sapphire foods india ltd share price Directors report


Dear Members,

Your directors are pleased to present the 14th Annual Report on the business and operations of Sapphire Foods India Limited ("Company") together with the audited financial statements for the financial year ended 31st March 2023.

Financial Results and Performance

The financial statements of the Company have been prepared in accordance with the applicable provisions of Indian Accounting Standards ("Ind AS"), Companies Act, 2013 and Rules made thereunder ("Companies Act"), Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and such other applicable rules, regulations, guidelines, etc., as amended from time to time.

The Companys financial (standalone and consolidated) performance during the financial year ended 31st March 2023 as compared to the previous financial year, is summarised below:

(Rs in Million)

Particulars

Standalone

Consolidated

F.Y. 2022-23 : F.Y. 2021-22 F.Y. 2022-23 : F.Y. 2021-22

Total Income

19,917.17 14,322.47 22,966.66 17,595.50

Less: Total Expenses

18,909.23 14,074.40 21,882.42 17,081.65

Profit/ (Loss) before tax

1,007.94 248.07 1,084.24 513.85

Less: Total tax expense/(credit)

(1,252.66) - (1,247.67) 54.00

Profit/ (Loss) after Tax

2,260.60 248.07 2,331.91 459.85

Total Comprehensive lncome/(Loss) for the year, net of tax

2,259.04 231.82 2,318.89 231.84

During the year under review, the total income of your Company was ^ 19,917.17 million on a standalone basis and Rs 22,966.66 million on a consolidated basis as compared to the previous financial year total income of Rs 14,322.47 million on a standalone basis and Rs 17,595.50 million on consolidated basis. The net profit/ (loss) for the year under review after total tax expense/ (credit) stood at Rs 2260.60 million on a standalone basis and Rs 2,331.91 million on a consolidated basis.

The Company has not transferred any amount to the general reserves. There was no change in the nature of the business of the Company during the year under review.

Business Operations and State of Companys Affairs

Sapphire Foods India Limited, directly and through its subsidiaries, is one of the largest franchisees of Yum! Brands in Indian sub-continent with a track record of successfully operating 743 KFC, Pizza Hut and Taco Bell restaurants across India, Sri Lanka and Maldives. Your Company has delivered highest revenue, profitability and new restaurant additions for the financial year ended on 31st March 2023.

For complete detail on Business Operations and State of Companys Affairs, please refer to the section of Management Discussion and Analysis Report which forms an integral part of this Annual Report.

Dividend

During the financial year under review, your Directors has not recommended any dividend to the Shareholders of the Company.

The Board of Directors of your Company has adopted Dividend Distribution Policy based on the parameters as specified under Listing Regulations. The Policy can be accessed from the website of the Company at https://www.sapphirefoods.in/investors- relation/corporate-governance.

Subsidiaries, Joint Venture and Associate Companies

As at the close of the financial year 31st March 2023, your Company has one wholly-owned subsidiary company viz., Gamma Pizzakraft (Overseas) Private Limited, which in turn, has three wholly-owned subsidiaries viz., Gamma Pizzakraft Private Limited, India; Gamma Pizzakraft Lanka (Private) Limited, Sri Lanka & French Restaurant Private Limited, Sri Lanka and one subsidiary viz., Gamma Island Foods Private Limited, Maldives. Apart from the above, no other company has become or ceased to be subsidiary, joint venture or associate of the Company during the financial year under review.

Pursuant to the applicable provisions of Indian Accounting Standards ("Ind AS"), Companies Act, 2013 and Rules made thereunder ("Companies Act"), Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and such other applicable rules, regulations, guidelines, etc., the consolidated financial statements presented by the Company include financial information of the subsidiary companies, which forms part of this Annual Report. In pursuance of Section 136 of the Companies Act, the annual report of the Company containing its standalone and consolidated financial statements have been uploaded on the website of the company. Further, Financials of the subsidiaries, are available on the website of the Company at https://www.sapphirefoods.in/investors-relation/annual-reports.

