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Parag Milk Foods

BSE: 539889|NSE: PARAGMILK|ISIN: INE883N01014|SECTOR: Food Processing
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Download Annual Report PDF Format 2017 | 2016
Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Directors are pleased to present the Twenty Sixth Annual Report of the Company together with the Audited Financial Statements (Standalone and Consolidated), for the financial year ended 31 March, 2018.

FINANCIAL HIGHLIGHTS

The comparable financial performance of the Company (Standalone & Consolidated) for the Financial year ended 31 March, 2018 is summarized as under:

(Rs. In million)

Particulars

Standalone

Consolidated

FY 2017-18

FY 2016-17

FY 2017-18

FY 2016-17

Revenue from Operations

19,181.18

17,010.85

19,545.06

17,307.39

Other Income

56.30

86.28

119.98

128.90

Total Income

19,237.48

17,097.13

19,665.04

17,436.29

Profit before Tax before exceptional items

1,076.23

99.58

1,189.58

182.62

Exceptional Items

-

(193.84)

-

(193.84)

Profit from ordinary activities before tax

1,076.23

(94.26)

1,189.58

(11.22)

Less:- Tax expenses

291.43

(76.63)

319.02

(58.78)

Profit After Tax (PAT)

784.80

(17.63)

870.56

47.56

Dividend on equity shares(including tax on dividend)

Earnings per Share

75.85

50.62

-

-

Basic

9.36

(0.21)

10.38

0.58

Diluted

9.33

(°.21)

10.35

0.58

Figures for FY2016-17 have been restated as per Ind AS and therefore may not be comparable with financials for FY2016-17 approved by the Directors and disclosed in the financial statement of previous year.

INDIAN ACCOUNTING STANDARD

The Ministry of Corporate Affairs (MCA) on 16 February, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from 1 April, 2017 with a transition date of 1 April, 2016. Ind AS has replaced the previous Indian IGAAP prescribed under Section 133 of the Companies Act, 2013 (“the Act”) read with Rule 7 of the Companies (Accounts) Rules, 2014. Ind AS is applicable to the Company from 1 April, 2017.

The effect of the transition from IGAAP and Ind AS has been explained by way of a reconciliation in the standalone financial statements and consolidated financial statements.

RESULTS OF OPERATIONS AND THE STATE OF COMPANY’S AFFAIRS

The Highlights of the Company’s Performance (Standalone) for the Year Ended 31 March, 2018 are as under:

Revenue from operations increased by 12.76% to Rs.19,181.18 million from Rs.17,010.85 million in previous year.

Profit before Tax was Rs.1,076.23 million as compared to a loss of Rs.94.26 million in the previous year.

Profit after Tax was Rs.784.80 million in comparison to a loss of Rs.17.63 million in the previous year.

Financial Performance Review and Analysis (Consolidated)

The Company achieved a consolidated turnover of Rs.19,545.06 million for the year ended 31 March, 2018, resulting in an increase of 12.90%, as compared to Rs.17,307.39 million in the previous year. Increase in revenue is primarily on account of growth in value added products and product mix. Profit after tax on consolidated basis was Rs.870.56 in comparison to Rs.47.56 million in the previous year on account of gross margin expansion and operational efficiency.

DIVIDEND

The Board of Directors is pleased to recommend a final dividend of Rs.0.75/- per equity share of face value of Rs.10/- each for the financial year ended 31 March, 2018 payable to those Member’s whose names appear in the register of Members as on the Record date amounting to Rs.75.85 million (inclusive of dividend distribution tax of Rs.12.93 million.

The final dividend is subject to the approval of Members at the ensuing Annual General Meeting (AGM).

TRANSFER TO RESERVES

The Company did not transfer any sum to the General Reserve for the financial year under review.

