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Vidhi Specialty Food Ingredients Ltd.

BSE: 531717 Sector: Industrials
NSE: VIDHIING ISIN Code: INE632C01026
BSE 00:00 | 24 Apr 2020 Vidhi Specialty Food Ingredients Ltd
NSE 05:30 | 01 Jan 1970 Vidhi Specialty Food Ingredients Ltd

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OPEN 59.75
PREVIOUS CLOSE 60.85
VOLUME 17617
52-Week high 83.00
52-Week low 38.75
P/E 9.47
Mkt Cap.(Rs cr) 300
Buy Price 60.00
Buy Qty 1331.00
Sell Price 63.00
Sell Qty 100.00
OPEN 59.75
CLOSE 60.85
VOLUME 17617
52-Week high 83.00
52-Week low 38.75
P/E 9.47
Mkt Cap.(Rs cr) 300
Buy Price 60.00
Buy Qty 1331.00
Sell Price 63.00
Sell Qty 100.00

Vidhi Specialty Food Ingredients Ltd. (VIDHIING) - Director Report


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Company director report

To

The Members

Vidhi Specialty Food Ingredients Limited

Your Directors take pleasure in presenting the Twenty-Sixth Annual Report on thebusiness and operations of your Company together with the Audited Financial Statement forthe financial year ended March 31 2019.

1. Financial Summary or Highlights:

The financial highlights of the Company are as follows:

(Rs in Lakhs)

Current Year Previous Year
Particulars 2018-19 2017-18
Total Income 22894.15 21740.99
Total Expenditure (excluding Depreciation) 18571.05 19056.29
Profit for the year before providing Depreciation 4323.10 2684.70
Less: Depreciation 238.34 249.50
Less: Exceptional Items Nil Nil
238.34 249.50
Profit before Tax 4084.76 2435.20
Less: Provision for Taxation
Current Year 1197.00 851.68
Earlier Year Nil 12.52
Deferred Tax (17.76) 7.79
1179.24 871.99
Profit after Tax 2905.52 1563.21
Add: Other Comprehensive Income 8.57 1.89
Total Comprehensive Income 2914.09 1565.10
Add: Profit brought forward from Previous Year 6308.79 5383.99
Total Profit in Balance Sheet 9222.88 6949.09
Appropriation
Dividend Paid 399.56 399.56
Transfer to General Reserve 291.41 157.13
Dividend Distribution Tax 83.61 83.61
Balance Profit carried to Balance Sheet 8448.30 6308.79

2. Financial Performance Operations and State of the Company's affairs:

During the year under review profit before tax for the year was Rs 4084.76 lakhs asagainst Rs 2435.20 lakhs in the previous year registering a growth of 67.74%.

Total Revenue from continuing operations was increased by 5.30% for the year endedMarch 31 2019 to Rs 22894.15 lakhs as against Rs 21740.99 lakhs achieved during theprevious year. Profit after tax from continuing operations for the year ended March 312019 was increased by 85.87% to Rs 2905.52 lakhs as against profit after tax of Rs1563.21 lakhs earned during the previous year.

The financial performance is discussed in detail in the Management Discussion andAnalysis Report which forms part of the Annual Report.

The Company has manufactured 3530.81 MT of food colours against 3037.89 MT in theprevious year. Your Directors assure to maintain the growth momentum in coming years andstrive for bright future for your Company.

3. Change in the nature of business if any:

The Company is engaged in the business of manufacturing and trading in synthetic foodcolours and chemicals. There was no change in nature of business activity during the year.

4. Dividend:

Your Directors are pleased to recommend a final dividend of Rs 0.20/- (Twenty PaisaOnly) per Equity Share of Rs 1/- each fully paid up (i.e. 20%) for the financial yearended March 31 2019. The total outflow on dividend account will be Rs 99.89 lakhs(excluding Dividend Distribution Tax). The dividend payment is subject to the approval ofthe Members at the ensuing Annual General Meeting ('AGM') and be paid to the Members whosenames appear in the Register of Members/ Beneficial Holders as on Record Date/Book ClosureDate fixed for the said purpose.

The dividend if declared at the AGM would be paid/dispatched within thirty days fromthe date of declaration of dividend to those persons or their mandates:

• whose names appear as beneficial owners as at the end of the business hours onMonday September 16 2019 in the list of the Beneficial Owners to be obtained from theDepositories i.e. National Securities Depository Limited [NSDL] and Central DepositoryServices (India) Limited [CDSL] in respect of the shares held in electronic/dematerialized mode; and

• whose names appear as Members in the Register of Members of the Company as onMonday September 16 2019 in respect of the shares held in physical mode.

In line with our focus on enhancing shareholder returns and in view of the Company'sstrong cash generation and positive growth momentum the Board of Directors had decided todistribute profits to its Members and accordingly the Board of Directors had declaredinterim dividends during the financial year 2018-19 as per details given below:

Type of Dividend Date of Board Meeting Rate of Dividend Per Share Dividend Total Outflow*
1st Interim Dividend August 10 2018 20% per share Rs 0.20/- per share Rs 99.89 lakhs
2nd Interim Dividend November 5 2018 20% per share Rs 0.20/- per share Rs 99.89 lakhs
3rd Interim Dividend February 12 2019 20% per share Rs 0.20/- per share Rs 99.89 lakhs

*excluding Dividend Distribution Tax paid by the Company.

Total dividend payout for the year 2018-19 is Rs 0.80/- per Equity Share of Rs 1/- eachagainst Rs 0.80/- per Equity Share for previous year.

