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Directors Report of JK Agri Genetics Ltd.

Mar 31, 2015

TO THE MEMBERS

The Directors have pleasure in presenting the Annual Report together with the Audited Financial Statements of the Company for the financial year ended 31st March, 2015.

Financial Results ( Rs in Crore)

Sales & Other Income 210.10

Profit before Finance Cost & Depreciation (PBIDT) 32.59

Profit before Depreciation 22.14

Profit Before Tax 17.19

Profit after Tax 12.22

Surplus brought forward 10.61

Amount available for appropriation 22.83

Appropriations

Dividend (incl. tax on Dividend) 1.30

General Reserve 7.24

Surplus carried to Balance Sheet 14.29

22.83

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 3 per Equity Share of Rs. 10 each (i.e. 30%) on the Equity Share Capital of Rs. 3.60 Crores for the financial year ended 31st March 2015. The Dividend outgo will be Rs. 1.30 Crores (inclusive of dividend tax of Rs. 0.22 Crores).

OPERATIONS

During the year ended 31st March, 2015, the Company achieved a turnover of Rs. 210.10 crores. EBIDTA of the Company increased by 19% to Rs. 32.59 crores from Rs. 27.30 crores and Profit Before Tax increased by 19% to Rs. 17.19 crores from Rs. 14.39 crores in the previous year.

While the Company continues to develop new hybrids and strengthen its marketing, the focus has been to increase its bottom line. This has been achieved by a better product mix as well as entering newer and more profitable segments. Launches of new innovative hybrids across field crops and vegetable segments have started showing some early positive signs. The Company lays emphasis on improving its seed production techniques as well as processing plant efficiencies. All these facts helped the Company to improve its overall performance.

RESEARCH AND DEVELOPMENT

The Company is conscious that an edge in this sector can only be achieved by developing technically superior and consumer friendly hybrids through a well- planned research programme and by continuously investing in research and development. Each crop segment typically has 5 or 6 leading hybrids that command majority of the market share. For any hybrid to be successful, it is important that it is significantly superior to the existing product in the market, both from the perspective of productivity as well as adaptability to flexible agronomic conditions. Your Company continues to focus on developing hybrids with these capabilities and characteristics through breeding, biotech R&D and transgenic research. This apart, your company has also developed key hybrids in vegetables and paddy through non transgenic methods like marker assisted breeding. Further, the biotechnology lab focuses on varieties tolerant to biotic and abiotic stresses and marker-assisted selection to speed up the breeding programme.

JK Agri Genetics invested 6% of its turnover in R&D activities and today produces and markets more than 80 of its internally developed hybrids in the areas of cotton, corn, paddy, sunflower, bajra, jowar, and in vegetable crops like okra, tomato and chillies. In the last few years the Company has established itself as one of the leading players in the area of vegetables and one of the top players in key crops like Okra and Tomato. While JK Agri Genetics'' Okra is in great demand, its newly introduced heat resistant tomato has done well in India as well as in our neighbouring countries.

LISTING

The Equity Shares of the Company have been voluntarily delisted from the Calcutta Stock Exchange Limited w.e.f. 21st August 2014. The Equity Shares of the Company, however, are continuing to be listed in BSE Ltd.

EXTRACT OF ANNUAL RETURN

An Extract of the Annual Return as on 31st March 2015 in the prescribed Form MGT-9 is attached as Annexure - 1 to this report and forms part of it.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The particulars of loans, guarantees or securities and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the financial statements.

RELATED PARTY TRANSACTIONS

During the financial year ended 31st March 2015, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm''s length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement.

Further, the Company has not entered into any contract or arrangement or transaction with the related parties which could be considered material

in accordance with the policy of the Company on materiality of Related Party Transactions. In view of the above, disclosure in Form AOC-2 is not applicable. The Related Party Transaction Policy as approved by the Board is available on the website of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

With enactment of the Companies Act, 2013, the Independent Directors of the Company, namely - Shri J.R.C. Bhandari, Shri S.K. Khaitan, Shri S.K. Jhunjhunwala and Shri S.C. Sethi were appointed by the Members at the Annual General Meeting (AGM) held on 6th September 2014 under Section 149 of the Act for a term of five consecutive years commencing from the date of the AGM.

