DIRECTORS' REPORT
Dear Members,
Your Board of Directors ("Board") are pleased to present the Twelfth (12th) Annual Report of FSN E-Commerce Ventures Limited ("your Company" or "the Company" or "Nykaa") together with the Audited Financial Statements of the Company, for the financial year ended March 31, 2024 ("the year under review" or "the year" or "FY 2023-24").
FINANCIAL PERFORMANCE - AN OVERVIEW
Standalone
Consolidated
* Restated on account of acquisition of business (Refer note 5 5 of the standalone financial statements).
REVIEW OF OPERATIONS
During the year under review, the Standalone income of your Company increased to Rs.4,425.63 million as compared to Rs.4,042.29 million in the previous year, registering a growth of 9.48%. The Standalone profit after tax for the year was Rs.1,170.90 million as compared to Rs.570.82 million in the previous year registering increase of 105.13%.
During the year under review, the Consolidated income of the Group increased to Rs.64,155.68 million compared to Rs.51,740.13 million in the previous year, registering growth of 24.00%. The Consolidated profit for the period for the Group was Rs.397.49 million as compared to Rs.209.61 million in the previous year registering increase of 89.63%.
The operating and financial performance of your Company has been covered in the Management Discussion and Analysis Report which forms part of the Annual Report.
DETAILS OF MATERIAL CHANGES AND COMMITMENTS FROM THE END OF THE FINANCIAL YEAR
There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the FY 2023-24 and the date of this report. Further, there has been no change in the nature of business of your Company.
RESERVES
There is no amount proposed to be transferred to the reserves.
DIVIDEND
Your Board did not recommend any dividend on the equity shares of the Company for financial year ended March 31, 2024 considering that the Company is in growth stage and requires funds to support its growth objectives.
DIVIDEND DISTRIBUTION POLICY
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), your Company has formulated a Dividend Distribution Policy, with an objective to provide the dividend distribution framework to the stakeholders of the Company. The policy sets out various internal and external factors, which shall be considered by the Board in determining the dividend pay-out. The policy is available on the website of the Company at: Dividend Distribution Policy
SHARE CAPITAL
The details of changes in paid-up equity share capital during the year under review, are as under:
STANDALONE AND CONSOLIDATED FINANCIAL STATEMENTS
The audited financial statements of the Company are drawn up, both on Standalone and Consolidated basis, for the financial year ended March 31, 2024, in accordance with the requirements of the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) notified under Section 133 of the Companies Act, 2013 ("Act") read with relevant Rules and other accounting principles. The Consolidated Financial Statement has been prepared based on the financial statements received from Subsidiaries and Associate company, as approved by their respective Board of Directors.
STRATEGIC INITIATIVES DURING THE YEAR UNDER REVIEW AND TILL THE DATE OF THIS REPORT
The Company strives to create and enhance the value for its shareholder through synergising and optimising its business operations and thus, in line with your Company's Value of 'Be Better Everyday', the following strategic initiatives were taken during the year under review:
A. ACQUISITION OF LINGERIE AND ATHLEISURE BUSINESS FROM NYKAA FASHION LIMITED BY THE COMPANY
Your Board, at its meeting held on February 06, 2024, had approved acquisition of athleisure and lingerie business of Nykaa Fashion Limited, wholly owned subsidiary of the Company, as a going concern on a slump sale basis via business transfer agreement and the same was completed by the Company during the financial year under review.
This transaction will enable the owned brands business to grow through improved focus. Further, Nykaa Fashion will become a distinct platform which will enable improved partner relationship.
B. DEMERGER OF E-B2B BUSINESS FROM FSN DISTRIBUTION LIMITED TO NYKAA E-RETAIL LIMITED
Your Board, at its meeting held on February 06, 2024, had approved Scheme of Arrangement between FSN Distribution Limited and Nykaa E-Retail Limited, Wholly owned subsidiaries of the Company, and their respective shareholders and creditors.
