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DFM Foods Ltd.

BSE:519588  |  NSE:DFMFOODSEQ  |  58888:dfmf  |  IND:FMCG Food & Beverages  |  ISIN code:INE456C01020  |  SECT:FMCG

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You can view full text of the Director's Report for DFM Foods Ltd.
Director Report
Mar2017   Mar 2018

Dear Shareholders,

The Directors have pleasure in presenting their report along with the audited accounts of the Company for the year ended 31st March, 2018.

Financial Results

The financial results as compared to the previous year are as under:-

(Rs. in Lakhs)

Year ended

Year ended

31st March, 2018

31st March, 2017

Revenue from operations

42,531

34,191

Profit before interest, financial expenses and depreciation

5,083

3,183

Other Income

434

499

Interest & financial expenses

1,002

449

Depreciation and amortization

997

723

Profit before exceptional items and tax

3,518

2,510

Exceptional items

-

-

Profit before tax

3,518

2,510

Tax expense

1,187

664

Profit after tax

2,331

1,846

Other Comprehensive Income (after tax)

(35)

(20)

Total Comprehensive Income (after tax)

2,296

1,826

Indian Accounting Standards (Ind AS)

The Company has adopted Ind AS w.e.f. 1st April, 2017 with a transition date of 1st April, 2016. Accordingly results for the year ended 31st March, 2018 have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. Previous year figures have been restated as per Ind AS to make them comparable.

Dividend Distribution Policy & Dividend

The Company has adopted Dividend Distribution Policy which is attached as Annexure - 1 and can also be accessed on the Company''s website at http://www.dfmfoods.com/download/ corporate/dividend-distribution-policy.pdf

Your Directors have recommended the payment of dividend of Rs.5/- per equity share of Rs.10/- each for the financial year ended 31st March, 2018 amounting to Rs.6.04 crores inclusive of dividend distribution tax of Rs.1.03 crores. The dividend payment is subject to the approval of members at the ensuing Annual General Meeting. The dividend will be paid to members, whose names would appear on the Register of Members as on 20th July, 2018.

Transfer to Reserves

During the year under review, no amount is proposed to be transferred to General Reserves.

Operational Review and the State of Company''s Affairs

The details on operational review and the state of Company''s affairs are provided in the Management''s Discussion and Analysis Report forming part of this Annual Report.

Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the corporate governance requirements set out by SEBI. The Report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the auditors of the Company confirming compliance is attached to the Report on Corporate Governance.

Directors and Key Managerial Personnel

Directors

Mr. Sandeep Singhal retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for reappointment. His brief resume and other details are provided in the Report on Corporate Governance.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed both under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Key Managerial Personnel

There has been no change in the Key Managerial Personnel of the Company during the year.

Policy on Directors appointment and Policy on Remuneration

The policy on appointment of Board members, including criteria for determining qualifications, positive attributes and independence of a Director and the policy on remuneration of Directors, KMP and other employees is attached as Annexure - 2.

The details of familiarization programmes to Independent Directors with the Company are put up on the website of the Company at the weblink http://www.dfmfoods.com/download/ investors/Familiarisation-Programme-detail.pdf

Performance Evaluation of the Board, its Committees and Individual Directors

The Board in consultation with its Nomination & Remuneration Committee has implemented a formal process for the annual evaluation of the performance of its Board, its Committees and individual Directors including Independent Directors. This process includes criteria for performance evaluation.

The annual performance evaluation has been carried out in accordance with the above for the year under review.

Particulars of Remuneration of Directors / KMP / Employees

The particulars of remuneration under Section 197(12) of the Companies Act, 2013 and Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached as Annexure - 2A and Annexure - 2B.

Employees Stock Option Scheme

No options were granted during the year. Of the 20,000 options vested earlier, all were exercised during the year. Accordingly, the Company has allotted 20,000 equity shares in two tranches of 10,000 equity shares each on 13th October, 2017 and 23rd February, 2018 respectively.

The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the members. The certificate would be placed at the Annual General Meeting for inspection by members.

During the year, there has been no change in the DFM Foods Employee Stock Option Plan-2014 of the Company.

The applicable disclosures as stipulated under the SEBI Guidelines as on 31st March, 2018 with regard to the DFM Foods Employee Stock Option Plan - 2014 of the Company are available on the website of the Company at www.dfmfoods.com and web link for the same is http://www.dfmfoods.com/download/corporate/ESOP.pdf

Meetings of the Board

Four Board meetings were held during the year. For further details please refer to the Report on Corporate Governance which forms part of this Annual Report.

