Ovobel Foods Ltd Directors Report.

To,

The members of

Ovobel Foods Limited

Your Directors are pleased to present the 27th (Twenty Seventh) Annual Report of Ovobel Foods Limited together with the Audited Statement of Accounts for the year ended 31st March 2019.

1. PERIOD OF THE REPORT:

This report pertains to the period from 01stApril 2018 to 31stMarch 2019.

2. EXTRACT OF ANNUAL RETURN AS PROVIDED UNDER SECTION 92(3):

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure I".

3. FINANCIAL SUMMARY AND HIGHLIGHTS:

The following gives a summary of the financial results of the Company:

(Rupees in Lakhs)
Particulars For the year ended 31.03.2019 For the year ended 31.03.2018
Total Income 11,211.51 9,997.42
Total Expenses excluding Finance Cost & Depreciation 10,185.25 9,250.90
Finance Cost & Depreciation 185.65 219.46
Total Expenses including Finance Cost & Depreciation 10,370.89 9,470.36
Net Profit (Loss) Before Tax 840.61 527.06
Tax Expenses:
Current Tax / Taxes of earlier year 241.63 103.11
Deferred Tax charge/(Income) 33.77 (28.92)
Net Profit (Loss) After Tax 565.22 452.88
Total Comprehensive Income for the year 565.51 450.00
Earnings Per Share
Basic & 5.38 4.31
Diluted (in Rs.) 5.38 4.31

4. OPERATIONAL REVIEW:

The highlights of the Company performance are as under:

• The Net Sales for the period increased from Rs. 8,360.18 lakhs (previous year) to Rs. 9,729.81 lakhs (current year).

• The Profit Before Tax for the period increased from Rs. 527.06 Lakhs (previous year) to Rs. 840.61 Lakhs (Current year).

• Profit/(Loss) after tax for the period increased from Rs. 452.88 Lakhs (previous year) to Rs. 565.22 lakhs (Current year).

Your board will take required actions for further increasing the revenue and reducing the cost of the Company.

5. NATURE OF BUSINESS:

The company operates in the domain of egg powder and frozen egg manufacture and exports.

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

6. SHARE CAPITAL AND ITS CHANGES:

Sl. No. Particulars Share Capital (No. of shares) Share Capital (In Rupees)
1 Authorized share Capital 1,10,00,000 11,00,00,000
2 Issued, Subscribed & Paid up share capital 1,05,00,800 10,50,08,000

During the year there has been no change in the capital structure of the company.

7. TRANSFER TO RESERVES AND SURPLUS ACCOUNT:

During the financial year, entire profit of the Company has been transferred to the reserves and surplus account.

8. DIVIDEND:

During the financial year ended 31st March 2019, the company has not proposed for any dividend payable to the shareholders.

The Board regret its inability to recommend any dividend as it is considered prudent to conserve the resources for investments in the business.

9. DEPOSITS:

During the financial year under review, the Company did not accept any deposits covered under chapter V of the Companies Act, 2013 and Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

10.INFORMATION ABOUT SUBSIDIARY/ JV/ ASSOCIATE COMPANY:

The Company does not have any subsidiary Company during the period under review.

11.CHANGES IN COMPOSITION OF BOARD OF DIRECTORS AND KMP:

During the financial year 2018-19, following changes have been occurred in the board of directors of the Company.

SL. No Name of Director DIN Designation Appointment / Resignation With effect from
1. Swapan Kuamr Majumder 03178122 Independent Director Re-Appointment 24.09.2018
2. Satish Narayana Swamy 05264105 Independent Director Re-Appointment 24.09.2018
3. Shanti Swarup Aggarwal 00322011 Managing Director Re-Appointment 24.09.2018

12.POLICIES ON APPOINTMENT OF DIRECTORS, REMUNERATION AND OTHER MATTERS:

Disclosures under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:

Your Board report that:

• the ratio (Approx.) of the remuneration of each director to the median remuneration of the employees of the company for the financial year 33.8:1.

• The percentage increase in remuneration during the financial year of each: Executive Director (including Chief Executive Officer); and Chief Financial Officer and Company Secretary (or Manager, if any,)

There was increase or decrease in the remuneration of any Executive Director, Chief Financial Officer or Company Secretary of the Company. Following are the details of the same:

Name Designation Remuneration in the FY 2018-19 Remuneration for the FY 2017-18 Percentage Increase / Decrease in the remuneration

(Rs. in lakhs)

(Rs. in lakhs)

Shanti Swarup Aggarwal Managing Director 84 84 Nil
Sudhir Kulkarni Chief Financial Officer 19 18 5.56
Ritu Singh Company Secretary 2 2 Nil

• The percentage increase in the median remuneration of employees in the financial year is: 1.43% (Approx.)

• The number of permanent employees on the rolls of company: 119 (As on 31.03.2019).

