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Director's Report
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Varun Beverages LtdIndustry : Food - Processing - Indian
BSE Code:540180
ISIN Demat:INE200M01013
Book Value(Rs):136.98
NSE Symbol:VBL
Div & Yield %:0.25
Market Cap (Rs Cr.):18519.38
P/E(TTM):41.39
EPS(TTM):15.5
Face Value(Rs):10
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Dear Members,

Your Directors have pleasure in presenting the 24th (Twenty Fourth) Annual Report on the business and operations of your Company along with the Audited Financial Statements, for the Financial Year ended December 31, 2018.

Financial Results

The financial performance of your Company for the Financial Year ended December 31, 2018 is summarized below:

(Rs in Million)

Standalone Consolidated
Particulars

Financial Year ended December 31, 2018

Financial Year ended December 31, 2017

Financial Year ended December 31, 2018

Financial Year ended December 31, 2017
Total Revenue 39,584.91 35,380.90 52,499.51 45,288.89
Total Expenses 34,955.33 32,338.97 48,191.73 42,392.85
Profit before tax after prior period items 4,629.58 3,041.93 4,337.98 2,909.54
Less: Tax Expenses 1,305.99 685.95 1,339.35 768.95
Profit after tax 3,323.59 2,355.98 2,928.41* 2,101.54*
Balance brought forward from last year 2,268.84 614.82 (594.12) (2,007.59)
Balance carried over to Balance Sheet 4,972.54 2,268.84 1,720.41 (594.12)
Debenture Redemption Reserve 0.00 159.17 0.00 159.17
General Reserve 444.26 191.25 444.26 191.25
Other Reserves 18,646.17 18,521.80 15,993.95 16,111.03
Reserves & Surplus carried to 24,062.97 21,141.06 18,158.62 15,867.33
Balance Sheet

*After adjustment on account of non-controlling interest and share profit of associate Companies.

Consolidated Financial Statements

The Consolidated Financial Statements of your Company for the Financial Year 2018, are prepared in compliance with the applicable provisions of the Companies Act, 2013 ("the Act"), Indian Accounting Standards ("Ind AS") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ["SEBI (LODR) Regulations"] which shall be placed before the members in their forthcoming Annual General Meeting (AGM).

To comply with Section 129 (3) of the Act, a statement containing the salient features of the Financial Statement of subsidiary/ associate/ joint venture companies is provided as Annexure in Form AOC – 1 to the Consolidated Financial Statement of the Company and therefore not repeated hereby to avoid duplication.

Deposits

Your Company has not accepted any deposits during the year under review, falling within the ambit of Section 73 of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

Transfer to General Reserve

During the year under review, the Company has transferred Rs 253.01 Million to General Reserve.

Change in the Nature of Business, if any

During the year under review, there was no change in the nature of the business of the Company.

Dividend Distribution Policy

The Board of Directors of the Company in their meeting held on August 9, 2017 approved and adopted a Policy on Distribution of Dividend to comply with Regulation 43A of SEBI (LODR) Regulations and the same is uploaded on the website of the Company at https://varunpepsi.com/ wp-content/uploads/2019/03/Dividend-Distribution-Policy.pdf

Dividend

During the year under review, the Board of Directors of the Company declared an interim dividend of Rs 2.50 per Equity Share (face value of Rs 10/- per Equity Share) for the year 2018. The Board of Directors do not recommend any final dividend for the Financial Year 2018.

Your Company has transferred the unpaid or unclaimed Interim Dividend to the Unclaimed Dividend Account – Varun Beverages Limited and the details of unpaid and unclaimed dividend amounts lying in the said Accounts (maintained with HDFC Bank Limited and Yes Bank Limited) are uploaded on the website of the Company at https://varunpepsi.com/wp-content/uploads/2019/02/ Unclaimed-Dividend-Data-2018.pdf

Acquisition Guidelines

Your Company applies stringent strategic and financial criteria to any potential acquisition or partnership and to enhance transparency, the Board of Directors of the Company in their meeting held on August 9, 2017 approved and adopted Acquisition Guidelines for Company's M&A activities for viable acquisitions and the same is uploaded on the website of the Company at http://varunpepsi.com/wp-content/uploads/2017/08/ VBL-Guidelines-for-Acquisition-in-India.pdf

Acquisitions

After the close of the Financial Year, your Company concluded acquisition of franchise rights from SMV Group to sell and distribute PepsiCo beverages in 13 Districts in the State of Karnataka, 14 Districts in the State of Maharashtra and 3 Districts in the State of Madhya Pradesh.