BUSINESS OVERVIEW

Parag Milk Foods Limited (PMFL) is India’s leading manufacturer and marketer of branded dairy foods and beverages based on 100% cow milk. The Company started off with collection and distribution of milk in 1992, and, over the years, it has evolved as India’s largest dairy FMCG player by developing a large portfolio of dairy and value-added products with a strong focus on health and nutrition. The Company has diverse range of products like cheese, ghee, fresh milk, whey proteins, paneer, curd, yoghurt, milk powder and dairy based beverages targeting a wide range of consumer groups under the brands Gowardhan, Go, Topp Up, Pride of Cows, Avvatar, Milkrich and Slurp.

Innovation has been an essential driver of the Company’s progress. It has transformed the way the Company meets the consumer demands by consistently introducing innovative products that have re-defining categories. Besides, it has also brought in innovation across its integrated business value chain, strengthening Company’s competitiveness. The Company has built a strong portfolio of value-added products to stay in sync with the evolving consumer preferences.

The financial year 2017-18 was ruled by several innovative and new product launches, line extensions, consumer engagement, supply chain enhancements, brand building and most importantly, an enhanced focus on health and nutrition segment.

To strengthen the company’s presence in north region, we have introduced fresh dahi. With this launch, we have expanded our geographical reach and have entered into Rs.1,500 cr curd market of Delhi. The Northern region contributes ~33% of curd consumption in India.

We have also launched Mishti Doi which is nutritionally rich in protein. We believe the addition of Mishti Doi to our product portfolio will further build up the Gowardhan Dahi category. This traditional Bengali dessert is a delicious way to end every meal.

We have launched Gowardhan Paneer as a fresh paneer category with a shelf life of 75 days and is made from 100 % cows’ milk. It is a rich source of proteins and vitamins. Being the 1st mover, we intend to create Branded category of fresh Paneer and rule the market as category leader. It is unadulterated and despite of 75 days of shelf life, it is free from preservatives and additives. This is the only product which has used ESL technology.

As we call ourselves “The Cheese People” and innovation is in our DNA. We have helped in developing and expanding the cheese market through the launch of several one-of-its-kind products like Cheese slices in the flavours of Green chutney (Mint leaves), Schezwan, Piri-Piri, Cheese spreads in the flavours of Smoked Paprika, Herbs and Olives, Garlic, Spice and Gourmet cheese, amongst others in the past. To continue the legacy, this year, we have launched G0 Cheese Cubes and Go Chocolate Cheese this year. Go chocolate cheese is the unique variant - a product that combines the taste of chocolate in the form of cheese.

With a mix of tasty and healthy, Go Chocolate Cheese is a distinctive product specially introduced to satiate the consumers’ changing preferences, while at the same time to provide nutrition to kids.

‘Go Cheese Cubes’ are creamy, tasty, and are all natural with no preservatives, emulsifiers, artificial colours or flavours, making it suitable even for health conscious consumers. It is a rich in calcium and milk protein. With the launch of ‘Go Cheese Cubes’, our aim is to cater to the growing retail segment by providing a mass-consumption item like cheese cubes, which is versatile in terms of applications. We are confident that this product will help us strengthen our distribution network in tier II & tier III markets where the penetration of cheese is increasing rapidly

In the whey protein segment, the Company widened its product offerings under the Avvatar brand by launching Advance Muscle Gainer. Advanced Muscle Gainer is the 1st Gainer in India to get Informed-Sports certification from WADA approved lab in UK confirming that it is banned substance free making it a perfect product for consumers and athletes.It is a healthy balance of freshest blend of protein and carbohydrates to help consumer gain lean muscle mass. Each 60g scoop offers highest protein (25.5g) in mass gainer segment along with 24g carbohydrates and naturally occurring 5.7g BCAA and 4.3g glutamic acid. It is a right blend of Protein-Carb Matrix - Whey Protein Concentrate and Isolate, Casein, Maltodextrin and Dextrose, specially designed for Indian consumers understanding Indian diet patterns. It has No added sugar which ensures that all the required calories comes from good quality Protein-Carb matrix. It is enriched with 21 vital vitamins and minerals to support overall well-being and growth

