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Directors Report of Goodricke Group Ltd.

Mar 31, 2017

The Directors have pleasure in presenting their Forty-first Annual Report and Accounts for the year ended 31st March, 2017.

FINANCIAL RESULTS (Rs. in millions)

Year ended (31.3.2017)

15 months Period ended (31.03.2016)

Revenue from Operations

6803.69

7332.42

Profit before Taxation

488.99

28.45

Tax Expense

157.67

149.85

Profit/(Loss) for the year / period

331.32

(121.40)

Other Comprehensive Income (net of tax)

(44.09)

(4.63)

Total Comprehensive Income

287.23

(126.03)

Other Equity at year end

2702.83

2519.59

The above figures are for 12 months and 15 months respectively, hence not comparable.

SHARE CAPITAL

During the year under review:

a. No Equity shares have been issued with differential voting rights. Hence, no disclosure is required in terms of Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

b. No issue of Sweat Equity Share has been made. Hence, no disclosure is required in terms of Rule 8 (13) of the Companies (Share Capital and Debentures) Rules, 2014.

c. There was no issue of Employee Stock Option. Hence, no disclosure is required in terms of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014.

d. There was no provision made by the Company for any money for purchase of its own shares by employees or by trustees for the benefit of employees. Hence, no disclosure is required in terms of Rule 16 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

e. The issued, subscribed and paid up share capital of the Company as on 1st April, 2016 stood at Rs. 216 million divided into 21600000 Equity Shares of Rs.10/- each remained unchanged as on 31st March, 2017.

TRANSFER TO RESERVE

Your Directors do not propose to transfer any amount to the General Reserve for the financial year ended 31st March, 2017.

DIVIDEND

Your Directors have recommended a dividend of Rs. 4.50 per share (45 %). On approval at the forth coming Annual General Meeting, Dividend will be paid to those members whose names are recorded in the Register of the Company at the close of business on 20th July, 2017, subject, however to the provision of Section 126 of the of the Companies Act, 2013. This equity dividend has not been included as a liability in the financial statement.

OPERATIONS

The Company performed creditably by harvesting a crop of 15.92 million Kgs. in Dooars whilst in Assam the same was 2.41 million kgs. and Darjeeling harvested 0.45 million kgs. over the 12 months period.

Substantial early rainfall combined with judicious usage of our excellent irrigation facilities as well as the good controls exercised over pest activity were the key factors that contributed to this achievement. Mother nature was kind and no garden suffered on account of hail storm as was the case in the previous year.

The out-sourced leaf segment registered lower volumes than expected on account of the fact that operations had to be scaled down in order to not jeorpardise quality of our own produce in the light of the higher than targeted harvest levels from our gardens.

The profitability of the garden operations in Dooars was affected on account of the following factors :-

1) The confusion created on account of the chaotic implementation of the pan India auction led to couple of sales being cancelled on account of non-participation of buyer community in the peak cropping months of September/October and there was a deliberate withdrawal of part of the buying community from the auctions till sanity was restored by Tea Board.

2) Extended pre-bonus agitation, post bonus absenteeism caused upheavel in plucking operations leading to gardens having to skiff tea areas due to extended plucking rounds.

3) Demonitization related upheaval in Siliguri Auction where at least 75% of our Dooars produce is sold post 2nd flush. The tertiary markets collapsed on account of demonitization which led to large scale withdrawal of the buying community for North India and this led to collapse of the market with only a handful of buyers operating at much lower levels than anticipated for lower and selected volumes of teas.

Unfortunately this also coincided with the high cropping months of October and November wherein Puja flush is harvested and good rainfall in October had resulted in substantially increased harvest levels in these two months as well. This resulted in over supply of teas in a market which was already financially strapped and very subdued. All of which led to price levels depressing beyond economic threshold levels for a large volume of teas sold at Siliguri across the spectrum.

Markets for Orthodox teas though remained comparatively more buoyant on account of export queries and commitments. Your garden in Mangaldai, Assam recorded hither to unattained levels of Orthodox production resultant of which the profit levels of these gardens witnessed sharp rise.

Produce of the Darjeeling estates of the group featured amongst the top marks in price realization and despite market trends was able to derive attractive price levels.

It is with some level of satisfaction that one would like to record here that the Company’s exports touched a figure of 5.6 million kgs. in the year.

The Instant Tea Plant at Aibheel Tea Estate continued to perform very satisfactorily and as an EOU contributed close to 300 MT in export volumes.

Branded Tea business was the single largest contributor to the overall profits of the Company in the year and currently the Goodricke brand holds the largest market share in Madhya Pradesh. In the Darjeeling tea segment the Company’s brands have the largest market share in Kolkata urban market. This is seen as a prime growth area for the company, with a presence in all three growing regions of North India, the company has a large bouquet of Tea to be offered to the consuming public.

CHANGE IN NATURE OF BUSINESS, IF ANY

There has been no change in the nature of business and the Company continues to concentrate on its own business with growth plans in short to medium terms.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Your Board of Directors at its Meeting held on 23rd May, 2017 appointed Mr. Atul Asthana, as an Additional Director to be designated as Whole time Director & Chief Operating Officer (COO) with effect from 1st June, 2017. A notice has been received from a member under Section 160 (1) of the Companies Act, 2013 proposing the appointment of Mr. Atul Asthana as a Director at the ensuing Annual General Meeting. The Board has also re-appointed Mr. Arun Narain Singh as Managing Director & CEO for another period of three months with effect from 1st January, 2018. The Board recommends the appointment / re-appointment of the aforesaid Directors on the ensuing Annual General Meeting.

The following persons continued as Key Managerial Personnel of the Company in compliance with the provisions of Section 203 of the Companies Act, 2013.

(a) Mr. A. N. Singh, Managing Director & CEO

(b) Mr. A. Sengupta, Vice President and CFO

(c) Mr. S. Banerjee, Sr. General Manager & Company Secretary

STATEMENT OF DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

All the Independent Directors have given declaration as per Section 149 (7) of the Companies Act, 2013 confirming that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act 2013.

REPORT ON CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and as stipulated in Listing Regulations. A Report on Corporate Governance along with the Auditor’s Certificate regarding Compliance of Corporate Governance are attached as Annexure II and Annexure III respectively, forming part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility (CSR) Committee consist of three directors namely, Dr. (Mrs) S. Kaul, Chairperson and Independent Director, Mr. A. N. Singh, Managing Director & CEO and Mr. K. Sinha, Independent Director as members with Mr. S. Banerjee, Sr. General Manager & Company Secretary as its Secretary. The broad terms of reference of the Corporate Social Responsibility Committee are :

— To formulate and recommend to the Board the Corporate Social Responsibility policy.

— Recommend the amount of expenditure to be incurred on the activities undertaken.

— Monitor the Corporate Social Responsibility of the Company from time to time.

— Review the performance of the Company in the areas of Corporate Social Responsibility including the evaluation of the inputs of the Company’s Corporate Social Responsibility activities.

— Review the Companies decisions on Corporate Social Responsibility matters.

The initiatives under taken by the Company on Corporate Social Responsibility activities during the year have been annexed as Annexure IV to the report.

DETAILS OF BOARD MEETINGS

The Board of Directors met 4 (four) times during the year on various dates as given herein below:

Sl. No.

Date of the meeting

No. of Directors attended the meeting

1.

23rd May, 2016

5

2.

8th August, 2016

6

3.

10 th November, 2016

5

4.

13 th February, 2017

6

Further details on Board of Directors are provided in the Corporate Governance Report.

COMMITTEES OF THE BOARD

a. Audit Committee

Sl. No.

Name

Category of Director

Chairman/Members

1.

Mr. K. Sinha

Non-Executive- Independent

Chairman

2.

Mr. P. K. Sen

Non-Executive - Independent

Member

3.

Mrs. S. A. Walker

Non-Executive - Non-Independent

Member

Further details of Audit Committee are given in the Corporate Governance Report.

• The Company has established a vigil mechanism / whistle blower mechanism which oversees through the Audit Committee and addresses the genuine concerns expressed by the employees and other Directors. The Company has also made provisions for adequate safeguards against victimization of its employees and Directors who express their concerns. The Chairman of the Audit Committee can be directly accessed by any employee for reporting issues which need to be brought to the notice of the Board.

The vigil mechanism / whistle blower policy of the Company has been uploaded on the website of the Company and can be accessed at Company’s weblink www.goodricke.com/ corporate/Goodricke -whistle-blower - policy.

b. Nomination & Remuneration Committee

Sl. No.

Name

Category of Director

Chairman/Members

1.

Mr. K. Sinha

Non-Executive- Independent

Chairman

2.

Mr. P.J. Field

Non-Executive

Member

3.

Mr. P. K. Sen

Non-Executive - Independent

Member

4.

Dr. (Mrs.) S. Kaul

Non-Executive -Independent

Member

Further details of Nomination and Remuneration Committee are given in the Corporate Governance Report.

c. Corporate Social Responsibility Committee

Sl. No.

Name

Chairperson /Members

1.

Dr. (Mrs.) S. Kaul

Chairperson

2.

Mr. K. Sinha

Member

3.

Mr. A. N. Singh

Member

Further details of Corporate Social Responsibility are available in the Report on Corporate Governance.

The Committee has approved the Corporate Social Responsibility (CSR ) Policy and the Budget for the Financial Year 2016 - 17 prepared in accordance with the provisions of Section 135 (5) of the Companies Act, 2013. The earmarked fund was fully spent on or before 31st March, 2017.

d. Stakeholders Relationship Committee

Sl. No.

Name

Chairperson/Members

1.

Dr. (Mrs.) S. Kaul

Chairperson

2.

Mr. K. Sinha

Member

3.

Mr. A. N. Singh

Member

Further details of Stakeholders Relationship Committee are available in the Report on Corporate Governance.

e. Risk Management Committee

Your Board at its meeting dated 14th November, 2014 has voluntarily constituted the following Risk Management Committee of the Board as per Listing Regulations.

Sl. No.

Name

Chairman/Members

1.

Mr. K. Sinha

Chairman

2.

Mr. P.K. Sen

Member

3.

