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ADF Foods Ltd.
 
March 2015

DIRECTORS' REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Twenty Fifth Annual Report together with the Audited Financial Statements for the year ended 31st March 2015.

FINANCIAL PERFORMANCE

Standalone results

During the year under review, your Company has recorded revenue from operations (net) of Rs. 149.45 Crore as against Rs. 141.81 Crore in the previous year. The Net profit (after tax and extra ordinary items) for the financial year ended 31st March 2015 is Rs. 14.60 crore as against Rs. 12.45 crore in the previous year recording an increase of 17%.

ADF FOODS LTD.

Consolidated Results

Your Company has recorded revenue from operations (net) of Rs. 203.80 Crore as against Rs. 207.64 Crore in the previous year. Despite of the revenue remaining almost at the same level as that of the previous year, the net profit (after tax and extra ordinary items) for the financial year grew by 56% to Rs. 8.84 Crore, as against Rs. 5.65 Crore during the previous year.

DIVIDEND

Your Directors are pleased to recommend a Dividend of Rs. 1.5 per share (i.e. @ 15 %) for the year ended 31st March 2015. The dividend payout, if approved, will result in outflow of Rs. 330.00 Lakhs inclusive of Rs. 67.18 Lakhs on account of Dividend Distribution Tax.

TRANSFERRED TO RESERVES

During the year, Rs. 125 Lakhs were transferred to General Reserves. BUSINESS DEVELOPMENT The Domestic market:

During the year the company took a major step of rebranding of the Company's brand ADF SOUL with a better look of the logo and more appealing packaging designs. The new products launched under this brand were the South Indian Style Pickles and Cooking Pastes - packed in user-friendly laminated tubes. These products have been well received by the consumers & are fast gaining shelf space amongst the top retail chains in India. The new product launch was supported by advertising in retail stores, outdoor campaigns, in-store branding, promotions, and presence in social media. The Company is gearing up to launch a range of exciting new products and expand its footprints in new markets in the forthcoming year.

During the year the Company's new manufacturing plant at Nadiad has become fully functional and the same would increase manufacturing capacity of the company's core products such as pickles and pastes.

The US Operations :

The Company continues to develop the presence of its core brands viz. ADF SOUL, Nate's and PJ's and solidify its distribution channels across the US markets. During the year, under review the Company developed and launched a range of new products including a very innovative product called Nate's Mediterranean Bites that has received an overwhelming response from the consumers. The company has been successful in doing new listing in major supermarket chains and natural grocery stores across the USA. Also several exciting and innovative new products are in pipeline under the Company's brand umbrella.

International business :

Apart from India and USA the Company's products are being sold in over 45 countries across the Globe. During the year under review, the company's leading International brands Ashoka , Aeroplane and Camel underwent packaging revamp.

The new product introductions under the Ashoka brand were Mini Samosas, Snacks, Kathi Rolls in the frozen range and Chutneys made with Olive Oil in the dry range. There were new introductions under Camel and Aeroplane brands like the Cooking Pastes, and South Indian Style Pickles, North Indian Pickles and Sauces.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the Financial year of the Company to which the Financial Statements relate and the date of the report.

DIRECTORS' RESPONSIBILITY STATEMENT

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

a. that in the preparation of the annual financial statements for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b.that such accounting policies as mentioned in Note 27(2) of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year;

c.that proper and sufficient care has been taken 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 annual financial statements have been prepared on a going concern basis;

e.that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f.that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2015 was Rs. 22 crore. During the year under review, the Company has neither issued shares with differential voting rights nor granted stock options nor sweat equity.

LISTING OF SHARES

The Company's shares are actively traded on BSE Limited (BSEL) and The National Stock Exchange of India Limited (NSEIL).

SECRETARIAL AUDIT

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 Messrs Keyul M. Dedhia & Associates, Company Secretary in Practice (C.P No. 8618) , to undertake the Secretarial Audit of the Company for the Financial Year 2014-15. The Secretarial Audit Report is annexed herewith as "Annexure II". There are no qualifications contained, in the said Report. However the Secretarial Auditors have stated the following observation in their Report :

The Company has an unspent amount during the year in the amount to be spend towards Corporate Social Responsibility.