To strengthen the presence in north we have acquired the manufacturing unit of Danone Foods and Beverages India Pvt Ltd., the local entity of French dairy firm Danone SA. The acquisition will strengthen the Company’s distribution of fresh category products like milk, dahi, paneer, yogurt in the Northern and Eastern regions of India, which is largely dominated by buffalo milk consumption. This move will bring us closer to the end consumer and will give us an edge to understand the consumer preferences in northern India. The plant is spread across 5,500 square meters on the outskirts of Delhi NCR. Its current milk processing capacity is 0.75 LLPD (lakh litre per day) along with curd processing capacity of 15 tonne. We aim to educate farmers on best practices and help enhance their income. Initially we have associated with over 2,000 farmers (to procure cows milk) and we will keep on adding to these numbers going forward.

During the year, the Company laid strong emphasis on enhancing the supply-chain management and distribution network. The Company also appointed a consulting group to optimise its distribution model through the concept of ‘Theory of Constraints’. It allowed the Company to improve the distribution reach with lower stock outs, reducing non-moving inventory and better rationalisation of inventory at dealers, retailers and the company level. The roll out of SFA (sales force automation) and DMS (distribution management system) will further strengthen the distribution network.

We have also strengthened our leadership team with strategic hirings and created new positions including Chief Operations Officer and Chief Commercial Officer (CCO). All these senior executives are seasoned professionals with long stints in the FMCG sector. As a strategy, we are focusing on becoming a strong national FMCG dairy company and putting more emphasis on growing our consumer business. With the support of the new senior leadership team, we are aiming at a double digit growth this fiscal.

Export Market

PMFL enjoys a strong reputation and brand recall across several geographies through its exports across UAE, Singapore, Oman, Kuwait, Mauritius, New Zealand, Australia, Congo, Seychelles, Iraq, Hong Kong, Philippines, Sri Lanka, UAE and Bangladesh.

During the year, the Company recorded an export turnover of was ? 596.43 million as against ? 568.22 million last year, increasing ~5% during the year.

Bhagyalaxmi Dairy Farm Pvt. Ltd.

Bhagyalaxmi is India’s first modern dairy farm consisting of approximately 2,500 Holstein Frieisan cows, equipped with state-of-the-art technology for feeding, milking and processing of fresh milk. It is PMFL’s subsidiary with a production capacity of approximately 30,000 LPD. It produces “Farm- to-Home” premium milk under the brand name of “Pride of Cows” (POC). Over the years the brand has gained demand from the markets due to its unique characteristics like fresh, untouched and unadulterated milk. Being fully automated without any human intervention the quality and safety of the milk has been accepted by our 20,000 households in Mumbai, Pune and Surat. The farm also operates as a R&D centre for dairy farming in India that educates farmers on best practices in animal feeding, rearing and milking for improving their cows’ productivity. PMFL also created a bioscience division with the aim of converting waste into developing cattle feed and organic manure for farmers.

Future Prospects

The Company enjoys strong partnerships with top institutional buyers in the country and will continue to deliver quality-consistent, customised product requirements.

The Company is bullish about its prospects in the health and nutrition segment. With the launch of its first 100% natural immunity booster called ‘GO Colo Power’ in July 2018, the Company has further strengthened its offerings in the health & nutrition segment, which further reiterates its leadership in the value-added products category.

Colo Power is made from the first milk of cows just after calving and is enriched with immunoglobulins and probiotics and has the same goodness equivalent to that of a mother’s first milk. The colostrum helps to build long-term immunity and improves and strengthens the digestive system.

With the ongoing investments in solidifying the supply chain management, the Company is hopeful of expanding its distribution reach to the untapped markets as well as improve existing distribution efficiency and productivity.

SHARE CAPITAL

During the year under review, there was no change in the Equity Share Capital of the Company.

