DIRECTORS' REPORT TO THE MEMBERS, Your Board of Directors ('Board') is pleased to present the Thirteenth Annual Report of your Company, Kaya Limited, for the year ended March 31, 2016 ('the year under review', 'the year' or 'FY16'). REVIEW OF OPERATIONS During FY16 Kaya Limited posted revenue from operations of INR 369.90 Crores, a growth of 11% over the previous year. The business reported Profit before Tax and exception of INR 8.86 Crores (2% of Net Revenue) as compared to Rs. 36.58 Crores (11% of Net Revenue) over last year. DIVIDEND The Directors have recommended no dividend for the year ended March 31, 2016. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis forming a part of this Annual Report, inter alia, covers the following: • Industry structure and development • Opportunities and Threats • Segment-wise or product-wise performance • Outlook • Risks and Concerns • Internal control systems and their adequacy • Discussion on financial performance with respect to operational performance • Material Developments in Human Resources/ Industrial Relations front, including number of people employed. CORPORATE SOCIAL RESPONSIBILTY ("CSR") The statutory provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 are not applicable to the Company as on March 31, 2016. Hence, your company is not required to adopt the CSR Policy for FY15-16. However, as a good Corporate Governance initiative, the Board of Directors at its meeting held on August 3, 2015 constituted the CSR Committee. Once the said statutory provisions are applicable to the Company, the CSR Committee shall recommend to the Board of Directors, the CSR Policy and amount of expenditure to be incurred for the purpose. The Composition of the Committee is laid down in the Corporate Governance Report forming part of this Annual Report. PUBLIC DEPOSITS The Company did not accept any public deposits during the year 2015-16. SCHEME OF ARRANGEMENT The Hon'ble High Court of Judicature at Bombay vide its order dated April 18, 2015 had approved the Scheme of Arrangement ("the Scheme") between Marico Kaya Enterprises Limited ("MaKE") and Kaya Limited ("the Company") and their respective Shareholders and Creditors. A copy of the Court order was filed with the Office of Registrar of Companies, Mumbai, Maharashtra on May 13, 2015 and accordingly the Scheme came into effect from May 13, 2015. In accordance with the Scheme, the entire business and whole of the undertaking of MaKE, was transferred to Kaya so as to become the properties and assets of Kaya with effect from the appointed date viz. April 1, 2014 pursuant to Sections 391 to 394 read with sections 100 to 103 of the Companies Act 1956 and section 52 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 1956 and Companies Act, 2013. Upon the Scheme being made effective, the Company allotted 1,28,97,100 fully paid up equity shares of face value of INR 10/- each on June 1, 2015 to the entitled shareholders of MaKE in the prescribed share exchange ratio of 1:1, i.e. 1 (One) Equity Share of the face value of INR 10/- each of Kaya, credited as fully paid-up. LISTING OF EQUITY SECURITIES During the year under review, your Company made an application to Securities Exchange Board of India ("SEBI") through the National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE") vide its letter dated June 12, 2015 for relaxation from the strict enforcement of the requirement of Rule 19 (2) (b) of the Securities Contract Regulation (Rules), 1957 (SCRR) for the purpose of listing of its equity securities. The application was made in accordance with SEBI Circular No. CIR/CFD/DIL/5/2013 dated February 4, 2013 read with circular No. CIR/CFD/DIL/8/2013 dated May 21, 2013. The Company received the final listing approval on August 12, 2015 from NSE and BSE for commencement of trading of its equity shares on the Stock Exchanges with effect from August 14, 2015. Listing Agreement Securities Exchange Board of India ("SEBI") on September 2, 2015 issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to be effective from December 1, 2015 with the aim to consolidate the provisions of Listing Agreement for different segments of capital market. Accordingly, the Company entered into Listing Agreement with BSE Limited and National Stock Exchange of India Limited on December 1, 2015 in accordance with the provisions of the above said Regulations. SUBSIDIARIES/JOINT VENTURE The below mentioned companies are the subsidiaries of Kaya as on date of this Report: 1. KME Holdings Pte. Ltd 2. Kaya Middle East DMCC (w.e.f. May 9, 2015) 3. Kaya Middle East FZE 4. Iris Medical Centre LLC (w.e.f. January 18, 2016) DIPL (Singapore) Pte. Ltd, ceased to be a subsidiary of the Company with effect from January 19, 2016 consequent to its name being struck off pursuant to an application for liquidation made by the Company under the applicable laws in Singapore. This liquidation does not have material impact on the financial statements of the Company. Kaya Middle East, DMCC, along with its local partner entered into a Share Purchase Agreement dated December 7, 2015 for acquiring 75% beneficial interest in Iris Medical Centre LLC ("Iris") situated at Abu Dhabi and acquired additional 10% beneficial interest in Iris on March 24, 2016. Thus, Kaya Middle East, DMCC now holds 85% beneficial interest in Iris. Iris carries out business of skincare services and operates one clinic in Abu Dhabi. Joint Venture During the year under review, Kaya Middle East, DMCC also entered into a Joint Venture Agreement ("JV") dated January 28, 2016 with Al Beda Medical Services K.S.C.C., Kuwait ("Al Beda") to set up and operate dermatology clinic. The interest of Al Beda and Kaya Middle East, DMCC in the JV is in ratio of 51% and 49% respectively. This JV marks the entry of Kaya Skin Clinics in Kuwait. Pursuant to first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014 and other applicable provisions, if any, a statement covering the salient features of the financial statements of our subsidiaries, joint venture in the prescribed format AOC-1 is annexed to this report as Annexure I. