DIRECTORS' REPORT To, The Members, Your Directors have pleasure in presenting their 28th Annual Report on the business and operations of the company together with the Audited Financial Statements for the year ended 31st March, 2015. 2. State of Company's Affairs and Future Outlook Your company's primary business is manufacturing of dairy products. The company's business was severely affected during the year due to various constraints. Your company is trying to reposition itself in the changing business scenario. Over the past decade, significant transformation took place in the Indian demographic space which led to heightened consumer interest in value added products. This shift in the dynamics of the dairy industry proved beneficial for the manufacturers since value added products have higher margins. 3. Change in Nature of Business There was no change in the nature of business of your company during the year. 4. Dividend No Dividend was declared for the current financial year. 5. Transfer to Reserves Your Company has not transferred any amount of profits to reserves. 6. Changes in Share Capital During the year, your Company had increased the Authorized Share Capital of the Company from Rs. 12 Corers to Rs. 20 Corers. Your Company has neither issued any equity shares with differential rights nor granted any employees stock options/ sweat equity shares to the Directors, Officers or employees of the company during the year. 7. Deposits from Public During the year your Company has not accepted any deposits within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. 8. Extract of Annual Return In accordance with Sections 134(3) (a) and 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "ANNEXURE-A." 9. Number of Board Meetings During the year 12 (twelve) Board Meetings were held, the details of which forms part of the Corporate Governance Report. 10. Particulars of Loans, Guarantees and Investments: Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. 11. Particulars of Contracts or Arrangements with Related Parties Disclosures as required under form AOC-2 are contained in Note 30 (Notes to Accounts).There are no Related Party Transactions which are not at arm's length basis. The policy on Related Party Transactions as approved by Board is uploaded on the Company's website www.mahaanfoods.com . 12. Auditors A. Statutory Auditors': Pursuant to the provisions of Section 139 of the Act and the rules framed there under, M/s D. D. Nagpal & Co., Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 27th annual general meeting (AGM) of the Company held on September 27, 2014 till the conclusion of the 33rd Annual General Meeting, subject to ratification of their appointment at every Annual General Meeting. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s D. D. Nagpal & Co, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders at the 28th Annual General Meeting of the Company. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. B. Secretarial Auditors': Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Ms. Shakshi Mittal, Practicing Company Secretary as Secretarial Auditors to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "ANNEXURE B". C. Internal Auditors': M/s Naresh Kumar & Co., Chartered Accountants, New Delhi are Internal Auditors of the Company. The Company has filed its Cost Audit Report for the financial year 2013-14 on 13th February, 2015. 13. Explanation to Auditor's Remarks A. Statutory Auditors As regards observations contained in the Auditor's Report, the respective notes to the accounts are self-explanatory and therefore, do not call for any further comments. The management reply to Auditors comment in their Auditors Report is as follows: Reply to Para 2(e) of the main auditors report No significant impact is expected on the working results of the Company on this account. B. Secretarial Auditors There were no comments in the Secretarial Auditors Report which required any explanation from the directors of the company. 14. Material Changes Affecting the Financial Position of the Company The inordinate delay in implementation of Company Law Board order dated 3rd September, 2010 involving family settlement amongst the promoters of the company has severely affected the financial position of the company. 15. Conservation of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo A. CONSERVATION OF ENERGY: i) Steps taken or impact on conservation of energy: ii) The steps taken by the company for utilizing alternate sources of energy Your Company has taken adequate measures to ensure optimum use of all equipment's so as to conserve energy. iii) Capital Investment on energy conservation equipments : Nil B. TECHNOLOGY ABSORPTION The company strives continuously to upgrade its technology adopted in all its operations. C. FOREIGN EXCHANGE EARNINGS AND OUTGO:- Nil 16. Details of subsidiary, joint venture or associates The Company is having Zeon Lifesciences Limited as its associate company in accordance with Section 2(6) of the Companies Act, 2013, however, the shareholding held by the company in Zeon Lifesciences Ltd. is subject to inter se transfer of shares between the promoters of the Company & Zeon Lifesciences Ltd. in accordance with the Hon'ble Company Law Board order dated 03.09.2010. The Company does not have any subsidiary or Joint venture company. 17. Risk Management The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Risk Management Policy is available on the Company Website at: www.mahaanfoods.com 18. Directors & Key Managerial Personnel (KMP) Mr. Sanjeev Goyal, Chairman cum Managing Director, Mr. G. K. Sharma, Chief Financial Officer and Mr. Vijay Gupta, Company Secretary are the Key Managerial Personnel of your Company under the provisions of Section 2(51) and Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. At the meeting of the Board of Directors of the Company held on 27 September, 2014, Ms. Saloni Goyal (DIN - 00400832) was appointed as an Additional Director of the Company. She holds the office of directorship up to the date of the ensuing Annual General Meeting. At the meeting of the Board of Directors of the Company held on 12th February, 2015, Ms. Moutushi Sengupta (DIN - 07092382) and Mr. Achal Kumar Khaneja (DIN - 02282489) were appointed as an Additional/Independent Directors of the Company. The details on their appointment as directors form part of the notice of the AGM. They hold the office of directors up to the date of the ensuing Annual General Meeting. Being eligible, they have also been appointed as Independent Directors of the Company. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year. During the year under review, Mr. R.K. Dhall, Independent Director resigned from the company with effect from 28th June, 2014, Mr. Youdhveer Singh Rawat, Independent Director, resigned from the Company with effect from 12th February, 2015. The Board places on record appreciation for valuable contribution made by them to the affairs of the Company during their tenure as Independent Director of the Company. 19. Details of significant & material orders passed by the regulators or courts or tribunal Your Company operations were severely affected on account of inordinate delay in the settlement of disputes amongst its promoters. The matter is pending for adjudication before the Arbitrator. 20. Internal Financial Controls Your Company has a proper and adequate system of internal financial controls. This ensures that all assets are safeguarded and protected against loss from unauthorised use or disposition and the transactions are authorised, recorded and reported correctly. The internal financial control system has been designed to ensure that the financial and other records are reliable for preparing financial and other statements and for maintaining accountability of assets. Audit Committee periodically reviews the performance of internal audit function and discusses internal audit reports with the Internal Auditor. 21. Fraud Neither the Statutory Auditors nor the Secretarial Auditors have brought to the notice of the Audit Committee or the Board of Directors or the Central Government the occurrence or brewing of any fraud in the Company. 22. Code of conduct for regulating & reporting trading by Insiders and for Fair Disclosure, 2015 Your Company has adopted the "Code of Conduct for Regulating & Reporting Trading by Insiders and for Fair Disclosure, 2015" which, inter alia, prohibits purchase or sale of securities of the Company by Directors, employees and other connected persons while in possession of unpublished price sensitive information in relation to the Company. 23. Disclosure of ratio of Remuneration of Directors and Key Managerial Personnel etc. The company did not pay any remuneration to the Managing Director and other directors of the company. As required under Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of the ratio of the remuneration of each director to the median employee's remuneration and such other details as prescribed therein are given in "ANNEXURE-C" which is attached hereto and forms a part of the Directors' Report. 24. Particulars of Employees The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, names and other particulars in respect of employees of the Company are required to be attached to the Directors' Report. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and other entitled thereto, excluding the information on employees' particulars as there are no employees whose particulars are required to be disclosed in this report. 25. Code of Conduct The Board of Directors has approved a Code of Conduct which is applicable to all the members of the Board & senior management of the company. The Code has been posted on the Company's website www.mahaanfoods.com . 26. Audit Committee The details pertaining to composition of Audit Committee are included in the Corporate Governance Report which forms part of this report. 27. Corporate Governance The clause 49 of the listing agreement is not applicable on your company in view of Securities and Exchange Board of India vide circular no CIR/ CFD/POLICY CELL/7/2014 dated 15th September, 2014, however a separate section on Corporate Governance along with a certificate from the Practicing Company Secretary on its compliance forms an integral part of this report. Further, Management Discussion and Analysis which includes review of operations, performance and future outlook of the Company also forms a part of this report. 28. Corporate Social Responsibility (CSR) The provisions of the Companies Act, 2013 related to Corporate Social Responsibility are not applicable on the Company. 29. Formal Evaluation of Board, Committees & Directors' Performance Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The Nomination and Remuneration Committee ("NRC") evaluated the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was reviewed taking into account the views of executive directors and non-executive directors of the company. 30. Remuneration Policy In accordance with the remuneration policy of the company the Nomination and Remuneration Committee recommend the appointment of Director and Senior Management Personnel of the Company, and their appointment or re-appointment, based on their qualifications, professional experience, positive attributes, view points, skills and area of expertise. The Remuneration Policy is placed on the Company's website www.mahaanfoods.com . 31. Whistle Blower/Vigilance Policy Your Company has established a whistle blower policy/vigil mechanism for the Directors, employees of the company, to report genuine concerns, calling the attention of the Audit Committee to some wrong doing occurring within an organization. Your Company has also provided adequate safeguards against victimization of whistleblowers who express their concerns against such wrong doings occurring in the organization. The Company has also provided direct access to the Chairman of the Audit Committee in exceptional circumstances. 32. Disclosure under sexual harassment of women at Workplace, (Prevention, Prohibition & Redressal) Act, 2013 Your company did not come across any complaint by any employee during the year under review relating to the sexual harassment. 33. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that: i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii) 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 of the Company for that period; iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the directors had prepared the annual accounts on a going concern basis; v) the directors had laid down the internal financial control to be followed by the company and that such Internal financial control are adequate and were operating effectively. vi ) 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. 34. Acknowledgements Your Directors express their sincere gratitude and deep appreciation for the co-operation and assistance given by the banks, suppliers and customers of the Company during the year under report and look forward to their continued support. Your Directors also thankfully acknowledge the trust and confidence reposed by you in the Company. By order of the Board of Directors Sd/- (Sanjeev Goyal) Chairman cum Managing Director Place: New Delhi Date: 1st September, 2015 |