BOARD REPORT DEAR MEMBERS, Your Directors have pleasure in presenting the Twentieth (20th) Annual Report, together with the Audited Financials of the Company for the Financial Year ended March 31, 2015 ("FY 2015"). RESULTS OF OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS The highlights of the Company's performance are as under: 1. Revenue from operations increased by 20.36% to Rs. 20,745 million 2. EBITDA increased by 3.00% to Rs. 2,628 million 3. Profit before Tax decreased by 8.00% to Rs. 1,721 million 4. Net Profit decreased by 2.00% to Rs. 1,233 million There are no transfer to the General Reserves. No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company. As the fiscal ended, the Company remained on track to deliver its goal of driving profitable growth while investing in initiative that can fuel Company's momentum over the long term. In FY 2015, the Company took successful strides to make its brands Domino's Pizza and Dunkin' Donuts more capable, efficient and highly relevant for its consumers. The Company focused on enhancing operations, tightening efficiencies and on creating more synergies for cementing the path for sustainable & profitable growth. During the year the Company not only stood tall through a moderating consumption environment but also successfully implemented strategic initiatives which included restaurant rollouts, exciting menu additions, novel offers and thrust on Online Ordering ("OLO"). The Company's sustained expansion on all these fronts and infrastructure in a tough market, was driven by its faith in the potential of the Food Service Industry. During the year Domino's India crossed the UK restaurant count and became the largest market for Domino's Pizza worldwide, outside USA. During the year the Company achieved its target of opening 150 new Domino's Pizza restaurants set at the start of the year. The Company has taken its total tally to 876 Domino's Pizza restaurants across 196 cities as on March 31, 2015. During the year Dunkin Donuts expansion remained well on track. Enthused by the consumer's response, the Company set up 28 new restaurants in FY 2015, taking Dunkin Donuts tally to 54 restaurants in 19 cities as on March 31, 2015. During the year, there was no change in the nature of the business of the Company. DIVIDEND Your Directors have recommended maiden dividend of Rs. 2.50 (i.e. 25%) per equity share amounting to Rs. 163.93 million (inclusive of taxes) for FY 2015. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. The dividend will be paid to members whose names appear in the Register of Members as on August 27, 2015 and in respect of shares held in dematerialized form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as on that date. OPERATIONS OF SUBSIDIARY Jubilant FoodWorks Lanka (Pvt.) Ltd.("JFLPL") The Company's wholly owned subsidiary, JFLPL continued with its steady efforts to strengthen Domino's Pizza brand in Sri Lanka. During the year, JFLPL launched 4 new Domino's Pizza Restaurants, taking its total restaurant count to 15 as on March 31, 2015. A report on the performance and the financial position of JFLPL, as per Companies Act, 2013 is provided in Form-AOC 1 attached to the consolidated financial statements forming part of this Annual Report. During FY 2015, there were no companies which ceased to exist as subsidiaries, joint venture or associate of the Company SHARE CAPITAL During the year, the Company issued 1,14,580 Equity Shares of x 10/- each on the exercise of stock options under Dominos Employees Stock Option Plan, 2007 and 16,180 Equity Shares of x 10/- each on the exercise of stock options under JFL Employees Stock Option Scheme, 2011. As a result, the issued, subscribed and paid-up equity share capital increased from 65,439,030 Equity Shares as on March 31, 2014 to 65,569,790 Equity Shares as at March 31, 2015. EXTRACT OF ANNUAL RETURN The extract of Annual Return as required under the Companies Act, 2013 in Form MGT-9 is annexed herewith as Annexure 'A' forming integral part of this Report. AUDITORS AND AUDITORS REPORT Statutory Auditors S. R. Batliboi & Co. LLP (ICAI Regn. No. 301003E), Chartered Accountants, Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for re-appointment as Statutory Auditors. Further, the Company has received the consent & eligibility certificate from S. R. Batliboi & Co. LLP under Section 139(1) and Section 141 of the Companies Act, 2013 & rules made thereunder. The Board of Directors recommend their re-appointment for further period of one year from the conclusion of the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting. Auditors' Report read together with Annexure referred to in the Auditors' Report does not contain any qualification, reservation, adverse remark or disclaimers. Members' attention is drawn towards Clause (xii) of the Annexure referred to in the Auditors' Report and the Directors wish to clarify that the Company has taken all the necessary steps, including taking legal action against the employees involved and has fully provided for the same in the financial statements. Further, effective steps have been taken to reduce/eliminate such cases. Secretarial Auditors The Board appointed Chandrasekaran Associates, Company Secretaries to conduct Secretarial Audit for FY 2015. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure 'B' forming integral part of this report. The said report is self explanatory and does not call for any comments. RELATED PARTY TRANSACTIONS All contracts, arrangements and transactions entered by the Company during FY 2015 were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract, arrangement and 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 of related party transactions and dealing with related party transactions as approved by the Board is disclosed on the website of the Company www.jubilantfoodworks.com Note 29 to the Standalone Financial Statements sets out related party disclosures. RISK MANAGEMENT The Company has a Risk Management Policy which has been approved by the Board. The aim of the Company's risk management policy is to create awareness of applicable risks and consequently limit, control and manage them, while safeguarding business opportunities and strengthening profitability. Through its well formulated strategy, the Company ensures that the risk exposure remains at the defined appropriate levels, while the overall management of the risks is integrated and embedded in the everyday business operations and activities. There are no risks identified by the Board which may threaten the existence of the Company. The detailed Risk Review is provided in the Management Discussion & Analysis section forming part of the Annual Report. INTERNAL FINANCIAL CONTROL The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. CORPORATE SOCIAL RESPONSIBILITY The Sustainability and Corporate Social Responsibility Committee ("SCSR Committee") has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy), which has been approved by the Board. The CSR Policy laid down by the Company ensures that the: • CSR agenda is integrated with the business • Focused efforts are made in the identified community development areas to achieve the expected outcomes • Support in nation-building through CSR activities In terms of CSR Policy the Company shall endeavor to focus in the areas of: 1. Skill Development 2. Nutrition 3. Education 4. Swachh Bharat Abhiyan 5. Road Safety The Annual Report on CSR is annexed as Annexure 'C' forming integral part of this Report. DIRECTORS & KEY MANAGERIAL PERSONNEL In terms of Articles of Association of the Company and provisions of Companies Act, 2013, Mr. Shyam S. Bhartia, Director of the Company, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. The Board of Directors recommend his re-appointment. Mr. Ajay Kaul, CEO cum Whole time Director of the Company was re-appointed as the Whole time Director w.e.f. March 14, 2015 by the Board of Directors, subject to the approval of the shareholders in the forthcoming Annual General Meeting. The Company has received necessary declaration from each Independent Director under Section 149 (7) of Companies Act,2013 that he/she meets the criteria of independence laid down in Section 149 (6) of Companies Act, 2013 and Clause 49 of Listing Agreement. During the year there was no change in the constitution of the Board and in the position of Key Managerial Personnel of the Company. PARTICULARS OF EMPLOYEES, DIRECTORS & KEY MANAGERIAL PERSONNEL The details of Employees, Directors and Key Managerial Personnel as required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration) Rules, 2014 is annexed herewith as Annexure 'D' forming integral part of this Report. EMPLOYEES STOCK OPTION SCHEMES The Company has two (2) Employees Stock Option Schemes in operation at present: • Dominos Employees Stock Option Plan, 2007 • JFL Employees Stock Option Scheme, 2011 During the year, the employees were allotted equity shares upon exercise of stock options under both the schemes. The applicable disclosures under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as at March 31, 2015 is annexed as Annexure 'E' forming integral part of this Report. Certificate from S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors, with respect to the implementation of the JFL Employees Stock Option Scheme, 2011 and Domino's Employees Stock Option Plan, 2007 would be placed before the members at the ensuing Annual General Meeting and a copy of the same shall be available for inspection at the Registered Office of the Company. SEXUAL HARRASMENT Employees at all levels are assured of a work place free of harassment irrespective of their gender, race, social class, caste, creed, religion, place of origin, sexual orientation, disability or economic status. The employees have the right to work in an