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Speciality Restaurants Ltd.

BSE: 534425 | NSE: SPECIALITY |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE247M01014 | SECTOR: Hotels

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012

Director’s Report

The Directors hereby present the Nineteenth Annual Report together with the audited Financial Statements of the Company for the financial year ended March 31, 2018.

1. Financial Results

Rs.In Millions

Particulars

Standalone

Consolidated

March 31, 2018

March 31, 2017

March 31, 2018

March 31, 2017

Revenue from operations

2,967.9

3,124.2

2,967.9

3,124.2

Other Income

79.0

87.3

79.0

87.3

Total Income

3,046.9

3,211.5

3046.9

3,211.5

Earnings before Interest, Depreciation, Amortization and Tax

86.6

74.0

86.6

74.0

Less:

Finance Costs

0.0

0.2

0.0

0.2

Depreciation /Amortization/Impairment

296.6

326.6

296.6

326.6

Loss before exceptional item and tax

(210.0)

(252.8)

(210.0)

(252.8)

Share of loss in Joint venture company

-

-

(19.2)

(36.7)

Loss before exceptional item and tax

(210.0)

(252.8)

(229.3)

(289.5)

Less: Exceptional item

101.4

-

15.8

-

Loss before Tax

(311.4)

(252.8)

(245.0)

(289.5)

Less: Taxes Expenses / (credit) Current Tax

2.4

2.4

Deferred Tax

222.6

(40.9)

222.6

(40.9)

Short provision for tax relating to prior years

-

4.2

-

4.2

Loss for the year

(534.1)

(218.5)

(467.7)

(255.2)

Total other comprehensive income

3.7

5.6

3.7

5.6

Total comprehensive income for the period

(530.4)

(212.9)

(463.9)

(249.7)

2. Financial Performance and the state of Company''s affairs

India continues to be one of the fastest growing large economies in the world. The year under review was far from normal. Structural transformative changes like demonetisation and implementation of the Goods and Services Tax (GST) have had an impact on the restaurant industry including your Company.

Goods and Services Tax (GST) was implemented by the Government of India across the country with effect from July 1, 2017, with a single rate of tax which was a bold move and also appreciated by all, even though it created a lot of confusion and some hardships to the common man as well as corporates. What followed next was a dynamic step of reduction in the tax slab rate with effect from November 15, 2017, wherein GST rate was reduced drastically from 18% to 5% for all standalone restaurants bringing a great relief to all customers and lot of cheer. However, with the reduction the government withdrew the Input Tax Credit facility for the restaurant industry, which was available earlier, that had a cascading effect on the organised restaurant operators.

The Restaurant industry is the only industry that is not allowed the benefit of input tax credit and hence has to bear the burden. This sudden change in the regulation by the Government has led to a substantial increase in cost of operations and also becoming detrimental for expansion and growth because of increase in project costs making it unviable.

While the economic growth momentum was temporarily impacted due to unfavourable economic conditions during the year, the Company continued its focus on the cost rationalisation and improving efficiencies.

The Company''s financial performance for the financial year ended March 31, 2018 is as under:

(i) Total Income of your Company for the year under review was Rs.3,046.9 million as against Rs.3,211.5 million in the previous year.

(ii) The earnings before Depreciation, Interest, Tax and Amortization (EBDITA) amounted to Rs.86.6 million (2.92% of the revenue) as against Rs.74.0 million (2.37% of the revenue) in the previous year.

(iii) Total comprehensive income for the period for the year under review was Rs. (530.4) million as against Rs. (212.9) million in the previous year.

Your company continued to face challenging environment during the year under review primarily attributable to reduction in discretionary spends of consumers as a result of inflationery trends, uncertainty in the markets on account of the lingering effects of demonetisation and confusion around GST, increase in lease rent and all other operational costs due to reversal of input tax credit. This resulted in same store sales growth remaining in the negative territory due to lower footfalls during weekdays.

Some of the other factors that played a major role were extended break-even period in some of the new restaurants, impairment of Investment and Receivables, reversal of Deferred Tax Asset, Share of Loss in Joint Venture company all of which resulted in a loss during the financial year 2017-18.

During the year under review, your Company opened nine (9) restaurants out of which three (3) are Company Owned Company Operated (COCO) while six (6) are Franchise Owned Company Operated (FOCO) and five (5) confectionaries at the end of financial year ended March 31, 2018, your Company has 106 Restaurants (including 27 franchisees), 22 Confectionaries.

