To,
The Members,
SHANTHALA FMCG PRODUCTS LIMITED
(formerly known as SHANTHALA FMCG PRODUCTS PRIVATE LIMITED)
Your directors are pleased to present the 10thAnnual Report of the business and operations of your Company (hereinafter referred to as the said "Company" or "SHANTHALA") accompanied with AuditedFinancial Statements for the Financial Year ended on March 31, 2024. The standalone performance of the Company hasbeen considered whenever required.
1. FINANCIAL RESULTS
The summarized financial performance for the financial year under review compared to the previous financial year is given here-in-below:
[Amount in Lakhs]
2. REVIEW OF OPERATIONS
During the financial year under review, the Company has posted revenue from its operations of INR 41,33,05,861/- as against INR 40,51,59,384/- for the corresponding previous year.
Further, the Company has earned a profit after tax of INR 29,42,173/- as against INR 17,72,509/- for the corresponding previous year.
For the financial year ended 31st March, 2024, no amount was carried to General reserve account by the Company.
3. STATE OF AFFAIRS AND FUTURE OUTLOOK:
Your Board is exploring new avenues to engage Company into trading activities with present product line, with an expectation to grow its business in upcoming year. Moreover, the Company has witnessed upward trend in its revenue and profit after tax. The Company is hopeful to do better in upcoming future.
4. DIVIDEND AND RESERVES:
In order to conserve the profit for future years, the company do not recommend dividend for the financial year 2023-24.
5. SHARE CAPITAL
< Changes in Paid up Capital:
1. The company has on 27th May, 2023, allotted fully paid-up 1,16,458 (One Lakh Sixteen Thousand Four Hundred Fifty Eight) Equity Shares of face value of INR 10/- (Indian Rupees Ten only) each on preferential issue basis to the respective allottees which was approved by way of special resolution at the Extraordinary General meeting held on 20th April, 2023 by the members of the Company.
2. Further, on 18th July, 2023, the Company has allotted 43,15,206 (Forty Three Lacs Fifteen Thousand Two Hundred and Six) Equity Shares through bonus issue to the existing shareholders vide members approval in the Extra- Ordinary General Meeting of the Company on 18th July, 2023 in the ratio of 7 new equity shares for every 1 shares held of INR 10.00 (Indian Rupees Ten Only) each to the shareholders whose names appear in the Register of Members as on the record date i.e., 14th July, 2023.
3. The Company has issued and allotted 17,66,400 equity share of INR 10/- each at a price of INR 91/- per share through an Initial Public Offer on 01st November, 2023.
As on March 31, 2024, the authorized capital of the company was INR 11,00,00,000/- (Indian Rupees Eleven Crores only) divided into 1,10,00,000 (One Crore Ten Lacs only) Equity Shares of INR 10/- (Indian Rupees Ten Only) each.
Further, the issued, subscribed and paid-up share capital of the Company was INR 6,69,80,640/- (Indian Rupees Six Crores Sixty Nine Lacs Eighty Thousand Six Hundred and Forty only) divided into 66,98,064 (Sixty Six Lacs Ninety Eight Thousand Sixty Four Only) Equity Shares of INR 10/- (Indian Rupees Ten Only) each.
6. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY.
a. Change in the nature of the business of the Company
1. The Board of Directors at their meeting held on April 03, 2023, approved Shifting of Registered office of the Company within local limits of the city i.e., from D.No.193, 14, Race Course Road, Madikere, Kodagu - 571201, Karnataka, India to 7th Block, Gandhinagar Bye Pass Road, Virajpet, Kodagu- 571218, Karnataka, India, w.e.f. 7th April, 2023.
