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Jubilant Foodworks Ltd.

BSE: 533155 | NSE: JUBLFOOD |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE797F01012 | SECTOR: Miscellaneous

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

Dear Members,

The Directors have pleasure in presenting the Twenty Third (23rd) Annual Report, together with the Audited Standalone and Consolidated Financial Statements for the Financial Year ended March 31, 2018 (“FY 2018”).

Financial Performance

A summary of the Company’s financial performance in FY 2018 is as follows:

(Rs. in Lakhs)

Particulars

Standalone

Consolidated

FY 2018

FY 2017

FY 2018

FY 2017

Sales & Other Income

300,316.45

256,055.47

304,147.67

259,813.14

Profit before Interest, Depreciation & Tax but after exceptional items

46,911.59

24,890.39

46,316.64

24,370.37

Less: Interest

-

-

-

-

Less: Depreciation

15,587.75

15,115.25

16,010.58

15,543.22

Profit / (Loss) before Tax

31,323.84

9,775.14

30,306.06

8,827.15

Less: Provision for Taxation

10,683.36

3,049.69

10,683.36

3,049.69

Profit / (Loss) after Tax

20,640.48

6,725.45

19,622.70

5,777.46

Results of Operations and the State of Company’s Affairs

The highlights of the Company’s performance for FY 2018 vis-a-vis FY 2017 are as under:

a) Revenue from operations increased by 17.1% to Rs.298,044 Lakhs

b) EBITDA increased by 81% to Rs.44,639.20 Lakhs

c) Profit before Tax increased by 220.44% to Rs.31,323.84 Lakhs

d) Net Profit increased by 206.9% to Rs.20,640.48 Lakhs

During the year, there are no transfer to the General Reserves.

No material changes and commitments have occurred after the close of the Financial Year till the date of this Report, which affect the financial position of the Company.

The Company with two strong brands in its portfolio addressing different food market segments and is in a sweet spot to leverage on the growth potential of food services segment in India.

During the year, the Company identified key driving the strategic pillars of product and innovation, value for money, customer experience, digital and technology while bringing cost optimization with a clear focus on sustainable growth. Company’s emphasis on driving the key strategic pillars translated into healthy same store sales growth YoY, while setting the base for consistent growth in line with the potential of the Quick Service Restaurant (QSR) space.

During the year, the implementation of structural reforms mainly Goods and Services Tax (GST) led to positive change for the organized Restaurant industry. The lowering in rate of applicable GST to 5% allowed the Company to demonstrate its commitment to deliver the best value proposition as the Company passed on the benefits of lower tax rate to the customers while taking a small calibrated price increase on few products to partially cover for the input credit loss.

Domino’s Pizza India (“DPI”) continuously focused on Innovation for resonating with consumers’ evolving tastes and meeting their expectations. With the launch of ‘All New Domino’s’, Domino’s Pizza unveiled its most significant product refresh with an across the board enhancement of its pizzas delighting consumers with the choicest taste and best quality. The 360-degree marketing campaign with the tagline Aapne Kaha, Humne Kiya’. The upgrade in core pizzas saw massive acceptance as reflected in new consumer acquisition as well as increase in existing consumer’s frequency. Further diversifying its side product offering, DPI launched three new formats of chicken products with international flavours.

The Company successfully added 24 Restaurants during the year. DPI’s network spanned across 266 cities as on March 31, 2018, as against 264 cities as on March 31, 2017. Seven (7) Restaurants were decommissioned during the year as they failed to deliver on the Company’s expected ROI parameters. As of March 31, 2018, the DPI network comprised 1,134 Restaurants as against 1,117 Restaurants as on March 31, 2017.

At Dunkin’ Donuts India (“DDI”), a new focus was brought on beverage and donuts, while food continued to be a strong play. The focused strategy of enhancing core offerings, driving efficiencies along with shutdown of unprofitable stores led to significant reduction in DDI losses. DDI has also experimented with smaller Restaurant size.

As an innovation, DDI launched Value range of donuts and signature donuts including Chocotella, White Choco Cheesecake, Choco Symphony and Coffee Toffee. Shaken Iced Coffee, Caramel Hazelnut Latte and Tiramisu Latte were among the new beverages launched during the year. On the food side, Toasties (Chilli Cheese and Chicken) and Big Joy Mayo Burger were added to the menu. DDI drove Value for Money by introducing a range of donuts at Rs.49 and also introduced a Donut Coffee combo at Rs.89 with the objective of seeding the Donuts Coffee habit.

DDI was cautious in its expansion strategy aligned to the Company’s overarching strategy of profitable growth. Five (5) new Restaurants were opened in FY 2018 while 31 Restaurants were decommissioned. The total number of DDI Restaurants stood at 37 as on March 31, 2018 as against 63 as on March 31, 2017.

