withdrawal of legal tender of high value ( Rs. 500 and
Rs. 1,000) currency notes which wiped out 86 per cent of Indias currency. The currency ban while in the short term impacted business and household economic activities dependant on cash, the long-term impact is expected to be positive. All this has the potential to increase GDP growth, better tax compliance and greater tax revenues.
As per the statistics issued by the Central Statistics Organisation (CSO), Indias GDP is expected to grow by 7.1% for FY 2017 as compared to 7.6% in the previous year. The slowdown in growth is partly attributed to demonetisation, which resulted in weak consumption and services activity. Notwithstanding the short-term impact of demonetisation, FY 2017 is expected to lay the foundation for sustained economic progress and accountability in the coming years. An environment of stable macro economic conditions by keeping fiscal deficit and inflation in control, the enactment of several structural reforms, two consecutive years of good monsoon and the expected roll out of the GST in July 2017 are expected to contribute to higher GDP growth. As per the estimates of the International Monetary Fund (IMF), the Indian economy is expected to grow by 7.2% in FY 2018 and by 7.7% in FY 2019.
Industry Structure and Overview
The Indian growth story of the last two-and-half decade is mirrored in Indias retail and consumer sectors. Within the retail and consumer segment, the Indian Food Service
Industry (FSI) is among the most vibrant and flourishing category, witnessing significant by Indias sizeable food-loving consumer base.
As per India Food Services Report 2016, released by National Restaurant Association of India (NRAI), the size of the FSI (organised and unorganised) was estimated at Rs. 3,09,110 Crores in FY 2016. While currently the FSI is dominated by the unorganised market having 67% market share, the organised market is expected to increase its share significantly over the next 4-5 years as empowered consumers increasingly prefer safe, hygienic and quality food. The share of the unorganised market is expected to fall to 59% by FY 2021. While the total market is projected to grow at a CAGR of 10% to reach Rs. 4,98,130 Crores by FY 2021, the organised market estimated Rs. 1,01,475 Crores in FY 2016, is projected to grow at a more rapid pace at a CAGR of 15% to reach Rs. 2,04,180 Crores by FY 2021. Within the organised market, the chained segment is expected to maintain a positive growth momentum. From its current share of 20% aggregating Rs. 20,400 Crores, it is projected to grow at a CAGR of 20% to reach Rs. 50,950 Crores by FY 2021, thus increasing its market share to 25%. While the medium to long-term prospects for the organised FSI is promising, during the year under review, the impact of demonetisation was felt across its various segments in the second half of FY 2017. With consumers facing liquidity crunch and focussing on staples and essentials, discretionary spending was down. On a brighter side, the move to a cashless economy is expected to drive more consumers towards organised sector, thus driving more rapid growth.
Quick Service Restaurants
One of the fastest growing sub-categories of the FSI is Quick Service Restaurants (QSR), a key component of the chained segment. Providing consistently quality food, fast service, innovative tasty offerings under a hygienic setup and at reasonable prices have made QSRs a hugely popular format with the consumers.
Key Growth Drivers of the Chained Food Service Industry
Among the worlds fastest growing economies, India offers significant lucrative growth opportunities for this segment of the FSI. Favourable factors exist on both the demand side as well as the supply side.
Jubilant Foodworks limited business Overview
Jubilant FoodWorks Limited (JFL/the Company) is one of Indias largest food service Company. The Company is part of the Jubilant Bhartia Group, Indias most respected conglomerate operating in diverse business areas and with a strong global presence.
JFL was incorporated in 1995 and started operations in 1996. JFL currently operates the Dominos Pizza and Dunkin Donuts brand in India. It also operates Dominos Pizza brand through its subsidiary in Sri Lanka.
