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DIRECTOR'S REPORT

Vadilal Enterprises Ltd.

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Market Cap. (₹) 103.26 Cr. P/BV 25.31 Book Value (₹) 47.29
52 Week High/Low (₹) 1311/774 FV/ML 10/1 P/E(X) 1,161.01
Bookclosure 30/09/2019 EPS (₹) 1.03 Div Yield (%) 0.07
Year End :2018-03 

The Directors have pleasure in presenting herewith the 33rd Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2018.

FINANCIAL HIGHLIGHTS :

(Rs. in Lacs)

Sr.

Particulars

Current Year ended on

Previous Year ended

No.

31-03-2018

on 31-03-2017

(a)

Earnings before Interest, Tax, Depreciation and Amortization

1332.68

1155.66

(b)

Finance Cost

(250.00)

(158.09)

(c)

Depreciation & Amortization Expense

(1060.95)

(948.47)

(d)

Profit/(Loss) before Tax

21.73

49.10

(e)

Tax Expense

- Current Tax

2.39

14.98

- Deferred Tax Expenses

4.54

5.02

- Short / (Excess) Provision of Tax of Earlier years

-

13.49

Total Tax:

6.93

33.49

(f)

Profit/(Loss) for the year

14.80

15.61

(g)

Other Comprehensive income

Item that will not be reclassified to Profit & Loss

- Re-measurement of Defined Benefit Plans

(0.52)

7.79

- Tax expenses of above items

0.15

(2.41)

Other Comprehensive income for the year

(0.37)

5.38

(i)

Total Comprehensive income for the year

15.17

10.23

STATE OF COMPANY’S AFFAIRS:

The Company has earned Revenue from Operations of Rs. 54585.94 lacs during the year ended on 31st March, 2018 as against Rs.51794.51 lacs earned during the previous year ended on 31st March, 2017 giving a rise of 5.39% as compared to previous year.

After adding thereto the other income of Rs.309.37 lakhs earned by the Company, the Company has earned total income of Rs.54895.31 lakhs during the year under review. The Company has incurred total expenses of Rs.54873.58 lakhs including Finance cost of Rs.250.00 lakhs and Depreciation and Amortization expenses of Rs.1060.95 lakhs, during the year under review.

The Company has earned profit before Tax of Rs.21.73 lacs during the year under review as compared to Profit Rs.49.10 lacs incurred during the previous year ended on 31st March, 2017. The Company has earned profit for the year of Rs.14.80 lacs during the year ended on 31st March, 2018 after deducting Current Tax of Rs.2.39 lacs and Deferred Tax of Rs.4.54 lacs, as compared to Profit of Rs.15.61 lacs incurred by the Company during the previous year ended on 31st March, 2017.

DIVIDEND:

The Directors have recommended dividend of Rs.0.80/- per share (@ 8.00%) on 8,62,668 Equity Shares of Rs.10/- each of the Company for the financial year ended on 31st March, 2018 as compared to Rs.0.80/- per share (@ 8.00%) dividend declared in the previous financial year ended on 31st March, 2017. If approved, the dividend will be paid without deduction of tax at source to the shareholders.

TRANSFER TO RESERVE:

The Company does not propose to transfer any amount to General Reserve during the year under review.

MANAGMENT DISCUSSION & ANALYSIS:

India is the largest producer and marketer of milk. It accounts for over 1/5th of the global milk production. This provides the ice cream industry with a large volume of raw material to manufacture ice creams. The ice cream market in India is forecast to exhibit a CAGR of 17.03% during 2016-2021. Keeping up with the economy's quantum growth in recent years, the ice cream market has also set new records. Today, the total organized Indian ice cream market is estimated at approx. Rs.6000 crores.

An ice cream makes everything better, be it an everyday occasion or life's most precious moments. Vadilal's range of ice creams and frozen desserts have always fulfilled this promise by making these special moments even more beautiful.

Increasing urbanization, rising disposable incomes and increasing “out of home food” consumption coupled with the ever-increasing availability of various foods in the markets close to residential areas are some of the reasons driving the ice cream industry.

To ensure maximum exposure to the public in terms of marketing, we spend on an optimal mix of above the line (ATL) and bellow the line (BTL) activities. We utilize various communication touch points like TV, Print, Digital, Retail activity, Point of purchase (POP), Point of sales (POS) etc. to get the brand message across. This year, we have a 360-degree marketing and communication plan. As a share of voice, we are the largest marketing investment company.

However, the advertising budgets are skewed more towards television as we have a nationwide reach now. Apart from traditional media platforms, we also enjoy commendable brand presence and preference in the digital space to cater youth and all class or society.

Our consumer engagement initiative, Vadilal Freeze the Moment Contest Calendar launched in 2012 has become a successful annual event and is eagerly awaited by consumers every year.

