Megastar Foods Ltd Directors Report.

The Directors are pleased to present the 7th Annual Report on the business and operations of the Company together with the Audited Accounts for the financial year ended March 31, 2018.

GENERAL OUTLOOK OF INDUSTRY AND ECONOMY

Our Company is having state of the art modern machinery at its wheat processing plant in Punjab, India, with an installed capacity of 81000 MT per year. It has been our constant endeavour at all the levels to ensure processing of wheat with quality, undertaking testing and exploring new possibilities by our team of highly skilled people. It has been our hallmark in our organization to strictly follow the Good Manufacturing Practices (GMP), Good Laboratory Practices (GLP) to ensure the high standards of food safety, quality & hygiene. At present we are catering primarily to MNCs in India and also exporting some of our products to United Nations Organization, Europe, United States & Middle East.

Our companys main aim is to maintain and deepen relationships with our customers to which we can serve successfully by providing them a point of difference, adding value and ultimately, providing profitable growth for both parties. Our customers are supported by a highly skilled, enthusiastic, can-do culture team throughout the whole business. Our endeavour is to maintain an efficiently sound business in order to provide a secured future to our fellow employees while stressing on the continual improvement of our highly ranked products for a constantly enhanced customer satisfaction.

For the financial year ended on March 31, 2018 the company has earned a net profit of Rs. 130.49 Lacs as compared to the net profit of Rs. 104.50 Lacs, for the previous year ended on March 31, 2017.

FINANCIAL PERFORMANCE

The financial position of the company for the financial year ended on March 31, 2018 is summarised below:

2017-18 2016-17
Revenue from Operations 10294.06 9768.59
Other Income 4.36 7.66
Total Revenue 10298.42 9776.25
Profit Before Tax, Depreciation and Finance Cost and extraordinary items 498.97 434.64
Finance Cost (266.34) (233.45)
Depreciation and Amortization expenses (86.59) (71.75)
Prior period expenses 0.00 (1.07)
Profit before Tax 146.04 128.37
Tax (15.55) (23.87)
Profit After Tax 130.49 104.50
Earning Per Share
Basic 2.16 1.75
Diluted 2.16 1.75

OPERATIONS

The companys operations are managed by a highly qualified and dedicated team of professionals. Under the abled guidance of the professional team, Company successfully maintained its operation amidst disruptions caused by the implementation of revolutionary economic changes such as GST. It is pertinent to inform until the month of November, 2017 there was certain lack of clarity about the taxability of branded and non-branded product, as there was an ambiguity in the definition of branded and non-branded products which hampered the sales of the Company.

Despite the tough challenges, the revenue from Sales for the Company increased from Rs. 9768.59 lakh in the previous year to Rs. 10294.06 lakh during the financial year ended on March 31, 2018.

DIVIDEND

Your Directors have decided to plough back the earnings in the growth of business and for this reason, have decided to not to recommend any Dividend for the year under review.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis Report for the year under review which also covers the performance of the company is presented in a separate section and forms a part of this Annual Report.

CORPORATE GOVERNANCE

Your Company is committed to maintain the highest standards of Corporate Governance and is in compliance with the Corporate Governance Regulations as laid out in the Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Although the shares of the company were listed on May 24, 2018 i.e. after the closure of the financial year 2017-18, a report on Corporate Governance has been submitted by the company as a part of this report.

INDUSTRIAL RELATIONS

Industrial relations and work atmosphere remained cordial throughout the year with sustained communication and engagement with workforce through various forums.

CREDIT RATING

The Company enjoys a credit rating provided by CRISIL BB/Stable which is assured to be substantially improved on the basis of current results.

SAFETY, HEALTH AND ENVIRONMENT

The Company continues to demonstrate strong commitment to safety, health and environment which have been adopted as core organizational values. The Company assures safety and facilities in accordance with statutory and regulatory requirements. Employees are continuously made aware of hazards / risks associated with their job and their knowledge and skills are updated through requisite training to meet any emergency. Medical and occupational check-ups of employees and eco-friendly activities are promoted. The Company does not produce any kind of hazardous waste.

FINANCE

Increase in sales, implementation of the GST and elongated working capital cycle during the year are the major causes for an increased finance cost during the year. The finance cost for the year ended on March 31, 2018 was Rs. 266.34 lakhs. The Company managed to procure enough lines of credit to ensure a smooth flow of operations. The free reserve of the Company as on 31st March, 2018 decreased from Rs. 143.05 lakhs to 137.93 lakhs.