Further, the Board of Directors in their meeting held on February 18, 2019 considered and approved, its intent to enter into a binding agreement with PepsiCo India Holdings Private Limited ("PepsiCo") to acquire franchise rights in South and West regions of India from PepsiCo for a national bottling, sales and distribution footprint in 7 States and 5 Union Territories (subject to receipt of necessary statutory approvals). On completion of the acquisition and related formalities, the Company will be a franchise of PepsiCo's beverages business across 27 States and 7 Union Territories of India.

Credit Rating

During the year under review, CRISIL has re-affirmed your Company's credit ratings as below:

Long-Term Rating CRISIL AA-/Positive
(Outlook revised from ‘Stable' and rating reaffirmed)
Short-Term Rating CRISIL A1+ (Reaffirmed)
Rs 2500 Million Commercial CRISIL A1+ (Reaffirmed)
Paper

Share Capital

The Authorized Share Capital of the Company is

Rs 10,000,000,000/- (Rupees Ten Thousand Million only) divided into 500,000,000 (Five Hundred Million) equity shares of Rs 10/- (Rupees Ten) each and 50,000,000 (Fifty Million) Preference Shares of Rs 100/- (Rupees Hundred) each. During the year under review, there is no change in the Authorized Share Capital of the Company.

During the year under review, the paid up capital of the Company has been increased from Rs 1,825,869,400/- (Rupees One Billion Eight Hundred and Twenty-Five Million Eight Hundred and Sixty-Nine Thousand Four Hundred) to Rs 1,826,419,400/- (Rupees One Billion Eight Hundred and Twenty-Six Million Four Hundred and Nineteen Thousand Four Hundred) due to exercise of 55,000 Stock Options (equivalent to 55,000 equity shares having face value of Rs 10 each) under Varun Beverages Limited Employee Stock Option Scheme 2013.

Employee Stock Option Schemes

Your Company has two Employee Stock Option Schemes viz. Varun Beverages Limited Employee Stock Option Scheme 2013 ("ESOP Scheme 2013") and Varun Beverages Limited Employee Stock Option Scheme 2016 ("ESOP Scheme 2016"). ESOP Scheme 2016 is in line with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.

Your Company has received a certificate from the Statutory Auditors of the Company that ESOP Scheme 2016 has been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the resolution(s) passed by the Members of the Company. The certificate would be placed at the ensuing AGM for inspection by Members of the Company.

Relevant disclosures pursuant to Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are attached to this report as Annexure – A.

Non-Convertible Debentures

During the year under review, pursuant to the exercise of put option by Debenture holders for redemption of 3,000

Secured, Rated, Listed, Redeemable, Non- Convertible Debentures ("Debentures"/ "NCD's") of a face value of

Rs 10,00,000 (Rupees Ten Lacs) each aggregating to

Rs 3,000,000,000 (Rupees Three Billion), your Company has made the full payment of principal and accrued interest on June 29, 2018.

Accordingly, as on the date of this report, the Company has no outstanding NCD's.

Related Party Transactions

TocomplywiththeprovisionsofSection188oftheAct,and Rules made thereunder read with Regulation 23 of SEBI (LODR) Regulations, your Company took necessary prior approval of the Audit and Risk Management Committee before entering into related party transactions. All contracts / arrangements / transactions entered into by the Company with related parties, as defined under the Act and SEBI (LODR) Regulations during the Financial Year 2018, were in the ordinary course of business and on arm's length basis.

During the year under review, your 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 for Related Party Transactions.

None of the transactions with any of the related parties were in conflict with the interest of the Company rather, these were synchronised and synergised with the Company's operations. Attention of Members is drawn to the disclosure of transactions with the related parties set out in Note no. 45 of the Standalone Financial Statements, forming part of the Annual Report.