Dominos Pizza USA is the recognised world leader in pizza delivery operating a network of Company-owned and franchise-owned stores in the United States and international markets. Dominos Pizza India (DPI) is the largest pizza chain in India in terms of Restaurant numbers, as well as the worlds largest franchisee outside USA for the Dominos Pizza brand. Encouraged by the success of Dominos Pizza in India, JFL leveraged its experience and expertise in the food service industry to introduce Dunkin Donuts in India in FY 2012. Dunkin Donuts is the worlds leading baked goods and coffee chain. In India, Dunkin Donuts focusses on the all-day part food and beverage market. While retaining the original character and charm of this international brand, JFL has customised the range and taste of offerings to suit the preferences of Indian consumers.
The overwhelming popularity of both the brands and with the brands catering to dissimilar categories and different markets, JFL has built a successful business model for long-term value creation.
After a successful journey spanning two decades, FY 2017 was a year of re-imagining and re-inventing processes to re-inforce the Companys indomitable position in the industry. The strategy encompasses undertaking projects for improved consumer experience, better asset utilisation, operational excellence, cost rationalisation, etc. The Company also embarked an intensive cost rationalisation drive for higher business efficiencies. Further, the use of digital technology, advanced analytics and design thinking for re-imagining and re-inventing processes, underpins JFLs vision to not only be at the forefront of the FSI but to also be a leader in leveraging technology and innovation. While many of the projects have been commissioned during the year under review, the complete results are expected to unfold over the short to medium term.
Dominos pizza India
Dominos Pizza India (DPI) backed by robust infrastructure, state-of-the-art technology, focussed operations and an empowered team, DPI has demonstrated its ability to deliver on its stated objectives of consumer satisfaction and leadership in the organised pizza market in India. The brand Dominos enjoys top of the mind recall cutting across all age-groups and cities and towns in India. network Expansion
While DPI remains deeply committed to Restaurant expansion,
FY 2017 saw an enhanced focus towards profitable growth.
In FY 2017, 103 new Restaurants were opened, which have further broadened accessibility in existing geographies and established DPIs presence in new cities and towns. While new openings were lower than that in the previous years, the Company remains committed to Restaurant expansion. An important milestone of the year was the opening of the the1100th Restaurant. Another significant entry of DPI in the State of Nagaland. This translates into a formidable pan India presence across 27 States and 4 Union Territories as on March 31, 2017.
It is also pertinent to share that in the course of the year, 14 DPI Restaurants were decommissioned guided by stringent ROI norms. network Expansion in numbers
As on March 31, 2017, the DPI network comprised 1,117 Restaurants as against 1,026 Restaurants on March 31, 2016. The network spanned 264 cities as on March 31, 2017 as against 235 cities ad on March 31, 2016. The number of new cities where DPI extended its footprint during the year stood at 29. new Cities Entered
|State||new Cities with 1st Restaurant in Fy 2017|
|Bihar||Begusarai, Purnia, Bettiah|
|Gujarat||Bardoli, Surendranagar, Palanpur|
|Karnataka||Huttur Hubli, Shimoga, Madikeri|
|Maharashtra||Yavatmal, Nanded, Miraj, Akola|
|Uttar Pradesh||Hapur, Barabanki|
Product Innovation & launches
Innovation continued to be a key growth driver for DPI. The year saw the launch of many new innovations including Burger Pizza, Quattro Formaggi and Choco Pizza.
pizza mania Extremes
An extension of the brands much loved Pizza Mania range; the Pizza Mania Extremes range was launched to make culinary experience accessible to all, especially the Pizza mania loyalists. Catering to a range of different tastes, Pizza Mania Extremes aim to redefine guest delight by allowing them to access superior/upgraded experience at affordable cost. The splendid tastes of Pizza Mania Extremes is available in four variants Herby, Spicy, Cheesy and Loaded.
Understanding the pulse of our consumers, DPI announced a significant
Pizza! Burger Pizza also addresses the all-day, individual consumption occasion. Burger-sized, but featuring a pizza-style crust bun filled with melted cheese, the Burger Pizza has been a success receiving extensive media coverage. The uniqueness of the Burger Pizza was that pizza toppings were used as a filling instead of the fried patty present in normal burgers.
