To

The Members,

The Directors are pleased to present the thirty-fourth Annual Report together with Audited Statement of Accounts for the year ended 31st March 2018.

1. KEY FINANCIAL HIGHTLIGHTS (as per IND AS)

(Rs. in Lakh)

2. FINANCIAL PERFORMANCE & OPERATIONS :

Your Company grew at a healthy Y-O-Y rate of 18% to achieve revenues of Rs. 303.10 crores during the year against Rs. 256.84 crores in the previous financial year. The exports led Consumer Business with sales of Rs. 189.3 crores grew 18% from Rs. 160.1 crores in the previous year while the Tasty Bite Food Service (TFS) business registered a growth of 16% with sales of Rs. 89.3 crores against Rs. 76.8 crores in the previous year.

Tasty Bite continues to retain in position of market leadership in its key markets including the United States, Canada, Australia and New Zealand.

Profit after Tax for the year ended FY 2018 at Rs. 26.4 crores against Rs. 21.9 crores in previous financial year 2017, a growth of 20%.

3. DIVIDEND:

The Board of Directors at their meeting held on May 16, 2018 recommended a final dividend of Rs.2 per equity share (20% on the face value of Rs. 10 each), subject to the approval of shareholders at the ensuing Annual General Meeting.

In addition to the above, the Company has provided for a preferential dividend of Rs. 59,530/- on its 59,530 1% non-cumulative, non-convertible Redeemable Preference Shares of Rs. 100/- each for the financial year 2017-18.

The total dividend payout on equity shares would involve a cash outgo of Rs. 51.32 lakhs and dividend tax of Rs. 10.45 lakhs. Dividend payout on preference shares is of Rs. 0.60 lakhs and dividend tax of Rs. 0.12 lakhs.

Upon declaration by the members at the ensuing Annual General Meeting, dividend shall be paid to those members, whose names appear on the Register of Members of the Company after effecting all valid share transfers in physical form lodged with the Company or its Registrar & Transfer Agents on or before Friday, July 20, 2018. In respect of shares held in dematerialized form, dividend will be paid on the basis of particulars of beneficial ownership furnished by Depositories as on the closing hours of business on Friday, July 20, 2018.

4. OPEN OFFER BY EFFEM HOLDINGS LTD:

Pursuant to the acquisition of Preferred Brands International Inc., by Effem Holdings Ltd. (“EHL”), the ownership structure of the Company was modified. EHL qualified as an “Acquirer” under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 and on August 14, 2017 made an open offer to acquire shares of the Company. The open offer was closed on November 30, 2017. EHL acquired 300 shares from Kagome Co. Ltd on November 2, 2017 for a consideration of INR 11,33,595 amounting to 0.01 % of the Company’s total share capital. Accordingly, Kagome filed an application dated January 17, 2018 with the Company under Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 for its de-classification as a part of the ‘promoter/ promoter group’ of the Company. Thereafter, the Company filed necessary applications with BSE and NSE under Regulation 31A of LODR in relation to the Kagome De-classification (“De-classification Application”) on March 3, 2018.

Declassification of Kagome requires shareholder approval and hence the same is proposed in notice of the Annual General Meeting.

5. RESEARCH AND DEVELOPMENT:

Tasty Bite Research Centre (TBRC), located within the factory campus continued to build on its mission to be a centre of excellence in product, process and ingredient innovation. During the course of the year, several new innovative products were developed by TBRC keeping in mind the evolving needs of our consumers.

The Department of Science & Industrial Research (DSIR) of the Union Ministry of Science & Technology renewed its accredition to TBRC during the year till March 2019. New products developed at TBRC in the last 2 years contributed 21% of the company’s revenues.

6. FIXED DEPOSITS:

The Company has not accepted or invited any deposits from the public during the year under review.

7. DIRECTORS:

Ms. Dawn Allen, Ms. Rama Kannan and Dr. Chengappa Ganapati were appointed as additional directors on November 14, 2017, December 22, 2017 and January 17, 2018 respectively.

Mrs. Sucharita Hegde, Mr. Masahiro Sumitomo and Dr. V S Arunachalam resigned from the directorship of the Company on October 9, 2017, November 2, 2017 and March 9, 2018 respectively. The Board has placed its gratitude towards services rendered by all the directors during their tenure.