Nykaa E-Retail Limited primarily has an inventory led business model to sell beauty and personal care products of own brands as well as third party brands through online channels i.e., its own online platforms and websites. FSN Distribution Limited has a B2B inventory led business model to sell beauty and personal care products through its distribution networks using online as well as offline sales channels. The Scheme comprises of demerger of online B2B beauty business from FSN Distribution Limited to Nykaa E- Retail Limited. Post demerger, residual business of offline B2B business i.e. General / Modern Trade Business will continue in FSN Distribution Limited.
This demerger will facilitate synergy in operations such as effective utilization of warehouse and office space, synergy in technology cost and overheads. It will further result into consolidation of beauty online business under one entity; reduction in compliances, intercompany transactions and improve customer experience.
C. ACQUISITION OF WESTERN WEAR AND ACCESSORIES BUSINESS BY WAY OF SLUMP SALE FROM NYKAA FASHION LIMITED
Your Board, at its meeting held on May 22, 2024, had approved the proposal to acquire the Western Wear and Accessories business of Nykaa Fashion Limited ("Transferor Company"), which is a wholly owned subsidiary of the Company, as a going concern on a slump sale basis, in accordance with the business transfer agreement ("BTA") to be entered between the Company and the Transferor Company. The expected date of completion of the acquisition is by September 30, 2024. The total cost of acquisition is approximately Rs. 1,337 million.
D. TRANSFER OF 100% EQUITY STAKE HELD IN ILUMINAR MEDIA LIMITED (LBB) TO NYKAA FASHION LIMITED WITH AN OBJECTIVE TO AMALGAMATE LBB WITH NYKAA FASHION LIMITED IN DUE COURSE
Your Board, at its meeting held on May 22, 2024, had approved transfer of 100% equity stake held in Iluminar Media Limited ("LBB") to Nykaa Fashion Limited, which is a wholly owned subsidiary of the Company. The Board of Directors of the Company had given its in-principle approval for the proposal to amalgamate Iluminar Media Limited ("Transferor Company") with Nykaa Fashion Limited ("Transferee Company") under sections 230-232 of the Act and the rules and regulations made thereunder. The Transferor Company and the Transferee Company are wholly owned subsidiaries of the Company. LBB have also initiated the process for shifting its registered office from Delhi to Mumbai, Maharashtra.
SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES
As on March 31, 2024, the Company has ten direct subsidiaries, four step-down subsidiaries and one associate company. Following subsidiaries were converted from Private Company to Public Company during the year under review:
(i) Nykaa E-Retail Private Limited to Nykaa E-Retail Limited;
(ii) Nykaa Fashion Private Limited to Nykaa Fashion Limited;
(iii) FSN International Private Limited to FSN International Limited;
(iv) Iluminar Media Private Limited to Iluminar Media Limited; and
(v) FSN Distribution Private Limited to FSN Distribution Limited.
Nessa International Holdings Limited ('Nessa International'), Step down subsidiary of the Company based out of UAE had incorporated a wholly-owned subsidiary, Nysaa Beauty LLC in Dubai, during the year under review.
Pursuant to the provisions of Section 129(3) of the Act read with the Companies (Accounts) Rules, 2014 and in accordance with applicable accounting standards, a statement containing the salient features of financial statements of your Company's Subsidiaries and Associate Company in Form No. AOC-1 is annexed as Annexure — I to this Report.
In accordance with the provisions of Section 136 of the Act and the amendments thereto, and the Listing Regulations, the Audited Financial Statements, including the Consolidated Financial Statements and related information of the Company and financial statements of your Company's Subsidiaries and Joint Ventures have been placed on the website of your Company viz. https://www. nykaa.com/subsidiaries-fy-23-24/lp.
Your Company has formulated a Policy for determining Material Subsidiaries. The said policy is available on the website of the Company at: Policy for determining Material Subsidiaries.
During the year under review, Nykaa E-Retail Limited, FSN Brands Marketing Private Limited and Nykaa Fashion Limited were material subsidiaries of the Company as per Regulation 16 of the Listing Regulations, while Nykaa E-Retail Limited and FSN Brands Marketing Private Limited were material subsidiaries of the Company as per Regulation 24 of the Listing Regulations, which requires appointment of one of the Company's independent directors on the boards of the material subsidiary company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a separate section, forming a part of the Annual Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)
SEBI vide Circular No. SEBI/HO/CFD/CMD/CIR/P/2017/10 dated February 06, 2017, had recommended voluntary adoption of 'Integrated Reporting' by the top 500 listed companies. SEBI has also mandated the requirement of submission of Business Responsibility and Sustainability Report ('BRSR') with effect from the financial year 2022-23 under Regulation 34(2)(f) of the Listing Regulations.