Mr. A. N. Singh

Member

4.

Mr. S. Banerjee

Member

Further details of Risk Management Committee are available in the Report on Corporate Governance.

ANNUAL PERFORMANCE EVALUATION

A Board Evaluation Framework was adopted as per the guidance note issued by SEBI dated 5th January, 2017 for evaluating the performance of the Board as a whole, Committees of the Board and also performance of the Individual Directors.

As per the said Evaluation Framework, the Board evaluated the performance of the Board, its Committees and the Individual Directors for the year 2016-17. The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors, based on the criteria such as attendance and participation in the meetings, preparedness on the issues to be discussed, suggestions on how risk factors may be handled etc. In addition, the chairman was also evaluated on the above aspects by the independent directors.

The Independent Directors also carried out the performance evaluation in terms of Part VII (3) ( c) of Schedule IV of the Companies Act 2013 in their Meeting held on 23rd May, 2017.

ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 forming a part of this Report, attached as Annexure V.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Clause (c) of sub section 3 of Section 134 of the Companies Act 2013 your Directors confirm that :

(a) in the preparation of the annual accounts, for the year ended 31st March 2017, the applicable accounting standards have been followed along with the proper explanation relating to material departure, if any.

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March 2017 and of the profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care 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;

(d) the Directors had prepared the annual accounts on a going concern basis;

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

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

AUDITORS AND AUDIT REPORT

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W / W-100018) were appointed as the Statutory Auditors of the Company in the last Annual General Meeting held on 28th July, 2016 in terms of Section 139 of the Companies Act 2013 till the conclusion of the Annual General Meeting to be held in 2021, subject to ratification by the Shareholders at every subsequent Annual General Meeting of the Company.

The Statutory Audit Report does not contain any qualification, reservation or adverse remarks.

COST AUDITORS

In terms of Sub Section (3) of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, M/s. Shome & Banerjee, Cost Accountants (Firm Registration No. 000001) has been appointed by the Board of Directors in its meeting held on 23rd May, 2017 as the Cost Auditor of the Company for the financial year 2017-18 based on the recommendation of the Audit Committee. The remuneration to be ratified by the Members in the ensuing Annual General Meeting.

The Cost Audit Report does not contain any qualification, reservation or adverse remarks.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. A. K. Roy & Co., Practicing Company Secretaries FCS 5684, CP No. 4557 had been appointed Secretarial Auditors of the Company for the year ended 31st March, 2017. The report of the Secretarial Auditors is enclosed as Annexure- VI to this report. The Report does not contain any qualification, reservation or adverse remark or disclaimer, which requires any further comments or explanations.

PARTICULARS OF COMPLIANCE OF CONTRACTS OR ARRANGMENTS MADE WITH RELATED PARTIES

The related party transactions entered during the year were in ordinary course of business and also on arm’s length basis in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict of the interest with the Company at large. All related party transactions are presented to the Audit Committee and the Board, if required for approval. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website at the web link: www.goodricke.com/policy-on-related-party-transactions.

Accordingly, disclosures of related party transactions in terms of Clause (h) of sub section (3) of Section 134 of Companies Act, 2013 read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 in Form AOC - 2, is not applicable. Transactions with related parties, as per requirements of Accounting Standard are disclosed in the notes to the accounts annexed to the financial statements.

LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees or investments made under section 186 of the Companies Act, 2013 are covered in the notes of the Financial Statement for the year ended 31st March, 2017.

HUMAN RESOURCES

Tea being a labour intensive industry the Company has employed large number of work force at the tea estates. Industrial Relations at all the units of the Company remain satisfactory and there was no major disruption of work at the garden or any other establishment of the Company during the year under review.

The total remuneration drawn by MD & CEO and other Key Managerial Personnel form part of Extract of the Annual Return in Form MGT - 9 to this Report enclosed as Annexure V .

In terms of requirements of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formed Internal Complaints Committee for its workplaces. During the year, no complaint regarding sexual harassment was received by the said Committee.

RISK MANAGEMENT POLICY

In terms of the requirement of the Companies Act, 2013 and Listing Regulations the Company has developed and implemented the Risk Management Policy. The Risk Management Committee of the Board reviews the same periodically.

The Company has under taken adequate measures to mitigate various risk encountered. In the opinion of the Board there is no such risk which may threaten the present existence of the Company.

NOMINATION AND REMUNERATION POLICY

The Company’s Policy relating to appointment of Directors, payment of managerial remuneration, Directors’ qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 and Listing Regulations is attached to this report as Annexure VII.

The details of Programme for familiarization of Independent Directors with the Company , nature of Industry and other related matters are available on the weblink : www.goodricke.com/corporate/familiarisation-program-for-independent-directors

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There is no significant or material order passed by any Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

INTERNAL FINANCIAL CONTROL

Your Company has adequate Internal Financial Control System at all levels of Management and they are reviewed from time to time. The Internal Audit is carried out in house as well as by firms of Chartered Accountants. The Audit Committee of the Board looks into Auditors’ review which is deliberated upon and corrective action taken, wherever required.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company transferred such amount of dividend lying unpaid or unclaimed for a period of seven years from the date of such dividend became due for payment to Investor Education and Protection Fund (IEPF).

DEPOSITS

Your Company has not accepted any deposits from public in terms of provisions contained in Chapter V of the Companies Act, 2013.

PARTICULARS OF EMPLOYEES

The ratio of the remuneration of each Director to the median employees’ remuneration and other particulars or details of employees pursuant to Section 197(12) of the Companies Act, 2013 along with the names of top

10 employees in terms of remuneration drawn read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended are attached to this Report as Annexure VIII.

POLICY ON PREVENTION OF INSIDER TRADING

Your Company has adopted a code of conduct for Prevention of Insider Trading with a view to regulate trading in Equity Shares of the Company by the Directors and designated employees of the Company.

The said regulation is available at Company’s weblink www.goodricke.com /Corporate/ Prohibition -of-insider-trading.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Listing Regulations Management Discussion and Analysis Report is attached as Annexure I forming part of this report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Conservation of energy

(i) The steps taken or impact on conservation of energy

1) Online Conveyorisation of manufacturing Processes which resulted in reduction of idle running of machineries, less time consumption thereby saving energy and increasing efficiency.

2) Installation of Coal Ratio Controller to reduce consumption of Coal. Approx. 20% saving of coal achieved.

3) Installation of new 7 Pass High Efficiency Coal Heater in New VFBD to dry Teas. To reduce coal consumption.

4) Installation of low wattage LED Lights, to reduce power consumption.

5) Installation of Rain Water Harvesting System to reduce pumping of ground water. To reduce power consumption.

6) Installation of High Efficiency CTC Roller Sharpening Equipment to increase speed of sharpening and thus reduce power cost.

(ii) The steps taken by the company for utilizing alternate sources of energy

1) Proposed up gradation of 100 KW Hydel Project at Thurbo Tea Garden.

2) Use of Firewood in Boiler at Aibheel Tea Garden and Gandrapara Tea Garden to reduce consumption of Coal.

3) Installation of CPC Water Heating System at ITP. Successful installation and implementation of this solar power system helped the Company.

(iii) The capital investment on energy conservation equipments

NIL

(b) Technology absorption

(i) The efforts made towards technology absorption

1) Dependence on Hydel Project to run our Factories.

2) Dependence on Solar Water Heating system to reduce dependence on conventional Energy.

3) Usage of Low wattage LED lights in place of high wattage CFLs.

4) Conversion of Coal Firing system into Gas Firing System using LPG Cylinders in Darjeeling gardens.

5) Use of Hygienic Ucrete Flooring System .

6) Online new conveyorisation of flow processes.

7) Introduction of online Green Tea Panning system to produce Green Tea at Leesh River Tea Garden.

8) Introduction of Variable Frequency Drier System in Fluid Bed Driers to save power

9) Introduction of VFBD in Rotorvane

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution

1) Reduction of Power Cost in Thurbo Tea Garden by 25%.

2) Due to online conveyorisation, Factory achieved higher Worker’s outturn, which ultimately led to reduction in Cost of Production.

3) With the introduction of Boiler and Coal Ratio Controller, uniform temperature could be maintained which resulted in better quality of produce and reduction in coal consumption.

4) With the introduction of VFD in VFBD, the power cost has been reduced in firing of Teas.

5) In our prestigious Instant Tea Plant, using of Solar parabolic panels has helped us to cut down on Coal Consumption by approx. 25%

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year).

(a) the details of technology imported

(b) the year of import;

(c) whether the technology been fully absorbed

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof

N I L

(iv) the expenditure incurred on Research and Development

Rs. 13.50 million

(c) Foreign exchange earnings and Outgo

During the year, the foreign exchange outgo was Rs 30.16 Million and the foreign exchange earning was Rs. 1083.35 million.

MATERIAL CHANGES AND COMMITMENTS

Your Directors confirm that there are no material changes and commitments, affecting the financial position of the company which has occurred between the end of the financial year of the company and the date of this report. The Ministry of Corporate Affairs, Government of India vide its notification dated February 16, 2015 has issued the Companies (Indian Accounting Standard) Rules 2015 which states that Companies should implement Indian Accounting Standard (Ind AS). Every listed Company is required to comply barring some companies with Ind AS in the preparation of their financial statements for accounting period beginning on or after April 1, 2016 with the comparatives for the period ending March 31, 2016. In pursuance of the above notification, your Company though not mandatorily required has voluntarily adopted Ind AS with effect from April, 2016.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.

Your Directors also thank the business associates, shareholders and other stakeholders of the Company for their continued support.

On behalf of the Board

A. N. Singh (DIN 00620929)

Managing Director & CEO

S. A. Walker (DIN 07225692)

S. Kaul (DIN 00150593)

K. Sinha (DIN 00123811)

Place : Kolkata P.K. Sen (DIN 00160160)

Dated : 23rd May, 2017 Directors


Dec 31, 2014

Dear Members,

The Directors have pleasure in presenting their Thirty-ninth Annual Report and Accounts for the year ended 31st December 2014.