On the sales promotions front, we constantly engage our trade patrons through various schemes and offers. Vadilal also invests in consumer promotional activities from time to time. As an example, last year we had a “surprise gift” available with every candy of Ice Trooper to delight our young customers.

We have worked on increasing the physical touch points with our consumers and executed it by putting in place a robust network of dealers, FOWs (Freezer On Wheels) and Ice Cream parlours.

The overall vision of the company is to increase the consumption of ice-cream at national level supported fully by appropriate promotion and communication strategies.

FINANCE :

During the year under review, the company has availed / reviewed various secured and unsecured loans from various Banks, FIs. During the year under review, the company has made regular repayment of Loan & interest and there is no any overdue payment to Banks and FIs. Company has maintained external rating from CARE Ratings, they have reviewed and enhanced the external rating of the company from BBB (Negative) to BBB (Stable).”

During the year under review, the Company has transferred Rs.46403/- to Investors' Education and Protection Fund being the amount of Unpaid/Unclaimed Dividend for the Financial year - 2009-2010.

During the year under review, the Company has transferred the unclaimed interest on Fixed Deposit of Rs.3980/- for the financial year ended on 31st March, 2011 to Investors' Education and Protection Fund.

DETAILS OF DEPOSITS:

a. During the year under review, the details of deposits accepted by the Company from its Members, after complying with the provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, are as under :

(Rs. in lakhs)

(a) Amount of existing deposits as at 1st April, 2017

93.77

(b) Amount of deposits accepted or renewed during the year

(i) Secured deposits

0

(ii) Unsecured deposits

25.25

Total (b) :

25.25

(c) Amount of deposits repaid during the year

20.09

(d) Balance of deposits outstanding at the end of the year (a b-c)

98.93

b. During the year under review, the Company has not made any default in repayment of deposits or payment of interest on deposits.

c. The Company has not accepted or renewed any deposit which is not in compliance with the provisions of Chapter - V of the Companies Act, 2013.

CONSOLIDATED FINANCIAL STATEMENTS:

As on 31st March, 2018, the Company does not have any subsidiary, joint venture or associate Company and hence, the Company is not required to attach the Consolidated Financial Statements alongwith its Financial Statement, in terms of provisions of Section 129(3) read with Schedule - III of the Companies Act, 2013 and Rules made thereunder, and Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirement), 2015 and other applicable Accounting Standards.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:

As on 31st March, 2018, the Company does not have any subsidiary, joint venture or associate company. Therefore Report on the performance and financial position of each of the subsidiaries, associates and joint venture companies is not require to be given.

During the year under review, none of the companies have become or ceased to be Company's subsidiaries, associates or joint ventures.

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to 'Meetings of the Board of Directors' and 'General Meetings', respectively, have been duly followed by the Company.

CORPORATE GOVERNANCE:

The provisions related to compliance with Corporate Governance of as mentioned in Regulation 16(2) of Chapter - IV of the SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015 (“SEBI-LODR”) are not applicable to the Company since the share capital of the company does not exceed Rs. 10.00 Crores and the net-worth of the Company does not exceed Rs.25 Crores, as per the last audited Balance sheet of the Company.

However, being a Listed Company, the Company has always taken necessary measures to adhere to the best governance practices and norms.

DIRECTORS’ RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(C) and 134(5) of the Companies Act, 2013 and confirm :

(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 this 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; and

(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.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided by the Company under Section 186 of the Companies Act, 2013 forms part of the Notes to the financial statements provided in this Annual Report.

EXTRACT OF ANNUAL RETURN:

Extract of Annual Return of the Company as required under Section 92(3) of the Act and Rule - 12 of the Companies (Management and Administration) Rules, 2014, in the prescribed Form - MGT-9, is annexed herewith as Annexure -A to this Report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure - B in the prescribed Form - AOC-2 and the same forms part of this report. All related party transactions are placed before the Audit Committee of the Company 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 viz. www.vadilalgroup.com.

Your Directors draw attention of the members to Note - 41 to the financial statement which sets out related party transactions.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

As on 31st March, 2018, the Board of the Company comprises the following Directors :

Sr.

No.

Name of the Director

Designation

Category

1.

Mr. Rajesh R. Gandhi

Chairman & Director

Non-executive and Non-Independent

2.

Mr. Devanshu L. Gandhi

Director

Non-executive and Non-Independent

3.

Mrs. Mamta R. Gandhi

Director

Non-executive and Non-Independent

4.

Mr. Jayantilal M. Shah

Director

Independent Director

5.

Mr. Jignesh J. Shah

Director

Independent Director

6.

Mr. Ashish H. Modi

Director

Independent Director

7.

