Vidhi Specialty Food Ingredients Ltd Directors Report.

To,

The Members,

Vidhi Specialty Food Ingredients Limited

(Formerly known as ‘Vidhi Dyestuffs Manufacturing Limited)

Your Directors take pleasure in presenting the Twenty-Fifth Annual Report on the business and operations of your Company together with the Audited Financial Statement for the financial year ended March 31, 2018.

1. Financial Summary or Highlights:

The Ministry of Corporate Affairs (‘MCA) on February 16, 2015, notified the Companies (Indian Accounting Standards)

Rules, 2015. It states that, Indian Accounting Standards (Ind AS) are applicable to the Companies in a phased manner from April 1, 2017 with a transition date of April 1, 2016. Ind AS has replaced the previous Indian GAAP prescribed under section 133 of the Companies Act, 2013 (including any statutory modification(s) or re-enactment or amendments thereof) (‘the Act) read with Rule 7 of the Companies (Accounts) Rules, 2014. Ind AS is applicable to your Company for the financial year commencing from April 1, 2017. The reconciliations and descriptions of the effect of the transition from previous GAAP to Ind AS have been set out in Note No. 30 in the Notes to Accounts in the Financial Statements. The figures for the Financial Year ended March 31, 2018 are also Ind AS compliant.

The financial highlights of the Company are as follows:

(Rs. in lakhs)
Particulars Current Year Previous Year
2017-18 2016-17
Total Income 21,740.99 20,767.15
Total Expenditure (excluding Depreciation) 19,045.01 18,181.11
Profit for the year before providing Depreciation 2,695.98 2,586.04
Less: Depreciation 249.50 225.87
Less: Exceptional Items Nil Nil
249.50 225.87
Profit before Tax 2,446.48 2,360.17
Less: Provision for Taxation
Current Year 851.68 785.54
Earlier Year 12.52 32.78
Deferred Tax 11.08 76.42
875.28 894.74
Profit after Tax 1,571.21 1,465.43
Add: Other Comprehensive Income 0.10 0.95
Total Comprehensive Income 1,571.31 1,466.38
Add: Profit brought forward from Previous Year 5,377.77 4,540.30
Total Profit in Balance Sheet 6,949.08 6,006.68
Appropriation:
Dividend Paid 399.56 399.56
Transfer to General Reserve 157.13 145.73
Dividend Distribution Tax 83.61 83.61
Balance Profit carried to Balance Sheet 6,308.79 5,377.77

2. Financial Performance, Operations and State of the Companys affairs:

During the year under review, Profit before Tax for the year was 2,446.48 lakhs as against 2,360.17 lakhs in the previous year.

Total Revenue from continuing operations for the year ended March 31, 2018 aggregated to 21,700.24 lakhs as against 20,685.03 lakhs achieved during the previous year. Profit after Tax from continuing operations for the year ended March 31, 2018 was 1,571.20 lakhs as against 1,465.43 lakhs earned during the previous year.

The financial performance is discussed in detail in the Management Discussion and Analysis Report which forms part of the Annual Report.

The Company has manufactured 3,037.89 MT of food colours against 2,514.05 MT in the previous year. Your Directors assure to maintain the growth momentum in coming years and strive for bright future of your Company.

3. Change in the nature of business, if any:

The Company is engaged in the business of manufacturing and trading in synthetic food colours and chemicals. There was no change in nature of business activity during the year.

4. Dividend:

Your Directors are pleased to recommend a finaldividend of 0.20/- (Twenty Paisa Only) per equity share of 1/- each fully paid up (i.e. 20%) for the financial year ended March 31, 2018. The total outflow on dividend account will be 99.89 lakhs (excluding Dividend Distribution Tax).

The dividend payment is subject to the approval of the Members at the ensuing Annual General Meeting (‘AGM) and be paid to the Members whose names appear in the Register of Members/Beneficial Holders as on Record Date/Book Closure Date fixed for the said purpose.

The dividend, if declared at the AGM, would be paid/dispatched within thirty days from the date of declaration of dividend to those persons or their mandates: l whose names appear as beneficialowners as at the end of the business hours on Friday, September 21, 2018 in the list of the Beneficial Owners to be obtained from the Depositories, i.e. National Securities Depository Limited [NSDL] and Central Depository Services (India) Limited [CDSL], in respect of the shares held in electronic/dematerialized mode; and l whose names appear as Members in the Register of Members of the Company as on Friday, September 21, 2018 after giving effect to valid share transfers in physical forms lodged with the Company/Registrar & Share Transfer Agent, in respect of the shares held in physical mode.