• Average percentage increases already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average increase in salaries of employees other than managerial personnel in 2018-19 was 13.76 % (approx.). there are no changes in the managerial remuneration for the year.

The key parameters for any variable component of remuneration availed by the directors: There is no variable component of remuneration availed by the directors.

• Affirmation that the remuneration is as per the remuneration policy of the Company: Company affirms that the remuneration is as per the Remuneration policy of the Company.

• Names of the top ten employees in terms of remuneration drawn:

Name Remunerat ion received (Amount in Rs.) Nature of employme nt whether contractua l or otherwise Qualification & Experience Date of commencement of employment Age Percentage of equity shares held by the employee as a remuneration Whether any employee is a relative of any director/ manager of the Company and if so, name of such director/ manager
S S Aggarwal Sudhir 84,00,000 Permanent B. Com 11-01-1993 68 Nil Nil
Kulkarni 19,00,000 Permanent B. Com 17-02-2011 59 Nil Nil
Sabitha Maheshwaran 12,83,947 Permanent M.Phil., Ph.D. in FSN 11-03-2017 44 Nil Nil
Ashwani Kumar Arora 11,64,344 Permanent B. Tech 12-09-2016 33 Nil Nil
Mohan. T. Gangoor 11,19,825 Permanent B. E 01-08-1997 51 Nil Nil
Sahadevan C 8,25,526 Permanent M.Sc., M.Phil., B.Ed., Ph.D. 19-09-1998 52 Nil Nil
Sunil Varghese P 7,77,667 Permanent B. Com 16-03-2015 43 Nil Nil
Vijaysekhar. T 4,81,399 Permanent B.Tech(Food Process Engg.) 03-07-2017 31 Nil Nil
Regina Mary D 4,00,060 Permanent B. Com 01-06-2006 43 Nil Nil
Srinivas O. L 2,28,560 Permanent B. Com (incomplete) 01-06-2006 55 Nil Nil

• The Name of every employee, who:

(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees: Nil.

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakhs and fifty thousand rupees per month: Nil.

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company: Nil.

13.RISK MANAGEMENT:

The Company does not have any Risk Management Policy as the elements of risk threatening the Companys existence are very minimal.

14.PARTICULARS OF CONTRACTS UNDER SECTION 188:

The Company has entered various Related Parties Transactions as defined under Section 188 of the Companies Act, 2013 with related parties as defined under Section 2 (76) of the said Act. Further all the necessary details relating to related party transactions during the period under review are provided in AOC-2 as "Annexure II".

The policy on the Related Parties Transactions has been disclosed on the website of the Company. Below is the link of the website.

http://www.ovobelfoods.com/general-information/policies/related-party-transaction/

15.DISCLOSURE UNDER THE SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The company has in place a Policy for prevention of Sexual Harassment at the Workplace in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and also has a policy and framework for employees to report sexual harassment cases at workplace and its process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.

The following is a summary of sexual harassment complaints received and disposed of during the year under review:

a) Number of complaints pending at the beginning of the year: Nil

b) Number of complaints received during the year: Nil

c) Number of complaints disposed of during the year: Nil

d) Number of cases pending at the end of the year: Nil

16.DISCLOSURE UNDER SECTION 134(3)(l) OF THE COMPANIES ACT,2013:

Except as disclosed elsewhere in this report, if there have been any material changes and commitments which can affect the financial position of the Company occurred between the end of the financial year of the Company and the date of this report, the same shall be reported here: Nil.

17.STATUTORY AUDITORS:

The Statutory Auditors M/s, Nara Hari & Raghavedra, Chartered Accountants, Bangalore, (Firm registration No. 014509S) was appointed as Statutory Auditor of the Company on Annual General Meeting held on 29th December, 2016 for a tenure of five years as per the provisions of Section 139 of the Companies Act, 2013, i.e. the appointment is valid till the conclusion of 29th Annual General Meeting for the Financial year 2020-2021.

As per the applicable provisions of the Companies Act, 2013 and relevant rules made thereunder, the Audited financial statements along with Statutory Audit report for the FY 2018-19 is hereby annexed as Annexure IX.

18.SECRETARIAL AUDITOR AND REPORT:

Pursuant to the provisions of Section 204 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder, the Board of Directors has appointed Mr. Rafeeulla Shariff, Practicing Company Secretary, Bangalore as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2018-19.

Section 204 of the Companies Act, 2013 read with rules made thereunder inter-alia requires every listed company to annex with its Board report, a Secretarial Audit Report given by a Company Secretary in Practice, in the Form MR-3.

As per the above-mentioned provisions Secretarial Audit report is hereby annexed as Annexure VI.

19.COST AUDITORS:

The requirement of appointment of cost auditors is not applicable to the Company.