During the financial year ended on March 31, 2018, an amount of Rs. 125.37 lakhs was utilised out of the reserves, towards the issue of bonus shares of the Company.

GOODS AND SERVICE TAX

Goods and Service Tax (GST) Act came into effect from July 1, 2017 through the implementation of One Hundred and First Amendment of the Constitution of India. The tax replaced existing multiple cascading taxes levied by the Central and State Governments.

Your Company has successfully implemented and migrated to GST followed by the changes across various departments/operations of the Company.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

As at the end of the financial year 2017-18, the company had 3 directors on the Board

1. Mr. Vikas Goel, Managing Director

2. Mr. Vikas Gupta, Director

3. Mr. Avinash Goel, Director

Mr. Avinash Goel resigned from the office of Director of the company w.e.f. 31.03.2018 and Mr. Mudit Goyal was appointed as an Additional Director of the company w.e.f. 31.03.2018.

Mr. Vijay Sharma was appointed as the Chief Financial Officer w.e.f. 31.03.2018 and Ms. Neharika Sodhi was appointed as the Company Secretary of the company w.e.f. 27.11.2017. Both of them hold the positions of Key Managerial Personnel of the company as per Section 203 of the Companies Act, 2013.

Further, after the end of the financial year under review, Mr. Prabhat Kumar, Mr. Amit Mittal and Ms. Savita Bansal were appointed as Non-Executive Independent Directors of the Company on April 04, 2018. The independent Directors are entitled to hold office for a term of 5 years and are not liable to retire by rotation.

At the ensuing 7th Annual General Meeting of the company, Mr. Vikas Gupta is liable to retire by rotation and being eligible offers himself for re-appointment. The Board recommends his re-appointment at the ensuing Annual General Meeting.

None of the Directors of your Company is disqualified under the provisions of Section 164(2)(a) and (b) of the Companies Act, 2013. During the period under review, none of the Non- Executive Directors of the Company had any pecuniary relationship or transactions with the Company. Further, none of the Non-Executive Directors of the company have any shareholding in the company.

The details of the Directors being recommended for appointment / re-appointment are contained in the Notice convening the forthcoming Annual General Meeting of the Company.

NOMINATION AND REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, hereinafter referred to as ‘Listing Regulations and based on the recommendations of its Nomination and Remuneration Committee, the Board has adopted a Nomination and Remuneration Policy, which is attached as Annexure-A.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has no Subsidiary, Joint Venture or Associate Company.

PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES

All contracts/ arrangements/ transactions entered by the Company during the financial year 2017-18, with related parties, as defined under Section 188 of the Companies Act, 2013 and rules made there under, were in the ordinary course of business and on arms length basis. Further no material related party transactions were entered during the

Financial Year under review, by your Company.

Accordingly disclosure of related party transactions as required under Section 134(3) (h) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is not required.

RELATED PARTY TRANSACTION POLICY

As per the applicable provisions of Listing Regulations to the company, subsequent to the listing of its shares, the Company has adopted a policy to deal with related party transactions as approved by the Board of Directors. The policy is available on the companys website www.megastarfoods.com at the weblink http://megastarfoods.com/assets/pdf/Policy-on-related-party-transactions.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Act and Rule 12 (1) of The Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is attached as Annexure-B.

MEETINGS OF THE BOARD

During the financial year 2017-18, the Board of Directors met fourteen (14) times viz., on 4th April, 2017, 27th April , 2017, 2nd May, 2017, 1st June, 2017, 28th July, 2017, 21st September, 2017, 25th September, 2017, 26th October, 2017, 14th December, 2017, 15th January, 2018, 20th January, 2018, 17th February, 2018, 23th March, 2018, 31st March, 2018 in accordance with the provisions of the Companies Act, 2013 and rules made there under.

PARTICULARS OF LOANS/ ADVANCES/ INVESTMENTS MADE DURING THE FINANCIAL YEAR

Particulars of loans, guarantees, investments and securities provided during the financial year under review, covered under the provisions of Section 186 of the Companies Act, 2013, have been provided in the Financial Statements which forms part of the Annual Report. (Please refer Note Nos. 5, 9 of the Financial Statements)

RESERVES

Entire amount of Net Profit of Rs. 130.49 Lakhs has been transferred to Profit and Loss Surplus account, which appears under the head "Reserves and Surplus." No amount has been transferred to any other reserves.