Further the details of unclaimed dividend and due dates for transfer of unclaimeddividend to IEPF account has been given in Notes to the Notice calling the Twenty-SixthAGM.

5. Reserves:

The Board during the year under review has transferred Rs 291.41 lakhs (P Y. Rs157.13 lakhs) to General Reserves.

6. Details of the Companies which have become or ceased to be its Subsidiaries JointVentures or Associate Companies during the year:

During the year under Report the Company did not have any Subsidiaries Joint Venturesor Associate Companies. However in the current year your Company has acquired 100% EquityShares of Arjun Food Colorants Manufacturing Private Limited a Company held by thePromoters of the Company thus making it as Wholly Owned Subsidiary Company of ourCompany.

7. Directors and Key Managerial Personnel:

As on the date of this Report your Company has 8 (Eight) Directors consisting of 4(Four) Independent Directors 2 (Two) Executive Directors and 2 (Two) Non-ExecutiveDirectors including a Woman Director.

In pursuance of the provisions of Section 152(6) of the Companies Act 2013("Act") and Articles of Association of the Company Mrs. Pravina Bipin Manek(DIN: 00416533) retires by rotation from the Board in the ensuing Annual General Meeting('AGM') and being eligible for re-appointment has offered herself for re-appointment.The Board of Directors recommends her re-appointment to the Members of the Company.

Mr. Prafulchandra Anantlal Shah (DIN: 00417022) and Mr. Niren Dinkerrai Desai (DIN:01978382) were appointed as Non-Executive Independent Directors on the Board under the Actw.e.f. September 27 2014 for a period of five years i.e. upto September 26 2019.Further Mr. Rahul Chakradhar Berde (DIN: 06981981) was appointed as Non-ExecutiveIndependent Director of the Company w.e.f. September 30 2014 for a period of five yearsi.e. upto September 29 2019.

In terms of Section 149 and other applicable provisions of the Act Mr. PrafulchandraAnantlal Shah (DIN: 00417022) and Mr. Niren Dinkerrai Desai (DIN: 01978382) beingeligible are offering themselves for re-appointment and are proposed to be re-appointedas Independent Directors on the recommendation of the Nomination & RemunerationCommittee and on the basis of the outcome of their performance evaluation up to thefinancial year 2018-19 for a second term of 5 (five) consecutive years commencing fromSeptember 27 2019 upto September 26 2024 subject to the approval of the shareholders bypassing Special Resolution.

Mr. Rahul Chakradhar Berde (DIN: 06981981) being eligible is also offering himselffor re-appointment and is proposed to be re-appointed as Independent Director on therecommendation of the Nomination & Remuneration Committee and on the basis of theoutcome of his performance evaluation up to the financial year 2018-19 for a second termof 5 (five) consecutive years commencing from September 30 2019 upto September 29 2024.

The Securities and Exchange Board of India ('SEBI') has vide its Notification No.SEBI/LAD-NRO/GN/2018/10 dated May 9 2018 issued the SEBI (Listing Obligations andDisclosure Requirements)(Amendment) Regulations 2018 ('the Amendment Regulations') whichbrought amendments in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ('the Listing Regulations'). According to the Amendment Regulationapproval of the Members by way of a Special Resolution shall be obtained every year inwhich the annual remuneration payable to a single Non-Executive Director exceeds 50% ofthe total annual remuneration payable to all the Non-Executive Directors giving detailsof the remuneration thereof. Since payment of remuneration to Mr. Vijay KrishnaswamiraoAtre (DIN: 00416853) as a NonExecutive Director is more than 50% of the total annualremuneration payable to all the Non-Executive Directors in order to comply with thisamendment and continue to pay him a remuneration on his existing scale during thefinancial year 2020-21 a Special Resolution is proposed in the ensuing AGM.

According to the Amendment Regulation 17(6)(e) if the aggregate annual remunerationpayable to more than one Executive Director who is a Promoter or is a Member of thePromoter Group exceeds 5% of the net profits of the Company calculated as per Section 198of the Act even though the annual remuneration payable to the Executive Directors iswithin the limit of 5% and 10% as specified u/s 197(1) of the Act then approval of theMembers by way of a Special Resolution is required. Such approval of the Members underthis provision shall be valid only till the expiry of the term of such Director. Theapproval of the Members by way of a Special Resolution was already taken in previous AGM.However the Board of Directors in their meeting held on May 212019 had approved theincrease of remuneration to be paid to Mr. Bipin Madhavji Manek (DIN: 00416441) ManagingDirector and Mr. Mihir Bipin Manek (DIN: 00650613) Joint Managing Director w.e.f. April1 2019 for their remaining tenure.

The Board recommends the aforesaid re-appointment and continuation as the Directors ofthe Company. The Board also recommends the approval for payment of aggregate annualremuneration to the Promoter-Executive Directors/ Members of the Promoter Group exceeding5% of the net profits of the Company and the payment of aggregate annual remuneration toMr. Vijay Krishnaswamirao Atre (DIN: 00416853) as a Non-Executive Director of the Companywhich exceeds fifty percent of the total annual remuneration payable to all theNon-Executive Directors.

