Tanvi Foods (India) Ltd Directors Report.

To

The Members,

Your Directors take pleasure in presenting the Twelfth Annual Report on the business and operations of the company together with the audited financial statements along with the report of the Auditors for the financial year ended March 31, 2019.

FINANCIAL SUMMARY:

(Amt. in lakhs)

STANDALONE CONSOLIDATED
Particulars For the FY ended 31.03.2019 For the FY ended 31.03.2018 For the FY ended 31.03.2019 For the FY ended 31.03.2018
Revenue from Operations 7279.04 6288.61 7635.13 6590.49
Other Income 156.18 144.37 75.84 69.51
Total Revenue 7435.23 6432.98 7710.97 6660.00
Total Expenses 7249.58 6279.43 7528.82 6493.57
Exceptional Items - - - -
Prior period items - - - -
Profit before tax 185.65 153.55 182.16 166.43
Tax Expenses 22.62 38.91 33.13 43.51
Profit after tax 163.03 114.64 149.02 122.92
EPS 3.32 2.77 3.03 2.97

REVIEW OF PERFORMANCE & COMPANYS STATE OF AFFAIRS:

AT STANDALONE LEVEL:

Our revenue from operations on standalone basis increased to Rs.7279.04 Lakhs from Rs. 6288.61 Lakhs in the previous year, at a growth rate of 15.75%. Your Company has posted yet another impressive year of performance. Out of the total revenue approx. 79% has been generated from the sale of Frozen Products.

Your Company has incurred total expenses of Rs.7249.58 as compared to Rs.6279.43 Crores in the preceding financial year. Further, during the financial year under review, certain fixed expenses such as depreciation & amortization expenses decreased from Rs.120.12 lakhs to Rs. 91.25 lakhs and finance costs increased from Rs 254.12 lakhs to Rs. 265.85 lakhs respectively as compared to the preceding financial year.

Your Company earned a Net Profit of Rs.163.03 lakhs for the Financial Year ended 31st March, 2019 as compared to Rs.114.64 in the preceding financial year.

No amount is being proposed to be transferred to Reserves for the financial year ended 31st March, 2019.

AT CONSOLIDATED LEVEL:

Your Company owns 100% stake in Polar Cube Cold Storage Solutions Private Limited and Squarepeg Distribution Services Private Limited, both being its Wholly Owned Subsidiaries (WOSs). The consolidated financial performance, presented herewith, comprises the financial performance of the Company and that of the said WOSs mentioned above.

At consolidated level, revenue from operations stood at Rs.7635.13 lakhs and profit before tax stood at Rs. 182.16 lakhs. After providing for taxes, the PAT stood at Rs. 149.02.

CONSOLIDATED FINANCIAL STATEMENTS:

Your Company has prepared Consolidated Financial Statements in accordance with Accounting Standard 21 - "Consolidated Financial Statements", prescribed by the Companies (Accounts) Rules, 2014 of the Companies Act, 2013. The Consolidated Statements reflect the results of the Company along with that of its Subsidiaries. The Audited Consolidated Financial Statements together with the Independent Auditors Report thereon are annexed and form part of this Annual Report.

MATERIAL CHANGES AFTER THE CLOSURE OF THE FINANCIAL YEAR

No material changes have occurred after the close of the financial year ended 31st March, 2019 till the date of this report.

CHANGE IN THE NATURE OF BUSINESS:

There was no change in the nature of business of your Company during the financial year ended 31st March, 2019.

DIVIDEND:

In view of the ongoing expansion activities of the Company, it needs to plough back its profits into the business. Hence, your Board of Directors has not recommended any dividend for the financial year ended 31st March, 2019.

FUTURE OUTLOOK:

As the members are aware, your company has set up a new plant near Vijayawada ( A.P.) with an investment of Rs.30 Crores approximately in order to scale up the operations of the company, to cater to the increasing demands of the customers and to get access to the larger markets across the country. Most likely, in the next couple of months plant will get ready to start its commercial production.

During the period under review, your company has introduced new products Paneer Samosa, Soya Samosa, Shanghai Roll, Chocolate Roll, Paneer Roll under the frozen foods segment, which are getting good response from the market.

ISSUE AND ALLOTMENT OF SECURITIES / CHANGES IN SHARE CAPITAL

During the period under review, your company issued and allotted 5,00,000 Equity Shares of Rs.10 at a price of Rs 80 per share ( including premium of Rs 70 each) upon conversion of warrants into equal number of shares.