2. During the financial year under review, there has been no change in the nature of the business of the Company. As per the special resolution passed by the members of the Company at the Extraordinary General Meeting held on June 12, 2023, approved the conversion of the Company from a Private Limited Company to a Public Limited Company and altered its Articles of Association (AoA) and Memorandum of Association (MoA). Consequently, the Company's name was changed from 'SHANTHALA FMCG PRODUCTS PRIVATE LIMITED' to 'SHANTHALA FMCG PRODUCTS
LIMITED', by removing the word "Private" before the word "Limited".
b. Initial Public Offer ("IPO") and Listing
Pursuant to Section 23 (1) of the Companies Act, 2013 and other provision under the said Act and rules made thereunder read with chapter IX of the securities and exchange board of India (issue of capital and disclosure requirements) regulations, 2018 ("SEBI (ICDR) regulations"), as amended in terms of rule 19(2)(b) of the securities contracts (regulation) rules, 1957 had made Initial Public Offer aggregating to INR 1607.42 Lakhs ("Issue Size") and has issued and allotted 17,66,400 equity share of INR 10/- each at a price of INR 91/- per share through an Initial Public Offer. Furthermore, the Equity Shares of your Company were listed on National Stock Exchange of India Limited on Small, Medium Enterprise ("SME") on Thursday, November 03, 2023.
7. MANAGEMENT DISCUSSION AND ANALYSIS.
The Management Discussion and Analysis as required in terms of the Listing Regulations is annexed to the report as "Annexure I" and is incorporated herein by reference and forms an integral part of this report.
8. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the financial year under review, the following changes took place: Appointments and change in designations of Directors and Key Managerial Personnel:
No.
Non -executive, Independent Director
In accordance with section 152(6) of the Companies Act, 2013 and in terms of Articles of Association of the Company Mrs. Bantwal Shobitha Mallya [DIN: 06793259], Director (Executive Director) of the Company, retires by rotation and being eligible; offers himself for re-appointment at the forthcoming 10th Annual General Meeting. The Board recommends the said reappointment for shareholders' approval.
All the directors of the Company have confirmed that they satisfy the fit and proper criteria as prescribed under the applicable regulations and that they are not disqualified from being appointed as directors in terms of Section 164(2) of the Companies Act, 2013.
Further, Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are:
9. SEPARATE MEETING OF INDEPENDENT DIRECTORS: BOARD EVALUATION &
DISCUSSIONS WITH INDEPENDENT DIRECTORS:
Pursuant to paragraph VII of Schedule IV, in terms of Section 149 (8) of Companies Act, 2013 and Regulation 25 (3) & (4) of Securities and Exchange Board of India (Listing Obligations and Disclosure requirements, 2015, the Board's policy is to regularly have separate meetings with Independent Directors, to update them on all business-related issues, new initiatives and changes in the industry specific market scenario. At such meetings, the Executive Directors and other Members of the Management make presentations on relevant issues.
Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement/ SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the
evaluation of the working of its committees. The Directors expressed satisfaction with the evaluation process.
10. DECLARATION BY INDEPENDENT DIRECTORS:
The Company has received the necessary declaration from each Independent Director in accordance with Section 149(7) of the Act and Regulations 16(1)(b) and 25(8) of the SEBI Listing Regulations, that he/she meets the criteria of independence as laid out in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations.
In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board. Further in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.
11. COMPOSITION OF BOARD, NUMBER OF BOARD MEETINGS & ITS POLICY:
The existing policy is having a blend of appropriate combination of executive, non-executive and independent directors to maintain the independence of the Board and separate its functions of governance and management. As of March 31, 2024, the Board had 5 (Five) members, consisting of 2 (Two) executive Directors, 03 (Three) non-executive & independent director. Dates for Board Meetings are well decided in advance and communicated to the Board and the intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. The information as required under Regulation 17(7) read with Schedule II Part A of the LODR is made available to the Board. The agenda and explanatory notes are sent to the Board in advance.
The Board periodically reviews compliance reports of all laws applicable to the Company. The Board meets at least once a quarter to review the progress of business of the Company and also to review half yearly financial results and other items on the agenda and also on the occasion of the Annual General Meeting ('AGM') of the Shareholders. Additional meetings are held, when necessary.