In line with our focus on enhancing shareholder returns and in view of the Companys strong cash generation and positive growth momentum, the Board of Directors decided to distribute profits to its Members and accordingly the Board of Directors had declared interim dividends during the financial year 2017-18 as per details given below:

Type of Dividend Date of Board Meeting Rate of Dividend Per share Dividend Total Outflow*
1st Interim Dividend 25.09.2017 20% per share 0.20/- per share 99.89 lakhs
2nd Interim Dividend 24.11.2017 20% per share 0.20/- per share 99.89 lakhs
3rd Interim Dividend 14.02.2018 20% per share 0.20/- per share 99.89 lakhs

*excluding Dividend Distribution Tax paid by the Company

Total dividend payout for the financial year 2017-18 is 0.80/- per equity share of 1/- each against 0.80/- per equity share for previous year.

Further, the details of unclaimed dividend and due dates for transfer of unclaimed dividend to IEPF account has been given in Notes to the Notice calling Twenty-Fifth AGM.

5. Reserves:

The Board, during the year under review, has transferred 157.13 lakhs (PY 145.73 lakhs) to General Reserves.

6. Directors and Key Managerial Personnel:

As on the date of this Report, your Company has 8 (Eight) Directors consisting of 4 (Four) Independent Directors. 2 (Two) are Executive Directors and 2 (Two) are Non-Executive Directors, including a Woman Director.

In pursuance of the provisions of Section 152(6) of the Act and Articles of Association of the Company, Mr. Mihir B. Manek (DIN: 00650613) retires by rotation from the Board in the ensuing AGM and, being eligible for re-appointment, has offered himself for re-appointment. The Board of Directors recommends his re-appointment to the Members of the Company.

During the year under review, Mr. Chetan P. Bavishi (DIN: 01978410), Independent & Non-Executive Director, has resigned from the Board of Directors of the Company with effect from June 13, 2018 due to personal commitments and other pre-occupations. The Board of Directors places on record their appreciation for the valuable contributions made by Mr. Chetan P. Bavishi (DIN: 01978410).

On the recommendation of the Nomination and Remuneration Committee, the Board of Directors in their meeting held on Monday, September 25, 2017 has re-appointment Mr. Bipin M. Manek (DIN: 00416441) as the Chairman and Managing

Director of the Company w.e.f. November 1, 2017 for a further period of five financial years i.e. till October 31, 2022. The said re-appointment was made subject to the approval of the Members. The approval of the Members was received at an Extra-ordinary General Meeting of the Company held on Thursday, March 29, 2018.

The Securities and Exchange Board of India (‘SEBI) has vide its Notification No. SEBI/LAD-NRO/GN/2018/10 dated May 9, 2018 issued the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 (‘the Amendment Regulations) which brought amendments in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations). The Amendment Regulations inserted Regulation 17(1A), 17(6)(ca) and 17(6)(e) in the Listing Regulations, to be effective from April 1, 2019. According to the Amendment Regulation 17(1A), a person who has attained the age of seventy five years can be appointed or continue as a Non-Executive Director of any listed entity only after the approval of the Members by way of a Special Resolution is obtained. Mr. Vijay Atre (DIN: 00416853) and Mr. Prafulchandra Shah (DIN: 00417022) have already attained the age of seventy five years. Thus, in order to comply with the above amendment, Special Resolutions are proposed in the ensuing AGM for Mr. Vijay Atre (DIN: 00416853) and Mr. Prafulchandra Shah (DIN: 00417022) to continue to hold the office of a Non-Executive Director and an Independent Non-Executive Director of the Company, respectively, on existing terms and conditions.

Further, according to the Amendment Regulation 17(6)(ca), approval of the Members by way of a Special Resolution shall be obtained every year, in which the annual remuneration payable to a single Non-Executive Director exceeds fifty per cent of the total annual remuneration payable to all the Non-Executive Directors, giving details of the remuneration thereof.

