Tarai Foods Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenng the 28 Annual Report, together with the audited statement of accounts of the Company for the year ended 31 March, 2018.

1. Statement of Company A airs:

a. financial Results & Performance:

The performance of the Company for the financial year ended 31 March, 2018 is summarized below:

financial Year ended 31 March, 2018 financial Year ended 31 March, 2017
Parcular s
(Rs. In Lacs) (Rs. In Lacs)
Gross Revenue 214.7 293.7
Less: Total Expenditure (235.5) (292.8)
Profit/(Loss) before Exceponal/ Extr aordinary
(20.8) 0.8
Items and Tax
-Exceponal It ems 7.06 -
-Extraordinary Items - 0.5
Profit/(Loss) before tax (13.7) 1.4
Tax Expenses - -
Profit/(Loss) for the period (13.7) 1.4
Other Comprehensive Income 0.6 -
Total Comprehensive Income for the Period (13.1) 1.4

The Company was in its twenty eighth year of operaons. During the year under review, the Gross revenue decreased to Rs. 214.7 Lacs as compared to Rs. 293.7 Lacs in the previous year. Further, the Company incurred a loss of Rs. 13.7 Lacs as compared to profit earned Rs. 1.4 Lacs during the previous year. The company focused its a enon only on producon and sale of fresh Mushrooms and the directors are hopeful of be er performance in the next year.

Adopon of Indian Accounng Standards ("IND AS")

The Company has adopted Indian Accounng Standards ("Ind AS") and accordingly these financial statements have been prepared in accordance with the same as required under secon 133 of the Companies Act, 2013 read with rules made there under. The date of transion to Ind AS is 1 April, 2017.

These financial statements for the year ended 31 March, 2018 are the Companys first Ind AS financial statements. The impact of transion has been accounted for in the opening reserves and the comparav the period gures have been reinstated accordingly.

Transfer to Reserves:

The company has not transferred any amount to Reserves of the Company during the financial year under review.

Dividend:

Your company has incurred losses during the year under review. Accordingly no dividend is recommended on the equity shares of the Company for the year ended 31 March, 2018.

Material changes and commitments subsequent to the Balance sheet:

Mr. Ashwini Kumar Pandey (DIN: 08198711) was appointed as an Addional Dir ector in capacity on Independent Director to hold o ce for a period of 5 year upto 13 August, 2023 subject to the approval of shareholders in the ensuing Annual General Meeng of the Compan y. Further

Mr. M.S. Grewal (DIN: 06525633) resigned from the directorship of the Company with the ect from 14 August, 2018.

MANAGEMENT DISCUSSION & ANALYSIS REPORT, REVIEW OF OPERATIONS DURING THE YEAR & FUTURE PLANS

(I) Industry structure and developments.

Mushroom farming is pracced in more than 100 countries and its producon is increasing at an annual rate of 6-7% presently. World producon of mushroom is over 27 million tons as per claims of Chinese Associaon of edible mushrooms. Indoor culv aon of mushrooms uliz es the verc al space and is regarded as the highest protein producer per unit area and me almost 100 mes more than the convenonal agriculture and animal husbandry. This high tech horcultur the venture has a promising scope to meet the food shortages without undue pressure on land. In India, mushroom producon shot up from near 11000 tons in 1992 over 1,20,000 tons in 2012. India produces about 600 million tons of agricultural waste annually and a major part of it are le out to decompose naturally or burnt in citu. This can the ecv ely be uliz ed to produce highly nutriv the food unlike mushrooms and spent mushroom substrate can be converted into organic manure for eld crops. Mushroom growing is highly labour oriented venture and two factors, i.e, availabilies of raw material and labour make mushroom growing economically pro table in India.

On the export front also, for the first me during 1994 India not only gured in the US imports but emerged as the II largest exporter of the canned mushrooms replacing Taiwan. Now a few commercial mushroom units are exporng c anned mushrooms to the Americans, European and other countries regularly

(ii) Opportunies Strength and Threats

Opportuni es

Macro-economic as well as industry specific indicaons point to enduring buoyancy in the domesc market, while the internaonal geographies

in which your Company operates are likely to be stable as well.