However, your Company continues to pursue the development of new restaurants and conversion of existing restaurants under various brands to newer formats, catering to the changing preferences of consumers in domestic markets and aggressively pursuing international expansion of existing brands through franchise route to achieve sustainable and profitable growth.

Despite adverse economic factors and structural changes in the taxation regime in the country, your Company continues to combat the same focussing on innovative offerings to enhance guest experience together with it''s efforts on cost rationalisation for improving operational efficiency.

The detailed financial performance is given in the Management Discussion and Analysis Report.

3. Dividend on Equity Shares

On account of the loss reported by the Company during the year under review and no surplus amount being available for declaration of dividend through reserves outstanding as on March 31, 2018, the Board of Directors did not recommend any dividend for the financial year ended March 31, 2018 (previous year-Nil).

4. Employee Stock Option Scheme (ESOS)

During the year under review, the Company has not granted any fresh stock option to its employees.

Details of the options granted under Employee Stock Option Scheme (ESOS), as also the disclosures in compliance with Section 62 of the Companies Act, 2013 and Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014, Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the SEBI Guidelines) and SEBI (Share Based Employee Benefits) Regulations, 2014 (the SEBI Regulations) are given in Annexure A which forms part of this report. Certificate from Statutory Auditors M/s. Deloitte Haskins and Sells LLP, Chartered Accountants, with regard to implementation of ESOS Scheme of the Company in compliance with ESOP Regulations would be placed for inspection by the Members at the ensuing annual general meeting.

5. Audited Financial Statements

As per Regulation 34(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), Audited Financial Statements (Standalone and Consolidated) for the financial year ended March 31, 2018 i.e. Balance Sheet, Statement of Profit and Loss and a Cash Flow Statement is appended.

Your Company had adopted Indian Accounting Standards (Ind-AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015 issued by the Ministry of Corporate Affairs (MCA) with effect from April 1, 2017. Previous financial year has been restated to Ind-AS.

There are no material changes and commitments affecting the financial position of the Company subsequent to the close of the financial year ended March 31, 2018 till the date of this report.

6. Subsidiary

Your Company has a wholly owned subsidiary company, Speciality Hospitality UK Limited as at March 31, 2018, which was incorporated as a private limited company, limited by shares (bearing company number 10927982) on August 22, 2017, registered with The Registrar of Companies for England and Wales, having its registered office at 134 Buckingham Palace Road, London, SW1W 9SA, United Kingdom under the UK Companies Act, 2006.

7. Joint Venture

Your Company has a joint venture company, Mainland China & Indigrill Restaurant LLC (erstwhile Mainland China Restaurant LLC) at Doha, Qatar as at March 31, 2018. The Consolidated Financial Statements of your Company and its joint venture company, prepared in accordance with the relevant Accounting Standards of the Institute of Chartered Accountants of India, duly audited by the Statutory Auditors, form a part of the Annual Report and are reflected in the Consolidated Accounts.

The partners of the Joint venture company, in view of the losses incurred, discontinued operations of the Mainland China restaurant with effect from May 16, 2017.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of joint venture company in Form AOC-1 is attached to the Financial Statements of your Company.

Exceptional Item:

In view of the continuous cash losses in the joint venture company (JV), the joint venture partner expressed a desire to exit from the JV. Various options were explored by the partners to restructure the operations of the JV and then mutually agreed and suspended the operations of the Mainland China restaurant at Doha, with effect from May 16, 2017 as no other options were available without infusion of additional capital which was not found viable by both.

Thereafter, JV partners even explored the possibility of introduction of a new partner in order to revive the business with infusion of additional capital as required but they soon realized that doing business in Doha was not conducive any more due to sanctions by GCC countries in June 2017. The situation went from bad to worse and there was nobody willing to be a new partner in JV as they did not find it to be feasible option. Thereafter JV partners agreed to sell the assets of the JV to realize the salvage value which was utilized by the JV to settle local liabilities. As the business of the JV has been closed down due to unfavourable market conditions in Qatar, the Company was left with no choice but to make provision for financial commitment and other dues from the JV amounting to Rs. 101.4 million.