Your Company has framed a Policy on Related Party Transactions in accordance with SEBI (LODR) Regulations and as per the amended provisions of the Act. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties. The policy is uploaded on the website of the Company at http:// varunpepsi.com/wp-content/uploads/2016/09/Policy-On-Related-Party-Transactions.pdf

Since all transactions which were entered into during the Financial Year 2018 were on arm's length basis and in the ordinary course of business and there was no material related party transaction entered by the Company during the Financial Year 2018 as per Related Party Transactions Policy, hence no detail is required to be provided in Form AOC-2 prescribed under Clause (h) of Sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Particulars of Loans, Guarantees or Investments

Details of Loans, Guarantees, Securities and Investments covered under the provisions of Section 186 of the Act are given in the Notes to the Standalone Financial Statements.

Subsidiaries, Associates and Joint Ventures

Your Company has following subsidiaries / associate companies:

Subsidiaries

Varun Beverages (Nepal) Private Limited; Varun Beverages Morocco SA; Varun Beverages Lanka (Private) Limited; Ole Springs Bottlers (Private) Limited (step-down subsidiary); Varun Beverages (Zambia) Limited; and Varun Beverages (Zimbabwe) (Private) Limited.

Associate Company

Angelica Technologies Private Limited

To comply with the provisions of Section 129 of the Act, a separate statement containing salient features of Financial Statements of Subsidiaries, Associates and Joint Ventures of your Company forms part of Consolidated Financial Statements.

Financial Statements of the aforesaid subsidiary companies are kept open for inspection by the Members at the Registered Office of your Company during business hours on all days except Saturday and Sunday up to the date of the AGM i.e. April 17, 2019 between 11:00 a.m. to 5:00 p.m. as required under Section 136 of the Act. Any Member desirous of obtaining a copy of the said Financial Statements may write to the Company at its Registered Office or Corporate Office. The Financial Statements including the Consolidated Financial Statements and all other documents required to be attached with this Report have been uploaded on the website of the Company at https://varunpepsi.com/wp-content/uploads/2019/02/ FinancialStatements31122018.pdf

To comply with the provisions of Regulation 16(c) of SEBI (LODR) Regulations, the Board of Directors of the Company have approved and adopted a Policy for determining Material Subsidiary and as on December 31, 2018 none of the subsidiary is a Material Subsidiary of the Company in terms of the said policy. The policy on Material Subsidiary has been uploaded on the website of the Company at http://varunpepsi.com/wp-content/ uploads/2016/09/Policy-For-Determination-Of-Material-Subsidiary-And-Governance-Of-Subsidiaries.pdf

Directors and Key Managerial Personnel

Appointments

Dr. Naresh Trehan (DIN 00012148), was appointed as an Independent Director of the Company for a period of three years with effect from December 1, 2015. Accordingly, his first term of office expired on November 30, 2018. Pursuant to the provisions of Section 161 of the Companies Act, 2013 and based on the performance evaluation of Independent Directors and on the recommendations of the Nomination and Remuneration Committee, the Board of Directors in their meeting held on October 25, 2018 reappointed Dr. Naresh Trehan as an Independent Director of the Company (subject to the approval of members by a special resolution) with effect from December 1, 2018 for a period of up to 5 (Five) years.

Your Company has also received a declaration from Dr. Naresh Trehan that he meets the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and under the SEBI (LODR) Regulations. He has further affirmed that he is not debarred from holding the office of an Independent Director by virtue of any SEBI order or any other such Authority.

Your Company has received necessary declarations from Dr. Naresh Trehan that he fulfils the conditions specified in the Act and rules made thereunder for his reappointment as an Independent Director of the Company and is independent of the management. The Board considered the same and is of the view that he fulfill / meets the criteria of independence and accordingly, recommends re-appointment of Dr. Naresh Trehan.

Dr. Naresh Trehan, being eligible and offering himself for re-appointment, is proposed to be re-appointed as an Independent Director for a second term of upto 5 (Five) years with effect from December 1, 2018.

Mr. Kapil Agarwal (DIN 02079161) was appointed as Whole Time Director of the Company for a period of three years with effect from January 1, 2016. Accordingly, his term of office expired on December 31, 2018. Pursuant to the provisions of Section 196 of the Companies Act, 2013 and based on the performance evaluation report and on the recommendations of Nomination and Remuneration Committee, the Board of Directors in their meeting held on October 25, 2018 re-appointed Mr. Kapil Agarwal as Whole Time Director and Chief Executive Officer of the Company (subject to the approval of members by an ordinary resolution) with effect from January 1, 2019 for a period of up to 5 (Five) years.

