Temptation Foods Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2010

The Directors have pleasure in presenting the 19th Annual Report together with the audited statement of accounts for the year ended March 31, 2010.

Financial Results

(Rupees in Mn.)

Particulars 2009-10 2008-09

Income 12,788.01 8,719.81

Less:- Expenditure 11,592.83 7,953.43

Profit Before Tax, Financial Expenses, Depreciation and Extraordinary Items 1,195.18 766.38

Less: Financial Charges 211.09 109.86

Depreciation 113.26 81.34

Proft for the year before Extraordinary Expenses and Taxes 870.83 575.18

Less: Extraordinary Item 119.59 25.19

Profit for the year after Extraordinary Expenses and before Taxes 751.24 549.99

Less : Provision for Taxes & Tax Adjustments 121.79 23.04

Profit After Tax 629.45 526.95

Balance Brought Forward from Previous Year 681.50 172.18

Less: Interim Divided (2008-09) and Dividend Distribution Tax thereon - 17.63

Less: Proposed Final Dividend (2009-10) and Dividend Distribution Tax thereon 22.06 -

Surplus carried to Balance Sheet 1,288.89 681.50





Operations

During the year under review, your Company has shown sterling performance in as much as the sales turnover has increased from Rs. 8,700.74 Mns in 2008-09 to Rs. 12,766.48 Mns in 2009- 10, representing an increase of about 46.73% and the profit after tax has gone up from Rs. 526.95 Mns to Rs. 629.45 Mns representing an increase of about 19.45%.

Dividend

Your Directors have recommended a dividend of Rs. 0.75 paise per equity share of Rs. 10 each, fully paid up i.e @ 7.5% for the financial year ended March 31, 2010. The dividend will be paid to members whose names appear in the Register of Members as on August 19, 2010. In respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited as beneficial owners as on August 19, 2010.

Business Prospects

In spite of recessionary trends, your Company has achieved a robust growth in sales and margins were safeguarded by initiating backward integration and enhancing production capacities thereby increasing scale of production and controlling the processing costs.

The production of all processes food products were brought under one roof at its Jejuri Plant from the outsourced units, so as to have better control over quality.

Good monsoon coupled with global recovery augurs well for the business and the Company has ambitious plans in the coming year, with emphasis on expansion by introducing several new variants in all the product segments- sauces, conserves, mayonnaise to cater to the mass market and to re launch the existing product range in attractive packs to consolidate the premium image in the niche market.

Forfeiture of Application Money

In the previous year, your company had allotted 7,300,000 warrants including 300,000 warrants allotted to its Directors and its business associates, on preferential basis on August 11, 2008. Each warrant was convertible into one equity share of the Company, fully paid up, at a conversion price of Rs. 200 per share. The option was required to be exercised within a stipulated period of 18 months from the date of allotment. The Warrant holders had paid 10 % of the conversion price at the time of allotment amounting to Rs. 146,000,000/- (Rupees Fourteen Cr Sixty Lakhs), which stands forfeited and credited to the Capital

Reserve Account, since the options were not exercised by the concerned allottees within the stipulated period consequent to the sharp decline in the share price.

Transfer to General Reserve

During the year, Company has transferred Rs. 2,613,173/- to General Reserves consisting of Special Capital Incentive Rs. 2,500,000/- and Subsidy from Government Rs. 113,173/-, since the said reserves became free on fulfling the conditions relating thereto.

Borrowings

During the year, your company has been sanctioned funded and non-funded working capital limits of Rs. 115 Cr by a bank against the security of the movable and immovable assets of the company and the corporate guarantee from the promoter company. The limits have been draw-down depending upon the requirements of your company. A financial institution renewed working capital of Rs. 49 Cr during the year.

Employees Stock Options

256,600 share options allotted to the employees of the Company under the Employees’ Stock Option Scheme, 2008 are outstanding.

The exercise price was Rs. 150 per share. The price was subsequently revised to Rs. 40 per share by the Board of Directors in its meeting held on April 27, 2009 and confrmed by the shareholders in Annual General Meeting held on August

10, 2009. The disclosures prescribed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are annexed hereto.

Non Renewal Of Group Gratuity Policy With Lic

Your Company has Employees Group Gratuity Scheme with the Life Insurance Corporation of India (LIC) to fund the defined benefits plan for the qualified employees. The scheme provides for lump sum payment to employees on retirement, death while in employment or termination of employment of an amount equivalent to 15 days salary for every completed year of service or part thereof in excess of six months, provided the employee has completed fve years in service.