The Authorised Share Capital of the Company is Rs.1,000,000,000/made up of 100,000,000 Equity Shares of Rs.10/- each, and the Issued, Subscribed and Paid Up Share Capital remains Rs.841,145,820/- made up of 84,114,582 Equity Shares of Rs.10/- each.

The Company has not issued shares with differential voting rights nor granted any stock options or sweat equity during the year under review. None of the Directors of the Company hold instruments convertible into equity shares of the Company.

Material Changes and Commitments affecting the Financial Position of the Company which have occurred Between the end of the Financial Year of the Company to which Date the Financial Statement relate and Date of the Report.

I. During the year, the Company sought approval of Members by way of Special Resolutions through Postal Ballot as required pursuant to Section 110 of the Act read with Rule 22 of the Companies (Management and Administration) Rules, 2014 (the “Act”) for the following Special Resolutions.

1. Re-classification of IRIS Business Solutions Private Limited from Promoter Category to Public Category; and

2. Increase of Investment Limit by Non-Resident Individuals to 24% of the Paid -up Equity Capital of the Company.

The resolutions were approved by the requisite majority and were deemed to have been passed on Monday, 9 April, 2018.

II. Acquisition of manufacturing plant from Danone Foods and Beverages India Private Limited (“the Seller”) which is part of the global food products multinational corporation headquartered in Paris (hereinafter referred to as “Danone”). The Company has acquired Danone’s factory situated at Plot No. 2266-2268, Food Park Phase -2 HSIIDC Industrial Estate- Rai, Sonipat, Haryana-131029, and proposes to spend additional capex for further expansion to be carried out in it.

SUBSIDIARY COMPANY

As on 31 March, 2018, the Company has one Wholly Owned Subsidiary called Bhagyalaxmi Dairy Farms Private Limited (BDFPL) which is located at Manchar, Pune. BDFPL which is fully automated cow farm, housing over 2,500 Holstein Friesian cows with superior quality yield. BDFPL was established with the aim to educate farmers about best practice of breeding, feeding, animal management and improving productivity.

BDFPL’s total revenue Stood at Rs.832.45 Mn in FY 17-18 in comparison to Rs.517.98 Mn in FY 16-17. BDFPL made Profit After Tax of Rs.85.78 Mn for FY 17-18 in comparison to Rs.65.19 Mn in FY 16-17.

The accounts of the Subsidiary are also uploaded on the website of the Company at www.paragmilkfoods.com

Pursuant to the provisions of Section 129 of the Company’s Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the Subsidiary Company in the prescribed format AOC-1 is appended as Annexure - I to this Report.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company for the FY 2017-18 are prepared in accordance with the requirements of Indian Accounting Standards AS 110 (read with IND AS 28), issued by, Central Government under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, the Listing regulations, the Audited Consolidated Financial Statements of the Company forms a part of this Annual Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Retirement by rotation and subsequent re-appointment

Pursuant of the provisions of Section 152 of the Act, Mr. B.M.Vyas, Non-Executive Director (DIN-00043804) is liable to retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.

i. Mr. Bharat Kedia resigned w.e.f 10 July, 2017, as Chief Financial Officer (Key Managerial Personnel) of the Company. Pursuant to the recommendation of the Nomination and Remuneration Committee and Audit Committee, Mr. Vimal Agarwal has been appointed as Chief Financial Officer (Key Managerial Personnel) of the Company w.e.f 21 December, 2017.

ii. Mr. Pritam Shah (DIN- 01127247) has been reappointed as Managing Director and Mr. Devendra Shah (DIN-01127319) has been re-appointed as Whole-time Director respectively for a further term of 5 years w.e.f 1 April, 2018 to 31 March, 2023, subject to the approval by the Members in the ensuing AGM.

iii. Mrs. Rachana Sanganeria is the Company Secretary and Compliance Officer of the Company as on 31 March, 2018.

Pursuant to Regulation 36(3) of the Listing Regulations, the brief profile of the Directors eligible for re-appointment forms part of the Notice of the AGM.