In the fourth quarter of FY 2018, the Company also commissioned its state-of-the-art facility in Greater Noida, a prestigious accomplishment for the Company that will give a better overall efficiency at the commissary level as well. The Commissary will have manufacturing capacity for dough ball and for a couple of other lines as well.

During the year, there was no change in the nature of the business of the Company.

Bonus Issue

The Board of Directors at its meeting held on May 08, 2018, recommended issue of bonus shares, subject to the approval of members, to the holders of equity shares of the Company in the proportion of 1 (One) equity share of Rs.10/- each fully paid up for every 1 (One) equity share of Rs.10/- each fully paid up as on the record date fixed for this purpose. The bonus shares will be issued by capitalisation of a part of the Securities Premium Account.

Dividend

Based on the Company’s performance, your Directors are pleased to recommend dividend of Rs.5/- (i.e. 50%) per equity share of Rs.10/- each for FY 2018 amounting to Rs.3,299.23 lakhs (excluding Dividend Distribution Tax of Rs.678.17 lakhs), subject to approval of members at the ensuing Annual General Meeting (“AGM”) of the Company.

The above referred dividend of Rs.5/- per equity share of Rs.10/- each is recommended by the Board of Directors on the basis of the existing paid up share capital of the Company (pre bonus share capital). Upon approval of issuance of Bonus shares, the dividend payout (post bonus issue) will work out to Rs.2.50/- per equity share of Rs.10/- each.

Share Capital

The movement of the share capital during the year is as follows:

(Amount in Rs.)

Particulars

Equity Share Capital

At the beginning of the year i.e. as on April 01, 2017

659,490,700

65,949,070 equity shares of Rs.10/- each

Stock Options allotted during the year under

Domino’s Employees Stock Option Plan, 2007

354,500

and JFL Employees Stock Option Scheme, 2011

35,450 equity shares of Rs.10/- each

At the end of the year i.e. as on March 31, 2018

659,845,200

65,984,520 equity shares of Rs.10/- each

To facilitate the issuance of Bonus Shares and for future requirements, the Board of Directors, subject to the approval of the members, approved the increase in Authorized Share Capital of the Company to Rs.1,500,000,000/- (Rupees One Hundred Fifty Crore) divided into 150,000,000 (Fifteen Crore) equity shares of Rs.10/- each by creation of additional 70,000,000 (Seven Crore) equity shares of Rs.10/- each ranking pari passu in all the respect with the existing equity shares of the Company. The increase in Authorised Share Capital would lead to consequential amendment in the existing Capital Clause of the Memorandum of Association of the Company.

Employees Stock Option Schemes

The Company has three (3) Employees Stock Option Schemes namely:

Domino’s Employees Stock Option Plan, 2007 (“ESOP 2007”) JFL Employees Stock Option Scheme, 2011 (“ESOP 2011”) JFL Employees Stock Option Scheme, 2016 (“ESOP 2016”)

ESOP 2007: During FY 2018, 6,000 options were exercised. Consequently, all options outstanding under the scheme have been exercised and no further grants were made.

ESOP 2011: During FY 2018, 33,932 options were granted under the scheme to the employees of the Company. Further, 179,631 options were exercised during the year.

ESOP 2016: During FY 2018, 20,947 options were granted under the scheme to the employees of the Company.

JFL Employees Welfare Trust (“ESOP Trust”): ESOP Trust acquired 380,670 equity shares from the secondary market for the purpose of implementation of ESOP 2011 and ESOP 2016. Out of this, 151,181 equity shares were transferred to the employees pursuant to exercise of options.

No change in paid up capital is expected due to exercise of options as it is envisaged to transfer the equity shares held by ESOP Trust to the employees on exercise of options.

The applicable disclosure under SEBI (Share Based Employee Benefits) Regulations, 2014 (the “ESOP Regulations”) as at March 31, 2018 is uploaded on the website of the Company (web link: http://www.jubilantfoodworks.com/investors/ financial-information-2/).

There has been no material change in the ESOP 2007, ESOP 2011 & ESOP 2016 (collectively referred as “ESOP Schemes”) of the Company and the ESOP Schemes are in compliance with the ESOP Regulations.

Certificates from Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors, with respect to the implementation of ESOP Schemes would be placed before the members at the ensuing AGM and a copy of the same shall be available for inspection at the Registered Office & Corporate Office of the Company.

Subsidiary and Joint Venture

Jubilant FoodWorks Lanka (Private) Limited (“JFLPL”)

During the year, the wholly owned subsidiary Company launched 1 (one) new Domino’s Pizza Restaurant, taking its total Restaurant count to 24 (twenty four) as on March 31, 2018 (23 Restaurant count as on March 31, 2017). In line with DPI, Every Day Value proposition was also rolled out for Sri Lanka business. New pizzas and sides were introduced in the menu to fuel excitement among the consumers.