MATERIAL CHANGES AND COMMITMENTS IF ANY, AFFECTING FINANCIAL POSITION OF THE COMPANY FROM THE END OF FINANCIAL YEAR AND TILL THE DATE OF THIS REPORT

After the closure of the financial year on March 31, 2018, the equity shares of the company were successfully listed on the SME Exchange of BSE Limited w.e.f May 24, 2018.

Further, except as disclosed elsewhere in this Boards Report, no material changes and commitments which could affect the Companys financial position have occurred since the close of the financial year, i.e., March 31, 2018 till the date of this Boards Report. Further it is hereby confirmed that there has been no change in the nature of business of the Company during the financial year 2017-18.

SUSTAINABILITY INITIATIVE

Your Company is conscious of its responsibility towards preservation of natural resources and continuously takes initiatives to reduce consumption of electricity and water.

RISK MANAGEMENT

The primary objective of risk management is to protect the Company against risks to the value of the business, its capital and its continuity. In order to achieve the objective and for better governance, the Company has adopted a formal Risk Management Policy. The Policy sets out key risk areas - financial risks (including risk to assets), legislative and regulatory risks, environmental risks (including natural disasters), operational risks (markets, production, technology, etc.), risks relating to employment and manpower, and individual large transactional risks.

The Chairman-cum-Managing Director of the company identifies and proposes action in respect of all risks through his Management team as and when any are perceived or foreseen or inherent in operations; analyses these, and then recommend it to Audit Committee for its review and further mitigation measures.

BOARD EVALUATION

The provisions of the Companies Act, 2013 and the Listing Regulations, in respect of the performance evaluation of the Individual Directors, Committees and the Board as a whole, became applicable to the company subsequent to its listing on May 24, 2018 i.e. after the closure of the financial year.

The necessary measure towards the performance evaluation shall be adopted by the company for the on-going financial year.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the year.

SHARE CAPITAL

During the financial year ended on March 31, 2018, the authorised share capital of the company was increased form Rs. 6.00 Crores to Rs. 15.00 crores, with the approval of the members. The company has issued and allotted 12,53,700 fully paid up equity shares of Rs. 10/- each on Bonus Issue basis during the financial year under review.

As at the end of the financial year 2017-18, the authorised share capital of the company was Rs. 15,00,00,000/- comprising of 1,50,00,000 equity shares of Rs. 10/- each and the issued, subscribed and paid up shares capital amounted to Rs. 9,90,37,000/- comprising of 99,03,700 equity shares of Rs. 10/- each.

Further, during the financial year 207-18, there were no instances of right issue of shares, issue of shares with differential voting rights, private placement/ preferential issue of shares, Sweat Equity Issue, Employee Stock Option or buy back of shares.

DEPOSITS

The Company has neither accepted nor renewed any fixed deposits from the public or the Members, within the meaning of Section 73 of the Companies Act, 2013, read with Chapter V of the Companies Act, 2013 and the Companies Acceptance of Deposits) Rules, 2014, during the financial year 2017-18, and as such, no amount of principal or interest on deposits from public or the Members, was outstanding as of the Balance Sheet date.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL

There are no significant and/or material orders passed by the Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status of the Company and its business operations in near future.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The provision of Listing Regulations regarding the development of a Familiarisation Programme for the Independent Directors became applicable to the company after the closure of the financial year 2017-18.

The company has already established a Familiarisation Programme for Independent Directors in respect of their roles, rights & responsibilities, nature of the industry in which Company operates, business model of the Company and related matters. The same is available on the website of the company www.megastarfoods.com.

SECRETARIAL AUDIT

The provisions of Section 204 of the Companies Act, 2013 regarding Secretarial Audit were not applicable to the company during the financial year ended on March 31, 2018.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The required information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in the Companies Act, 2013 is attached as Annexure-C.

HUMAN RESOURCES AND EMPLOYEE RELATIONS

There is an on-going emphasis on building a progressive Human Resources culture within the Organisation. Structured initiatives to nurture talent and create a working environment that fosters motivation, team-work and result orientation continue to be addressed. Productivity level continued to be subject to continuous monitoring. Employee strength as on March 31, 2018 was 71 as compared to 54 in the previous year.

DISCLOSURE OF INTERNAL FINANCIAL CONTROLS

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate and commensurate with the size, scale and complexity of its operation. The internal controls are tested for adequacy, efficiency and effectiveness through audits by the in- house internal audit department and the observations, corrective and preventative actions are reviewed by the management and Audit committee of the Board of Directors.

During financial year under review, no material or serious observation has been received from the Internal Auditors of the Company for inadequacy or ineffectiveness of such controls.