SEBI vide its Notification dated December 26, 2019 and consequent amendments carried out to the Listing Regulations has made the Business Responsibility and Sustainability Report (BRSR) applicable to the top 1,000 listed entities (by market capitalisation) for reporting on a mandatory basis from FY 2022-23.
An Integrated Report intends to give a holistic picture of an organisation's performance and prospects to the providers of financial capital and other stakeholders. It is thus widely regarded as the future of corporate reporting. In line with the global trends on Environmental, Social, and Governance ("ESG"), your Company continues with its integrated reporting journey in the current fiscal for comprehensive review of the financial and non-financial factors enabling better assessment of the Company's long-term perspective. The Board acknowledges its responsibility for the integrity of the report and the information contained therein.
The BRSR for the year under review, containing the initiatives taken by your Company from social and governance perspective, forms an integral part of the Annual Report.
CORPORATE GOVERNANCE
Your Company embeds sound Corporate Governance practices and constantly strives to adopt emerging best practices. It has always been the Company's endeavour to excel through better Corporate Governance and fair and transparent practices. A Report on Corporate Governance forms part of this Report as 'Annexure — II'.
M/s. S. N. Ananthasubramanian & Co., Company Secretaries, the Secretarial Auditor of the Company vide their certificate dated May 22, 2024, have confirmed that the Company is and has been compliant with the conditions stipulated in the chapter IV of the Listing Regulations. The said certificate is annexed as 'Annexure — III' to this Report.
ANNUAL RETURN
The Annual Return of the Company as on March 31, 2024 in Form MGT - 7 in accordance with Section 92(3) and Section 134(3) (a) of the Act as amended from time to time and the Companies (Management and Administration) Rules, 2014, will be made available on the website of the Company at: https://www.nvkaa. com/annual-report/lp.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions under Section 134(5) of the Act, with respect to Directors' Responsibility Statement, the Directors of the Company confirm that:
(a) in the preparation of the annual accounts for the year ended March 31, 2024, the applicable accounting standards had been followed and there are no material departures from the same;
(b) the Directors had selected such accounting policies and applied them consistently and made judgements 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 March 31, 2024 and of the profits of the Company for the year ended on that date;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
AUDITORS AND THEIR REPORT
(i) Statutory Auditors
M/s. S. R. Batilboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W /E300004), were reappointed as Statutory Auditors of the Company at the 9th AGM of the Company held on September 29, 2021, to hold office till the conclusion of the 14th AGM to be held for the FY 2025-26.
In terms of Section 139 and 141 of the Act and relevant Rules prescribed thereunder, M/s. S. R. Batilboi & Associates LLP, Chartered Accountants has confirmed that they are not disqualified from continuing as Auditors of the Company. The Auditors have also confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of the ICAI.
The Auditors have issued an unmodified opinion on the Financial Statements for the financial year 2023-24 and the Auditor's Report forms part of this Annual Report. The Auditor's Report does not contain any qualification, reservation or adverse remark.
(ii) Secretarial Auditor
In terms of the provisions of Section 204 of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations, your Company has appointed M/s. S. N. Ananthasubramanian & Co., Company Secretaries, as Secretarial Auditor to conduct Secretarial Audit of the Company for FY 2023-24. The Secretarial Audit Report of the Company does not contain any qualification, reservation, adverse remark or disclaimer.
Further, in compliance of Regulation 24A of the Listing Regulations, Company's unlisted material subsidiaries also undergo Secretarial Audit and the Secretarial Audit Reports of the Company and its unlisted material subsidiaries thereto in the prescribed Form No. MR-3 is attached as Annexure - IV, IV(A), IV(B) and IV(C) forming part of this Report. The same are also available on the website of the Company.