8. Awards and Recognition

Your Company''s brand initiatives have been recognized and appreciated across forums. During the year under review your Company has won the following awards:

- Mainland China, Kolkata won ''The Week Golden Plate Award'' in the category of Culine-5 Rating.

- Mainland China, Pune won ''The Times Food Awards'' in the category of Best Chinese restaurant.

- Oh! Calcutta, Kolkata won ''The Week Golden Plate Award'' in the category Culine-5 Rating.

- Oh! Calcutta, Mumbai won ''Times Food Awards'' in the category of Best Bengali in Casual Dining.

- Sigree Global Grill, Springs Hotel Chennai won the ''Burrp Award'' in the category of Best Buffet.

- Sigree, Anna Nagar, Chennai won the ''Rocheston Award'' in the category of Distinguished Restaurant.

- Sigree, Anna Nagar, Chennai won the ''Times Food Awards'' in the category Best North Indian Restaurant.

- Asia Kitchen by Mainland China, Spring Hotel, Chennai won ''The Week Golden Plate Award'' in the category of Culine-4 Rating.

- Cafe Mezzuna, Kolkata won ''The Telegraph Food Guide Award'' in the category of Award for Excellence.

- POH, Mumbai won the ''Living Foodz Epicurean Guild Awards'' in the category of Best New Restaurant.

- Sweet Bengal, Mumbai, won the ''Times Food Awards'' in the category of Best Mithai Shop.

9. Directors and Key Managerial Personnel

I. Directors

Your Company has six (6) Directors of which three (3) are Independent Directors and three (3) are Executive Directors.

II. Independent Directors

In terms of the definition of ''Independent Directors'' as prescribed under Regulation 16(1)(b) of the Listing Regulations and Section 149(6) of the Companies Act, 2013, the Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013, to the effect that each of them meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1) of the Listing Regulations. The following Non-Executive Directors are Independent Directors of the Company:

1. Mr. Dushyant Mehta

2. Mr. Ullal Ravindra Bhat (appointed with effect from April 28, 2017)

3. Mr. Rakesh Pandey (appointed with effect from November 29, 2017)

III. Woman Director

Mrs. Suchhanda Chatterjee is a Director of the Company since incorporation of the Company. Accordingly, the requirements of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1) of the Listing Regulations have been complied with by the Company.

IV. Managing Director and Whole-time Directors

Mr. Anjan Chatterjee has been serving as the Managing Director of the Company since December 2007. He has been appointed as the Chairman of the Board with effect from September 11, 2017.

Mrs. Suchhanda Chatterjee and Mr. Indranil Chatterjee have been serving as Whole-time Directors of the Company since July 2010.

V. Director and Key Managerial Personnel Appointments

Mr. Ullal Ravindra Bhat (DIN: 00008425) was appointed as an Additional Director on the Board of the Company with effect from April 28, 2017. His appointment as an Independent Director of the Company with effect from April 28, 2017 for the period of five (5) years has been approved at the 18th Annual General Meeting of the Members of the Company held on August 21, 2017.

Mr. Rakesh Pandey (DIN: 00113227) was appointed as an Additional Director on the Board of the Company with effect from November 29, 2017. His appointment as an Independent Director of the Company with effect from November 29, 2017 for the period of five (5) years has been approved by the Members of the Company through a Resolution passed by Postal Ballot on March 24, 2018.

The Board of Directors of the Company has approved appointment of Mr. Anjan Chatterjee, Managing Director of the Company as Chairman of the Board with effect from September 11, 2017.

Resignation

During the year Mr. Susim Mukul Datta (DIN: 00032812), Chairman of the Board and Independent Director of your Company resigned with effect from August 31, 2017. The Board places on record its appreciation for the valuable services rendered and contribution made by Mr. Susim Mukul Datta during his tenure as Director of the Company.

Key Managerial Personnel

Mr. Anjan Chatterjee, Chairman & Managing Director; Mrs. Suchhanda Chatterjee, Whole-time Director; Mr. Indranil Chatterjee, Whole-time Director; Mr. Rajesh Kumar Mohta, Executive Director-Finance and CFO and Mr. Avinash Kinhikar, Company Secretary & Legal Head are the Key Managerial Personnel of the Company as per the provisions of the Companies Act, 2013.

VI. Re-appointment of Director Anjan Chatterjee (DIN: 00200443)

In order to comply with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Anjan Chatterjee, Chairman & Managing Director of the Company agreed to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offered himself for re-appointment.