The highlights of performance and financial position of each of the subsidiary company for the financial year ended 31st March 2023, is provided in form AOC-1, in accordance with the provisions of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014. The form AOC-1 is enclosed with the Consolidated Financial Statements and forms an integral part of this Annual Report.

Your Company, in accordance with the Listing Regulations, has formulated and adopted the policy for determining material subsidiaries. The said policy is available on the website of the Company at https://www.sapphirefoods.in/investors-relation/ corporate-governance

The Company has obtained a certificate from M/s. S R B C & Co. LLP, Statutory Auditor, for financial year ended 31st March 2023 certifying that the Company is in compliance with the Foreign Exchange Management (Non - Debt Instruments) Rules, 2019 read with Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 with respect to Downstream Investment. The said certificate issued by the Statutory Auditor does not contain any observation and is free from qualifications.

Scheme of Merger by Absorption of Gamma Pizzakraft (Overseas) Private Limited and Gamma Pizzakraft Private Limited, wholly-owned subsidiaries with Sapphire Foods India Limited and their respective shareholders

The Board of Directors of your Company at their meeting held on 11th February 2022, subject to requisite approvals/ consents, approved the Scheme of Merger by Absorption of Gamma Pizzakraft (Overseas) Private Limited ("GPOPL") and Gamma Pizzakraft Private Limited ("GPPL") with Sapphire Foods India Limited ("Company") and their respective shareholders ("Scheme") under the applicable provisions of the Companies Act and Listing Regulations. The appointed date of the Scheme is 1st April 2022. Upon the Scheme becoming effective, all equity shares held by the Company in GPOPL and GPOPL in GPPL shall stand cancelled, without any further act or deed and no consideration shall be issued on merger.

The scheme application was filed and admitted with the National Company Law Tribunal (NCLT), Mumbai Bench on 5th May 2022. The merger formalities is currently in progress.

Increase in Equity Stake of Gamma Island Food Private Limited, step-down subsidiary of Sapphire Foods India Limited ("Company") through Gamma Pizzakraft

(Overseas) Private Limited, wholly-owned subsidiary of the Company

During the year under review, the Board of Directors of Gamma Pizzakraft (Overseas) Private Limited ("GPOPL"), wholly-owned subsidiary of Sapphire Foods India Limited ("Company"), has considered and approved subscription of upto 81,914 Equity Shares of Gamma Island Food Private Limited ("GIFPL"), subsidiary of GPOPL and step-down subsidiary of the Company, for a total consideration of upto MVR 18,840,220 ("Proposed Acquisition"). Pursuant to this proposed acquisition, the equity share holding of GPOPL in GIFPL will be increased from the existing 51% up to 75%. The proposed acquisition will be completed on or before 30th June, 2023.

Share Capital Authorised Share Capital

During the financial year under review, there was no change in the authorised share capital of the Company. The authorised share capital of the company as on 31st March 2023 amounted to Rs 4,31,68,20,000 comprising of 43,16,82,000 Equity Shares of face value of Rs 10 each.

Issued, Subscribed and Paid-up Share Capital

As on 31st March 2023, the issued, subscribed and paid-up capital of the Company stands at Rs 63,54,25,410 comprising of 6,35,42,541 equity shares of face value of Rs 10 /- each.

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

Employee Stock Option Plan / Schemes

With a view to attract, reward and retain talented and key employees in the competitive environment and encourage them to align individual performance with Company objectives, the Company has implemented Sapphire Foods Employees Stock Option Plan 2017 ("ESOP Plan") which was originally approved by the Board of Directors and the Shareholders of the Company on 24th May 2018 and 30th May 2018 respectively. Sapphire Foods Employees Stock Option Scheme 2019 - Scheme III - Management other than CEO ("Scheme III"), Sapphire Foods Employees Stock Option Scheme 2019 - Scheme IV - CEO ("Scheme IV"), Sapphire Foods Employee Stock Option Scheme 2022 - Scheme III A - Management other than CEO ("Scheme III A") and Sapphire Foods Employee Stock Option Scheme 2022 - Scheme IVA - CEO ("Scheme IVA") (hereinafter collectively referred to as "ESOP Schemes") forms an integral part of the ESOP Plan. With a view to reward loyalty for past services with the Company, retention of critical employees and align employees interest with companys performance and shareholders interest, the Company has granted, from time to time, stock options to the eligible employees under the said ESOP Plan / Schemes.

