Directors Report of McLeod Russel (India) Ltd.
Mar 31, 2023
The Directors have pleasure in presenting the Twenty-Fifth Annual Report with the Audited Financial Statements ofyourCompany,forthe financial yearended 31st March 2023.
|
Thefinancials oftheCompanyfortheyearended 31st March 2023 aresummarized below: |
(Rs. in Lakhs] |
|
|
2022-23 |
2021-22 |
|
|
Revenue from Operations |
1,09,669.66 |
1,10,853.44 |
|
Other Income |
1,366.15 |
554.08 |
|
Total Revenue |
1,11,035.81 |
1,11,407.52 |
|
Profit before Finance Costs, Depreciation, Exceptional Items and Taxation |
7,568.02 |
9,424.32 |
|
Less: Finance Costs |
18,391.83 |
15,207.62 |
|
Less : Depreciation and Amortization Expenses |
5,255.33 |
5,628.48 |
|
Profit/(Loss) before Exceptional ItemsandTax |
(16,079.14) |
(11,411.78) |
|
Add/(Less): Exceptional Items |
(93,342.16) |
- |
|
Profit before Tax |
(1,09,421.30) |
(11,411.78) |
|
Tax Expense |
(4,479.03) |
2,205.36 |
|
Profit/(Loss) for the year |
(1,04,942.27) |
(13,617.14) |
The operational turnover of the Company was lower at Rs. 1,09,669.66 lakhs against Rs. 1,10,853.44 lakhs in the last year, due to lower production (although selling price was higher) ''Loss before exceptional items'' was 16,079.14 lakhs against Rs. 11,411.78 lakhs for the last year. The higher loss was mainly due to lower operational turnover (as above) and also due to increase in wage rate and other inputs.
The Statement of Profit & Loss for the year 2022-23 includes charge of Rs 93,342.16 Lakhs on account of ''Exceptional Items'' being provision made in theyearagainst Inter-Corporate Deposits and advancegiven in earlieryears.This is part-provision,without prejudiceto company''s legal right to recover the amounts given by it.
The Company has not been able to meet terms of facilities/loans availed from various Lenders. The company has been in discussion with lenders for debt-resolution. Forensic audit, Techno Economic Viability Study (TEV), valuations, and credit-ratings have already been done satisfactorily. Meanwhile, lenders in addition to the above also requested for submission of the proposal for One Time Settlement (''OTS proposal'') oftheirdues.The resolution process as stated aboveare under active consideration ofthe lenders and related plans and proposals are expected to be finalised after due consideration of all the related aspects and once finalised will be placed for necessary approval for implementation. The management is confident that with the bankers'' support in restructuring/settlement of their debt to a sustainable level and resultant rationalisation of cost of borrowing and other costs, induction of additional fund in the system by sale of assets or otherwise etc. and other ameliorative measures taken and/or proposed to be taken, the company will be able to generate sufficient cashflow to meet its obligationsand strengthen itsfinancial position overa period oftime.
The Authorised Share Capital ofthe Company is Rs. 60,00,00,000/- divided into 12,00,00,000 equity shares of Rs. 5/- each and the Issued, Subscribed and Paid up share capital of the Company is Rs. 52,22,79,000/- divided into 10,44,55,735 equity shares of Rs. 5/- each.
During the year, the Company did not issue any shares with differential rights or convertible securities. The Company does not have any scheme for the issue ofshares, including sweat equity to the employees or directors ofthe Company. The Company does not have a scheme forthe purchase of its shares by employees or by trustees for the benefit of employees. The company securities have been suspended from trading on The Calcutta Stock Exchange Limited and the Company is in process of revocation for the same.
There was no change in the capital structure ofthe Company during the period under review.
RECLASSIFICATION OF PROMOTER AND PROMOTER GROUP
Subsequentto theclosureoffinancial year,theCompanyat the request ofEveready Industries India Limited (''EIIL''), falling under Promoter and Promoter Group Category has applied for reclassification ofEIIL from ''Promoter and Promoter Group'' category to ''Public Shareholder'' category with the stock exchanges. Approval is awaited from the exchanges.
The Board has decided not totransferanyamount to theGeneral Reservefortheyearended 31st March 2023 becauseofloss sustained. DIVIDEND
In view of the loss sustained by the Company during the year under review, the Board decided to not recommend any dividend for the year ended 31st March 2023.
During the Financial year under review, fluctuating and inconsistent weather conditions resulted in a loss of harvest during peak cropping months. The saleable production of your Company was 414.29 Lakh Kgs tea, as compared to 489.04 Lakh Kgs in the previous year.
Emphasis in pluckingstandards remained a priorityand qualityofleafharvested improved considerably, resulting in a betterqualityofteas produced. The Uprooting and Replanting PolicyofyourCompanycontinued to remain in focus and has further improved the percentage oftea underfiftyyears which is nowover 75%ofthe area. "Integrated Pest Management" practice continued as per past practice and was very effective resulting in improved pest control and reduced cost. Timely supply and application of fertilizer also controlled further crop loss. A high standard ofClonalTea nurseries with requisite,approved Clonal Blendwas established on all estates. The Shade Nurseries being of a good standard contributed as one of the key factors in developing a healthy plantation. The Afforestation program continues to be enhanced along with creation of new water-bodies, to improve the "micro-climate", in select areas which has become essential to counter the effects of climate change. Plantation of ''Agarwood'' continued, for revenue enhancement, on some estates.
It has always been your Company''s endeavor to produce Quality teas, which continued to command a premium, both in the domestic and international markets. Factory infrastructure and machinery was enhanced accordingly, to meet the requirements and Capital expenditure to further improve processes were accordingly sanctioned. To improve field operations and overcome the acute shortage of workers by way of absenteeism, additional investments in plucking Shears and Pruning machines were made available. Additions to the transport fleet included Tractors to aid field operations, and Ambulances to further improve the medical facilities.
The Company has thirty-one ISO 22000:2005 certified Factories which are in the process ofupgradation to ISO 22000:2018. YourCompany has twenty seven estates certified under "Rainforest Alliance." All our factories are certified under the "Trustea" certification and we are also in the process of assisting our suppliers of leaf from Small Tea Growers to become compliant under this certification.
YourCompanyalso participates in the Ethical Tea Partnershipforumforinternational buyersand producersto promotesustainable practices jointly. Due to such initiatives we have set up ''Community Development Forums'' on some of our estates, to enable welfare schemes mandated by the Government to reach our communities as well as bring about better awareness and improve the livelihood of our workers and their families.
We have also over the last few years, engaged with various organisations including UN Women, IDH, Dharmalife, GAIN, BSR, Mercy Corps, ZvdZ Foundation, ETPand ITAto build awarenessand provide responsibleservicesamong all levelsofouremployees, particularlywomen. Programmes such as ''Preventing Violence Against Women and Girls'', ''Women''s Safety Accelerator Fund'', ''Work and Opportunities for Women'', ''Global Alliancefor Improved Nutrition'', ''Project Sanitation''etc. now covertwenty-nineofour Estates in Assam and have proven to be most successful at building social awareness amongst women and children.
The Company performed wellin the domestic and overseas markets and achieved a sales turnover of Rs 1,05,871.64 lakhs. Favorable feedback was received from all buyers both in terms of quality and deliveries. Your Company continues to be the leading producer-exporter of tea with shipments to over seventeen countries worldwide at an FOB/CIF value of Rs 28,830.35 lakhs.
CORPORATE INSOLVENCY RESOLUTION PROCESS ("CIRP") PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016
During the year under review, the Company was under Corporate Insolvency Resolution Process ("CIRP") pursuant to order dated 10th February, 2023,ofHon''ble National Company Law Tribunal, Kolkata Bench, Court II, Kolkata ("NCLT") and the Hon''ble NCLThad appointed Mr. Ritesh Prakash Adatiya, having registration number IBBI/IPA-001/IP-P01334/2018-2019/12013),as Interim Resolution Professional (''IRP'') to perform thefunctions as mentioned under the Insolvencyand BankruptcyCode, 2016 (theCode) and the related rules and regulations issued thereunder.The powers ofthe Board of Directors was suspended and such powers had been vested with the IRP and had sincetaken control of the management of the Company.
Further,the Hon''ble National Company Law Appellate Tribunal, New Delhi Bench, New Delhi ("NCLAT") vide its Orderdated 15th May, 2023, has closed the CIRP initiated vide order dated 10th February 2023 and has set aside the said order. The suspension of the Board of Directors ofthe Company has been revoked and the Company has been set free ofthe restrictions ofthe CIRP and IRP has also been relieved from hisfunctions.
Further, Aditya Birla Finance Limited, State Bank of India, Shah Brothers and IndusInd Bank Limited (not registered) have filed applications before National Company Law Tribunal (NCLT), Kolkata for initiating Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 which are being contested by the Company.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirements of Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations''),a Management Discussion and Analysis Report is attached as Annexure-Iforming partofthis Report.
REPORT ON CORPORATE GOVERNANCE
In terms of requirements of Regulation 34(3) of the Listing Regulations, a Report on Corporate Governance together with the Auditors'' Certificate regarding Compliance ofConditions ofCorporate Governance are attached as Annexure II and Annexure III respectively, forming part ofthis Report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
The Company has one wholly owned subsidiary namely, Borelli Tea Holdings Limited, U.K. (Borelli) and four step down Subsidiaries. Borelli is inter alia engaged in the business of investing funds in various companies engaged in tea production, blending and marketing activities. As atthe end oftheyearon 31st March 2023 Borelli had thefollowing Subsidiaries in different countries:-
(i) Phu BenTeaCompanyLimited,Vietnam-controllingstakeofBorellibeing 100%
(ii) McLeod Russel Uganda Limited-controlling stake of Borelli being 100%
(iii) McLeod Russel Middle East DMCC, UAE - controlling stake of Borelli being 100%
(iv) McLeod Russel Africa Limited, Kenya - controlling Stake of Borelli being 100%
The performances ofthe Subsidiaries aresummarised belowforyourinformation.As required underSection 129(3) ofthe CompaniesAct, 2013and Regulation 33and 34(2)(b) ofthe Listing Regulations,Consolidated Profit & Loss StatementoftheCompanyand itsfivesubsidiaries and theConsolidated BalanceSheetofthe Companyand itsfivesubsidiaries prepared in accordancewith the Indian Accounting Standards prescribed underSection 133 ofthe Companies Act 2013 read with the Companies (Indian Accounting Standard) Rules 2015 as amended ("Ind AS") are appended in the Annual Report. Investments made in D1 Williamson Magor Bio Fuel Limited, an Associate Company, have been fully provided for in the Accounts of the earlier years and as such the Financial Statements of the said Company have not been considered for consolidation.
A statement containing the salient features of the financial statements of the Company''s Five Subsidiaries and the Associate Company pursuanttothefirst provisotosub-section (3) ofSection 129oftheCompaniesAct,2013 prepared in FormAOC-1 isattachedtothefinancial statements of the Company for your information.
In termsof Regulation 34(2)(a) ofthe Listing Regulations, Statements on impact ofAudit Qualifications as stipulated in Regulation 33(3)(d) ofthe Listing Regulationsareappended in theAnnual Report.
Although the Company does not have any material subsidiary still the Company has formulated a "Policy for determining Material Subsidiary" and the same is disclosed on the website of the Company and can be accessed at: http://www.mcleodrussel.com/ investors/policies.aspx
Borelli Tea Holdings Limited (''Borelli'') has investments in its subsidiaries in Vietnam, Uganda, Dubai and Kenya. During the year under review, Borelli has a loss after tax GBP 174,64,728 as compared to last year (2021-22) loss ofGBP 8,12,243.The loss was due to provision for diminution in the value of its investment inPhu Ben Tea Co Limited byGBP17,158,826.
PHU BEN TEA COMPANY LIMITED (PBT)
PBT''s business is cultivation and manufacture oftea. It prepares its accounts calendaryearwise. During the year 2022, the company incurred loss (both pre-taxand post-tax) ofUSD 2.91 million as against loss (both pre-tax and post-tax) of USD 4.51 million in year 2021. During the year2022, PBT manufactured 0.63 million kg oftea asagainst3.24 million kg in year2021.
During theyear2022, PBT sold 3.25 million kg tea as compared to last year (2021) of6.14million kg.Average selling price perkg during 2022 was USD 1.08 as compared to last year ended (2021) of USD 1.19. Closing Stock oftea as at 31st December 2022 was 0.59 million kgs as compared to last year 31st December 2021 of3.16 million kgs.
Performance of PBT has continued to deteriorate. The measures, so far taken to improve the operations, have not been successful. The Company has been engaged in monetisation oftea stocks and repayment of bank loan. The management is actively considering monetisation ofthe company/assets in orderto reduce liabilities / repay debt.
