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Modi Naturals

BSE: 519003|ISIN: INE537F01012|SECTOR: Edible Oils & Solvent Extraction
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Directors Report Year End : Mar '16    Mar 15

DIRECTORS'' REPORT

To the Members,

The Directors are pleased to present the 42nd Annual Report and Audited Accounts of the Company for the financial year ended March 31, 2016.

1. Financial highlights

The summarized financial results for the year ended March 31, 2016 and for the previous year ended March 31, 2015 are as follows: -

(in lakh)

Particulars

2015-16

2014-15

Revenue from Operations / Net Sales

26930.35

23194.87

Other Income

243.09

199.81

Profit before interest, depreciation and tax

886.24

421.64

Profit before exceptional item and tax

419.23

14.52

Profit before tax

419.23

14.52

Tax expense

-Current Tax

94.00

7.58

-Deferred Tax

128.34

(8.84)

Profit after tax

196.88

15.78

EPS (face value of Rs.10/- each)

-Basic & Diluted

1.77

0.14

The Company achieved gross turnover including other income of Rs 27,173.44 Lacs and posted net profit of Rs.196.88 Lacs for the financial year ended on 31st March, 2016 as against gross turnover including other income of Rs. 23,394.68 Lacs and net profit of Rs. 15.78 Lacs in the previous financial year.

2. State of company affairs and future outlook

In the current financial year, the company continues to focus on growth of its branded business and is confident that the consumer business will continue its steady growth, which is in line with our medium to long term strategy; The flagship brand where the company is seeing a growing leadership position is:

Oleev - olive oils and healthy oils

Other than that we have developed the following value added products:

Rizolo - India''s Finest - Rice Bran Oil

Miller - Canola Oil with low absorption technology

Olivana Wellness - massage oils.

Whilst Rizolo and Miller have a direct fit in the edible oil stable, Olivana Wellness is the company''s foray into the personal care segment of FMCG. With the launch of the new brands of packaged edible oils, the focus is slowly tilting more towards enhancing value through well branded consumer focused products. The Company is also creating niche brands in edible oils and blended oils which have various health benefits and thereby commanding a premium in the marketplace.

By increasing its foothold across all major distribution platforms like wholesale, modern retail, ecommerce etc., the Company is poised to strengthen its brand presence across the country. The Company has launched its largest advertisement campaign until now to strengthen its brand presence and improving brand recall.

In the years to come, Modi Naturals visualizes itself as a major contributor to the Indian FMCG sector and primarily the branded edible oil industry

3. Change in nature of business

The Company is engaged in the business of manufacturing and marketing of Edible oil and De-oiled cake. There was no change in the nature of business of your company during the year.

4. Dividend

No dividend is proposed for the financial year ended March 31, 2016.

5. Transfer to reserves

No amount is proposed to be transferred to reserves.

6. Change in Share Capital

Your Company has neither issued any equity shares with differential rights nor granted any employees stock options / sweat equity shares to the directors, officers or employees of the Company during the year.

7. Deposits from public

During the year, your Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and there is no outstanding amount of deposits at the end of the financial year.

8. Extract of Annual Return

As provided under Sections 134(3) (a) and 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of annual Return in Form MGT-9 is given in Annexure-1 which forms part of this report.

9. Number of Board Meetings

During the financial year ended March 31, 2016, the Company had ten (10) Board meetings on April 10, 2015, May 30, 2015, August 12, 2015, September 2, 2015, October 15, 2015, November 14, 2015, November 30, 2015, January 27, 2016, February 3, 2016, and March 30, 2016 respectively.

10. Particulars of loans, guarantees and investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Note no. 14 and 19 to the Financial Statements.

11. Particulars of contracts or arrangements with related parties

All related party transactions that were entered into during the year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The details of related party transactions are provided in Note no. 34 to the Financial Statements.

During the year, pursuant to Section 177 of the Companies Act, 2013 and erstwhile Clause 49 of the Listing Agreement and/ or Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, all related party transactions were placed before the Audit Committee and also for the Board approval, wherever required.