Since payment of remuneration to Mr. Vijay Atre (DIN: 00416853) as a Non-Executive Director is more than fifty per cent of the total annual remuneration payable to all the Non-Executive Directors, in order to comply with this amendment and continue to pay him a remuneration on his existing scale during the financial year 2019-20, a Special Resolution is proposed in the ensuing AGM.

According to the Amendment Regulation 17(6)(e), if the aggregate annual remuneration payable to more than one Executive Director who is a Promoter or is a Member of the Promoter Group, exceeds 5% of the net profits of the Company calculated as per Section 198 of the Act then approval of the Members by way of a Special Resolution is required. Such approval of the Members under this provision shall be valid only till the expiry of the term of such Director. The approval of the Members by way of a Special Resolution is required since the Company has more than one Promoter Executive Director, i.e. Mr. Bipin M. Manek (DIN: 00416441) and Mr. Mihir B. Manek (DIN: 00650613), and remuneration paid to them is in excess of 5% of the net profits of the Company calculated as per Section 198 of the Act, even though the annual remuneration payable to the Executive Directors is within the limit of 5% and 10% as specified u/s 197(1) of the Act.

The Board recommends the aforesaid re-appointment and continuation as the Directors of the Company. The Board also recommends the approval for payment of aggregate annual remuneration to the Promoter-Executive Directors/Members of the Promoter Group exceeding 5% of the net profits of the Company and the payment of aggregate annual remuneration to Mr. Vijay K. Atre (DIN: 00416853) as a Non-Executive Director of the Company, which exceeds fifty per cent of the total annual remuneration payable to all the Non-Executive Directors.

The Company has received declarations from all the Independent Directors of the Company pursuant to the provisions of Section 149(7) of the Act, stating that they meet the criteria of independence as provided under the Act and the Listing Regulations and that they are not disqualified to become Directors under the Act; and in the opinion of the Board of Directors, all the Independent Directors fulfill the criteria of independence as provided under the Act read with the Listing

Regulations and that they are independent of the Management.

Further, at the time of the appointment of an Independent Director, the Company issues a formal letter of appointment outlining his role, function, duties and responsibilities. The format of the letter of appointment is available on our website at http://www.vidhifoodcolour.com/financials.php?m=52

Brief resume and other details of the Director proposed to be re-appointed and Directors seeking approval for continuation of holding the office as the Non-Executive Directors at the AGM, as stipulated under the Listing Regulations and Secretarial Standard-2, has been furnished separately in the Notice convening the AGM read with the Annexure thereto forming part of this Report.

Details of the number of meetings of the Board of Directors and Committees and attendance at the meetings have been furnished in the Report on Corporate Governance.

Following persons are designated as Key Managerial Personnel (KMP):

• Mr . Bipin M. Manek (DIN: 00416441), Chairman and Managing Director

• Mr . Mitesh D. Manek, Chief Financial Officer

• Ms. Kalika V. Dabholkar, Company Secretary and Compliance Officer

7. Board Evaluation:

The Board of Directors is committed to continued improvement in its effectiveness. Accordingly, the Board participated in the annual formal evaluation of its performance. This was designed to ensure, amongst other things, that the Board, its Committees and each Director continue to contribute effectively. As per Section 134(3)(p) of the Act, a statement indicating the manner in which formal annual evaluation was made by the Board of their performance and that of its Committees and individual Directors, has to be furnished to the shareholders as part of the Boards Report. Further, the Independent Directors as part of their mandate under Schedule IV of the

Act need to make an evaluation of performance of the constituents of the Board apart from their self evaluation. Under this process, a structured questionnaire was prepared after taking into consideration inputs received from the Directors, setting out parameters of evaluation; the questionnaire for evaluation are to be filled in, consolidated and discussed with the Chairman. The evaluation by the Independent Directors has been undertaken at their meeting held on August 16, 2017. The Board of Directors undertook evaluation of Independent Directors at their meeting held on February 14, 2018 and placed on its record that the Independent Directors have the requisite qualification, expertise and track record for performing their duties as envisaged under the Law, and they add value in the decision making process of the Board.

