Umang Dairies Ltd Management Discussions

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 Companys 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 Companys 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 arms 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 Auditors 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 employees 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 Companys 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 Companys 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