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Modern Dairies Directors Report, Modern Dairies Reports by Directors
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Modern Dairies

BSE: 519287|ISIN: INE617B01011|SECTOR: Food Processing
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Directors Report Year End : Mar '15    Mar 14
Dear Members,
 
 The Directors hereby present their 23rd Annual Report together with
 the Audited Accounts of the Company for the year ended 31st March,
 2015.
 
 FINANCIALS
 
                                                               in Lacs
 
                                               Year Ended   Year Ended
                                               31.03.2015   31.03.2014
 
 Net Sales and other Income                         62673        64049
 
 Operating (Loss)/ Profit                             (125)        2114
 
 Finance Cost                                        1790         1627
 
 Cash (Loss)/ Profit                                 (1915)         487
 
 Depreciation & Amortisation                          481          701
 
 Exceptional items                                      -        (1144)
 
 (Loss)/ Profit before Tax                           (2396)         930
 
 (Loss)/ Profit after Tax                            (2225)         944
 
 PERFORMANCE
 
 During the year under review, the Company achieved Net Sales and Other
 Income of Rs. 626.73 crores against Rs. 640.49 crores in the previous year.
 The Company faced difficult market situation right from the beginning of
 the fiscal. The global commodity market went into the turmoil, which
 continued throughout the fiscal 2014-15.  This not only affected the
 international market but also had its impact on the domestic market.
 
 The product prices of Milk Powders, Casein and other dairy commodities
 had a sharp decline. On the other hand, the major input cost i.e. Milk
 prices stood to its ground and did not soften up in tandem with the
 markets.
 
 This resulted into Company facing operating loss of Rs. 125 Lacs as
 against the operating Profit of Rs. 2114 Lacs, last year.
 
 CURRENT OPERATIONS
 
 During the quarter ending 30th June, 2015, the Company has achieved Net
 Sales and other Operating Income of Rs. 136.75 crores as against Rs. 163.83
 crores during the same period last year. The demand of exports based
 products of the Company in the international market and Milk Powders in
 the domestic market continued to be weak in this period.
 
 Looking to the changed market scenario the Company has reviewed its
 working, product mix and focus to meet the market challenges. The
 Company has realigned
 
 its business strategy by adding more remunerative product mix and has
 decided to focus on marketing and distribution of fresh dairy products
 like Milk in sachets, Dahi, Lassi etc. in its own brand. We have
 started introducing these products in the neighbouring markets and have
 encouraging response. These initiatives are expected to yield better
 results.
 
 MILK CESS
 
 As the members are aware that the Company has fled a Special Leave
 Petition with the Hon''ble Supreme Court of India against the judgment
 of Hon''ble Punjab & Haryana High Court challenging imposition of Milk
 Cess by the Govt. of Haryana. The Hon''ble Supreme Court on 7th
 September, 2012, directed an interim stay of the High Court judgment
 and order subject to the Company''s depositing 50% of the cess levied
 and demanded by the Government of Haryana which has been deposited with
 the Department within the stipulated time. The matter is expected to
 come up before the Hon''ble Supreme Court for hearing shortly.
 
 OPTIONALLY CONVERTIBLE DEBENTURES
 
 In terms of the CDR rework package Optionally Convertible Debentures
 were allotted by the Company to the lenders on 3rd April, 2013.
 
 The lenders have exercised their option for conversion of OCDs into
 equity. Your Company has conveyed to the lenders that it cannot allot
 shares at a price less than Rs. 60 per share. The matter is under
 consideration and discussion with the lenders.
 
 FINANCIAL ASSISTANCE
 
 The Company is in discussions with the Lenders to find out a workable
 solution to the present financial difficulties of the Company.
 
 QUALITY, FOOD SAFETY & ENVIRONMENT STANDARDS
 
 The Company is committed to maintain best of the management practices
 in its plant. In pursuit of its commitment, the Company''s systems have
 been certified by DNV Netherlands for Quality Management Systems, Food
 Safety Systems and Environment Management Systems. The manufacturing
 facilities continue to maintain ISO 9001:2008, ISO 14001:2004, HACCP
 Certification and Food Safety Systems certification i.e. FSSC 22000 :
 2011. Further FSSC:22000 has been upgraded to the latest version of
 combining ISO:22000:2005 and ISO/TS 22002/1 in July 2014.
 
 DIRECTORS
 
 Pursuant to the provisions of the Companies Act, 2013 and the Articles
 of Association of the Company, Dr. Renu Vig was appointed as an
 Additional Independent Non Executive Director w.e.f. 1st July, 2015 by
 the Board of Directors of the Company and she shall hold Office up to
 the date of the ensuing Annual General Meeting. The Company has
 received notice in writing from a member proposing Dr.  Renu Vig for
 appointment as an Independent Director.
 
 Mr. Krishan Kumar Goyal, Chairman & Mg. Director of the Company shall
 retire by rotation at the ensuing Annual General Meeting and being
 eligible has offered himself for reappointment.
 
 BOARD MEETINGS
 
 During the year, four Board Meetings were convened and held, the
 details of which are given in the Corporate Governance Report
 
 DECLARATION BY INDEPENDENT DIRECTORS
 
 All the Independent Directors have given a declaration under
 sub-section (7) of section 149 of the Companies Act, 2013 that they
 meet the criteria of independence as laid down under section 149 (6) of
 the Companies Act, 2013 and Clause 49 of the Listing Agreement.
 
