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MANAGEMENT DISCUSSIONS AND ANALYSIS
To the Members,
The Directors have pleasure in presenting the 29th Annual Report along with Audited
Financial Statements of the Company for the financial year ended 31st March 2022.
FINANCIAL RESULTS
(Rs in crore)
| Particulars |
2021-22 |
2020-21 |
| Revenue from Operations |
208.08 |
248.95 |
| Profit/(Loss) before Finance Cost and Depreciation (PBIDT) |
(10.23) |
14.62 |
| Profit/(Loss) before Tax (PBT) |
(19.69) |
6.09 |
| Profit/(Loss) after Tax (PAT) |
(14.25) |
4.10 |
| Surplus brought forward |
40.73 |
37.73 |
| Total amount available for appropriation |
26.47 |
41.83 |
| APPROPRIATIONS: |
|
|
| General Reserve |
0.00 |
0.00 |
| Dividend (Incl. Tax) |
1.10 |
1.10 |
| Surplus carried forward |
25.37 |
40.73 |
DIVIDEND
In view of losses, the Directors have not recommended any dividend for the financial
year 2021-22 on equity shares.
OPERATIONS
The Revenue from Operations was Rs 208.08 crore during the year as compared to Rs
248.95 crore in the previous year.
The 2nd wave of COVID-19 jolted the confidence of customers, pushing down the overall
demand for consumer products. Your Company's Dairy Creamer business suffered badly in the
first half of the year because of significant price reduction by competition. After
aggressive marketing and promotion initiatives, sales of consumer products started
recovering from second half.
Though overall market started improving in second half of 2021-22, input prices
remained high due to poor milk availability, especially in the flush season. Margins thus
remained under pressure in the second half with price increases lagging input cost
increases.
Your Company's products have been well accepted in Institutions and Hotel and
Restaurant segments (HORECA) and your Company is working on various value-added product
categories to enhance our offerings. Your Company has also added new customers in the
category of Institution and HORECA and continues its efforts to further expand its
customer base.
Your Company also launched 2 new products based on changing demand patterns and
consumer research. All the products garnered good response in the market. In the coming
year, your Company stands committed to rebound the business and continuously build
consumer, institutional and bulk business.
Milk Procurement / Raw Material Security
Rural India being not untouched from the impact of second wave of COVID-19, lockdown
led to unemployment among casual labour and millions slipped into poverty last year due to
job losses. Shrinking farmer margins led to low investment on cattle and dairy. This
resulted in low availability of milk during second half of 2021-22 (flush season) and
steep increase in milk prices.
Your Company has enhanced its milk procurement capabilities at the village level,
adding new collection centres and BMCs. Your Company is helping farmers to have more
sustainable business and providing support to get low-cost fodder, veterinary support, and
empowering farmers by providing literacy training programs like development of clean milk
etc.
Food Safety
Food Safety and Quality always remained the key focus area for your Company during FY
2021-22.
We upgraded our plant to further amendments of FSSC 22000 version 5.0, GMP and Quality
Management System as per ISO: 9001 - 2015. 20 Certified Internal Auditors continued their
support for compliances across functions at the plant site as well as the front end.
Good Manufacturing Practices (GMP), Prevention of Food Fraud, Food Threats and
Integrated Pest Management System remained the most important compliance practices.
Your Company successfully cleared GMP & Food Safety Audits, conducted by the four
renowned brands in FY 2021-22. This covers infrastructure and systems in the dairy
processing plant for food safety compliance. In-house capability of QA lab is maintained
and enhanced the systems and processes.
COVID Protocol compliance played a key role during the pandemic and all the staffs
received FASSAI approved COVID prevention training with an aim of Food Safety Compliance
on shop floor and benefit to individuals.
INDUSTRY SCENARIO
INDIAN DAIRY INDUSTRY
India remained the largest producer and consumer for dairy products. However, COVID-19
slowed down the pace of milk production due to constrained investment lead to low
productivity per bovine and less improvement in the population of milch animals. On the
other hand, it helped farmers to get better milk prices during the year while bringing in
new investment opportunities in Dairy Farming.
Liquid milk remained the largest segment within the Indian dairy industry. The growth
of some value-added product categories witnessed significant growth due to health and
hygiene concerns with recommended higher protein intake due to COVID-19.