All independent directors have provided declaration stating their independence under the provisions of section 149 of Companies Act, 2013 (“Act”) and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (“LODR”).

In accordance with the provisions of the Companies Act, 2013 and Memorandum and Articles of Association of the Company, Mr. Ashok Vasudevan, retires by rotation at the ensuing Annual General Meeting, and being eligible, has offered himself for reappointment.

Mr. Sohel Shikari was appointed as an Alternate Director to Mr. Ashok Vasudevan during the year due to absence of Mr. Ashok Vasudevan from India.

- Board evaluation:

Pursuant to provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015, the Board carried out evaluation of its own performance, individual performance of the directors as well as the respective Committees. Evaluation of Chairman was also carried out. The manner of evaluation is mentioned in Corporate Governance Report.

- Remuneration & Evaluation Policy:

The Board on recommendation of Nomination & Remuneration Committee adopted ‘Remuneration and Evaluation Policy’ for selection, appointment and remuneration of Directors and Senior Management Personnel. Necessary diversity in the board was ensured. Detailed policy has been stated in Corporate Governance Report.

- Meetings:

There were five(5) Board meetings held during the financial year ended March 31, 2018. These were held on May 16, 2017, August 10, 2017, November 13, 2017, December 28, 2017 and February 6, 2018. The maximum interval between any two meetings was not more than 120 days. Details of these meetings are stated in Corporate Governance Report.

8. EXTRACT OF ANNUAL RETURN:

The extract of Annual Return as provided under Section 92(3) in Form MGT - 9 is annexed herewith as “Annexure A”.

9. DIRECTORS’ RESPONSIBILITY STATEMENT:

Directors confirm that:

(a). in the preparation of the annual accounts for the year ended March 31, 2018, applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

(b). they have selected and consistently applied such accounting policies, judgments and estimates that are reasonable and prudent to ensure 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). they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d). they have prepared the financial statements/ annual accounts on a going concern basis;

(e). they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f). they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

10. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12):

During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board of Directors under section 143(12) of Companies Act, 2013.

11. CORPORATE GOVERNANCE:

Your Company places great significance to good Corporate Governance as an important step towards building investors’ confidence, improve investors’ protection and maximize long-term shareholders’ value. Accordingly, it has taken adequate steps to ensure that the provisions of Corporate Governance as prescribed under the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015.

A certificate from statutory auditor of the Company regarding compliance of conditions of Corporate Governance is in “Annexure B” to this Report. A detailed report on Corporate Governance forms a part of this Annual Report.

12. AUDITORS:

- Statutory Auditors:

M/s BSR & Associates LLP, existing statutory auditors were appointed by the shareholders in previous year for a period of 5 years. As per recent amendments in the Companies Act, 2013, ratification of statutory auditor is not required.

- Internal Auditors:

Pursuant to section 138 of Companies Act, 2013, the Company appointed M/s Suresh Surana & Associates LLP, Chartered Accountants as internal auditor for financial year 2018-19. The scope and fee of internal audit is fixed by the Board on recommendation of Audit Committee.

- Secretarial Auditor:

Pursuant to section 204 of the Companies Act, 2013, the Company appointed Mr. Abhishek Jagdale, Company Secretary in Practice, Pune as Secretarial Auditor. Based on the Audit Committee recommendations, Board has approved the appointment of Secretarial Auditor for financial year 2018-19. The Secretarial Audit Report is in “Annexure C” of this report.

13. WHISTLE BLOWER & VIGIL MECHANISM POLICY:

In compliance with the provisions of Section 177(9) of the Companies Act 2013, the Company has established Whistle Blower and Vigil Mechanism Policy for its directors and employees to report their genuine concerns and also to deal with the instances of fraud and mismanagements, if any. The details of the Policy are explained in the Corporate Governance Report and the policy is available on the website of the Company www.tastybite.co.in

14. AUDIT COMMITTEE:

In compliance with the provisions of Section 177 of the Companies Act, 2013 and Listing Obligation Regulations, the Company has a duly constituted Audit Committee. The composition and other relevant details of the Audit Committee are given in the Corporate Governance Report annexed herewith. All suggestions of Audit Committee during the year were accepted by the Board.

15. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

During the year under review, there is nothing to be reported under the heads loans, guarantees or investments covered under the provisions of Section 186 of the Companies Act, 2013.

16. SHARE CAPITAL:

During the year under review, the Company has neither issued any shares with differential voting rights nor issued sweat equity shares. Further, the Company did not grant any stock options during the year under review. As on March 31, 2018, details of the shares held by Directors in the Company are as under.

*out of which 100 as joint holder There are no convertible instruments issued by the Company.

A. SEGMENT WISE OR PRODUCT WISE PERFORMANCE/ NATURE OF BUSINESS

The Company operates in one segment: Prepared food consisting ready to serve products and intermediate food products such as prepared meals, frozen formed foods and sauces. There is no change in nature of business of the Company.

17. THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company has been making significant efforts to ensure conservation of energy. The details of energy conservation, technology absorption, research and development and foreign exchange earnings and outgo are as per “Annexure D”.

18. RISK MANAGEMENT POLICY:

In compliance with the provisions of Section 134 of the Companies Act, 2013, the Company has identified the elements of the risks, industry specific and in general as well, which in the opinion of the Board may threaten the existence of the Company. The Company has developed and implemented a ‘Business Contingency Plan for Risk Mitigation’ for the Company.

The details of the Business Contingency Plan for Risk Mitigation of the Company are given in the Management Discussion and Analysis.

19. CORPORATE SOCIAL RESPONSIBILITY:

The Company has a Policy and a Committee for Corporate Social Responsibility in compliance with the provisions of Companies Act, 2013. The details about the Policy and the Committee are given in Corporate Governance Report annexed to this report. Annual Report on CSR activities is annexed as “Annexure E”

As per the provisions of Section 135 of the Companies Act, 2013, every Company falling under the applicability of Corporate Social Responsibility is required to spend 2% of its net profits on the activities given under Schedule VII of the Companies Act, 2013 and CSR policy adopted by the Board of Directors. The Company has spent required amount of Rs. 48.93 Lakh during the financial year 2017-18 on construction of school building in Bhandgaon area. ‘Education’ forms a part of CSR Policy of the Company. Company was required to spend Rs. 50.98 Lakh during the year.

20. STANDALONE FINANCIAL STATEMENTS AND POSITION OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES:

During the year under review, the Company neither had a subsidiary company, associate company nor a joint venture company. Hence, comments and details on preparation of financials on standalone basis or report on the performance of subsidiary company or associate company nor a joint venture company are not required to be offered.

21. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of contracts or arrangements with related parties in Form AOC - 2 are annexed herewith as “Annexure F”. The Board hereby informs that all the related party transactions are carried out in the ordinary course of business and on arm’s length basis. Further, the Company has duly complied with Indian Accounting Standard 24 related to transactions with related parties of the Company. The Company has adopted policy on Related Party Transactions and same is posted on website of the Company (www.tastybite.co.in)

22. SIGNIFICANT/ MATERIAL ORDERS PASSED BY COURTS/ REGULATORS IMPACTING GOING CONCERN STATUS OF THE COMPANY:

There are no significant or material orders or awards passed by the Courts or any other Regulators or Tribunals relating to Companies Act, 2013 or Listing Agreement, which would affect the going concern status and Company’s future operations.

23. Buyback of 59,530 1% Non-cumulative, Non-convertible Redeemable Preference shares:

The Board of Directors of the Company, at its meeting held on July 6, 2018 approved proposal for buyback of 59,530 1% Non-cumulative, Non-convertible Redeemable Preference shares of Rs. 100/- each, at a price of Rs. 2,050 per preference share. The offer size is 12.49% of total paid up capital and free reserves of the Company as per latest audited balance sheet as at March 31, 2018. Buyback shall be sourced from Securities Premium account / free reserves / surplus available with the Company. The aggreate offer size exceeds 10% of total paid up capital and free reserves and thus as per section 68 of the Companies Act, 2013 requires shareholders approval by way of Special Resolution. The Board seeks approval of shareholders on the proposal.

As per provision of section 102 of the Act, detailed explanatory note is attached to the notice calling the meeting.

24. APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL:

1. The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2017-18:

(Rs. in Lakhs)

*remuneration including provident fund, gratuity, leave encashment, etc and all other statutory dues.