Further, Committees of the Board usually meet on the same day of formal Board Meeting, or whenever the need arises for transacting business. The recommendations of the Committees are placed before the Board for necessary approval and noting. During the Financial Year 2023-24, the
Company held 15 (Fifteen) board meetings of the Board of Directors as per Section173 of Companies Act, 2013 which is summarized below. The provisions of Companies Act, 2013 was adhered to while considering the time gap between two meetings.
Strength
Attendance details of Directors for the year ended March 31, 2024 are given below:
12. FORMATION OF THE COMMITTEES OF THE BOARD
AUDIT COMMITTEE
The Audit Committee of the Company is constituted in line with the provisions of Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") read with Section 177 of the Companies Act, 2013 ("Act").
The primary objective of the Audit Committee is to monitor
and provide an effective supervision of the Management's financial reporting process, to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The Committee oversees the work carried out in the financial reporting process by the Management, the statutory auditor and notes the processes and safeguards employed by each of them.
Meetings of the Committee were held during the year ended 31st March, 2024, the dates of which are July 18, 2023, October 16, 2023, November 23, 2023 and March 19, 2024.
Details of Composition of the Committee:
Independent
Director
NOMINATION & REMUNERATION COMMITTEE:
Your Company has formed a Nomination & Remuneration Committee to lay down norms for determination of remuneration of the executive as well as non-executive directors and executives at all levels of the Company. The Nomination & Remuneration committee has been assigned to approve and settle the remuneration package with optimum blending of monetary and non-monetary outlay.
During the year ended 31st March, 2024, 1(One) meeting of the Committee was held on March 19, 2024.
Nomination and Remuneration Policy:
The Board of Directors has framed a policy, as detailed in Annexure V, which lays down a framework in relation to remuneration of Directors. This policy also lays down criteria for selection and appointment of Board Members. The Board of Directors is authorized to decide Remuneration to Executive Directors. The Remuneration structure comprises of Salary and Perquisites. Salary is paid to Executive Directors within the Salary grade approved by the Members. The Nomination & Remuneration committee has been assigned to approve and settle the remuneration package with optimum blending of monetary and non-monetary outlay.
STAKEHOLDERS RELATIONSHIP COMMITTEE:
The terms of reference are in line with Section 178 of the Companies Act, 2013 and Regulation 20 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Committee reviews Shareholder's/Investor's complaints like non-receipt of Annual Report, physical transfer/ transmission/transposition, split/ consolidation of share certificates, issue of duplicate share certificates etc. This Committee is also empowered to consider and resolve the grievance of other stakeholders of the Company including security holders.
Meeting of the Committee held during the year ended 31st March, 2024, the date of which is March 19, 2024.
Details of the composition of the Committee and attendance during the year are as under:
Manjunath
Mallya
Managing
The details of complaints received and resolved during the Financial Year ended March 31, 2024 are given in the Table below.
The complaints relate to non-receipt of annual report, dividend, share transfers, other investor grievances, etc.
Details of complaints received and resolved during the Financial Year 2023-24:
13. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) & 134(5) of the Companies
Act, 2013, the Board of Directors of the Company hereby
confirm that:
(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(b) 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 at the end of the financial year and of the profit and loss of the company for that period;
(c) 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 the company and for preventing and detecting fraud and other irregularities;
(d) the directors have prepared the annual accounts on a 'going concern' basis;
(e) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
14. CODE FOR PROHIBITION OF INSIDER TRADING
Your Company has adopted the Internal Code of conduct for Regulating, monitoring and reporting of trades by Designated persons under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015 ("Code") for prohibition of insider trading in the securities of the SHANTHALA to curb the practice for dealing in the securities while having Unpublished Price Sensitive Information ("UPSI") by the Insiders of the Company.
The Code, inter alia, prohibits dealing in securities by insiders while in possession of unpublished price sensitive information. The said Code has been amended, from time to time, to give effect to the various notifications/circulars of Securities and Exchange Board of India ("SEBI") with respect to the SEBI (Prohibition of Insider Trading) Regulations, 2015.