OPPORTUNITIES & THREATS
Opportunities
i. COVID-19 converted "out of home consumption" trend into "order
online". As the consumer intent to shop online continues to increase, it will create
more opportunities for the value added dairy product category.
ii. Participation of start-ups in the dairy industry will support significant
infrastructure investment across processing, chilling, logistics, cattle feed etc.
iii. Product engineering in the value added category and introduction of innovative
products, as per the specific requirements of the customers, will bring growth in the
coming years.
Threats
i. Growth in milk production is not in line with the demand because of stagnancy in the
population of bovine milch animals and availability of Artificial Intelligence
technologies to only 50% of the farmers.
ii. Less yield from milch animals due to less feed and heat stress, owing to climate
change and shortening of growing seasons.
GROWTH OUTLOOK
Indian Dairy industry witnessed a steady recovery after the COVID-19. Most of the
value-added product categories are expected to deliver a double digit growth in the coming
years. Rapid urbanisation and population growth will help in robust growth of the liquid
milk market, which is estimated to grow by 2.5 times in the next 5 years.
RISKS & CONCERNS
Dairy analogues, adulteration and plant-based products pose a major challenge and
threat to the dairy industry and specially to value added product category.
HUMAN RESOURCE MANAGEMENT/ INDUSTRIAL RELATIONS
Employees are considered as key stakeholders in the progress of organisation and
various initiatives are being taken to upgrade their skills through internal and external
training. Job rotation opportunities are encouraging people to take on new roles and
maximize their learning and work experience. "Reward and Recognition" schemes
have been introduced to develop a competitive and performance-oriented work culture.
Automation of HR functions helps in building speed, accuracy and improve employee
experience. In order to encourage leadership and problem-solving qualities among workmen,
your Company has established cross Functional Team projects. Your Company provides various
Communication platforms with Senior Leadership to ensure open and transparent feedback
from employees.
Industrial Relations remained cordial throughout the year under review.
INTERNAL CONTROL SYSTEM
The Company has in place adequate internal controls commensurate with the size and
nature of its operations.
There is a Corporate Internal Audit team consisting of qualified professionals. In
addition, services of external Audit firm is also availed to further strengthen its
effectiveness. Regular internal audits are conducted to review the internal control
systems and compliance thereof as per the annual audit plan approved by Audit Committee of
the Board. The findings of the Audit team are reviewed by the Audit Committee and
corrective actions are initiated, where necessary. In addition, the Company also follows a
Compliance monitoring software tool to capture status of all applicable statutory
compliances online.
DETAILS OF SIGNIFICANT CHANGES (i.e. change of 25% or more compared to the immediate
previous financial year)
| S ..' Particulars No. |
UOM |
2021-22 |
2020-21 |
% Change |
Definition |
Remark for variation |
| 1 Debtors Turnover Ratio |
Days |
15.72 |
21.05 |
25.30% |
Sales/Average Trade Receivables |
Better Sales Realization |
| 2 Interest Coverage Ratio |
Times |
-2.37 |
3.91 |
-160.75% |
EBITDA/Finance Cost |
Due to Losses |
| 3 Debt Equity Ratio |
Times |
1.14 |
0.58 |
-97.19% |
Gross Debt/Equity |
Due to Losses |
| 4 Operating Profit Margin |
% |
-5% |
6% |
-184.99% |
EBITDA/Net Sales |
Due to Losses |
| 5 Net Profit Margin |
% |
-6.99% |
1.65 |
-522.64% |
PAT/Net Sales |
Due to Losses |
| 6 Return on Net Worth |
% |
-30% |
6% |
-571.12% |
PAT/Equity |
Due to Losses |
CAPITAL STRUCTURE
During the year under review, there has been no change in the Authorised and Paid-up
share capital of the Company. As on 31st March 2022, the Authorised Share Capital of the
Company was Rs 21 crore and Paid Up Share Capital was Rs 11 crore. Umang Dairies
maintained its Long Term Rating and Short Term Rating as CRISIL BBB. CRISIL has not
revised the credit rating of the Company during the financial year 2021-22.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of the Companies Act, 2013 (‘the Act'), the Annual
Return of the Company is available on the website of the Company and can be accessed at
https://www.umangdairies.com/Annual%20Return%202020-21.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year the Company has not given/made any loans, guarantees/securities and
investments in terms of the provisions of Section 186 of the Act.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2022, all the contracts or arrangements or
transactions entered into by the Company with the Related Parties were in the ordinary
course of business and on arm's length basis and were in compliance with the applicable
provisions of the Act and SEBI (Listing Obligations & Disclosure Requirements)
Regulations, 2015 (‘the Listing Regulations').