20.EXPLANATIONS OR COMMENTS BY THE BOARD ON EVERY QUALIFICATION, RESERVATION/ADVERSE REMARK / DISCLAIMER MADE BY THE AUDITORS:

(i) Statutory Auditors observations/comments/qualifications:

Point No (i) (b) of CARO Report states that: The Company has a regular program of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. However, in the current year no physical verification of fixed assets has been done by the Company.

Management Reply: The Company is taking necessary measures to physically verify the fixed assets. The Company is also planning to increase the frequency of verification of fixed assets in the coming future.

(ii) Secretarial Auditors observations/comments/qualifications:

a. Listed entity shall ensure that hundred percent of shareholding of promoter(s) and promoter group to be in dematerialized form and the same is maintained on a continuous basis in the manner as specified by the Board. I observed that, one of the promoters (M/s. Ovobel NV) shares are not in dematerialized form as prescribed in the provisions of Regulation 31 (2) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.

b. The Company is suspended from trading of securities at Calcutta Stock Exchange Limited.

c. There were Two days delay in submission of financial results for the 1st Quarter ended 30.06.2018 and One day delay furnishing prior intimation about the Board meeting dated 14.11.2018 to BSE in pursuant to Regulation 33 & 29 of SEBI (LODR) Regulations, 2015.

Management Reply:

a. The directors of the Company have intimated to the respective promoters to convert their shares from physical form into dematerialized form and the respective promoters are in the process of conversion of their physical shares into dematerialized form.

b. The Directors of the Company will take necessary steps for delisting of securities at Calcutta Stock Exchange Limited. The Directors of the Company had visited to the Stock Exchange and discussed the matter relating to delisting of shares.

c. The delay in filing of financial results was due to technical error in the Bombay Stock Exchanges (BSE) website while submitting the financial results with Bombay Stock Exchange (BSE). Further, the Company Suo moto has submitted request letter for condonation of delay in filing the financial results.

The delay in furnishing prior intimation of the Board of directors meeting was due to medical emergency of Mrs. Ritu Singh, Company Secretary cum Compliance officer of the Company. Further, the Company has submitted request letter for condonation of delay in furnishing prior intimation of Board of Directors meeting.

21.DIRECTORS RESPONSIBILITY STATEMENT:

In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and hereby confirm the following:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) The directors had 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 affairs of the company at the end of the financial year i.e. 31.03.2019 and of the profit and loss of the company for that period;

c) The directors had taken proper and sufficient care 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 directors had prepared the annual accounts on a going concern basis; and

e) The directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively:

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

22.CFO CERTIFICATION:

CFO Certification Pursuant to SEBI (LODR) Regulation, 2015, forms part of this Annual Report and annexed to this Report as Annexure VIII.

23.COMPLIANCE WITH SECRETARIAL STANDARD:

The company is in compliance with the applicable Secretarial Standards and other Secretarial Standards voluntarily adopted by the company.

24.EMPLOYEE STOCK OPTION PLAN (ESOP):

During the year there was no Employee Stock Option plan in the company.

25.INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY:

The Company had laid down guidelines, policies, procedures and structure to enable implementation of appropriate internal financial controls across the Company. These control processes enable and ensure the orderly and efficient conduct of Companys business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation & disclosure of financial statements. Review and control mechanisms are built in to ensure that such control systems are adequate and operating effectively. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & Managing Director.

26.CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company as part of its CSR initiatives has undertaken projects/programs in accordance with the CSR Policy and the details of the CSR activities are given as Annexure VII forming part of this Report.

The policy on the Corporate Social Responsibility has been disclosed on the website of the Company. Below is the link of the website.

http://www.ovobelfoods.com/general-information/policies/csr-policy/

27.PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

The Company has invested in 10,000 Equity Instruments at a face value of Rs. 10/- each fully paid in SMIFS Capital Markets Limited (Quoted) on 28th March 1995. (Market value of the equity shares as on 31st March 2018 was Rs. 5.68 lakhs and as on 31.03.2019 was Rs. 3.90 Lakhs).

28.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS/ OUTGO IN TERMS OF SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 AND RULE 8 OF COMPANIES (ACCOUNTS) RULES, 2014:

a) Conservation of Energy:

With the increase in demand for the non-renewable energy resources such as water and electricity, the Company has been using Wood Fired Boilers in the factory which run on a fuel known as Briquettes (Agro waste) instead of electricity.

The Briquettes fuel is made of saw dust, groundnut shell, coffee husk and tamarind shell.

The consumption of the briquettes per hour is 380 kgs/hr.