Subsequent to the Initial Public Offering ("IPO") of the Company in November 2021, the shareholders of the Company, pursuant to the approval and recommendation of the Nomination and

Remuneration Committee and Board of Directors at their respective meetings, has passed special resolutions by way of postal ballot on 8th April 2022 for:

• Ratification of Sapphire Foods Employees Stock Option Scheme 2019 - Scheme III - Management other than CEO and Sapphire Foods Employees Stock Option Scheme 2019 — Scheme IV-CEO read with Sapphire Foods Employees Stock Option Plan 2017;

• Amendment of ESOP Plan to increase the quantum of options reserved under the ESOP Plan from 28,39,033 stock options to 43,33,889 stock options by creating additional 14,94,856 stock options convertible into equivalent number of equity shares of face value of Rs 10 each fully paid-up, upon exercise of vested options;

• Approval and Institution of Sapphire Foods Employee Stock Option Scheme 2022 - Scheme IIIA - Management other than CEO read with Sapphire Foods Employees Stock Option Plan 2017;

• Approval and Institution of Sapphire Foods Employee Stock Option Scheme 2022 - Scheme IVA-CEO read with Sapphire Foods Employees Stock Option Plan 2017;

• Approval of grant of stock options to Whole-time Director & Group CEO exceeding 1 % of the issued and paid-up capital of the Company.

The shareholders of the Company, further, at their 13th Annual General Meeting held on 2nd September 2022, pursuant to the recommendation of the Nomination and Remuneration Committee and Board of Directors at their respective meetings, has passed special resolutions for:

• Ratification of Sapphire Food Employees Stock Option Scheme 2019 - Scheme III - Management other than CEO read with Sapphire Foods Employees Stock Option Plan 2017, for grant of options to the eligible employees of subsidiary companies.

• Approval of grants under Sapphire Foods Employee Stock Option Scheme 2022 - Scheme III A - Management other than CEO read with Sapphire Foods Employee Stock Option Plan 2017 to the eligible employees / directors of the subsidiary company(ies) of the Company.

The Nomination and Remuneration Committee of the Board is entrusted with the responsibility of implementation and administration of the ESOP Plan / Schemes.

The details of ESOP are provided in the notes to accounts in the financial statements forming part of this Annual Report and the disclosures as mandated under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB & SE Regulations") are made available on the website of the Company at https://www. sapphirefoods.in/investors-relation/updates. Certificate from M/s. Alwyn Jay & Co. LLP, Secretarial Auditors of the Company, with respect to the implementation of ESOP Plan / Schemes in accordance with SEBI SBEB & SE Regulations shall be placed before the members at the ensuing Annual General Meeting of the Company.

The Company has not issued any sweat equity shares during the year under review and hence no information as per the provisions of Companies Act and SEBI SBEB & SE Regulations is furnished thereto.

Credit Rating

As at the end of the financial year 31st March 2023, long-term rating on the bank lines of your company is [IC RA]A (Stable) and the long term/short term unallocated limits is [ICRA]A(Stable)/ [ICRA]A2+.

Deposits

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Elence, the requirement for furnishing of details relating to deposits covered under Chapter V of the Companies Act or the details of deposits which are not in compliance with Chapter V of the Companies Act is not applicable.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the financial year under review, as prescribed under Listing Regulations, is presented as a separate section which forms an integral part of this Annual Report.

Report on Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India. A separate report on Corporate Governance for the financial year ended 31st March 2023 is appended to this report and forms an integral part of this annual report.

A certificate from Practicing Company Secretary confirming the compliance with the conditions of Corporate Governance under Listing Regulations is also annexed to the report on Corporate Governance.