Changing demographics (young, higher disposable income, experimental, urbanizaon, willingness to spend) further fuelled by trends like a greater awareness of health and nutrion on one hand and more hedonism (especially the new a uent generaon) is rapidly enlarging the opportunity.

Development trends of Mushroom industry is based on the increasing consumer consciousness and demand for nutrious quality and organic products in domesc and internaonal market. Increasing interest in protecon of environment from the industrial polluon and environment friendly progress in mushroom producon and processing technologies resulng in tremendous growth in the producvity and producon 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 availabilies of raw materials and labour make mushroom growing economically pro table 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 composng. Besides, the moderate climate of the Tarai region is well suited to mushroom producon as temperature does not as high alike other parts of the country.

Awareness about food and medicinal values of mushrooms increasing quant av the use of mushrooms in the country thus creang be er 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 variaon. 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 this food items. This problem gets aggravated during peak producon months, also because there is no minimum support price from the Govt.

??High transportatton charges:

Although, agro and animal wastes are available in plenty in India but their availability are not evenly distributed. Due to diversi ed climate and topography of land, di erent kinds of crops are raised in di erent parts of the Country and producon/ manufacture have to pay heavy transport charges. The hike in diesel/petrol prices from me to me aggravates this problem.

??Compeutton: eg -Availability of canned Chinese mushroom at lower price.

??Unorganized producon and sale parcularly by seasonal farmers resulng in glut in market during winter months. This results in price cut in

the period.

??Lack of modern facilies to produce quality compost, casing material and spawn TFL is going to improve its facilies in this regard.

(iii) Segment wise & Product-wise performance:

The Company operates in a single segment. The product wise performance is as under:

? Fresh Mushrooms ????Mushroom Spawn ??? Compost for Mushroom

 

Product-wise performance
Sale of Finished Goods

 

Descripon

Current Year 2017-18

Previous Year 2016-17

Qty. (in MTs) Value (in Rs. In lacs) Qty. (in MTs) Value (in Rs. In Lacs)
Fresh Mushrooms 170.57 193.87 239.11 282.1
Mushroom Spawn 5.94 7.44 4.16 5.12
Compost for Mushroom

87.57

2.92

-

-

The company has completely diversi ed in Mushroom growing under ar cially controlled condions. It has been successful in creang

capacies of ton a day for Mushroom and is hopeful of expanding it to 1 ton a day in near future.

Management is consistently keeping close watch on the changing market scenario and the business strategy is reviewed regularly for achieving a

consistent growth by meeng the tough compeon successfully.

(iv) Risks and concerns:

Every business has inherent risks involved in it operaons, which may be either external or internal. The external factors are market compeon,

availability of cheaper substut the products, Government policies regarding ongoing polic al and economic changes in the imporng Country. The

Company may not have much control over such factors; however it is important to address these risks & concerns to mig ate 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 connuity and proacv the Management of related business environment are essenal for the risk management in the overall supply chain and business in general.

(v) Internal control systems and their adequacy.

The Company has an adequate system of internal controls to ensure that all acvies are monitored and controlled as well as transacons 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 Commi ee of the Board meets on quarterly basis and reviews the internal control systems as well as financial statements.

(vi) Discussion on financial performance with respect to operaonal performance:

The Company has diversi ed its operaons into Mushroom growing in ar cially controlled temperature seng and o ers spawn and compost

to mushroom growers.

(viii) Material developments in Human Resources / Industrial Relaons fr ont, including number of people employed

The Company lays due emphasis on sound Human Resource Management pracces and appraisal systems with focus on cordial employee relaons to ensure higher level of producvity and operaonal the ciency. Adequate the orts have been made to strengthen and develop its human resources as a key strength through connuous training inputs and focused development plan. As on 31st March 2018, the total numbers of permanent employees in the Company were 12 (Twelve).

