, REVIEW OF OPERATIONS DURING THE YEAR &
FUTURE PLANS
(i) Industry structure and developments.
Indian food processing industry is widely recognized as a sunrise industry, having huge
potential for uplifting agricultural economy, creating of large scale processed food
manufacturing and food chain facilities and the resultant generation of employment and
export earnings. Indian food industry is expected to grow to US$ 280 billion by 2015 and
generate an additional employment for approximately 8.2 million people.
Mushroom farming is practiced in more than 100 countries and its production is
increasing at an annual rate of 6-7% presently. World production of mushroom is over 25
million tons as per claims of Chinese Association of edible mushrooms. Indoor cultivation
of mushrooms utilizes the vertical space and is regarded as the highest protein producer
per unit area and time - almost 100 times more than the conventional agriculture and
animal husbandry. This high tech horticulture venture has a promising scope to meet the
food shortages without undue pressure on land . In India, mushroom production shot up from
near 5000 tons in 1992 over 1 lac tons in 2010. India produces about 600 million tons of
agricultural waste annually and a major part of it are left out to decompose naturally for
burnt in citu. This can effectively be utilized to produce highly nutritive food unlike
mushrooms and spent mushroom substrate can be converted into organic manure for field
crops. Mushroom growing is highly labour oriented venture and two factors, i.e ,
availabilities of raw material and labour make mushroom growing economically profitable in
India.
On the export front also, for the first time during 1994 India not only figured in the
US imports but emerged as the IInd largest exporter of the canned mushrooms replacing
Taiwan. Now a few commercial mushroom units are exporting canned mushrooms to the
Americans, European and other countries regularly.
(ii) Opportunities and Threats.
Opportunities
Foods and vegetables - fast growing sector
Fruits and vegetables are one of the most important and fast growing sub-sectors of the
food processing industry. Over the last few years, there has been a positive growth in
ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruits and
vegetable products, tomato products, pickles, convenience veg spice pastes, processed
mushrooms and curried vegetables. The demand has increased because of the factors like
consumption by nuclear families, working women, students and single employees staying
alone. There are abundant opportunities in expanding the export market because of good
international demand for certain fruits and vegetable products. The Indian food processing
industry is primarily export oriented. Indias geographical situation gives it the unique
advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia
and Korea.
Macro-economic as well as industry specific (FMCG and Packaged Food) indications point
to enduring buoyancy in the domestic market, while the international geographies in which
your Company operates are likely to be stable as well.
Changing demographics (young, higher disposable income, experimental, urbanization,
willingness to spend) further fuelled by trends like a greater awareness of health and
nutrition on one hand and more hedonism (especially the new affluent generation) is
rapidly enlarging the opportunity.
Mushrooms:
Development trends of Mushroom industry is based on the increasing consumer
consciousness and demand for nutritious quality and organic products in domestic and
international market. Increasing interest in protection of environment from the industrial
pollution and environment friendly progress in mushroom production and processing
technologies resulting in tremendous growth in the productivity and production of
mushrooms.
Strength-
Mushrooms are grown seasonally as well as state-of-art environment controlled Crop room
in the commercial units. It is highly labour oriented venture and labour availability is
no constraint in the vicinity of Tarai Foods and two factors that is availabilities
of raw materials and labour make mushroom growing economically profitable in this region.
Moreover, Tarai foods Ltd. Rudrapur is located in the bowl of raw materials like
Wheat Straw, Sugar cane Bagasse & Chicken Manure required for composting. Besides,
the moderate climate of the Tarai region is well suited to mushroom production as
temperature does not as high alike other parts of the country.
Awareness about food and medicinal values of mushrooms increasing quantitative use of
mushrooms in the country thus creating better market for a product like fresh and
processed mushrooms. There is increasing market for post harvest products like pickles or
soup powder of mushrooms.
Threats
• Uncontrolled price structure
When there is a glut in the market, the price of certain food items falls down
considerably but as the demand increases or there is shortage of those food items in the
market the price rises up with a vast variation. Thus there is always an uncertainty in
market prices of most of the food items which reduces the amount of net profit and this
discourages the manufacturers/ producers of these food items. This problem gets aggravated
during peak production months, also because there is no minimum support price from the
Govt.
• High transportation charges:
Although, agro and animal wastes are available in plenty in India but their
availability are not evenly distributed. Due to diversified climate and topography of
land, different kinds of crops are raised in different parts of the Country and
production/ manufacture have to pay heavy transport charges. The hike in diesel/petrol
prices from time to time aggravates this problem.