Consequent upon the aforesaid conversion of warrants into equity shares, the Capital Structure, as on 31.03.2019, stands as follows:

SI. No Particulars At the end of FY ended 2019 At the end of FY ended 2018
(Amt. in Rs.) (Amt. in Rs.)
1 Authorized Capital
65,00,000 Equity Shares of Rs.10each 6,50,00,000 6,50,00,000
2 Issued, Subscribed & Paid up Capital 5,36,67,750 4,86,67,750
53,66,775 Equity Shares of Rs.10 each

SUBSIDIARY, JOINT VENTURES & ASSOCIATE COMPANIES

Your company has two wholly owned subsidiaries in India.

• Polar Cube Cold Storage Solutions Private Limited is a wholly owned subsidiary of the company and is involved in the business of cold storage, warehousing, refrigerated store keepers etc.

• Squarepeg Distribution Services Private Limited is also a wholly owned subsidiary of the company and provides cargo services to your Company and to others.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of Subsidiaries/Associates in the prescribed format i.e. Form AOC-1 is provided as Annexure-I to this Report. This statement also provides the details of performance, financial position of each of the subsidiaries/associates.

Further, your Company undertakes that the Annual Accounts of the Subsidiary Companies and the related detailed information will be made available to its shareholders and to the shareholders of its Subsidiary Companies seeking such information at any point of time. Further, the Annual Accounts of the Subsidiary Companies shall also be kept open for inspection by any shareholder at its Registered office and that of the concerned Subsidiary Companies during the office hours.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each subsidiary, are available on our website www.tanvifoods.com

The company has no other joint ventures or associate companies as on till date.

TRANSACTIONS WITH RELATED PARTIES:

During the FY under review, transactions conducted by the Company pursuant to the Agreements entered into with its Related Parties during the FY 2018-19 were at an arms length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or any related party which may have a potential conflict with the interest of the Company at large.

As a matter of Companys Policy all Related Party Transactions are placed before the Audit Committee and the Board for its approval.

The details of related party transactions which were entered into during the previous years/ current year are provided in the Note No. 33 forming part of the notes to financial statements.

As per Section 134(3)(h) of the Companies act, 2013, the particulars of related party transactions as referred to in Section 188(1) of the Companies act, 2013 have been disclosed in Form No. AOC – 2 which is appended as Annexure –II to this Report.

DIRECTORS AND KEY MANAGERIAL PERSONS:

The Board of Directors is duly constituted

During the period under review, following changes took place in the offices of Directors/ KMPs:

Based on the recommendations of Nomination and Remuneration Committee, Mr A. Sarat Chandra Babu was re-appointed as ‘Whole Time Director ‘designated as ‘Chairman of the Company for a further period of 3 year w.e.f 1st April, 2019 by the Board of Directors of the Company in their meeting held on 30th March, 2019, subject to the approval of the members of the Company.

Further, in the same meeting your Company has appointed Mr. Avneet Singh as a Company Secretary & Compliance officer of the company in place of Mrs Shilpa Kotagiri who has resigned from the office of Company Secretary w.e.f 05.04.2019.

Mrs. A. Sarada retired by rotation in the previous AGM held on 26.09.2018 and was reappointed thereat.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and in accordance with provisions of Articles of Association of the Company, Mr A. Sarat Chandra Babu retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.

The composition of the Board of Directors & Key Managerial Personnel as on 31.03.2019 stands as follows:

1. Mr. A. Sarat Chandra Babu Chairman
2. Mrs. A. Vasavi Managing Director
3. Mrs. A. Sarada Non-Executive Director
4. Mr. Naveen Nandigam Independent Director
5. Mr. R. V. Radhakrishna Independent Director
Key Managerial Personnel:
1. Mr. A. Sri Nagaveer Chief Executive Officer (CEO)
2. Mr. M. Srinivas Reddy Chief Financial Officer (CFO)
3. Mrs. Shilpa Kotagiri Company Secretary (CS)

DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received respective declarations from both the Independent Directors confirming that they meet the criteria of independence as prescribed under sub-section (7) of Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (LODR) Regulations.