McLEOD RUSSEL UGANDA LIMITED (MRUL)
MRUL''s business is cultivation and manufacture oftea. It prepares accounts on calendar year wise. During the year 2022, MRUL''s total comprehensive income was USD 1.80 million as against the total comprehensive loss of USD 0.70 million in year 2021
Duringtheyear2022, MRUL manufactured 19.65 million kgsand that was lesserbyabout 6%ascompared to previousyeari.e. 2021 of20.97 million kgs.
The sale price during theyear2022 has increased to USD 1.32 per kg ascompared to USD 1.15 per kg in previousyear registering increase ofUSD0.17 perkg.
However, there has been decline in tea price in 2023 due to excess tea supply in Mumbasa Tea Auction, the decline has since been arrested and is likely to improve in future. To mitigate the expected problems in tea-market, the company is trying to improve quality.
MCLEOD RUSSEL MIDDLE EAST - DMCC (MRME)
MRME''s business is blending and selling oftea. It prepares its accounts calendaryearwise. During theyear2022, MRME''s total comprehensive income was USD 44,735 as compared to total comprehensive loss of USD 172,912 in year 2021.
The current year 2023 is expected to bring growth in business and profitability. Higher sales-volumes are expected from export-market as well as domestic-market.
MCLEOD RUSSEL AFRICA LIMITED (MRAL)
MRAL''s business is trading in tea. It prepares its accounts calendaryear wise. During the year 2022, MRAL''s total comprehensive income was USD 59,444as compared to USD 18,902 in year2021.
For the current year 2023, MRAL expects to expand its customer-base and thereby increase its business and profitability.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The philosophy of your Company towards fair governance going hand-in hand with social responsibilities is deeply embedded in its day to dayworking.TheCompany has, over theyears, successfullyformulated a methodologyaimed towards improving the life ofthe people and the environment, which surround the units of the Company and thereby enriching the society.
In terms ofSection 135(5) ofthe Companies Act, 2013, certain class ofcompanies are required to spend at least 2%ofAverage Net Profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. Although your Company did not have Average Net Profit during the above period computed in terms ofSection 198 ofthe Act, still like earlier years, it continued with its welfare activities for development in the field of education, culture and other welfare measures to improve the general standard ofliving in and around the Tea Estates oftheCompanyand otherareas where it operates.
The Company has a CSR Committee and has adopted a CSR Policy which can be accessed at http://www.mcleodrussel.com/investors /policies.aspx. The Corporate Social Responsibility Committee ofthe Board as on 31st March, 2023 comprised of 2 Executive Directors, namely, Mr.Aditya Khaitan and Mr. Azam Monem. Mrs. Arundhuti Dhar,an Independent Director,who was the Member oftheCommittee ceased to be a Director with effect from 1st October 2022. As mentioned elsewhere in the report, post CIRP, the committee has been reconstituted and comprises of Mr. Aditya Khaitan, Executive Director, Mr. Sanjay Ginodia and Mrs. Rupanjana De, Independent Directors. Mr. Aditya Khaitan acts as the Chairperson of the Committee. A report on CSR is attached as Annexure VIII.
In accordancewith the Regulation 43Aofthe Listing Regulations, the BoardofDirectorsofthe Companyhasadopteda Dividend Distribution Policy. These has been no change in this policy during the year under review. The Policy is also available on the website ofthe Company and can be accessed at the weblink http://www.mcleodrussel.com/investor/policies.aspx.
DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY
The Company has a Directors and Officers Liability Insurance Policy which protects Directors and Officers ofthe Company for any breach offiduciaryduty.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Board acknowledges the responsibilityforensuring compliance with the provisions ofSection 134(3)(c) read with Section 134(5) ofthe Companies Act, 2013 for the year ended 31st March 2023 and state that:
(a) In the preparation oftheannual accounts,theapplicableaccounting standards had been followed with no material departure.
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonableand prudent so as to give a true and fairview ofthe state of affairs ofthe Company at the end ofthefinancial yearand of the profit andlossofthe 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 ofthe 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 were operating effectively and subject to continuous improvement.
(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.
DIRECTORS & KEY MANAGERIAL PERSONNEL
The Board ofDirectorsofthe Companyason 31st March 2023 comprised of7(seven) Directorsofwhom 4(four) were Independent Directors including one woman Director. In the opinion of the Board, allthe Directors possess the requisite qualifications, experience and expertise and hold high standards of integrity.
During the period under review, Mrs. Arundhuti Dhar, Non - Executive Independent Director resigned from the Board of Directors of the Company with effect from 01st October 2022.
The Board places on record its appreciation for the valuable services and cooperation rendered by Mrs. Arundhuti Dhar during her tenure as a Directorand Member/Chairperson oftheCommittees.
Further, the Board based on the recommendation ofthe Nomination and Remuneration Committee ofthe Company, approved thefollowing appointments on the Board during the period under review:
(i) the Board at its meeting held on 14th November 2022 approved the appointment of Mr. Sanjay Ginodia (DIN: 07781746) as an Additional Director (Non - Executive Independent) fora period offiveconsecutiveyears commencing from 14th November2022 to 13th November 2027 (both days inclusive).
(ii) the Board at its meeting held on 30th December 2022 approved the appointment of Mrs. Rupanjana De (DIN: 01560140) as an Additional Director (Non - Executive Independent) fora period ofthree consecutiveyears commencing from 30th December 2022 to 29th December 2025 (both days inclusive).
The above mentioned appointments have been approved by the Shareholders through Postal Ballot by way of remote e-voting on 28th January 2023 and31st March 2023 respectively.
Further,the tenureofMr.Aditya Khaitan as Managing DirectoroftheCompany had expired on31st March 2023 butdue to initiation ofCIRP, the said reappointment could not be regularized. Subsequently, the Board at its meeting held on 17th May 2023 had approved the appointmentofMr.Aditya Khaitan as the Managing DirectoroftheCompanyforaperiod ofthreeyears commencingfrom 17th May2023 to 16th May 2026 (both days inclusive).Thesaidappointmentis subject toapproval oftheShareholdersand such othernecessaryapprovals as may be required in terms of Section 196 read with Schedule V of the Companies Act, 2013.
ThetenureofMr.Azam Monem as Wholetime DirectoroftheCompanyhas expired on31st March 2023 and he hasexpressed his unwillingness to continue in the said position on the Board of Directors of the Company and has stepped down from the position with effect from 01st April 2023.
The Board places on record its deep sense ofappreciation and gratitude to Mr. Monem who has been a part of the Group for over 4 decades, for the leadership, immense invaluable contribution, guidance and cooperation rendered byhim during his tenure as a Wholetime Director since 2005 and Member of the Committees that has helped the Company build and execute a resilient growth strategy.
RETIREMENT BY ROTATION AND SUBSEQUENT REAPPOINTMENT
In accordance with the provisions of the Articles of Association of the Company read with Section 152 of the Companies Act, 2013, Mr. Amritanshu Khaitan (DIN: 00213413) will retire by rotation at theforthcoming Annual General Meeting and being eligible has offered his candidature for re-appointment.
As per provisions ofthe Act, the Independent Directors are not liable to retire by rotation.
Brief resume, nature ofexpertise, disclosure of relationship between directors inter-se, details ofdirectorships and committee membership held in othercompanies ofMr.Amritanshu Khaitan proposed to bere-appointed,alongwith his shareholding in theCompany,as stipulated under Secretarial Standard-2 and Regulation 36 ofthe Listing Regulations, is appended as an Annexureto the Notice oftheensuing AGM.
During the year, the Company had 4 Key Managerial Personnel, being Mr. Aditya Khaitan, Chairman and Managing Director, Mr. Azam Monem, Whole time Director, Mr. Pradip Bhar, Chief Financial Officer and Mr. Alok Kumar Samant, Company Secretary.
DECLARATION FROM INDEPENDENT DIRECTORS
The Independent Directors have submitted their disclosures to the Board, that they meet the criteria as stipulated in Section 149(6) of the Companies Act, 2013.
In the opinion ofthe Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity required to dischargetheirduties with an objective independentjudgment and without anyexternal influence. List ofkeyskills, expertise and core competencies ofthe Board, including the Independent Directors, forms a part ofthe Corporate Governance Report of this Integrated Annual Report.
In termsofSection 150 oftheCompanies Act, 2013 read with Rule6oftheCompanies (Appointmentand Qualification of Directors) Rules, 2014, as amended, the names of all the Independent Directors ofthe Company have been included in the data bank maintained by the Indian Institute of Corporate Affairs.
A certificate of Non-Disqualification of Directors furnished by M/s. A.K. Labh & Co., Company Secretaries as required under Regulation 34(3) read with Schedule V Para C sub-clause 10(i) of SEBI (LODR) Regulations, 2015 is attached as Annexure IX.
The Board metsixtimesduringtheyearon 30th May 2022,12th August 2022,31st August 2022,14th November2022,30th December 2022 and 19th January 2023 which was adjourned to 21st January 2023.
During the period under review, as intimated earlier, the Companywas undergoing through the process ofCorporate Insolvency Resolution Process during the period commencingfrom February-March quarterand therefore, Four(4) meetings were held on 14th February2023, 28th February 2023,17th March 2023 and 31st March 2023 under the Chairmanship ofthe Insolvency Resolution Professional with Key Managerial Personnel in lieu ofBoard Meeting.
BOARD EVALUATION AND FAMILIARISATION PROGRAMME
The Securities and Exchange Board of India (SEBI) vide its circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2017 had issued a guidance note on Board Evaluation which interalia contains indicative criterion forevaluation ofthe Board of Directors, its Committees and the individual members ofthe Board.
The Nomination & Remuneration Committee ofthe Board of Directors had laid down the criteria forevaluation ofthe performance ofthe Board as a whole, the Directors individuallyas well as the evaluation ofthe working ofthe Audit, Nomination & Remuneration, Stakeholders Relationshipand Corporate Social ResponsibilityCommittees ofthe Board. Annual Performance Evaluationsas required have been carried out.Thestatement indicating the manner in which formal annual evaluation ofthe Directors (including Independent Directors),the Board and Board level Committees is given in the Corporate Governance Report, which forms a part of this Annual Report.
7
The Company has adopted a Familiarization Programme for Independent Directors and the same is disclosed on the website ofthe Company and can be accessed at http://www.mcleodrussel. com/investors/policies.aspx.
SEPARATE MEETING OF INDEPENDENT DIRECTORS
During the period under review, theCompanywas underCorporate Insolvency Resolution Process commencing from 10th February 2023 till 15th May 2023 and hence, no meeting ofthe Independent Directors as required underSchedule IV ofthe Companies Act, 2013, was held as the powers of the Board of Directors of the Company were suspended by virtue of the said NCLT order dated 10th February 2023.
As on 31st March, 2023, the Board has 4 statutory Committees: Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders Relationship Committee. During the year, all recommendations ofthe Committees ofthe Board which were mandatorily required have been accepted by the Board. A detailed note on the composition ofthe Board and its Committees, meetings held during the year and its terms of reference is provided in the Corporate Governance Report forming part of this Integrated Annual Report. Thecomposition and terms ofreference ofall the Committees ofthe Board of Directors ofthe Company is in line with the provisionsoftheActand the Listing Regulations.
The Company has established a Vigil Mechanism/Whistle Blower Policy and oversees through the Audit Committee, the genuine concerns, ifany, expressed by the employees and the Directors. The Company has also made provisions for adequate safeguards against victimization of employees, Directors or any other person who express their concerns. The Company has also provided direct access to the Chairperson of the Audit Committee on reporting issues concerning the interests of the employees and the Company. During the year under review, there has been no complaint received by the company. The Vigil Mechanism / Whistle Blower Policy of the Company has been uploaded on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx.
LOANS, GUARANTEES OR INVESTMENTS MADEUNDER SECTION 186 OF THE COMPANIES ACT, 2013
The particulars ofloans,guarantee or investment made underSection 186 ofthe Companies Act, 2013 arefurnished in the Note50 to the Financial Statements for the year ended 31st March 2023.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
The Related PartyTransactionsentered into bythe Companyduring theyearunderreviewwereon arm''s length basis in theordinarycourse ofbusiness.Therewas no contract, arrangementor transaction with Related Parties which could be considered as material and which may have a potential conflict with the interest of the Company. Accordingly, the disclosure required u/s 134(3)(h) ofthe Act in Form AOC-2 is not applicable to yourCompany. The Company has formulated a Related PartyTransaction Policyand the same is disclosed on the website ofthe Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx.