Your Company has also received a declaration from Mr. Kapil Agarwal as required under the Act and under the SEBI (LODR) Regulations. He has further affirmed that he is not debarred from holding the office of a Whole Time Director by virtue of any SEBI order or any other such Authority.

To comply with the provisions of Section 152 of the Act and in terms of the Articles of Association of the Company, Mr. Varun Jaipuria, Whole-time Director and Mr. Kamlesh Kumar Jain, Whole-time Director and Chief Financial Officer are liable to retire by rotation at the ensuing AGM and being eligible, seeks re-appointment. Your Board of Directors recommend their re-appointment.

Key Managerial Personnel

Mr. Kapil Agarwal, Whole-time Director and Chief Executive Officer, Mr. Kamlesh Kumar Jain, Whole-time Director and Chief Financial Officer and Mr. Ravi Batra

- Chief Risk Officer and Group Company Secretary, continued to be the Key Managerial Personnel of your Company in accordance with the provisions of Section 2(51) and Section 203 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Board Evaluation

To comply with the provisions of Section 134 (3)(p) of the Act and the rules made thereunder, and Regulation 17(10) of SEBI (LODR) Regulations, the Board has carried out the annual performance evaluation of the Directors individually including the Independent Directors (wherein the concerned director being evaluated did not participate), Board as a whole, and following Committees of the Board of Directors:

i) Audit and Risk Management Committee; ii) Nomination and Remuneration Committee; iii) Stakeholders' Relationship Committee; and iv) Corporate Social Responsibility Committee.

The manner in which the annual performance evaluation has been carried out is explained in the Corporate Governance Report which forms part of this report. Board is responsible to monitor and review Directors' Evaluation framework.

Further, to comply with Regulation 25 (4) of SEBI (LODR) Regulations, Independent Directors also evaluated the performance of Non Independent Directors, Chairman and Board as a body at a separate meeting of Independent Directors.

Meetings of the Board and Committees

The number of meetings of the Board and various Committees of your Company are set out in the Corporate Governance Report which forms part of this report.

The intervening gap between the meetings was within the period prescribed under the provisions of Section 173 of the Act and SEBI (LODR) Regulations.

Remuneration Policy

To comply with the provisions of Section 178 of the Act read with Rules made thereunder and Regulation 19 of SEBI (LODR) Regulations, the Company's Remuneration Policy for Directors, Key Managerial Personnel and Senior Management is uploaded on the website of the Company at http://varunpepsi.com/wp-content/ uploads/2016/09/Remuneration-Policy.pdf

Remuneration of Directors, Key Managerial Personnel and Particulars of Employees

The information required to be disclosed in the Board's Report pursuant to Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached with this report as Annexure – B.

Statutory Auditors

Members in their 23rd Annual General meeting held on April 17, 2018 appointed M/s. Walker Chandiok & Co. LLP, (Firm Registration Number 001076N/N500013) as Joint Statutory Auditors of the Company to hold office for a period of up to 5 (Five) years i.e. till the conclusion of the 28th AGM of the Company to be held in the Financial Year 2023, subject to ratification by the Members at every AGM of the Company.

Further, Members of the Company in their 22nd Annual General Meeting held on April 17, 2017 appointed M/s. APAS & Co., Chartered Accountants (Firm Registration Number 000340C) as Joint Statutory Auditors of the Company to hold office for a period of up to 5 (five) years i.e. till the conclusion of the 27th AGM of the Company to be held in the Financial Year 2022, subject to ratification by the Members at every AGM of the Company.

Pursuant to the notification issued by the Ministry of Corporate Affairs on May 7, 2018 amending Section 139 of the Companies Act, 2013 and the Rules framed thereunder, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted. Accordingly, the Notice of ensuing AGM does not include the proposal for seeking Members approval for ratification of appointment of Joint Statutory Auditors of the Company.

The Statutory Auditors' Report for the Financial Year 2018 does not contain any qualification, reservation or adverse remark.

The Statutory Auditors have not reported any frauds under Section 143(12) of the Act.

Cost Audit

In terms of Section 148 of the Act and the Companies (Cost Records and Audit) Rules, 2014 and any amendment thereto, Cost Audit is not applicable to the Company.