Shri Vikrampati Singhania retires by rotation and being eligible offers himself for re-appointment at the ensuing AGM.

The Board of Directors appointed Smt. Swati Singhania as an Additional Director of the Company pursuant to Section 161 of the Companies Act, 2013 (Act) effective 3rd February 2015. The Board of Directors also appointed Shri Abhimanyu Jhaver as an Additional Director pursuant to Section 161 of the Act effective 25th March 2015 and also appointed him as an Independent Director of the Company from the said date for a term of five consecutive years pursuant to the provisions of Section 149 of the Act and the Listing Agreement with Stock Exchange, subject to approval of the members of the Company at the ensuing AGM.

In terms of Section 161 of the Act, Smt. Swati Singhania and Shri Abhimanyu Jhaver will hold office as Directors up to the date of the ensuing AGM.

The Company has received from members notices in accordance with Section 160 of the Act proposing candidatures of Smt. Swati Singhania for appointment as Director, liable to retire by rotation and of Shri Abhimanyu Jhaver for appointment as Director as aforesaid.

The Board recommends appointments as aforesaid. All Independent Directors of the Company have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Clause 49 of the Listing Agreement with the Stock Exchange.

Further, in terms of Section 203 of the Companies Act 2013, Shri S.K. Gupta, President & Director; Shri Amit Agarwal, Chief Financial Officer and Shri Anoop Singh Gusain, Company Secretary were appointed as Key Managerial Personnel of the Company on their existing terms and conditions.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure -2 and forms part of it.

DEPOSITS

The Company has neither invited nor accepted any deposits from the public.

AUDITORS

(a) Statutory Auditors and their Report

M/s Lodha & Co., Chartered Accountants, have been appointed as Auditors of the Company to hold the office from the conclusion of the 14th Annual General Meeting (AGM) held on 6th September 2014 until the conclusion of the 17th AGM to be held in the year 2017, subject to ratification of their appointment by the members at the respective AGMs to be held in the years 2015 and 2016. Accordingly, being eligible, matter relating to the appointment of the Auditors will be placed for ratification by members at the forthcoming AGM. The observations of the Auditors in their Report on Accounts and the financial statements, read with relevant notes are self-explanatory.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2014-15. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure -3. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

(c) Cost Audit

The Cost Audit for the financial year ended 31st March 2014 was conducted by M/s Vijender Sharma & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with Ministry of Corporate Affairs, Government of India. Pursuant to the order of the Central Government dated 30th June 2014 and also revised order dated 31st December 2014, your Company did not fall within the ambit of Cost Audit for the financial year 2014-15.

PARTICULARS OF REMUNERATION

Information in accordance with the provisions of Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 regarding remuneration and other details is annexed to this Report. However, as per the provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the aforesaid information. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company. The said information is available for inspection at the Registered Office of the Company during working hours.

CORPORATE SOCIAL RESPONSIBILITY

Since inception, your Company considers itself a responsible corporate citizen and has been involved in undertaking projects and interventions for overall development and welfare of the society. It has been working closely with the farming community in areas of adult literacy, imparting agricultural knowledge and promoting preventive healthcare, rural development and livelihood enhancement projects.

The Company has framed Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. The contents of the CSR Policy are disclosed on the website of the Company.

The Annual Report on the CSR activities undertaken by the Company during the financial year under review, in the prescribed format is annexed to this Report as Annexure - 4.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the financial year under review, there were no significant and material orders passed by the regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

CORPORATE GOVERNANCE - including details pertaining to Board Meetings, Nomination and Remuneration Policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism.