POLICY ON DIRECTOR''S APPOINTMENT AND REMUNERATION AND OTHER DETAILS
In pursuance of the provisions of Section 178 of the Companies Act, 2013 and Listing Regulations, the Company has formulated a Remuneration Policy.There has been no change in this policyduring theyearunderreviewand a copyofthesaid Policyis annexed as Annexure IVand is also available at the website of the Company at the web link http://www.mcleodrussel.com/investors/policies.aspx
The Remuneration Policy, inter-alia, includes the appointment criterion & qualification requirements, process for appointment & removal, retirement policy and remuneration structure & components, etc. ofthe Directors, Key Managerial Personnel (KMP) and other senior management personnel ofthe Company. As per the Remuneration Policy, a person proposed to be appointed as Director, KMP or other senior management personnel should beaperson ofintegritywith high level ofethical standards. In caseofappointment asan Independent Director,the person shouldfulfil the criteria ofindependence prescribed undertheCompanies Act, 2013, rulesframed thereunderand the Listing Regulations.The Remuneration Policyalso contains provisionsaboutthe payment offixed &variable components ofremuneration to the Whole-time Directorand paymentofsittingfee&commission to the Non-Executive Directors.
The Company has neither accepted nor renewed any deposits during the year under review.
SIGNIFICANT AND MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS
During the year under review, no significant or material order was passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future except the orderdated 10th February 2023 passed by Hon''ble National Company LawTribunal, Kolkata Bench initiating Corporate Insolvency Resolution Process against the Companyas mentioned elsewhere in the report.
However, in the matterofArbitration between Aditya Birla Finance Limited (ABFL) vs McNally Bharat Engineering Company Limited (MBECL) and others, the Sole Arbitrator, passed an Interim Order on 30th June 2020 upon the Company to perform obligations under the Put Option Agreement dated 24th March 2018.TheCompany hadfiled an application forsetting aside theaward which was subsequentlywithdrawn as the disputes between the parties was settled.
Members'' attention is also invited to Notes on Contingent Liabilities, in the notes forming part of the Financial Statements.
MATERIAL CHANGES AFTER ENDOF THE FINANCIAL YEAR
Except as disclosed elsewhere in the report, no other material changes and commitments which could affect the financial position of the Company have occurred between the end ofthe last financial year and the date ofthis Annual Report.
ONE TIME SETTLEMENT WITH BANKS AND FINANCIAL INSTITUTIONS
Duringtheyearunderreview,theCompany has not entered intoanyOneTime Settlement with Banks and Financial Institutions, hence,the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof is not applicable.
However, in earlieryearsthecompanyhad given undertakings to IL&FS Infrastructure Debt Fund (''ILFS-IDF'') andAditya Birla Finance Limited (ABFL) in connection with borrowings and otherfacilities availed by group companies. After 31st March 2023, pursuant to thesettlement agreement entered with ILFS-IDF on 05th May 2023 and ABFL on 07th June 2023, the claim made by them have been settled by another group company. The company''s obligations in this respect and consequential impact, if any, in this respect have presently not been determined.
Further, during the year under review, the Company had entered into an exclusivity agreement (''agreement'') with Carbon Resources Private Limited to exclusively discuss, negotiate and evaluate a mutually agreeable mechanism for the Company to offer a proposed one-time settlement ofthe debt owed by the Company to its identified lenders, pursuant to a debt resolution process to be undertaken by the Lenders as perthe Reserve BankofIndia''s Prudential Frameworkfor Resolution ofStressed AssetsdatedJune7,2019. The said agreementhadexpired on31st March 2023 but dueto initiation ofCIRPw.e.f. 10th February 2023,thesame could not be renewed. Subsequent to withdrawal of CIRP w.e.f. 15th May 2023, the said agreement was further extended till 28th July 2023 by the Board of Directors ofthe Company and thereafter a term sheet was finally executed by the Company on 04th August 2023. The Company has given an OTS offer to the banking lenderswhich is under consideration.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Financial statements (i.e. Balance Sheet, Profit & Loss Statement and Cash-Flow Statement, together with notes) are prepared through the process which has automated as well as manual controls to ensure accuracy of recording all transactions which have taken place during any accounting period, and the resultant financial position at period end. All data pertaining to payroll, purchases, agricultural activities, plucking, manufacturing, dispatch, selling and other activities are recorded through ERP systems operating in tea estates as well as head office. All data/transactions entered in systemsarechecked byvariousfunctional personnel on the basisofsupporting documents&records, then the accounting entries are checked by accounts personnel and finally those are validated by managerial personnel.
At periodic intervals, the accounting data are compiled, and financial statements are prepared. While preparing the financial statements, it is ensured that all transactions pertaining to the accounting period are recorded. Fixed assets, stockoftea, all significant items ofstores and monetary assets are physically verified. Balance confirmations are obtained for all significant items of trade receivable and advances.
After preparation ofthefinancial statements, all items appearing in thestatements are analysed in orderto ensureoverall reasonableness.
The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection offraud and errors, accuracy and completeness ofthe accounting records, and timely preparation of reliable financial disclosures.
In terms of Part B of Schedule II of Listing Regulations, the CEO and the CFO of the Company certify to the Board regarding review of the financial statements, compliance with the accounting standards, maintenance of internal control systems for financial reporting and accounting policies, etc.
HEALTH, SAFETY AND WORKING ENVIRONMENT
The Company considers its people as one ofthe most valuable resources and recognises that safe and healthy working environment motivate employees to be more productiveand innovative. TheCompanytakesadequate measures to keep itsfield andfactories safe in all respects. Regular training is imparted to the employeesfor promoting awareness on safetyand skill enhancement.TheCompany runs a hospital in each of its Tea Estates where the employees of the concerned Estate get regular medical attention. In addition, the Company has set up few central hospitals which are equipped with modern medical instruments. These hospitals are accessible to the employees ofthe surrounding areas. The Company also provides facilities for sporting and cultural activities for the employees in the Tea Estates.
ANNUAL SECRETARIAL COMPLIANCE REPORT
The Company has undertaken an Audit of all the applicable compliances as per the SEBI Regulations and Circulars/Guidelines issued thereunder.
The Annual Secretarial Compliance Report issued by a Practising Company Secretary (PCS) has been submitted to the Stock Exchanges within the stipulated time as mentioned in SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/109 dated June 25,2020.
The Annual Return oftheCompanyas on March 31,2023 pursuant to the provisions ofSection 92 oftheCompanies Act, 2013 is available on the Company''s website and can be accessed at https://www.mcleodrussel.com/investors/annual-return.aspx
In terms ofSection 139ofthe CompaniesAct, 2013, M/s. Lodha&Co.,Chartered Accountants (Registrationfirm No. 301051E) was appointed as theStatutoryAuditors oftheCompanyto hold officeforaterm of5 (five) consecutiveyearsfrom the conclusion of21st Annual General Meeting till the conclusion ofthe 26th Annual General Meeting. M/s. Lodha & Co. has conducted audit for the Financial Year ended 31st March 2023 and furnished their report.
In their Report dated 30th May 2023, M/s. Lodha & Co. has given an adverse opinion in relation to the Standalone and Consolidated Financial Statements oftheCompanyforthe Financial Yearended31st March 2023.The Board''s response in relation to the said opinion is as under:-
|
SI.No. |
Audit-Qualification |
Board''s Response |
|
(i) |
Inter Corporate Deposits (ICD) with ref to Note no. 58(a) of the standalonefinancial statement aggregating to Rs. 2,86,115 lakhs (including interest accrued till March 31,2019) ason March 31, 2023 given to certain companies which are doubtful of recovery and considering recoverability etc. are prejudicial to the interest of the company. Provision of Rs. 1,01,039 lakhs (including Rs. 9,097 lakhs provided in earlier years) has been made against this till March 31, 2023. In absence of provision against the remaining amount, the loss for the year is understated to that extent. Impact in this respect have not been ascertained by the management and recognised in the financial statements. |
In respect of Inter-Corporate Deposits (ICDs) given to Promoter group and certain other companies (''borrowing companies''), the amount outstanding aggregates to Rs. 2,76,174 Lakhs as at March 31,2023. Further, interest of Rs. 9,941 lakhs on these amounts were accrued upto March 31,2019and are remaining unpaid in this respect ason March 31,2023. Interest on such ICDs considering the waiver sought by borrower companies and uncertainties involved with respect to recovery and determination ofamount thereof, has not been accrued since April 01,2019. These borrowing companies which in turn advanced the amount so taken by them to other entities including one of the promoter group company which is under Corporate Insolvency and Resolution Process (''CIRP'') as per the Insolvency and Bankruptcy Code, 2016 (IBC) are in the process of recovering these amounts. The claims made by these borrowing companies pursuant to CIRP have not been fully acknowledged and amount as admitted by Resolution Professional (''RP'') are stated to be substantially lower than those being claimed by these companies. Whilst CIRP proceeding is yet to be concluded and amount finally recoverable pursuant to the same is yet to be determined, considering the amount so far accepted by the RP in respect oftheclaims made bythecompanies, valuation indications, eventuality of recovery in this respect and resultant net worth of these companies, provision of Rs. 1,01,039 lakhs (including Rs. 9,097 lakhs provided in earlier years) on lumpsum basis without prejudice to company''s legal right to recover the amounts given by it, has been made in these financial statements. This includes provision of Rs. 9,941 lakhs (including Rs. 7,999 lakhs provided in earlier years) provided against interest accrued upto March 31,2019 which has been fully provided for in the financial statements. The management believes that the outstanding dues, net of provision there against, as mentioned above, shall be recovered/adjusted and/or restructured depending upon the outcome ofthe recovery proceedings pursuant to CIRP or otherwise and completion of the resolution process of the company. Impacts if any in this respect will be given effect to on determination of the amount in this respect and no further provision/adjustment is required at this stage. |
|
(ii) |
Non-recognition of Interest on Inter Corporate Deposits (ICD) of Rs. 9185.03 lakhs (including Rs. 2469.03 lakhs for the year) with reference to Note No. 36.2 of the standalone financial statements taken by the company and thereby the loss for the year is understated to the extent indicated in said note and nondetermination of interest and other consequential adjustments/disclosures in absence of relevant terms and conditions in respect ofcertain advances being so claimed by customers as stated therein. Further, as stated in Note no. 59(b), penal/compound interest and other adjustments in respect of borrowings from lenders/banks/financial institution have not been recognised and amount payable to banks and financial institutions as recognised in this respect are subject to confirmation from respective parties and consequential reconciliation. Pending final determination of amount in this respect, adjustments and impacts arising therefrom have not been ascertained and as such cannot be commented upon by us. |
The Company submits that the resolution process as stated in Note no. 59(a) of the standalone financial statements are under active consideration of the lenders and related plans and proposals are expected to be finalised afterdue consideration ofall the related aspects. The amount of interest will be determined and recognised based on the proposals once finalised to give effect to all the aspect ofthe proposal on comprehensive basis. Penal interest / compound interest has not yet been confirmed by banks. Further, interest would be restructured/finalised in accordance with the plans and proposals under consideration ofthe lenders and amount payable will then be ascertained and given effect to in theaccounts |
|
SI. No. |
Audit-Qualification |
Board''s Response |
|
(iii) |
Non reconciliation/disclosure with ref to Note No. 60 of the standalone financial statements regarding certain debit and credit balances with individual details and confirmations etc. including borrowings and interest thereupon dealt with in Note no. 59. Adjustments/ Impacts with respect to these are currently not ascertainable and as such cannot be commented upon by us. |
Not quantified The Companysubmits that it has 33 tea estates/factories and 2 offices and therefore it is practically not feasible to reconcile the entire balances and such reconciliation is an ongoing process. Impact will thus become ascertainable only upon reconciliations and confirmations. However,during theyearcertain account balances which were under reconciliation have been reconciled and required adjustments thereof have been given effect to in this year. |
|
(iv) |
Non-determination/recognition ofamount payablewith refto Note No. 57 of the standalone financial statements in respect of claims made pursuant to shortfall undertaking executed between the company and debenture holders in respect ofthe debentures issued by certain group companies as dealt with in the said note and Note no. 18.2 dealing with company''s obligation in respect ofthe settlement arrived at with a corporate lender in earlieryear. Pending finalisation ofterms and condition with respect to the company''s obligations in respect of settlement arrived at with the parties, adjustments required in this respect are currently not ascertainable and as such cannot be commented upon by us |
Not quantified The company as stated in Note no. 57 of the financial statements had given shortfall undertaking (''undertaking'') to IL&FS Infrastructure Debt Fund (''ILFS-IDF'') in connection with Debt Service Reserve Account (''DSRA'') obligations pertaining to the secured debentures of Rs. 15,000 lakhs and Rs. 9,950 lakhs issued respectively by Babcock Borsig Limited (''BBL'') and Williamson Magor & Company Limited (''WMCL''). The claims made by ILFS-IDF pursuant to an agreement entered with the party have been settled by Dufflaghur Investment Limited for Rs. 4,967 lakhs and CIRP proceedings as stated in Note no. 57 have since been withdrawn. The settlement obligation in this respect has been fulfilled by the said company.The company''s obligations in this respect and related terms and condition thereofand consequential impact if any in this respect have presently not been determined and therefore has not been given effect to in thesefinancial statements. Finance Cost includes Rs. 2,000 lakhs being the amount paid by a third party on behalf of the company in settlement of the dues of a corporate lender in earlier year. This represents differential amount overand above the principle amount so far paid in terms of the said settlement. Pending discharge of balance obligations and finalisation of related terms and conditions, further adjustments required ifany in this respect are presently not ascertainable. |
|
(v) |
As stated in Note no. 58(b) ofthe financial statements, the predecessor auditor pertaining to financial year ended March 31,2019inrespectofloans includedunderqualification 1 above have reported that it includes amounts given to group companies whereby applicability of Section 185 of the Companies Act, 2013could not be ascertained and commented upon by them. They were not been able to ascertain if the aforesaid promotercompanies could, in substance, be deemed to be related parties to the Company in accordance with paragraph 10of Ind AS-24 "Related Party Disclosures". Further certain ICDs as reported were in nature of book entries and/or are prejudicial to the interest ofthe company. Moreover, in case ofadvancetoabodycorporateas stated in Note no. 18.3 which has now been fully provided appropriate audit evidences were not made available to them.These amounts are outstanding as on this date and the status thereof have remained unchanged and uncertainty and related concerns including utilisation thereof and being prejudicial to the interest of the company are valid for periods subsequent to March 31,2019 including current year also. The promotercompanies have not been considered as related parties and therefore, transactions and outstanding from them have not been disclosed separately in the financial statements. As represented by the management, the parties involved are not |
Could not be ascertained. The matter as reported is pending before regulatory authorities. |
|
SI. No. |
Audit-Qualification |
Board''s Response |
|
related parties requiring disclosure in terms ofthe said accounting standard and provisions of Companies Act, 2013 and concerns expressed as above are not relevant and as such inconsequential to the Company. The matteras reported is under examination and pending beforeregulatoryauthorities. Pendingfinal outcome of the matter under examination we are unable to ascertain the impact of non-compliances and comment on consequential impact thereof. |
In terms ofthe requirements ofSection 204 of the Companies Act, 2013, the Secretarial Audit of the Companyfor the year ended 31st March 2023 was conducted by Messrs. A. K. Labh & Co., Company Secretaries. The Secretarial Auditors'' Report is attached to this Report as Annexure V and forms part ofthe Directors'' Report.