Disclosure Under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

To comply with provisions of Section 134 of the Act and rules made there under, your Company has duly constituted Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, no case was filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Secretarial Auditors

Your Board, on the recommendations of the Audit and Risk Management Committee, has appointed M/s. Sanjay Grover & Associates, Company Secretaries to conduct Secretarial Audit of your Company. The Secretarial Audit Report for the Financial Year 2018 is attached to this report as Annexure - C to this Report and does not contain any qualification, reservation or adverse remark.

Risk Management

Pursuant to the provisions of Regulation 21(5) of SEBI (LODR) Regulations, the top 500 listed entities, determined on the basis of market capitalization, as at the end of the immediate previous financial year shall constitute a Risk Management Committee. Accordingly, during the year under review, your Company has renamed its Audit Committee as Audit and Risk Management Committee and also updated the terms of reference of this Committee to cover provisions related to Risk Management review, as approved by the Board of Directors in their meeting held on August 9, 2018.

Your Company has a robust Risk Management Policy which identifies and evaluates business risks and opportunities. The Company recognize that these risks need to be managed and mitigated to protect the interest of the stakeholders and to achieve business objectives. The risk management framework is aimed at effectively mitigating the Company's various business and operational risks, through strategic actions.

Internal Financial Controls

Your Company has in place adequate Internal Financial Controls. The report on the Internal Financial Controls issued by M/s. Walker Chandiok & Co. LLP, Chartered Accountants and M/s. APAS & Co., Chartered Accountants, the Joint Statutory Auditors of the

Company is annexed to the Audit Report on the Financial Statements of the Company and does not contain any reportable weakness of the Company.

Corporate Social Responsibility

Your Company has a Corporate Social Responsibility Policy which is uploaded on the website of the Company http://varunpepsi.com/wp-content/uploads/2016/09/ Corporate-Social-Responsibility-Policy.pdf

Annual Report on CSR activities for the Financial Year 2018 as required under Section 134 and 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and Rule 9 of the Companies (Accounts) Rules, 2014 is attached with this report as Annexure - D.

Directors' Responsibility Statement

Pursuant to Section 134(3)(c) read with Section 134(5) of the Act, the Directors state:

(a) that in the preparation of the annual accounts for the Financial Year ended December 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) 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 December 31, 2018 and of the profits of the Company for the period ended on that date;

(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(d) that the annual accounts have been prepared on a going concern basis;

(e) that proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Other Information

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) of SEBI (LODR) Regulations, is attached with this report.

Business Responsibility Report

Business Responsibility Report for the year under review, as stipulated under Regulation 34(2)(f) of SEBI (LODR) Regulations, is attached with this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3) (m) read with Rule 8 of the Companies (Accounts) Rules, 2014 is attached with this report as Annexure – E.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by Securities and Exchange Board of India. The report on Corporate Governance as stipulated under the SEBI (LODR) Regulations forms an integral part of this Report and the same is attached with this report as Annexure – F. The requisite certificate from M/s. Sanjay Grover & Associates, Company Secretaries confirming compliance with the conditions of corporate governance is also attached with the Corporate Governance Report.

Listing

The Equity Shares of the Company are listed on the trading terminals of the National Stock Exchange of India Limited and BSE Limited.

Both these stock exchanges have nation-wide terminals. The Company has paid the listing fee to both the Stock Exchanges.

Extract of the Annual Return

The details forming part of the extract of the Annual Return in Form No. MGT – 9 in accordance with the provisions of Section 92 of the Act read with the Companies (Management and Administration) Rules, 2014, is attached with this report as Annexure – G.

Research and Development (R&D)

During the year under review, no Research & Development was carried out.

Cautionary Statement

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statements.

General

Your Directors confirm that no disclosure or reporting is required in respect of the following items as there was no transaction on these items during the year under review:-

1. Issue of equity shares with differential voting rights as to dividend, voting or otherwise.

2. The Whole-time Directors of the Company does not receive any remuneration or commission from any of its subsidiaries.

3. 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.

4. Issue of Sweat Equity Shares.

5. The Company is in regular compliance of the applicable provisions of Secretarial Standards issued by the Institute of Company Secretaries of India.

Acknowledgements

Your Company's organizational culture upholds professionalism, integrity and continuous improvement across all functions, as well as efficient utilization of the Company's resources for sustainable and profitable growth.