The criteria for evaluation of performance of Directors, the Board as a whole and the Boards Committee, are summarized in the table given below:

Evaluation of Evaluation by Criteria
Non-Independent Director (Executive) Independent Directors Transparency, Leadership (business and people), Governance and Communication
Non-Independent Director (Non-Executive) Independent Directors Preparedness, Participation, Value addition, Governance and Communication
Independent Director All other Board Members Preparedness, Participation, Value addition, Governance and Communication
Chairman Independent Directors Meeting dynamics, Leadership (business and people), Governance and Communication
Committees Board Members Composition, Process and Dynamics
Board as a whole Independent Directors Composition, Process and Dynamics

8. Board Familiarization Programmes:

At the time of appointment of a new Director, through the induction process, he/she is familiarized with the Company, the Directors roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. Detailed presentations are made before the Board Members at the Board and its Committee

Meetings covering various areas including business, strategy, financial performance and forecast, compliances/regulatory updates, audit reports, risk assessment and mitigation, industry, roles, rights, responsibilities of Independent Directors, etc.

Familiarization Programmes for Independent Directors:

The Familiarization Programme aims to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. All Independent Directors attended the orientation and familiarization programmes held during the financial year 2017-18.

The details of training and familiarization programmes are available on our website at http://www.vidhifoodcolour.com/ financial/code_policies/familiarisation_programe_for_independent_director.pdf

9. Policy on the Directors appointment and remuneration:

The Companys Policy on the Directors appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors and other matters as provided under Section 178 of the Act is annexed to this Report as the Nomination & Remuneration Policy and appended as Annexure A to this Report.

10. Number of meetings of the Board of Directors:

The Board of Directors met 7 (Seven) times during the Financial Year under review. The intervening gap between any two meetings was not more than 120 days as prescribed under the Act. Details of the dates of Board Meetings and the attendance of the Directors at the Board Meetings are provided separately in the Report on Corporate Governance.

11. Audit Committee:

The Audit Committee of the Company consists of the following Directors as on the date of this Report:

Name Designation Category
Mr. Nirenbhai D. Desai (DIN: 01978382) Chairman Non-Executive, Independent
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive, Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive, Independent
Mr. Mihir B. Manek (DIN: 00650613) Member Executive

*resigned from the Board of Directors of the Company with effect from June 13, 2018. Thus, he ceased to be the Member of the Audit Committee.

The Internal Auditors of the Company report directly to the Audit Committee. All the recommendations of the Audit Committee were accepted by the Board of Directors. Brief description of terms of reference and other relevant details of the Audit Committee have been furnished in the Report on Corporate Governance.

12. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee of the Company comprises of the following Directors as on the date of this Report:

Name Designation Category
Mr. Nirenbhai D. Desai (DIN: 01978382) Chairman Non-Executive, Independent
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive, Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive, Independent
Mrs. Pravina B Manek (DIN: 00416533) Member Non-Executive, Promoter

*resigned from the Board of Directors of the Company with effect from June 13, 2018. Thus, he ceased to be the Member of the Nomination and Remuneration Committee.

Brief description of terms of reference and other relevant details of the Nomination and Remuneration Committee have been furnished in the Report on Corporate Governance.

13. Stakeholders Relationship Committee:

The Stakeholders Relationship Committee of the Company comprises of the following Directors as on the date of this Report:

Name Designation Category
Mrs. Pravina B. Manek (DIN: 00416533) Chairperson Non-Executive, Promoter
Mr. Prafulchandra A. Shah (DIN: 00417022) Member Non-Executive, Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive, Independent

*resigned from the Board of Directors of the Company with effect from June 13, 2018. Thus, he ceased to be the Member of the Stakeholders Relationship Committee.

Brief description of terms of reference and other relevant details of the Stakeholders Relationship Committee have been furnished in the Report on Corporate Governance.

14. CSR Committee:

The constitution, composition, quorum requirements, terms of reference, role, powers, rights, obligations of Corporate Social Responsibility Committee (‘CSR Committee) are in conformity with the provisions of Section 135 and all other applicable provisions of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 and all other applicable rules made under the Act.

The CSR Committee comprises of the following Directors as on the date of this Report:

Name Designation Category
Mr. Prafulchandra A. Shah (DIN: 00417022) Chairman Non-Executive, Independent
Mr. Chetan P. Bavishi (DIN: 01978410)* Member Non-Executive, Independent
Mr. Nirenbhai D. Desai (DIN: 01978382) Member Non-Executive, Independent
Mr. Rahul C. Berde (DIN: 06981981) Member Non-Executive, Independent

*resigned from the Board of Directors of the Company with effect from June 13, 2018. Thus, he ceased to be the Member of the Corporate Social Responsibility Committee.