Quattro Formaggi & Choco pizza
DPI launched the Quattro Formaggi Burst Crust - a crust with a mix of four cheese flavours and Choco Pizza - the first dessert pizza for India. Both products found good acceptance among the consumer base.
DPI rolled out an entire all-vegetarian menu around the festive season of Navratra to align with the festival sentiment.
Special pizza made of water chestnut flour and white millet flour, topped with fresh mozzarella cheese, paneer, tomatoes and crunchy sabudana, with a layer of fresh tomato sauce, made with rock salt and without onion & garlic. It was complemented with a side order in the form of Sabudana Crispies and a sweet dessert in the form of Sago Pudding. During Navratras, around 459 DPI Restaurants across the country were converted to 100% vegetarian outlets.
Enhancing consumer experience
A core proposition of DPI is superior consumer experience. Building on this basic pillar, DPI continued to invest in systems and processes and undertook diverse initiatives for improving consumer experience.
With consumers leading increasingly digital lifestyles, online ordering is increasing at a brisk pace. Further, within the online segment, there is a shift towards ordering on mobile phones. Responding to these changes, DPI revamped its mobile app and mobile website with better user interface and new features for an enhanced ordering experience. The success of DPIs online ordering system can be inferred from the following highlights: "Dominos e-Commerce" is rated the 7th largest transacted brand in India as reported by The Hindu Business Line In FY 2017, the online ordering sales contribution to delivery sales stands at 46% as against 36% in the previous year In FY 2017, mobile ordering sales contribution to overall online ordering was as high as 57% as against 34% in the previous year Mobile ordering apps have seen over 6.9 Million downloads since inception To encourage online ordering, a new campaign was launched featuring celebrity actor Paresh Rawal. The actor had also featured in DPIs hugely successful commercial of 30 minutes or free launched several years ago. The new commercial highlights the convenience of using the DPI mobile app and web for ordering, while re-inforcing DPIs core proposition of home delivery within the digital platform 30minutes.Special to incentivise consumers to shift to online ordering.
Increasing payment options for offline business
While for online orders, consumers have the option of making payments via credit cards or by using mobile wallet solutions, post demonetisation, DPI introduced new cashless payment option for its home delivery business (i.e. ordered via telephones). To make payments easier for consumers ordering via telephone, DPI entered into an arrangement with leading mobile wallet partners. This arrangement enabled DPI to send an SMS with a payment link to its consumers through which they could pay by using their credit card, ensuring convenience for consumers even in times of liquidity crunch.
DPI has also stepped up its consumer engagement initiatives at the Restaurant level through its precision marketing team. The team reviews the Restaurants by leveraging advanced analytics and suggests customised door hangers and Restaurant/location specific offers for reimagining guest experience. The efforts have been instrumental in bringing in new guests, improving dine-in experience and driving occasion specific visits. In the category of occasion celebrations, birthday parties have gained significant since it first
Sharing the enthusiasm and happiness of its junior guests, DPI restarted the Junior Pizza Maker programme that had been launched some years ago. By teaching children how to make pizzas, the programme encourages creativity and independence while giving them a differentiated experience. The programme has resonated well with the target audience, doing especially well in Tier 3 and Tier 4 cities.
measuring consumer satisfaction
For measuring consumer satisfaction, previously the Guest Satisfaction Index (GSI) mechanism was being applied wherein feedback was obtained via telephone calls / questionnaire from consumers. In its efforts to make evaluation more accurate, DPI has now adopted a technology-backed method of NPS (Net Promoter Score) matrix. The NPS matrix has several advantages like real-time data intelligence.
Taking brand experience to new formats
Apart from enhancing consumer experience at Restaurant level and for home-delivery, DPI remains committed to make available the brand experience across new and evolving formats as well. Empanelled as an official IRCTC (Indian
Railway Catering and Tourism Corporation) partner, DPI is catering to 134 stations as on March 31, 2017 as against 62 stations in the previous year. During the year, DPI won the bid to open a Restaurant at Agra station and outside the Patna airport. This steady progress in the transit space enables DPI to extend brand experience across a diverse and ever-expanding consumer base. In another first, DPI has set up a Restaurant at KidZania Noida, a Global Indoor Theme Park and also at IIT Kanpur.