Further, the Company has not entered any contract or arrangement or transaction with
the Related Parties which could be considered material in accordance with the Policy of
the Company on materiality of Related Party Transactions. In view of the above, disclosure
in Form AOC-2 is not applicable.
SEBI vide its Notification dt. 9th November 2021 has amended the provisions relating to
Related Party and Related Party Transactions, effective from 1st April 2022. Accordingly,
amended Policy on Materiality of Related Party Transactions and on Dealing with Related
Party Transactions is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Rajiv Sheopuri (DlN:03450185) was appointed as an Independent Director of the
Company for a term of three consecutive years w.e.f. 19th August 2021 by the Members at
the Annual General Meeting (AGM) of the Company held on 16th September 2021. The Board is
of the opinion that Shri Rajiv Sheopuri has high integrity and relevant experience.
Shri Desh Bandhu Doda (DlN:00165518), has been re-designated and appointed as
Independent Director of the Company for a term of three consecutive years w.e.f. 19th
August 2021 by the Members at AGM of the Company held on 16th September 2021.
Also, pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Third
Amendment) Regulations, 2021 which was effective from 1st January 2022, Shri A.S. Mehta
(DIN:00030694), an Independent Director of the Company, was re-designated and appointed as
director liable to retire by rotation w.e.f. 1.10.2021, and Shri V. Kumaraswamy
(DIN:02443804), who was appointed as Additional Director (Independent) w.e.f. 18.5.2021,
has been re-designated and appointed as director liable to retire by rotation w.e.f. 19th
August 2021, by the Members at the AGM of the Company held on 16th September, 2021.
Shri Virupakshan Kumaraswamy (DIN: 02443804) retires by rotation and being eligible
offers himself for re-appointment at the forthcoming AGM of the Company.
Shri Ratan Chand Jain (DIN:00165590), Independent Director on the Board of the Company,
passed away on 23rd April 2021 and Shri Vinit Marwaha (DIN:00051403) ceased to be
Independent Director of the Company w.e.f. 16th September 2021, pursuant to abovementioned
amendment in Listing Regulations. The Board places on record its appreciation for the
services rendered by them during their tenure as Directors of the Company.
All the Independent Directors of the Company have given requisite declarations that
they meet the criteria of independence as provided under the Act and Listing Regulations.
Except as stated above, there was no other change in Directors and Key Managerial
Personnel of the Company, during the year under review.
CORPORATE SOCIAL RESPONSIBILITY
Your Company considers community as its key stakeholder and endeavours to create
economically viable and socially inclusive. CSR programmes of the Company are aimed at
inclusive development and welfare of the community by providing livelihood opportunities
through micro enterprises, healthcare, sanitation, education, empowering women through
adult literacy and other means.
The Company has a Corporate Social Responsibility (CSR) Policy in accordance with the
provisions of the Act. CSR Policy of the Company is displayed on the website of the
Company.
During the year under review, the Company has spent Rs 12.42 lac under various CSR
activities.
Annual Report on the CSR activities undertaken by the Company during the financial year
ended 31st March 2022, in the prescribed format, is annexed to this Report as Annexure-1
and forms part of it.
AUDITORS & THEIR REPORTS
(a) Statutory Auditors
In accordance with the provisions of the Act and Rules made thereunder, M/s Singhi
& Co., Chartered Accountants, were appointed as Auditors of the Company to hold office
from the conclusion of the 24th Annual General Meeting (AGM) held in the year 2017 till
the conclusion of 29th AGM of the Company to be held in the year 2022. Accordingly, the
term of office of said Auditors shall expire at the conclusion of the forthcoming AGM.
In terms of the provisions of Section 139 of the Act and the Rules made thereunder,
your Directors have recommended re-appointment of M/s Singhi & Co., Chartered
Accountants, as Statutory Auditors of the Company for another term of five consecutive
years from conclusion of the forthcoming AGM of the Company till the conclusion of the
34th AGM of the Company to be held in the year 2027, for approval of Members of the
Company. M/s Singhi & Co. have given their consent to act as Statutory Auditors of the
Company and have further confirmed that their appointment, if made, at the forthcoming AGM
shall be in accordance with conditions specified in the Act.
The observations of the Auditors in their report on Accounts and the Financial
Statements, read with the relevant notes are self-explanatory. The Auditor's Report does
not contain any qualification, reservation, adverse remark or disclaimer.