Your Directors wish to place on record their appreciation for the sincere services rendered by employees of the Company at all levels. Your Directors also wish to place on record their appreciation for the valuable co-operation and support received from the various Government Authorities, the Banks / Financial Institutions and other stakeholders such as, members, customers and suppliers, among others. Your Directors also commend the continuing commitment and dedication of the employees at all levels, which has been critical for the Company's success. Your Directors look forward to their continued support in future.

For and on behalf of the Board of Directors
For Varun Beverages Limited
Place: Gurugram
Date : February 26, 2019 Ravi Kant Jaipuria
Chairman
DIN : 00003668

Annexure – A

Statement as at December 31, 2018 pursuant to Rule 12 (9) of Companies (Share Capital and Debentures) Rules, 2014 and the Regulations 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014:

The Company has two Employee Stock Option Schemes viz. Employee Stock Option Scheme – 2013 (ESOS-2013) and Employee Stock Option Scheme - 2016 (ESOS – 2016). All the relevant details of these schemes are provided below.

Following details are also available on the website of the Company and can be accessed at www.varunpepsi.com A. Relevant disclosures in terms of the ‘Guidance note on accounting for employee share-based payments' issued by

ICAI or any other relevant accounting standards as prescribed from time to time.

Please refer Note no. 51 of Notes to the Standalone Financial Statements forming part of the Annual Report.

B. Diluted EPS on issue of shares pursuant to all the schemes covered under the regulations in accordance with

‘Indian Accounting Standard (Ind AS) - 33 - Earnings Per Share' or any other relevant accounting standards as prescribed from time to time:

Disclosure on diluted EPS

Fully diluted EPS pursuant to issue of Equity Shares on exercise of options calculated in accordance with Ind AS - 33 ‘Earning Per Share' ESOS - 2013 ESOS – 2016
Rs 18.20 on a standalone basis Not Applicable

C. Details Relating to ESOS – 2013

Particulars Details
(i) (a) Date of shareholders' approval May 13, 2013
(b) Total number of options approved/granted 26,75,400
(c) Vesting requirements 25% - On the date of Grant of options (First Vesting);
25% - On the 1st day of January in the calendar year succeeding the calendar year of First Vest (Second Vesting);
25% - On the 1st day of January in the calendar year succeeding the calendar year of Second Vest (Third Vesting); and
25% - On the 1st day of January in the calendar year succeeding the calendar year of Third Vest (Fourth Vesting)
All the options granted under this scheme have been vested on or before January, 2016.
(d) Exercise price or pricing formula Rs 149.51 per equity share
(e) Maximum term of options granted 5 years for exercising the options from the date of vesting
(f) Source of shares (primary, secondary or combination) Primary
(g) Variation in terms of options Under the erstwhile ESOS 2013, the vesting was to occur at the time of filing of the Red Herring Prospectus by the Company for the purpose of IPO and the exercise period was to commence only after the IPO. The vesting period got amended by the Board of Directors on December 1, 2015 in such a way that the 1st, 2nd and 3rd vesting occurred on December 1, 2015 and the restriction on exercise of the option after IPO was removed. Thereafter, the ESOS 2013 was amended on November 2, 2016 removing the restriction to exercise the Options in full in respect of the shares vested on a Vesting Date. During the year under review, there was no variation in terms of options.
(ii) Method used to account for ESOS - 2013 Fair value
(iii) Difference between the employee compensation cost using the intrinsic value of stock options and the employee compensation cost that shall have been recognized if it had used the fair value of the options. During the Financial Year 2018, the Company followed Fair Value accounting of stock options. All the options have been vested & there were no accounting charge to Statement of Profit & Loss for the year
The impact of this difference on profits and on EPS of the Company.
(iv) Option movement during Financial Year – 2018
Number of options outstanding at the beginning of the year 78,285
Number of options granted during the year Nil
Number of options forfeited / lapsed during the year Nil
Number of options vested during the year Nil
Number of options exercised during the year 55,000
Number of shares arising as a result of exercise of options 55,000
Money realized by exercise of options, if scheme is implemented directly by the Company Rs 8,223,050
Loan repaid by the Trust during the year from exercise price received Not Applicable
Number of options outstanding at the end of the year 23,285
Number of options exercisable at the end of the year 23,285
(v) Weighted-average exercise prices and weighted- average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock Please refer Note No. 51 of Notes to the Standalone Financial Statements forming part of the Annual Report.