The explanation for the above observation is mentioned below under the Head

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, of its committees and the directors individually.

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure IV

CORPORATE GOVERNANCE

In compliance with the requirements of Clause 49 of the Listing Agreement with the Stock Exchanges, a separate report on Corporate Governance along with Auditors' certificate on its compliance has been provided elsewhere in this Annual Report.

Report on Management Discussion and Analysis is provided in separate section and forms part of this Annual Report.

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.

DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Bimal R. Thakkar, Director, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

The Board of Directors has appointed Ms. Anjali Seth as an Additional Director of the Company in the category of Woman / Independent Director with effect from 10th March, 2015.

The brief particulars of Ms. Anjali Seth , for which approval of members for her appointment is sought, have been provided in the Notice of the Twenty Fifth Annual General Meeting pursuant to the Clause 49 of the Listing Agreement relating to the Corporate Governance.

During the year, Mr. Ashok H. Thakkar, Chairman of the Company was appointed for a period of one year from 1st October, 2014, Mr. Bimal R. Thakkar as Managing Director for a period of one year from 1st October, 2014 and Mr. Bhavesh R. Thakkar as Executive Director for a period of one year from 1st October, 2014.

AUDITORS AND THEIR REPORT

In the previous Annual General Meeting M/s. D.P Ghevaria & Co. , Chartered Accountants, Mumbai were appointed as joint Statutory Auditors of the Company for the F.Y. 2014-15. Prior to the said appointment M/s. D.P! Ghevaria & Co. had served the Company as Statutory Auditors for more than 5 consecutive years. Therefore, pursuant to Section 139 of the Companies Act, 2013 and the Rules framed thereunder, M/s. D. P Ghevaria & Co., not being entitled for re-appointment, ceases to be the Statutory Auditors of the Company.

For the financial year 2015-16, it is proposed to ratify appointment of M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai as Statutory Auditors subject to approval of members in the ensuing Annual General Meeting.

The Company has received letters from the Auditors to the effect that their appointment/re-appointment, if made, would be within the prescribed limits under Section I4l(3)(g) of the Companies Act, 2013 and that they are not disqualified for appointment/re-appointment.

There are no qualifications contained, in the Auditors Report and therefore there are no further explanations to be provided for in this report.

INTERNAL AUDIT

M/s. Suresh Gandhi & Associates, Surat have been associated with your Company as internal auditor for Gujarat location.

During the year, on account of resignation of M/s. Pipalia Singhal & Associates, Chartered Accountants, Mumbai, M/s. S M S R & Co., Chartered Accountants, Mumbai have been appointed as the internal Auditors for Mumbai and Nasik locations of the Company.

The Audit Committee of the Board of Directors, Statutory Auditors and the Management are periodically apprised of the Internal Audit findings and corrective actions taken.

SEXUAL HARASSMENT POLICY

During the year the Company has formed the policy on Sexual Harassment of Women at Workplace pursuant to the provisions of Sexual Harassment of Woman at Workplace (Prevention, Prohibition & Redressal) Act 2013. The company did not receive any such complaints during the year.

Sexual Harassment Policy of the Company is displayed on the Company's website www.adf-foods.com and is available under the weblink: http://www.adf-foods.com/pdfs/Sexualharasspolicy.pdf.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The company has formulated Corporate Social Responsibility (CSR) policy and set up CSR Committee comprising of three members viz. Mr. Viren Merchant, Independent Director, Mr. Nipun Shah, Independent Director and Mr. Bimal R. Thakkar, Managing Director.

During the FY 2014-15 the Company was required to spend an amount of Rs. 31.83 Lakhs on the CSR activities pursuant to Section 135 of the Companies Act, 2013. The Company was keen on undertaking the CSR activities in Nasik and Nadiad where the Company's plants have been situated. The Company identified certain concrete projects and was in the talks with the concerned Government Authorities to start the CSR activity. However pending certain information and clarifications from the authorities the activities could not be undertaken in the FY 2014-15. However, since April 2015, the Company has started construction work of household toilets in Nadiad District that forms part of the 'Swatchh Bharat Mission' initiated by the Government of India . Simultaneously the company has been also planning to undertake CSR activities in the areas of primary education, women empowerment and conservation of the natural resources.