DECLARATION OF INDEPENDENCE FROM INDEPENDENT DIRECTORS:

Pursuant to Section 134(3)(d) of the Act, the Company has received declaration from all the Independent Directors confirming that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Regulation 16(1)(b) of the Listing Regulations.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT.

Appointment and Remuneration of Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re-enactment(s) thereof for the time being in force is available on the website of the Company at www.paragmilkfoods.com.

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modifications(s) thereof in respect of Directors/ employees of the Company is set out in this report.

No commission was paid during the year to the Managing Director/Whole Time Director from the Company or from its subsidiary company.

ANNUAL EVALUATION OF BOARD’S PERFORMANCE

Pursuant to the provisions of the Companies Act, 2013 read with Rules thereunder and the Corporate Governance requirements as prescribed under Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its committees as well as the performance of the Directors individually.

The performance of the Board and individual Directors was evaluated by the Board seeking inputs from all the Directors. The performance of the Committees was evaluated by the Board seeking inputs from the Committee Members. The Nomination and Remuneration Committee reviewed the performance of the individual Directors .

A separate meeting of Independent Directors was held on 24 March, 2018 chaired by Mr. Ramesh Chandak, Independent Director, pursuant to Schedule IV of the Act and the Listing Regulations,. This was followed by the Board Meeting that discussed the performance of the Board, its Committees and the Individual Directors.

The criteria for performance evaluation of the Board included composition and structure of the Board & Committee(s), attendance of Directors at Board and committee meetings,participation at meetings, domain knowledge, cohesion in the Board’s meeting, awareness and observance of governance, constructive contribution and inputs in the meetings and decision making process and effectiveness of Board processes etc.

FAMILIARIZATION PROGRAMMES FOR THE INDEPENDENT DIRECTORS

In compliance with the requirements of the Listing Regulations, the Company has put in place familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operate business model etc,. The familiarisation programme for Independent Directors in terms of provisions of Regulation 46(2)(i) of Listing Regulations, is uploaded on the website of the Company at www.paragmilkfoods.com.

MEETINGS OF THE BOARD

The Board of Directors met 5(five) times in the FY 2017-2018.The details of the Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report which forms part of this Annual Report. Further, the Board has also dealt with certain items through circular resolutions, which were confirmed by the Directors at the subsequent Board Meeting.

COMMITTEES OF THE BOARD

There are currently 4 (Four) Statutory Committees of the Board and 1 (one) Non-mandatory committee, as follows:

I. Audit Committee;

II. Stakeholders’ Relationship Committee;

III. Nomination and Remuneration Committee;

IV. Corporate Social Responsibility Committee; and

V. Finance Committee.

During the Financial Year under review, the Board re-constituted some of the Committees in accordance with the Act and the Listing Regulations. Details of all the Committees along with their terms of reference, composition and meetings of each Committee held during the Financial Year are provided in the Corporate Governance Report annexed to the Annual Report, and on the website of the Company at www.paragmilkfoods.com.

AUDIT COMMITTEE

The composition of the Audit Committee is covered under the Corporate Governance Report, which forms a part of the report.

The Board has accepted all the recommendations made by the Audit Committee during the year under review.

Buy Back

The Company has not bought back any of its securities during the Financial Year ended 31 March, 2018.

Directors Responsibility Statements

Pursuant to the requirements under Section 134 of the Companies Act, 2013, with respect to the Director’s Responsibility Statements, the Board of Directors of the Company hereby confirms:

a) that in the preparation of the annual accounts for the Financial Year ended 31 March, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) t hat 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 and loss of the Company for the Financial Year ended 31 March, 2018.

c) that the Directors 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) that the Directors had prepared the annual accounts for the Financial Year ended 31 March, 2018 on a going concern basis; and

e) that 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.

DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS

The Company had instituted the ESOP Trust in the name of “Parag Milk Foods Employees Stock Option Trust” and the “Parag Milk Foods Limited- Employee Stock Option Scheme 2015” (ESOS 2015) during the Per-IPO period. The ESOS 2015 is in accordance with the SEBI Regulations and the relevant provisions of the Companies Act, 2013 along with the Rules made there under including any amendments made there to or notifications thereof.

There is no material change in the ESOS 2015 during the year under review and the scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014.

The ESOS 2015 is administered by the ESOP Trust. 2,27,000 Equity Shares were allotted to the ESOP Trust on 3 September, 2015. The Options were granted to the eligible employees pursuant to the Nomination & Remuneration Committee Meeting on 04 September, 2015. The Nomination & Remuneration Committee on 24 June, 2016 approved vesting of the options in accordance with the ESOS 2015 and conditions of grant based on the Company’s performance during the FY 2015- 2016 and subject to the continued employment of the eligible employees till 3 September, 2016 and that the right to exercise would extinguish on 3 September, 2018.

Details required to be provided under Section 62 of the Companies Act, 2013 and Rule 12(9) of Companies (Share Capital and Debenture Rules, 2014) and SEBI (Share Based Employee Benefits) Regulations, 2014 are set out as Annexure II to this report.

As the aforesaid ESOS 2015 scheme was formulated in the pre-IPO period the Company is seeking to ratify the existing ESOS 2015 scheme by the Members in the ensuing AGM.

RISK & INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by the Statutory Auditors as well as Internal Auditors and cover all offices, factories and key business areas.

M/s. KPMG (In India), Chartered Accountants, Pune, appointed as Internal Auditors of the Company, conducted Internal Audit for the FY 2017-18 as per the provisions of Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014. Their reports were reviewed by the Audit Committee and follow-up measures taken wherever necessary.

The Audit Committee reviews the adequacy and effectiveness of the Company’s internal control system and the risk management policies and systems. The Audit Committee reviews the risks faced by the Company on periodic basis and submits its periodical report to the Board about the measures taken for mitigation of Risk in the organization.

The risks faced by the Company and the various measures taken by the Company are detailed in Management Discussion and Analysis section.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established a vigil mechanism in form of Whistle Blower Policy for Directors and employees to report their genuine concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy.

The Policy provides for adequate safeguards against victimization of Directors/employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee.

The Whistle Blower Policy has been placed on the website of the Company at www.paragmilkfoods.com

CORPORATE SOCIAL RESPONSIBILITY

The details of the Corporate Social Responsibility Committee has been provided in the Corporate governance section of this Annual Report.

The report as per Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) on the CSR activities is annexed to this report as “Annexure III”.

CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in ordinary course of business and on arm’s length basis.

During the year, the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material in accordance with the Policy of the Company on materiality of related party transactions.

The Policy on materiality and dealing with related party transactions as approved by the Board is uploaded on the Company’s website and can be accessed at the website at : www.paragmilkfoods.com.

Members may refer to Note 43 to the standalone financial statement which sets out related party disclosures pursuant to Ind AS.

PARTICULARS OF INVESTMENTS, LOANS, AND GUARANTEES

The particulars of Investments, Loans, Guarantees covered under the Provisions Section 186 of the Companies Act, 2013 read with rules made thereunder form part of the notes to the financial statements provided in the Annual Report.

DEPOSITS

During the year under review, the Company has not accepted any deposit within the meaning of Section 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force). The Company has neither accepted nor renewed any deposits during the Financial Year ended 31 March, 2018.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [‘POSH Act’].

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The objective of this policy is to lay clear guidelines and provide right direction in case of any reported incidence of sexual harassment across the Company’s offices, and take appropriate decision in resolving such issues.