Environment, Social and Governance & Corporate Social Responsibility Practices

Environment, Social and Governance (ESG) has long been an integral to our journey and your company recognise it as a continuous path that requires a clear strategy and roadmap. As part of the ESG journey, your company aim to reduce the carbon footprint of our value chain and to improve business resilience by managing the short and long-term risks and impacts of climate change. Your company also endeavor to have a diverse, equitable and inclusive workplace which makes us stronger and enables us to create a better shared future for employees and communities. The Company is committed for making a tangible difference in society through interventions across four strategic pillars i.e., People, Planet, Food and Governance. The ESG Report for FY2023 is published along side this Annual Report and can be accessed at https://www.sapphirefoods.in/investors-relation/ annual-reports.

In accordance with the provisions of Section 135 of the Companies Act, 2013 and Rules made thereunder, your Company has formed a Corporate Social Responsibility (CSR) Committee to monitor CSR activities of the Company. During the financial year 31st March 2023, the scope of the existing CSR Committee was enhanced to accommodate the scope of ESG / BRSR framework and the Committee was renamed as "CSR & ESG Committee" of the Board of Directors. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Board of Directors has approved a CSR Policy for the Company which provides a broad framework with regard to implementation of CSR activities carried out by the Company in accordance with Schedule VII of the Act. The CSR Policy is available on the Companys website at https://www. sapphirefoods.in/investors-relation/corporate-governance.

The Business Responsibility and Sustainability Report ("BRSR") as mandated under Listing Regulations, detailing the various initiatives taken by your Company from the Environmental, Social and Governance perspective, forms part of this annual report and is appended hereinbelow. The Annual Report on CSR activities as prescribed under the Companies Act and Rules made thereunder is also annexed to this report.

Directors and Key Managerial Personnel

The Board of Directors are constituted in accordance with the provisions of Companies Act and Listing Regulations and Articles of Association of the Company. The Company has received relevant disclosures and declarations from the Directors and none of them are disqualified from being appointed as Director in terms of Section 164(2) of the Companies Act and Listing Regulations.

Your Board consists of eminent personalities with considerable professional expertise and credentials in finance, law, accountancy and other related skills and fields. Their wide experience and professional credentials help the Company for strategy formulation and its implementation, thereby enabling its growth objectives. As at 31st March 2023, the composition of Board of Directors of your Company was as under:

Sr.

No.

Name of Director

Designation

DIN

1.

Mr. Sunil Chandiramani

Chairman & Independent Director

00524035

2.

Mr. Sanjay Purohit

Whole Time Director & Group CEO

00117676

3.

Mr. Sumeet Narang

Non-Executive Nominee Director

01874599

4.

Mr. Vikram Agarwal

Non-Executive Nominee Director

03038370

5.

Mr. Kabir Thakur

Non-Executive Nominee Director

08422362

6.

Mr. Vinod Nambiar

Non-Executive Nominee Director

07290613

7.

Mr. Paul Robine

Non-Executive Nominee Director

07828525

8.

Ms. Anu Aggarwal

Independent Director

07301689

9.

Ms. Deepa Wadhwa

Independent Director

07862942

10.

Mr. Norbert Fernandes

Alternate Director

06716549

The Board of Directors at their meeting held on 17th May 2022 had appointed Mr. Norbert Fernandes (DIN: 06716549) as an Alternate Director (in the capacity of Non-Executive Non- Independent Nominee Director) to Mr. Paul Robine. During the financial year under review, there were no other changes in the Directorship of the Company.

As on the date of this report, Mr. Paul Robine has resigned from the Board of Directors of the Company and consequently Mr. Norbert Fernandes ceased to be the Alternate Director to Mr. Paul Robine effective from 12th May, 2023. Further, pursuant to the recommendation of Nomination and Remuneration Committee, Mr. Norbert Fernandes was appointed as Additional (Non-Executive Nominee) Director by the Board of Directors on 12th May 2023. The regularisation of Mr. Norbert Fernandes as Non-Executive Nominee Director shall be placed before the shareholders at the ensuing 14th Annual General Meeting of the Company.