VIGIL MECHANISM POLICY

The Company has in place a Vigil Mechanism/Whistle Blower Policy, in terms of provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its powers) Rules, 2014 which was approved by the Board of Directors on 4th April, 2018. The Companys personnel have direct access to the chairman of the Audit Committee to report concerns about unethical behaviour (actual or suspected), frauds and other grievances. No personnel of the Company have been denied access to the Audit Committee. Adequate safeguards are being provided against victimization of whistle blowers availing of such mechanism.

Whistle Blower Policy of the Company is hosted on the website of the Company at the weblink http://megastarfoods.com/vigil-mechanism.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has zero tolerance policy in case of sexual harassment at workplace and is committed to provide a healthy environment to each and every employee of the Company. The Company has in place ‘Policy for

Prevention and Redressal of Sexual Harassment in line with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (hereinafter referred "as the said act") and Rules made there under. As per the provisions of Section 4 of the said Act, the Board of Directors has constituted the Internal

Complaints Committee (‘ICC) at the Registered Office, Works to deal with the Complaints received by the Company pertaining to gender discrimination and sexual harassment at workplace.

Further, as per the provisions of Section 21 & 22 of the said Act, the Report on the details of the number of cases filed under Sexual Harassment and their disposal for the financial year under review, is as under:

Sr. No. No. of cases pending as on the beginning of the financial year under review No. of complaints filed during the financial year under review No. of cases pending as on the end of the financial year under review
1. NIL NIL NIL

SECRETARIAL STANDARDS

The Company has duly complied with the applicable Secretarial Standards on Meeting of Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Board of Directors hereby confirms that: a. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b. Such accounting policies have been selected and applied consistently and the Directors have made judgements 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 31st, 2018 and of the Profit and Loss of the Company for the year ended on that date; c. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. The annual accounts of the Company have been prepared on a going concern basis;

e. Internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ALTERATION OF MEMORANDUM OF ASSOCIATION AND ADOPTION OF NEW ARTICLES OF ASSOCIATION

During the financial year under review, the company has carried out amendments to the Memorandum of Association and has also adopted an Altered Set of Articles of Association of the company. The said alterations and amendments were carried out with the approval of the members of the company and in compliance with the applicable provisions of companies Act, 2013.

COMMITTEES OF BOARD OF DIRECTORS

1. Audit Committee

The company has constituted an Audit Committee ("Audit Committee") vide Board Resolution dated April 04, 2018, as per the applicable provisions of the Section 177 of the Companies Act, 2013 and also to comply with

Listing Regulations applicable upon listing of the Companys Equity shares on SME platform of BSE. The composition of the Audit Committee is as under:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the Audit Committee. Since the committee was constitutes after the closure of the financial year, no meeting of the committee was held during the financial year ended March 31, 2018. The scope and function of the Audit Committee and its terms of reference shall include the following:

A. Tenure: The Audit Committee shall continue to be in function as a committee of the Board until otherwise resolved by the Board, to carry out the functions of the Audit Committee as approved by the Board.

B. Meetings of the Committee: The committee shall meet at least four times in a year and not more than 120 days shall elapse between any two meetings. The quorum for the meeting shall be either two members or one third of the members of the committee, whichever is higher but there shall be presence of minimum two Independent members at each meeting.

C. Role and Powers: The Role of Audit Committee together with its powers as Part C of Schedule II of SEBI Listing Regulation, 2015 and Companies Act, 2013 shall be as under:

1. Oversight of the listed entitys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

2. Recommendation for appointment, remuneration and terms of appointment of auditors of the listed entity;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements and auditors report thereon before submission to the board for approval;

5. Reviewing, with the management, the half yearly financial statements before submission to the board for approval, with particular reference to;

matters required to be included in the directors responsibility statement to be included in the boards report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013;

changes, if any, in accounting policies and practices and reasons for the same;

major accounting entries involving estimates based on the exercise of judgment by management; significant adjustments made in the financial statements arising out of audit findings; compliance with listing and other legal requirements relating to financial statements; disclosure of any related party transactions; modified opinion(s) in the draft audit report;

6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps in this matter;

7. Reviewing and monitoring the auditors independence and performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of the listed entity with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the listed entity, wherever it is necessary; 11. Evaluation of internal financial controls and risk management systems;

12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any significant findings and follow up there on;

15. The Audit Committee may call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company. 16. Discussing with the statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 17. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 18. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 19. The Audit Committee shall have authority to investigate into any matter in relation to the items specified in section 177(4) of Companies Act 2013 or referred to it by the Board. 20. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 21. To review the functioning of the whistle blower mechanism;

22. Approving the appointment of the Chief Financial Officer (i.e. the whole time finance director or any other person heading the finance function) after assessing the qualifications, experience and background, etc., of the candidate; and; 23. Audit committee shall oversee the vigil mechanism.