Your Company reaffirms its commitment to good corporate governance practices. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of this Annual Report. The Corporate Governance Report which forms part of this Report also covers the following:

a) Particulars of the four Board Meetings held during the financial year under review.

b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.

c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.

d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.

e) Details regarding Risk Management

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Companies Act 2013, your Directors state that:-

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis;

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

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

ACKNOWLEDGEMENTS

Your Directors wish to acknowledge and place on record the commitment and dedication on the part of the employees of your Company in achieving good results.

Your Directors would also like to acknowledge and record their appreciation of the continued support and assistance received by the Company from its valued Customers, Dealers, Suppliers, Shareholders, Banks and various Central and State Government Agencies.

On behalf of the Board

Date: 7th August 2015 (Bharat Hari Singhania) New Delhi Chairman


Mar 31, 2014

TO THE MEMBERS

The Directors have pleasure in presenting the Annual Report together with the Audited Accounts of the Company for the financial year ended 31st March, 2014.

Financial results ( Rs. in Crore)

Sales & Other Income 188.84

Profit before Finance Cost & Depreciation

(PBIDT) 27.30

Profit before Depreciation 17.17

Profit after Tax 11.86

Surplus brought forward 4.80

Amount available for appropriation 16.66

Appropriations

Dividend (incl. tax on Dividend) 1.05

General Reserve 5.00

Surplus carried to Balance Sheet 10.61

16.66

DIVIDEND

Your Directors are pleased to recommend a maiden dividend of Rs. 2.5 per Equity Share of Rs. 10 each (i.e. 25%) on the Equity Share Capital of Rs. 3.60 Crores. The Dividend outgo will be Rs. 1.05 Crores (inclusive of dividend tax of Rs. 0.15 Crores).

LISTING

As the members are aware, 36,03,906 Equity Shares of Rs. 10 each of the Company were listed with BSE Ltd. and the Calcutta Stock Exchange Ltd. pursuant to their respective approvals dated 26th September 2013 and 24th September 2013.

OPERATIONS

During the year ended 31st March, 2014 the Company achieved a turnover of Rs. 188.84 Crores. EBIDTA of the Company increased by 26% from Rs. 21.67 Crores to Rs. 27.30 Crores and Profit Before Tax increased by 36% from Rs. 10.58 Crores to Rs. 14.39 Crores.

The Company continues to develop new hybrids and also increase its distribution depth and width across the country. The endeavour of the marketing team is to increase penetration of the Company''s hybrids in the market by demonstrating its superiority and benefits to the farming community. The Company is pursuing innovative farm productivity enhancing techniques and is working closely with its increasing network of channel partners to reach the target customers. Continuous emphasis on distribution, logistics as well as better management of seed production techniques, is helping the company drive efficiencies.

Introduction of new products both for Kharif and Rabi seasons as well as introduction of newer products in vegetable seeds is helping the company gain momen- tum. The Company continues to focus on field crops like Cotton, Paddy, Maize, Bajra and Jowar, apart from Okra, Tomato and Chillies in the vegetable segment.

RESEARCH AND DEVELOPMENT

Your Company continues to strengthen its base in developing its future capabilities and competencies in breeding, biotech R&D and transgenic research. Your company believes that in the competitive arena this capability will help differentiate the company and its products from others. The dedicated team of Scientists is working closely with a number of National & International Research Institutes, e.g. ICRISAT, CIMMYT, IRRI, etc.

Apart from working on transgenic technology, the Company has been working on development of hybrids through non-transgenic methods like marker assisted breeding, etc. This has led to development of value added products in field crops as well as vegetables. Developed using molecular markers and due to its uniqueness in tolerating multiple abiotic stresses, the launch of its new rice hybrid is an important milestone for the company. A number of products in Cotton, Maize and Bajra are also undergoing trials. Products in Okra and Tomato are also showing great potential due to their ability to tolerate diseases. Such multi-pronged research is creating the platform for your Company''s growth in the coming years.