During the financial year under review, the Committee met twice on August 16, 2017 and February 14, 2018.

Brief description of terms of reference of the Committee inter-alia includes:

• formulate and recommend to the Board of Directors (Board), a Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Act;

• approve CSR activities;

• recommend to the Board the amount of expenditure to be incurred on the CSR activities;

• monitor the CSR Policy of the Company from time to time;

• institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the Company; and

• carry out any other functions as authorized by the Board from time to time or as enforced by statutory/regulatory authorities.

CSR Policy development and implementation:

The CSR Policy is available on the Companys website at: http://www.vidhifoodcolour.com/financial/code_policies/csr_policy.pdf

Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure B to this Report.

15. Vigil Mechanism:

The Company has a ‘Whistle Blower Policy/‘Vigil Mechanism in place. The objective of the Vigil Mechanism is to provide the employees, Directors, customers, contractors and other stakeholders of/in the Company an impartial and fair avenue to raise concerns and seek their redressal, in line with the Companys commitment to the highest possible standards of ethical, moral and legal business conduct and fair dealings with all its stakeholders and constituents and its commitment to open communication channels. The Company is also committed to provide requisite safeguards for the protection of the persons who raise such concerns from reprisals or victimization, for whistle blowing in good faith. The Board of Directors affirms and confirmsthat no personnel have been denied access to the Audit Committee. The Policy contains the provision for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases.

Vigil Mechanism cum Whistle Blower Policy is available on the Companys website at: http://www.vidhifoodcolour.com/financial/code_policies/vigil_mechanism.pdf

16. Audit Report: a) Statutory Audit Report:

The Company has received a modified opinion in the Auditors Report for the financial year 2017-18 which read as under:

The Provision for gratuity as required Benefits" has not been made in current year. The perIndAS19-"Employee impact of same cannot be ascertained in absence of audit evidence (Actuarial Report) which constitutes a departure from the Ind AS 19 "Employee Benefits". Consequently, the employee cost and short term & long term provisions are understated, profit for the year and other equity are overstated.

The Managements reply to the above audit observation is as follows:

The Management of the Company is in the process of obtaining actuarial valuation report to adopt Ind AS 19. The Management is of the opinion that the provisions related to employee benefits made in the financial statement are adequate. Thus, the impact of understatement of employee cost and short term & long term provisions and the consequential overstatement of profit for the year and other equity would be minimal. Comments given in Annexure to the Auditors Report are self explanatory.

b) Secretarial Audit Report:

The Board of Directors had appointed M/s. Hemanshu Kapadia & Associates, Company Secretaries (FCS: 3477 and C.P. No.: 2285), to conduct Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is appended asAnnexure C to this Report.

The Secretarial Audit Report dated August 10, 2018 contains two observations. The observations of the Secretarial Auditors and the reply of the Management for the same are as under:

Sr. Secretarial Auditors Observation Reply from the Management
No.
1 There was a minor delay in transferring the amount of 1st interim dividend declared for the financial year 2017-18 in the Scheduled Bank. The delay in transferring the amount was on account of system upgradation carried out by the Corporation Bank with whom the Company opened the Bank Account. Hence, there was a minor delay.
2 The Company has not uploaded e-Form IEPF- 2 pertaining to details of Unclaimed & Unpaid Dividend amounts as on the date of the AGM held for the financialyear 2016-17 with ROC/MCA within the stipulated time. The Company is in the process of reconciliation of the Statement of Unpaid/Unclaimed Dividend amounts received by the Bank and the Registrar & Share Transfer Agents (R & TA) since there was a difference in the amounts reported by both of them. On completion of reconciliation, the Company shall file the e-Form IEPF with ROC/MCA.