24. Audit Committee will facilitate KMP/auditor(s) of the Company to be heard in its meetings.

25. Carrying out any other function as is mentioned in the terms of reference of the audit committee or containing into SEBI Listing Regulations 2015.

Further, the Audit Committee shall mandatorily review the following:

a) Management discussion and analysis of financial condition and results of operations; b) Statement of significant related party transactions (as defined by the audit committee),submitted by management; c) Management letters / letters of internal control weaknesses issued by the statutory auditors; d) Internal audit reports relating to internal control weaknesses; and e) The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee. f) Statement of deviations: Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1). Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7).

2. Nomination And Remuneration Committee

The Company has constituted the Nomination and Remuneration Committee as per Regulation 19 of Listing Regulation, vide Resolution dated April 04, 2018. The Nomination and Remuneration Committee comprise the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mrs. Savita Bansal Member Non-Executive Independent Director

The Company Secretary of our Company shall act as a Secretary to the Nomination and Remuneration Committee. Since the committee was constitutes after the closure of the financial year, no meeting of the committee was held during the financial year ended March 31, 2018. The scope and function of the Committee and its terms of reference shall include the following:

A. Tenure: The Nomination and Remuneration Committee shall continue to be in function as a committee of the Board until otherwise resolved by the Board.

B. Meetings: The committee shall meet as and when the need arises for review of Managerial Remuneration. The quorum for the meeting shall be one third of the total strength of the committee or two members, whichever is higher. The Chairperson of the nomination and remuneration committee may be present at the annual general meeting, to answer the shareholders queries; however, it shall be up to the chairperson to decide who shall answer the queries.

C. Role of Terms of Reference:

Identify persons who are qualified to become directors and may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every directors performance;

Formulate the criteria for determining the qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for directors, KMPs and other employees;

Formulation of criteria for evaluation of performance of independent directors and the board of directors; Devising a policy on diversity of board of directors; Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors;

Determine our Companys policy on specific remuneration package for the Managing Director / Executive

Director including pension rights;

Decide the salary, allowances, perquisites, bonuses, notice period, severance fees and increment of Executive Directors;

Define and implement the Performance Linked Incentive Scheme (including ESOP of the Company) and evaluate the performance and determine the amount of incentive of the Executive Directors for that purpose. Decide the amount of Commission payable to the Whole time Directors;

Review and suggest revision of the total remuneration package of the Executive Directors keeping in view the performance of the Company, standards prevailing in the industry, statutory guidelines etc; and To formulate and administer the Employee Stock Option Scheme.

3. Stakeholders Relationship Committee

The Company has formed the Stakeholders Relationship Committee as per Regulation 20 of Listing Regulation, vide Resolution dated April 04, 2018. The constituted Stakeholders Relationship Committee comprises the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive Independent Director
Mr. Amit Mittal Member Non-Executive Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the Stakeholders Relationship Committee Since the committee was constitutes after the closure of the financial year, no meeting of the committee was held during the financial year ended March 31, 2018. The scope and function of the Stakeholders Relationship Committee and its terms of reference shall include the following:

A. Tenure: The Stakeholders Relationship Committee shall continue to be in function as a committee of the

Board until otherwise resolved by the Board, to carry out the functions of the Stakeholders Relationship Committee as approved by the Board.

B. Meetings: The Stakeholders Relationship Committee shall meet at least four times a year with maximum interval of four months between two meetings and shall report to the Board on a quarterly basis regarding the status of redressal of complaints received from the shareholders of the Company. The quorum shall be two members present.

C. Terms of Reference: Redressal of shareholders and investors complaints, including and in respect of:

Allotment, transfer of shares including transmission, splitting of shares, changing joint holding into single holding and vice versa, issue of duplicate shares in lieu of those torn, destroyed, lost or defaced or where the space at back for recording transfers have been fully utilized. Issue of duplicate certificates and new certificates on split/consolidation/renewal, etc.;

Review the process and mechanism of redressal of Shareholders /Investors grievance and suggest measures of improving the system of redressal of Shareholders /Investors grievances.