In accordancewith the requirements ofSection 148 oftheCompanies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors ofthe Company has appointed the following firms of Cost Accountants to conduct audit of Cost Records maintained bytheCompanyfortheTea Plantations oftheCompanyfortheyearending31st March 2024;
(i)M/sMani&Company (ii)M/sSPKAssociates (iii)M/sDGM&Associates.
Pursuant tothe provisionsof Rule 14oftheCompanies (Auditand Auditors) Rules, 2014,the remuneration ofthe Cost Auditors is required to be ratified bythe MembersoftheCompany,a resolution forwhich has been placed beforethe Members at theensuing Annual General Meeting for their approval.
TheCost Audit Reportfurnished bythe Cost Auditors in respectoftheyearended 31st March 2023 which did not contain anyqualification, reservation oradverse remarkwasfiled with the MinistryofCorporate Affairs within the time prescribed under theCompanies Act, 2013.
During the year under review, no instances of fraud has been reported to the Audit Committee under Section 143(12) ofthe Companies Act, 2013 against theCompanybyits officers oremployees, thedetailsofwhich would need to be mentioned in the Board''s Report neither by the Statutory Auditors nor the Secretarial Auditors.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
A statement giving details of conservation of energy, technology absorption and foreign exchange earnings & outgo in accordance with Section 134(3)(m) oftheAct read with Rule8(3) oftheCompanies (Accounts) Rules, 2014, is attached tothis Report asAnnexureVI.
TheCompany identifiesvarious riskswhich the Companyencounters with during thecourse ofits business and which in theopinion ofthe Board may threaten the very existence of the Company itself. The Company has taken adequate measures to mitigate various risks encountered by the Company. The Company has in place a risk management policy to mitigate these actual and potential risks both at tea estates and head office. The Board is activelyconsidering a comprehensive review ofthe policyforfurther improvement.
YourCompany hasadopted a CodeofConduct to regulate, monitorand report trading by insiders in compliance with the SEBI (Prohibition ofInsider Trading) Regulations, 2015. All Directors, employeesand other designated persons, who could haveaccess to unpublished price sensitive information ofthe Company, are governed bythis Code. The trading windowfordealing with equityshares oftheCompany is duly closed during declaration of financial results and occurrence of any other material events as per the code. During the year under review there has been due compliance with the code.
The ratio of the remuneration ofeach Director to the median employee''s remuneration and other particulars or details ofemployees pursuant to Section 197(12) ofthe CompaniesAct, 2013read with Rule5oftheCompanies (Appointmentand Remuneration ofManagerial Personnel) Rules, 2014 are attached to this Report as Annexure VII.
The Company''s large workforce continues to remain the backbone of its operations and theirwelfare has remained a prime area offocus. Upgradation of housing facilities, water supply, medical infrastructure etc. have been given priority.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has constituted an Internal Complaints Committee, under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and has a policy and frameworkfor employees to report sexual harassment cases at workplace. The Company''s process ensures complete anonymity and confidentiality of information. Adequate workshops and awareness programmes against sexual harassment are conducted across the organization.
As per requirement of the POSH act, your Company follows calendar year for annual filling with statutory authority and as per the filing, therewere no complaints related to sexual harassment raised in thecalendaryear2022.
COMPLIANCE WITH SECRETARIAL STANDARDS
YourCompanycomplies with all applicableSecretarial Standards as issued bythe Institute ofCompanySecretaries ofIndia (ICSI).
Pursuant to the relevant circulars issued by Ministry of Corporate Affairs, Government of India (MCA) and Securities and Exchange Board of India and as a continuing endeavour towards ''Go Green'' initiative undertaken by the MCA, the Company proposes to send all the correspondences/communications including Notice and Annual Report etc. to shareholders at their e-mail address already registered with the Depository Participants ("DPs") and Registrarand ShareTransferAgents ("RTA").
In view ofthe above, shareholders who have not yet registered their email addresses are requested to register the same with their DPs/ the Company''s RTA for receiving all communications, including Annual Report, Notices, Circulars etc. from the Company electronically.
Your Board of Directors wish to place on record its sincere appreciation for the dedicated services rendered by the executives, staff and workers atall levelsforsmooth functioning ofall theestates.
Mar 31, 2018
For the year ended 31st March 2018
The Directors have pleasure in presenting the Twentieth Annual Report with the Audited Financial Statements of your Company, for the financial year ended 31st March 2018.
REVIEW OF PERFORMANCE
The financial results of the Company for the year ended 31st March 2018 are summarized below:
Rs. In lakhs
|
2017-18 |
2016-17 |
|
|
Revenue from Operations |
159634 |
148540 |
|
Other Income |
32285 |
18448 |
|
Total Revenue |
191919 |
166988 |
|
Profit before Finance Costs, Depreciation, Exceptional Items and Taxation |
33684 |
21508 |
|
Less : Finance Costs |
17093 |
12757 |
|
Less : Depreciation and Amortization Expenses |
8268 |
8252 |
|
Profit before Exceptional Items and Tax |
8323 |
499 |
|
Less : Exceptional Items |
- |
- |
|
Profit before Tax |
8323 |
499 |
|
Tax Expense |
1597 |
(2554) |
|
Profit for the year |
6726 |
3053 |
FINANCIAL PERFORMANCE
The Company registered an improved financial performance during the year under review. The revenue from operation was higher at Rs. 159634 lakhs as compared to Rs. 148540 lakhs in the previous year. The total income during the year stood at Rs. 191919 lakhs which is higher by Rs. 24935 lakhs. The higher income is primarily attributable to higher income from operations and higher dividend income. The profit after tax was Rs. 6726 lakhs as against Rs. 3053 lakhs achieved in the previous year. The profit could have been higher but for substantial increase in employee benefits expense which was higher by Rs.7075 lakhs as also increase in certain other input costs.
TRANSFER TO GENERAL RESERVE
Your Directors decided to transfer Rs.15000 lakhs to the General Reserve from the Retained Earnings of the Company and after such transfer Rs.3618 lakhs will remain in the Retained Earnings of the Company.
DIVIDEND
Your Directors have recommended a dividend of Re. 0.50 per equity share, being 10% on 109455735 fully paid up equity shares of Rs. 5/- each for the year ended 31st March 2018 for your approval.
REVIEW OF OPERATIONS
During the Financial year under review, saleable production of your Company was 888.71 Lakh Kgs tea, as compared to 846.10 Lakh Kgs in the previous year. Favourable weather, with better distribution of rainfall through the year contributed towards a better cropping pattern and ultimately, increased harvests. Pests and disease were better controlled, in spite of the restrictions on use of many key chemicals by the recently imposed Plant Protection Code.
The Uprooting and Replanting Policy of your Company continued to remain in focus and has further improved the percentage of tea under fifty years which is approximately 75% of the area. All tea Estates established good Clonal Tea nurseries with requisite, approved Clonal Blend. The Shade Nurseries are also of a good standard which is a key factor in developing a healthy plantation. The A forestation programme was enhanced along with creation of new water-bodies, to improve "micro-climate", in select areas which has become essential to counter the effects of climate change.
It has always been Your Company''s endeavor to produce Quality teas, which has continued to command a premium both in the domestic and international market. Production of premium Orthodox Teas was increased with an aim to fetch better prices and factory infrastructure and machinery was enhanced to meet the requirements. As part of a continuous up-gradation and modernization programme of factories, withering capacity was increased on some estates. With positive results from the trial of Continuous Withering Machine undertaken during 2013-14, another such machine was installed. In addition, the factories were provided with additional Rotorvanes, where required, CTC Machines, 65 Khari Sifters, 2 Orthodox ECP Dryers, 3 Milling/ Chasing Machines, Coal Stoves and 7 Colour Sorters. To improve quality and grade mix 45 Sorting Machines and
3 De-humidifiers for tea storage bins were installed. In some factories extension of building was undertaken to accommodate additional sorting machinery. To augment the standby generating capacity, 4 Diesel Generating Sets and 15 new transformers were also installed. To facilitate weighment and recording of bought leaf an additional 10 Weighing Machines and 40 Easy Weigh Machines were provided. To improve field operations and overcome the acute shortage of workers, 2300 Plucking Shears and 157 Pruning Machines were made available. With prevailing drought conditions every year, additional irrigation equipment was augmented on 25 Estates along with creation of new Water Bodies. The Transport Fleet was upgraded on Estates with the purchase of 24 new Tractors. Water supply to the residents of the estates was enhanced with the installation of 14 new Water Filtration Units. The increased requirement of Housing and Sanitation infrastructure for our workers and their families are being met under a planned programme and will continue to remain one of our key commitments.
The Company has forty seven ISO 22000 certified Factories. Your Company also has four estates certified as "Fairtrade" and forty five estates certified under "Rainforest Alliance." Our endeavor to have all our factories certified under the new Indian "Trustea" certification is progressing satisfactorily with several factories already certified. We are also in the process of assisting our Bought Leaf Suppliers to be compliant under this certification. Your Company also participates in the Ethical Tea Partnership, a global initiative. We have, over the year, engaged with "UN Women" to build awareness among all levels of our employees on "Violence Against Women." This programme will continue over the next two years. "Community Development Forums" have been set up on some of our estates in partnership with Taylor''s of Harrogate and Ethical Tea Partnership to bring about better awareness and improve the livelihood of our workers and their families.
The Company saw a total export quantum of 195.60 lakh Kgs in 2017-18 with an overall turnover of over Rs. 41704 lakhs. Favourable feedback was received from the buyers both in terms of quality and deliveries.
DISPOSAL OF CERTAIN TEA ESTATES
The Board of Directors (the "Board") at its Meeting held on 30th May, 2018, after considering all relevant factors, has decided to dispose of certain tea estates to achieve rationalization with the objective to optimize the operational performance by way of bringing balance amongst the Company''s own production, production using bought leaf procured from small growers and the teas produced by the overseas subsidiaries of the Company. For this purpose, the Board has formed a Committee authorizing it to identify the tea estates and carry out the process of disposal. The Board decided to utilize the sale proceeds in repayment of certain high cost debts, for buying back Company''s own shares to the tune not exceeding Rs. 100 Crores being below 10% of the Paid up capital and free reserves of the Company and making investment for diversification into packet tea business for which the Company has already agreed in principle to join hands with Eveready Industries India Limited for developing packet tea business through a third entity. Earlier, during the year under review, the Company, subject to the approval of the Government of West Bengal, sold Bhatpara Tea Estate, a loss making unit in Dooars.