INDUSTRY OVERVIEW

Indian agriculture has come a long way since the Green Revolution of the late 1960s. India presents an interesting scenario: both GDP and food grain production in the country have risen faster than the growth in population over the last 50 years. However, now the situation is becoming alarming as the agricultural growth has been static in recent years. The enormity of the problem is indicated by the fact that during the 7 year period 2006-07 to 2012-13, our food grain production has grown at a CAGR of only 2.4%. The total estimated demand for food grains will touch 298 million tons by 2020. To achieve the forgoing amount of production the compounded annual growth rate of 2.2% in agricultural sector has to be maintained over next 7 years. For this, agricultural growth needs to be in the forefront of our national GDP growth agenda.

Indian seed Industry is one of the most mature and vibrant ones in the world, currently occupying 6th position with nearly Rs. 12,000 Crore turnover. During the past 5 years the Indian Seed Industry has been growing at a CAGR of 10% compared to global growth of 6-7%. In value terms the major growth has come from increased adoption of BT cotton hybrids, single cross corn hybrids and hybrid vegetables. The volume growth has mainly come through increased Seed Replacement Rates in crops like Paddy and Wheat.

India has the second largest agricultural land and has favourable climatic conditions to support this growth. It has over 15 major climatic zones and possesses 46 different soil types. India is the largest producer of pulses, milk, tea, cashew and jute; and the second largest producer of wheat, rice, fruits and vegetables, sugarcane, cotton and oilseeds. All in all with its land resources and the growing role of farm input companies, India will continue to play a major role in world agriculture.

OPPORTUNITIES, THREATS & CONCERNS

The large population of India is the key driver of demand for agricultural products. Rising urban and rural incomes have also aided demand growth. The growth of organised procurement and retail as well as growing consumption of packaged and processed food would also fuel demand. The potential to not only export processed food but also the improvement in infrastructure is allowing fresh farm produce to be exported to other countries. Apart from being one of the largest consumers of agricultural products, India is also among the top 10 leading exporters

of agricultural products in the world. The continued focus and incentives under various national and state Government schemes, like Rashtriya Krishi Vikas Yojana as well as focus for improvement in farm productivity under the aegis of National Food Security Mission is helping increase production and productivity. Improved rural lending facilities as well as improved infrastructure to store and distribute produce will also help this process.

While there are number of opportunities, they continue to be inherent concerns and threats for the seeds industry. The vagaries of weather and inconsistent monsoon across the country continue to be the major challenge. The growing unavailability of water either through rivers or bore-wells is also threatening productivity. Pest attacks and rising temperatures also have an impact on agricultural production. The inconsistent Government policies and regulations on GM crops is also a matter of concern.

HUMAN RESOURCE DEVELOPMENT

The real strength of your Company lies in the hands of its teams and people. The backbone of the Company, whether be it in R&D or in the field, is based on the dedication of its teams. The company has adopted a robust, progressive and dynamic culture and focuses on organisational development, engagement and Talent Management of its employees through a structured mechanism for identification, reviewing, implementing and rewarding the identified talent. The Company identifies "High Talent" through assessment centres and provides high potential employees a cross-functional exposure creating a growth path for them. People are sponsored to various internal and external training programmes including leading Business schools to hone their technical as well as general management skills. The Company also runs a special programme under the group''s "Krishna-Arjuna" initiative which serves as the mentoring and guidance platform.

INTERNAL CONTROL SYSTEMS

The Company has a structured Internal Audit system. All the functions of the Company are reviewed periodically. The system ensures that the Company achieves its targets and complies with the applicable laws and regulations and checks efficiency of operations and reliability of financial reporting.

Financial Statements on quarterly and on annual basis are placed before the Audit Committee consisting

of Independent Directors before submission to the Board for approval. Audit Committee meets every quarter to review the Audit Report and action taken on the findings of Internal Audit Reports are discussed and wherever required action is taken to enhance effectiveness of the internal control system.

DIRECTORS

Shri Bharat Hari Singhania and Dr. Raghupati Singhania who were appointed as Directors of the Company w.e.f. 30th March 2013, in the casual vacancy caused by resignation of Shri A.K. Kinra and Shri P.K. Rustagi respectively pursuant to Section 262 of the Companies Act, 1956 retire by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting (AGM).