The Capacity of the boiler is 20,00,000 kcals/hr. and the Company has invested Rs.35,03,000/- (inclusive of system oil) towards it.

b) Technology Absorption:

The Company continues to keep abreast the developments and seeks to implement the latest technology in the factory for the forthcoming years. However, there was no technology imported by the Company during the last three years.

c) Foreign Exchange Outflow/Inflow:

Particulars 31.03.2019 31.03.2018

(Rupees in Lakhs)

(Rupees in Lakhs)

Foreign Exchange Earnings 8,377.11 7,491.98
Foreign Exchange Expenditures 266.86 239.58

29.INDUSTRIAL RELATIONS:

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

30.FRAUD REPORTING:

There have been no frauds reported by the Statutory Auditors of the Company to the Audit Committee or the Board of Directors under sub-section (12) of section 143 of the Companies Act, 2013 during the financial year.

31.CHANGE OF REGISTRAR & SHARE TRANSFER AGENTS:

During the Financial Year 2018-19, there was no change in Registrar and Share transfer agents.

32.MATERIAL CHANGES AND COMMITMENTS:

Material changes and commitments affecting our financial position between the end of the financial year to which this financial statement relates and date of this report:

During the financial year 2018-19, as per BIFR proceedings, Karnataka State Industrial and Infrastructure Development Corporation Limited (KSIIDC) & Ministry of Food Processing Industry (MFPI) have accepted the scheme of one-time settlement and have issued no due certificate.

33.MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Report on Management Discussion and Analysis Report as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report and is annexed to this Report as Annexure III. Certain Statements in the said report may be forward looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook.

34.CORPORATE GOVERNANCE:

Your Company is committed to observe good Corporate Governance practices. The report on Corporate Governance for the financial year ended March 31, 2019 as per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report and is annexed to this Report as Annexure V. The requisite certificate from Statutory Auditors, M/s, Narahari & Raghavendra, Bangalore confirming Compliance with the provisions of Corporate Governance, is attached to this Report as Annexure IV.

35.DECLARATION BY INDEPENDENT DIRECTORS:

All independent directors have given declarations stating that they meet the criteria of independence as laid down under section 149(7) and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder and as per the requirement of SEBI (LODR) Regulation 2015.

36.BOARD EVALUATION:

• As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the formal annual evaluation was carried out for the Boards own performance, its committee & Individual directors.

• The Independent Directors meeting to review the performance of the non-Independent Directors and Board as whole was held on 11.03.2019.

37.BOARD MEETINGS/COMMITTEE MEETINGS:

During the financial year 2018-19, Six Board Meetings and Twenty-Three Committee Meetings were held. The details of all Board meeting and Various Committees Meeting are given in the Corporate Governance Report. The intervening gap between the Meetings was within the time prescribed under the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015.

38.CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL:

• The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and on matters relating to integrity in the workplace, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behavior from an employee in each situation and the reporting structure.

• All the Board Members and the Senior Management personnel have confirmed compliance with the Code.

• The Code of conduct has been posted on the Company website http://www.ovobelfoods.com/general-information/policies/code-conduct/

39.AUDIT COMMITTEE /STAKEHOLDER RELATIONSHIP COMMITTEE /NOMINATION AND REMUNERATION COMMITTEE /CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

The Board of Directors has constituted four Committees i.e., Audit Committee, Stakeholder Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee as per requirement of Corporate Governance under SEBI (LODR) Regulation 2015 and any other applicable provisions of Statutes. The majority of the members of these committees are Independent and non-executives.

During the financial year 2018-19, 4 (Four) Audit Committee Meetings, 1 (One) Nomination and Remuneration Committee Meeting, 17 (Seventeen) Stakeholders Relationship Committee Meetings and 1 (One) Corporate Social Responsibility Meetings were held at the Company as per requirement of Corporate Governance and any other applicable Regulations of the SEBI (LODR) Regulation 2015.

40.VIGIL MECHANISM /WHISTLE BLOWER POLICY:

Your Company has laid down a Whistle Blower Policy covering Vigil Mechanism with protective clauses for the Whistle Blowers to report genuine concerns or grievances. The Whistle Blower Policy has been hosted on the website of the Company at http://www.ovobelfoods.com/general-information/policies/whistle-blower-policy/

41.ACKNOWLEDGEMENTS AND APPRECIATIONS:

Your Directors gratefully acknowledge all stakeholders of the Company viz. customers, members, clients, employees, consultants, associates, solicitors, vendors, shareholders, bankers and business associates for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

For and on behalf of the Board of Ovobel Foods Limited

Sd/- Sd/-
Shanti Swarup Aggarwal Swapan Kumar Majumder
Managing Director Director
DIN: 00322011 DIN: 03178122
Place: Kolkata Place: Kolkata
Date:30.05.2019 Date: 30.05.2019
Sd/- Sd/-
Sudhir Kulkarni Ritu Singh
Chief Financial Officer Company Secretary & Compliance Officer
PAN: AFEPK8240D Membership No.: A24934
Place: Bangalore Place: Bangalore
Date: 30.05.2019 Date: 30.05.2019