Mrs. Suchhanda Chatterjee (DIN: 00226893)

The Board of Directors of the Company based on the recommendation of Nomination and Remuneration Committee at their meeting held on May 26, 2018, subject to the approval of the Members in the ensuing Annual General Meeting of the Company, approved the re-appointment of Mrs. Suchhanda Chatterjee, as Whole-time Director of the Company designated as Director-Interior and Design for a further period of three years with effect from July 1, 2018.

Mr. Indranil Chatterjee (DIN: 00200577)

The Board of Directors of the Company based on the recommendation of Nomination and Remuneration Committee at their meeting held on May 26, 2018, subject to the approval of the Members in the ensuing Annual General Meeting of the Company, approved the re-appointment of Mr. Indranil Chatterjee, as Whole-time Director of the Company designated as Director-Commercial Operations for a further period of three years with effect from July 1, 2018.

Further details about the Directors seeking re-appointment in the ensuing Annual General Meeting are annexed to the Notice which is being sent to the Members alongwith the Annual Report.

VII. Evaluation of Performance of the Directors, Board and Committees of the Board

Pursuant to the applicable provisions of the Companies Act, 2013, the Listing Regulations and SEBI Guidance Note on Board Evaluation, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as evaluation of its Committees.

The manner in which the formal annual evaluation of the Directors, Committees of the Board and the Board as a whole is given in the report on Corporate Governance which forms part of the Annual Report.

VIII. Policy on Directors'' appointment, remuneration and other details

The Company''s policy relating to remuneration of Directors, Key Managerial Personnel and other Employees as stipulated in Section 178 (3) of the Companies Act, 2013 has been disclosed in the Corporate Governance report, which forms part of the Directors'' report.

IX. Number of Board Meetings

The Board of Directors met six (6) times during the financial year ended March 31, 2018 and the intervening gap between the meetings did not exceed the period prescribed under the Companies Act, 2013. Detailed information on the Meetings of the Board is included in the report on Corporate Governance which forms part of this Annual Report. A separate Meeting of Independent Directors was also held during the financial year ended March 31, 2018.

Besides the above, several Committee Meetings of the Board were held during the financial year ended March 31, 2018, the detailed information of which is included in the report on Corporate Governance.

X. Share Capital

The Paid-up Equity Share Capital of the Company as on March 31, 2018 was Rs.46,95,76,570/-. During the year under review, there was no change in the issued, subscribed and paid-up share capital of the Company.

XI. Related Party Transactions

All the related party contracts, arrangements and transactions during the year were entered in the ordinary course of business and on arm''s length basis. There were no materially significant related party contracts, arrangements and transactions entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions in Form AOC-2 is not applicable.

All Related Party contracts, arrangements and transactions were presented to the Audit Committee for review and approval. Omnibus approval granted by the Audit Committee of the Company for the related party transactions which are foreseen and repetitive in nature were reviewed by the Committee on quarterly basis.

The Policy on Materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Board is uploaded on the Company''s website at the following web lin http://www.speciality.co.in/pdf/policies/POLICY ON MATERIALITY OF RELATED PARTY TRANSACTIONS AND ALSO ON DEALING WITH RELATED PARTY TRANSACTIONS.pdf The details of the transactions with Related Parties are provided on Page No. 116 under Financial Statements.

The report on Corporate Governance as stipulated under Regulation 34 (3) read with para C of Schedule V to the Listing Regulations forms part of the Annual Report. The requisite Certificate from the Practising Company Secretaries confirming compliance with the conditions of Corporate Governance as stipulated under the Listing Regulations is attached to this report.

11. Management Discussion and Analysis Report

As stipulated under Regulation 34(2) of the Listing Regulations, Management Discussion and Analysis Report for the financial year under review is provided in a separate section forming part of the Annual Report.

12. Composition of Audit Committee

The details relating to the composition of the Audit Committee are provided in the Report on Corporate Governance which forms part of this report.

13. Corporate Social Responsibility

In terms of Section 135 of the Companies Act, 2013, the Board of Directors of your Company has constituted a Corporate Social Responsibility Committee (CSR Committee) under the Chairmanship of an Independent Director of the Company. The CSR Committee of the Board has formulated a CSR Policy which has been uploaded on the website of the Company at http://www.speciality.co.in/pdf/ policies/CORPORATE SOCIAL RESPONSIBILITY POLICY.pdf

The Annual Report on CSR activities as prescribed under Section 135 of the Companies Act, 2013 is annexed as Annexure B which forms part of this report.