The belief that great people create great organizaons has been at the core of the Companys approach to its people. We connued to make

signi cant investments for training in the areas of markeng excellence, customer service and building capabilies 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: NIL

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 impacng the going concern status and companys operaon in future.

2. Directors:

The Board of Directors of the Company is duly constut ed. During the year under review no director resigned from the directorship of the

Company.

a. Composion and Meengs of the Board:

The Board Comprises of Mr. G.S Sandhu, Ms. Kiran Sandhu, Mr. Ram Pyare Singh, Mr. Ganesh Kumar, Mr. Melvinder Singh Garewal and Mr.

st

Hakam Singh Saini as on 31 March, 2018. The meengs of Board of directors were duly held four mes on 30/05/2017, 14/08/2017, 14/11/2017 and 13/02/2018 in respect of which proper noces were given and the proceedings were properly recorded and the maximum me gap between 2 board meengs is as per the provisions of the Companies Act, 2013 readwith SEBI (Lisng Obligaons & Disclosure Requirement) regulaons, 2015. The details of the directors who a ended the meengs are given separately in the Corporate Governance report annexed separately. The Board has adopted all the recommendaons of Audit Commi ee.

b. Composion and Mee ng of Audit Commi ee:

The Audit Commi ee is duly constut ed. The Audit Commi ee comprises of Mr. Ganesh Kumar, Ms. Kiran Sandhu, Mr. Melvinder Singh Garewal and Mr. Hakam Singh Saini as the members of the Commi ee. The Audit Commi ee duly met Four (4) mes on 30/05/2017, 14/08/2017, 14/11/2017 and 13/02/2018 during the financial year. The details of the Members who a ended the meengs are given separately in the Corporate Governance report annexed separately.

c. Composion and Mee ng of Nomina on and R emuneraon Commi ee:

The Nominaon and R emuneraon Commi ee comprises of Mr. Ganesh kumar, Mr. Melvinder Singh Garewal, Mr. Hakam Singh Saini and Ms. Kiran Sandhu as the members of the Commi ee. There was no Nominaon and R emuneraon Commi ee meeng during the y ear under review.

d. Composion and mee ng of St akeholders Relaonship Committ ee:

The Stakeholders Relaonship Commi ee comprises of Mr. Ganesh Kumar, Mr. Melvinder Singh Garewal, Mr. Hakam Singh Saini and Ms.

Kiran Sandhu as the members of the Commi ee. There was no Stakeholders Relaonship Commi ee during the year under review.

e. Declaraon by Independen t Directors and their meeng:

The Company has received the requisite declaraons under secon 149(7) of the Companies Act, 2013 from each of the Independent directors in the start of the financial Year stang that they meet the criteria of independence as menoned under Secon 149(6) of the Act. During the year under review, the Independent Directors of the Company met once on 13/02/2018.

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, responsibilies in the Company, nature of the industry in which the Company operates, business model of the Company etc. f. Policy on Directors appointment and remuneraon:

The current policy is to have an appropriate mix of execuv the & non-execuv the and independent directors to maintain the independence of the board and separate its funcons of governance and management. The policy of the Company on Directors appointment and remuneraon including the criteria for determining the quali caons, posiv the aribut es, independence of a Director and other ma ers as provided under Secon 178(3) of the Companies Act, 2013 is as per the terms laid down in the Nominaon & Remuneraon policy of the Company. The Nominaon & remuneraon Policy of the Company is annexed as Annexure-1.

3. Auditors: a. Statutory Audit:

M/s Ra an Anil & Co., Chartered Accountants, A-90, Gali No. 6, 1 Floor, Madhu Vihar Market, Patparganj Bus Depot., Delhi, were appointed as

Statutory Auditors of the Company for a period of 5 years in the 24 Annual General Meeng ll the conclusion of 29 Annual General Meeng of the Company to be held in the year 2019. However, they had expressed their unwillingness to connue to act as Statutory Auditors of the company from the forthcoming Annual General Meeng of the Company. M/s. Sunil Vashisht & Co. Chartered Accountant (FRN: 005016N), having o ce situated at R-8, South Extension Part 2, New Delhi- 110049,is proposed to be appointed as the Statutory Auditors of the Company to hold the o ce for a period of 5 years in the ensuing Annual General Meeng of the Company. Further, the Company has received a wri en consent from M/s. Sunil Vashisht & Co. Chartered Accountant (FRN: 005016N), to act as the Statutory Auditor and Cer c ate from the Auditors to the the ect that their appointment, if made, would be in accordance with the provisions of Secon 141 of the Companies Act, 2013.