**Mr. Sohel Shikari receives remuneration as Chief Financial Officer and not as an alternate director.

2. The percentage increase in remuneration of each director, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year;

(Rs. in Lakh)

Increase based on cost to company basis inclusive of perquisites, allowances and statutory dues such as provident fund, gratuity, leave encashment, etc.

**In addition to the above, the Company Secretary receives consideration w.r.t. Value Pool Agreement with the holding company.

3. Number of permanent employees are 225 on the roll of company as on March 31, 2018.

4. The remuneration paid to the employees is in affirmation with Remuneration & Evaluation Policy of the Company. Remuneration policy is available on website of the Company (www.tastybite.co.in). Salient features of the policy are mentioned in Corporate Governance Report attached.

5. During the year, increase in remuneration of Managing Director was approved by the Board on recommendation of Nomination & Remuneration Committee in February 6, 2018 meeting. The approved increase in salary is within the limit approved by the shareholders in General Meeting on September 19, 2016. Increase in salary is based on performance of the Company, general industry standard, contribution by MD in enhancement of performance of the Company and various other factors considered appropriate by the Board and Remuneration Committee.

6. During the year, increase in remuneration of Chief Financial Officer was also approved by the Board in its meeting held on February 6, 2018 on the recommendation of Nomination & Remuneration Committee and Audit Committee and as per the Remuneration policy. None among the employee received remuneration higher than that of Managing Director (Managerial Personnel).

7. During the year increment was also made in salary of Company Secretary and Senior Management on basis of annual appraisal by the management on proportionate basis and as per the remuneration policy recommended by the Nomination & Remuneration Committee.

8. Average percentile increase in salaries of employees other than the managerial personnel in the last financial year 2018 was 31.01%. Percentile increase in the managerial remuneration in FY 2018 was 30%. Increase in remuneration of MD and CFO was w.e.f. January 1, 2018. Increase in salary of employees is based on performance of the Company, general industry standard, contribution by employee in enhancement of performance of the Company and various other factors considered appropriate by the Management.

9. The Company does not have a variable pay compensation structure.

10. Statement of employees receiving remuneration under Section 197(12) of Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as ”Annexure G”.

11. Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over/decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer in case of listed companies:

The Company made Public Offering in February, 1987 of 7,50,000 equity shares at Rs. 10 each. The market quotation of the Equity shares of the Company as on March 31, 2018 was Rs. 7,463.20 for shares of face value of Rs. 10/- each, representing an increase of 74,632% over the period.

25. INVESTMENTS IN ITS OWN SHARES BY COMPANY, ITS SUBSIDIARIES, ASSOCIATES ETC:

The Company during the period under review has not made investments in its own shares. The Company neither has any subsidiary company nor associate company in terms of the provisions of Companies Act, 2013 hence the comments are not required to be offered.

26. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE DIRECTORS:

During the period under review, there was no pecuniary relationship or pecuniary transactions between the Company and its Non-Executive Directors.

27. INTERNAL COMPLAINTS COMMITTEE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

Your Company is an equal opportunity employer and safety of all employees and all other persons while within the premises is of utmost importance to your Company. The Company has been practicing safety of women at workplace as part of its formally adopted Code of Conduct. In order to strengthen it and also in compliance to newly enacted Act for protection of women, your Company has formed Internal Complaints Committee and adopted “Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace”. The Committee’s mandate is to bring awareness about ensuring safe workplace for women; receive and take appropriate decision on complaints, if any.

The Committee as appointed by the Management consists:

- Ms. Anila Thomas - Presiding Officer

- Ms. Minal Talwar- Member

- Mr. Rajendra Jadhav - Member

- Ms. Suman Bhagwat - Member

- Mr. Kuldeep Joshi - Independent Member

No complaints have been received during the year.

Appreciation

Your Directors acknowledge the efforts and contribution of its employees at all levels during the year and seek their continued commitment in the years to come.

Your Directors also would like to acknowledge the contribution of its parent, Preferred Brands International Inc. in the role of the marketing company in growing and developing the business in all international markets.

Finally, the Board places its appreciation for the confidence reposed on it by its customers, suppliers, investors, bankers and all other stakeholders that are its partners in growth.

For and on behalf of the Board of Directors

Ashok Vasudevan

Chairman

July 6, 2018

Pune