Retirement by Rotation

In terms of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Vikram Agarwal and Mr. Kabir Thakur, Non-Executive Nominee Directors of the Company, retires by rotation and being eligible, offers themselves for re-appointment at the ensuing 14th Annual General Meeting of the Company.

The brief profile in terms of Regulation 36 of Listing Regulations and the Secretarial Standards on General Meetings (SS-2), in respect of the directors seeking appointment/re-appointment has been annexed to the notice of the 14th Annual General Meeting.

Independent Directors

Mr. Sunil Chandiramani, Ms. Anu Aggarwal and Ms. Deepa Wadhwa were appointed as Independent Directors of the Company, effective 5th August 2021, for a fixed term of five years from the date of their respective appointment/regularisation by the shareholders. Mr. Sunil Chandiramani is designated as the Chairperson of the Board of Directors.

The Company has received declarations from the Independent Directors of the Company confirming that they continue to meet the criteria of independence, as prescribed under applicable provisions of the Companies Act and Listing Regulations. The Independent Directors have also confirmed that they have complied with the Code of Conduct of the Company and that they have registered themselves as an Independent Director in the data bank maintained with the Indian Institute of Corporate Affairs. The Independent Directors of the Company are not liable to retire by rotation.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of strategy, planning and execution, management and leadership, functional and managerial experience, legal and risk management, corporate governance systems and practices, finance, banking and accounts and they hold highest standards of integrity and are independent of the management.

Key Managerial Personnel

Pursuant to the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the following persons are the Key Managerial Personnel ("KMP") of your Company:

Name of the KMP

Designation

Mr. Sanjay Purohit

Whole Time Director & Group CEO

Mr. Vijay Jain

Chief Financial Officer

Mr. Sachin Dudam

Company Secretary & Compliance Officer

During the year under review, there has been no change in the Key Managerial Personnel of the Company.

Board Meetings

During the financial year 2022-23, four (4) meetings of the Board of Directors were convened and held. The meetings were held as per the business requirements and maximum gap between any two Board Meetings is within the permissible limits as prescribed under the Companies Act and Listing Regulations.

The details of the composition of the board, meetings held during the year and the attendance of the Directors at the Board Meetings, inter-alia, are provided at Report on Corporate Governance, forming part of this Report.

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) on meetings of Board of Directors and General Meetings.

Board Committees

The Board of Directors of the Company has constituted following Committees in order to effectively carry out some of the diverse functions of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Risk Management Committee

• CSR & ESG Committee

• Operations Committee

• IPO Committee

The details of the composition of these committees of the Board, meetings held during the financial year, etc. are set out at the Report on Corporate Governance, forming part of this Report.

Familiarsiation Programme

Pursuant to Regulation 25 of Listing Regulations, the Board of Directors has framed a policy to familiarise the Independent Directors about the Company. The Company shall conduct orientation programs / presentations / training sessions/ store visits, periodically at regular intervals, to familiarise the Directors including Independent Directors with the strategy, operations and functions of the Company. The Directors are also familiarised through presentation on business performance /operations, risk management framework, etc. at the Board Meetings.

The details as per the applicable provisions of the Companies Act and Listing Regulations are posted on the website of the Company at https://www.sapphirefoods.in/investors-relation/ corporate-governance.

Board Evaluation

In accordance with the provisions of Companies Act and Listing Regulations, the Board of Directors shall conduct formal evaluation, on annual basis, of its own performance and that of its committees and individual directors including chairperson. The Nomination and Remuneration Committee is mandated for formulating criteria for evaluation of performance of the Board of Directors and its Committees and Directors.

Pursuant to determination of criteria by the Nomination and Remuneration Committee, the Company has carried out performance evaluation surveys for the Board of Directors and its Committees, Individual Directors including Whole-time Director & Group CEO, Chairperson, etc. The evaluation surveys were circulated to the concerned board members through BoardPAC application. All the Directors had actively participated in the evaluation surveys carried out by the Company.