Your Company has also formulated and adopted the Policy and Procedures for inquiry in case of leak or suspected leak of Unpublished Price Sensitive Information [Under Regulation 9A (5) of Securities and Exchange Board of India (Prevention of Insider Trading) Regulations, 2015].
15. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 in respect of employees of the Company, is enclosed as "Annexure II" and forms an integral part of this report.
Further, as per the provisions specified in Chapter XIII of Companies (Appointment & Remuneration of Managerial Personnel) Amendment Rules, 2016, none of the employees of the Company are in receipt of remuneration exceeding ' 1,02,00,000/- per annum, if employed for whole of the year or ' 8,50,000/- per month if employed for part of the year.
16. ANNUAL RETURN:
Pursuant to Notification dated 28th August, 2020 issued by the Ministry of Corporate Affairs as published in the Gazette of India on 28th August, 2020, the details forming part of the extract of Annual Return in Form MGT-9 is not required to be annexed herewith to this report. However, the Annual Return will be made available at the website of the Company at: https://shanthalafmcg.com.
17. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES:
The Company is in process to incorporate two subsidiary companies, namely, Ind-Edge Industries Limited and M/s. STPL Commtrade Private Limited (WOS).
18. STATUTORY AUDITORS' AND AUDITORS' REPORT:
At the Annual General Meeting held on 18th July, 2023, the company has appointed M/s. Kale Malde & Co. Chartered Accountants, bearing ICAI Registration Number: 154422W, as the Statutory Auditors of the Company for a period of five years from the conclusion of 9th AGM till the conclusion of the 14th AGM.
Explanation as required under Sec 134(3)(f)(i) of the Companies Act, 2013:
Re: Based on our examination, the company has not implemented the audit trail facility in its accounting software for maintaining its books of account during the current financial year:
Explanation: The company is in process to implement the audit trail facility in its accounting software for maintaining its books of account as per the requirement.
19. SECRETARIAL AUDIT:
Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, made there under, mandate the company to have Company Secretary in practice for furnishing secretarial audit report, accordingly, M/s Deep Shukla & Associates have been appointed as Secretarial Auditors of the Company. The Board of Directors of your SHANTHALA had already appointed M/s. Deep Shukla & Associates, Practicing Company Secretaries, Mumbai, a peer-reviewed firm, to act as the Secretarial Auditor. The Secretarial Audit Report for the financial year ended 31st March 2024, as required under Section 204 of the Act.
The Secretarial Auditors' Report is enclosed as Annexure III to the Board's report, which forms part of this Integrated Annual Report.
20. INTERNAL AUDIT & CONTROLS:
The Company has in place adequate internal financial controls with reference to the financial statement. During the year, such controls were tested and no reportable material weakness in the design or operation was noticed. The Audit Committee of the Board periodically reviews the internal control systems with the management and Statutory Auditors.
Further, M/s. Manjuanatha & Shobhavathi, Chartered Accountants (Firm Reg. No. 011554S) acting as an Internal Auditor of the Company for a term of five (5) years i.e., from Financial Year 2023-24 to 2027-28.
21. EMPLOYEES' STOCK OPTION PLAN:
The Company has not provided stock options to any employee.
22. VIGIL MECHANISM:
In pursuant to the provisions of sections 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at https://shanthalafmcg.com. The employees of the Company are made aware of the said policy at the time of joining the Company.
23. RISK MANAGEMENT POLICY:
The Company has laid down the procedure to inform the Board about the risk assessment and minimization procedures. These procedures are reviewed by the Board annually to ensure that there is timely identification and assessment of risks, measures to mitigate them, and mechanisms for their proper and timely monitoring and reporting.
The Company does not fall under the ambit of the top 1000 listed entities, determined on the basis of market capitalization as at the end of the immediately preceding financial year. Hence, compliance under Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not applicable.