• Commercial rate of electricity tariff:
Similarly, both small and big production/ manufacture have to pay electricity charges
at commercial rate, although mushroom farming is an agricultural activity. It has been
highlighted by the concerned scientific community during scientific gatherings, seminars,
meetings etc. many times, but no relief has been given. This has led to high cost of
production due to increased capital as well as recurring expenditure on production/
manufacturing affecting its competitiveness in world markets.
• Competition: eg -Availability of canned Chinese mushroom at lower price.
• High cost of energy tariff for year round production though the mushrooms have
been included as one of the agricultural crops.
• Unorganized production and sale particularly by seasonal farmers resulting in
glut in market during winter months. This results in price cut in the period.
• Lack of modern facilities to produce quality compost, casing material spawn and
processed products. TFL is going to improve its facilities in this regard.
To address these risks, the Company has a single point source supplier of Frozen/IQF
(Individually Quick Frozen products to the customers as per their requirements with high
quality products at a lower cost. Though the competition is fierce, the goodwill and the
quality of the products offered by the Company are great plus factors and the Company
expects to overcome the competition. The Company had expanded its product line both
horizontally as well as vertically.
(iii) Segment wise & Product-wise performance:
The Company operates in a single segment. The product wise performance is as under:
Processed Foods
• Fresh Mushrooms
• Frozen Peas
• Mushroom Spawn
• Frozen sweet corn
Product-wise performance Sale of Finished Goods
| Description |
Current Year |
P rovious Year |
|
Qty. (in MTs) |
Value (in Rs. In lacs) |
Qty. (in MTs) |
Value (in Rs. In Lacs) |
| Fresh Mush rooms |
153.65 |
177.77 |
8 8.32 |
96.91 |
| Frozen Peas |
61.27 |
19.01 |
2 30.12 |
82.66 |
| Frozen sweet corn |
10.63 |
04.79 |
15.38 |
07.04 |
| Mushroom Spawn |
8.73 |
05.45 |
5 |
04.06 |
The company has completely diversified in Mushroom growing in artificially controlled
temperature setting. It has been successful in creating capacities of Y ton a day for
Mushroom and is hopeful of expanding it to 1 ton a day in near future.
The overall current years production and realizations in Frozen Vegetable category has
increased . The Company hopes to continue with the increasing trends.
(iv) Outlook:
Food Processing Industry is of enormous significance for Indias development because of
the vital linkages and synergies that it promotes between the two pillars of the economy,
namely Industry and Agriculture. The growth potential of this sector is enormous and it is
expected that the food production will double in the next 5 years and the consumption of
value added food products will also grow at a fast pace. This growth of the Food
Processing Industry will be of immense benefits to the economy, raising agricultural
yields, meeting productivity, creating employment and raising the standard of very large
number of people throughout the Country, specially, in the rural areas. Economic
liberalization and rising consumer prosperity is opening up new opportunities for
diversification in food processing sector.
The nature of the Indian food processing market and the experiences of successful
Indian and MNC players indicate that this sector will grow substantially in future because
of the following reasons :
1. Effective distribution network and supply chain
2. Product range that is customized to suit local market requirements.
3. Superior processing technology
4. Brand building and marketing
Management is consistently keeping close watch on the changing market scenario and the
business strategy is reviewed regularly for achieving a consistent growth by meeting the
tough international competition successfully.
(v) Risks and concerns:
Every business has inherent risks involved in it operations, which may be either
external or internal. The external factors are market competition, availability of cheaper
substitute products, Government policies regarding power tariffs and ongoing political and
economic changes in the importing Country. The Company may not have much control over such
factors; however it is important to address these risks & concerns to mitigate their
overall impact on the business. Formal risk assessment and Management approach along with
the regular monitoring mechanism in the Company ensures that these risks are duly
addressed and well managed. High focus on safety of plant, its premises and people
continuity and proactive Management of related business environment are essential for the
risk management in the overall supply chain and business in general.
(vi) Internal control systems and their adequacy.
The Company has an adequate system of internal controls to ensure that all activities
are monitored and controlled as well as transactions are authorized, recorded and reported
correctly. The Company ensures adherence to all internal control policies and procedures
as well as compliance with all regulatory guidelines, which are supplemented by internal
audit regularly.
The Audit Committee of the Board meets on quarterly basis and reviews the internal
control systems as well as financial statements.
(vii) Discussion on financial performance with respect to operational performance:
The Company has diversified its operations into Mushroom growing in artificially
controlled temperature setting and offers a wide range Frozen and IQF (Individually Quick
Frozen) product range of peas, fruits/ vegetables as per the requirements of the
customers, meeting strict quality & hygiene standards. Canned peas in various shapes
and sizes are also available as per the customer requirement. The Company is a single
point source of supplier of Frozen, IQF products to the customers as per their
requirements.