Dominos pizza Sri lanka
Dominos Pizza, Sri Lanka business witnessed impressive traction in FY 2017. The performance in FY 2017 was even more remarkable considering it was achieved in the face of headwinds which came in the form of devaluation of the Sri Lankan currency in August 2016, increase of VAT from 11% to 15%, and slower GDP growth of 4.4% in FY 2016 as compared to 4.8% in the previous year. (Source: https://www. adb.org/countries/sri-lanka/economy, http://www.vatlive. com/vat-news/sri-lanka-15-vat/). The menu was revamped in July 2016 to cater to the Sri Lankan taste. New sides were also launched for menu reinvigoration. The number of new Restaurants opened during the year stood at 3, taking the total count to 23. The Restaurants maintained a healthy same Restaurant sales growth (SSG) of 20%. The Company is confident about Sri
Lankan business and expects to be a strong and growing part of our overall portfolio.
Dunkin Donuts India
officially known as Dunkin Dunkin Donuts India (DDI),
Donuts & More, occupies the sweet spot between QSR and the Caf markets. Apart from its trademark and internationally famous doughnuts and coffees, DDI also offers an all-part menu comprising burgers, wraps, sandwiches and varied beverages. The brand is focussed on the urban youth consumer and this is reflected in their product offerings.
During the year, the Company continued to make encouraging progress and distil critical learnings from the market.
Product Innovation & launches
DDI continued to evolve the menu in alignment with its objective of providing innovative offerings that can be enjoyed throughout the day. The new products launched during the year were: Big Joy Paneer Delight - crunchy paneer patty in a sesame bun, Chefs Favourite Paneer- rich thick paneer slice crumb fried and served with accompaniments,
Munchkins in assorted flavours and fillings,
Cakes - a blend of doughnuts and cakes in three variants, DunkyDoos - a new range of donuts for the young guests, and
Big Joy Burger a Dunkin burger experience at an economical price point for value conscious consumers.
DDI followed a prudent and judicious expansion strategy with the focus of getting proper return on investment. 12 new Restaurants were opened during the year. Aligned to the Companys objective of profitable growth, 20 Restaurants were decommissioned as, they failed to deliver on the Companys expected ROI parameters. The total number of Dunkin Donuts Restaurants stood at 63 as on March 31,
2017 as against 71 on the same date in the previous fiscal.
The brand is present across 16 cities as on March 31, 2017.
Apart from developing a pipeline of innovative products that would resonate with the urban youth, DDI implemented several new digital initiatives for enhancing consumer experience. The mobile website for DDI went live in August 2016. The chat feature was introduced on the online platform to strengthen communication between the brand and its guests. Instant SMS-based guest feedback management system was launched across all DDI Restaurants during the year. At the Restaurants, the brand continues to deliver a superlative consumer experience through contemporary design and dcor, comfortable ambience and warm and personalised service.
Several initiatives were undertaken during the year to increase the brand appeal and drive guest visits.marinated With the target audience being the urban youth, DDI continued to leverage the digital and social media asEggless Donuts well as radio for deeper impact. Innovative and storytelling content established deeper brand connection for DDI fans and followers. Online ordering for DDI products, introduced in the previous year, has also broadened brand accessibility.
Product sampling was among the new initiatives undertaken to drive brand awareness. Free coffees and donuts were distributed at select locations to drive product awareness and trials.
For increasing guest trafficon specific occasions, DDI built excitement through innovative products and communication. For instance, around Valentines Day, heart-shaped, red-colour donuts were introduced in a special box that had space for a personalised message. The approach has been very successful and DDI is now using this to activate all important occasions and drive trials and consumption.