The details of Directors or Key Managerial Personnel who were appointed or haveresigned during the year are as follows:

a. Mr. Chetan Prabhudas Bavishi (DIN: 01978410) Independent & Non-ExecutiveDirector had resigned from the Board of Directors of the Company w.e.f. June 13 2018 dueto personal commitments and other pre-occupations.

b. Ms. Kalika Dabholkar (Membership No.: A38704) Company Secretary & ComplianceOfficer of the Company had resigned from the Company w.e.f. November 13 2018 due tobetter future prospects.

c. Ms. Sherry Jain (Membership No.: A57258) was appointed as the Company Secretary& Compliance Officer of the Company w.e.f. February 12 2019.

d. Mr. Anil Kumar Dhar (DIN: 01524239) Independent & Non-Executive Director hadresigned from the Board of Directors of the Company w.e.f. March 22 2019 due to personalcommitments and other pre-occupations.

Further after closure of the financial year Mr. Ashit Kantilal Doshi (DIN: 08486679)was appointed as an Additional Independent & Non-Executive Director w.e.f. June 202019 for a period of five years i.e. upto June 19 2024 subject to the approval of theMembers of the Company in the ensuing AGM u/s 149 and 161 of the Act.

The Company has received declarations from all the Independent Directors of the Companypursuant to the provisions of Section 149(7) of the Act stating that they meet thecriteria of independence as provided under the Act and the Listing Regulations and thatthey are not disqualified to become Directors under the Act; and in the opinion of theBoard of Directors all the Independent Directors fulfill the criteria of independence asprovided under the Act read with the Listing Regulations and that they are independent ofthe Management.

Further at the time of the appointment of an Independent Director the Company issuesa formal letter of appointment outlining his role function duties and responsibilities.The format of the letter of appointment is available on our website at http://www.vidhifoodcolour.com/pdf/9.%20Codes%20and%20Polices/Terms%20&%20Conditions%20of%20ID.pdf

Brief resume and other details of the Director proposed to be appointed andre-appointed as stipulated under the Listing Regulations and Secretarial Standard-2 hasbeen furnished separately in the Notice convening the AGM read with the Annexure theretoforming part of this Report.

Details of the number of meetings of the Board of Directors and Committees andattendance at the meetings have been furnished in the Report on Corporate Governance.

Following persons are designated as Key Managerial Personnel (KMP):

• Mr. Bipin Madhavji Manek (DIN: 00416441) Chairman and Managing Director

• Mr. Mitesh Dinesh Manek Chief Financial Officer

• Ms. Sherry Jain Company Secretary and Compliance Officer

8. Board Evaluation:

The Board of Directors is committed to continued improvement in its effectiveness.Accordingly formal evaluation of Board's it's Committee and Directors performance iscarried out annually. This was designed to ensure amongst other things that the Boardits Committees and each Director continue to contribute effectively.

As per Section 134(3)(p) of the Act a statement indicating the manner in which formalannual evaluation was made by the Board of their performance and that of its Committeesand individual Directors has to be furnished to the Members as part of the Board'sReport.

As per provisions of Section 178(2) of the Act Nomination and Remuneration Committeeshall specify the manner for effective evaluation of performance of Board its Committeesand individual Directors to be carried out. Further the Independent Directors as part oftheir mandate under Schedule IV of the Act need to make an evaluation of performance ofthe Board it's Committee and constituents of the Board apart from their self-evaluation.Under this process a structured questionnaire was prepared after taking intoconsideration inputs received from the Directors setting out parameters of evaluation;the questionnaire for evaluation are to be filled in consolidated and discussed with theChairman. The evaluation by the Independent Directors has been undertaken at their meetingheld on November 5 2018. The Board of Directors undertook evaluation of IndependentDirectors at their meeting held on February 12 2019 and placed on its record that theIndependent Directors have the requisite qualification expertise and track record forperforming their duties as envisaged under the Law and they add value in the decisionmaking process of the Board.

The criteria for evaluation of performance of Directors the Board as a whole and theBoard's Committee as specified by Nomination and Remuneration Committee are summarizedin the table given below:

Evaluation of Evaluation by Criteria
Non-Independent Director (Executive) Independent Directors Transparency Leadership (business and people) Governance and Communication
Non-Independent Director (Non-Executive) Independent Directors Preparedness Participation Value addition Governance and Communication
Independent Director All other Board Members Preparedness Participation Value addition Governance and Communication
Chairman Independent Directors Meeting dynamics Leadership (business and people) Governance and Communication
Committees Board Members Composition Process and Dynamics
Board as a whole Independent Directors Composition Process and Dynamics

9. Board Familiarization Program:

At the time of appointment of Independent Director through the induction processhe/she is familiarized with the Company the Director's roles rights and responsibilitiesin the Company nature of the industry in which the Company operates business model ofthe Company etc. Detailed presentations are made before the Board Members at the BoardMeetings covering various areas including business strategy financial performance andforecast compliances/regulatory updates audit reports risk assessment and mitigationindustry roles rights responsibilities of Independent Directors etc. TheFamiliarization Program aims to provide insights into the Company to enable theIndependent Directors to understand its business in depth and contribute significantly tothe Company. All Independent Directors attended the orientation and familiarizationprograms held during the financial year 2018-19.

The details of training and familiarization programs are available on our website at http://www.vidhifoodcolour.eom/pdf/9.%20Codes%20and%20Polices/Details%20of%20Familarisation%20Programmes.pdf

10. Policy on the Directors' appointment and remuneration:

The Company's Policy on the Directors' appointment and remuneration including criteriafor determining qualifications positive attributes independence of Directors and othermatters as provided under section 178 of the Act is annexed to this Report as AnnexureA to this Report.