The said policy has not been renewed by your Company. In view of the above, LIC has not given the detailed disclosure required under AS-15. The disclosure in the notes to accounts is based on the renewal notice received from LIC which in opinion of your Company satisfies the requirements relating to disclosure of gratuity liability as per AS-15.The Auditor in their report has mentioned regarding non renewal of Group Gratuity Policy with Life Insurance Corporation of India. Your Company is in the process of exploring alternate avenues with regard to renewing the Group Gratuity Policy with LIC or to make payment of Gratuity liability from its own internal sources.

Fixed Deposits

Your Company has not accepted any fxed deposits from public during the year under review. There are no outstanding deposits, which have remained unpaid.

Temptation Foods FZE (‘FzE’)

Your company has incorporated a company by the name of Temptation Foods FZE (‘FZE’), limited by shares, in the Sharjah Airport Free Trade Zone, of which it is likely to hold 51% of the equity share capital.

Temptation Foods FZE (‘FZE’), is intended to be used as a special purpose vehicle for acquisitions of business overseas and /or for raising of funds overseas.

Temptation Foods international Limited

Your Company had incorporated Temptation Foods International Limited (TFIL), in the British Virgin Islands (BVI). Your Company currently envisages that the purpose for which TFIL is formed may not materialize now and hence Company did not pay BVI Annual License Fees. As the said fees are not paid, the above said Company has been stuck off from the BVI Government Register and hence it is not a subsidiary of your company. As per BVI laws, company can be restored at anytime up to ten years after the strike off date by paying prescribed fees. As and when required your Company will restore the name of above said company.

Disinvestment in the Shares of Kohinoor Foods Limited (KFL)

Keeping in view the declining market price of equity shares of KFL, your Company decided to disinvest/sell the shares of KFL, in order to prevent further loss to your Company. By selling the said equity shares of KFL, your company suffered a loss of Rs. 119,589,019/-. The Directors of the Company had visualised an appreciation in price and consequential profits, but due to adverse market scenario, the same did not materialize.

Inspection Under Section 209A of the companies Act, 1956

During the year, inspection under Section 209 A of the Companies Act, 1956 has been carried out by the office of Ministry of Corporate Affairs. No irregularities other than of a compoundable nature has been observed by the Investigating authority. Your Company is in the process of fling compounding applications with the Authorities against the observations/remarks of the Investigating authority.

Directors

Dr. S. Kaushik was appointed as an additional Director w.e.f. January 29, 2010. In terms of Section 260 of the Companies Act, 1956, he shall hold office only up to the date of the ensuing Annual General Meeting. The Company has received notice in writing from a member proposing his candidature for the offce of Director liable to retire by rotation.

Mr.R.V.Joshi and Mr. G.Ramachandran resigned as Directors from the Board with effect from January 29, 2010 and May 28, 2010 respectively. The Board places on record its deep sense of appreciation for the valuable contributions made by them during their tenure as Directors of the Company.

Ms. Elizabeth Harrington retires by rotation and being eligible, offers herself for re-appointment at the forthcoming Annual General Meeting.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility Statement, it is hereby confirmed :

a) That in the preparation of the Annual Accounts for the year ended March 31, 2010, the applicable Accounting Standards have been followed and proper explanations were provided for material departures, if any.

b) That the Directors have 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 as at the end of the Financial Year and of the profit of the Company for the year.

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) That the Directors have prepared the Annual Accounts for the Financial Year ended March 31, 2010 on a ‘going concern’ basis.

corporate Governance

Your Company has been practicing the principles of good Corporate Governance over the years and it is a continuous and ongoing process. A detailed report on Corporate Governance practices followed by your Company in terms of Clause 49(vi) of the Listing Agreement with Stock Exchange is provided separately in this Annual Report.

Secretarial Audit

As per SEBI requirement, Secretarial audit is being carried out at specific periodicity by a Practicing Company Secretary. The fndings of the audit have been satisfactory.

Additional information Pursuant To Section 217

a) Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 is enclosed herewith by way of an Annexure.

b) Additional information pursuant to Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars) Rules, 1988 is enclosed herewith by way of an Annexure.

Auditors

M/s. Sharp and Tannan, Chartered Accountants, hold the office as Auditors of your Company till the conclusion of the forthcoming Annual General Meeting and have expressed their willingness to be reappointed. Their reappointment, if made, would be within the limits specified under section 224(1-B) of the Companies Act, 1956. Members are requested to reappoint them and fix their remuneration.

Acknowledgement

Your Directors take this opportunity to place on record their appreciation to the contribution made by the employees to the working of the Company.