Key Factors Driving both brands
Centralised and integrated world-class manufacturing and distribution facilities, also known as Supply Chain Centres (SCCs), have been set up by JFL for manufacture, storage and distribution of ingredients required at the Restaurants of both the brands. Dedicated cold chain trucks then transport these materials to Restaurants across the country. Merging the supply chain requirements for all the Restaurants across both brands enables the Company to leverage economies of scale while helping to ensure compliance with quality and safety standards. Further, by embedding Lean and Six Sigma improvement techniques at the SCCs, the Company has been able to realise higher levels of business performance.
In what will be a significant chain capability, a world-class multi-category supply chain centre is coming up at Greater Noida. Operations at the existing facilities at Noida is being phased out and shifted to Greater Noida. The new facility with its capacity to serve 600 Restaurants bears the distinction of being the largest in the Dominos Pizza World in terms of capacity as on date of this report. Gold rated green certification and high level of automation including a central command centre are the other outstanding features of this facility. The facility, serving Dunkin Donuts Restaurants as well, will bring in greater efficiency in operations and enable a larger degree of in-house manufacturing. Post this shift of facilities to Greater Noida, the total number of supply chain centres will stand at eight.
Two new distribution centres were set up at Ahmedabad and Chennai. Strategically situated close to the market, the centres will help to reduce logistics cost and improve responsiveness.
JFLs focussed efforts re-imagining and re-inventing processes was manifested significantly through technological advancements across its business functions, which provide a strong impetus to consumer experience and efficiencies.
The Company has been leveraging the power of IT over the years with consistent investments. Robust IT will have dual benefits of optimising consumer experience. JFL firmly believes that IT will play an increasingly crucial role impacting both core and non-core functions, evolving from a support function to a business enabler. At the consumer-facing level, the point of sale and the online and mobile systems were strengthened by installing modern technology to provide a positive and seamless consumer experience. Harnessing the power of digital has enabled the Company to better engage with consumers and lower costs. Speech recognition-based order taking platform has been deployed at select Restaurants. The option of makingboosttothe Companyssupply payments through e-wallet partners has been embedded for both online and offline transactions, thus making the payment process easier and convenient. At the backend-level, the Company continues to deploy industry-leading technology across its various functions to retain its competitive edge.
A noteworthy development for the year was the successful completion of implementation of SAP HANA across the business landscape. This initiative commenced in FY 2016 and was completed in the year under review with the SAP going live fully in September 2016 along with the complete infrastructure on Cloud and the integration of SAP with Point of Sales and other applications. The fundamental benefit achieved as a result of the shift to the SAP platform is better control over operations, better visibility of data across the system and real-time analysis of business operations. Another important measure on the technology front is the leverage of the Wipro Energy Management System for driving efficiencies in energy consumption. During the year, the analytics-driven energy management platform was extended to almost half of the Restaurants, thus providing enhanced monitoring control of energy consumption at all Restaurants.
The Company is steered by the firm belief that passionate and empowered employees inspire and drive greater innovation within the organisation leading to consumer delight. For its efforts in building an enabling work environment leading to high employee satisfaction, the Company has consistently received external recognition, including being certified as a Great Place to Work.
There has been significant work in the areas of productivity and cost optimisation through experiments with various manpower models at the Restaurant level. The Companys efforts on developing a strong leadership pipeline through structured learning and talent intervention, continue to act as enablers in this journey. As an organisation, one of the key priorities are driving a high performance culture and a robust performance management approach.