24. CORPORATE GOVERNANCE REPORT:
Your Company is committed to achieving and adhering to the highest standards of Corporate Governance. However, the provisions of Corporate Governance are not applicable to the Company pursuant to Regulation read with Regulation 15(2)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
However, your Company undertakes that when the above said provision is applicable to the Company the same will be duly complied with in the period of 6 months.
25. DEPOSITS:
The Company has neither accepted nor renewed any fixed deposits during the year under review under Section76 of the Companies Act, 2013. There are no unclaimed deposits, unclaimed / unpaid interest, refunds due to the deposit holders or to be deposited to the Investor Education and Protection Fund as on March 31, 2024.
26. LOANS & GUARANTEES:
During the year under review, the Company has not provided any loan, guarantee, security or made any investment covered under the provisions of Section 186 of the Companies Act, 2013, to any person or other body corporate.
27. RELATED PARTY TRANSACTIONS:
Related party transactions, if any, that were entered into during the period ended March 31, 2024, were on an arm's length basis and were in the ordinary course of business, details of which are provided in the notes to Accounts of the Company. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.
Further all the necessary details of transaction entered with the related parties pursuant to provisions of Section 188(1) of the Companies Act, 2013 are attached herewith in Form AOC-2 for your kind perusal and information. (Annexure: IV)
28. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE:
The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:
(a) Conservation of Energy:
The use of energy is being optimized through improved operational methods. Continuous efforts are being made to optimize and conserve energy by improvement in production process. Even though its operations are not energyintensive,significant measures are taken to reduce energy consumption by using energy- efficient equipment. TheCompany regularly reviews power consumption patterns in its all locations and implements requisite improvements/changes in the process in order to optimize energy/ power consumption and thereby achieve cost savings.
Steps taken for utilizing alternate sources of energy;
The Company has not made any investment for utilizing alternate source of energy;
Capital investment on energy conservation equipment;
The Company has taken adequate measures to conserve energy by way of optimizing usage of power.
(b) Absorption of Technology:
The efforts made towards technology absorption:
In this era of competition, in order to maintain and increase the number of clients and customers, we need to provide the best quality services to our clients and customers at a minimum cost, which is not possible without innovation, and adapting to the latest technology available in the market for providing the services.
The Company has not imported any technology during the year under review;
The Company has not expended any expenditure towards Research and Development during the year under review.
29. CORPORATE SOCIAL RESPONSIBILITY:
The Company is committed to discharging its social responsibility as a good corporate citizen. As per the Financial Statements for the period under review, the provisions of Section 135 of Companies Act, 2013 are not applicable to the Company for the F.Y. 2024-25. Consequently, the Company is not required to formulate the Corporate Social Responsibility (CSR) Committee.
30. COST AUDIT / COST RECORDS:
As per the Cost Audit Orders and in terms of the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, Cost Audit and Cost Records are not applicable to our Company.
31. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment at Workplace (Prevention, Prohibition, and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) arecovered under this policy. During the year ended 31st March 2024, Company has not received any complaint of harassment.
32. LISTING WITH STOCK EXCHANGE:
The shares of the Company were listed on National Stock Exchange of India Limited on Small, Medium Enterprise ("SME") on Friday, November 03, 2024-23 only.
33. SECRETARIAL STANDARDS:
The Company has in place proper systems to ensure compliance with the provisions of the applicable secretarial standards issued by The Institute of Company Secretaries of India and such systems are adequate and operating effectively.
34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:
There are no significant and material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its future operations.
35. ACKNOWLEDGEMENT:
The Directors would like to thank all shareholders, customers, bankers, suppliers and everybody else with whose help, cooperation and hard work the Company is able to achieve the results. The Directors would also like to place on record their appreciation of the dedicated efforts put in by the employees of the Company.
ON BEHALF OF THE BOARD OF DIRECTORS SHANTHALA FMCG PRODUCTS LIMITED