FINANCIAL RESULTS For the year ended 31st December

2014 2013

(Rs. in millions)

GROSS SALES 6,001.63 5,783.10

PROFIT BEFORE TAXATION 290.39 486.18

Less: Provision for Taxation (net) 68.00 152.61

PROFIT AFTER TAX 222.39 333.57

Add: Profit brought forward from last year 47.85 48.67 270.24 382.24

APPROPRIATIONS:

Dividend 97.20 97.20

Tax on Dividend 19.43 17.19

Transfer to General Reserve 110.00 220.00

Balance carried forward 43.61 47.85

The turnover for the year 2014 marginally increased by over 3.78% to Rs. 6,001.63 million from Rs5,783 million in the previous year essentially due to improved prices.

OPERATIONS

The total manufactured crop was slightly lower at 22.09 million kgs vis-a-vis 22.29 million kgs for 2013 on account of the severe drought in the early part of the year. Augmented irrigation facilities enabled the gardens to minimize crop loss vis-a-vis the rest of the region. Outsourced leaf production was higher than 2013 as concerted efforts were made in order to maximize this very remunerative operation.

Withdrawal of monsoon by early October denied chances of a prolific backend harvest resultant of which the gardens were unable to attain the budgeted crop levels by minor margin. The increase in sale price did not substantially improve the profitability due to steep escalation in the cost of coal, fuel, oil, electricity, fertilizer, agrochemicals etc. Fresh wage agreements which would come into effect retrospectively from 1st April 2014 have also impinged on profitability levels in West Bengal gardens.

All India tea production decreased by 1.33 percent to 1184 million kgs in 2014 against 1200 million kgs in 2013.

The markets remained selective with the price levels of better quality teas maintaining and even surpassing 2013 levels by a fair margin. But the medium and plainer category of teas attracted only tepid demand resultant of which marks / gardens / producers who did not adhere to "quality" production were left at the mercy of market forces. Export markets were also selective with Iran especially being apprehensive of the adverse media reporting on proliferation of chemically tainted teas being produced in India.

Nonetheless, the Company as a whole did manage to attain 2013 export levels in 2014 and the buoyant price levels attained in auction centers for all its marks did enable the Company to enhance its turnover over 2013.

The Packet Tea Division continued to make inroads into the major established brands'' traditional domain

and the newly launched "Goodricke Khaass" brand is currently recognized as a major rival to the established brands in the premium segment.

As a part of our endeavour to adhere to global standards, four of our gardens in Dooars have been certified under the Rainforest Alliance regime. Goodricke is the first major tea manufacturer to attain this norm in Dooars. The certification of the balance gardens of Dooars will be pursued in the year ahead. The rest of the Dooars gardens are in the process of being certified under ISO 22000.

The Company continues to avail Tea Board''s replanting/ rejuvenation subsidy schemes for replacement of old tea areas with quality planting material. These have been helpful in ensuring sustained growth and to improve productivity along with the quality profile of the Company.

In terms of Corporate Governance disclosure under Clause 49 of the Stock Exchange Listing Agreement, the Management discussion and analysis report is given in annexure ''E'' forming part of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is a constituent of Camellia Plc., U.K., one of the largest global producer of tea with interests in other plantation crop, agriculture, engineering and private banking. It is committed to CSR in its global operation. The Statement of Business Principles of the U. K. Principal, as well as norms followed by global bodies like Rainforest Alliance (RA) and Fair Trade Practices (FTP) are in place for environment sustainability. The policies adopted as standing operating procedures covers:

Health & Safety Social

Waste Management Environment

Some of the major activities covered under the above groups are:

Primary Hospitals at all gardens.

Group Hospital with specialized equipment at Dooars, North Bengal

Tracking of family health status at the gardens.

Camps for sterilization, reconstructive surgery by overseas Doctors, eye surgery and child immunization programmes.

Malaria prevention schemes for residents of Garden and adjoining villages.

Primary schools at all gardens and buses for school children to go to the Secondary schools.

Special School for making difference in the lives of physically challenged students at Siliguri.

Self help centres for vocational training.

Afforestation / vegetation on non- traditional tea areas in order to improve the Micro-environment.

Scholarship scheme for meritorious students of the tea garden employees.

Packing of teas by physically challenged students at The Indian Institute of Cerebral Palsy (IICP), as part of vocational training.

Green initiative for sustainable operation through use of dual fired boilers to use woody biomass instead of coal thereby lowering consumption of carbon fuel and reducing methane emission.

Water harvesting and Creation of Waterbodies to charge underground water table.

Encourage use of smokeless chullas.

DIVIDEND

The Board recommends a dividend of Rs. 4.50/- per share (45%). Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on 21st March, 2015, subject, however to the provision of Section 206A of the Companies Act, 1956/Section 126 of the Companies Act, 2013.

FINANCE AND ACCOUNTS

Overall increase in price have compensated to a certain extent the cost escalation of most of the inputs. However the major factor for lower profitability is on account of substantial shortage in the Retirement Funds due to the negative swing in the Bond yields coupled with the proposed increase in labour wages.

COST AUDIT

For the Current financial year beginning on 1st January 2015 and ending on 31st December, 2015, the Board of Directors, based on the recommendation of the Audit Committee, has appointed Messrs. Shome & Banerjee, Cost Accountants as the Cost Auditors of the Company to comply with the provisions of Section 148 of the Companies Act, 2013 read with Rule 14 of Companies (Audit and Auditors) Rules 2014, as may be applicable.

As required under Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit & Auditors) Rules 2014, the remuneration payable to the Cost Auditors for this year ending 31st December, 2015 will be placed before the members at the ensuing Annual General Meeting for ratification.

PROSPECTS

Overall prospect of the tea business appears to be encouraging with strong demand for CTC teas. The Company is in process of replacing high cost coal with alternative fuels i.e., waste wood, bio-mass etc. Modernisation of spraying equipments are under process which will reduce costs as well as deployment on pest control which had been a major drain on revenues over the past decades.

Barring unforeseen adverse weather conditions, to combat which, substantial investment on augmenting irrigation infrastructure has been undertaken, the Company is expected to strengthen its profitability in future years with upgraded factories and renewed tea areas. The slower off-take of Orthodox teas by Iran is a cause for worry as is the proposed sharp increase in wages and the continuing clamour for "minimum wages in tea" by some sections of the Unions.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

Clause 49 of the Listing Agreement on Corporate Governance in terms of quarterly and annual results etc. were complied with during the year. A certificate from the Statutory Auditors of your Company regarding the compliance by the Company of the conditions stipulated under Clause 49 of the Listing Agreement is also attached with this report.

The Audit Committee of the Board was set up in 1997 well before it became mandatory. The Committee has played an important role during the year. It co-ordinated with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered guidance in the areas of Corporate Governance, internal audit, finance and accounts.

The Code of Conduct for the Directors and Senior management personnel is being complied with and Risk Profile Analysis is being carried out from time to time. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - ''F'' of the report.

STAKEHOLDERS'' RELATIONSHIP COMMITTEE

The Committee has met regularly in course of the year. With the compulsory dematerialization of the Company''s shares and electronic mode of transfers, postal despatches which led to usual complaints, have been minimized. At the year end 97.97% of the total shares were dematerialized with no unresolved pending investor grievances.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee recommends to the Board the remuneration Package of Directors, Key Managerial Personnel and other employees.

PERSONNEL

The Company has a large work force employed on tea estates which are located in remote areas away from towns and cities. Inspite of these isolated locations and disturbed political environment in some areas, the morale of the managerial staff and other personnel were high throughout the year. There were no major disruptions of work at the garden or any other establishment of the Company during the year.

Your Directors place on record the co-operation received and dedication of all employees at the gardens and other establishments of the Company.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy and Technology absorption in terms of Section 217(1)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors'' Responsibility Statement, in terms of Section 217(2AA), is given in Annexure ''D''. All the Annexures form part of the Report.

DIRECTORS

In terms of the provisions of the Companies Act, and the Company''s Articles of Association, Mr. A. K. Mathur shall retire by rotation and being eligible, offers himself for reappointment. The Board has re-appointed Mr. Arun Narain Singh as Managing Director and CEO for a period of three years with effect from 1st January, 2015. The Board recommends the appointment/ re-appointment of the aforesaid Directors on the ensuing Annual General Meeting.

Pursuant to Section 149 and other applicable provisions of the Companies Act, 2013 the Board of Directors is seeking appointment of Mr. K. Sinha, Mr. P. K. Sen and Dr. S. Kaul as Independent Directors for a term of five consecutive years i.e. upto the conclusion of the forty fourth (44) Annual General Meeting to be held in 2020. Details of the proposal for appointment of Mr. K. Sinha, Mr. P.K. Sen and Dr. S. Kaul have been mentioned in the statement pursuant to Section 102 of the Companies Act 2013 in the Notice of the Annual General Meeting. The aforesaid Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder for their appointment as Independent Directors.

The Board is of the opinion that their continued association as Independent Directors shall immensely benefit the Company. The Board recommends their appointment as Independent Directors by the shareholders.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

Applicability of the Companies Act, 1956

As clarified by the Govt. of India., Ministry of Corporate Affairs, vide its General Circular No. 08/2014 dated 4th April, 2014 the information given and contents of this Report are governed by the relevant provisions / schedules / Rules of the Companies Act, 1956.

On behalf of the Board A. N. Singh Managing Director S. Kaul K. Sinha Kolkata P.K. Sen 20th February, 2015 Directors


Dec 31, 2013

The Directors have pleasure in presenting their Thirty-eighth Annual Report and Accounts for the year ended 31st December 2013.







FINANCIAL RESULTS For the year ended 31st December

2013 2012 (Rs. in millions)

GROSS SALES 5,783.10 5,383.81

PROFIT BEFORE TAXATION 486.18 274.44

Less: Provision for Taxation (net) 152.61 74.45

PROFIT AFTER TAX 333.57 199.99

Add: Profit brought forward from last year 48.67 49.10

382.24 249.09

APPROPRIATIONS:

Dividend 97.20 86.40

Tax on Dividend 17.19 14.02

Transfer to General Reserve 220.00 100.00

Balance carried forward 47.85 48.67

The turnover for the year 2013 increased by over 7.40% to Rs. 5,783 million from Rs.5,383 million in the previous year essentially due to increased crop and improved prices.