BUY BACK OF SHARES
The Board at its Meeting held on 30th May, 2018 decided for buying back shares of the Company for an amount not exceeding Rs. 100 Crores at a maximum price of Rs. 210 per share from the existing shareholders from the open market through the stock exchanges. The Promoters of the Company will not participate in the proposed buy back of shares. The Board feels that the buyback would reduce the outstanding number of equity shares and consequently increase Earnings Per Share over a period of time, enable effective utilization of available cash and improve key return ratios. The Company believes that the buy-back will create long term shareholder value for the continuing shareholders.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirements of Regulation 34(2)(e) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''Listing Regulations''), a Management Discussion and Analysis Report is attached as Annexure
- I forming part of this Report.
REPORT ON CORPORATE GOVERNANCE
In terms of requirements of Regulation 34(3) of the Listing Regulations, a Report on Corporate Governance together with the Auditors'' Certificate regarding Compliance of Conditions of Corporate Governance are attached as Annexure II and Annexure III respectively, forming part of this Report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
The Company has one wholly owned subsidiary namely, Borelli Tea Holdings Limited, U.K. (Borelli) and six step down Subsidiaries. Borelli is inter alia engaged in the business of investing funds in various companies engaged in tea production, blending and marketing activities. As at the end of the year on 31st March 2018 Borelli had the following Subsidiaries in different countries:-
(i) Phu Ben Tea Company Limited, Vietnam -controlling stake of Borelli being 100%
(ii) McLeod Russel Uganda Limited - controlling stake of Borelli being 100%
(iii) Gisovu Tea Company Limited, Rwanda - controlling stake of Borelli being 60%
(iv) McLeod Russel Middle East DMCC, UAE - controlling stake of Borelli being 100%
(v) McLeod Russel Africa Limited, Kenya - controlling Stake of Borelli being 100%
(vi) Pfunda Tea Company Limited, Rwanda - controlling stake of Borelli being 90%
The performances of the Subsidiaries are summarized below for your information.
As required under Section 129 (3) of the Companies Act, 2013 and Regulation 33 and 34(2)(b) of the Listing Regulations, Consolidated Financial Statements of the Company and its seven Subsidiaries prepared in accordance with the applicable Accounting Standards issued by The Institute of Chartered Accountants of India are appended in the Annual Report. Investments made in D1 Williamson Magor Bio Fuel Limited, an Associate Company, have been fully provided for in the Accounts of the earlier years and as such the Financial Statements of the said Company have not been considered for consolidation.
A statement containing the salient features of the financial statements of the Company''s seven Subsidiaries and the Associate Company pursuant to the first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 prepared in Form AOC-1 is attached to the financial statements of the Company for your information.
The Company has formulated a Policy for determining "Material Subsidiary" and the same is disclosed on the website of the Company and can be accessed at: http:// www.mcleodrussel.com/investors/policies.aspx
BORELLI TEA HOLDINGS LIMITED
Borelli Tea Holdings Limited (''Borelli'') has invested in its subsidiaries in Vietnam, Uganda, Rwanda, Dubai and Kenya. During the year under review, Borelli earned a profit after tax equivalent to Indian Rs.26326.61 lakhs which includes a profit of Rs.19881.74 lakhs on sale of a part of its long-term investments and paid interim dividends equivalent to Indian Rs.15395.43 lakhs. The Board of Directors of Borelli has recommended payment of final dividend at the rate of 200%, being 2 GBP per share on its equity capital entirely held by your Company.
PHU BEN TEA COMPANY LIMITED (PBTCL)
The Company produced 73.9 lakh kgs in 2017 as compared to 84.30 lakh kgs in 2016. Sales quantity in 2017 was 74.3 lakh kgs compared to 68.6 lakh kgs for 2016. Inclement weather conditions hampered harvests and production during the peak production months. Cyclones, storms, heavy rainfall and flooding disrupted operations and also damaged some plantation areas and infrastructure. The Company incurred a loss equivalent to Rs.1397 lakh during the year 2017 as compared to a loss of Rs.1708 lakh incurred during the year2016.
The diversified range of Phu Ben''s products including Black CTC, Green CTC, Green Orthodox & Black Orthodox teas, have contributed to our presence in the market positively and our teas are well sought after. The Company continues to lay stress on quality control in both field and factory and adheres to GAP for plantation activities, along with IPM for pest control.
All Phu Ben estates and factories including Tai Trung and Ngoc Hai are accredited ISO 9000: 2008 and ISO 22000: 2005, GMP & Halal and are also Rainforest Alliance certified.
McLEOD RUSSEL UGANDA LIMITED (MRUL)
The operating results and the profitability of McLeod Russel Uganda Limited (MRUL) received a new height in 2017 due to increased sale price.
The company earned a post-tax profit equivalent to Indian Rs.7544 Lakh in the year 2017 compared to a profit of Rs.5646 Lakhs in 2016. The sale price of MRUL teas improved in 2017 compared to 2016 and the cost of production was controlled resulting in higher profits during the year.
During the year 2016, MRUL manufactured 166.7 lakh kgs (2016 - 173.1 lakh kgs), a reduction of approximately 4% due to drought weather experienced in tea growing areas of Africa. The decrease in production in company''s own crop was 12.6 lakh kgs which was in the first half of the year. However there has been increase in tea produced from out-growers'' leaf by 6.2 lakh kgs.
MRUL paid an interim dividend equivalent to Rs.3561 Lakh for the year 2017 (2016 - Rs.3092 Lakh).
The company has expanded its production capacity at Ankole Tea Estate by 1.5 million kg per annum during the year which will be used in processing increasing volume of green leaf from out growers. The factory has successfully installed Continuous Withering Machine which will give consistent wither and is cost effective process. It has commenced setting up a new factory at Kisaru Tea Estate to process additional volume of leaf.
There has been continuous effort to enhance the quality of tea by improved plucking technique and it has paid result in terms of better sale price, especially at Bugambe Tea Estate. The company has received prestigious President''s Exporter award of the year for two years in succession.
Development of Sports Activity is the key focus for the company and it has been holding inter estate soccer tournament with active participation of the employees. This has resulted in improvement in the moral and has contributed in improved human productivity.
GISOVU TEA COMPANY LIMITED (GTCL)
There has been record production of crop in the year 2017 at 27.4 lakh kgs as against 24.1 lakh kgs in 2016 registering an increase of 14%. The sale price of tea also improved during the year. The cost of sales for the year 2017 was at USD 2.40 per kg as compared to USD 2.31 per kg in the previous year.
The above factors have resulted in a very impressive profit after tax at Rs.2371 Lakh in 2017 as compared to Rs.1229 Lakh in 2016. The company had declared dividend of Rs.1359 Lakh in the year 2017 as compared to Rs.713 Lakh in the previous year.
The strength of the company is to produce high quality tea in Rwanda and it maintained its lead during the year in terms of highest sale price even with increased volume of crop.
The company has received the charge of development of about 61 Hect of land given on short term renewable lease by local government. The estate is developing it on a fast pace.
The company has focused its CSR activities in terms of providing improved housing and drinking water to neighboring villages. This has gathered the momentum during the year and has completed 10 houses and one water project.
McLEOD RUSSEL MIDDLE EAST DMCC (MRME)
MRME maintained its performance with a post tax profit of Rs.131 Lakh (2016 - Rs.127 Lakh). The total revenue of the company has been Rs 2438 Lakh (2016 - Rs.2123 Lakh) The company purchased 15.75 lakh kgs of tea compared to 13.33 lakh kgs in 2016. It sold 16.12 lakh kgs of tea compared to 13.87 lakh kgs in previous year.
McLEOD RUSSEL AFRICA LIMITED (MRAL)
There had been decline in the volume of business in MRAL during 2017 due to less crop produced in Kenya. The company had purchased and sold 22 lakh kgs of tea in 2017 compared to 37 lakh kgs in 2016. The low volume of business had resulted in a net loss of Rs.67 Lakh in 2017 as compared to net profit of Rs.16 lakh in previous year. The business outlook for the year 2018 has brightened and increased volume has been experienced in the quarter ended 31st March 2018.
PFUNDA TEA COMPANY LIMITED (PTCL)
The production of tea in 2017 was less at 24.7 lakh kgs as compared to 25.4 lakh kgs in previous year. However, improved sale price in 2017 has helped in enhancing post tax profit equivalent to Rs.1415 Lakh as compared to Rs.661 Lakh in 2016. The cost of sales at USD 2.08 in 2017 is marginally higher than previous year. The company declared a dividend of Rs.679 Lakh in 2017 (2016 -Rs.238 Lakh).
The company has a young tea plantation on about 254 hectare of land which is expected to enhance the volume of crop and bring in new character to the present tea due to its high elevation. The estate has been undertaking necessary upkeep and consolidation of the area where harvesting is expected to commence in a couple of years.
The company has developed one basketball court under CSR to enhance the sporting events in the estate.
CORPORATE SOCIAL RESPONSIBILITY
The philosophy of your Company towards fair governance going hand-in hand with social responsibilities is deeply embedded in its day to day working. The Company has, over the years, successfully formulated a methodology aimed towards improving the life of the people and the environment, which surround the units of the Company and thereby enriching the society.
In terms of Section 135 (5) of the Companies Act, 2013, certain class of companies are required to spend at least 2% of Average Net Profits made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. Although your Company did not have Average Net Profit during the above period computed in terms of Section 198 of the Act, still like earlier years, it continued with its welfare activities for development in the field of education, culture and other welfare measures to create livelihood and improve the general standard of living in and around the Tea Estates of the Company and other areas where it operates. The details of the said projects pursued by the Company are given in Annexure IV in the form prescribed under the Companies (Corporate Social Responsibility) Rules, 2014.
In addition to the above, like the earlier years, the Company was also associated with various other Social Welfare activities which include the following:
Facilitating Cataract Operation Camps in association with Shankardev Netralaya where good number of patients has undergone successful eye surgeries.
Supported Moran Blind School like earlier years.
Associated with Williamson Magor Education Trust in awarding the Assam Valley Literary Award which was conferred on this year to three eminent persons of the literary world of Assam, namely, poet Shri Sananta Tanti, novelists Shri Yeshe Dorjee Thongchi and Dr. Rita Chowdhury.
Involved in preservation of ecosystem and natural habitats.
Supporting heritage conservation.
The Company has a CSR Committee and adopted a CSR Policy which can be accessed at http://www.mcleodrussel. com/investor/policies.aspx. The Corporate Social Responsibility Committee of the Board as on 31st March, 2018 consisted of 3 Executive Directors, namely, Mr. R. Takru, Mr. A. Monem, Mr. K. K. Baheti and Mr. R. Sen, an Independent Director. Mr. R. Takru is the Chairman of the CSR Committee.
BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report of the Company for the year ended 31 st March, 2018 is attached as Annexure V and forms a part of the Directors'' Report.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure VI. The Policy is hosted on the website of the Company and can be viewed at http://www.mcleodrussel. com/investor/policies.aspx.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Board acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 for the year ended 31st March 2018 and state that:
(a) In the preparation of the annual accounts, the applicable accounting standards had been followed with no material departure.
(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 at the end of the financial year 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.
(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.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Since the last Report there has been no change in the Board of Directors. In accordance with the provisions of the Articles of Association of the Company read with Section 152 of the Companies Act, 2013, Mr. Amritanshu Khaitan and Mr. Azam Monem will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.
In terms of Regulation 17(1 A) of Listing Regulations as inserted by the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, which is effective from 1st April 2019, the continuation of the directorship of Mr. B. M. Khaitan and Dr. R. Srinivasan, who have already attained the age of 75 years is recommended for the approval of the Members by way of Special Resolutions at the forthcoming Annual General Meeting.
During the year, the Company had five Key Managerial Personnel, being Mr. Aditya Khaitan, Vice-Chairman and Managing Director, Mr. R. Takru, Whole time Director, Mr. A. Monem, Whole time Director, Mr. K. K. Baheti, Whole time Director and CFO and Mr. A. Guha Sarkar, Company Secretary.
The Independent Directors have submitted their disclosures to the Board that they meet the criteria as stipulated in Section 149(6) of the Companies Act, 2013.
The Board met four times during the year on 30th May 2017, 8th August 2017, 10th November 2017 and 5th February 2018. The intervening gap between any two Board Meetings was within the period prescribed by the Companies Act, 2013.
The Company has adopted a Familiarization Programme for Independent Directors and the same is disclosed on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx.