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements forming part of this Annual Report. RELATED PARTY TRANSACTIONS All transactions with the related parties entered into during the financial year 2015-16 were at arm's length and in the ordinary course of business and in accordance with the provisions of Companies Act, 2013 and the Rules made thereunder. Accordingly, no disclosure is made in respect of the Related Party Transactions in the prescribed Form AOC-2 in terms of Section 134 of the Companies Act, 2013. All transactions with related parties are placed before the Audit Committee for approval. Prior omnibus approval is obtained for Related Party transactions which are of repetitive nature. The Audit Committee reviews all transactions entered into pursuant to the omnibus approval so granted on a quarterly basis. The Board approved Policy on Related Party Transactions is uploaded on the website of the Company at www.kaya.in DIRECTOR'S RESPONSIBILITY STATEMENT To the best of their knowledge and information and based on the information and explanations provided to them by the Company, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013 ("the Act"): • that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed and there are no material departures from the same; • that 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 your Company as at March 31, 2016 and of the profit and loss of your Company for the said period; • that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; • that the annual accounts have been prepared on a 'going concern' basis; • that proper internal financial controls to be followed by the Company were laid down and such internal financial controls are adequate and were operating effectively; • that proper systems to ensure compliance with the provisions of all applicable laws were devised and that such systems were adequate and operating effectively. CORPORATE GOVERNANCE A separate section on corporate governance practices followed by the Company together with a certificate from the Statutory Auditors confirming compliance thereto is annexed to this Annual Report. DIRECTORS Mr. Harsh Mariwala has been on the Board of your Company since its incorporation i.e. March 27, 2003. He was designated as the Chairman and Managing Director of the Company for a term of 5 (five) years, without remuneration, with effect from November 1, 2011. Since the agreement with Mr. Harsh Mariwala is effective till October 31, 2016, re-appointment of Mr. Harsh Mariwala for another term of 5 (five) years, without remuneration, subject to approval of shareholders of the Company, was approved by the Board of Directors at its meeting held on May 26, 2016. Your Board of Directors recommends the re-appointment of Mr. Harsh Mariwala as Chairman and Managing Director of the Company for another term of 5 years. Further, Dr. Ravindra Mariwala and Mr. Rishabh Mariwala have resigned from the Board of Directors of the Company with effect from April 28, 2015. Director Retiring by Rotation As per Section 152 and other applicable provisions of the Companies Act, 2013, Mr. Rajen Mariwala being liable to retire by rotation at the ensuing Annual General Meeting of the Company has offered himself for re-appointment. Independent Directors During the year under review, the Members at the last Annual General Meeting of the Company held on September 24, 2015 approved the appointment of Mr. Nikhil Khattau, Mr. B. S. Nagesh and Mr. Irfan Mustafa as Independent Directors. The Company has received declarations from the Independent Directors affirming that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and declaration under Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been received from each Independent Director listing the Companies in which he is a Director/ Member stating his Committee Chairmanships and Memberships. MEETINGS OF THE BOARD OF DIRECTORS IN THE FINANCIAL YEAR 2015-2016 The Board of Directors of the Company ("the Board'') met 5 times during the year to deliberate on various matters. Details of the meetings held are laid down in the Corporate Governance Report forming part of this Annual Report. KEY MANAGERIAL PERSONNEL ("KMP's") There has been no change in the following Key Managerial Personnel of the Company during the year under review: • Mr. Harsh Mariwala is the Chairman and Managing Director; • Mr. Dharmendar Jain is the Chief Financial Officer; • Mr. Subramanian S. is the Chief Executive Officer, Kaya Business - India; • Ms. Almas Badar is the Company Secretary and Compliance Officer. POLICY ON NOMINATION AND REMUNERATION The Nomination and Remuneration Policy ("NR Policy") of the Company, inter alia, covers the following aspects: 1. framework in relation to appointment, removal and remuneration of Directors, and Key Managerial Personnel; 2. evaluation of the performance of Independent Directors and the Board; 3. to preserve Board diversity and assist the Board in ensuring that plan is in place for orderly succession for appointments to the Board; 4. to ensure a transparent board nomination process with the diversity of thought, experience, knowledge, perspective and gender in the Board. The Board approved Policy on Nomination and Remuneration is annexed as Annexure II. PERFORMANCE EVALUATION OF DIRECTORS, BOARD AND ITS COMMITTEES A formal evaluation of the performance of the Board and its Committees and the individual Directors