17. Auditors:

a) Statutory Auditors:

On the recommendation of the Audit Committee and the Board, the Members, in their Twenty-Fourth Annual General Meeting has appointed M/s. JMR & Associates, Chartered Accountants, Mumbai (Firm Registration No: 106912W) (‘JMR) as the Statutory Auditors of the Company for a period of five consecutive years from the conclusion of the Twenty-Fourth AGM of the Company till the conclusion of the Twenty-Ninth AGM to be held for the financial year 2021-22. In view of provisions of proviso to Section 139(1) of the Act, the said appointment was made subject to ratification of their appointment in subsequent AGMs. Pursuant to the Companies (Amendment) Act, 2017, the said proviso was omitted with effect from May 7, 2018. In view of the same, no ratification of appointment of Auditors will be required every year. However, as at the time of appointment, i.e. as at the Twenty-Fourth AGM, it was decided to ratify appointment of the Statutory Auditors in subsequent AGMs. Accordingly, it is recommended to ratify their appointment in this AGM for their remaining tenure and payment of remuneration.

Act and the Companies (Audit JMR has furnished and Auditors) Rules, 2014 and confirmed certificate their eligibility in terms of the provisions of Section 141 and all other applicable provisions of the Act, read with the applicable Rules thereto.

b) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Hemanshu Kapadia & Associates, Practicing Company Secretaries (FCS: 3477 and C.P. No.: 2285), to undertake the Secretarial Audit of the Company for the financial year 2018-19 and issue Secretarial Audit Report as required under the Act.

c) Internal Auditors:

Pursuant to the provisions of Section 138 of the Act read with Rule 13 of Companies (Accounts) Rules, 2014 and on the basis of the recommendation of Audit Committee, the Board of Directors in their meeting held on May 23, 2018 had appointed M/s. Rahul Gondhiya & Associates, Chartered Accountants, Mumbai (Firm Registration Number: 133649W) as the Internal Auditors of the Company for the financial year ended March 31, 2019.

18. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The information as per Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 with respect to Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and Outgo are given in Annexure D to this Report.

19. Managerial Remuneration and Particulars of Employees:

Disclosures pertaining to remuneration and other details as required under section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure E to this Report.

20. Extract of Annual Return:

In accordance with Section 134(3)(a) read with Section 92(3) of the Act, an extract of the Annual Return in Form MGT-9 is placed on the website of the Company and same can be downloaded by clicking on the following link: http://www.vidhifoodcolour.com/financial/MGT-9_201718.pdf

21. Share Capital & Listing of Securities:

During the financial year under review, the Company has not issued:

• any equity shares with differential rights as to dividend, voting or otherwise;

• any equity shares (including sweat equity shares) to employees of the Company under any scheme;

• any sweat equity shares.

The Companys equity shares are listed on Ahmedabad Stock Exchange Limited (ASE)*, BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE). The stock code of the Company at ASE* is 65175, BSE is 531717 and the symbol for NSE is VIDHIING.

*The equity shares of the Company are listed on ASE - A-2, Kamdhenu Complex, Opposite Sahajanand College, 120 Feet Ring Rd, Panjara Pol, Ambawadi, Ahmedabad, Gujarat-380 015. However, ASE has applied to the SEBI on July 11, 2014 for surrender to exit as Stock Exchange. On April 2, 2018 the SEBI has passed an Exit Order in respect of ASE.

22. Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the financial year under review as stipulated under regulation 34 of the Listing Regulations is set out in a separate Section forming part of this Report.

23. Corporate Governance:

The Company is adhering to good corporate governance practices in every sphere of its operations. The Company has taken adequate steps to comply with the applicable provisions of Corporate Governance as stipulated under the Listing Regulations. A separate Report on Corporate Governance is enclosed as a part of this Report along with the Certificate from the Practicing Company Secretary.

24. Directors Responsibility Statement:

As stipulated under section 134(3)(c) read with Section 134(5) of the Act, your Directors hereby state and confirm that:

a) in the preparation of the annual accounts for the financial year ended on March 31, 2018, the applicable accounting standards have been followed and that there are no material departures from the same except the provision for gratuity has not been made as per Ind AS 19 "Employee Benefits";

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 at the end of the financial year ended on March 31, 2018 and of the profit and loss of the Company for that period;

c) they have taken proper and sufficient care 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;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively during the financial year ended March 31, 2018; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively during the financial year ended March 31, 2018.

25. Particulars of Contracts and arrangements with related parties:

During the financial year under review, the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material in accordance with the Companys Policy on materiality of related party transactions. All contracts/arrangements/transactions entered into by the Company during the financial year under review with related parties were in the ordinary course of business and on an arms length basis. Accordingly, the disclosure of related party transactions to be provided under section 134(3)(h) of the Act in Form AOC-2 is not applicable.