The Board of Directors appointed Shri S.K. Gupta as an Additional Director pursuant to Section 161 of the Companies Act, 2013 and also appointed him as Whole-time Director with the designation ''President & Director'' for a period of three years w.e.f. 23rd October, 2013 subject to the approval of shareholders and other necessary approvals as may be required. In terms of the said Section Shri S.K. Gupta will hold office as Director upto the date of the ensuing AGM.

The Company has received from members, notices in accordance with Section 160 of the Companies Act, 2013 proposing candidatures of Shri Bharat Hari Singhania, Dr. Raghupati Singhania and Shri S.K. Gupta for appointment as Directors as aforesaid.

Shri JRC Bhandari, Shri S.C. Sethi, Shri S.K. Khaitan and Shri S.K. Jhunjhunwala whose period of office is liable to determination by retirement of Directors by rotation are proposed to be appointed as Independent Directors of the Company, each for a term of five consecutive years commencing from the date of ensuing AGM. The Company has also received declarations from the said directors about their independence pursuant to Section 149 of the Companies Act, 2013.

The Board recommends appointments as aforesaid.

AUDITORS

M/s Lodha & Co., Chartered Accountants, Auditors of the Company, retire and are eligible for re- appointment. The observations of the Auditors in their report on Accounts read with the relevant notes are self-explanatory.

COST AUDIT

The Cost Audit for the financial year ended 31st March 2013 was conducted by M/s Vijender Sharma & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with Ministry of Corporate Affairs, Government of India. The Audit of the cost accounts of the Company for the financial year ended 31st March 2014 is being conducted by the said firm and the Report will also be filed.

PARTICULARS OF EMPLOYEES

Particulars of employees required under Section 217 (2A) of the Companies Act, 1956 are given in the enclosed statement forming part of the Report. However, as per the provisions of Section 219 (1) (b) (IV) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders of the Company excluding aforesaid information. Any shareholder interested in obtaining such particulars may write to the Secretary at the Company''s New Delhi address

CORPORATE SOCIAL RESPONSIBILITY

The Company has always been life sensitive towards its social responsibility and has been undertaking various programmes like, Adult Literacy, Medical Camp and Health awareness, etc. Pursuant to the provisions of the Companies Act, 2013 and Rules thereto, a Corporate Social Responsibility (CSR) Committee of the Board has been constituted to monitor CSR related activities in terms of the said provisions and Rules, comprising of Shri Vikrampati Singhania (Chairman of the Committee), Shri S.K. Jhunjhunwala and Shri S.K. Gupta, as members.

CORPORATE GOVERNANCE

Your Company reaffirms its commitment to good corporate governance practices. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Compa- nies Act, 1956, your Directors state that:

(i) in the preparation of Annual Accounts, the applicable accounting standards have been

followed along with proper explanation relating to material departures;

(ii) the accounting policies selected and applied are consistent and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

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

(iv) the annual accounts have been prepared on a going concern basis.

CAUTIONARY STATEMENT

"Management''s Discussion and Analysis Report" contains forward looking statements, which may be identified by the use of the words in that direction, or connoting the same. All statements that address expectation or projections about the future, including, but not limited to statements about the Company''s strategy for growth, product development, market position, expenditures and financial results are forward looking statements. The Company''s actual results, performance or achievements could thus differ materially from those projected in such forward- looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward - looking statements on the basis of any subsequent development, information or events.

ACKNOWLEDGEMENTS

Your Directors wish to acknowledge and place on record the commitment and dedication on the part of the employees of your Company in achieving good results.

Your Directors would also like to acknowledge and record their appreciation of the continued support and assistance received by the Company from its valued Customers, Dealers, Suppliers, Shareholders, Banks and various Central and State Government Agencies.

On behalf of the Board Date: 27 th May 2014 Bharat Hari Singhania New Delhi Chairman

 
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