Directors Responsibility Statement Your Directors state:

a) That in the preparation of the annual accounts for the year ended 31st March, 2018 the applicable accounting standards have been followed and there are no material departures from the same;

b) That the Directors 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, 2018 and of the profit of the Company for the year ended on that date;

c) That the Directors 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;

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

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

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

Auditors and Auditors'' Report

Statutory Auditor

M/s. Deloitte Haskins & Sells, (Firm Registration No.015125N), Chartered Accountants had been appointed as statutory auditors of the Company for a period of 4 consecutive years from the conclusion of the Annual General Meeting held on 31st July 2014, subject to ratification of their re-appointment at every Annual General Meeting. The current tenure of the statutory auditors expires at the conclusion of the ensuing Annual General Meeting.

The Board of Directors on the recommendation of the Audit Committee has recommended re-appointment of M/s. Deloitte Haskins & Sells, (Firm Registration No.015125N), Chartered Accountants as statutory auditors of the Company for a further term of 5 consecutive years from the conclusion of the ensuing Annual General Meeting (AGM), till the conclusion of 30th AGM to be held in the year 2023 subject to approval of the Members.

The Auditors'' Report on the financial statement of the Company for the year forms part of the Annual Report.

There has been no qualification, reservation, adverse remark or disclaimer by the Auditors in their Audit Report.

Secretarial Auditor

The Board had appointed Mrs. Sunita Mathur, Practicing Company Secretary, to conduct the Secretarial Audit for the Financial Year 2017-18. The Secretarial Audit Report is annexed as Annexure - 3. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Internal Financial Control System

The Directors have laid down internal financial controls to be followed by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and the completeness of the accounting records and the timely preparation of reliable financial information.

The Audit Committee evaluates the internal financial control system periodically and no reportable material weaknesses in the design or operation were observed during the year.

Risk Management

Your Directors continually evaluate the risks faced by the Company which could affect its business operations or threaten its existence. The Company takes appropriate risk containment measures and manages the same on an ongoing basis.

Subsidiaries, Joint Ventures and Associate Companies

The Company does not have any subsidiary, Joint Ventures or Associate Company.

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

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo are provided in Annexure - 4 to this Report.

Corporate Social Responsibility (CSR)

The Company has adopted a CSR Policy which can be accessed at the following web link http://www.dfmfoods.com/download/ corporate/CSR-Policy.pdf

The Company has spent above 2% of the average net profits of the Company during the three immediately preceding financial years. The details are provided in the Annual Report on CSR activities attached as Annexure - 5.

Change in Capital Structure and Listing of Shares

During the year under review, the Company has allotted 20,000 Equity Shares under DFM Foods Employee Stock Option Plan -2014 of the Company. With the said allotment the paid-up capital of the Company has increased from Rs.10,00,16,760 divided into 10001676 Equity Shares of the face values of Rs.10/- each to Rs.10,02,16,760 divided into 10021676 equity shares of the face values of Rs.10/- each.

The Company''s shares are listed with BSE Ltd. and National Stock Exchange of India Ltd.

Extract of Annual Return

The extract of Annual Return of the Company is provided in Annexure - 6 to this Report.

Particulars of loans and guarantees given, securities provided and investments made

The Company has neither given any loans or guarantees nor provided any securities covered under the provisions of Section 186 of the Companies Act, 2013.

Contracts and Agreements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the normal course of business and on an 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. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length. All related party transactions are placed before the Audit Committee for review and approval.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link http://www.dfmfoods.com/download/corporate/policy-on-related-party-transactions-and-materiality-of-related-party-transactions.pdf

Your Directors draw attention of the members to Note 30 to the financial statement which sets out related party disclosures.

Disclosures Audit Committee

The Audit Committee comprises of Independent Directors namely Mr. Pradeep Dinodia as Chairman, Mr. Mohit Satyanand, Mr. Sarat Chandra Nanda and Ms. Hiroo Mirchandani as members.

Public Deposits

During the year under review, your Company has not accepted any public deposits under Chapter V of the Companies Act, 2013.

Vigil Mechanism

The Company promotes ethical behaviour in all its business activities and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Vigil mechanism and Whistle blower policy under which the employees are free to report violations of applicable laws and regulations and the Code of Conduct. Employees may also report to the Chairman of the Audit Committee.

Sexual Harassment

Your Directors state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Significant and Material Orders passed by the Regulators / Courts / Tribunals

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.

Acknowledgement

Your Directors would like to place on record their sincere gratitude for the assistance and cooperation received from all the banks. They also wish to place on record their appreciation for the loyal and devoted services rendered by all categories of employees.

On behalf of the Board

Place: New Delhi Mohit Jain

Date: 25th May, 2018 Chairman

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