12. Auditors and Auditors'' Report Statutory Auditors''

Pursuant to the provisions of Section 139 of the Act and the rules framed there under, Messrs K. K. Jain & Co., Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 40th annual general meeting (AGM) of the Company held on August 19, 2014 till the conclusion of the 43rd Annual General Meeting, subject to ratification of their appointment at every Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly the appointment of Messrs K. K. Jain & Co, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders at the 42nd Annual General Meeting of the Company. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

There are no qualifications made by the Auditors in their Report which requires any explanation from the Board of Directors of the Company The Notes to Accounts referred to in the Auditors'' Report are self-explanatory and d o not call for any further comments.

Secretarial Auditors''

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Deepak Bansal & Associates, Company Secretaries to undertake the Secretarial Audit of the Company The Secretarial Audit Report is annexed herewith as Annexure 2.

The said Secretarial Audit Report has no qualification, reservation or adverse remarks and it is self-explanatory; Thus there is no need to give any further explanation or comment by the Board.

Cost Auditors''

Based on the Audit Committee''s recommendations at its meeting held on August 8, 2016 and subject to approval by the Central Government, the Board recommends the appointment of M/s. Manisha & Associates as the Cost Auditors of the Company for the year ended on March 2016-17 at a remuneration of Rs. 60000/- plus traveling, lodging and boarding expenses. The remuneration payable to the Cost Auditors for the financial year 2016-17 requires ratification by the members at the ensuing annual general meeting.

The cost audit report for the financial year 2014-15 has been filed to the Central Government vide SRN S42517854 dated 28.10.2015. The Cost Audit Report for the financial year 2015-16, prescribed under Cost Audit Rules, 2014, is due to be filed with MCA on or before 30.09.2016 (being within 180 days from the end of reporting year).

13. Material changes affecting the financial position of the company

There are no material changes affecting the financial position of the Company.

14. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The Particulars with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo are given below:

A. Conservation of energy:

i) Steps taken or impact on conservation of energy:

ii) The steps taken by the company for utilizing alternate sources of energy

Your Company has taken adequate measures to ensure optimum use of all equipments so as to conserve energy

iii) Capital Investment on energy conservation equipments: Nil

B. Technology absorption, adaption and innovation:

The company strives continuously to upgrade its technology adopted in all its operations.

C. Foreign exchange earnings and outgo

a) Earnings - Nil

b) Outgo - Rs. 486105

16. Details of subsidiary, joint venture or associates

The Company does not have any Subsidiary/Joint Venture/Associate Company.

17. Risk management

The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

18. Directors and key managerial personnel (KMP)

Ms. Purva Satija, Company Secretary and Compliance Officer of the Company resigned on 30.04.2015. On the basis of recommendation of Nomination and Remuneration Committee, the Board of Directors at its meeting held on 15th October, 2015 has appointed to Mr. Ankit Agarwal as Company Secretary from 15th October, 2015 in terms of pro vision of the Companies Act, 2013 and rules made there under.

Pursuant to Section 152 and other applicable provisions, if any of the Companies Act, 2013, Mr. Ani l Modi, Director of the Company retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment in accordance with the provisions of the said Act.

The Board of Directors in their meeting held on 08th August, 2016 has recommended to re-appoint Mr. Akshay Modi as Executive Non-Independent Director within the meaning of Section 196, 197 and 203 of the Companies Act, 2013 read with Schedule IV thereto and Rules made there under, for a further period of 3 (three) years from December 15, 2016 commencing immediately after the expiry of his current tenure on December 14, 2016, subject to retirement by rotation.

The Nomination and Remuneration Committee of the Board in its meeting held on 08th August, 2016 has considered and recommended the aforesaid re-appointments of Mr. Anil Modi and Mr. Akshay Modi to the Board for their approval.

The Board has considered that the presence of Mr. Anil Modi and Mr. Akshay Modi as Directors on the Board would be of immense benefit to the Company and has decided to recommend their reappointment for the approval of members of the Company at the ensuing annual general meeting of the company

A brief resume of the Directors being appointed/ re-appointed, are furnished in the explanatory statement to the notice of the ensuing AGM.

19. Details of significant & material orders passed by the regulators or courts or tribunal

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

20. Internal financial controls

Your Company has a proper and adequate system of internal financial controls. This ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly. The internal financial control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets.

Audit Committee periodically reviews the performance of internal audit function and discusses internal audit reports with the Internal Auditor

21. Fraud

Neither the Statutory Auditors nor the Secretarial Auditors have brought to the notice of the Audit Committee or the Board of Directors or the Central Government the occurrence or brewing of any fraud in the Company.