DISCLOSURES IN TERMS OF THE PROVISIONS OF THE ACT & THE LISTING REGULATIONS
A. Board of Directors ("Board")
(i) Number of meetings
The Board met 5 (Five) times during the year under review. The details of such meetings are disclosed in the Corporate Governance Report forming part of this Annual Report.
The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act.
(ii) Directors retiring by rotation
In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Sanjay Nayar, Non Executive (Non-Independent) Director and Mr. Anchit Nayar, Executive Director, are due to retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. The Board of Directors on the recommendation of the Nomination and Remuneration Committee ("NRC") has recommended their re-appointment.
Resolution seeking their re-appointment along-with their profile as required under Regulation 36(3) of the Listing Regulations forms part of the Notice of Twelfth Annual General Meeting.
(iii) Board evaluation
The Nomination and Remuneration Committee and the Board of Directors reviewed the Board evaluation framework and process for the financial year 2023-2024 to further strengthen the criteria, parameters and sharpness of rating/feedback for Board, its Committees & individual Board Members.
Pursuant to applicable provisions of the Act and the Listing Regulations, the Board, in consultation with its Nomination and Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and Individual Directors, including Independent Directors. The framework is monitored, reviewed and updated by the Board, in consultation with the Nomination and Remuneration Committee, in accordance with the new compliance requirements.
The annual performance evaluation of the Board, its Committees and each Director has been carried out for the financial year 2023-24 in accordance with the framework. The details of evaluation process of the Board, its Committees and Individual Directors, including Independent Directors have been provided under the Corporate Governance Report which forms part of this Report.
The Policy on Board of Directors' Evaluation Framework can be accessed at: Policy on Board of Directors' Evaluation Framework
(iv) Declaration of independence
The Company has received necessary declaration from each Independent Director of the Company stating that:
(i) they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations; and
(ii) they have registered their names in the Independent Directors' Databank maintained by the Indian Institute of Corporate Affairs as required vide Rule 6 (1) & (2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
Based on the declarations received from the Directors, the Board confirms that the Independent Directors fulfil the conditions as specified under Schedule V of the Listing Regulations and are independent of the management.
(v) Familiarisation programme for Independent Directors
Disclosure pertaining to familiarisation programme for Independent Directors is provided in the Corporate Governance Report forming part of this Annual Report.
B. Committees of the Board
The Board has constituted five committees which are mandated by the Act and the Listing Regulations, viz.
(i) Audit Committee,
(ii) Nomination and Remuneration Committee,
(iii) Stakeholders' Relationship Committee,
(iv) Risk Management Committee and
(v) Corporate Social Responsibility & Environmental, Social, and Governance Committee.
In addition to the said committees, the Board has also constituted Fundraise and Investment Committee.
Details of all the committees, along with their charters, composition and meetings held during the year, are provided in the Corporate Governance Report forming part of this Annual Report.
C. Directors and Key Managerial Personnel
During the year, following were the changes in Director/ Key Managerial Personnel:
1. Mr. Neelabja Chakrabarty has been appointed as the Company Secretary & Compliance Officer with effect from February 08, 2024, in place of Mr. Sujeet Jain. Mr. Sujeet Jain continues to be the Chief Legal and Regulatory Officer of the Company.
After the year end and upto the date of the Report, following are the changes in Director/ Key Managerial Personnel:
1. The Board of Directors at its meeting held on May 22, 2024, on the recommendation of Nomination and Remuneration Committee, has approved the re-appointment of Mr. Pradeep Parameswaran as an Independent Director for a term of 3 (three) years to be effective from July 15, 2024, subject to approval of the shareholders.
2. The Board of Directors at its meeting held on May 22, 2024, on the recommendation of Nomination and Remuneration Committee, has approved the re-appointment of Mr. Seshashayee Sridhara as an Independent Director for a term of 3 (three) years to be effective from July 26, 2024, subject to approval of the shareholders.
3. The Board of Directors at its meeting held on May 22, 2024, on the recommendation of Nomination and Remuneration Committee, has approved the appointment of Mr. Santosh Desai as an Independent Director for a term of 3 (three) years to be effective from July 15, 2024, subject to approval of the shareholders.