Independent Directors of your company has duly met during the year to discuss the Performance of the Non-Independent Directors. All independent directors were present during the meeting.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 134(5) of the Companies Act, 2013, the Directors confirm that:

i. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and that no material departures are made from the same ;

ii. The Directors 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 at the end of the Financial year and of the profits of the company for the period;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv. The annual accounts have been prepared on a going concern basis.

v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

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

MEETINGS OF THE BOARD OF DIRECTORS:

The meetings of the Board are scheduled at regular intervals to decide and discuss on business performance, policies, strategies and other matters of significance.

The Board duly met 5 times during the Financial Year 2018-19.The intervening gap between any two consecutive Board Meetings was within the period prescribed under the provisions of the Companies Act, 2013.

The names of members of the Board and their attendance at the Board Meetings are as under:

Name of the Director Number of Meetings attended/ Total Meetings held during the F.Y. 2018-19
Mr. A. Sarat Chandra Babu 3/5
Mrs. A. Vasavi 4/5
Mrs. A. Sarada 3/5
Mr. Naveen Nandigam 4/5
Mr. R. V. Radhakrishna 4/5

The details of the date of meeting and Directors attendance are as below:

SI.N o Date of Board Meetings A. Sarat Chandra Babu Naveen Nandigam R. V. Radhakrishna A. Vasavi A. Sarada
1. 30.05.2018 Absent Attended Attended Attended Attended
2. 24.08.2018 Attended Absent Absent Attended Attended
3. 14.11.2018 Attended Attended Attended Attended Absent
4. 28.02.2019 Absent Attended Attended Absent Attended
5. 30.03.2019 Attended Attended Attended Attended Absent

COMPOSITION OF BOARD COMMITTEES

We have in place all the Committees of the Board which are required to be constituted under the Companies Act 2013 & SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The details of the constituted committees and the attendance by each member of the Committee are as detailed hereunder:

Audit Committee

Name of Director Category No. of Meetings held during the year No. of Meetings Attended
Mr. Naveen Nandigam Chairman 2 2
Mr. R. V. Radhakrishna Member 2 2
Mrs. A. Vasavi Member 2 2

The Committee met 2 times during the year. The said Committee met on the following Dates

30.05.2018 14.11.2018

Nomination and Remuneration Committee

Name of Director Category No. of Meetings held during the year No. of Meetings Attended
Mr. Naveen Nandigam Chairman 2 2
Mr. R. V. Radhakrishna Member 2 2
Mrs. A. Sarada Member 2 2

The Committee met 2 times during the year. The said Committee met on the following Dates

14.11.2018 30.03.2019

Stakeholders Relationship Committee

Name of Director Category No. of Meetings held during the year No. of Meetings Attended
Mr. Naveen Nandigam Chairman 2 2
Mr. R. V. Radhakrishna Member 2 2
Mrs. A. Vasavi Member 2 2

The Committee met 2 times during the year. The said Committee met on the following Dates

14.11.2018 30.03.2019

Further, we have in place a Committee under the name and style "Internal Complaints Committee" which looks into various matters concerning harassment, if any, against women at workplace. Details of composition etc., of the said committee are provided in the section on Corporate Governance.

BOARD EVALUATION, NOMINATION AND REMUNERATION POLICY:

In terms of the requirements of the Companies Act, 2013 and the Listing Regulations, an annual performance evaluation of the Board is undertaken where the Board formally assesses its own performance with an aim to improve the effectiveness of the Board and the Committees.

During the year, Board Evaluation cycle was completed by the Company internally which included the evaluation of the Board as a whole, Board Committees and peer evaluation of directors. The exercise was led by the chairman of Nomination and Remuneration Committee Company. The evaluation process focused on various aspects of the functioning of the Board and Committees such as composition of the Board and its committees, experience and competencies, performance of special duties and obligations, governance issues etc., as on outcome of the exercise, it was noted that the Board as a whole is functioning as cohesive body which is well engaged with different perspectives.

Besides, your Company also surveys on the best practices prevalent in the Industry with respect to evaluation of the performance of the Board and its members. Your Company also avails services of professionals seeking their suggestions on the said matter. Based on the inputs received from the aforesaid sources and in accordance with the Policy of the Company, evaluation process is undertaken at appropriate time(s).

The performance evaluation of all the Directors and that of the Board as a whole and its committees was conducted based on the criteria and framework adopted by the board.