22. Code of conduct for regulating and reporting trading by insiders and for fair disclosure, 2015

Your Company has adopted the Code of Conduct for regulating & reporting trading by insiders and for fair disclosure, 2015 which, inter alia, prohibits purchase or sale of securities of the Company by Directors, employees and other connected persons while in possession of unpublished price sensitive information in relation to the Company

23. Disclosure of ratio of remuneration of directors and key managerial personnel

As required under Section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of the ratio of the remuneration of each director to the median employee''s remuneration and such other details as prescribed therein are given in Annexure-3, which is attached hereto and forms a part of the Directors'' Report.

24. Particulars of employees

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, names and other particulars in respect of employees of the Company are required to be attached to the Directors'' Report. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and other entitled thereto, excluding the information on employees'' particulars required to be disclosed in this report. The said information is available for inspection at Registered Office of the Company during the working hours and any member interested in obtaining such information may write to the Company Secretary

25. Personnel

Your Company aims to be a preferred employer in the industry and remains committed to developing its employees to meet the current and future challenges of the business.

26. Code of conduct

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and Senior Management Personnel in the course of day to day business operations of the Company. The Code has been posted on the Company''s website (www.modinaturals.com).

27. Audit committee

The details pertaining to composition of Audit Committee are included in the Corporate Governance Report which forms part of this report.

28. Corporate governance

Your Company has complied with the requirements and disclosures that have to be made under the Code of Corporate Governance as required under Regulation 27(2) of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015. Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) the Company has executed fresh Listing Agreement(s) with the Stock Exchange(s).

As a listed company necessary measures are taken to comply with the Listing Agreement with the Stock Exchange. A report on Corporate Governance, along with a certificate of compliance from the Statutory Auditors, forms part of this Annual Report. The Chairman & Managing Directors'' declaration regarding compliance with ''Modi Naturals'' Code of Conduct for Board Members and Senior Management'' is attached to the Corporate Governance Report.

29. Corporate social responsibility (CSR) policy

The provisions of the Companies Act, 2013 relating to Corporate Social Responsibility are not applicable on the Company

30. Annual evaluation of board, committees & directors'' performance

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees. The manner in which the evaluation has been carried out has been explained hereunder.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was reviewed, taking into account the views of executive directors and nonexecutive directors of the company.

Declaration from Independent Directors

As required by Section 149 (7) of the Companies Act, 2013, All Independent Directors of the Company have made declaration to the effect that they meet the criteria of independence as stipulated under Section 149(6) of the Act.

31. Remuneration policy

The Nomination and Remuneration Committee recommend the appointment of Director, and their appointment or reappointment, based on their qualifications, professional experience, positive attributes, view points, skills and area of expertise and independence. The Company follows a policy on remuneration of Directors and Senior Management employees, details of the same are given in the Corporate Governance Report. The Remuneration Policy has been posted on the Company''s website (www.modinaturals.com).

32. Whistle blower / vigilance policy

Your Company has established a whistle blower policy/vigil mechanism for the Directors, employees of the company, to report genuine concerns, calling the attention of the Audit Committee to some wrong doing occurring within an organization. Your Company has also provided adequate safeguards against victimization of whistleblowers who express their concerns against such wrongdoings occurring in the organization. The Company has also provided direct access to the chairman of the Audit Committee, in exceptional circumstances.

During the financial year 2015-16, there were no instances of unethical behaviour, fraud or violation of the company''s code of conduct or ethics policy and no personnel have been denied access to the audit committee. The details of establishment of such mechanism are disclosed on the website of the Company viz. (www.modinaturals.com).

33. Disclosure under sexual harassment of women at workplace, (prevention, prohibition & redressal) act, 2013

Your company did not come across any complaints by any employee during the year under review relating to the sexual harassment.

34. Directors'' responsibility statement

Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability confirm that:

i. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii. 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;

iii. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the directors had prepared the annual accounts on a going concern basis;

v the directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. 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

35. Acknowledgements

The Board of Directors take this opportunity to thank all its Shareholders, valued customers, banks, Government and Statutory Authorities, Investors and the Stock Exchange for their continued support to the Company Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company''s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued Shareholders and the Promoters of the Company.

On behalf of the board of directors

Sd/-

Anil Modi

Place: New Delhi Chairman and Managing Director

Date: 08th August, 2016 DIN No.: 00187078

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