The results along with feedback were shared with the Independent Directors at a duly convened meeting of the Independent Directors for their consideration. The Independent Directors, at their meeting held on 21st March 2023, deliberated in detail on the performance evaluation of the Board of Directors (as a whole), its Committees and Non-Independent Directors including Whole-time Director and Chairperson, inter-alia. Thereafter, the feedback from the meeting of the Independent Directors and board evaluation were presented to the Management and Board of Directors for their perusal and implementation thereof.

Nomination and Remuneration Policy

In compliance with Section 178 of the Companies Act, 2013 and Regulation 19 of Listing Regulations, the Board of Directors have formulated and adopted Nomination and Remuneration Policy for the Company, covering following objectives:

• To lay down criteria and terms and conditions for identifying persons who are qualified to become Directors & KMPs and who may be appointed / reappointed in Senior Management of the Company.

• To provide framework for remuneration of Directors and Employees and align with the Companys business strategies, values, key priorities and goals.

• To provide for rewards linked directly to the effort, performance and achievement of Companys targets by the employees.

• Formulating the criteria for performance evaluation of all Directors

• Succession Planning for Board and Senior Management

• Board Diversity

The salient features of this policy have been disclosed in the Report of Corporate Governance, forming part of this Report. The Nomination and Remuneration Policy of the Company can be accessed on the website of the Company at https://www. sapphirefoods.in/investors-relation/corporate-governance.

Particulars of Employees

The disclosures pertaining to remuneration and other required information pursuant to Section 197(12) of the Companies Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of Directors, Key Managerial Personnels and Employees of the Company, is appended to this report and forms part of this Annual Report.

The disclosure pertaining to remuneration as required under provisions of Section 197(12) of the Companies Act read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Annual Report. In terms of Section 136(1) of the Act and the rules made thereunder, the Report and Financial Statements are being sent to the shareholders excluding the said information. Any shareholder interested in obtaining copy of the aforesaid information, may send an email to the Company Secretary and Compliance Officer at investor@sapphirefoods.in.

Auditors Statutory Auditors

M/s. S R B C & Co. LLP, Chartered Accountants (Registration No. 324982E/E300003) were re-appointed as Statutory Auditors of the Company at Annual General Meeting held on 15th October 2020, for a term of five consecutive years to hold office from the conclusion of 11th Annual General Meeting (AGM) till the conclusion of 16th Annual General Meeting of the Company. The auditors have confirmed that they are not disqualified from being re-appointed as Statutory Auditors of the Company and that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The report given by the Statutory Auditors on the Financial Statements (Standalone and Consolidated) of the Company for financial year ended 31st March 2023 are annexed to the Financial Statements, forming an integral part of this Annual Report. The Auditors Report read together with Annexures referred to in the Auditors Report for the financial year ended 31st March 2023 does not contain any qualification, reservation, adverse remark or disclaimers. During the year under review, the Statutory Auditors have not reported any matter of frauds under Section 143(12) of the Companies Act.

Internal Auditors

The Company had appointed M/s. Deloitte Touche Tohmatsu India LLP, Chartered Accountants, as Internal Auditor Partner for carrying out the activities of Management Testing of Internal Financial Controls and Internal Audit of various business/ functions process for the financial year 31st March 2023.

The Company had designated Mr. Balkrishna Chaturvedi, Head- Management Assurance and Special Projects, as Internal Auditor of the Company, in compliance with the provisions of Section 138 of the Companies Act, 2013 and Rules framed thereunder.

Internal Audit Reports are reviewed by the Audit Committee of the Company at their meetings held during quarterly intervals. Both internal auditors carry out their functions as per the scope of work assigned and place their reports at the meetings of the Audit Committee, during quarterly intervals.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act, 2013, the Board of Directors, has appointed M/s. Alwyn Jay & Co., Practising Company Secretaries (Firm Registration No. P2010MH021500) as Secretarial Auditor for carrying out secretarial audit and requisite certifications as mandated under Companies Act and Listing Regulations.

The Secretarial Audit Report for the financial year ended 31st March 2023 received from M/s. Alwyn Jay & Co., Secretarial Auditor of the Company is annexed to this report and forms an integral part of this Annual Report. The Report does not contain any qualifications, reservations, adverse remarks, disclaimers or reporting of fraud.