Reporng of frauds by auditors:

During the year under review, the auditors has not reported to the Board, under sub-secon (12) of secon 143 of the Companies Act, 2013 any instances of fraud commi ed against the Company by its o cers or employees, the details of which would need to be menoned in the Boards report.

Boards explanaon and Comments:

Auditors Responsibility Statement read with Clause 12 on Note 21: The Company has been repairing the plant on regular basis depending on the liquidity posion as per the need of the hour. Extensive repairs are made to the plant & machinery every year. The Company has also led a case with the High Court on Insurance Company towards this claim. However the esma te of the damage and repairs cannot be done unless all the insulaon from the walls, windows, floor etc. is removed.

Auditors Responsibility Statement read with Clause 9 on Note 21: Interest on secured term loans (IDBI Bank and IFCI Ltd.) with the secured lenders have not been provided for in the books of accounts as the company has entered into negoa ted selemen t with the Secured Lenders financial Instuons in 2009-10. The Company made a payment of Rs. 1 crore towards the said selemen t in earlier years as part of the selemen t but defaulted in the payment of further instalments. Both of the secured lenders have revoked the negoa ted selemen t but the company has approached them again for reselemen t of the ma er and is hopeful of selemen t in the near future. Current provision of interest of Rs. 28.99 crs due to the secured lenders along with Principal amount of Rs. 3.40 crs as per Books of Accounts is more than the selemen t 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.

Auditors Responsibility Statement read with Clause 10 on Note 21: The Company has approached the secured lenders for reselemen t and payment of Rs. 2, 05, 70,000/- was made in earlier years to these secured lenders towards the negoa ted selemen t which stand revoked as on date. On fully seling the dues of these secured lenders as per the selemen t, the company will be able to come out of the negav the networth and also revive its operaons fully. The company has also diversi ed in the eld of Mushroom, growing it in ar cially controlled temperature and is hopeful of revival of its operaons fully.

Other points are self-explanatory as given in various clauses on Note 21.

b. Secretarial Audit:

The Board has appointed M/s Santosh Kumar Pradhan, Praccing Company Secretary as the Secretarial Auditor for the financial Year 2017-18.

The secretarial audit report as required under secon 204 of the Companies Act, 2013 is annexed as Annexure 2 and forms part of this report.

Boards explanaon and Comments:

The Company has tried on roll services of a Company Secretary as Key Managerial Personnel. However, since the company is going through sever liquidity crunch, it is di cult to persuade the applicants to work on a reasonable salary. However, the company is commi ed to employ Company secretary in near future. c. Disclosure about Cost Audit:

The provisions of the cost audit and maintenance of cost records as specified by the Central Government under sub-secon (1) of secon 148 of the Companies Act, 2013, is not applicable on the Company and accordingly such accounts and records are not required to be made and maintained.

4. Annual Return:

The extract of Annual return as provided under sub-secon (3) of Secon 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 Secon 177(9) of the Companies Act, 2013 w as approved by the Board. The vigil mechanism shall provide for adequate safeguards against vicmiz aon of employ ees and directors who avail of the vigil mechanism and also provide for direct access to the Chairperson of the Audit Commi ee, in exceponal c ases.

Mr. Manjeet 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 o ences of serious nature may be brought to the a enon Mr. Ganesh Kumar, Chairman of the Audit Commi ee of the Company who shall a er hearing the concerned person award appropriate punishment to the o ender.