A report on the performance and the financial position of JFLPL, as per Companies Act, 2013 and Rules made thereunder (the “Act”) is provided in Form AOC-1 attached to the Consolidated Financial Statements forming integral part of the Annual Report.

Pursuant to the provisions of Section 136 of the Act, separate audited accounts of JFLPL, are available on the website of the Company at www.jubilantfoodworks.com.

Jubilant Golden Harvest Limited

During the year under review, the Company announced joint venture with Golden Harvest QSR Ltd. (Golden Harvest), part of Golden Harvest group of Bangladesh to launch Domino’s Pizza Restaurants in Bangladesh.

For the purpose of this joint venture, a private limited Company, Jubilant Golden Harvest Limited (“JGHL”) was incorporated. No investments were made in JGHL by the Company. Subsequent to investment, the Company will be the majority shareholder with 51% of the total shareholding, while Golden Harvest will hold the balance 49%.

Extracts of Annual Return

The extracts of Annual Return as required under the Act in Form MGT - 9 is annexed herewith as Annexure “A” forming integral part of this Report.

Directors and Key Managerial Personnel

In terms of Articles of Association of the Company and provisions of the Act, Mr. Hari S. Bhartia, Director of the Company, is liable to retire by rotation at the ensuing AGM and being eligible, offer himself for re-appointment. The Board of Directors recommend his re-appointment for the consideration of the members of the Company at the ensuing AGM.

A brief profile and other details as required under the Act, Secretarial Standard-2 and Listing Regulations of the director proposed to be re-appointed is annexed to the Notice convening the AGM.

During the year, Mr. Sachin Sharma, President & Chief Financial Officer and Key Managerial Personnel of the Company resigned from the Company with effect from July 22, 2017.

Mr. Prakash C. Bisht was appointed as EVP & Chief Financial Officer and Key Managerial Personnel of the Company with effect from January 19, 2018. He is a Chartered Accountant with over three decades of experience in the area of Financial Reporting, Financial Planning & Analysis, M&A transactions, Fund raising, Corporate Structuring, IT solution implementation and Commercial Operations.

Particulars of Employees, Directors & Key Managerial Personnel

The details of Employees, Directors and Key Managerial Personnel as required under Section 197 of the Act read with Companies (Appointment and Remuneration) Rules, 2014 is annexed herewith as Annexure “B” forming integral part of this Report.

Loans, Guarantees and Investments

Particulars of loans, guarantees and investments made under the provisions of Section 186 of the Act have been disclosed in Note 04 to the Standalone Financial Statements forming integral part of the Annual Report.

Related Party Transactions

All contracts, arrangements and transactions entered by the Company during FY 2018 with related parties were in the ordinary course of business and on arm’s length basis and were approved by the Audit Committee. During the year, the Company had not entered into any materially significant transaction with related parties as defined in the Company’s Policy on materiality and dealing with related party transactions (the “policy”). Accordingly the disclosure of Related Party Transactions in Form AOC 2 is not applicable.

Related Party disclosures have been disclosed in Note 33 to the Standalone Financial Statements forming integral part of the Annual Report.

Auditors and Auditor’s Report

Statutory Auditors

Deloitte Haskins & Sells LLP, Chartered Accountants (ICAI Regn. No. 117366W/W-100018) (Deloitte), were appointed as Statutory Auditors of the Company to hold office from the conclusion of 22nd AGM until the conclusion of 27th AGM of the Company, subject to ratification by the members at every intervening AGM.

The Board of Directors has recommended ratification of appointment of Deloitte as Statutory Auditors to the members of the Company.

The Auditors’ Report read together with Annexure referred to in the Auditors’ Report do not contain any qualification, reservation, adverse remark or disclaimers. During the year under review, the Statutory Auditors have not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

Secretarial Auditors

The Secretarial Audit Report for the Financial Year ended March 31, 2018 received from Chandrasekaran Associates, Secretarial Auditors of the Company is annexed herewith as Annexure “C” forming integral part of this report. The said report is self-explanatory and does not contain any qualification, reservation, adverse remark or disclaimers.

Risk Management

The detailed Risk Review is provided in the Management Discussion & Analysis section forming integral part of the Annual Report.

Internal Financial Control

The Company has in place adequate internal financial controls with reference to Financial Statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the year under review, in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) is presented in a separate section, forming integral part of the Annual Report.

Business Responsibility Report

Regulation 34 of Listing Regulations mandates inclusion of the Business Responsibility Report (“BRR”) as part of the Annual Report for top five hundred (500) listed entities based on market capitalization as on March 31 of every Financial Year.

In compliance with Listing Regulations, BRR is annexed as Annexure “D” forming integral part of this Report.