OPERATIONS

The total manufactured crop was higher at 22.29 million kgs. against 20.73 million kgs in 2012. Favourable weather conditions coupled with augmented irrigation facilities were the major contributing factors. Out sourced leaf procurement recorded some decline due to our own high production.

All India tea production increased by 6.5 percent to 1200 million kgs in 2013 against 1126.33 million kgs in 2012. Majority of the increase came from North India although South Indian crop also was ahead of previous year.

Average CTC tea prices were lower in all auction centers compared to previous year. Markets were polarized at the top and bottom with top teas seeing attractive levels with virtually 100% sales. But medium and plainer sorts saw outlots with lower prices. Our Group averages however were higher than last year in both Dooars and Assam. Orthodox prices were also higher than last year.

All India Bulk tea Export figures were higher than 2012. Exports to Iran increased substantially with Rupee Letter of Credit being opened. Our Company''s exports also increased to 4.20 million kgs from 3-28 million kgs in the previous year.

The domestic sales were positive and indicated future growth potential. In Packet tea division, attractive incentives were offered to maintain steady growth of business. A new brand named "Goodricke Khaass" was launched during the year at Kolkata which was very well accepted in the market. A new central packaging unit along with storage facility was inaugurated in Dewas, Madhya Pradesh to strengthen logistics and cut down on multiple units/inventory.

Our endeavours of converting the three Darjeeling gardens namely Barnesbeg, Badamtam and Thurbo into organic have been successfully completed. All three gardens as also the two Assam gardens continue to be certified under the global Rainforest Alliance.

The Company continues to avail Tea Board''s replanting/ rejuvenation subsidy schemes for replacement of old tea areas with quality planting material. These have been helpful in ensuring sustained growth and to improve productivity along with the quality profile of the Company.

In terms of Corporate Governance disclosure under Clause 49 of the Stock Exchange Listing Agreement, the Management discussion and analysis report is given in Annexure "E" forming part of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companies Act 2013 which has been assented by the President of India on 29th August 2013 suggests for specific provisions for spending on Corporate Social Responsibility (CSR), which is yet to come into effect. It stipulates expenditure of 2% of the average profit of past three years on CSR activities. It further requires the Board''s report to give a note on such activities and in the event of shortfall from the specified quantum, the reasons for the same to be explained therein. A Committee of the Board has already been constituted with Dr. Sudha Kaul, an Independent Director as its Chairperson.

Your Company is a constituent of Camellia Pic, U.K., one of the largest global producer of tea with interests in other plantation crop, agriculture, engineering and private banking. It is committed to CSR in its global operation. The Statement of Business Principles of the U. K. Principal, as well as norms followed by global bodies like Rainforest Alliance (RA) and Fair Trade Practices (FTP) are in place for environment sustainability. The policies adopted as standing operating procedures covers:-

- Health & Safety - Social

- Waste Management - Environment

Some of the major activities covered under the above groups are:-

- Primary Hospitals at all gardens.

- Group Hospital with specialized equipment at Dooars, North Bengal

- Tracking of family health status at the gardens.

- Camps for sterilization, reconstructive surgery by overseas Doctors, eye surgery and child immunization programmes.

- Malaria prevention schemes for residents of Garden and adjoining villages.

a Primary schools at all gardens and buses for school children to go to the Secondary schools.

- Self help centres for vocational training.

- Afforestation / vegetation on non-tea areas.

G Scholarship scheme for meritorious students of the tea garden employees.

- Packing of teas by physically challenged students at The Indian Institute of Cerebral Palsy (IICP), as part of vocational training.

- Green initiative for sustainable operation through use of dual fired boilers to use woody biomass instead of coal.

- The third and final phase of expansion of the Goodricke School for Special Education at Siliguri, North Bengal, was inaugurated on 15th April 2013, providing for additional classrooms and Hydro therapy facility.

DIVIDEND

The Board recommends a dividend of Rs. 4.50/- per share (45%). Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on the date of Annual General Meeting, subject, however to the provision of Section 206A of the Companies Act, 1956.

FINANCE AND ACCOUNTS

The higher crop and overall increase in prices had a favourable effect on the profitability and cash flow of the company. However, due to the high utilization of bank borrowings for most of the months, the interest remained on the higher side. The Debt/Equity and the interest covers are healthy.

Cost Audit u/s 233 of the Companies Act 1956 is being carried out by Messrs Shome & Banerjee, Cost Accountants appointed with the approval of the Minsitry of Corporate Affairs, Government of India.

PROSPECTS

Tea market is expected to remain strong in 2014 due to negative carry forward of old season stocks. Good quality CTC teas will continue to attract premiums and could reach new thresholds in 2014. With easing of sanctions on Iran, prospect for Orthodox teas also look bright.

The price trends at the auctions and private sales have been attracting premium prices for quality teas. This is evident from the prices commanded by the Company''s teas as compared to the auction averages. Barring unforeseen adverse weather conditions, the Company is expected to strengthen it''s profitability in future years with upgraded factories and renewed tea areas.

However, this should be viewed against the backdrop of sharp increase in wages and cost of inputs together with social costs which are to be reckoned with in the coming years, the next wage revision is due from 1st April, 2014.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

Clause 49 of the Listing Agreement on Corporate Governance in terms of quarterly and annual results etc. were complied with during the year. A certificate from the Statutory Auditors of your Company regarding the compliance by the Company of the conditions stipulated under Clause 49 of the Listing Agreement is also attached with this report.

The Audit Committee of the Board was set up in 1997 well before it became mandatory. The Committee has played an important role during the year. It co-ordinated with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered guidance in the areas of Corporate Governance, internal audit, finance and accounts.

The Code of Conduct for the Directors and Senior management personnel is being complied with and Risk Profile Analysis is being carried out from time to time. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - ''F'' of the report.

Enterprise Resource Planning (ERP)

The Company has implemented ERP which was the decision of the Board of Directors. It is a significant paradigm shift for the organization into a new age of digitilised enterprise.

The successful implementation of ERP was possible only because of the hard work put in by the Management at Head Office and estates, especially the computer operators at the up-country level.

ERP integrates the various functions within the organization and presents in a greater manner the transparency of the transactions of the organization. It has also brought about better controls and efficiency in the various processes. This is the first tea Company in India to use ERP.

SHAREHOLDERS'' / INVESTORS'' GRIEVANCE COMMITTEE

The Committee has met regularly in course of the year. With the compulsory dematerialization of the Company''s shares and electronic mode of transfers, postal despatches which led to usual complaints, have been minimized. At the year end 97.81% of the total shares were dematerialized with no unresolved pending investor grievances.

REMUNERATION COMMITTEE

The Remuneration Committee met twice during the year to review and recommend annual increment and payment of commission to Managing Director within the terms of appointment.

PERSONNEL

Majority of the gardens are located in remote areas away from towns and cities. Inspite of these isolated locations and disturbed political environment in some areas, the morale of the managerial staff and other personnel were high throughout the year. There were no major disruptions of work at the garden or any other establishment of the Company during the year.

Group activities were organized during the course of the year like football, golf, tennis, flower show and cultural programme for greater team work in the gardens amongst the Company''s managerial and other personnel.

Your Directors place on record the co-operation received and dedication of all employees at the gardens and other establishments of the Company.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy and Technology absorption in terms of Section 217(l)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors'' Responsibility Statement, in terms of Section 217(2AA), is given in Annexure "D". All the Annexures form part of the Report.

DIRECTORS

There has been no change in the Board of Directors of the Company during the year under report.

Mr. K. Sinha and Mr. P. J. Field, retire by rotation and being eligible offer themselves for re-appointment subject to approval of the General Body. Your Board of Directors commends the reappointments.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

On behalf of the Board

A. N. Singh

Managing Director

S. Kaul

K. Sinha

Kolkata P.K. Sen

26th February, 2014 Directors


Dec 31, 2012

The Directors have pleasure in presenting their Thirty-seventh Annual Report and Accounts for the year ended 31st December 2012.

FINANCIAL RESULTS For the year ended 31st December

2012 2011

(Rs. in millions)

GROSS SALES 5,383.81 4,581.30

PROFIT BEFORE TAXATION 274.44 503.35

Less: Provision for Taxation (net) 74.45 129.10

PROFIT AFTER TAX 199.99 374.25

Add: Profit brought forward from last year 49.10 55.27

249.09 429.52

APPROPRIATIONS:

Dividend 86.40 86.40

Tax on Dividend 14.02 14.02

Transfer to General Reserve 100.00 280.00

Balance carried forward 48.67 49.10

The turnover for the year 2012 increased by over 17% to Rs.5,383 million from Rs.4,581 million in the previous year essentially due to improved prices. The Profit Before Tax (PBT) has decreased substantially from last year due to significant crop loss and adverse impact on costs.

OPERATIONS

The total manufactured crop was marginally higher at 20.73 million kgs. against 20.66 million kgs. in 2011. Dooars own crop suffered due to adverse weather conditions, the total quantum made up to some extent by outsourced leaf. Two Assam gardens i.e. Orangajuli & Nonaipara lost 21% crop from prolonged drought and erratic weather. These two gardens are prime profit making properties and the significant crop loss has impacted the overall profitability severely. Orangajuli and Nonaipara, are located in the Mangaldai area and as per Industry statistics this sub-district lost nearly 25% crop from the previous year. The three Darjeeling gardens were marginally down in crop from previous year''s levels due to organic conversion.

Tea Board of India has revised the methodology of compiling all India tea crop statistics. The 2012 crop is marginally lower at 1,112 million kgs. against 1,116 million kgs in 2011. While the organized sector has suffered substantial crop loss there has been significant increase from the small growers. The price realizations for Assam teas were encouraging but the same was not true for Dooars gardens. Against the spiralling cost inflation, the price increase was limited particularly for Dooars teas.

Market was selectively buoyant for quality teas. Teas from non quality areas continued to be lower priced with preference for better teas. Your Company''s teas attracted a premium over the auction averages. A payment settlement system has been put in place for exports to Iran which has paved the way for increased export to this vital destination. Prices for Darjeeling varieties were firmer largely due to a higher export demand. Globally there has been a decrease in crop mainly due to substantial reduction in Kenya, Malawi and Sri Lanka.