(viii) Material developments in Human Resources / Industrial Relations front, including
number of people employed
The Company lays due emphasis on sound Human Resource Management practices and
appraisal systems with focus on cordial employee relations to ensure higher level of
productivity and operational efficiency. Adequate efforts have been made to strengthen and
develop its human resources as a key strength through continuous training inputs and
focused development plan. As on 31st March 2015, the total numbers of permanent employees
in the Company were _13.
The belief that great people create great organizations has been at the core of the
Companys approach to its people. We continued to make significant investments for
training in the areas of marketing excellence, customer service and building capabilities
for organized retail trade.
b. Key Changes during the year:
1. Changes in the Nature of business: NIL
2. Changes during the year in Directors and KMP:
Dr. Ram pyare Singh was appointed as Chief Financial Officer of the Company w.e.f. 30th
May, 2014 and Mr. Gurprit Singh Sandhu, Managing Director was re-designated as Key
Managerial Personnel of the Company w.e.f. 14th February, 2015.
In accordance with the provisions of Section 152 of the Companies Act, 2013 Mr. Gurprit
Singh Sandhu, retires by rotation at the ensuing Annual General Meeting of the Company and
being eligible offers himself for the re-appointment.
3. Changes in the Subsidiaries, Joint Venture and Associate Company: The Company
did not make any subsidiaries, Joint Ventures and Associate Company during the financial
year under review.
4. Details of the order passed by the Regulators/ Courts/ Tribunals: No order has
been passed by the regulators, courts or tribunals impacting the going concern status and
companys operation in future.
2. Directors:
The Board of Directors of the Company is duly constituted. During the year under review
no director resigned from the directorship of the Company.
a. Composition and Meetings of the Board:
The Board Comprises of Mr. G.S Sandhu, Ms. Kiran Sandhu, Mr. Ram Pyare Singh, Mr. Vijay
Jolly, Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as on 31st March, 2015. The
Board of Directors duly met Five times on 30/05/2014, 14/08/2014, 14/11/2014, 14/02/2015
and 02/03/2015 in respect of which meetings proper notices were given and the proceedings
were properly recorded. The details of the directors who attended the meetings are given
separately in the Corporate Governance report annexed separately. The Board has adopted
all the recommendations of Audit Committee.
b Composition and Meeting of Audit Committee:
The Audit Committee is duly constituted. The Audit Committee comprises of Mr. Vijay
Jolly, Ms. Kiran Sandhu, Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as the
members of the Committee. The Audit Committee duly met Four (4) times on 30/05/2014,
14/08/2014, 14/11/2014 and 14/02/2015 during the financial year. The details of the
Members who attended the meetings are given separately in the Corporate Governance report
annexed separately.
c. Composition and Meeting of Nomination and Remuneration Committee:
The Nomination and Remuneration Committee comprises of Mr. Vijay Jolly, Ms. Kiran
Sandhu, Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as the members of the
Committee. The Nomination and Remuneration Committee duly met twice (2) on 30/05/2014 and
14/08/2014 during the financial year. The details of the Members who attended the meetings
are given separately in the Corporate Governance report annexed separately.
d. Composition and meeting of Stakeholders Relationship Committee:
The Stakeholders Relationship Committee comprises of Mr. Vijay Jolly, Ms. Kiran Sandhu,
Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as the members of the Committee. The
Stakeholders Relationship Committee duly met once on 14/08/2014 during the financial year.
The details of the Members who attended the meetings are given separately in the Corporate
Governance report annexed separately.
e. Declaration by Independent Directors and their meeting:
The Company has received the requisite declarations under section 149(7) of the
Companies Act, 2013 from each of the Independent directors at the time of their
appointment stating that they meet the criteria of independence as mentioned under Section
149(6) of the Act.
During the year under review, the Independent Directors of the Company met once on 14th
August, 2014.
Training of Independent Directors:
The Company had provided suitable training to all the independent directors of the
Company to familiarize them with the Company, their roles, rights, responsibilities in the
Company, nature of the industry in which the Company operates, business model of the
Company etc.
f. Policy on Directors appointment and remuneration:
The current policy is to have an appropriate mix of executive & non-executive and
independent directors to maintain the independence of the board and separate its
functions of governance and management. The policy of the Company on Directors appointment
and remuneration including the criteria for determining the qualifications, positive
attributes, independence of a Director and other matters as provided under Section 178(3)
of the Companies Act, 2013 is as per the terms laid down in the Nomination &
Remuneration policy of the Company. The Nomination & remuneration Policy of the
Company is annexed as Annexure-1.