environment free from any form of discrimination and conduct which can be considered harassing, coercive, or disruptive particularly behaviors that tantamount to sexual harassment. In view of above, the Company has adopted a policy on the prevention of sexual harassment at workplace. The Company received two (2) complaints during the calendar year 2014 under this policy which were suitably addressed. CORPORATE GOVERNANCE The corporate governance philosophy of the Company is driven by the interest of stakeholders and business needs of the organization. Aligning itself to this philosophy, and in order to sustain the stakeholder's trust, the Company has placed corporate governance on a high priority. In terms of clause 49 of the Listing Agreement with the Stock Exchanges, the Corporate Governance Report along with certificate from M/s Chandrasekaran Associates, Company Secretaries certifying the compliance with the conditions of Corporate Governance is annexed as Annexure 'F' forming an integral part of this Report. The Corporate Governance Report, inter-alia, contains the following disclosures: a) Number of Board Meetings b) Composition of Audit Committee c) Composition of Sustainability & Corporate Social Responsibility Committee d) Whistle Blower Policy (vigil mechanism) e) Appointment & Remuneration Policy (for Directors, Key Managerial Personnel, Senior Management and other Employees of the Company) f) Performance Evaluation criteria of the Board, its Committees & individual Directors CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO A) Conservation of energy The Company values the significance of conservation of energy and therefore endeavors to operate in an eco-friendly manner so as to protect and improve the environment. The Company is making continuous efforts for judicious use of energy at all levels of operations by utilizing energy efficient system and processes. i) The steps taken or impact on conservation of energy Installation of energy efficient LED Lights in certain restaurants and Commissaries Installation of Energy Management System in certain restaurants. Due to Company's innovative approach in Oven Technology, LPG Consumption in certain restaurants reduced. Installation of Energy Saving Sensors in the AC System of certain restuarants. Procurement of E-bikes for some restaurants on trial basis. ii) The steps taken by the Company for utilizing alternate sources of energy The Company has installed 200 KW Solar Power plant at Mumbai Commissary and is in the process of installing 120KW Solar Power Plant at Nagpur Commissary. Efforts are on to install plants at other locations also. B) Technology Absorption All steps taken towards Energy Conservation are the result of technology absorption, however, there is no specific information to be furnished in this regard. (C) Foreign Exchange Earnings & Outgo Information pertaining to Foreign Exchange Earnings & Outgo is given in Note No. 32 of the Notes forming part of the Standalone Financial Statements. DIRECTORS RESPONSIBILITY STATEMENT Your Directors state that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) 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 that period; (c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 ("Act") for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) The directors had prepared the annual accounts on a going concern basis; (e) The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; Based on the framework of internal financial controls including the financial reporting and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and the reviews performed by the management, the Board is of the opinion that the Company's internal financial controls are adequate and effective during the Financial Year 2014-15. (f) 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. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions related to these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except the ESOP Schemes referred to in this Report. 4. Neither the Managing Director nor the Whole time Directors of the Company receive any remuneration or commission from any of Company's subsidiaries. 5. 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. ACKNOWLEDGEMENTS Your Directors wish to extend their deep sense of appreciation to employees at all levels for their continuing support and unstinting efforts. Your Directors also acknowledge the continued support from Domino's International, Dunkin Donuts' International, government and regulatory authorities, business partners, bankers, members and other stakeholders. Your Directors would also like to appreciate the confidence and loyalty displayed by the guests, whom the Company always strive to serve better. For and on behalf of the Board of Directors (Shyam S. Bhartia) Chairman & Director DIN No. 00010484 (Hari S. Bhartia) Co-Chairman & Director DIN No. 00010499 Date: May 14, 2015 Place: Noida |