Corporate Social Responsibility

In terms of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014 as amended (“CSR Rules”), the Board of Directors have approved a Corporate Social Responsibility Policy (“CSR Policy”) that strives towards welfare and sustainable development of the different segments of the community, specifically the deprived and underprivileged segment.

The Annual Report on CSR is annexed as Annexure “E” forming integral part of this Report.

Corporate Governance

The Corporate Governance philosophy of the Company is driven by the interest of stakeholders and business needs of the organization. The Company continues to be compliant with the requirements of Corporate Governance as enshrined in Listing Regulations. In terms of Regulation 27 of Listing Regulations, the Corporate Governance Report is annexed as Annexure “F” forming integral part of this Report.

The Corporate Governance Report, inter-alia, contains the following disclosures:

a) Details of Board & Committee Meetings;

b) Composition of Sustainability and Corporate Social Responsibility Committee;

c) Details of Whistle Blower Policy (Vigil Mechanism);

d) Dividend Distribution Policy;

e) Appointment & Remuneration Policy;

f) Performance Evaluation criteria of the Board, its Committees & individual Directors.

Sexual Harassment

Pursuant to the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has adopted a policy on prevention of sexual harassment at workplace.

The Company is committed towards promoting the work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment irrespective of their gender, race, social class, caste, creed, religion, place of origin, sexual orientation, disability or economic status.

During the Calendar year, the Company received 1 (one) complaint which was suitably addressed.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

A) Conservation of Energy

The Company is committed to take effective measures to conserve energy and drive energy efficiency in its operations and also continuously making efforts on increasing use of renewable energy and enhancing waste management to reduce the carbon footprint. The Company also strives to focus on technologies, processes and improvements that matter for the environment.

Accordingly, the Company undertook some cost-effective energy-efficiency initiatives across its Restaurants and Supply Chain Centres (“SCC”).

i) The steps taken or impact on conservation of energy

Installation of energy efficient LED Lights in all Restaurants and SCC.

Installation of Energy Management System in 425 (approx.) Restaurants.

Installation of Energy Saving Sensors in the AC System of 388 (approx.) Restaurants. Solar Power plant at Nagpur, Kolkata, and Mumbai SCCs. Efforts are on to install plants at Greater Noida SCC.

Onsite Sewage Treatment Plant at Greater Noida SCC to treat 100% of the waste water generated.

ii) The steps taken by the Company for utilizing alternate sources of energy in few Restaurants

Conversion of Liquefied Petroleum Gas Fuel into Piped Natural Gas for Ovens installed.

iii) The capital investment on energy conservation equipment:

(B) Technology Absorption

All steps taken towards Energy Conservation are the result of technology absorption, however, there is no specific information to be furnished in this regard.

(C) Foreign Exchange Earnings & Outgo

Information pertaining to Foreign Exchange Earnings & Outgo is as under:-

Directors Responsibility Statement

Your Directors state that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

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 and of the profit of the Company for that period;

c) they have 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;

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

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and Based on the framework of internal financial controls including the financial reporting and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and the reviews performed by the management, the Board is of the opinion that the Company’s internal financial controls are adequate and effective during the FY 2018.

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Other Statutory Disclosures

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

a) No deposits have been accepted by the Company during the year from the public. The Company had no outstanding, unpaid or unclaimed public deposits at the begining and end of financial year 2017-18.

b) No equity shares were issued with differential rights as to dividend, voting or otherwise.

c) Issue of shares (including sweat equity shares) to employees of the Company under any Scheme save and except ESOP Schemes referred to in this Report.

d) The Wholetime Director of the Company doesn’t receive any remuneration or commission from its subsidiary Company.

e) No significant or material orders were passed by the Regulators/Courts/Tribunals which impact the going concern status and Company’s operations in future.

The Company has complied with the applicable Secretarial Standards on Meetings of the Board of Directors and on General Meetings issued by the Institute of Company Secretaries of India.

Acknowledgements

Your Directors take this opportunity to thank and acknowledge with gratitude the cooperation and assistance received from Domino’s International, Dunkin’ Donuts International, Government and Regulatory Authorities, Business Partners, Bankers, Members and other Stakeholders. Also, the Board places on record its appreciation for the enthusiastic, co-operation, hard work, dedication and commitment of the employees at all levels.

Your Directors would also like to appreciate the confidence and loyalty displayed by the guests, whom the Company always strive to serve better.

For and on behalf of the Board of Directors

Sd/- Sd/-

Shyam S. Bhartia Hari S. Bhartia

Chairman & Director Co-Chairman & Director

DIN No. 00010484 DIN No. 00010499

Place: Noida

Date: May 08, 2018

(Figures have been rounded off for the purpose of reporting)

Director’s Report