Embedding technology as an enabler for people development
Launch of new app called iManage, which empowers employees to access their work-related information at their fingertips
Automation of the Reward and Recognition programme by launching the Kwench--Instapat application, thus promoting greater transparency
To improve the digital quotient of the team, a 4-day digital skill enhancement workshop was conducted for cross-functional group of employees
Developing a strong leadership pipeline
Top leadership team gained exposure of new trends in the international arena which were also shared with the emerging pool of leaders within the organisation
Talent assessment centres were set up to identify the top 100 leaders who undertook leadership programmes at IIM Kashipur
Launch of a structural leadership development initiative called JALDI (Jubilant Accelerated Leadership Development)
Different forms of learning intervention like storytelling, workshops, mentoring from senior leaders, etc. were applied for the next generation of top leaders
Focussed on developing key women leaders where lot of functional capability building initiatives like communication programmes were undertaken
Food Safety and Quality assurance
Being successful the right way is non-negotiable at JFL. This naturally extends to providing safe, reliable and quality food prepared in a hygienic manner and abiding by relevant regulatory food safety compliances and guidelines. To its credit, JFL is amongst the few companies selected by FSSAI (Food Safety and Standards Authority of India) for working closely with them for improving the food safety system in the FSI. During the year, the Company continued to take sincere and substantial steps for reinforcing the quality standards of its products and processes.
ISO 22000 Certification (Internationally accepted food safety standard) for 615 DPI Restaurants;
8 out of total 9 Supply Chain Centres are ISO 22000 certified
Stringent checking of raw materials, in-process and finished products to ensure adherence to food safety guidelines and statutory compliance
95.71% of total vendors (including those of Dunkin Donuts) are FSMS (Food Safety Management Systems) certified.
Continual tracking and monitoring of vendor food safety certificates and FSSAI licence to confirm its relevance.
Jubilant Foodworks limited
Conferred the Best Risk Management Framework & System Retail Award by ICICI Lombard and CNBC TV18
Winner of the National Award for Excellence in Corporate Communication in the category of Best Annual Report for FY 2016 organised by World HRD Congress
Worlds popular newswire, India CSR, honoured JFL for its social responsibility efforts at the 3rd Annual CSR Awards Ceremony; Awards won in two main categories: Sanitation Swachh Bharat Abhiyan (Clean our Neighbourhood programme) and Road Safety Winner of the 4th Edition of Indias Most Ethical Companies Award 2016 by the World CSR Day Conferred Seven CII Awards for Food Safety under various categories
Winner of 3rd edition of Indian Risk Management Award Best Risk Management Practice (Retail) by CNBC TV 18
Dominos pizza India
Conferred the National Award Best Deployment of Learning Management System at Best in Class Learning & Development Awards organised by World HRD Congress
Winner of the National Award Excellence in Customer Service organised by World HRD Congress Winner of the Best Customer Service Award at the Indian Restaurant Awards 2016 organised by Franchise India
Winner of the National Award - Excellence in Customer Service & Loyalty in the Category of Cafe Restaurant at Global Awards for Excellence in Quality Management & Leadership organised by World Quality Congress Asian Award for Best in Quality Service at 7th Asian Best Employer Brand Award 2016 organised jointly by World HRD Congress National Award - Best Customer Service by a Caf
Restaurant at Indian Restaurants Awards 2016 organised by Franchise India Food Safety Excellence Award at the Dunkin International Middle East Rally Awards 2016 organised by Dunkin International
Financial Review total Income
The total income for the financial year ending March 31, 2017 stood at Rs. 25,606 Million as against Rs. 24,215 Million for FY 2016, which represents a growth of 5.7%. The restrained market situation dampened DPIs Same Restaurant Sales Growth (SSG) for the year, which stood at negative 2.4%.
Operational expenses mainly include raw material costs, rentals, personnel cost, advertising and promotion costs, administrative expenses and other Restaurant expenses. Total Expenditure for FY 2017 stood at Rs. 22,995 Million as against Rs. 21,384 Million in the previous year. The increase in expenditure was primarily on account of expansion in operations due to the addition of new Restaurants and inflationary increase in some of the cost lines.
Expenditure under the head of Raw Material & Provisions Consumed increased to Rs. 6,160 Million in FY 2017 up from Rs. 5,701 Million in the previous year.
Personnel expenses stood at Rs. 5,845 Million for the year ended FY 2017 as against Rs. 5,684 Million in FY 2016. Regular wage inflation, increase in minimum wages in many states in the country as well as increased demand and competition for talent especially in the delivery segment exerted an upward pressure on costs under this category. The Company has embarked upon the implementation of a variable manpower model and is driving automation across operations. Further, concerted efforts are being taken to increase employees efficiency and productivity. The total number of employees as on March 31, 2017 stood at 26,604 as against 27,719 as on March 31, 2016.