Yours Directors also express gratitude to the customers, suppliers, shareholders, banks, financiers and investors for the confidence reposed in your Company and for their continued co-operation during the year under Report.

By Order of the Board of Directors

Sd/-

Vinit Kumar

Chairman & Managing Director



Place: Mumbai Date: May 28, 2010

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Mar 31, 2009

The Directors have plasure in presenting the 18th Annual Report together with the audited statment of accounts for the year ended 31st March,2009.

1. FINANCIAL RESUETS

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4. BUSINESS PROSPECTS:

Ouring the year your Company continued to show robust growth in its business in all products categories, as the financial results reflect. All the product categories showed more than 100% growth in sales. The margins, however were under a pressune.

Though the food sector, especially the product catergries in which your Company operates, and the business of your Company is largely unaffected by the current economic turmoil and downturn trend all over the world, the opprating environment has become difficult and is expected to continue to remain so till the situation improves.

The trend in the growth in business across all the product categories is expected to remain good in the running year, though the margins would remain tight. The endevour is to achieve a change in the product mix by increasting the proportion of the higher value added products and the branded products.

The operations of your Company have been discussed in details in the Management Discussion and Analysis Report, wich is separately issued under the Corporate Govenance norms prescribed under the Listing Agreement with the Bombay stock Exchange.

5. ISSUE OF OPTIONALLY CONVERTIBLE BONDS/FCCBS/ EOUITY SHARES:

Your Company had taken your approval for issue of Fully/ Partly Combertible/Non-convertible Bonds, Equiry Shares, Prefernce Shares and/or any other financial instrument in India or overseas through a Q/P/GDR/ADR, etc issue for an amount up to UD$ 200 million.

Your Company had initiated the process of issue of Optionally Convertible Bonds/Equity shares for an amount up to Rs. 800 crores to Qualified Institutional Buyers. The terms of issue of the Bonds were finalised and necessary legal opinions were taken. Bank guarantee up to sixty percent of the face value was arranged through one of the leading banks in India to make the issue marketable and attractive to the potential investors. The Placement Document for the issue was approved by the Bombay Stock Exchange.

However, due to the drastic deterioration in the financial markets the world over, especially in the second half of 2008, the issue could not be proceeded with as the potential investors suspended all new investments and thereby the long term investments to fund acquisitions failed.



It is hoped that the situation would improve in the coming months and the investors would return to the market and your Company would be successful in raising the aforementioned amount to fructify its acquisitions.

6. ISSUE OF WARRANTS ON PREFERENTIAL BASIS:

During the year, your Company has allotted 70,00,000 warrants to NRI Tax Services.com Private Limited, 1,50,000 warrants to the six independent and non-executive Directors and 1 ,50,000 warrants to four of its business associates, on preferential basis. Each warrant shall entitle the holder there of to apply for one fully paid up equity share of your Comapny within 18 months of the allotment of the warrant. The issue price of Rs. 200/- per warram and the conversion price of Rs.200/- per share are in compliance with the applicable SEBI guidelines.

7. BORROWINGES:

During the year, your Company has been sanctioned funded and non-funded working capital limits/term loans over Rs.200 crores by some banks/financial institutions against the secrity of the movable and immovable assets of the Company. The timits have been draw/down depending upon the requirements of your Comapny.

Your Company has also taken loans from certain Non Banking Finance Companies and share brokers for part Limited against inter alia, the security of the shares of Kohinoor Foods Limited and from some corporates for meeting working capital requirements.

8. INVESTMENT IN THE SHARES OF KOHINOOR FOODS LIMITED:

Your Comapny has invested in the shares of Kohinoor Foods Limited as a long term investment. The peak holding by your Company during the year was of 36,34,148 sbares, representing 13.47% of the then share capital of the Kohinoor Foods Limited.

Your Cmapny has made the requiste disclosures required to be made under the regulations under Securities & Exchange Board of India Act and has complied with all other statutory/regulatory requirements in respect of

loans from some Non Banking Finance Companies and some share brokers for part funding the inbestment, against, inter alia, the security of the shares of Koohinoor Foods Limited.