The CSR Policy of the Company and the relevant report as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed in Annexure-III to this Report.

TECHNOLOGY AND QUALITY

Your Company is committed to deliver highest quality of products by continuous improvement in terms of product quality and achieving customer satisfaction and delight. Your Company has already obtained various quality certifications such as the Internationally recognized BRC (British Retail Consortium) Global Standard - Foods, ISO 22000/ HACCP & ISO 9001: 2000 certifications for its plants located at Nadiad, Gujarat and Nashik, Maharashtra.

ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

Information required under Section 134 (3) (m) of the Companies Act, 2013 read with the Rule 8 of The Companies (Accounts) Rules, 2014 is appended hereto at Annexure VI.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 124 of the Companies Act, 2013 (corresponding to Section 205 A and 205C of the Companies Act, 1956), dividends pertaining to the financial year 2006-07 (Interim) & (Final) amounting to Rs. 6,76,523/- and Rs. 6,00,396/- respectively and pertaining to the financial year 2007-08 (Interim ) amounting to Rs. 5,71,806/- which remained unpaid or unclaimed for a period of 7 years were transferred by the Company to the Investor Education and Protection Fund.

PARTICULARS OF EMPLOYEES

There are no employees drawing remuneration exceeding the monetary ceiling of Rs. 60 lakhs or more per annum or Rs. 5 lakhs or more per month, if employed for a part of the year prescribed under provisions of Section 197 of the Companies Act, 2013 and the Rules made thereunder.

SUBSIDIARY COMPANIES

Your Company has three subsidiaries namely ADF Foods UK Ltd, Power Brands (Foods) Pvt. Ltd.and ADF Foods (India) Ltd. and two step down subsidiaries viz. ADF Holdings (USA) Ltd. and ADF Foods (USA) Ltd.

M/s Power Brands (Foods) Pvt. Ltd, 99.99% Subsidiary of the Company, is undergoing Voluntary Liquidation vide Special resolution passed by the Members on 5th November, 2012.

Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary.

In terms of proviso to sub section (3) of Section I29 of the Act, the salient features of the financial statement of the subsidiaries are set out in the prescribed form AOC-I and the same is attached to the financial statements.

CASH FLOW STATEMENT

The Cash Flow Statement pursuant to Clause 32 of the Listing agreement is annexed to this Report.

CONSOLIDATED ACCOUNTS

In compliance with Clause 32 of the Listing Agreement with the Stock Exchanges and in accordance with the requirements of Accounting Standards AS-21 prescribed by the Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Report.

CORPORATE GOVERNANCE REPORT, MANAGEMENT DISCUSSION & ANALYSIS AND OTHER INFORMATION REQUIRED UNDER THE COMPANIES ACT, 2013 AND LISTING AGREEMENT

As per Clause 49 of the listing agreement entered into with the stock exchanges, Corporate Governance Report with Auditors' certificate thereon and Management Discussion and Analysis report are attached and form part of this report.

Various information required to be disclosed under the Act and the Listing Agreement is set out in the Annexure-I and forms part of this report.

DEPOSIT

Your Company has not accepted any deposit within the meaning of Section 73 of the Companies Act, 2013 during the financial year 2014-15.

HUMAN RESOURCE AND EMPLOYEE RELATIONS

The Company has always perceived its Manpower as its biggest strength. The emphasis was on grooming in-house talent enabling them to take higher responsibilities. The Employee relations continue to be cordial at all the divisions of the Company. Your Directors place on record their deep appreciation for exemplary contribution of the employees at all levels. Their dedicated efforts and enthusiasm have been integral to your Company's steady performance.

ACKNOWLEDGEMENTS

Your Directors wish to express their sincere appreciation of the excellent support and co-operation extended by the Company's shareholders, customers, bankers, suppliers and all other stakeholders.

For and on Behalf of the Board of Directors

Ashok H. Thakkar

Chairman DIN:00087465

Place  Mumbai,

date : 12th August, 2015

Regd. Office :83/86 GIDC Industrial Estate, Nadiad 387001, Gujarat Tel.: 0268-2551381/2 Fax. : 0268-2565068;E-mail: info@adf-foods.com; website: www.adf-foods.com CIN: LI5400GJI990PLC0I4265

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