14. Vigil Mechanism / Whistle Blower Policy

In pursuance of the provisions of Sections 177 (9) and 177 (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and Employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at http://www.speciality.co.in/pdf/policies/VIGIL MECHANISM POLICY.pdf

15. Risk Management

Your Company constituted a Risk Management Committee on November 12, 2014 for complying with the requirements of the Companies Act, 2013 and Listing Agreement to implement the risk management plan and policy of the Company.

The Formation of Risk Management Committee is only applicable to top 100 listed entities, determined on the basis of market capitalisation, as at the end of the immediate previous financial year in terms of Regulation 21(5) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board vide their Resolution dated February 14, 2018 merged Risk Management Committee of the Company with the Audit Committee and included the terms of reference of the Risk Management Committee with the terms of reference of the Audit Committee.

The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the areas of internal financial and risk management systems.

16. Particulars of loans, guarantees or investments

Disclosure on particulars relating to loans, guarantees or investments made during the financial year ended March 31, 2018 under Section 186 of the Companies Act, 2013 is provided on Page No. 99 under Financial Statements.

17. Consolidated Financial Statement

The Consolidated Financial Statement of the Company and Joint Venture company, prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, form part of the Annual Report and are reflected in the Consolidated Financial Statement of the Company.

The Company prepared its financial statements in accordance with Ind-AS, including accounting standard read with Section 133 of the Companies Act, 2013 notified under the Companies (Accounting Standard) Rules, 2006.

The annual financial statement of the joint venture company and related detailed information will be kept at the Registered Office of the Company and will be available to investors seeking information.

The consolidated financial statement reflect the operations of the Mainland China & Indigrill Restaurant LLC (erstwhile Mainland China Restaurant LLC), the Joint Venture company, in which your Company has 49% stake.

18. Internal Financial Controls System and their adequacy

Your Company has laid down adequate internal financial controls system, through requisite policies and procedures. Such controls are operating effectively to ensure accuracy and completeness of the accounting records, the timely preparation of reliable financial information along with the orderly and efficient conduct of business.

In addition, during FY 2017-18, as required under Section 143 of the Companies Act, 2013, the Statutory auditors have evaluated and expressed an opinion on the Company''s Internal financial controls over financial reporting based on an audit. In their opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as on March 31, 2018.

I. Statutory Auditors and their report

M/s. Deloitte Haskins and Sells LLP, Statutory Auditors of the Company were appointed at the Fifteenth Annual General Meeting of the Company held on September 15, 2014 to hold office until the conclusion of the Annual General Meeting to be held in the year 2019.

Pursuant to the Companies (Amendment) Act, 2017, which was made effective from May 7, 2018, had omitted the requirement of ratification of appointment of auditors by members of the Company at every annual general meeting. Pursuant to the amendment, the Resolution for ratification of appointment of statutory auditors has been excluded from the Notice of AGM.

The Notes on Financial Statements referred to in the Auditor''s Report are self-explanatory and do not call for any further comments. The Auditor''s Report does not contain any qualification, reservation or adverse remark.

II. Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. GMJ & Associates, a firm of Company Secretaries in Practice, to conduct the Secretarial Audit of your Company for the financial year ended March 31, 2018. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed as Annexure C which forms part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

20. Compliance with Secretarial Standards on Board Meetings and General Meetings

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

21. Particulars of Employees

The ratio of remuneration of each director to the median employee''s remuneration and other details in terms of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as Annexure D which forms part of this report.

The information in respect of employees of the Company required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

22. Statutory Disclosures

I. Conservation of Energy, Technology Absorption and Foreign Exchange and Outgo

(i) Conservation of Energy

The disclosures required as per the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) (A) of the Companies (Accounts) Rules, 2014 regarding Conservation of Energy is detailed below:

The Company values the significance of conservation of energy and remain conscious about the environmental impact of its business operations and continuously strives to improve energy efficiency through various initiatives. During the year, the Company undertook a variety of energy conservation measures across all its Restaurants, making continuous efforts for judicious use of energy at all levels of operations by utilizing energy efficient system and processes.

a) The steps taken or impact on conservation of energy

- Installed energy efficient LED Lights in all restaurants.