(vi) Employee wise details of the shares issued during the year to:

Name Designation No. of Options granted Exercise Price (Rs )
(i) Senior Managerial Personnel – Nil
(ii) any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year - Nil
(iii) identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital of the Company (excluding outstanding warrants and conversions) at the time of grant Nil Nil Nil Nil
(vii) Method and significant assumptions used during the year to estimate the fair value of options including the following information: Kindly refer Note No. 51 to Standalone Financial Statements forming part of the Annual Report
(a) the weighted-average values of share price Rs 721.66
(b) weighted average exercise price Kindly refer Note No. 51 to Standalone Financial Statements forming part of the Annual Report
(c) expected volatility -do-
(d) expected option life -do-
(e) expected dividends -do-
(f) risk-free interest rate and any other inputs to the model -do-
(g) the method used and the assumptions made to incorporate the effects of expected early exercise; -do-
(h) how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility; and -do-
(i) whether and how any other features of the option grant were incorporated into the measurement of fair value, such as a market condition. -do-
D. Details Relating to ESOS – 2016*
(i) (a) Date of shareholders' approval

April 27, 2016

(b) Total number of options approved / granted Nil
(c) Vesting requirements Unless otherwise specified in ESOS-2016, the continuation of the Grantee in the services of the
Company shall be primary requirement of the
Vesting
25% - one year from the date of Grant (First Vesting)
25% - On the 1st day of January in the calendar
year succeeding the calendar year of First Vest (Second Vesting)
25% - On the 1st day of January in the calendar year succeeding the calendar year of Second Vest (Third Vesting)
25% - On the 1st day of January in the calendar year succeeding the calendar year of Third Vest (Fourth Vesting)
(d) Exercise price or pricing formula Not applicable.
(e) Maximum term of options granted Not applicable.
(f) Source of shares (primary, secondary or combination) Not applicable.
(g) Variation in terms of options Not applicable.
(ii) Method used to account for ESOS – 2016 Not applicable.
(iii) Difference between the employee compensation cost using the intrinsic value of stock options and the employee compensation cost that shall have been recognized if it had used the fair value of the options. Not applicable.
The impact of this difference on profits and on EPS of the Company. Not applicable.
(iv) Option movement during Financial Year – 2018 Number of options outstanding at the beginning of the year Nil
Number of options granted during the year Nil
Number of options forfeited / lapsed during the year Nil
Number of options vested during the year Nil
Number of options exercised during the year Nil
Number of shares arising as a result of exercise of options Nil
Money realized by exercise of options, if scheme is implemented directly by the Company Not applicable
Loan repaid by the Trust during the year from exercise price received Not Applicable
Number of options outstanding at the end of the year Nil
Number of options exercisable at the end of the year Nil
(v) Weighted-average exercise prices and weighted- average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock Not applicable

 

(vi) Employee wise details of the shares issued to:
Name Designation No. of Options granted Exercise Price (Rs )
(i) Senior Managerial Personnel Not applicable.
(ii) any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Not applicable.
(iii) identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital of the Company (excluding outstanding warrants and conversions) at the time of grant. Not applicable.
(vii) Description of the method and significant assumptions used during the year to estimate the fair value of options including the following information: Not applicable.
(a) the weighted-average values of share price, exercise price, expected volatility, expected option life, expected dividends, the risk-free interest rate and any other inputs to the model;
(b) the method used and the assumptions made to incorporate the effects of expected early exercise;
(c) how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility; and
(d) whether and how any other features of the option grant were incorporated into the measurement of fair value, such as a market condition.

*The Company has not granted any stock options under ESOS 2016 till date.