The Independent Directors reviewed the performance of Non-Independent Directors, the Board and the Chairperson of the Company. Further, the performance evaluation of Independent Directors was carried out by the entire Board, excluding the director being evaluated. Standard parameters such as attendance, acquaintance with business, communication inter se Board members, effective participation in Board deliberations, compliance with code of conduct, general thought process and inputs etc., are adopted in the process of evaluation. In particular, performance evaluation was also carried out for Mr. A. Sarat Chandra Babu, who retires by rotation and being eligible for re appointment.

None of the Independent Directors is due for reappointment.

POLICY ON DIRECTORS APPOINTMENT, REMUNERATION, ETC.:

The following policies are attached herewith and marked as Annexure – III and IV respectively and are available at www.tanvifoods.com:

a. Policy for selection of Directors and determining Directors Independence; and evaluation mechanism.

b. Remuneration Policy for Directors, Key managerial Personnel and other employees.

INTERNAL FINANCIAL CONTROLS:

Your Company has an adequate system of internal financial controls with reference to financial statements, including but not limited to safeguard and protection of assets from loss, their unauthorized use or disposition. All the transactions were properly authorized, recorded and reported to the Management. Your Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting in the financial statements. Your Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

SECRETARIAL STANDARDS

The Directors state that applicable secretarial standards i.e., SS-1 and SS-2 relating to ‘Meeting of the Board of Directors and ‘General Meetings respectively, have been duly followed by the Company.

STATUTORY AUDITORS:

As the members are aware, in the 9th Annual General Meeting (AGM) held on 30.09.2016 M/s. GV & Co., Chartered Accountants, Hyderabad, were appointed as Statutory Auditors of the Company for a period of 5 years, to hold office till the conclusion of 14th AGM.

INTERNAL AUDITORS:

The Board of Directors based on the recommendation of the Audit Committee has re-appointed M/s NSVR& Associates LLP, Chartered Accountant, Hyderabad ( Firm Registration No. 008801S/S200060), as the Internal Auditor of your Company. The Internal Auditor is submitting his report on half yearly basis.

SECRETARIAL AUDITORS REPORT:

Pursuant to provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 we have obtained a Secretarial Audit report from Mr. Anand Kumar C. Kasat, Practicing Company Secretary, Hyderabad. The copy of said Report is attached herewith and marked as Annexure –V.

OBSERVATIONS:

As observed by the Secretarial Auditor, the delay in filing of Listing Application with BSE was caused primarily on account of technical glitches. Despite several attempts, the Application could not be uploaded on the Portal. The Company is pursuing the matter with the Stock Exchange.

MAINTENANCE OF COST RECORDS:

Company is not required to maintain cost records as specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013

LOANS, GUARANTEES AND INVESTMENTS:

Your company has not made any new investment during the period under review, Further, the investments made by the Company in its following wholly owned subsidiaries continue to remain as such during the year under review:

• Squarepeg Distribution Services (P) Ltd.

• Polar Cube Cold Storage Solutions (P) Ltd.

FIXED DEPOSITS:

Your Company has neither accepted nor repaid any deposits during the financial year ended on 31st March, 2019. Further, there were no outstanding deposits as at the beginning or at any time during the financial year. Hence, no details are required to be provided pursuant to Rule 8 (5) (v) & (vi) of the Companies (Accounts) Rules, 2014.

Further, the details of unsecured loans borrowed from Directors during the FY ended 31st March, 2019 and / or outstanding as on the said date are as hereunder:

Sl. No. Name Borrowings during the year Amt. outstanding as on 31st March, 2019
(Rs. In lacs) (Rs. In lacs)
1. A. Vasavi 8.94 8.94

Further, the said Directors have provided declaration(s) in writing that the amounts lent by them are their own funds and not been given out of funds acquired by them by borrowing or accepting loans or deposits from others.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 ( 1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and as amended in respect of our employees, is attached herewith and marked as Annexure –VI(i).

Your company hereby affirms that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

Further, company do not have any employee whose remuneration falls within the purview of the limits prescribed under the provisions of Section 197 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and as amended i.e. Rs.8.5 lakhs per month or Rs.1.02 Crores per annum.

Further, details of top ten employees in terms of remuneration drawn during the financial year ended 31stMarch, 2018 as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and as amended is attached herewith and marked as Annexure-VI (ii).

RISK MANAGEMENT POLICY:

A risk management policy has been devised and adopted by the Board.