11. Number of meetings of the Board of Directors:

The Board of Directors met 5 (Five) times during the financial year under review. Theintervening gap between any two meetings was not more than 120 days as prescribed underthe Act. Details of the dates of Board Meetings and the attendance of the Directors at theBoard Meetings are provided separately in the Report on Corporate Governance.

12. Audit Committee:

The Audit Committee of the Company consists of the following Directors as on the dateof this Report:

Name Designation Category
Mr. Niren Dinkerrai Desai (DIN: 01978382) Chairman Non-Executive Independent
Mr. Prafulchandra Anantlal Shah (DIN: 00417022) Member Non-Executive Independent
Mr. Mihir Bipin Manek (DIN: 00650613) Member Executive

The Internal Auditors of the Company report directly to the Audit Committee. All therecommendations of the Audit Committee were accepted by the Board of Directors. Briefdescription of terms of reference and other relevant details of the Audit Committee havebeen furnished in the Report on Corporate Governance.

13. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee of the Company comprises of the followingDirectors as on the date of this Report:

Name Designation Category
Mr. Niren Dinkerrai Desai (DIN: 01978382) Chairman Non-Executive Independent
Mr. Prafulchandra Anantlal Shah (DIN: 00417022) Member Non-Executive Independent
Mrs. Pravina Bipin Manek (DIN: 00416533) Member Non-Executive Promoter

Brief description of terms of reference and other relevant details of the Nominationand Remuneration Committee have been furnished in the Report on Corporate Governance.

14. Stakeholders' Relationship Committee:

The Stakeholders' Relationship Committee of the Company comprises of the followingDirectors as on the date of this Report:

Name Designation Category
Mrs. Pravina Bipin Manek (DIN: 00416533) Chairperson Non-Executive Promoter
Mr. Prafulchandra Anantlal Shah (DIN: 00417022) Member Non-Executive Independent
Mr. Rahul Chakradhar Berde* (DIN: 06981981) Member Non-Executive Independent

*Appointed as a Member of the committee w.e.f. April 1 2019.

Brief description of terms of reference and other relevant details of the Stakeholders'Relationship Committee have been furnished in the Report on Corporate Governance.

15. Corporate Social Responsibility Committee (‘CSR Committee'):

Since net profit of the Company is in excess of Rs 5 Crores the provisions of Section135 of the Act regarding Corporate Social Responsibility became applicable to the Company.The constitution composition quorum requirements terms of reference role powersrights and obligations of CSR Committee are in conformity with the provisions of Section135 and all other applicable provisions of the Act read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 and all other applicable Rules made under theAct.

The CSR Committee comprises of the following Directors as on the date of this Report:

Name Designation Category
Mr. Prafulchandra Anantlal Shah (DIN: 00417022) Chairman Non-Executive Independent
Mr. Niren Dinkerrai Desai (DIN: 01978382) Member Non-Executive Independent
Mr. Rahul Chakradhar Berde (DIN: 06981981) Member Non-Executive Independent

During the financial year under review the Committee met twice on May 23 2018 andAugust 10 2018.

Brief description of terms of reference of the Committee inter-alia includes:

• formulate and recommend to the Board of Directors (Board) a Corporate SocialResponsibility (CSR) Policy which shall indicate the activities to be undertaken by theCompany as specified in Schedule VII of the Act;

• approve CSR activities;

• recommend to the Board the amount of expenditure to be incurred on the CSRactivities;

• monitor the CSR Policy of the Company from time to time;

• institute a transparent monitoring mechanism for implementation of the CSRprojects or programs or activities undertaken by the Company; and

• carry out any other functions as authorized by the Board from time to time or asenforced by statutory/regulatory authorities.

CSR Policy development and implementation:

The CSR Policy is available on the Company's website at:

http://www.vidhifoodcolour.eom/pdf/9.%20Codes%20and%20Polices/CSR%20Policy.pdf

Annual Report on CSR activities as required under the Companies (Corporate SocialResponsibility Policy) Rules 2014 has been appended as Annexure B to thisReport.

16. Vigil Mechanism:

The Company has a 'Whistle Blower Policy'/'Vigil Mechanism' in place. The objective ofthe Vigil Mechanism is to provide the employees Directors customers contractors andother stakeholders of the Company an impartial and fair avenue to raise concerns and seektheir redressal in line with the Company's commitment to the highest possible standardsof ethical moral and legal business conduct and fair dealings with all its stakeholdersand constituents and its commitment to open communication channels. The Company is alsocommitted to provide requisite safeguards for the protection of the persons who raise suchconcerns from reprisals or victimization for whistle blowing in good faith. The Board ofDirectors affirms and confirms that no personnel have been denied access to the AuditCommittee. The Policy contains the provision for direct access to the Chairman of theAudit Committee in appropriate or exceptional cases.

Vigil Mechanism cum Whistle Blower Policy is available on the Company's website at:

http://www.vidhifoodcolour.com/pdf/9%20Codes%20and%20Polices/Vigil%20Mechanism%20Cum%20Whistle%20Blower%020Policy.pdf

17. Audit Report:

a) Statutory Audit Report:

The financial statements of the Company have been prepared in accordance with IndianAccounting Standards (Ind AS) notified under section 133 of the Act. The Company hasreceived an unmodified opinion in the Auditors' Report for the financial year 2018-19.

b) Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board had appointed M/s. HemanshuKapadia & Associates Practicing Company Secretaries to undertake the SecretarialAudit of the Company for the financial year 2018-19 and issue Secretarial Audit Report.Secretarial Audit Report issued by M/s. Hemanshu Kapadia & Associates for thefinancial year 2018-19 in Form MR-3 forms part of this report and annexed hereto as AnnexureC.