6. Deposits:

During the year under review, your company has not accepted any public deposits in terms of the provisions of Secon 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 pares:

The Company has not entered into any contracts and arrangements with related pares referred to in sub secon (1) of Secon 188 of the

Companies Act, 2013 and hence the Form AOC-2 is not required to be annexed.

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 operaons, which may be either external or internal. The external factors are market compeon, availability of cheaper substut the products, Government policies regarding power tari s and ongoing polic al and economic changes in the imporng Country. The Company may not have much control over such factors; however it is important to address these risks & concerns to mig ate 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 connuity and proacv the Management of related business environment are essenal f or 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 acvies ar the monitored and controlled as well as transacons ar the 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 Commi ee 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 vong 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 o er to buy back its shares.

13. Parcular s of Employees:

Informaon in accordance with the provisions of Secon 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and

Remuneraon of Managerial Personnel) Rules, 2014 is annexed as Annexure 4 and forms part of this report.

14. Energy Conservaon, Technology Absorpon and Foreign Exchange Earnings and Outgo:

Informaon in accordance with the provisions of Secon 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014 regarding conservaon of energy, technology absorpon and Foreign exchange earning & outgo of the Company were given as per Annexure 5 to this report.

15. Corporate Governance report:

A Comprehensive report on Corporate Governance as spula ted under Regulaon 34(3) of the SEBI (Lisng Obligaons & Disclosure

Requirements) Regulaons, 2015 is a ached to this report.

Your Company has obtained a cer c ate from the Statutory Auditor regarding the compliance of condions of Corporate Governance as

spula ted under Schedule V (E) the SEBI (Lisng Obligaons & Disclosure Requirements) Regulaons, 2015 and the same is annexed.

16. Formal Annual Evaluaon of Board of its own performance and that of its Commiuees and Directors:

Our Company has prescribed required parameters to evaluate the performance of the Board and its commi ees. 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 (Prevenon, Prohibion 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 acon taken by the employee or District o cer: N.A

The Company is in the process of constung Internal Complaints Commi ee under Sexual Harassment of Women at Workplace (Prevenon, Prohibion and Redressal) Act, 2013. The Internal Complaints Commi ee will provide adequate safeguard against Sexual Harassment Complaints and will provide direct access to the Chairperson of the Internal Complaints Commi ee. It will take steps to resolve the issues and a er hearing the concerned person award appropriate punishment to the o ender.

18. Disclosure under Secretarial Standard-1 (SS-1):

Adherence by a Company to the Secretarial Standards is mandatory as per Sub-secon (10) of Secon 118 of Companies Act, 2013. As per the disclosure requirement of para (9) of Secretarial Standard-1 (SS-1), the Company complies with the provisions of applicable Secretarial Standards in respect of the convening of the Board & General Meengs.

19. Directors Responsibility Statement:

Pursuant to the requirement under Secon 134(5) of the Companies Act, 2013, with respect to the Directors Responsibility Statement, it is hereby con rmed that: 1. in the preparaon of the annual accounts, the applicable accounng standards had been followed along with proper explanaon relang to material departures;

2. The Directors had selected such accounng policies and applied them consistently, and made judgments and esma tes that are reasonable and prudent so as to give a true and fair view of the state of a airs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

3. The Directors had taken proper and su cient care for the maintenance of adequate accounng records in accordance with the provisions of this Act for safeguarding the assets of the Company and for prevenng and detecng fraud and other irregularies

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 operang the ecv ely.

6. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operang the ecv ely.

APPRECIATION:

We wish to convey our sincere thanks to the Shareholders and various agencies of the Central Government, State Governments, financial Instuons, Companys Banker and Business Associates for their connued cooperaon extended to the Company. We also wish to record our deep appreciaon of the contribuon made by the employees at all levels.

By Order of the Board
Tarai Foods Limited
Place : Rudrapur
Date : 14.08.2018 Sd/-
Mr. G.S. Sandhu
Chairman
DIN: 00053527
Address: 118, Madan Lal Block,
Asian Games Village,
New Delhi- 110049.