SEPARATE MEETING OF INDEPENDENT DIRECTORS
In terms of requirement of Schedule IV to the Companies Act, 2013, the Independent Directors had a separate meeting on 30th March 2018 without the attendance of non-independent Directors and members of management. All the Independent Directors were present at the said meeting. The activities prescribed in paragraph VII of Schedule IV to the Act were carried out at the said meeting.
BOARD EVALUATION
The Securities Exchange Board of India (SEBI) vide its circular No. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January 2017 had issued a guidance note on Board Evaluation which inter alia contains indicative criterion for evaluation of the Board of Directors, its Committees and the individual members of the Board.
The Board of Directors at its Meeting held on 30th March, 2017 had considered and adopted the indicative criterion for evaluation of the Board of Directors, the Committees of the Board and the individual directors as enumerated in the said Circular and amended the Board evaluation framework accordingly.
Pursuant to the new Evaluation Framework adopted by the Board, the Board evaluated the performance of the Board, its Committees and the Individual Directors for the financial year 2017-18. After the evaluation process was complete, the Board was of the view that the performance of the Board as a whole was adequate and fulfilled the parameters stipulated in the evaluation framework in its pro-growth activity and facing challenging operational, climatic and economic adversities during the year. The Board also ensured that the Committees functioned adequately and independently in terms of the requirements of the Companies Act, 2013 and the Listing Regulations and at the same time supported as well as coordinated with the Board to help in its decision making. The individual Directors'' performance was also evaluated and the Board was of the view that the Directors fulfilled their applicable responsibilities and duties as laid down by the Listing Regulations and the Companies Act, 2013 and at the same time contributed with their valuable knowledge, experience and expertise to grab the opportunity and counter the adverse challenges faced by the Company during the year.
AUDIT COMMITTEE
The Audit Committee of the Board as on 31st March 2018 consisted of Dr. R. Srinivasan, Mr. B. Bajoria, Mr. R. Sen and Mr. Aditya Khaitan. Dr. R. Srinivasan, a NonExecutive Independent Director, is the Chairman of the Audit Committee.
The Company has established a Vigil Mechanism/ Whistle Blower Policy and oversees through the Audit Committee, the genuine concerns, if any, expressed by the employees and the Directors. The Company has also made provisions for adequate safeguards against victimization of employees, Directors or any other person who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The Vigil Mechanism / Whistle Blower Policy of the Company has been uploaded on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee of the Board as on 31st March 2018 comprised Mr. B. Bajoria, a Non-Executive Independent Director, as its Chairman and Dr. R. Srinivasan and Mr. R. Sen, Non-Executive Independent Directors as its Members.
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 Regulation 19 of the Listing Regulations is attached to this report as Annexure VII.
LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
The particulars of loans, guarantee or investment made under Section 186 of the Companies Act, 2013 are furnished in the Notes to the Financial Statements for the year ended 31st March 2018.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
The Related Party Transactions entered into by the Company during the year under review were on arm''s length basis in the ordinary course of business for mutual benefits. There was no contract, arrangement or transaction with Related Parties which could be considered as material and which may have a potential conflict with the interest of the Company. The Company has formulated a Related Party Transaction Policy and the same is disclosed on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/ policies.aspx.
DEPOSITS
The Company has neither accepted nor renewed any deposits during the year under review.
GOING CONCERN STATUS
No significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operation in the future.
MATERIAL CHANGES AFTER END OF THE FINANCIAL YEAR
Except as disclosed elsewhere in this Annual Report, no material changes and commitments which could affect the financial position of the Company, have occurred between the end of the last financial year and the date of this Annual Report.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Financial statements (i.e. Balance Sheet, Profit & Loss Statement and Cash-Flow Statement, together with notes) are prepared through the process which has automated as well as manual controls to ensure accuracy of recording all transactions which have taken place during any accounting period, and the resultant financial position at period end. All data pertaining to payroll, purchases, agricultural activities, plucking, manufacturing, dispatch, selling and other activities are recorded through ERP systems operating in tea estates as well as head office. All data/transactions entered in systems are checked by various functional personnel on the basis of supporting documents & records, then the accounting entries are checked by accounts personnel and finally those are validated by managerial personnel.
At periodic intervals, the accounting data are compiled, and financial statements are prepared. While preparing the financial statements, it is ensured that all transactions pertaining to the accounting period are recorded. Fixed assets, stock of tea, all significant items of stores and monetary assets are physically verified. Balance confirmations are obtained for all significant items of trade receivable and advances.
After preparation of the financial statements, all items appearing in the statements are analysed in order to ensure overall reasonableness.
The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.
CEO AND CFO CERTIFICATION:
In terms of Part B of of Listing Regulations, the CEO and the CFO of the Company certify to the Board regarding review of the financial statements, compliance with the accounting standards, maintenance of internal control systems for financial reporting and accounting policies, etc.
HEALTH, SAFETY AND WORKING ENVIRONMENT
The Company considers its people as one of the most valuable resources and recognizes that safe and healthy working environment motivate employees to be more productive and innovative. The Company takes adequate measures to keep its field and factories safe in all respects. Regular training is imparted to the employees for promoting awareness on safety and skill enhancement. The Company runs a hospital in each of its Tea Estates where the employees of the concerned Estate get regular medical attention. In addition, the Company has set up six central hospitals which are equipped with modern medical instruments. These hospitals are accessible to the employees of the surrounding areas. The Company also provides facilities for sporting and cultural activities for the employees in the Tea Estates.
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 is attached to this Report as Annexure VIII.
SECRETARIAL AUDIT
In terms of the requirements of Section 204 of the Companies Act, 2013, the Secretarial Audit of the Company for the year ended 31st March 2018 was conducted by Messrs. A. K. Labh & Co, Company Secretaries. The Secretarial Auditors'' Report is attached to this Report as Annexure IX and forms part of the Directors'' Report. There is no qualification or reservation or adverse remark or disclaimer made by the Secretarial Auditor in the Report.
COST AUDIT
The Board had appointed four firms of Cost Accountants to conduct audit of cost records maintained by the Company for the year ended 31st March, 2018 and the remuneration of the said firms were ratified by the shareholders at the 19th Annual General Meeting of the Company. It is informed with regret that Mr. Ashok Kumar, Proprietor of Messrs. Kumar & Associates, one of the said four firms, expired in January 2018. In view of this the Board, based on the recommendation of the Audit Committee allocated the Tea Estates which were to be audited by Messrs. Kumar & Associates to the three other Cost Auditors at a revised remuneration. A suitable resolution will be placed before the Members at the ensuing Annual General Meeting for ratification of the said remuneration for the year ended 31st March, 2018.
In accordance with the requirements of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of the Company has appointed the following firms of Cost Accountants to conduct audit of Cost Records maintained by the Company for the Tea Plantations of the Company for the year ending 31st March 2019;
(i) M/s Mani & Company
(ii) M/s SPK Associates
(iii) M/s DGM & Associates.
Pursuant to the provisions of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors is required to be ratified by the Members of the Company, a resolution for which will be placed before the Members at the ensuing Annual General Meeting.
The Cost Audit Report furnished by the Cost Auditors in respect of the year ended 31st March, 2017 which did not contain any qualification, reservation or adverse remark was filed with the Ministry of Corporate Affairs within the time prescribed under the Companies Act, 2013.
AUDITORS AND AUDIT REPORT
Under Section 139 of the Companies Act, 2013 and rules made there under, it is mandatory to rotate the Statutory Auditors. In line with the requirements of the Act, Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration Number 117366W/W-100018) ("Deloitte") was appointed as the Statutory Auditors of the Company to hold office for a period of 5 consecutive years from the conclusion of the 19th Annual General Meeting held on 9th August, 2017 till the conclusion of 24th Annual General Meeting. Deloitte has conducted Audit for the financial year ended 31st March, 2018 and furnished their report to the Board. There is no qualification, reservation or adverse remark made by the Statutory Auditors of the Company in their Report pertaining to the year ended 31st March 2018.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
A statement giving details of conservation of energy, technology absorption and foreign exchange earnings & outgo in accordance with Section 134(3)(m) of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, is attached to this Report as Annexure X.
RISK MANAGEMENT
The Company has adopted and implemented a Risk Management Policy after identifying various risks which the Company encounters with during the course of its business none of which in the opinion of the Board may threaten the very existence of the Company itself. The Company maintains a Risk Register where the particulars of the risks identified are entered. The Company has taken adequate measures to mitigate various risks encountered by the Company.
PREVENTION OF INSIDER TRADING:
Your Company has adopted a Code of Conduct for prevention of Insider Trading in compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015. All Directors, employees and other designated persons, who could have access to unpublished price sensitive information of the Company are governed by this Code.
The trading window for dealing with equity shares of the Company is duly closed during declaration of financial results and occurrence of any other material events as per the code. During the year under review there has been due compliance with the code.
PARTICULARS OF EMPLOYEES
The ratio of the remuneration of each Director to the median employee''s remuneration and other particulars or details of employees pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this Report as Annexure XI.
EMPLOYEE RELATIONS
The Company''s large work force continues to remain the backbone of its operations and their welfare has remained a prime area of focus. Upgradation and introduction of new housing facilities, water supply and sanitation, medical infrastructure etc. have been given priority.
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 Committees (ICC) for its workplaces. During the year, two complaints regarding sexual harassment in two different Tea Estates were received by one of the said Committees. The said complaints were duly handled by the concerned ICC in terms of the Policy adopted by the Company and were disposed of within the prescribed time.
Your Board of Directors wish to place on record its sincere appreciation for the dedicated services rendered by the executives, staff and workers at all levels for smooth functioning of all the estates.
For and on behalf of the Board of Directors
A. Khaitan K. K. Baheti
Managing Director Whole time Director & CFO
Place: Kolkata
Date: 30th May 2018
Mar 31, 2017
REPORT OF THE DIRECTORS
for the year ended 31st March 2017
The Directors have pleasure in presenting the Nineteenth Annual Report with the Audited Financial Statements of your Company, for the financial year ended 31st March 2017.
REVIEW OF PERFORMANCE
The financial results of the Company for the year ended 31st March 2017 are summarized below:
Rs. in Lakhs
|
2016-17 |
2015-16 |
|
|
Revenue from Operations |
148540 |
150678 |
|
Other Income |
18448 |
9770 |
|
Total Revenue |
166988 |
160448 |
|
Profit before Finance Costs, Depreciation, Exceptional Items and Taxation |
21508 |
18161 |
|
Less : Finance Costs |
12757 |
10078 |
|
Less : Depreciation and Amortization Expenses |
8252 |
8064 |
|
Profit before Exceptional Items and Tax |
499 |
19 |
|
Less : Exceptional Items |
- |
- |
|
Profit before Tax |
499 |
19 |
|
Tax Expense |
(2554) |
(391) |
|
Profit for the year |
3053 |
410 |
FINANCIAL PERFORMANCE
In a difficult year your Company has performed reasonably well. Although the income from operations during the year was little down at Rs. 148540 lakhs as against Rs. 150678 lakhs in the previous year, the total income during the year has increased from Rs. 160448 lakhs to Rs. 166988 lakhs on account of increase in other income. There was a sizeable reduction in cost of materials consumed primarily on account of lower quantity of green leaf purchased at a lower purchase price.
The profit after tax was up at Rs. 3053 lakhs from Rs. 410 lakhs earned in the earlier year which is attributable to increase in other income, reduction in cost of materials consumed and reversal of tax provisions. The profit could have been higher but for substantial increase in employee costs to the tune of Rs. 8633 lakhs on account of higher wages and ancillary benefits given to the workers in terms of industry wide agreement with the Workers'' Union, increase in cost of cereals etc.
Sales during the year was down at Rs. 139297 lakhs from Rs. 148308 lakhs in the previous year, primarily on account of unfavorable selling price which was lower compared to the previous year by Rs. 10.79 per kg. The price of tea was down on account of higher production in certain tea producing countries, weak economic conditions in some of the tea consuming nations which had affected Company''s exports and also on account of demonetization of Indian currency notes of higher denominations, during the latter part of the year.
DIVIDEND
Your Directors have recommended a dividend of Re. 0.25 per equity share, being 5% on 109455735 fully paid up equity shares of Rs. 5/- each for the year ended 31st March 2017 for your approval.