The Secretarial Auditor has qualified the Secretarial Audit Report dated August 142019. The observations of the Secretarial Auditors and the reply of the Management for thesame are as under:

Sr. No. Secretarial Auditors' Observation Reply from the Management
1. There was a delay in uploading Form IEPF- 2. The said form was required to be filed by December 27 2018. However the same was filed on April 18 2019. The delay in uploading the Form IEPF-2 was due to the time taken for reconciliation of the Statement of Unpaid/ Unclaimed Dividend amounts received by the Bank and the Registrar & Share Transfer Agents (R & TA).
2. There was a minor delay in filing Form CHG- 4 with reference to Charge ID: 100020310 of HSBC Bank. The same was filed after the stipulated time. The delay in filing Form CHG-4 was due to delay in receipt of No Due Certificate from HSBC Bank. Subsequently the form was filed with additional fees.
3. The Company has necessary license under FSSAI Act as on the date. The Company has made an application dated November 30 2017 to the FSSAI Authority for renewal of license and the license was under renewal with FSSAI Authority during the period from January 1 2018 to July 23 2018 and the same has been renewed w.e.f. July 24 2018. The Company's FSSAI license was valid till December 312017. The Company has made necessary application to the FSSAI Authority for renewal of said license before its expiration i.e on November 30 2017. However the license was renewed by the authority on July 24 2018.

18. Auditors:

a) Statutory Auditors:

On the recommendation of the Audit Committee and the Board the Members in theirTwenty-Fourth AGM has appointed M/s. JMR & Associates Chartered Accountants Mumbai(Firm Registration No: 106912W) as the Statutory Auditors of the Company for a period offive consecutive financial years from the conclusion of the Twenty- Fourth AGM of theCompany till the conclusion of the Twenty-Ninth AGM to be held for the financial year2021-22.

b) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board in their meeting held on May21 2019 had appointed M/s. Hemanshu Kapadia & Associates Practicing CompanySecretaries (FCS: 3477 and C.P No.: 2285) to undertake the Secretarial Audit of theCompany for the financial year 2019-20 and issue Secretarial Audit Report as requiredunder the Act.

c) Internal Auditors:

Pursuant to the provisions of Section 138 of the Act read with Rule 13 of Companies(Accounts) Rules 2014 and on the basis of the recommendation of Audit Committee theBoard of Directors in their meeting held on May 21 2019 had appointed M/s. Jayesh Kothari& Co. Chartered Accountants (FRN: 148528W) as the Internal Auditors of the Companyfor the financial year ended March 31 2020.

19. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:

The information as per Section 134(3)(m) of the Act read with the Companies (Accounts)Rules 2014 with respect to Conservation of Energy Technology Absorption & ForeignExchange Earnings and Outgo are given in Annexure D to this Report.

20. Managerial Remuneration and Particulars of Employees:

Disclosures pertaining to remuneration and other details as required under section 197of the Act read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are appended as Annexure E to this Report.

21. Extract of Annual Return:

In accordance with Section 134(3)(a) read with Section 92(3) of the Act an extract ofthe Annual Return in Form MGT-9 is placed on the website of the Company and same can bedownloaded by clicking on the following link:

http://www.vidhifoodcolour.eom/pdf/4.%20Annual%20Reports/2018-19/2.%20MGT-9_2018-19.pdf

22. Share Capital & Listing of Securities:

During the financial year under review the Company has not issued:

• any equity shares with differential rights as to dividend voting or otherwise;

• any equity shares (including sweat equity shares) to employees of the Companyunder any scheme; and

• any sweat equity shares.

The Company's equity shares are listed on BSE Ltd. (BSE) and National Stock Exchange ofIndia Limited (NSE). The stock code of the Company at BSE is 531717 and the symbol for NSEis VIDHIING.

23. Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the financial year under review asstipulated under regulation 34 of the Listing Regulations is set out in a separate sectionforming part of this Report.

24. Corporate Governance:

The Company is adhering to good corporate governance practices in every sphere of itsoperations. The Company has taken adequate steps to comply with the applicable provisionsof Corporate Governance as stipulated under the Listing Regulations. A separate Reporton Corporate Governance is enclosed as a part of this Report along with theCertificate from the Practicing Company Secretary.

25. Directors' Responsibility Statement:

As stipulated under section 134(3)(c) read with Section 134(5) of the Act yourDirectors hereby state and confirm that:

a) in the preparation of the annual accounts for the financial year ended on March 312019 the applicable accounting standards have been followed and that there are nomaterial departures from the same;

b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended on March 312019 and of the profit and loss of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

e) they have laid down internal financial controls for the Company and such internalfinancial controls are adequate and operating effectively during the financial year endedMarch 31 2019; and

f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively during thefinancial year ended March 31 2019.

26. Particulars of Contracts and arrangements with related parties:

During the financial year under review the Company has not entered into anycontracts/arrangements/transactions with related parties which could be consideredmaterial in accordance with the Company's Policy on materiality of related partytransactions. All contracts/arrangements/transactions entered into by the Company duringthe financial year under review with related parties were in the ordinary course ofbusiness and on an arm's length basis but not material in nature. Accordingly thedisclosure of related party transactions to be provided under section 134(3)(h) of the Actin Form AOC-2 is not applicable.