Cost Auditors

The Company is not required to maintain cost records, as specified by the Central Government under section 148 of the Companies Act, 2013 and Rules made thereunder.

Particulars of Investments, Loans, Guarantees and Securities

The full particulars of the loan, investments, guarantees and securities, in accordance with the applicable provisions of the Companies Act, 2013 and Listing Regulations made by your Company during the financial year 2022-23, has been furnished at Note 5 to the Notes to Accounts of the Financial Statements forming an integral part of this Annual Report.

Particular of Contracts or Arrangements with Related Parties

The Related Party Transactions are placed at the meetings of the Audit Committee / Board of Directors for their respective approval. Prior omnibus approval of the Audit Committee is obtained by the Company on an annual basis for Related Party Transactions that are foreseeable and repetitive in nature. A detailed statement of such Related Party Transactions entered into pursuant to the omnibus approval so granted are placed at the meetings of the Audit Committee for their review on a quarterly basis. The half yearly statement on the Related Party Transactions are also filed with the respective stock exchanges on which the equity shares of the Company are listed.

The Related Party Transactions entered during the financial year under review were in the ordinary course of business and on arms length basis. There were no significant material related party transactions entered into by the Company with any related party during the financial year under review. Thus, the disclosure under Section 134 of the Companies Act, 2013 as per specified form AOC-2 is not applicable to the Company.

Details of Related Party Transactions as per Indian Accounting Standard - 24 (Ind AS 24) are given under Note 36 forming part of the Notes to Account of the Standalone Financial Statements to this Report.

Pursuant to the provisions of the Companies Act and Listing Regulations, your company has formulated a policy on Related Party Transactions for the purpose of identification and monitoring of such transactions, which is available on the website of the Company at - https://www.sapphirefoods.in/ investors-relation/corporate-governance.

Annual Return

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act, 2013, the copy of the Annual Return of the Company for the financial year ended 31st March 2023 is placed at the Companys Website and can be accessed at https://www.sapphirefoods.in/investors-relation/updates

Risk Management Policy

Adequate Risk Management Framework is a necessity for the purpose of Risk Assessment and minimisation/mitigation of risks involved in business activity. The Company has laid down a robust risk management framework for identification and management of risks that could adversely affect the Company. The Company has formulated Risk Management Policy in order to achieve the following objectives, inter-alia:

• To ensure that all the current and future material risk exposures of the Company are identified, assessed, appropriately mitigated, minimised and managed i.e. to ensure adequate systems for risk management.

• To establish a framework for the companys risk management process and to ensure its implementation.

• To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices.

• To assure business growth with financial stability.

In terms of the provision of Regulation 21 of Listing Regulations, the Board of Directors has constituted a Risk Management Committee. The details with respect to its terms of reference, composition and meetings held during the part of the financial year under review are set out at the Report on Corporate Governance, annexed to this Report. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The Risk Management Policy is also available on the website of the Company at https://www.sapphirefoods.in/investors-relation/ corporate-governance. For more details on risk management framework, please refer to the section of Management Discussion and Analysis Report which forms an integral part of this Annual Report.

Vigil Mechanism

The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior.

Your Company has adopted a Whistle Blower Policy to provide a mechanism for the employees to report genuine concerns about any unethical behavior, actual or suspected fraud or violation of your Companys Code of Conduct. During the year under review, this policy was amended to enhance the scope for the vendors and suppliers of the company and subsequently the code of conduct for suppliers was introduced and promulgated.

The concerned constituents including employees of the Company are encouraged to voice their concerns internally and at a high level and to disclose information which the individual believes shows malpractice or impropriety. A designated email id whistleblower@sapphirefoods.in has been created and disseminated through this policy/code to the concerned stakeholders to voice their grievances. The access of this designated email id is mapped and made available to the members of the Audit Committee including its Chairperson.

The provisions of this policy are in line with the provisions of Section 177 (9) of the Companies Act, 2013 and Regulation 22 of Listing Regulations. All cases registered under the whistle blower policy of the Company are subject to review by the Audit Committee. The Whistle Blower policy of the Company is available on the Companys website at https://www. sapphirefoods.in/investors-relation/corporate-governance.