(b) Secretarial Auditor
The Board of Directors had appointed Shri Namo Narain Agarwal, Company Secretary in
Practice, as Secretarial Auditor to carry out Secretarial Audit of the Company for the
financial year 2021-22. The Report given by him for the said financial year in the
prescribed format, pursuant to the provisions of Section 204 of the Act and Regulation 24A
of the Listing Regulations, is annexed to this Report as Annexure-2 and forms part of it.
The Secretarial Audit Report does not contain any qualification, reservation, adverse
remark or disclaimer.
(c) Cost Auditor
In accordance with the provisions of Section 148(1) of the Act, the Company has
maintained cost accounts and records. The Cost Audit for the financial year ended 31st
March 2021 was conducted by M/s Sanjay Kumar Garg & Associates, Cost Accountants,
Delhi and the Cost Audit Report was duly filed with the Ministry of Corporate Affairs,
Government of India. The Audit of the Cost Records for the financial year ended 31st March
2022, is being conducted by the said firm and the Report will also be filed with the
Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review, there were no significant and material orders passed by
the Regulators or Courts or Tribunals which would impact the going concern status of the
Company and its future operations. Further, during the year under review, no applications
were made or no proceedings were pending as at the end of the year under the Insolvency
and Bankruptcy Code, 2016.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments 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 this report.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there was no change in the nature of business of the
Company.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) of the Act read with the Companies
(Accounts) Rules, 2014 is annexed to this Report as Annexure-3 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each Director to the median employee's
remuneration and other requisite details pursuant to Section 197(12) of the Act read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, is annexed to this Report as Annexure-4 and forms part of it. Further, Particulars
of Employees pursuant to Rule 5(2) & (3) of the above Rules, also form part of this
Board Report. However, in terms of provisions of Section 136 of the
Act, the Annual Report for the financial year 2021-22 is being sent to all the members
of the Company and others entitled thereto, excluding the said particulars of employees.
Any member interested in obtaining such particulars may write to the Company Secretary.
The said information is also available for inspection at the Registered Office of the
Company on working days during working hours.
CORPORATE GOVERNANCE
Your Company reaffirms its commitment to the highest standards of corporate governance
practices. Pursuant to Regulation 34 read with Schedule V of the Listing Regulations,
Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate
regarding compliance of conditions of Corporate Governance are made part of this Annual
Report.
The Corporate Governance Report which forms part of this Annual Report, also covers the
following:
a) Particulars of the five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and
Senior Management including, inter alia, the criteria for performance evaluation of
Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own
performance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of
Vigil Mechanism.
e) Details regarding Risk Management.
f) Disclosure under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.
DEPOSITS
During the year under review, the Company has not taken any deposits from the public.
COMPLIANCE WITH SECRETARIAL STANDARDS
The applicable Secretarial Standards issued under Section 118 of the Act have been
complied with by the Company.
DIRECTORS’ RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Act, your Directors state that:-
a) in the preparation of the annual accounts, the applicable accounting standards have
been followed along with proper explanation relating to material departures; if any;
b) the accounting policies have been selected and applied consistently and judgments
and estimates made are reasonable and prudent so as to give a true and fair view of the
state of affairs of the Company at the end of the financial year and of the profit of the
Company for that period;
c) proper and sufficient care has been taken for the maintenance of adequate accounting
records in accordance with the provisions of the said Act for safeguarding the assets of
the Company and for preventing and detecting fraud and other irregularities;
d) the annual accounts have been prepared on a going concern basis;
e) the proper internal financial controls to be followed by the Company have been laid
down and that such internal financial controls are adequate and were operating
effectively; and
f) the proper systems have been devised to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
CAUTIONARY STATEMENT
Management Discussion and Analysis Report contains forward looking statements which may
be identified by the use of words in that direction or connoting the same. All statements
that address expectations or projections about the future, including, but not limited to
statements about the Company's strategy for growth, product development, market position,
expenditures and
financial results are forward looking statements. These are based on certain
assumptions and expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realized. The Company's actual
results, performance or achievement could thus differ materially from those projected in
any such forward looking statements. The Company assumes no responsibility to publicly
amend, modify or revise such forward looking statements, on the basis of any subsequent
development, information or events.
ACKNOWLEDGEMENT
The Directors wish to thank its Customers, Shareholders, Banks, Dealers, Suppliers and
Government Authorities for their continued support.
The Board also places on record its sincere appreciation of the hard work, put in by
the employees at all levels during the period under report.
|
On behalf of the Board of Directors |
|
| Place: New Delhi |
(A.S. Mehta) |
(R.C. Periwal) |
| Date: 20th May 2022 |
Director |
Director |
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