 BOARD DIVERSITY AND REMUNERATION POLICY
 
 The Company has a policy for formation of the Board to have Executive
 Directors and Independent Directors of diverse background to maintain
 the independence of the Board. As on 31st March, 2015, the Board
 consists of seven members out of which two are Executive Directors, two
 Nominee Directors and three are independent directors. The Board
 periodically evaluates the need for change in its composition and size.
 
 We affirm that the remuneration paid to the Directors is as per the
 terms approved by the Nomination and Remuneration Committee of the
 Company.
 
 AUDITORS
 
 In the 22nd Annual General meeting held on 24th September, 2014, M/s.
 Walker Chandiok & Co LLP, Chartered Accountants were appointed as
 Statutory Auditors of the Company to hold Office till the conclusion of
 AGM to be held in the year 2019, subject to the ratification by the
 members at every Annual General Meeting.
 
 Accordingly the matter of ratification of the appointment of M/s.
 Walker Chandiok & Co LLP as statutory auditors of the Company for the
 FY 2015-2016 shall be placed before the members. The Statutory Auditors
 have confirmed their eligibility to the effect that their appointment,
 if made would be within the prescribed limits under the Companies Act,
 2013 and that they are not disqualified.
 
 The Board of Directors have approved the appointment and remuneration
 of M/s. Aggarwal Vimal & Associates as Cost Auditors of the Company to
 conduct the cost audit for the year 2015-16 on the recommendations of
 the Audit Committee subject to the ratification of the remuneration by
 the Shareholders.  The Board has appointed M/s. Sharma Sarin &
 Associates, Company Secretaries, to conduct Secretarial Audit for the
 Financial Year 2014-15. The Secretarial Audit Report in Form MR-3 for
 the Financial Year ended 31st March, 2015 is annexed herewith as
 Annexure ''A'' to this report.
 
 AUDITOR''S REPORT
 
 All the comments of the Statutory Auditors on the Annual accounts are
 self explanatory and require no further explanation.
 
 RISK MANAGEMENT
 
 A detailed review of business risks and the Company''s plan to mitigate
 them is presented to the Audit Committee and Board. The Company has
 been taking steps to mitigate foreseeable business risks. Business risk
 evaluation and management is an ongoing and continuous process within
 the Company and regularly updated to the Audit Committee and Board.
 
 INTERNAL FINANCIAL CONTROLS
 
 The Company has in place adequate internal financial controls with
 reference to the Financial Statements.  During the year, such controls
 were tested and no reportable material weakness was observed in the
 design or implementation.
 
 MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION
 OF THE COMPANY
 
 There are no adverse material changes or commitments occurring after
 31st March, 2015, which may affect the financial position of the
 Company.
 
 FIXED DEPOSITS
 
 Your Company did not invite or accept any fixed deposit pursuant to
 provisions of Chapter 5 of the Companies Act, 2013, during the year.
 
 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
 
 Loans, guarantees and investments covered under section 186 of the
 Companies Act, 2013 form part of the Notes to the Financial Statements
 provided in this Annual Report.
 
 RELATED PARTY TRANSACTIONS
 
 All contracts or arrangements entered into by the Company with Related
 Parties have been done at an arm''s length and are in the ordinary
 course of business.  Pursuant to Section 134 of the Companies Act, 2013
 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the
 particulars of such transactions are provided in Form AOC-2 which is
 annexed as Annexure B to this report. Related Party disclosures as
 per AS-18 have been provided in the Notes to the Financial Statement.
 
 CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS
 
 A separate report on Corporate Governance and Management Discussion &
 Analysis is attached to this report.
 
 HUMAN RESOURCES
 
 Harmonious employee relations prevailed throughout the year. Your
 Directors place on record their appreciation for all categories of
 employees for their hard work and dedication.
 
 There were no employees employed throughout the financial year or part
 thereof drawing remuneration as prescribed under Rule 5 of Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
 
 EXTRACT OF ANNUAL RETURN
 
 The extract of annual return as provided under section 92(3) is annexed
 herewith as annexure ''C''.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
 EARNINGS AND OUTGO.
 
 Information as per section 134(3) of the Companies Act, 2013, read with
 Rule 8 of the Companies (Accounts) Rules 2014, is given in the Annexure
 ''D'' and forms part of this report.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to section 134(5) of the Companies Act, 2013,
 
 your Directors confirm that:
 
 (a) in the preparation of the annual accounts, the applicable
 accounting standards had been followed
 
 (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 as at 31st March, 2015 and of the loss of the Company for
 the year;
 
 (c) they have 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) the annual accounts are prepared on a going concern basis;
 
 (e) they had laid down internal financial controls to be followed by the
 Company and that such internal financial controls are adequate and were
 operating effectively.
 
 (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.
 
 APPRECIATION
 
 Your Directors wish to place on record their sincere appreciation for
 the continued support from its business associates and stakeholders of
 the Company.
 
                                         For & on behalf of the Board
 
 Place: Chandigarh                                Krishan Kumar Goyal
 
 Dated: 8th August, 2015                      Chairman & Mg. Director
Source : Dion Global Solutions Limited
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