Pursuant to the said policy, the Board (a) oversees and approves the Companys enterprise wide risk management framework and ( b) oversees that all the risks that the organization may face such as material procurement, sale and distribution, financial, liquidity, security, legal, regulatory, reputational and other risks have been identified and assessed and ensures that there is an adequate risk management mechanism in place capable of addressing those risks.

The policy aims at sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business.

CORPORATE SOCIAL RESPONSIBILITY POLICY:

Since the Company does not fall within any of the parameters specified under the provisions of Section 135 of the Companies Act, 2013 read with Rules made thereunder, reporting pursuant to Section 134(3) (o) is Not Applicable.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE INFLOW AND OUTFLOW:

The details regarding Energy Conservation, Technology Absorption, Foreign Exchange Inflow and Outflow as required under Section 134 (3) (m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are given in the Annexure –VII and forms part of this Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

In accordance with the provisions of SEBI (LODR) Regulations, 2015, a Report on the Management Discussion and Analysis is set out in Annexure–VIII attached to this Report.

CORPORATE GOVERNANCE:

The Companys policy on Corporate Governance is simple and forward looking. Tanvi Foods aims at maximizing the stakeholders value legally, ethically and sustainably. It always seeks to ensure that the performance is driven by integrity. The board exercises its fiduciary responsibilities in the widest sense of the term. Company also endeavors to enhance long-term shareholder value and respect minority rights in all our business decisions.

Your Company, being listed on BSE SME segment, the provisions as regards Corporate Governance and related disclosures in the Annual Report are not applicable to it.

EXTRACT OF ANNUAL RETURN:

In accordance with Section 134 (3) (a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed Format i.e. Form MGT -9 is appended as Annexure –IX to this Report and the same is being uploaded on the website of the company and the web link is www.tanvifoods.com.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has in place a robust and full-fledged Vigil Mechanism and a Whistle Blower Policy for its directors and employees, to report concerns about unethical behavior, actual or suspected fraud or violation of the Companys code of conduct in terms of Section 177 ( 10) of the Act and Rules thereunder. The mechanism provides adequate safeguards against victimization of persons who use this mechanism.

Mr. Naveen Nandigam, Independent Director of the Company is the Head of the Vigil Mechanism Policy; all the employees have direct access to report their concerns and complaints. During the year under the review no complaint has been received.

The Vigil Mechanism and Whistle Blower Policy adopted by the Company is set out in Annexure X to this Report.

DISPATCH OF ANNUAL REPORTS

In compliance of the applicable provisions, we shall dispatch the Annual Report for the FY 2018-19 in electronic format to all our members whose E-Mail addresses are registered and updated with our Registrar & Transfer Agents. To all the other members, the Annual Report will be sent in physical format.

LISTING & TRADING

The equity shares of your Company are listed on the SME Platform of BSE Limited. The listing fee for the financial year 2019-20 has been duly paid. You may further note that the listing/ trading was never suspended at any time during the financial year 2018-19.

DEMATERIALIZATION OF SHARES

Total paid up share capital of your Company is in dematerialized form as on 31stMarch, 2019

SIGNIFICANT OR MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no orders passed by the Regulators / Courts which would impact the going concern status of your Company and its future operations. Further, we confirm that there were no instances of fraud to be reported by the Auditors vide their Report for the FY 2018-19.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE:

We strongly support the rights of all our employees to work in harassment – free environment. We have adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ( ‘POSH Act") and the Rules made thereunder. The policy aims to provide protection to Employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where Employees feel secure.

Further, we have in place a Committee under the name and style "Internal Complaints Committee" in compliance of POSH Act, which looks into various matters concerning harassment, if any, against women at workplace, addresses concerns and complaints of sexual harassment and recommends appropriate action. Details of composition etc., of the said committee are provided in the section on Corporate Governance.

We further confirm that during the year under review, there were no cases filed pursuant to the said Act.

ACKNOWLEDGEMENT:

Your Directors would like to express their profound gratitude for the assistance, support and cooperation received from the Banks, Government authorities, Business Partners, Customers and other Stakeholders for the confidence reposed in the Company.

Further, your directors also wish to place on record their sincere appreciation for the committed services, hard work, dedication and commitment of the Executives, Staff and Workers of the Company at all levels.

For and on behalf of the Board of
Tanvi Foods (INDIA) Limited
Sd/-
A. Sarat Chandra Babu
Chairman
DIN: 02589830
Place: Hyderabad
Date: 27/08/2019