All India net exports was lower than last year''s level at 201 million kgs. However, the Company''s exports of bulk teas and instant teas was 3.3 million kgs. which is 22% higher with improved prices especially for Darjeeling and Assam CTC teas.

The domestic auction and private bulk tea sales were higher. Both the volume and value of Branded tea operations also improved. Sales were higher at 7.8 million kgs supported by new brand launches, extension of own depot operations and Institutional sales. Further, streamlining of packeting operation is in progress to strengthen logistics and cut down on multiple units and inventory. The marketing tie-up for retail sales of Pre-mix instant teas of several flavours continues. The Iced tea pouches launched last year were well received by the market. New flavours are planned for the summer launch.

The Company''s three Darjeeling properties are well on the path of conversion to organic. For Barnesbeg, it was the second year of operation after conversion with favourable exports and higher prices. Badamtam has achieved full conversion recently while a substantial portion of Thurbo has been certified as organic. All the three properties have received certification for environment sustainability from global Rainforest Alliance (RA). Certification from UTZ and Fair Trade are enjoyed by Barnesbeg & Badamtam tea gardens. The two Assam gardens, Orangajuli & Nonaipara, continues to be certified under Rainforest Alliance (RA) which is part of the Global Sustainable Agriculture Network. These certifications confirm adherence to labour & environmental standards of International quality. Your company continues to uproot and replant @ 2.5% for long term sustainability in Dooars and Assam regions.

Two key subsidy schemes of Tea Board of India continues to provide useful support to the garden development efforts. These are being availed by all the gardens and consists of (a) Plantation Development Scheme (PDS) for replanting/ rejuvenation of the old tea bushes and for irrigation, transport & drainage (b) Quality Upgradation & Product Diversification Scheme (QUPDS) for modernization of factory machineries and buildings.

Substantial investments have been done in developing irrigation facilities to combat the adverse effects of drought, which has become a regular feature than exception.

A chart of the rainfall of the two quarters in the company''s tea areas, compared to the 20 year average, highlights the significant change in climatic condition :-

(Rainfall in cm)

JANUARY/ MARCH OCTOBER / DECEMBER DOOARS DARJEELING MANGALDAI DOOARS DARJEELING MANGALDAI (ASSAM) (ASSAM)

A) 20 Year 10.72 6.39 13.56 24.52 12.13 16.01 Average

B) 2012 1.87 1.93 0.83 9.74 4.64 4.84 Actual

Climate change globally has been the biggest challenge being faced by tea industry. To meet these challenges your Company has taken sustainable programme on water harvesting, large scale planting of fuel trees, efforts to reduce carbon emission and streamline utilization of marginal resources.

The Management Discussion and Analysis Report in terms of clause 49 of the Stock Exchange listing agreement is given in Annexure - ‘E'' forming part of the Report

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Companies Bill 2012, as passed by the Lok Sabha (lower house of Parliament) provides for specific provision for spending on Corporate Social Responsibility. It stipulates expenditure of 2% of the average profit of past three years on CSR activities. The Bill further requires the Board Report to give a note on such activities and in the event of shortfall from the specified quantum, the reasons for the same to be explained therein. A Committee of the Board has since been constituted with independent Director Dr. Sudha Kaul as its Chairperson. Dr Kaul is recipient of Padma Shree Award from President of India for her contribution to Charitable Institutions and is eminently suited to guide the Company to draw up the Policy framework.

Your Company is a constituent of Camellia Plc., U.K., the second largest global producer of tea with interests also in agriculture, engineering and private banking. The Statement of Business Principles of the U. K. Principal, as well as norms followed by global bodies like Rainforest Alliance (RA) and Fair Trade Practices (FTP) are in place for environment sustainability. The policies adopted as standing operating procedures covers:-

- Health & Safety - Social

- Waste Management - Environment

Some of the major activities covered under the above groups are:-

- Group Hospital with specialized equipment at Dooars, North Bengal

- Primary Hospitals at all gardens.

- Tracking of family health status at the gardens.

- Camps for sterilization, reconstructive surgery by overseas Doctors, eye surgery and child immunization programmes.

- Primary schools at all gardens and buses for school children to go to the Secondary schools.

- Self help centres for vocational training.

- Afforestation / vegetation on non-tea areas.

- Malaria prevention schemes for residents of Garden and adjoining villages.

- Scholarship scheme for meritorious students of the tea garden employees.

- Packing of teas by physically challenged students at The Indian Institute of Cerebral Palsy (IICP), as part of vocational training.

- Green initiative for sustainable operation through use of dual fired boilers to use woody biomass instead of coal.

- The Goodricke School for Special Education at Siliguri, North Bengal, will inaugurate in April 2013 its third phase expansion of the School building. This will provide additional classrooms and hydro-therapy facilities.

DIVIDEND

Inspite of a lower profit the Board recommends maintaining the dividend at last year''s level. The Board recommends a dividend of Rs. 4/- per share (40%). Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on the date of Annual General Meeting, subject, however to the provision of Section 206A of the Companies Act, 1956.

FINANCE AND ACCOUNTS

The lower crop, limited price increase for Group''s Dooars gardens and significant rise in input cost had an adverse effect on the profitability and cash flow. Consequently, the interest cost has increased with higher bank borrowings. However, the ratios of Debt/Equity and the Interest covers are healthy. The accounts have been prepared as per the revised Schedule VI of the Companies Act ‘56

The internal accruals have been utilized for capital expenditure on upgrading the basic infrastructure, plantations and labour welfare.

Cost Audit u/s 233 of the Companies Act 1956 is being carried out by Messrs Shome & Banerjee, Cost Accountants, appointed with the approval of the Ministry of Corporate Affairs, Government of India. Enterprise Resource Planning (ERP) system is in place both at the Gardens and at the Registered office. This has provided for greater control and effective Management Information System (MIS).

PROSPECTS

The shortfall in the global tea market for the last three years is expected to continue into 2013. The limited carryover and rising domestic demand have all contributed to a demand supply mismatch. Good and better CTC are likely to fetch further premiums. The settlement system for export to Iran, which has become operational, will provide a steady market for the Company''s Orthodox teas. The demand at the auctions and private sales have resulted in premium prices for the Company''s quality teas. Darjeeling markets are expected to witness buoyant trends. These are evident from the price differentials between the prices commanded by the Company''s teas as compared to the auction averages. Barring unforeseen adverse weather conditions, the Company is expected to strengthen its profitability in the coming years. The operations of Branded teas, exports and Instant tea are poised towards contributing to a higher profitability in the coming years.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

Clause 49 of the Listing Agreement on Corporate Governance in terms of quarterly and annual results etc. were complied with during the year. Your Company has been one of the pioneers in effecting Corporate Governance, the Audit Committee of the Board being set up in 1997 well before it became mandatory. The Committee has played an important role in course of the year. It co-ordinated with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered guidance in the areas of Corporate Governance, internal audit, finance and accounts.

The Code of Conduct for the Directors and Senior management personnel is being complied with and Risk Profile Analysis is being carried out from time to time. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - ''F'' of the report.

SHAREHOLDERS'' / INVESTORS'' GRIEVANCE COMMITTEE

The Committee has met regularly in course of the year. With the compulsory dematerialization of the Company''s shares and electronic mode of transfers, postal despatches which led to usual complaints, have been minimized. At the year end 97.72% of the total shares were dematerialized with no unresolved pending investor grievances.

REMUNERATION COMMITTEE

The Remuneration Committee met twice during the year to review and recommend annual increment and payment of commission to Managing Director within the terms of appointment.

PERSONNEL

There were no major work disruptions at the gardens or at any other establishments of the Company during the year. Several courses on field management, motivation, finance & ERP System etc. were organized. Personnel were nominated to courses at Business Chambers, Tea Research Association (TRA), Administrative Staff College (ASC) and other professional bodies for specialized topics.

The various fellowship group activities covering Annual sports, Flower shows, Merchant Cup participations in Golf, Football & Cricket at the garden and at Kolkata were held as per tradition.

Your Directors place on record the co-operation received and dedication of all employees at the gardens and other establishments of the Company.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy and Technology absorption in terms of Section 217(1)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors'' Responsibility Statement, in terms of Section 217(2AA), is given in Annexure ''D''. All the Annexures form part of the Report.

DIRECTORS

There has been no change in the Board of Directors of the Company during the year under report.

Mr. P.K. Sen and Mr. A.K. Mathur, retire by rotation and being eligible offer themselves for re-appointment subject to approval of the General Body. Your Board of Directors commends the reappointments.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

On behalf of the Board

A. N. Singh

Managing Director

S. Kaul

K. Sinha

Kolkata P.K. Sen

27th February, 2013 Directors


Dec 31, 2011

The Directors have pleasure in presenting their Thirty-sixth Annual Report and Accounts for the year ended 31st December 2011.

FINANCIAL RESULTS For the year ended 31st December 2011 2010 (Rs. in millions)

GROSS SALES 4,581.29 4,004.30

PROFIT BEFORE TAXATION 503.35 630.71

LESS: PROVISION FOR TAXATION (NET) 129.10 180.75

PROFIT AFTER TAX 374.25 449.96

Add: Profit brought forward from last year 55.27 51.25

429.52 501.21

APPROPRIATIONS:

Dividend 86.40 108.00

Tax on Dividend 14.02 17.94

Transfer to General Reserve 280.00 320.00

Balance carried forward 49.10 55.27

The turnover for the year 2011 has increased by over 14% to Rs. 4,581 million from Rs.4,004 million in the previous year due to increased saleable crop and firmer prices. The profit before tax (PBT) has decreased by 20% from last year due to substantial increase in wages for the Darjeeling & Dooars gardens from the new Industry wage agreements effective 1st April 2011.

OPERATIONS

The total manufactured crop was marginally higher at 20.66 million kgs. against 20.58 million kgs. in 2010. Dooars own crop, as well as bought leaf, suffered due to labour and political unrest in North Bengal in the earlier part of the season. Assam gardens lost crop from drought like conditions in October and November. The three Darjeeling gardens maintained crop at previous year's level.