During the FY 2017-18, the Company has not received any complaint on sexual harassment.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by the Securities and Exchange Board of India (SEBI). The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under Regulation 34(4) read with Schedule V of the Listing Regulations, together with certificate received from Company Secretaries in Practice confirming compliance with the conditions of Corporate Governance is attached to the Report on Corporate Governance.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations is presented in a separate section, forming part of the Annual Report and provides details of the overall industry structure, developments, performance and state of affairs of the Company’s various business along with internal controls and their adequacy, Risk Management Systems and other material developments during the financial year ended 31 March, 2018.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of Companies (Accounts) Rules, 2014, the particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act are annexed as “Annexure IV” to this report.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, Extract of Annual Return of the Company as on 31 March, 2018 in the prescribed Form MGT-9 is annexed to this report as “Annexure V”.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure pertaining to remuneration as per Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, the disclosures pertaining to the remuneration and other details are annexed as “Annexure VI” to this Report.

Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) and(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, drawing in excess of the limits set out in these Rules forms part of this Annual Report. In terms of Section 136 of the Act, this report is being sent to the Members and others entitled thereto, excluding the aforesaid information. The said information shall be available for inspection by the Members at the Registered Office of the Company during the business hours on all working days (Monday to Friday) upto the date of the ensuing AGM. The said information shall also be provided to any Member of the Company, who sends a written request to the Company.

SIGNIFICANT / MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review , the Company has complied with the applicable Secretarial Standards i.e.SS-1 and SS-2, relating to “Meetings of the Board of Directors” and “General Meetings, respectively, issued by The Institute of Company Secretaries of India.

STATUTORY AUDITORS

In accordance with the provisions of Companies Act, 2013, at the Annual General Meeting held on 26 June, 2015, the shareholders had appointed M/s Haribhakti & Co, LLP, Chartered Accountants, Pune (Firm Registration No. 103523W / W100048), as Statutory Auditors of the Company, for a period of 5 years i.e. upto the conclusion of the Annual General Meeting to be held for the FY 2019-2020.

Pursuant to the notification issued by the Ministry of Corporate Affairs on 7 May, 2018, amending Section 139 of the Companies Act, 2013, the mandatory requirement for ratification of Auditors by the Members at every AGM has been omitted and hence your Company has not proposed ratification of appointment of M/s. Haribhakti & Co., LLP, Chartered Accountants, at the forthcoming AGM.

There is no qualification or adverse remark in Auditors’ report. There is no incident of fraud requiring reporting by the auditors under Section 143(12) of the Companies Act, 2013.

COST AUDITORS

The Board of Directors of the Company in its Board Meeting held on 09 May, 2018, on recommendations made by the Audit Committee have reappointed M/s. Harshad Deshpande & Associates, Cost Accountants, Pune (Firm Registration Number: 00378) as the Cost Auditors of the Company to conduct the cost records for the FY 2018 -2019. In terms of the provisions of Section 148(3) of the Companies Act, 2013, read with Companies (Audit and Auditors) Rules, 2014, as amended, the remuneration payable to the Cost Auditors has to be ratified by the Members of Company. Accordingly, recommends to the Members, the resolution as stated in Item No. 6 of the Notice convening the ensuing AGM.

The Company has received consent from M/s. Harshad Deshpande & Associates, Cost Accountants to act as Cost Auditors of the Company for FY 2018-19 along with certificate confirming their independence and arm’s length relationship.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. N. L. Bhatia & Associates, a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report in Form MR-3 is annexed as “Annexure - VII” to this Report.

The Secretarial Audit Report for the financial year ended 31, March, 2018 does not contain any qualification, reservation, adverse remark in their report.

ACKNOWLEDGMENTS

Your Directors wish to place on record their sincere appreciation for the assistance and support extended by the employees, shareholders, customers, financial institutions, banks, vendors, dealers, the Central and State Governments and others associated with the activities of the Company. We look forward to their continued support in future. Your Company takes pride in its highly motivated employees, workers, staff and wishes to place on record its deep sense of appreciation for their committed services and best contribution towards growth and success of your Company.

For and on behalf of the Board of Directors

Devendra Shah

Place: Mumbai Executive Chairman

Date: 9 May, 2018 (DIN: 01127319)

Source : Dion Global Solutions Limited
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