For and on behalf of the Board of Directors
For Varun Beverages Limited
Place: Gurugram
Date : February 26, 2019 Ravi Kant Jaipuria
Chairman
DIN : 00003668

Annexure – B

Details pertaining to Remuneration as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

(i) Ratio of the remuneration of each director to the median remuneration of the employees of the Company for the Financial Year 2018, the percentage increase in remuneration of each of the Director, Chief Financial Officer and Company Secretary during the Financial Year 2018:

(Rs in Million)
Name of Director/KMP and Designation

Remuneration of Director/KMP for Financial Year 2018

% increase in Remuneration in Financial Year 2018

Ratio of Remuneration of Director to Median Remuneration of employees
1. Mr. Varun Jaipuria, Whole-time Director 31.22 6.11 %# 111.50
2. Mr. Raj Pal Gandhi, Whole-time Director 48.68 26.96 % 173.85
3. Mr. Kapil Agarwal, Whole-time Director & Chief Executive Officer 47.48 6.12 % 169.57
4. Mr. Kamlesh Kumar Jain, Whole-time Director & Chief Financial Officer 12.27 9.07 % 43.82
5. Mr. Ravi Batra, Chief Risk Officer & Group Company Secretary 7.46 75.53 %* 26.64

# There was no increase in the salary of Mr. Varun Jaipuria during the Financial Year 2018. However, the increase in Financial Year 2017 was effective from April 1, 2017, thereby indicating the increase.

* For calculation of percentage increase in Remuneration for Financial Year 2018 of Mr. Ravi Batra, remuneration figures from May 12, 2017 have been considered.

(ii) The number of permanent employees as on December 31, 2018 were 5,662 and the median remuneration was

Rs 0.28 Million annually. The median remuneration of employees (excluding above Directors and KMPs) in Financial

Year 2018 has increased by 7.69 % as the Company had set an aggressive business targets and expansions for the year ahead.

(iii) The remuneration of Directors, KMPs and other employees is in accordance with the Remuneration Policy of the Company which is uploaded on the website of the Company at http://varunpepsi.com/wp-content/ uploads/2016/09/Remuneration-Policy.pdf

(iv) The average percentile increase already made in the salaries of employees other than Managerial personnel in the last Financial Year was 7.60% and the average percentile increase in the remuneration of Managerial Personnel was 15.70%. The higher percentage in the increase of Managerial Personnel was based on external benchmarking, growth plans of the Company and individual performance of the Managerial Personnel.

Statement of particulars under Section 197(12) of the Act and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended December 31, 2018 (also includes the details of top ten employees of the Company)

Name Designation Remuneration Received Age Qualification Experience in years Last Employment Date of Commencement of Employment
(Rs in million)
1 Mr. Varun Jaipuria Whole-time Director 31.22 31 Attended Millfield School, Somerset, England 10 - July 01, 2009
2 Mr. Raj Pal Gandhi Whole-time Director 48.68 61 FCA 38 Devyani Beverages Ltd. November 01, 2004
3 Mr. Kapil Agarwal Whole-time Director & Chief Executive Officer 47.48 54 PGDM 27 Devyani Beverages Ltd. November 01, 2004
4 Mr. Vivek Gupta* Executive Director 24.40 55 PGDM 31 Lunarmech Technologies Pvt. Ltd. April 01, 2015
5 Mr. R.J.S. Bagga Chief Operating Officer 24.23 56 M.Tech. 32 Eveready Industries December 11, 1995
6 Mr. Kamlesh Kumar Jain Whole-time Director & Chief Financial Officer 12.27 56 FCA 29 Devyani Beverages Ltd. November 01, 2004
7 Mr. Sudin Kumar Gaunker Chief Operating Officer 12.00 47 B.Com. 19 Goa Bottling Company Limited June 21, 2000
8 Mr. Bhupinder Singh Sr. Vice President 11.97 54 MBA 28 ABinbev India Private Limited May 01, 2015
9 Mr. Kamal Karnatak Sr. Vice President 10.44 46 MBA 23 Unitech Limited October 01, 2008
10 Mr. Sugato Palit Chief HR Officer 9.60 47 MBA 23 Accumen March 31, 2017

* Not a member of the Board of Directors of the Company.

Notes:-

1. Mr. Varun Jaipuria is the son of Mr. Ravi Kant Jaipuria, Chairman of the Company and holds 39,175,500 (21.45%) equity shares in the Company. None of the other employees hold by himself or along with his/her spouse and dependent children, 2% or more of equity shares of the Company.

2. None of the employee receive remuneration during 2018 in excess of the remuneration of any of the Directors except the details of employees forming part of this annexure.

3. Nature of employment for all these employees are permanent.

For and on behalf of the Board of Directors For Varun Beverages Limited

Ravi Kant Jaipuria Chairman

DIN : 00003668

Place: Gurugram

Date : February 26, 2019

   

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