was carried out for the year 2015-16. The details of which have been provided in the Corporate Governance Report forming part of this Annual Report. DISCLOSURE RELATING TO REMUNERATION The disclosure on the details of remuneration to Directors and other employees pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure III. Details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 shall be made available on the website of the Company 21 days prior to the date of meeting of forthcoming Annual General Meeting. This information is also available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any member desirous of obtaining a copy of the said annexure may write to the Company Secretary of your Company. COMPOSITION OF THE AUDIT AND RISK MANAGEMENT COMMITTEE The composition and the detailed terms of reference of the Committee are stated in the Corporate Governance Report forming part of this Annual Report. RISK MANAGEMENT The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. INTERNAL FINANCIAL CONTROLS The Company practices adequate internal controls with reference to financial statements which are also monitored by the internal auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company's risk management policies and systems. VIGIL MECHANISM We have embodied the mechanism in the Code of Conduct of the Company for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of our Code of Conduct. This mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases and no personnel have been denied access to the Audit Committee. The Board and its Audit Committee are informed periodically on the cases reported, if any and the status of resolution of such cases. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your company has constituted an Internal Committee and during the year under review, the Committee received no complaints on sexual harassment. EMPLOYEES' STOCK OPTION SCHEME The Company has formulated and implemented Kaya Limited Employees Stock Option Scheme, 2014 and Kaya Limited Employees Stock Option Scheme, 2014 - KME for grant of options to employees of the Company and its subsidiaries respectively. The Members of the Company at its Extra Ordinary General Meeting held on September 26, 2014 approved the said Schemes. The Company has successfully passed the requisite resolutions to sanction the revision in number of options granted and exercise price due to the merger of Marico Kaya Enterprises Limited with the Company. Vesting Date for the options granted under Kaya Limited Employees Stock Option Scheme, 2014 and Kaya Limited Employees Stock Option Scheme, 2014 - KME is March 31, 2016 and March 31, 2017 respectively. Additional information on ESOS in terms of section 62(1) (b) of the Companies Act, 2013 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 and applicable provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014 is annexed to this Report as Annexure IV and shall be made available on the website of the Company. Link: www.kaya.in DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS There were no significant/ material orders passed by the regulators or courts or tribunals impacting the going concern status of your Company and its operations in future. AUDITORS Statutory Auditors The Members at the Twelfth Annual General Meeting had approved the appointment of M/s. Price Waterhouse, Chartered Accountants as Statutory Auditors of the Company for a period of 1 year to hold office from the conclusion of the Twelfth Annual General Meeting until the conclusion of the Thirteenth Annual General Meeting. M/s. Price Waterhouse, Chartered Accountants have given their consent and confirmed their eligibility to act as the Auditors of the Company for FY16-17. Your Board recommends their appointment for a period of 1 year to hold office from the conclusion of the Thirteenth Annual General Meeting until the conclusion of the Fourteenth Annual General Meeting of the Company Internal Auditors M/s. Ernst & Young LLP, a Chartered Accountant Firm, has been associated with your Company as its internal auditor partnering your Company in the area of risk management and internal control systems. SECRETARIAL AUDIT Pursuant to Section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your company appointed Amita Desai & Co., Practicing Company Secretaries, Mumbai, to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is enclosed as Annexure V to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. AUDITORS' REPORT The Auditors' Report does not contain any qualification, reservation or adverse remark or disclaimer by M/s. Price Waterhouse, Chartered Accountants. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Conservation of Energy The information of Conservation of Energy as required under Section 134(3) (m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is not applicable to the business segment in which your Company operates. Technology Absorption No technology has been developed and/or imported by way of foreign collaboration EXTRACT OF ANNUAL RETURN Pursuant to the provisions of the Section 92 of the Companies Act, 2013 ('' the Act'') read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended March 31, 2016 is given in Annexure VI to this report. ACKNOWLEDGEMENT The Board takes this opportunity to thank all its employees for their dedicated service and firm commitment to the goals of the Company. The Board also wishes to place on record its sincere appreciation for the wholehearted support received from shareholders, bankers, all other business associates, and customers. We look forward to continued support of all these partners in progress. On behalf of the Board of Directors Harsh Mariwala Chairman & Managing Director Date : May 26, 2016 Place : Mumbai |