- Installed Energy Management System in 25 restaurants

- Installed Energy Saving Sensors in the AC System of 25 restaurants.

b) The steps taken by the Company for utilizing alternate sources of energy

The Company has a installed 20KW Solar Power Plant at Mainland China Restaurant at Greater Kailash (GK—II) at New Delhi.

c) The capital investment on energy conservation equipments

Rs.in Millions

Particulars of Investment

Amount

Installation of Energy Management System

1.5

Installation of AC Energy Saver System

Investment in power efficient LED Lights in all restaurants

(ii) Technology Absorption

The activities of the Company are not covered under the disclosure required as per the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 (3) (B) of the Companies (Accounts) Rules, 2014 regarding technology absorption.

The disclosure required as per the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3)(C) the Companies (Accounts) Rules, 2014 regarding foreign exchange earned in terms of actual inflows and Foreign Exchange outgo during the year under review in terms of actual outflows are given below:

Rs.in Millions

Foreign Exchange Earnings and Outgo

2017-18

2016-17

Foreign Exchange Earned in terms of actual inflows

14.3

14.3

Foreign Exchange Outgo in terms of actual outflows

1.9

2.4

II. Your Company has zero tolerance for sexual harassment at its workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at the 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.

No complaint has been received by the Internal Complaints Committee during the year under review pursuant to Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

III. No stock options were granted to the Directors of your Company during the year under review.

IV. Additional information and details as specified in Rule 8(5) of the Companies (Accounts) Rules, 2014 are included in the Directors'' Report.

23. General 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:

i. Details relating to deposits covered under Chapter V of the Companies Act, 2013.

ii. Issue of equity shares with differential rights as to dividend, voting or otherwise.

iii. Issue of shares including sweat equity shares to employees of the Company under any scheme save and except Employee Stock Options Scheme referred to in this Report.

iv. Neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from the subsidiary company.

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

24. Extracts of Annual Return

Pursuant to Sections 134 (3) (a) and 92 (3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return as at March 31 , 2018 is annexed as Annexure E which forms part of this report.

25. Directors'' Responsibility Statement

The Directors confirm that:-

i. in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed and no material departures have been made from the same;

ii. 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 the affairs of the Company at the end of the financial year ended March 31, 2018 and of the loss of the Company for that period;

iii. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

v. they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

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

26. Utilisation of net proceeds from the Initial Public Offering (Issue)

Pursuant to the approval of the Members of the Company obtained through Postal Ballot on November 27, 2015 the objects of the issue as disclosed in the Prospectus dated May 22, 2012 issued by the Company for its Issue were varied. In terms of variation, the Company had proposed to utilise the balance unutilised amount of Rs 578.5 million as on March 31, 2015 towards development of new restaurants/ conversion of existing restaurants under new formats in various locations across the country depending upon various factors such as the customer''s preference, competition, suitable location, selection of suitable premises at an affordable rent, etc., in the financial years 2015-18.

The Company had utilized Rs 355.4 million upto March 31, 2018 out of the balance unutilized amount of Rs 578.5 million towards the new objects relating to the business of the Company approved by the Members on November 27, 2015.

The approval of Members was received through Postal Ballot on March 24, 2018 for variation in terms of the contract or objects of the issue, to utilise the balance amount towards development of new restaurants / conversion of existing restaurants under new formats for further period of three (3) years with effect from April 1, 2018.

The Company has a good set of brands in different cuisines and segments and has also been investing in refreshing of brands to service the aspirations of all guests across geographies. The Company is well poised to effectively capture the growth opportunities in food and beverage domain.

The details of utilization of the IPO Proceeds and the balance outstanding as on March 31, 2018 are provided in the Corporate Governance Report.

27. Acknowledgement

Your Directors would like to express their appreciation for the assistance and co-operation received from the banks, government authorities, customers, vendors and members during the year under review.

Your Directors also wish to place on record their appreciation for the committed services by the executives, staff and employees of the Company.

For and on behalf of the Board

Speciality Restaurants Limited

Anjan Chatterjee

Place: Mumbai. Chairman & Managing Director

Date: May 26, 2018 (DIN: 00200443)

Director’s Report