4. Ms. Alpana Parida shall complete her term as an Independent Director of the Company on July 14, 2024 and hence shall cease to be a Director of the Company effective end of the day, July 14, 2024.
In accordance with the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the following are the Key Managerial Personnel of the Company:
(a) Ms. Falguni Nayar - Executive Chairperson, Managing Director and Chief Executive Officer;
(b) Mr. P. Ganesh - Chief Financial Officer
(c) Mr. Sujeet Jain - Chief Legal and Regulatory Officer, Company Secretary & Compliance Officer (till February 07, 2024)*
(d) Mr. Neelabja Chakrabarty - Company Secretary & Compliance Officer (appointed w.e.f. February 08, 2024)
* Mr. Sujeet Jain ceased to be the Company Secretary & Compliance Officer of the Company, with effect from close of business hours on February 07, 2024. Mr. Sujeet Jain continues to be the Chief Legal and Regulatory Officer of the Company.
D. Remuneration of Directors and Employees
Disclosure comprising particulars with respect to the remuneration of Directors and employees and other details, as required to be disclosed in terms of the provisions of Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as "Annexure - V" to this Report.
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, statement showing the names of the top ten employees in terms of remuneration drawn and names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.
Further, in terms of the second proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such information may write to the Company Secretary or e-mail at nvkaacompanvsecretarv@ nvkaa.com.
Your Company has adopted 'Remuneration Policy for Directors, Key Managerial Personnel and other Employees' which sets out criteria for the remuneration for Directors, Key Managerial Personnels ('KMPs') and Employees which can be accessed at: Remuneration Policy for Directors, KMPs and other Employees.
E. Vigil Mechanism/Whistle-Blower
Your Company believes in conduct of the affairs of its business in a fair and transparent manner by adopting highest standards of honesty, integrity, professionalism, and ethical behavior.
Your Company has established a Vigil Mechanism/Whistle- Blower Policy ("Policy") in accordance with the provisions of the Act and the Listing Regulations with a view to provide a platform and mechanism for Employees, Directors and other stakeholders of the Company to report actual or suspected unethical behaviour, fraud or violation of the Company's Code of Conduct, ethics, principles and matters specified in the Policy without any fear of retaliation, and also provide for direct access to the Chairperson of the Audit Committee as the case may be, in exceptional cases.
Employees and other stakeholders are encouraged to report actual or suspected concerns or violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns or violations are called 'Protected Disclosures' which can be raised by a Whistle-blower to "Speak-up Helpline" (an external independent agency appointed by the Company to receive and attend to the Protected Disclosures through toll-free number/e-mail/web portal), established in terms of the Policy.
The Company affirms that in compliance with the WhistleBlower Policy/Vigil Mechanism, no personnel had been denied access to the Audit Committee. The Policy is available on the Company's website and can be accessed at: Whistle-Blower Policy/Vigil Mechanism.
F. Corporate Social Responsibility ('CSR')
A brief outline of the CSR Philosophy, salient features of the CSR Policy of the Company, the CSR initiatives undertaken during the financial year 2023-24 together with progress thereon and the report on CSR activities in the prescribed format, as required under Section 134(3)(o) read with Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014, are set out in Annexure - VI to this Report and the CSR Policy can be accessed using the link CSR Policy.
G. Employee Stock Option Scheme and Share Based Employee Benefits
Your Company grants employee stock options that would enable the employees to share the value they create for the Company in the years to come. Accordingly, pursuant to the approval of Board and shareholders of the Company and in terms of the provisions of applicable laws, your Company has instituted Employees Stock Options Scheme - 2012 ("ESOS 2012"), FSN Employees Stock Scheme - 2017 ("ESOS 2017"), FSN E-Commerce Ventures Limited - Employee Stock Option Plan 2022" ("ESOP 2022") and FSN E-Commerce Ventures Limited - Employee Stock Unit Plan 2022 ("Stock Unit Plan 2022") for grant of stock options to eligible employees.
The Nomination and Remuneration Committee of the Board of Directors of the Company, inter-alia, administers and monitors the ESOS & RSU Schemes, in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB Regulations"). During the year under review, there is no material change in the ESOS & RSU Schemes, and they are in compliance with the provisions of SEBI SBEB Regulations and other applicable provisions of law.