The EBITDA for FY 2017 stood at Rs. 2,466 Million as against
Rs. 2,718 Million in the previous year. EBITDA margins decreased from 11.3% in FY 2016 to 9.7% in FY 2017. Negative SSG and increase in cost on account of expansion resulted in the reduction of EBITDA.
The challenges in the external environment had a cascading effect on business profitability. Additionally, during the fourth quarter, the Company incurred a one-time separation cost of Rs. 121 Million towards manpower rationalisation exercise.
Profitbefore Tax (PBT) stood at Rs. 978 Million in FY 2017 as against Rs. 1,588 Million in FY 2016, registering a decline of 38.5%. Profit Rs. 673 Million for FY 2017 as against Rs. 1,066 Million in FY 2016, dipped by 36.9%. The Company has adopted Indian Accounting Standards
("Ind AS") effective April 1, 2016 and accordingly, the financial statements for the year ended March 31, 2017 have been prepared as per Ind AS. Further financial statements for the year ended March 31, 2016 have also been restated in accordance with Ind AS for comparative information.
Notwithstanding this aberration in performance, the sharp focus on better customer experience, calibrated Restaurant expansion, cost rationalisation and technology are expected to bring the Company back on the path of high profitability.
Return to Shareholders
The Board has recommended a dividend of 25% (i.e. Rs. 2.50/- per equity share of Rs. 10 face value) for the year ended March 31, 2017, subject to the approval by the members at the ensuing Annual General Meeting of the Company.
Keeping in perspective the dynamism of the industry, the risk identification and mitigation processes have been designed to be responsive to the ever-changing environment. The framework incorporates risk identification, formulating mitigation plans, regular review mechanism and reporting to top management and Board. Risk Updation is a continuous process by using a highly structured risk rating methodology based on their potential impact and likelihood of occurrence, after consideration of mitigating and controlling actions that are in place.
The Risk Management Policy is defined and approved by
Audit Committee and Board of Directors. The Board, Audit Committee and Senior Management reviews and monitor the same on periodic basis.
The table shared below lists the principal risks and uncertainties that may affect the Company and highlights the mitigating actions in place to manage those risks. The table however, is not intended to be an exhaustive list of all the risks and uncertainties that may arise.
Internal Controls and their adequacy
JFL employs rigorous internal controls to ensure commitment to operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies. The internal controls provide for appropriate segregation of duties and responsibilities and there are documented policies regarding utilisation of assets and proper financial reporting.
These formally stated and regularly communicated policies set high standards of ethical conduct for all employees. A robust internal audit process is operated by management assurance team. The team delivers a comprehensive risk-based combined assurance plan and regularly recommends to the
Board on the effectiveness of the design and operation of the control environment. Along with internal audit procedures, control-self assessment, formal validation of self-assessment results and subsequent development of remediation plans is widely used to expand audit coverage and improve ability to meet business objectives.
With the requisite enablers of technology, infrastructure and innovation strongly in place, the Company is well-positioned to maintain its leadership position in the industry and drive new benchmarks in performance. Further, the Company will continue to make the necessary investments in these critical areas as well as strengthen its basics for sustained growth. Market expansion in the immediate future for both brands will be tempered aligned to the Companys focus on profitable growth and keeping in perspective the continued slow revival of consumer sentiments.
With profitable growth as its guiding principle, the Company is committed to optimise operational efficiencies through cost rationalisation and leverage technology as a strategic business enabler. In this regard, the commencement of the Greater Noida Supply Chain Centre is expected to be a major contributor towards controlling costs and improving efficiencies. Driving employee area for improving costs. Constant innovation for products and processes, implementing business excellence programmes, and using the channel of online media for marketing to drive sales are also expected to generate sustainable profits.