Mr. Preet P. Shah

Director

Independent Director

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Devanshu L. Gandhi, Director (DIN: 00010146) of the Company, shall retire by rotation at this Annual General Meeting and being eligible, offer himself for re-appointment. The Members are requested to consider her re-appointment as Director of the Company, for which necessary resolution has been incorporated in the notice of the meeting.

The brief resume/details relating to Mr. Devanshu L. Gandhi is furnished in the Notes to the Notice of the Annual General Meeting.

NUMBER OF BOARD MEETINGS:

Total Eight meetings of the Board of Directors were held during the year i.e. on 10-4-2017, 25-5-2017, 26-8-2017, 14-9-2017, 12-10-2017, 27-11-2017, 2-12-2017 and 13-2-2018 and their attendance is as follows:

Name of Director

Attendance Particulars (Total 8 Board Meetings held during the year)

Mr. Rajesh R. Gandhi

8

Mr. Devanshu L. Gandhi

8

Mrs. Mamta R. Gandhi

8

Mr. Jignesh J. Shah

8

Mr. Jayantilal M. Shah

4

Mr. Ashish H. Modi

6

Mr. Preet P. Shah

7

COMMITTEES OF DIRECTORS:

The details of various committees of Directors constituted under various provisions of Companies Act, 2013 and Rules made thereunder are as follows:

A. AUDIT COMMITTEE :

The Audit Committee comprises the following Director of the Company, as on 31st March, 2018 namely:

Sr.

No.

Name of the Member

Designation

Category

1

Mr. Jignesh J. Shah

-

Chairman

Independent Director

2

Mr. Rajesh R. Gandhi

-

Member

Non-Executive and Non-Independent Director

3

Mr. Devanshu L. Gandhi

-

Member

Non-Executive and Non-Independent Director

4

Mr. Jayantilal M. Shah

-

Member

Independent Director

5

Mr. Preet P. Shah

-

Member

Independent Director

T he constitution of the Audit Committee fulfills the requirements of Section 177 of the Companies Act, 2013 and Rules made thereunder. The members of audit committee are financially literate and having accounting or related financial management expertise.

Mr. Darshan Shah, who is a Company Secretary of the Company, is the Secretary to the Audit Committee.

B. NOMINATION AND REMUNERATION COMMITTEE :

The Nomination and Remuneration Committee of the Company comprises the following Directors of the Company, as on 31st March, 2018 namely:

Sr.

No.

Name of the Member

Designation

Category

1

Mr. Jignesh J. Shah

-

Chairman

Independent Director

2

Mr. Devanshu L. Gandhi

-

Member

Non-executive and Non-Independent Director

3

Mr. Preet P. Shah

-

Member

Independent Director

The constitution of Nomination and Remuneration Committee fulfills the requirements of Section 178 of the Companies Act, 2013 and Rules made thereunder.

C. STAKEHOLDERS’ RELATIONSHIP COMMITTEE :

The Stakeholders' Relationship Committee of the Company comprises the following Directors of the Company, as on 31st March, 2018, namely:

Sr.

No.

Name of the Member

Designation

Category

1

Mr. Rajesh R. Gandhi

-

Chairman

Non-Executive and Non-Independent Director

2

Mr. Devanshu L. Gandhi

-

Member

Non-Executive and Non-Independent Director

The constitution of Stakeholders' Relationship Committee fulfills the requirements of Section 178 of the Companies Act, 2013 and Rules made thereunder.

The Committee, inter alia, approves the transfer of Shares, issue of duplicate Share Certificates, splitting and consolidation of Shares etc. The Committee also looks after redressal of Shareholder's complaints like transfer of shares, non-receipt of balance sheet, non-receipt of dividends, etc. The Board of Directors has delegated the power of approving transfer of Shares etc. to the Stakeholders' Relationship Committee.

BOARD PERFORMANCE EVALUATION:

The board of directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act.

The performance of the Board was evaluated by the Board on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee (“NRC”) reviewed 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION:

The Policy on appointment and remuneration of Directors is enclosed with the Directors' report and marked as Annexure - C.

OTHER POLICIES AS PER THE REQUIREMENT OF COMPANIES ACT, 2013 AND SEBI (LISTING OBLIGATION AND DISCLOSURE REQUIREMENT), 2015

The policies formulated by the Company under various provisions of Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirement), 2015 are available on the website of the Company viz : www.vadilalgroup.com.

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

The details of Conservation of Energy and Technology Absorption are not required to provide as the provisions of Section 134(1)(m) are not applicable to the Company due to the nature of the Company's business operations, being Marketing Company.

There is no any Foreign Exchange Earnings or outgo during the year under review.

INTERNAL FINANCIAL CONTROLS

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 operation were observed.