REVIEW OF OPERATIONS
During the financial year under review, your Company had saleable production of 846.10 Lakh Kgs of tea as compared to 856.55 Lakh Kgs in the previous year. The Company could have achieved better production but for inclement weather and pest attacks which adversely affected cropping. Unprecedented heavy rainfall during June and July 2016 resulted in drop in temperatures and excessive wet conditions which are not entirely conducive to good leaf growth. Heavy rainfall continued till September 2016 causing flooding and water-logging on many estates. Weather conditions improved over October and early November 2016, after which the winter dry spell commenced and continued till late February 2017. Though the total rainfall for the year was marginally higher than the previous year, uneven distribution impeded good flushing and adversely affected harvests. With only moderate precipitation over the period February and March 2017, early cropping for the First Flush season was adversely affected. Pest activity was a matter of concern in most districts of Assam and Dooars. All estates are now strictly following the Tea Boards "Plant Protection Code" with a restricted choice of chemicals for effective pest management. Efforts to control pest infestation were largely successful.
The Uprooting and Replanting Policy of your Company continued to remain an area of focus and has further increased the percentage of tea under fifty years which is approximately 72% of the total area. All tea estates established good Clonal Tea nurseries with requisite, approved Clonal Blends. A forestation programs to create improved micro-climates were also enhanced. With the growing trend of migration of workers from the estates and the resulting shortage of hands to work on the estates, your Company has taken initiatives to mechanize some field operations, namely introduction of Plucking Machines, Plucking Shears and Pruning Machines. Earth Movers and Excavators are also being extensively used. Considerable work on upgrading of existing irrigation equipment has been undertaken and additional sets provided. Most estates are now adequately equipped and more projects will continue over the next few years as irrigation has now become critical with changing weather patterns and prolonged dry winter. During the year the Company has incurred total capital expenditure to the tune of Rs. 10776 lakhs, the benefits of which will be derived in the years to come. The Nilpur Blending Unit has been shifted to the Companyâs new unit at Guwahati.
Your Company''s focus to produce Quality Teas was given further impetus and our teas continued to command a premium both in the domestic and international market. Modernisation and up gradation programs for our manufacturing units have remained an area of priority to improve the process of tea manufacture and produce better quality teas. Continued introduction of energy efficient machinery and infrastructure is your Company''s priority and useful steps were taken in this direction.
The Company has forty seven ISO 22000 certified Tea Estates and Factories, four "Fairtrade" certified and forty four "Rainforest Alliance" certified. Your Company also participates in Ethical Tea Partnership, a global initiative.
The Company saw a total export quantum of 154.79 lakh Kgs during the year with an export turnover of over Rs. 32548 lakhs. Favorable feedback was received from the buyers both in terms of quality and deliveries.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
In terms of requirements of Regulation 34(2)(e) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''Listing Regulations''), a Management Discussion and Analysis Report is attached as Annexure - I forming part of this Report.
REPORT ON CORPORATE GOVERNANCE
In terms of requirements of Regulation 34(3) of the Listing Regulations, a Report on Corporate Governance together with the Auditors'' Certificate regarding Compliance of Conditions of Corporate Governance are attached as Annexure II and Annexure III respectively, forming part of this Report.
The disclosure in terms of item (iv) of sub clause (iv) of second proviso of clause (B) of Section II of Part II of Schedule V to the Companies Act, 2013 has been provided in the Report on Corporate Governance attached to this Report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
The Company has one wholly owned subsidiary namely, Borelli Tea Holdings Limited, U.K. (Borelli) and six step down Subsidiaries. Borelli is inter alia engaged in the business of investing funds in various companies engaged in tea production, blending and marketing activities. During the year under review, Rwenzori Tea Investment Company Limited, Uganda which was a subsidiary of Borelli, was amalgamated with McLeod Russel Uganda Limited. As at the end of the year on 31st March 2017 Borelli had the following Subsidiaries in different countries:-
(i) Phu Ben Tea Company Limited, Vietnam -controlling stake of Borelli being 100%
(ii) McLeod Russel Uganda Limited - controlling stake of Boreli being 100%
(iii) Gisovu Tea Company Limited, Rwanda - controlling stake of Borelli being 60%
(iv) McLeod Russel Middle East DMCC, UAE - controlling stake of Borelli being 100%
(v) McLeod Russel Africa Limited, Kenya - controlling Stake of Borelli being 100%
(vi) Pfunda Tea Company Limited, Rwanda - controlling stake of Borelli being 90%
The performances of the Subsidiaries are summarized below for your information. D1 Williamson Magor Bio Fuel Limited, an Associate of the Company, did not have any business during the year under review.
As required under Section 129 (3) of the Companies Act, 2013 and Regulation 33 and 34(2)(b) of the Listing Regulations, Consolidated Financial Statements of the Company, its seven Subsidiaries and an Associate Company prepared in accordance with the applicable Accounting Standards issued by The Institute of Chartered Accountants of India are appended in the Annual Report.
A statement containing the salient features of the financial statements of the Company''s seven Subsidiaries and the Associate Company pursuant to the first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 prepared in Form AOC-1 is attached to the financial statements of the Company for your information.
The Company has formulated a Policy for determining "Material Subsidiary" and the same is disclosed on the website of the Company and can be accessed at: http:// www.mcleodrussel.com/investors/policies.aspx
BORELLI TEA HOLDINGS LIMITED
Borelli Tea Holdings Limited (''Borelli'') has invested in its subsidiaries in Vietnam, Uganda, Rwanda, Dubai and Kenya. During the year under review, Borelli earned a profit after tax equivalent to Indian Rs. 3189.23 lakhs and its Board of Directors has recommended payment of dividend at the rate of 200% on its equity capital entirely held by your Company.
PHU BEN TEA COMPANY LIMITED
The Company produced 84.28 lakh kgs of tea during
2016 as compared to 86.64 lakh kgs in the earlier year. The tea market in 2016 continued to be depressed and a surplus in the world market suppressed prices in spite of the good standard of teas produced. Sales in 2016 was 68.61 lakh kgs compared to 100.21 lakh kgs in 2015. The average selling price was USD 1.42 per kg as compared to USD 1.43 per kg in 2015. During the year the Company has incurred a loss equivalent to Indian Rs. 1708 lakhs.
The ''Tai Trung'' Green Tea Factory and ''Ngoc Hai'' & "Khanh Hoa" Orthodox Tea Factories were upgraded and produced a good standard of Teas. The production of Jasmine Tea was introduced in the Tai Trung Factory which received an encouraging response with the teas being awarded for the Best team in this category in the North American Tea Conference Awards. The CTC teas produced in the other factories were of a much improved standard and efforts on the front of EU compliance have increased the demand for our teas. All Phu Ben estates and factories including Tai Trung and Ngoc Hai are accredited ISO 9000: 2008 and ISO 22000: 2005, GMP & Halal certified. Phu Tho, Ha Hoa and Doan Hung estates are Rainforest Alliance certified. Five factories, including Phu Tho, Ha Hoa, Doan Hung, Van Linh and Khanh Hoa are also Rainforest Alliance Chain of Custody certified.
Changing weather patterns and prolonged dry spell till June 2016 adversely affected cropping trends. Another dry spell set in from November 2016 till February 2017. A tropical storm ''Dianmu'' hit North Vietnam during mid-August causing extensive damage to our plantations and infrastructure. Cropping patterns consequently changed in spite of which the year''s production estimates were achieved.
Phu Ben Tea Company was also recognized with the following awards:
- Good Implementation of Tax Laws awarded by the National Tax Department of Vietnam.
- Best Jasmine Tea awarded by the North American Tea Conference.
MCLEOD RUSSEL UGANDA LIMITED
During the year 2016, the performance of McLeod Russel Uganda Limited (MRUL) was commendable. MRUL earned a post-tax profit equivalent to Indian Rs. 5646 lakhs in the year 2016 compared to a profit of Rs. 2994 lakhs in 2015. The sale price of MRUL teas improved in 2016 compared to 2015 and the cost of production was controlled resulting in higher profits during the year. Gains on foreign exchange also contributed to increased profitability.
During the year 2016, the Company''s turnover decreased to equivalent of Indian Rs. 17544 lakhs compared to Rs. 18027 lakhs in the year 2015. During the year, the Company manufactured 173.09 lakh kgs (2015 - 184.10 lakh kgs), of tea, a reduction of approximately 6 %. The weather conditions during 2016, especially during the second half of the year, were unfavorable. The decrease in production was almost entirely in the own crop of the Company which went down by 1.1 million kgs and all of it was lost during the second half of the year. The selling price during the year 2016 improved to US $ 1.63 per kg from US $ 1.56 per kg fetched in 2015.
The Company declared a dividend equivalent to Rs. 3092 lakhs for the year 2016 as against Rs. 1708 lakhs declared in the previous year.
Quality improvement was very much emphasized in the year. A series of developmental activities are carried out both in field and factory. Introduction of Mist Blowers to improve on spraying efficiency and effectiveness for Litchen/Moss control and foliar fertilizer application has improved on the efficiency of application. Use of Trichoderma and Slurry for control of Armillaria root rot disease following successful experiments was spread across the Company. There was a slight improvement in leaf appearance across the board; leaf was blackish, grainy and fairly clean.
MRUL received the President''s Exporter of the year Gold award in the Tea Sector organized by Uganda Exports Promotions Board (UEPB). The Company was awarded a certificate of recognition for the outstanding export performance in the Tea Sector during 2015.
The Company is currently certified with Rainforest Alliance (RA), Fairtrade and Food Safety Management System (FSMS). Internal and external audits for all standards were conducted successfully during the months of June - November 2016. Our investment in Rainforest Alliance and FSMS accreditation has been supported by majority of smallholders being accredited. Management of out growers'' fields improved as observed during the audits for the farmers. This could have contributed in part to increased production for the out growers. Additionally, seventeen (17) out growers at Ankole and Muzizi were successfully added to the MRUL certified group.
Major renovations were undertaken at Bugambe, Kiko, Mwenge and Muzizi which have seen great improvements in workers'' housing conditions of over 20 housing and sanitary facilities, with major replacements of Elephant houses.
GISOVU TEA COMPANY LIMITED
The performance of Gisovu Tea Company Limited (GTCL) in the year 2016 was satisfactory. GTCL achieved the highest ever production during the year 2016. However, prices, compared to the previous year, declined and the cost of production increased, mainly due to increase in price of green leaf purchased from out growers.
During the year GTCL''s production was 24.10 lakh kgs., compared to 22.4 lakh kgs in 2015. This was an all-time record for GTCL. During the year the market for better quality teas declined and GTCL was also affected by this. The selling price declined during the year to US $ 3.20 per kg as against US $ 3.51 per kg in 2015. The turnover for the year 2016 was equivalent of Indian Rs. 4587 lakhs compared to Rs. 5165 lakhs in 2015. During the year the green leaf prices, supplied by out growers, were increased to 40 % of the selling price and it impacted the cost of production of GTCL. A reduction in corporation tax rate from 30 % to 15 % buoyed the post-tax profit of the Company. The post-tax profit of the Company was equivalent to Indian Rs. 1229 lakhs compared to Rs. 1412 lakhs in 2015. The Company declared a dividend equivalent to Rs. 713 lakhs for the year 2016 as compared to Rs. 720 lakhs paid for the year 2015.
The Company successfully commissioned orthodox machineries during the year and the trials were commenced. The Company will commercially manufacture orthodox teas in a phased manner from the current year.
MCLEOD RUSSEL MIDDLE EAST DMCC
McLeod Russel Middle East DMCC (MRME) registered an improved performance in the year 2016. The operations for the year resulted in a post-tax profit equivalent to Indian Rs. 127 lakhs compared to a profit of Rs. 93 lakhs in 2015. The Company''s turnover in 2016 was equivalent to Rs. 2123 lakhs compared to Rs. 2,647 lakhs in the previous year. Although the overall revenue declined due to lower volume, the profitability increased on account of better margin. The Company purchased 1.32 lakh kgs of tea in
2016 compared to 1.45 lakh kgs in the previous year. It sold 1.39 lakh kgs of tea compared to 1.55 lakh kgs in the earlier year. The Company is expected to continue with its improved performance.
MCLEOD RUSSEL AFRICA LIMITED
The Company continued to record satisfactory growth in volumes in its second year of operation. The Company''s revenue for the year 2016 was equivalent to Indian Rs. 5055 lakhs against Rs. 3438 lakhs in 2015. The profit after tax for the year 2016 was Rs. 16 lakhs compared to a profit of Rs. 36 lakhs in 2015. The decline in profit after tax was due to certain changes in income tax laws in Kenya. The profit before tax however was higher than the previous year. During the year 2016 the Company purchased 36.42 lakh kgs of tea against 15.89 lakh kgs for the year 2015. The Company is expected to continue to grow in the coming years.