The details of transactions entered into with related parties, as per Accounting Standards, are disclosed in the Note No. 26 of the Financial Statement.

The Companys Policy on Materiality of related party transactions and dealing with related party transactions is available on the Companys website at: http://www.vidhifoodcolour.com/financial/code_policies/policy_on_related_party_transactions. pdf

26. Particulars of loans given, investments made, guarantees given and securities provided:

The Company has not given any loan, except loan to employees, or given guarantee or provided securities as covered under section 186 of the Act. Further, the Company has not made any fresh investment falling within the meaning of Section 186 of the Act.

On the recommendation of the Audit Committee and the Board of Directors, the Members in their Extra-ordinary General Meeting held on Thursday, March 29, 2018 has approved acquisition of 100% shareholding in Arjun Food Colorants Manufacturing Private Limited, a Company promoted by the Promoters of the Company. As on March 31, 2018, the

Company does not have any investments.

27. Risk Management:

The Company is exposed to inherent uncertainties owing to the sector in which it operates. A key factor in determining a Companys capacity to create sustainable value is the risks that the Company is willing to take (at strategic and operational levels) and its ability to manage them effectively. Many risks exist in a Companys operating environment and they emerge on a regular basis. The Companys Risk Management process focuses on ensuring that these risks are identified timely basis and addressed.

The Audit Committee oversees enterprise risk management Framework to ensure execution of decided strategies with focus on action and monitoring risks arising out of unintended consequences of decisions or actions and related to performance, operations, compliance, incidents, processes, systems and transactions are managed appropriately. The Company believes that the overall risk exposure of present and future risks remains within risk capacity.

28. Internal Financial Controls with reference to the Financial Statement:

The Company has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The Company has in place adequate internal financial controls with reference to financial statements. The Companys internal control systems, including internal financial controls, are commensurate with the nature of its business and the size and complexity of its operations and same are adequate and operating effectively. These systems are periodically tested and no reportable material weakness in the design or operation was observed. The Audit Committee reviews adequacy and effectiveness of the Companys internal control system including internal financial controls.

29. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Company has always believed in providing a safe and harassment-free workplace for every individual working in the Company. The Company has complied with the applicable provisions of the aforesaid Act, including constitution of the Internal Complaints Committee. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary and trainees) are covered under this Policy. The Policy is gender neutral.

We are pleased to inform you that no complaints pertaining to sexual harassment were received during the Financial Year 2017-18.

30. Insurance:

The Company has taken insurance, to the extent Management felt appropriate, to cover the risks to its employees, property, plant and equipment, buildings and other assets and third parties.

31. Secretarial Standards:

The Company has complied with all the applicable secretarial standards issued by The Institute of Company Secretaries of India and notified by the Central Government.

32. Cost Records:

As per Section 148(1) of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the maintenance of cost records is not mandated for the products manufactured by the Company.

33. Other Disclosures/Reporting:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no events/ instances/transactions occurred on these items during the year under review:

a) Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report;

b) Details about Subsidiary Company/Associate Company, as the Company does not have any Subsidiary Company/ Associate Company;

c) Details relating to deposits covered under Chapter V of the Act;

d) Details of payment of remuneration or commission to Managing Director or Joint Managing Director of the Company from any of its Subsidiary Company since the Company does not have any Subsidiary Company;

e) Voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act);

f) Significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future; and

g) Details in respect of frauds reported by Auditors under section 143(12) other than those which are reportable to the Central Government, as there were no such frauds reported by the Auditors.

34. Acknowledgements:

Your Board wish to place on record their appreciation and acknowledge with gratitude the support and co-operation extended by the Government Authorities, Bankers, Customers, Employees and Members during the year under review and look forward to their continued support.

By Order of the Board of Directors
For Vidhi Specialty Food Ingredients Limited
(Formerly known as ‘Vidhi Dyestuffs Manufacturing Limited),
Sd/-
Date: August 10, 2018 Bipin M. Manek
Place: Mumbai Chairman & Managing Director
(DIN: 00416441)
Address: Flat No.12, Somerset House,
Off. Bhulabhai Desai Road,
Warden Road, Mumbai – 400 026