On a petition filed by Kohinoor Foods Limited under section 11 1 A of the Companies Act, 1 956, before the Company Law Board alleging violation by your Company of the SEBJ (Substantial Acquisition of Shares and Takeovers) Regulations, 1 997, along with forty five other individuals/corporates, all of who were alleged by Kohinoor Foods Limited to be Persons Acting in Concent in acquiring shares of Kohinoor Foods Limited, the Comapny Law Board had stayed the voting rights of your Company and the other fony five individual/corporates. However, pursuant to proceedings before the Comapny Law Board, the Hon ble Board was subsequently pleased to bacate the stay of the voting rights and alsn stayed. till futher orders, the holding of the annual general meetings and other shareholder meetings by Kohinoor Foods Limited. The Dethi High Cort, on appeal by Kohinoor Foods Limited against the order of the Honble Board, confirmed the order of the Honble Board Your Directors state that your Comapny has not violated the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and any other regulation/low in acquiring the shares of Kohinoor Foods Limited and are confident that the proceedings before the Honble Board would end in favour of your Comapny.

Your Comapny has filed a perition before the Comapny Law Board under sections 397 and 398 of the Comapnies Act. 1956, agaist Kohinoor Foods Limited on the grounds of oppression of minority shareholders and mismangement of the affairs of Kohinoor Foods Limited. The petirion is pending before the Honble Board.

9. EMPLOYEES STOCK OPTIONS:

During the year under review, your Comapny has issued 256,600 options to the employees of your Comapny under the Employees Stock Option Scheme, 2008. The disclosures prescribed under the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are annexted hereto.

10. FIXED DEPOSITS:

Your Comapany has not accepted any fixed deposits from public during the year under review. There are no outstanding deposits, which have remained unpaid.

11. TEMPTATION FOODS INTERNATIONAL LIMITED:

Your Company has incorporated a Company by th* name of Temptation Foods international Limited ("TFH-"), limited by shares, in the British Virgin Islands of which it will hold 1 00% of the equity share capital as and when TFIL issues its shares. As on March 31, 2009, TFIL has not issued any shares. Mr Vinit Kumar, Chairman and Managing Director and Mr. E David Ellington, Directors, are Directors of TFIL TFIL is intended to be used as a special purpose vehicle for acquisitions of business oberseas and/or for raising of funds overseas.

As TFIL has not issued any capital and has not commenced any business, the documents and the statments referred to in section 212 of the Comapnies Act,1956 are not attached to the Balance Sheet as on March 31,2009.

12. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby state:

a) That in the preparation of the Annual Accounts for the year ended 31st March, 2009, the aplicable Accounting Standareds have been followed.

b) That the Directors have seleted such accounting policies and applied them consistently and made judgments and estimares that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Comapny at the end of the financial year and of the profit of your Company for the year.

c) That the Directors have 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 your Comapny and for preventing and detecting fraud and other irregluarities and

d) That the Directors have prepared the Annual Accounts on a going concem basis.

13. DIRECTORS:

Ms. Bhairavi Goswanmi and Dr. (Ms.) Kala Pant retire by rotation at the forthcoming Annual General Meeting, and being eligible, offer themeselves for re-appointment.

14. CORPORATE GOVETRANCE:

Pursuant to Clause 49 of the Listing Agreement, the following are annexed to this report:

a) a Report on the Corporate Governance and a Certificate from the Auditors of your Company regarding compliance of the conditions of Corporate Governance; and

b) Management Discussion and Analysis Report. Mr. Viriit Kumar, Chairman and Managing Director, declares that affirmations have been obtained from the Directors and the senior management of your Company as regards compliance with the Code of Conduct norms prescribed by the Securities and Exchange Board of India.

15. ADDITIONAL INFORMATION PURSUANT TO SECTION 217:

a) Information as per Section 217 (2A) of the Companies Act, 1 956, read with the Companies (Particulars of Employees) Rules, 1 975 is enclosed herewith by way of an Annexure.

b) Additional information pursuant to Section 21 7(1 Me) of the Companies Act, 1 956, read with Companies (Disclosure of Particulars) Rules, 1988 is enclosed herewith by way of an Annexure.

16. AUDITORS:

M/s. Sharp and Tannan hold the office as Auditors of your Company till the conclusion of the forthcoming Annual General Meeting and have expressed their willingness to be reappointed. Their reappointment, if made, would be within the limits specified under section 224(1 -B) of the Companies Act, 1 956. Members are requested to reappoint them and fix their remuneration.

17. ACKNOWLEDGEMENT:

Your Directors take this opportunity to place on record their appreciation to the contribution made by the employees to the working of the Company.

Yours Directors also express gratitude to the customers, suppliers, shareholders, banks, financiers and investors for the confidence reposed in your Company and for their continued co-operation during the year under Report.

By Order of the Board of Directors



Place : Mumbai Vinit Kumar

Date: April 27, 2009 Chairman & Managing Director