The all India production in 2011 could not achieve the 1,000 million kg. level. It was higher at 988 million kgs. against 966 million kgs. in the previous year, the shortfall resultant of the lower crop in Dooars and South India. The rising domestic demand, with no significant increase in crop, has led to low carry-over stock for the current year. The new year has commenced well with prices firming up particularly for select varieties.

Tea prices (CTC) in general which started hardening in 2009, maintained firm trend till June 2011 and weakened thereafter. At the initial part of the year, prices were comparable to the previous season but with lower arrivals, market became selectively buoyant for better teas. Teas from non quality areas continued to be discounted as there was a strong preference for quality only. Your Company's teas attracted a premium over the auction averages. Orthodox prices ruled steady till July & thereafter suffered from external factors arising from payment difficulties faced by Iran on account of U.S. trade sanctions. Prices for Darjeeling varieties were firmer largely due to a higher export demand. On the global front, there has been a decrease in crop mainly due to substantial reduction in Kenya, Malawi and Sri Lanka.

All India net exports was lower than last year's level at 187 million kgs. This was despite the largest ever purchases by Pakistan during this year. However, the Company's exports of bulk teas increased and recorded improved prices especially for its Darjeeling and Assam CTC teas. Inspite of lower offtake from Iran resulting from U.S. trade sanctions, the Company's export of Orthodox to other destinations were substantially higher. The Instant Tea exports performed satisfactorily during the year.

The domestic sales were positive and indicate future growth potential. Packet Tea operations saw increased volume. Fresh brand positioning, strengthening of own depot operations and higher Institutional sales contributed to the increase. The operational logistics have been strengthened with additional facilities for warehousing, streamlining of own packing units and a new packeting tie-up with Balmer Lawrie & Co. Ltd. The current year is expected to witness further increase in the quantum. Some notable bulk orders, covering supplies to Tirupati temple in Andhra Pradesh and to Government of Rajasthan, were major milestones for the Company. A marketing tie-up has been finalized for retail sales of Pre-mix instant teas of several flavours both in Hot & Cold water categories.

The Darjeeling gardens have been largely converted to organic with the elimination of chemical inputs. Barnesbeg Tea Garden has achieved full conversion and has been certified by the Institute for Marketecology (IMO). Barnesbeg achieved substantial increase in exports and price recoveries were very encouraging. Badamtam and half of Thurbo tea gardens are under organic conversion process. Badamtam & Barnesbeg are now also certified under Fair Trade and Rainforest Alliance (RA) Certification while Thurbo is covered under RA.

The two Assam gardens, Orangajuli & Nonaipara, have received certification under Rainforest Alliance (RA) which is part of the Global Sustainable Agriculture Network. These global certifications confirm that the gardens maintain labour & environmental standards of International quality.

The Company has availed of the Tea Board's Plantation Development Scheme (PDS) for replanting/rejuvenation of the old tea bushes and for irrigation, transport & drainage. It is also receiving subsidy under Quality Upgradation & Product Diversification Scheme (QUPDS) for modernization of factory machineries and buildings. Two newly introduced systems at the auction centres have now stabilized (i) electronic auctions (except Darjeeling) and (ii) payment settlement system. These have enhanced price discovery on a transparent basis. The settlement system has removed the risk from payment defaults by buyers. The active role played by Tea Board of India on these two systems is greatly appreciated.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Ministry of Corporate Affairs, Government of India has laid down National Voluntary Guidelines on Social, Environmental and Economic responsibilities of business, 2011.

Your Company is a major constituent of Camellia Plc, U.K., one of the largest global producers of tea with interests in other plantation crops, agriculture, engineering and banking. It is committed to CSR in its global operations. The Statement of Business Principles of the U. K. Principal, as well as norms followed by global bodies like Rainforest Alliance (RA), Fair Trade Practices (FTP) and Ethical Tea Partnership (ETP), are being complied with for sustainability. The Company has adopted specific policies towards meeting the above requirements under the following groups:-

¦ Health & Safety ¦ Social

¦ Waste Management ¦ Environment

Some of the major activities covered under the above groups are:-

- Primary Hospitals at all gardens, with a Group Hospital in Dooars.

- Tracking of family health status at the gardens.

- Functioning "Safety Committee" at garden factories.

- Camps for sterilization, reconstruction surgery by overseas Doctors under the aegis of Group hospital, eye surgery and child immunization.

- Primary schools at all gardens and transport arrangement for school children.

- Mothers' Club at the gardens for spreading awareness on health & hygiene.

- Commencement of Waste management through segregation of wastes and its safe disposal and effluent treatment.

- Self help centers for vocational activities.

- Afforestation / vegetation on non-tea areas.

- Malaria prevention schemes for Garden and adjoining villages.

- Scholarship scheme for meritorious students

- Towards limiting environmental pollution and reduced carbon footprint, the Company has installed dual

fired boilers at two of its factories in North Bengal to operate on renewable woody biomass replacing fossil fuel. These have reduced harmful emissions.

- Certain brands of Darjeeling tea packets are being packed by physically challenged students at The Indian Institute of Cerebral Palsy (IICP). This serves as a vocational training and is also enabling them to contribute towards their family income.

- The Goodricke School for Special Education at Siliguri, North Bengal, continues to render relevant education to children with special needs. The third phase of the School building, to provide additional classroom and therapy facilities, has commenced . A modern auditorium had become operational earlier.

- Rainforest Alliance (RA) certification has been granted to the Assam & Darjeeling gardens - it lays down strict compliance with the environmental norms with emphasis on labour safety and their wellbeing.

The above activities do cover to a large extent the objectives enumerated by the Voluntary guidelines of the Government.

DIVIDEND

The Board recommends a dividend of Rs. 4/- per share (40%) [Previous year Rs.5.00 per share (50%)]. Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on the date of Annual General Meeting, subject, however to the provision of Section 206A of the Companies Act, 1956.

FINANCE AND ACCOUNTS

There has been a major financial impact from the new three year Industry wage agreements for Darjeeling and Dooars gardens. The overall increase have been substantial, effective 1st April, 2011 and has affected profitability. This is in addition to the inflationary effect from other operational inputs like coal, power, chemicals and others. The price realizations have not been commensurate.

The process of modernization/upgradation of the tea factories is continuing with Orangajuli T.E. in Assam now in the process of upgradation. Borrowings have been higher due to increased requirement of working capital for packet tea and export business. The internal accruals have been utilized for capital expenditure on basic infrastructure, plantations and labour welfare.

Cost Audit u/s 233 of the Companies Act 1956 is being carried out by Messrs Shome & Banerjee, Cost Accountants, appointed with the approval of the Ministry of Corporate Affairs, Government of India.

PROSPECTS

The shortfall in the global tea market for the last two years is expected to continue into 2012 particularly with the lower crop in Kenya, Indonesia and Sri Lanka. Due to lower crop in Dooars / Terai and South India, there has been only a marginal increase in the Indian crop in 2011 thereby adding to the domestic shortfall of the previous year. The exports, lower carryover, steady domestic demand and lower imports have all contributed to a demand supply mismatch. The weakening of Assam orthodox prices, may ease if a suitable payment settlement system can be put in place between Iran and India. The two Governments are negotiating the same and some positive outcome is looked forward to by the Industry. The price trends at the auctions and private sales have been attracting premium prices for quality teas. This is evident from the price differentials between the prices commanded by the Company's teas as compared to the auction averages. Barring unforeseen adverse weather conditions, the Company is expected to strengthen its profitability in the coming years with the upgraded factories producing quality teas. The Packet tea and Instant tea operations are poised for contributing to a higher profitability. However, this should be viewed against the backdrop of substantial increase in the cost structure.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

Clause 49 of the Listing Agreement on Corporate Governance has undergone some revisions for greater disclosures in course of the year. Your Company has been one of the pioneers in effecting Corporate Governance . The Audit Committee of the Board was set up in 1997 well before it became mandatory. The Committee has played an important role in course of the year. It co-ordinated with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered guidance in the areas

of Corporate Governance, internal audit, finance and accounts.

The Code of Conduct for the Directors and Senior management personnel is being complied with and Risk Profile Analysis is being carried out from time to time. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - 'F' of the report.

SHAREHOLDERS' / INVESTORS' GRIEVANCE COMMITTEE

The Committee has met regularly in course of the year. With the compulsory dematerialization of the Company's shares and electronic mode of transfers, postal despatches which led to usual complaints, have been eliminated. At the year end there were no unresolved pending investor grievances. REMUNERATION COMMITTEE

The Remuneration Committee met twice during the year to review and recommend annual increment and payment of commission to Managing Director within the terms of appointment. The Committee also recommended the re-appointment of Mr. A.N. Singh as Managing Director for a further period of three years effective 1st January 2012.

PERSONNEL

The majority of the Group's gardens are located in remote areas in North Bengal & Assam. In spite of these isolated locations, the morale of the managerial and other personnel were high throughout the year. We are happy to report that in course of the year, there were no major work disruptions at the gardens or at any other establishments of the Company.

Garden managerial personnel were nominated for various courses organized by the Business Chambers, Tea Research Association (TRA), Administrative Staff College (ASC) and other professional bodies.

Group activities like football, golf, tennis, flower show and cultural programmes were carried out to instill fellowship and team building at upcountry and at Kolkata.

Your Directors place on record the co-operation received and dedication of all employees at the gardens and other establishments of the Company.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy and Technology absorption in terms of Section 217(1)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors' Responsibility Statement, in terms of Section 217(2AA), is given in Annexure 'D'. All the Annexures form part of the Report.

DIRECTORS

The earlier term of office of Mr. A. N. Singh, Managing Director terminated on 31st December 2011. On the recommendation of the Remuneration Committee, the Board, at its meeting held on 18th November 2011, re-appointed Mr. A. N. Singh for a further period of three years effective 1st January 2012 subject to approval by the General body.

There has been no change in the Board of Directors of the Company during the year under report.