Disclosure Under Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013

In line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act"), your Company has in place a policy on prevention, prohibition and redressal of sexual harassment at workplace. All employees (permanent, contractual, temporary, trainees) including at stores level, are covered under this policy.

As per the rules made under the POSH Act, the Company has constituted an Internal Complaints Committee (ICC) to redress the complaints received pertaining to sexual harassment at workplace. The Committee meets, as and when required, to discuss various cases received and to address the same uniformly across the organisation.

The details of the complaints received during the financial year 2022-23 are as follows:

Particulars

No. of Complaints

Complaints pending as on start of the financial year i.e. 1st April 2022

1

Complaints received during the financial year under review

8

Complaints disposed off during the financial year under review

9

Complaints pending as on end of the financial year i.e. 31a March 2023

0

An update on the aforesaid complaints received and disposed are placed at the meetings of the Audit Committee during quarterly intervals.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The activities of the Company are not energy intensive as the Company is not engaged in any manufacturing activity. Further, no technology has been developed and / or imported by way of foreign collaboration.

For complete details, please refer to the section of Business Responsibility and Sustainability Report which forms an integral part of this Report. The particulars with regard to Foreign Exchange Earnings and Outgo are given in Standalone and Consolidated Financial Statements, forming part of this Annual Report.

Disclosure of Orders Passed by Regulators or Courts or Tribunal

During the financial year under review, there were no significant/ material orders passed by the Regulator, Courts, Tribunals, etc. which can have an impact on the going concern status and the Companys operations in future.

The Company has not filed any application under Insolvency and Bankruptcy Code, 2016 as at the end of the financial year 31st March 2023. However, during the financial year ended on 31st March 2023, two petitions were pending against your company with National Company Law Tribunal ("NCLT") filed by operational creditors ("lessors"). Your company would like to clarify and state that the monetary demands raised by these operational creditors are unreasonable and inappropriate. Your company will make the necessary appearance before the NCLT in the concerned cases and is of the belief that the petitions may not be admitted by the Honble NCLT and strike-off at the outset.

Internal Financial Controls

Your Company has aligned its current systems of internal financial control with the requirement of Companies Act 2013. The Internal Control Framework is intended to increase transparency and accountability in an organisations process of designing and implementing a system of internal control. Your Company has successfully laid down the framework and ensured its effectiveness. The internal controls are commensurate with the size of the Company and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance with corporate policies.

M/s. S R B C & Co LLP, Statutory Auditors of the Company have audited the financial statements included in this annual report and have issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013).

The internal audit department along with the external partners/ consultants carry out internal audit of the Companys business/ functional activities. The audit is based on an internal audit plan, which is reviewed each year in consultation with and approved by the audit committee. The audit committee reviews reports submitted by the internal auditor, internal audit partner and statutory auditor. Basis inputs received from the audit committee, suggestions for improvement are considered and the audit committee follows up on corrective action.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal auditor, statutory auditors and external partner/consultant, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year ended 31st March 2023.

Directors Responsibility Statement

In terms of 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 and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2023 and of the profit/loss of the Company for that year;

c. they have 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. they have prepared the annual accounts of the Company on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Material Changes and Commitments, if any. Affecting Financial Position of the Company

Except as disclosed in this report, no material changes and commitments which could affect the Companys financial position, have occurred between the end of the financial year of the Company and date of this report.

Acknowledgements and Appreciation

The Board places on record its appreciation for the support and co-operation, your company has been receiving from its various stakeholders including Customers, Suppliers, Business Partners and Associates, Financial Institutions, Regulatory Bodies and Central & State Governments.

Your Directors appreciate and value the contribution made by every member of the Sapphire Family.

For and on behalf of the Board

Sapphire Foods India Limited

Mr. Sunil Chandiramani

Mr. Sanjay Purohit

Date: 12th May 2023

Chairman and Independent Director

Whole Time Director and Group CEO

Place: Mumbai

DIN: 00524035

DIN: 00117676