The details of transactions entered into with related parties as per AccountingStandards are disclosed in the Note No. 27 of the Financial Statement.

The Company's Policy on Materiality of related party transactions and dealing withrelated party transactions is available on the Company's website at:

http://www.vidhifoodcolour.eom/pdf/9.%20Codes%20and%20Polices/Policy%20on%20Related%20Party%20Transactions.pdf

27. Particulars of loans given investments made guarantees given and securitiesprovided:

The Company has not given any loan except loan to employees or given guarantee orprovided securities as covered under section 186 of the Act. Further the Company has notmade any fresh investment falling within the meaning of Section 186 of the Act during theyear under review.

On the recommendation of the Audit Committee and the Board of Directors the Members intheir Extra-ordinary General Meeting held on Thursday March 29 2018 has approvedacquisition of 100% shareholding in Arjun Food Colorants Manufacturing Private Limited aCompany promoted by the Promoters of the Company. The Company has acquired 100% shares ofArjun Food Colorants Manufacturing Private Limited during the current financial yearmaking the said Company as the Wholly Owned Subsidiary of the Company.

28. Risk Management:

The Company is exposed to inherent uncertainties owing to the sector in which itoperates. A key factor in determining a Company's capacity to create sustainable value isthe risks that the Company is willing to take (at strategic and operational levels) andits ability to manage them effectively. Many risks exist in a Company's operatingenvironment and they emerge on a regular basis. The Company's Risk Management processfocuses on ensuring that these risks are identified on a timely basis and addressed.

The Audit Committee oversees enterprise risk management framework to ensure executionof decided strategies with focus on action and monitoring risks arising out of unintendedconsequences of decisions or actions and related to performance operations complianceincidents processes systems and transactions are managed appropriately. The Companybelieves that the overall risk exposure of present and future risks remains within riskcapacity.

29. Internal Financial Controls with reference to the Financial Statement:

The Company has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information.

The Company has in place adequate internal financial controls with reference tofinancial statements. The Company's internal control systems including internal financialcontrols are commensurate with the nature of its business and the size and complexity ofits operations and the same are adequate and operating effectively. These systems areperiodically tested and no reportable material weakness in the design or operation wasobserved. The Audit Committee reviews adequacy and effectiveness of the Company's internalcontrol system including internal financial controls.

30. Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013:

Your Company has always believed in providing a safe and harassment-free workplace forevery individual working in the Company. The Company has complied with the applicableprovisions of the aforesaid Act including constitution of the Internal ComplaintsCommittee. The Company has in place an Anti-Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees (permanent contractual temporary and trainees) arecovered under this Policy. The Policy is gender neutral. We are pleased to inform you thatno complaints pertaining to sexual harassment were received during the Financial Year2018-19.

31. Secretarial Standards:

The Company has complied with all the applicable Secretarial Standards issued by TheInstitute of Company Secretaries of India and notified by the Central Government.

32. Cost Records:

As per Section 148(1) of the Act read with the Companies (Cost Records and Audit)Rules 2014 the maintenance of cost records is not mandated for the products manufacturedby the Company.

33. Other Disclosures/Reporting:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no events/ instances/transactions occurred on these itemsduring the year under review:

a) Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of the report;

b) Details relating to deposits covered under Chapter V of the Act;

c) Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Act);

d) Significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future; and

e) Details in respect of frauds reported by the Auditors under section 143(12) otherthan those which are reportable to the Central Government as there were no such fraudsreported by the Auditors.

34. Acknowledgements:

Your Board wish to place on record their appreciation and acknowledge with gratitudethe support and co-operation extended by the Government Authorities Bankers CustomersEmployees and Members during the year under review and look forward to their continuedsupport.

For and on behalf of the Board of Directors
Sd/-
Date: August 14 2019 Bipin Madhavji Manek
Place: Mumbai Chairman & Managing Director
(DIN: 00416441)
Address: Flat No.12 Somerset House
Off. Bhulabhai Desai Road
Warden Road Mumbai - 400 026

Annexure A

Nomination & Remuneration Policy

I. OBJECTIVE:

The Nomination and Remuneration Committee (NRC or the Committee) has formulated theNomination & Remuneration Policy in compliance with Section 178 of the Companies Act2013 read with the applicable rules thereto and Regulation 19(4) read with Part D ofSchedule II under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time. This policy is mainly focused on nomination andremuneration of Directors Key Managerial Personnel and Senior Management.

The objective of the policy is to ensure that:

• the Board is being guided in relation to appointment and removal of DirectorsKey Managerial Personnel (KMP) and Senior Management including Department head;

• the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully;

• relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and

• remuneration to Directors Key Managerial Personnel and senior managementinvolves a balance between fixed and incentive pay reflecting short and long-termperformance objectives appropriate to the working of the company and its goals.

II. DEFINITIONS:

Key definitions of terms used in this Policy are as follows:

1. Act means the Companies Act 2013 and Rules framed thereunder as amended fromtime to time.

2. Listing Regulations means SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended from time to time.

3. Board means Board of Directors of the Company.

4. Directors mean Directors of the Company.

5. Key Managerial Personnel means

i. Chief Executive Officer or the Managing Director or the Manager;

ii. Whole-time director;

iii. Chief Financial Officer;

iv. Company Secretary; and

v. such other officer as may be prescribed.

6. Senior Management means personnel of the company who are members of its coremanagement team excluding the Board of Directors including Functional Heads.