3. Auditors:
a. Statutory Audit: M/s Rattan Anil & Co., Chartered Accountants,, A-90, Gali
No. 6, 1st Floor, Madhu Vihar Market, PatparGanj Bus Depot., Delhi, Statutory Auditors of
the Company retire at the conclusion of the ensuing Annual General Meeting and being
eligible have offered themselves for reappointment as Statutory Auditors of the Company to
hold from the conclusion of 25th Annual General Meeting until the conclusion of 31st
Annual General Meeting of the Company. The Company has also received the written consent
of the auditor and a certificate from them to the effect that their appointment, if made,
would be in accordance with the provisions of Section 139 read with Section 141 of the
Companies Act, 2013.
Boards explanation and Comments:
Auditors Responsibility Statement read with Clause 13 on Note 22: The company has
been repairing the plant on regular basis depending on the liquidity position as per the
need of the hour. Extensive repairs are made to the plant and plant & machineries
every year. The company has also filed a case with the High Court on Insurance Company
towards this claim.
Auditors responsibility Statement read with Clause 9 on Note 22: The company had
entered into settlement with secured lenders and part payments have already been made to
these lenders as per the terms of the settlement in the earlier years. Although all the
secured lenders have already revoked the sanctioned Settlement. But the company has
approached them again and is hopeful to clear the default as per the negotiated
settlement. As per the discussions on the settlements, the interest are not payable to
them on the original liability and Current provision of Interest due to the secured
lenders along with Principal amount due to them at Rs. 2.40 Crs. (after taking into
consideration the payment made towards the negotiated settlement) as per Books of Accounts
is more than the settlement amount discussed with these lenders and in view of this, there
is no fresh provision of interest made for the year under review in the Books of Accounts.
Complete details have been provided in the clause 09 on note 22 which is self explanatory.
Auditors responsibility Statement read with Clause 11 on Note 22: The company has
approached the secured lenders for resettlement. Term Loan of IARC has been settled in
full and final during the year under review. A payment of Rs. 1 cr. was made in earlier
years to the secured lenders towards the negotiated settlement which stand revoked as on
date. On fully settling the dues of these secured lenders as per the settlement, the
company will be able to come out of the negative networth and also revive its operations
fully. The company has also diversified in the field of Mushroom, growing it in
artificially controlled temperature and is hopeful of revival of its operations fully.
Point No. (vii) (a) to the Annexure to the Auditors Report:
The company has defaulted in depositing the dues with the Provident Fund Authorities
due to the adverse financial condition but it has approached the Provident Fund
Authorities to work out the plans so that the payments can be made to them in
installments. It has already started making the payment to clear the Provident Fund dues.
The company is hopeful to clear the entire dues in the near future.
The company has outstanding dues of around Rs. 8.37 lacs towards the sales tax demand.
The company has taken up the steps to approach the relevant Authorities (including filing
of appeal) for cancellation of demand of Rs. 5.11 lacs . Rest of the Sales Tax demand of
Rs. 3.26 lacs has not been paid due to adverse liquidity position. The company is hopeful
to clear the dues soon.
Other points are self explanatory as given in various clauses on Note 22.
b. Secretarial Audit:
The Board has appointed M/s Santosh Ku. Pradhan, Practising Company Secretary as the
Secretarial Auditor for the Financial Year 2014-15. The secretarial audit report as
required under section 204 of the Companies Act, 2013 is annexed as Annexure 2 and
forms part of this report.
Boards explanation and Comments:
The Company has tried to take on roll services of a Company Secretary as Key Managerial
Personnel. However, since the company is going through severe liquidity crunch, it is
difficult to persuade the applicants to work on a reasonable salary. However, the company
is committed to employ Company secretary in near future.
4. Annual Return:
The extract of Annual return as provided under sub-section (3) of Section 92 is annexed
as Annexure 3 and forms part of this report.
5. Vigil Mechanism: (Whistle Blower Policy)
A Vigil Mechanism / Whistle Blower Policy, pursuant to the provisions of Section 177(9)
of the Companies Act, 2013 was approved by the Board. The vigil mechanism shall provide
for adequate safeguards against victimization of employees and directors who avail of the
vigil mechanism and also provide for direct access to the Chairperson of the Audit
Committee, in exceptional cases.
Mr. Manjit Singh, Plant Manager was appointed as the Vigilance Officer to hear the
grievances of the employees with any person in the company and take steps to resolve the
issues amicably and report the same to the Managing Director of the Company and offences
of serious nature may be brought
to the attention Mr. Vijay Jolly, Chairman of the Audit Committee of the Company who
shall after hearing the concerned person award appropriate punishment to the offender.