The applicable disclosures as stipulated under Regulation 14 of SEBI SBEB Regulations with regard to the ESOP & RSU Schemes of the Company are available on the website of the Company and weblink for the same is https://www.nvkaa. com/annual-report/lp.
A certificate from M/s. S.N. Ananthasubramanian & Co., Company Secretaries, the Secretarial Auditor of the Company, confirming that the aforesaid ESOP & RSU Schemes have been implemented in accordance with the SEBI SBEB Regulations, will be open for inspection at the ensuing Twelfth Annual General Meeting.
H. Investor Education and Protection Fund ('IEPF')
The Company, till date, is not required to transfer any amount to the IEPF Account in terms of the provisions of the Companies Act, 2013 and the rules thereunder.
I. Related Party Transactions
All transactions with related parties were reviewed and approved by the Audit Committee and are in accordance with the Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions and the Related Party Framework, formulated and adopted by the Company. An omnibus approval from the Audit Committee is obtained for the related party transactions which are unforeseen in nature.
All contracts/arrangements/transactions entered into by the Company during the year under review with Related Parties were in the ordinary course of business and on arm's length. During the year under review, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions or which is required to be reported in Form No. AOC-2 in terms of Section 134(3) (h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. Accordingly, there are no transactions that are required to be reported in Form AOC-2.
The Company's Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions is available on the website of the Company at: Related Party Transactions Policy.
The details of the related party transactions as per Indian Accounting Standards (IND AS) - 24 are set out in the Standalone Financial Statement of the Company. The Company, in terms of Regulation 23 of the Listing Regulations, submits within the stipulated time from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions, in the specified format to the stock exchanges. The said disclosures can be accessed on the website of the Company at: https://www.nykaa.com/quarterly-half-yearly- annual-filings-2024/lp.
J. Conservation of Energy, Technology
Absorption, Foreign Exchange Earnings and Outgo
Considering the nature of business of your Company, the particulars with respect to conservation of energy and technology absorption required as per Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are not applicable to the Company.
The foreign exchange earnings and outgo are as below:
K. Risk Management
Your Company has a risk management framework that supports decision making across various levels, across the enterprise while being designed to proactively identify, assess and mitigate risks.
Furthermore, the Enterprise Risk Management ('ERM') Governance Structure of your Company identifies the key internal stakeholders responsible for creating, implementing and sustaining ERM in the organisation.
The Board of Directors of the Company has formed a Risk Management Committee to frame, implement, and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Committee considers the risks that impact the mid-term to the long-term objectives of the business, including those reputational in nature.
The Company endeavours to continually strengthen its Risk Management systems and processes in line with a rapidly changing business environment. There are no risks which in the opinion of the Board threaten the existence of the Company. Details of various risks faced by your Company are provided in the Management Discussion & Analysis Report.
Your Company has framed and implemented a Risk Management Policy in terms of the provisions of Regulation 21 of the Listing Regulations, for the assessment and minimisation of risk, including identification therein of elements of risk, if any, which may threaten the existence of the Company. The policy can be accessed at Risk Management Policy
L. Internal Financial Control
According to Section 134(5)(e) of the Act the term Internal Financial Control (IFC) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Act also mandate the need for an effective Internal Financial Control system in the Company which should be adequate and shall operate effectively. Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Board's Report.
The Company has adequate Internal Financial Control System over financial reporting ensuring that all transactions are authorised, recorded, and reported correctly in a timely manner to provide reliable financial information and to comply with applicable accounting standards which commensurate with the size and volume of business of the Company.
The key internal financial controls have been documented, automated wherever possible and embedded in the respective business processes. Assurance to the Board on the effectiveness of internal financial controls is obtained through 3 Lines of Defence which include:
(a) Management reviews and self-assessment;
(b) Continuous controls monitoring by functional experts; and
(c) Independent design and operational testing by the external professional firm.
The Company believes that these systems provide reasonable assurance that the Company's internal financial controls are adequate and are operating effectively, as intended. During the year under review, such controls were tested by the Statutory Auditors of the Company and no material weaknesses or significant deficiencies in the design or operations were observed and reported by the Statutory Auditors. Details of the internal controls system are provided in the Management Discussion & Analysis Report.