Assurance on the effectiveness of internal financial controls is obtained through management reviews, control selfassessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.

AUDITORS:

Under the provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, it is mandatory to rotate the Statutory Auditors on completion of the maximum term permitted under the said section. In line with the requirements of Companies Act, 2013, Deloitee Haskins & Sells LLP, Chartered Accounts, Firm Registration No. 117366W/W 100018)(“Deloitee”) was appointed as Statutory Auditors of the Company for a period of five consecutive years i.e. to hold office from the conclusion of the 32nd Annual General Meeting till the conclusion of the 37th Annual General Meeting of the Company to be held in the year 2022, subject to ratification of their appointment by the Members at every Annual General Meeting or as may be necessitated by the Act from time to time.

However, Section 40 of the Companies (Amendment) Act, 2017 which came into force w.e.f. 7th May, 2018, has omitted the requirement of rectification of the appointment of Statutory Auditors at every Annual General Meeting.

AUDITORS’ REPORT OF THE COMPANY:

The Auditors' Report on the Annual Accounts of the Company for the year ended on 31st March, 2018 does not contain any qualification / reservation / observation.

SECRETARIAL AUDITOR:

Section 204 of the Companies Act, 2013 inter alia requires every listed company to annex with its Board Report a Secretarial Audit Report given by a Company Secretary in practice in the prescribed form. The Board has appointed M/s SPAN & Co., Company Secretaries LLP, to conduct Secretarial Audit for the financial year - 2017-2018. The Secretarial Audit Report for the financial year ended March 31, 2018 is annexed herewith marked as Annexure - D to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

COST AUDIT:

The maintenance of cost records has not been specified by Central Government under section 148(1) of the Companies Act, 2013 for the business categories in which Company operates accordingly such accounts and records are not maintained.

PARTICULARS OF EMPLOYEES:

The Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed with this report as Annexure - E.

The Statement of particulars of employees under Section 197(12) read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 is not required to be provided, since during the financial year under review, no employee of the Company except the Managing Directors, was in receipt of remuneration in excess of the limits set out in the said rules.

MATERIAL INFORMATION:

During the period under review, a Company Petition (being Company Petition No. 43 of 2017) has been filed against the Company, before the National Company Law Tribunal, Ahmedabad ("NCLT"), under Sections 241 and 242 of the Companies Act, 2013. In connection to the said Company Petition No. 43 of 2017, the Petitioners and some of the parties to the petition are seeking to arrive at an amicable resolution of matter. The matter was lastly heard by the Hon'ble NCLT on 27-07-2018.

GENERAL:

- During the year under review, there was no change in the nature of business of the Company and there is no material change and/or commitments, affecting the financial position of the Company, during the period from 31st March, 2018 till the date of this report.

- During the year under review, there was no significant and/or material order passed by any regulators or courts or tribunals impacting the going concern status and company's operations in future.

- The Company does not provide any loan or other financial arrangement to its employees or Directors or Key Managerial Personnel for purchase of its own shares and hence, the disclosure under Section 67(3)(c) of the Companies Act, 2013 does not require.

- During the year under review, no Director or Managing Director of the Company has received any remuneration or commission from subsidiary of the Company in terms of provisions of Section 197(14) of the Companies Act, 2013.

- The disclosure in terms of Rule - 4 of Companies (Share Capital and Debenture) Rules, 2014 is not provided, as the Company does not have any equity shares with differential voting rights.

- The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.

- The trademark “Vadilal” and its associated trademarks are owned by Vadilal International Pvt. Ltd. The Company is a licensee of the said Trademarks.

INSURANCE:

All insurable interests of the Company including buildings, plant and machinery, furniture & fixtures and other insurable interest are adequately insured.

TRADE RELATIONS:

The Board desires to place on record its appreciation of the support and co-operation that your Company received from Distributors, Dealers, Stockiest, C&F Agents, Retailers and all others associated with your Company. It will be your Company's continued endeavor to build and nurture strong links with the trade, based on mutuality, respect and co-operation and consistent with the consumer interest.

ACKNOWLEDGEMENT:

The Directors place on record the appreciation and gratitude for the co-operation and assistance extended by various departments of the Union Government, State Government, Bankers and Financial Institutions.

The Directors also place on record their appreciation of dedicated and sincere services of the employees of the Company at all levels.

The Company will make every effort to meet the aspirations of its Shareholders and wish to sincerely thank them for their whole hearted co-operation and support at all times.

By Order of the Board of Directors

For VADILAL ENTERPRISES LTD.

RAJESH R. GANDHI DEVANSHU L. GANDHI

CHAIRMAN & DIRECTOR DIRECTOR

DIN : 00009879 DIN : 00010146

Date : 11th August, 2018

Place : Ahmedabad.

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