6. Deposits:
During the year under review, your company has not accepted any public deposits in
terms of the provisions of Section 73 of the Companies Act, 2013 read with the Companies
(Acceptance of Deposit) Rules, 2014.
7. Loans, Guarantees or investments:
The Company has not given any loan or provided any Guarantees and has not made any
investments during the financial year under review.
8. Contracts and arrangements with related parties:
The particulars of Contracts and arrangements with related parties referred to in sub
section (1) of Section 188 in AOC-2 is annexed as Annexure-4 and forms part of this
report.
9. Corporate Social Responsibility:
The provisions of Corporate Social Responsibility are not applicable on the Company.
10. Risk Management Policy:
Every business has inherent risks involved in it operations, which may be either
external or internal. The external factors are market competition, availability of cheaper
substitute products, Government policies regarding power tariffs and ongoing political and
economic changes in the importing Country. The Company may not have much control over such
factors; however it is important to address these risks & concerns to mitigate their
overall impact on the business. Formal risk assessment and Management approach along with
the regular monitoring mechanism in the Company ensures that these risks are duly
addressed and well managed. High focus on safety of plant, its premises and people
continuity and proactive Management of related business environment are essential for the
risk management in the overall supply chain and business in general.
11. Internal Financial controls:
The Company has an adequate system of internal controls to ensure that all activities
are monitored and controlled as well as transactions are authorized, recorded and reported
correctly. The Company ensures adherence to all internal control policies and procedures
as well as compliance with all regulatory guidelines, which are supplemented by internal
audit regularly.
The Audit Committee of the Board meets on quarterly basis and reviews the internal
control systems as well as financial statements.
12 Share Capital:
The Company has only one kind of Shares i.e. Equity shares with same voting rights. The
Company has not issued any sweat equity shares during the financial year under review. The
Company has not issued any further shares during the financial year under review. Further,
during the year under review, the Company has not made any offer to buy back its shares.
13 Particulars of Employees:
Information in accordance with the provisions of Section 197 of the Companies Act, 2013
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed as Annexure 5 and forms part of this report.
14. Energy Conservation. Technology Absorption and Foreign Exchange Earnings and Outgo:
Information in accordance with the provisions of Section 134 of the Companies Act,
2013, read with the Companies (Accounts) Rules, 2014 regarding conservation of energy,
technology absorption and Foreign exchange earning & outgo of the Company were given
as per Annexure 6 to this report.
15. Corporate Governance report:
A Comprehensive report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement is attached to this report.
Your Company has obtained a certificate from the Statutory Auditor regarding the
compliance of conditions of Corporate Governance as Stipulated in the Clause 49 of the
Listing Agreement and the same is annexed.
16. Formal Annual Evaluation of Board of its own performance and that of its Committees
and Directors:
Our Company has prescribed required parameters to evaluate the performance of the Board
and its committees. It is always recognized that the Board comprises appropriately
qualified and professional people with broad range of experience.
17. Disclosure under the Sexual Harassment of Women at workplace (Prevention.
Prohibition and Redressal) Act. 2013:
The details are as follows:
1. Number of Complaints of Sexual Harassment received in the year: Nil
2. Number of Complaints disposed during the year: N.A
3. No. of cases pending for more than ninety days:Nil
4. No. of workshops or awareness programme against Sexual harassment carried out: Nil
5. Nature of action taken by the employee or District officer: N.A
18. Directors1 Responsibility Statement:
Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with
respect to the Directors Responsibility Statement, it is hereby confirmed that:
1. in the preparation of the annual accounts, the applicable accounting standards had
been followed along with proper explanation relating to material departures;
2. 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 and of
the profit of the Company for that period;
3. 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
4. The Directors had prepared the annual accounts on a going concern basis; and
5. The directors had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively.
6. 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.
APPRECIATION:
We wish to convey our sincere thanks to the Shareholders and various agencies of the
Central Government, State Governments, Financial Institutions, Companys Banker and
Business Associates for their continued cooperation extended to the Company. We also wish
to record our deep appreciation of the contribution made by the employees at all levels.
|
By Order of the Board |
|
Tarai Foods Limited |
|
Sd/- |
| Place: Rudrapur |
|
| Date: 14th August, 2015 |
Mr. G.S. Sandhu |
|
Chairman |
|
DIN:00053527 |
|
Address: 118, Madan Lal Block, |
|
Asian Games Village, |
|
New Delhi- 110049. |
+91-9892691696