M. Policy on Directors' Appointment and Remuneration
In terms of Section 178 of the Act and Regulation 19 of the Listing Regulations, the Board of your Company, on recommendation of the Nomination and Remuneration Committee ("NRC"), had adopted a "Remuneration Policy for Directors, Key Managerial Personal ('KMP') and other employees" ('Remuneration Policy') and "Policy on Board Diversity".
The Company's Remuneration Policy is directed towards designing remuneration so as to attract, retain, and reward talent who will contribute to long-term success of the Company and build value for its shareholders. Objective of Board Diversity Policy is to ensure that the Board is fully diversified and comprises of an ideal combination of Executive and Non-Executive Directors, including Independent Directors, with diverse backgrounds.
The salient features of the policies are outlined in the Corporate Governance Report and the policies are made available on the Company's website, which can be accessed using the link https://www.nykaa.com/policies.
N. Particulars of Loans, Guarantees and Investments
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security provided is proposed to be utilised by the recipient are provided in the Standalone Financial Statement.
O. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
In compliance with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has adopted a Prevention of Sexual Harassment Policy for the prevention of sexual harassment and constituted Internal Complaints Committee to deal with complaints relating to sexual harassment at workplace. For details, kindly refer to relevant disclosures in the Corporate Governance Report which forms part of the Annual Report 2023-24.
P. Environment & Safety
Your Company is conscious of the importance of environmentally clean and safe operations and has framed and adopted Health, Safety and Environment (HSE) Policy which can be accessed at Health, Safety and Environment Policy. The Company's policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.
Your Company is committed to the highest standards of health, safety and environment practices within the organisation and the extended areas within its influence, with an aim to provide safe and healthy working environment to the employees, customers, business partners, suppliers and visitors.
During the year under review, the Company continued its waste management efforts through various environment friendly measures i.e. use of eco-friendly packaging material, recycling of plastic waste and redesigning packaging to reduce plastic waste. Scrap disposal is in line with industry benchmarks.
GENERAL
Your directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events on these items during the year under review:
• There was no change in the nature of business of your Company as stipulated under sub-rule 5(ii) of Rule 8 of Companies (Accounts) Rules, 2014.
• Details relating to deposits covered under Chapter V of the Act since your Company has not accepted any deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014.
• No significant or material orders were passed by the Regulators or Courts or Tribunals, which impact the going concern status and Company's operations in future.
• Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except Employees' Stock Options Schemes referred to in this Report.
• No fraud has been reported by the Auditors to the Audit Committee or the Board.
• There is no application made or proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the FY 2023-24.
• The Company has not made any one-time settlement for the loans taken from the Banks or Financial Institutions, therefore, the same is not applicable.
• Your Company has not issued Equity shares with differential rights as to dividend, voting or otherwise; and
• Your Company has not raised funds through preferential allotment or qualified institutions placement as per Regulation 32(7A) of the Listing Regulations.
SECRETARIAL STANDARDS
During the year under review, your Company has complied with the Secretarial Standards 1 and 2 on meetings of the Board of Directors and on General Meetings, respectively, issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs, in terms of Section 118(10) of the Act.
MAINTENANCE OF COST RECORDS
Your Company is not engaged in the business of production of goods or providing of services as specified in Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 ("Rules"). Accordingly, the requirement of maintaining cost records in accordance with Section 148(1) of the Act read with the Rules is not applicable to the Company for the period under review.
ACKNOWLEDGEMENT
The Board wishes to place on record its appreciation for the assistance, co-operation and encouragement extended to the Company by the Company's customers, business partners, brands, bankers and other stakeholders.
The Directors take this opportunity to place on record their warm appreciation for the valuable contribution, untiring efforts and spirit of dedication demonstrated by the employees and officers at all levels, in ensuring an excellent all-around operational performance. We applaud them for their superior levels of competence, solidarity, and commitment to the Company. The Directors would also like to thank the shareholders for their wholehearted support and contribution. We look forward to their continued support in future.