III. ROLE OF COMMITTEE:

1. Matters to be dealt with perused and recommended to the Board by the Nomination andRemuneration Committee

The Committee shall:

i. Periodically review the size and composition of the Board to ensure that it isstructured in such a manner which enables to take appropriate decision in the bestinterest of the Company as a whole;

ii. Formulate the criteria for determining qualifications positive attributes andindependence of a director and recommending candidates to the Board as and when needarises keeping in view the Board structure and expertise/experience required;

iii. Establish and on regular basis review the succession plan of the Board KMPs andSenior Executives;

iv. Identify persons who are qualified to become Director and persons who may beappointed in Key Managerial and Senior Management positions in accordance with thecriteria laid down in this policy;

v. To formulate criteria for evaluation of Independent Directors and the Board;

vi. Recommend to the Board performance criteria for the Directors KMPs and SeniorManagement;

vii. Recommend to the Board appointment and removal of Director KMP and SeniorManagement Personnel and their remuneration;

viii. Help the Board to formulate and ensure the Board nomination process keeping inmind the diversity of gender expertise experience and Board structure;

ix. Review and recommend to the Board:

a) The Remuneration Policy for all employees including KMPs and Senior Managementincluding various components of remuneration whether fix or variable performance rewardretirement benefits

b) Remuneration of the Executive Directors and KMPs

c) Remuneration of Non Executive Directors including Chairman as a whole andindividually and sitting fees to be paid for attending the meeting of the Board andCommittee thereof and

d) Equity based incentive Schemes;

x. To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage; and

xi. To carry out any other function as is mandated by the Board from time to time and /or enforced by any statutory notification amendment or modification as may beapplicable;

xii. Devising a policy on diversity of the Board of Directors;

xiii. Aligning key executive and board remuneration with the long term interests of theCompany and its shareholders;

xiv. Ensuring a transparent board nomination process with the diversity of thoughtexperience knowledge perspective and gender in the Board;

xv. To carry out any other functions as authorized by the Board from time to time or asenforced by statutory/ regulatory authorities;

xvi. To perform such other functions as may be necessary or appropriate for theperformance of its duties;

2. Policy for appointment and removal of Director KMP and Senior Management:

i. Appointment criteria and qualifications

a. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or at Senior Managementlevel and recommend to the Board his/her appointment as per Company's Policy.

b. A person to be recommended to the Board should be a man with integrity possessadequate qualification expertise and experience for the position he/ she is consideredfor appointment and industry in which Company operates. The Committee has discretion todecide whether qualification expertise and experience possessed by a person issufficient/satisfactory for the concerned position.

c. A person to be appointed as Director should possess impeccable reputation forintegrity deep expertise and insights in sectors/areas relevant to the Company abilityto contribute to the Company's growth complementary skills in relation to the other BoardMembers.

d. The Company shall not appoint or continue the employment of any person as ManagingDirector and/or Whole-time Director who has attained the age of seventy years Providedthat the term of the person holding this position may be extended beyond the age ofseventy years with the approval of shareholders by passing a special resolution based onthe explanatory statement annexed to the notice for such motion indicating thejustification for extension of appointment beyond seventy years.

e. A whole-time KMP of the Company shall not hold office in more than one Companyexcept in its Subsidiary Company at the same time. However a whole-time KMP can beappointed as a Director in any Company with the permission of the Board of Directors ofthe Company.

ii. Term/Tenure:

a. Managing Director/Whole-time Director:

The Company shall appoint or re-appoint any person as its Managing Director orExecutive/Whole-time Director for a term not exceeding five years at a time. Nore-appointment shall be made earlier than one year before the expiry of term.

b. Independent Director:

• An Independent Director shall hold office for a term up to five consecutiveyears on the Board of the Company and will be eligible for re-appointment on passing of aspecial resolution by the Company and disclosure of such appointment in the Board'sreport.

• No Independent Director shall hold office for more than two consecutive termsbut such Independent Director shall be eligible for appointment after expiry of threeyears of ceasing to become an Independent Director.

Provided that an Independent Director shall not during the said period of threeyears be appointed in or be associated with the Company in any other capacity eitherdirectly or indirectly.

At the time of appointment of Independent Director it should be ensured that number ofBoards on which such Independent Director serve is restricted to seven Listed Companies asan Independent Director and three Listed Companies as an Independent Director in case suchperson is serving as a Whole-time Director of a Listed Company or such other number as maybe prescribed under the Act.

iii. Evaluation:

The Committee shall carry out evaluation of performance of every Director KMP andSenior Management Personnel at regular interval (yearly) or at such intervals as may beconsidered necessary.

iv. Removal:

The Committee may recommend to the Board with reasons recorded in writing removal ofa Director KMP or Senior Management Personnel subject to the provisions and compliance ofthe Act rules and regulations and the policy of the Company.

v. Retirement:

The Director KMP and Senior Management Personnel shall retire as per the term ofappointment provisions of the Act Listing Regulations and the Policies of the Company.The Board will have the discretion to retain the Director KMP Senior ManagementPersonnel in the same position/remuneration or otherwise even after attaining theretirement age for the benefit of the Company subject to compliance of provisions of theAct and Listing Regulations.