Non-receipt of share certificate(s), non-receipt of declared dividends, non-receipt of interest/dividend warrants, non-receipt of annual report and any other grievance/complaints with Company or any officer of the Company arising out in discharge of his duties. Oversee the performance of the Registrar & Share Transfer Agent and also review and take note of complaints directly received and resolved them. Oversee the implementation and compliance of the Code of Conduct adopted by the Company for prevention of Insider Trading for Listed Companies as specified in the Securities & Exchange Board of India (Prohibition of insider Trading) Regulations, 2015 as amended from time to time. Any other power specifically assigned by the Board of Directors of the Company from time to time by way of resolution passed by it in a duly conducted Meeting, and Carrying out any other function contained in the equity listing agreements as and when amended from time to time.

4. Corporate Social Responsibility Committee

The Company has formed Corporate Social Responsibility (CSR) Committee pursuant to the provisions of Section 135 of the Companies Act, 2013, vide Resolution dated April 04, 2018. Corporate Social Responsibility Committee comprising the following:

Name of the Director Status in Committee Nature of Directorship
Mr. Prabhat Kumar Chairman Non-Executive-Independent Director
Mr. Amit Mittal Member Non-Executive-Independent Director
Mr. Vikas Goel Member Chairman & Managing Director

The Company Secretary of our Company shall act as a Secretary to the Corporate Social Responsibility Committee. Since the committee was constitutes after the closure of the financial year, no meeting of the committee was held during the financial year ended March 31, 2018. The scope and function of the Committee and its terms of reference shall include the following:

a. To formulate and recommend to the Board, a CSR policy which shall indicate the activities to be undertaken by the Company as per the Companies Act, 2013; b. To review and recommend the amount of expenditure to be incurred on the activities to be undertaken by the company; c. To monitor the CSR policy of the Company from time to time; d. Any other matter as the CSR Committee may deem appropriate after approval of the Board of Directors or as may be directed by the Board of Directors from time to time.

The provisions of Section 135 of the Companies Act, 2013 regarding the Corporate Social Responsibility Policy are not applicable to the Company as Company has formed the CSR Committee on voluntary basis.

STATUTORY AUDITOR AND THEIR REPORT

M/s Avnish Sharma & Associates (Firm Regn. No.009398N), Chartered Accountants, Chandigarh, were appointed as Statutory Auditors of the Company at the 3rd Annual General Meeting held on 30th September, 2014 for a term of five consecutive years.

The Auditors Report being self-explanatory requires no comments from the Directors. Further, there are no reservations, qualifications, adverse remarks or Modified opinion in the Audit Reports issued by them in respect of Financial Statements of the Company for the Financial Year 2017-18.

HUMAN RESOURCES DEVELOPMENT

It is a proud statement in itself that your Company continues to be an Employer of choice for a host of workforce.

Value based HR programs unleashed by the Company from time to time have enabled the companys HR team to contribute substantially to the overall growth of the Company. In order to keep pace with the ever evolving demands of the existing business and the gamut of activities in Digital space, HR has been placing tremendous focus on capability building in newer areas with an objective to predict, diagnose, and take actions that will improve business performance. Further discussion on this subject is included in the Management Discussion and Analysis Report forming part of this report.

PARTICULARS OF EMPLOYEES

The disclosure as per Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to the company as the shares of the company were listed after the closure of the financial year under review.

REPORTING OF FRAUDS

There has been no frauds reported by the Auditors, under sub section (12) of Section 143 of the Companies Act, 2013(including amendments), during the financial year under review, to the Board of Directors and hence, as such there is nothing to report by the Board under Section 134(3)(ca) of the Companies Act, 2013.

COST AUDIT

As per the provisions of Section 148 read with the Cost Audit Rules, the provisions regarding Cost Audit is not applicable to the Company.

ACKNOWLEDGEMENT

Employee relations throughout the Company were harmonious. The Board wishes to place on record its appreciation to all employees in the Company, for their sustained efforts and immense contribution to the good levels of performance and growth that the Company has achieved during the financial year under review.

Your Directors also place on record their sincere thanks and appreciation for the continuing support and assistance received from the financial institutions, banks, Government as well as non government authorities, customers, vendors, and members during the financial year under review.

Date: 02.08.2018
Place: Chandigarh
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
MEGASTAR FOODS LIMITED
SD/- SD/-
Vikas Goel Vikas Gupta
Chairman-cum-Managing Director Whole Time Director
(DIN: 05122585) (DIN: 05123386)