Mr. P.J. Field and Dr. S. Kaul, retire by rotation and being eligible offer themselves for re-appointment subject to approval of the General Body. Your Board of Directors commends the reappointments.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

On behalf of the Board A. N. Singh

Managing Director

S. Kaul

K. Sinha

Kolkata P.K. Sen

27th February, 2012 Directors


Dec 31, 2010

The Directors have pleasure in presenting their Thirty-fifth Annual Report and Accounts for the year ended 31st December 2010.

FINANCIAL RESULTS For the year ended 31st December

2010 2009

(Rs. in millions)

GROSS SALES 4,004.30 3,721.59

PROFIT BEFORE TAXATION 630.71 530.67

Less: Provision for Taxation (net) 180.75 111.24

PROFIT AFTER TAX 449.96 419.43

Add: Profit brought forward from last year 51.25 32.91

501.21 452.34

APPROPRIATIONS:

Dividend 108.00 86.40

Tax on Dividend 17.94 14.69

Transfer to General Reserve 320.00 300.00

Balance carried forward 55.27 51.25



The turnover for the financial year 2010 has increased by 7.6% to Rs. 4,004 million from Rs.3,722 million in the previous year due to increase in saleable crop, improved quality and firmer prices. The profit before tax (PBT) has increased by 18.9% over last year.

OPERATIONS

The total manufactured crop was higher at 20.58 million kgs. against 19.96 million kgs. in 2009- The increase was essentially due to relatively favourable weather conditions in Dooars and Assam. However, Darjeeling crop suffered from drought like conditions in the early part of the season.

The all India production in 2010 was lower at 966 million kgs. against 979 million kgs. in the previous year, resultant of adverse weather conditions and pest attack in upper Assam gardens. This is the second consecutive year of all India crop shortfall which has left the trade with low carryover stock for the current year.

Tea prices, which started firming up in 2009, saw a firmer trend in 2010. In the initial part of the year, prices were comparable to the previous season but with lower arrivals, market became buoyant although only for better teas. Teas from non quality areas were discounted and attracted lower prices compared to 2009- Prices for Darjeeling and Assam Orthodox varieties were higher largely in tune with the global price upsurge. CTC prices improved wholly on domestic demand supply mismatch from crop shortfall. However, there was a wide price differential with quality teas attracting premium, while medium and plainer teas obtained much lower prices. Your Companys teas attracted a premium over the auction average. On the global front, there has been an increase in crop mainly due to substantial increase in Kenya and Sri Lanka, after recovery from severe droughts in the previous years.

All India exports suffered a setback with despatches lower than last year at 193 million kgs. The Companys exports of bulk teas also decreased but recorded improved prices especially from Darjeeling teas. The Instant Tea exports, however, did not fare satisfactorily during the year.

The Instant Tea Plant did not achieve any major improvement in its operations during the year. Higher domestic sales and the growth of instant premixed powder were, however, positive and indicate future growth potential. Packet Tea operations also played an important role in the overall profitability. New brand launches and fresh designs were well received by the market. Additional facilities for warehousing and new packeting set-up have been organized and the current year should witness further increase in quantum.

All the three Darjeeling gardens have been converted to organic with the elimination of chemical inputs.

Barnesbeg Tea Garden has achieved full conversion and was certified by the Institute for Marketecology (IMO) with Thurbo and Badamtam tea gardens under process. There has been a distinct improvement in quality in Barnesbeg with discerning European buyers showing preference for such teas.

The two Assam gardens, Orangajuli & Nonaipara, have received certification under Rainforest Alliance (RA) which is part of the Global Sustainable Agriculture Network.

The Company has availed of the Tea Boards quality upgradation scheme for replanting/rejuvenation of the old tea bushes. This has been helpful to ensure sustained growth and should improve productivity in future years. Two newly introduced systems at the auction centres have now stabilized (i) electronic auctions (except Darjeeling) and (ii) payment settlement system. These have brought in a major transformation in price discovery and have also provided a safety-net against payment defaults to producers.

In terms of Corporate Governance disclosure, under clause 49 of the Stock Exchange Listing Agreement, the Management Discussion and Analysis Report is given in Annexure - E forming part of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is a major constituent of Camellia Pic, U.K. one of the largest global producers of tea with interests in other plantation crops, agriculture, engineering and banking. The Statement of Business Principles of the Principal as well as norms followed by global bodies like Rainforest Alliance (RA), Fair Trade Practices (FTP) and Ethical Tea Partnership (ETP) are being complied with for sustainability. The Company has adopted specific policies towards meeting the above requirements under the following groups:-

- Health & Safety - Social

- Waste Management - Environment

Some of the key activities covered under the above framework are:-

- Primary Hospitals at all gardens, with a Group Hospital in Dooars.

- Tracking of health status of every family at the gardens.

- Visit by garden Doctors to adjoining villages to review disease status as part of CSR.

- Functioning "Safety Committee" at all gardens.

- Camps for sterilization, eye surgery and child immunization.

- Primary schools at all gardens and transport arrangement to secondary schools.

- Mothers Club at the gardens for spreading awareness on health & hygiene.

- Waste management through segregation of waste, effluent treatment etc.

- Self help centres for various vocational activities.

- Afforestation / vegetation on non-tea areas.

- Malaria prevention schemes for Garden and adjoining villages.

- Scholarship scheme for meritorious students

- Adoption of School in the vicinity of the estates

- Towards limiting environmental pollution and reduced carbon footprint, the Company has installed dual fired boilers at its two factories in North Bengal to operate on renewable woody biomass replacing fossil fuel. This will cut down harmful emissions and also be eligible for carbon credits.

- Towards extending vocational training, certain brands of Darjeeling tea packets are being packed by physically challenged students of The Indian Institute of Cerebral Palsy (IICP). This is also enabling them to contribute towards their family income.

- The Goodricke School for Special Education at Siliguri, North Bengal, continues to render specialized education to children with special needs. The second phase of the School building with a modern auditorium has become operational.

- Rainforest Alliance (RA) - The norms lay down strict compliance with the environmental and social aspects with emphasis on labour welfare measures.

DIVIDEND

The Board recommends a higher dividend of Rs. 5.00 per share (50%) [Previous year Rs.4.00 per share (40%)]. Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on the date of Annual General Meeting, subject, however to the provision of Section 206A of the Companies Act, 1956.

FINANCE AND ACCOUNTS

The higher profitability has further strengthened the financial base of the Company. The process of modernization/upgradation of the tea factories is continuing and by end of next year all factories in Dooars and Assam will be covered. Borrowings have also been reduced resulting in lower interest outgoings. In course of the year, the tea factories at Danguajhar Phase II, Lakhipara and Aibheel in Dooars, North Bengal, were upgraded and are producing quality teas at a lower cost. The higher internal accruals have also enabled capital expenditure on supporting utilities, plantations, R&D and labour welfare activities. The cost of production has, however, increased significantly with higher personnel cost together with that of coal, electricity, diesel, chemicals and others.

Cost Audit is being conducted by Messrs Shome & Banerjee, Cost Accountants, appointed with the approval of the Ministry of Corporate Affairs.

PROSPECTS

The shortfall in the global tea market for the last two years has eased considerably with large increases in crop by Kenya and Sri Lanka. Due to adverse weather conditions and pest attack in upper Assam, there has been a reduced crop in India in 2010 thereby adding to the domestic shortfall of the previous year. Although there is a decrease in exports, the lower carryover, steady domestic demand and lower imports have contributed to larger demand supply mismatch. The price trends at the auctions and private sales have consistently attracted premium prices for quality teas. This is evident from the price differentials between the prices commanded by the Companys teas as compared to the auction averages. The Company stands at a favourable point for enhanced profitability in the coming years with the upgraded factories producing quality teas. However, this should be viewed against the backdrop of steady increase in the cost of inputs and social costs which are to be reckoned with in the coming years.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

Clause 49 of the Listing Agreement on Corporate Governance has undergone revisions in course of the year which have been implemented. Your Company has been one of the pioneers in Corporate Governance with the set-up of the Audit Committee of the Board in 1997 well before it became mandatory. The Audit Committee has played an important role during the year. It has interacted with the Statutory Auditors, Internal Auditors and other key personnel of the Company and has rendered advice in the areas of internal audit, finance and accounts.

The Code of Conduct for the Directors and Senior management is being complied with and Risk Profile Analysis is being carried out from time to time. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - F of the report.

SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE

The Committee has met regularly in course of the year. With the compulsory dematerialization of the Companys shares and electronic mode of transfers, postal despatches have been eliminated. At the year end there were no unresolved pending investor grievances.

REMUNERATION COMMITTEE

The Remuneration Committee met twice during the year essentially to review and recommend annual increment and payment of commission to Managing Director within the terms of appointment.

PERSONNEL

The majority of the Groups gardens are located in remote areas away from towns and cities. In spite of these isolated locations and disturbed political environment in some areas, high morale was maintained by garden executives and workers. There were no major disruptions of work at the gardens or at any other establishments of the Company during the year.

Garden managerial personnel were nominated for specialized training at the Tea Research Association (TRA), Administrative Staff College (ASC) and others.

Group activities were organized in course of the year like football, golf, tennis, flower show and cultural programmes for greater team work amongst the Companys managerial and other personnel.

Your Directors place on record the co-operation received and sense of duty shown by all employees at its gardens and other establishments of the Company.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy and Technology absorption in terms of Section 217(l)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors Responsibility Statement, in terms of Section 217(2AA), is given in Annexure D. All the Annexures form part of the Report.

DIRECTORS

There has been no change in the Board of Directors of the Company during the year under report.

Mr. A.K. Mathur and Mr. K. Sinha, retire by rotation and being eligible offer themselves for re-appointment subject to approval of the General Body. Your Board of Directors commends the reappointments.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

On behalf of the Board

A. N. Singh

Managing Director

S. Kaul

K. Sinha

Kolkata P.K. Sen

28th February, 2011 Directors


Dec 31, 2009

The Directors have pleasure in presenting their Thirty-fourth Annual Report and Accounts for the year ended 31st December 2009.