3. Policy relating to the Remuneration for the Managing Director Whole-time DirectorKMP and Senior Management Personnel:

i. General:

a. The remuneration/compensation/commission/fees etc. to be paid to the ManagingDirector Whole-time Director other Directors KMP and Senior Management Personnel willbe determined by the Committee and recommended to the Board for approval which shall besubject to the prior/post approval of the shareholders of the Company or CentralGovernment wherever required.

b. The remuneration and commission to be paid to the Managing Director Whole-timeDirector shall be in accordance with the percentage/ slabs/conditions laid down in theArticles of Association of the Company and as per the provisions of the Act.

c. Increments to the existing remuneration/compensation structure may berecommended by the Committee to the Board which should be within the slabs approved by theShareholders in the case of Managing Director and Whole-time Director.

d. Where any insurance is taken by the Company on behalf of its Managing DirectorWhole-time Director Chief Executive Officer Chief Financial Officer the CompanySecretary and any other employees for indemnifying them against any liability the premiumpaid on such insurance shall not be treated as part of the remuneration.

ii. Remuneration to Managing Director/Whole-time Directors:

a. Fixed pay:

The Managing Director/Whole-time Director/KMP and Senior Management Personnel shall beeligible for a monthly remuneration as may be approved by the Board on the recommendationof the Committee. The breakup of the pay scale and quantum of perquisites includingemployer's contribution to P.F. pension scheme medical expenses club fees etc. shallbe decided and approved by the Board on the recommendation of the Committee subject tothe approval of the shareholders or Central Government wherever required.

b. Minimum Remuneration:

If in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Managing Director Whole-time Director inaccordance with the provisions of Schedule V of the Act and if it is not able to complywith such provisions with the previous approval of the Central Government.

c. Provisions for excess remuneration:

If any Managing Director Whole-time Director draws or receives directly or indirectlyby way of remuneration any such sums in excess of the limits prescribed under the Act orwithout the approval of the shareholders or the Central Government where required he/she shall refund such sums to the Company and until such sum is refunded hold it intrust for the Company. The Company shall not waive recovery of such sum refundable to itunless permitted by the shareholder or Central Government.

iii. Remuneration to Non- Executive / Independent Director:

a. Sitting Fees:

The Non-Executive/Independent Director may receive remuneration by way of fees forattending meetings of Board or Committee thereof provided that the amount of sitting feesshall be such as may be recommended by the Nomination and Remuneration Committee andapproved by the Board of Directors. However the amount of such fees shall not exceed Rs 1Lakh per meeting of the Board or Committee attended by Director or such other amount asmay be prescribed by the Central Government from time to time.

b. Remuneration / Commission:

All the remuneration of the Non-Executive/Independent Directors (excluding remunerationfor attending meetings as prescribed under Section 197 (5) of the Companies Act 2013)shall be subject to ceiling/ limits as provided under Companies Act 2013 and rules madethere under or any other enactment for the time being in force. The amount of suchremuneration shall be such as may be recommended by the Nomination and RemunerationCommittee and approved by the Board of Directors or shareholders as the case may be.

c. Stock Options:

An Independent Director shall not be eligible to get Stock Options and also shall notbe eligible to participate in any share based payment schemes of the Company.

d. Remuneration for services of Professional Nature:

Any remuneration paid to Non- Executive Directors for services rendered which areprofessional in nature shall not be considered as part of the remuneration for thepurposes of clause (b) above if the following conditions are satisfied:

i) The Services are rendered by such Director in his/her capacity as the professional;and

ii) In the opinion of the Committee the Director possesses the requisite qualificationfor the practice of that profession.

iv. Remuneration to Key Managerial Personnel and Senior Management:

a. The remuneration to Key Managerial Personnel and Senior Management shall consist offixed pay and incentive pay in compliance with the provisions of the Companies Act 2013and in accordance with the Company's Policy.

b. The Nomination and Remuneration Committee or any other Committee to be constitutedby the Company for the purpose of administering the Employee Stock Option/ PurchaseSchemes shall determine the stock options and other share based payments to be made toKey Managerial Personnel and Senior Management.

c. The fixed pay shall include monthly remuneration employer's contribution toProvident Fund contribution to pension fund pension schemes etc. as decided from totime.

d. The incentive pay/performance linked pay shall be decided based on the extent ofachievement of the individual target/objective or performance of the Key ManagerialPersonnel and Senior Management and performance of the Company which will be decidedannually or at such intervals as may be considered appropriate.

4. Policy Review:

The Policy is framed based on the provisions of the Companies Act 2013 and rules madethere under and the requirement of Regulation 19(4) and Schedule II (Part D) of theListing Regulations. In case of any subsequent changes in the provisions of the Act or anyother Regulations which makes any of the provisions of this Policy inconsistent with theAct or any such Regulation then the provisions of the Act or such Regulation wouldprevail over the Policy and the provisions in the Policy would be modified in due courseto make it in consistent with the Act or such Regulation.

The Committee shall review the Policy as and when any changes are to be incorporated inthe Policy due to changes in the Act or such Regulation or felt necessary by theCommittee. Any changes in the Policy shall be recommended by the Committee to the Boardand shall be effective on approval of the Board.

IV. Implementation:

• The Committee may issue guidelines procedures formats reporting mechanism andmanuals in supplement and for better implementation of this policy as consideredappropriate.

• The Committee may Delegate any of its powers to one or more of its Members.

For and on behalf of the Board of Directors
Sd/-
Date: August 14 2019 Bipin Madhavji Manek
Place: Mumbai Chairman & Managing Director
(DIN: 00416441)
Address: Flat No.12 Somerset House
Off. Bhulabhai Desai Road
Warden Road Mumbai - 400 026


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