FINANCIAL RESULTS For the year ended 31st December 2009 2008 (Rs. in millions)

GROSS SALES 3,721.59 2,940.50

PROFIT BEFORE TAXATION 530.67 235.19

Less: Provision for Taxation (Net) 111.24 59.32

PROFIT AFTER TAX 419.43 175.87

Add: Profit brought forward from last year 32.91 32.85

452.34 208.72

APPROPRIATIONS:

Dividend 86.40 64.80 Tax on Dividend 14.69 11.01

Transfer to General Reserve 300.00 100.00

Balance carried forward 51.25 32.91

TURNOVER

The gross turnover for the year 2009 has been higher by over 26% at Rs. 3,722 million from Rs.2,941 million in the previous year. The increase in turnover was wholly due to firmer prices prevailing throughout the period under review.

OPERATIONS

The total manufactured crop was lower by 7% at 19.96 million kgs. from 21.52 million kgs. in 2008. The decrease was essentially due to drought like conditions in the early part of the season in both Darjeeling & Dooars. Assam crop was also lower but to a lesser extent. The all India production in 2009 was marginally lower at 979 million kgs. against 981 million kgs. in the previous year resultant of adverse weather conditions in North Bengal.

Tea prices, which started firming up in 2008, continued to strengthen in 2009. This was due to demand/supply mismatch arising from global crop deficit contributed by Kenya and Sri Lanka and also increased domestic consumption. The average price realization from all the three tea growing areas of the Company was higher by Rs.33/- per kg. over previous year as against Industry average of Rs. 27/-.

All India exports did not witness any major quantum growth and were lower than that of the previous year at 192 million kgs. However, the unit realizations were much improved from weaker Rupee and higher global prices. The exports to Iraq only have been significantly higher with no major changes in the other directions of shipments. The Companys exports, except instant teas, have increased and the overall growth is over 10% with higher unit realizations covering Assam CTC & Orthodox and Darjeeling teas.

The Instant Tea Plant, the export oriented unit, ended the year with a positive margin. However, the global demand for Instant tea did not strengthen during the year due to the economic downturn worldwide. The sale to Domestic Tariff area witnessed growth and Iced tea powder was developed in-house for commercial marketing.

The Packet tea operations have also contributed to the overall profitability through its encouraging results. While there was no major increase in the quantum, there has been further strengthening of the market reach with improved distribution system and greater publicity. Some new brands and newly designed packets

were launched during the year and have been well accepted by the market. Amongst the new launches, Iced tea of various flavours was introduced at select retail outlets.

The Company has been availing of the Tea Boards incentive schemes for quality upgradation and for replanting/rejuvenation of the tea bushes. These schemes are assisting the tea gardens for long term benefit. The electronic auctions at the tea centres in South India are operating successfully and the same are expected to commence at the North Indian auction centres in course of the year. These electronic auctions would ensure transparency and improved price discovery. In the early part of the year, one of the auction brokers failed to honour the prompt dues leading to temporary disruption in trade and non-recovery of receivables. To avoid repetition of such incidents, the payment settlement system at the auction centres has undergone major reforms and is now operational. The active role played by the Tea Board of India towards strengthening the system and procedures is greatly appreciated.

In compliance with the Corporate Governance disclosure, stipulated in Clause 49 of the Stock Exchange Listing Agreement, the Management Discussion and Analysis Report is given in Annexure - E forming part of the report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed towards compliance and adherence to the Statement of Business Principles of Camellia Plc. as well as to the norms followed by global bodies like Rain Forest Alliance (RFA), Fair Trade Practices (FTP) and Ethical Tea Partnership (ETP). The Company has adopted specific policies towards meeting the above requirements under the following groups:-

Health & Safety Social

Waste Management Environment

Some of the key activities covered under the above framework are:-

- Hospitals at all gardens with a Group Hospital in Dooars.

- Specialized surgery camps for cleft lip/ palate reconstruction and for correction of congenital talipes equinovarus.

- Line tracking of health status of every family at the gardens.

- Tracking of diseases in adjoining villages

- Functioning "Safety Committee" at all gardens.

- Camps for sterilization, eye surgery and child immunization.

- Primary schools at all gardens and transport arrangement to secondary schools.

- Garden level Mothers Club for spreading awareness on health & hygiene.

- Waste management through segregation of waste, effluent treatment etc.

- Self help centres to teach weaving, tailoring and other vocational activities.

- Afforestation / vegetation on non-tea areas.

- Malaria prevention schemes for Garden and adjoining villages.

- Scholarship scheme for meritorious students at every garden.

- Adoption of School/College in the district.

- As part of the global effort towards limiting environmental pollution and reduce carbon footprint, the Company is installing dual fired boilers at its two factories which will be run on woody biomass replacing fossil fuel. This will cut down harmful emissions and also be eligible for carbon credits. There are plans to extend this for other factories also.

- The Goodricke School for Special Education at Siliguri, North Bengal, has widened its coverage in rendering specialized education to children with special needs. The second phase of the Schools building is complete and will be operational within a few weeks time.

DIVIDEND

The Board recommends a higher dividend of Rs. 4.00 per share (40%) [Previous year Rs. 3.00 per share (30%)]. Such dividend, on declaration, will be paid to those members recorded in the Registers of the Company at the close of business on the date of Annual General Meeting, subject, however to the provision of Section 206A of the Companies Act, 1956.

FINANCE AND ACCOUNTS

The finances of the Company strengthened substantially during the year. This enabled the Company to accelerate the process of upgradation of the Companys tea factories and modernize essential utilities for greater energy efficiency and cost reduction. The strength of the financials is reflected in the nominal borrowings at the year end.

During the year, the tea factories at Kumargram, Leesh River, Chulsa and Sankos were upgraded. These have resulted in lower operating cost and improved quality leading to higher realizations. These, along with capital expenditures on plantations, labour welfare etc., were largely funded from internal resources. In the current year also the capital expenditure plans cover factory modernization and extension planting.

Cost Audit is being conducted by Messrs Shome & Banerjee, Cost Accountants, appointed with the approval of the Ministry of Corporate Affairs.

PROSPECTS

The global mismatch in demand and supply is expected to continue in the current year at least till the arrival of the new crop. There is low carryover stock and the global shortage emanating from Kenya and Sri Lanka continues. The domestic consumption pattern is also showing a steady growth of approximately 2% per annum with greater preference for quality tea. All these are expected to have beneficial impact on the prices and on the tea Industry as a whole. The substantial capital expenditure on upgradation and modernization of the Companys tea factories has progressively reduced manufacturing cost with improved quality. Since your Company is a producer of quality teas only, the premium for such teas will be reflected in the price realizations.

CORPORATE GOVERNANCE & AUDIT COMMITTEE

The Stock Exchange introduced Clause 49 in the Listing Agreement in 2001 with several changes from time to time thereafter. Your Company constituted the Audit Committee of the Board in 1997 well before it became a mandatory requirement. The Committee has carried out the roles as laid out in the terms of reference. The Audit Committee interacted with the statutory auditors, chief internal auditor, internal auditors and key operating personnel whenever required. It reviewed the financial and Corporate Governance Report for Boards consideration. The Code of Conduct of the Directors and senior management are being complied with and Risk Analysis undertaken on a continuous basis. In terms of Clause 49 of the Listing Agreement, disclosures under Corporate Governance are given in Annexure - F of the report.

SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE

With the dematerialization of shares, investor grievances were negligible and were dealt with promptly. The Committee in course of its meetings approved/reviewed regularly the physical transfers, the extent of dematerialization, investor grievances and regulatory disclosures.

REMUNERATION COMMITTEE

The Remuneration Committee met twice during the year. The Committee had considered and recommended to the Board the annual increment and payment of commission to the Managing Director as laid down in the terms of appointment.

PERSONNEL

In course of the year, there were political disturbances from time to time in the tea garden areas of Darjeeling

and Dooars. However, due to cordial relations with the staff and workers, the garden activities were not affected. A special appreciation is well deserved by all employees at the gardens in such disturbed areas. Your Directors acknowledge the dedication and co-operation extended by all employees at the gardens and at other establishments of the Company.

The Companys commitment on extending several benefits to workers and their families, much more than that provided for under the statutes, has been largely responsible for maintaining uninterrupted workings at the gardens.

PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956

The particulars of Conservation of Energy, Technology absorption and Foreign exchange in terms of Section 217(1)(e) are given in Annexures "A" and "B". The particulars of employees attracting the provisions of Section 217(2A) are given in Annexure "C". Directors Responsibility Statement, in terms of Section 217(2AA), is given in Annexure D. All the Annexures form part of the Report.

DIRECTORS

Mr. PA. Leggatt, Chairman of the Board of Directors, suddenly passed away peacefully on 28th November, 2009 at his London residence. Mr. Leggatt joined the Board on 1st April, 1988 and was appointed as Chairman on 25th July, 1990. Apart from discharging very ably the role of Chairman of the Board, he was the inspiration behind a number of activities covering establishment of the Goodricke School for Special Education for physically challenged children, Scholarship for meritorious children of tea garden workers, Charitable trusts and several community welfare schemes. Mr. Leggatt was also the key link between Indian planting fraternity and its counterpart in United Kingdom. The Board places on record its deep sense of acknowledgement to the invaluable services rendered by Mr. PA. Leggatt in course of his tenure on the Board.

The Board of Directors has since appointed Mr. Peter John Field, a Director of the Company, as its Chairman. Mr. Field is a banker by profession and is the Managing Director of Duncan Lawrie Ltd. based in U.K. His other particulars are given under details of Directors circulated with the notice of the meeting.

Mr. Field was appointed as an additional Director effective 1st May, 2009 and the notice of the meeting contains a resolution for his appointment as a Director by the General Body.

Dr. Sudha Kaul, the Independent Director on the Board and Vice Chairperson of The Indian Institute of Cerebral Palsy, has been awarded "Padma Shri" by the Government of India this year.

Dr. S. Kaul and Mr. P.K. Sen retire by rotation and being eligible offer themselves for reappointment subject to the approval of the General Body. Your Board of Directors commends the reappointments.

AUDITORS

The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire and are eligible for reappointment.

On behalf of the Board

A. N. Singh Managing Director S. Kaul K. Sinha Kolkata P.K. Sen

25th February, 2010. Directors

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