PFUNDA TEA COMPANY LIMITED
During the year 2016 Pfunda Tea Company Limited (PTCL) manufactured a record crop of 25.43 lakh kgs of tea - up from previous year''s record production of 24.37 lakh kgs. Though the production was high, the selling price was lower and the cost was higher resulting in decline in profitability. The profit after tax in 2016 declined to an equivalent of Indian Rs. 661 lakhs compared to Rs. 1293 lakhs in 2015. Reduction in income tax rate from 30 % to 15 % buoyed the post-tax profit of the Company. The turnover for the year 2016 declined from an equivalent of Rs. 4736 lakhs in 2015 to Rs. 3572 lakhs in 2016. The selling price of tea was lower at USD 2.42/kg compared to USD 3.05 /kg in 2015. In spite of higher production, the cost of production went up, mainly due to increase in the price of green leaf, mandated by the Government of Rwanda. The Company declared a dividend equivalent of Rs. 238 lakhs in 2016 as compared to Rs. 450 lakhs in 2015.
The climatic conditions were favorable in general other than in June, July and August which witnessed low rainfall.
Tea infilling continued to be the main focus area of PTCL with 242,066 numbers of plants were unfilled during the year 2016.
With 0.95 ha of extension planting done in 2016 the entire extension programme covering an area of 253.74 ha was completed in the new area acquired.
The Company also underwent the RA and the ISO 22000:2005 certification audit during 2016, passing both the audits successfully.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is conscious of its social responsibility and the environment in which it operates. The philosophy of your Company towards fair governance going hand-in-hand with social responsibilities is deeply embedded in its day to day working. The Company has, over the years, successfully formulated a methodology aimed towards improving the life of the people and the environment which surround the Tea Estates of the Company.
Like earlier years it continued its welfare activities for development in the field of education, culture and other welfare measures to improve the general standard of living in and around the Tea Estates.
After Corporate Social Responsibility became an obligation under the Companies Act, 2013 the Company has taken up several specific projects to comply with the requirements of section 135 of the Companies Act, 2013 and the Rules made hereunder.
The details of the said projects are given in the Annexure IV in the form prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014.
The Board of Directors has formed a CSR Committee and adopted a CSR Policy for the Company which can be accessed at http://www.mcleodrussel.com/investors/ policies.aspx The Corporate Social Responsibility
Committee of the Board as on 31st March, 2017 consisted of 3 Executive Directors, namely, Mr. R. Takru, Mr. A. Monem, Mr. K. K. Baheti and Mr. R. Sen, an Independent Director. Mr. R. Takru is the Chairman of the CSR Committee.
The Company has spent Rs. 197.93 lakhs in the year under review on the CSR projects adopted by the Company representing over 2% of the average net profits of the Company for the immediately preceding three financial years.
In addition to the above, like the earlier years, the Company was also associated with various other Social Welfare activities which include the following:
- Facilitating Cataract Operation Camps in association with Shankardev Netralaya where good number of patients have undergone successful eye surgeries.
- Supported Moran Blind School like earlier years.
- Associated with Williamson Magor Education Trust in awarding the Assam Valley Literary Award which was conferred this year on Dr. Arupa Patangia Kalita, an eminent figure of the literary world of Assam.
- Involved in preservation of ecosystem and natural habitats.
- Supporting heritage conservation.
BUSINESS RESPONSIBILITY REPORT
In compliance with Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report of the Company for the year ended 31st March, 2017 is attached as Annexure V and forms a part of the Directors'' Report.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of the Listing Regulations, the Company has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure VI. The Policy is hosted on the website of the Company and can be viewed at http://www.mcleodrussel. com/investors/policies.aspx
DIRECTORS'' RESPONSIBILITY STATEMENT
The Board acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 for the year ended 31st March 2017 and state that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed with no material departure.
(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 at the end of the financial year 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.
(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.
DIRECTORS & KEY MANAGERIAL PERSONNEL
Since the last Report there has been no change in the Board of Directors. In accordance with the provisions of the Articles of Association of the Company read with Section 152 of the Companies Act, 2013, Mr. R. Takru and Mr. K.K. Baheti will retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.
The three year term of appointment of Mr. A. Khaitan, as the Managing Director and Mr. R. Takru, Mr. A. Monem and Mr. K. K. Baheti as the Whole time Directors had expired on 31st March, 2017. The Board at its Meeting held on 30th March, 2017 re-appointed each of them in their respective capacity for a fresh term of three years with effect from 1st April, 2017. Appropriate Resolutions will be placed before the Members at the ensuing Annual General Meeting seeking their approval to the re-appointment of the Managing Director and the Whole time Directors and the remuneration payable to them.
During the year, the Company had five Key Managerial Personnel, being Mr. Aditya Khaitan, Vice-Chairman and Managing Director, Mr. R. Takru, Whole time Director, Mr. A. Monem, Whole time Director, Mr. K. K. Baheti, Whole time Director and CFO and Mr. A. Guha Sarkar, Company Secretary.
The Independent Directors have submitted their disclosures to the Board that they meet the criteria as stipulated in Section 149(6) of the Companies Act, 2013.
The Board met six times during the year on 11th May 2016, 30th May, 2016 8th August 2016, 8th November 2016, 3rd February 2017 and 30th March 2017. The intervening gap between any two Board Meetings was within the period prescribed by the Companies Act, 2013.
The Company has adopted a Familiarization Programme for Independent Directors and the same is disclosed on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx
BOARD EVALUATION
Securities Exchange Board of India (SEBI) vide its circular no. SEBI/HO/CFD/CMD/CIR/P/2017/004 dated 5th January, 2017 had issued a guidance note on Board Evaluation which inter alia contains indicative criterion for evaluation of the Board of Directors, its Committees and the individual members of the Board.
The Board of Directors at its Meeting held on 30th March, 2017 had considered and adopted the indicative criterion for evaluation of the Board of Directors, the Committees of the Board and the individual directors as enumerated in the said Circular and amended the Board evaluation framework accordingly.
Pursuant to the new Evaluation Framework adopted by the Board, the Board evaluated the performance of the Board, its Committees and the Individual Directors for the financial year 2016-17. After the evaluation process was complete, the Board was of the view that the performance of the Board as a whole was adequate and fulfilled the parameters stipulated in the evaluation framework in its pro-growth activity and facing challenging operational, climatic and economic adversities during the year. The Board also ensured that the Committees functioned adequately and independently in terms of the requirements of the Companies Act, 2013 and the Listing Regulations and at the same time supported as well as coordinated with the Board to help in its decision making. The individual Directors'' performance was also evaluated and the Board was of the view that the Directors fulfilled their applicable responsibilities and duties as laid down by the Listing Regulations and the Companies Act, 2013 and at the same time contributed with their valuable knowledge, experience and expertise to grab the opportunity and counter the adverse challenges faced by the Company during the year.
AUDIT COMMITTEE
The Audit Committee of the Board as on 31st March 2017 consisted of Dr. R. Srinivasan, Mr. B. Bajoria, Mr. R. Sen and Mr. Aditya Khaitan. Dr. R. Srinivasan, a Non-Executive Independent Director, is the Chairman of the Audit Committee.
The Company has established a Vigil Mechanism/ Whistle Blower Policy and oversees through the Audit Committee, the genuine concerns, if any, expressed by the employees and the Directors. The Company has also made provisions for adequate safeguards against victimization of employees, Directors or any other person who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The Vigil Mechanism / Whistle Blower Policy of the Company has been uploaded on the website of the Company and can be accessed at http://www. mcleodrussel.com/investors/policies.aspx.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee of the Board as on 31st March 2017 comprised Mr. B. Bajoria, a Non-Executive Independent Director, as its Chairman and Dr. R. Srinivasan and Mr. R. Sen, Non-Executive Independent Directors as its Members.
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 Regulation 19 of the Listing Regulations is attached to this report as Annexure VII.
INDIAN ACCOUNTING STANDARDS
Your Company has adopted Indian Accounting Standards i.e., Ind-AS with effect from 1st April, 2016 pursuant to the notification issued by the Ministry of Corporate Affairs dated 16th February, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015. The Financial Statements for the year ended 31st March, 2017 provided in this Annual Report have been prepared following the Ind-AS. The financial Statements for the year ended 31st March 2016 have been restated to comply with Ind-AS to make them comparable.
LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
The particulars of loans, guarantee or investment made under Section 186 of the Companies Act, 2013 are furnished in the Notes to the Financial Statements for the year ended 31st March 2017.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
The Related Party Transactions entered into by the Company during the year under review were on arm''s length basis in the ordinary course of business for mutual benefits. There was no contract, arrangement or transaction with Related Parties which could be considered as material and which may have a potential conflict with the interest of the Company. The Company has formulated a related Party Transaction Policy and the same is disclosed on the website of the Company and can be accessed at http://www.mcleodrussel.com/investors/policies.aspx
DEPOSITS
The Company has neither accepted nor renewed any deposits during the year under review.
GOING CONCERN STATUS
No significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operation in the future.
MATERIAL CHANGES AFTER END OF THE FINANCIAL YEAR
Except as disclosed elsewhere in this Annual Report, no material changes and commitments which could affect the financial position of the Company, have occurred between the end of the last financial year and the date of this Annual Report.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Financial statements (i.e. Balance Sheet, Profit & Loss Statement and Cash-Flow Statement, together with notes) are prepared through the process which has automated as well as manual controls to ensure accuracy of recording all transactions which have taken place during any accounting period, and the resultant financial position at period end. All data pertaining to payroll, purchases, agricultural activities, plucking, manufacturing, dispatch, selling and other activities are recorded through ERP systems operating in tea estates as well as head office. All data/transactions entered in systems are checked by various functional personnel on the basis of supporting documents & records, then the accounting entries are checked by accounts personnel and finally those are validated by managerial personnel.
At periodic intervals, the accounting data are compiled, and financial statements are prepared. While preparing the financial statements, it is ensured that all transactions pertaining to the accounting period are recorded. Fixed assets, stock of tea, all significant items of stores and monetary assets are physically verified. Balance confirmations are obtained for all significant items of trade receivable and advances.
After preparation of the financial statements, all items appearing in the statements are analyzed in order to ensure overall reasonableness.
The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.
HEALTH, SAFETY AND WORKING ENVIRONMENT
The Company considers its people as one of the most valuable resources and recognizes that safe and healthy working environment motivate employees to be more productive and innovative. The Company takes adequate measures to keep its field and factories safe in all respects. Regular training is imparted to the employees for promoting awareness on safety and skill enhancement. The Company runs a hospital in each of its Tea Estates where the employees of the concerned Estate get regular medical attention. In addition, the Company has set up six central hospitals which are equipped with modern medical instruments. These hospitals are accessible to the employees of the surrounding areas. The Company also provides facilities for sporting and cultural activities for the employees in the Tea Estates.
ADOPTION OF NEW ARTICLES OF ASSOCIATION
The Ministry of Corporate Affairs has notified most of the Sections of the Companies Act, 2013 which have replaced various provisions of the Companies Act, 1956. In view of the change of the Companies Act, it is felt necessary to bring the Articles of Association of the Company in line with the provisions of the Companies Act, 2013. Accordingly, the Board has proposed for adoption of a new set of Articles in substitution and to the exclusion of the existing Articles of Association. A Resolution to this effect will be placed before the members at the ensuing Annual General Meeting for their approval.
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 is attached to this Report as Annexure VIII.
SECRETARIAL AUDIT
In terms of the requirements of Section 204 of the Companies Act, 2013, the Secretarial Audit of the Company for the year ended 31st March 2017 was conducted by Messrs. A. K. Labh & Co, Company Secretaries. The Secretarial Auditors'' Report is attached to this Report as Annexure IX and forms part of the Directors'' Report. There is no qualification or reservation or adverse remark or disclaimer made by the Secretarial Auditor in the Report.
COST AUDIT
In accordance with the requirements of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of the Company has appointed the following firms of Cost Accountants to conduct audit of Cost Records maintained by the Company for the Tea Plantations of the Company for the year ending 31st March 2018;
(i) M/s Mani & Company
(ii) M/s SPK Associates
(iii) M/s Kumar & Associates
(iv) M/s DGM & Associates.
Pursuant to the provisions of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors is required to be ratified by the Members of the Company, a resolution for which will be placed before the Members at the ensuing Annual General Meeting.
The Cost Audit Report furnished by the aforesaid firms of Cost Accountants in respect of the year ended 31st March, 2016 which did not contain any qualification, reservation or adverse remark was filed with the Ministry of Corporate Affairs within the time prescribed under the Companies Act, 2013.
AUDITORS AND AUDIT REPORT
Messrs. Price Waterhouse, Chartered Accountants, retire as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting.
In accordance with Section 139 of the Companies Act, 2013, Listed Companies cannot appoint or re-appoint the Auditors for more than two terms of five consecutive years. The existing Companies covered under Auditor rotation requirement are to comply with these requirements within 3 years from the date of commencement of the Act.
Messrs. Price Waterhouse, Chartered Accountants (ICAI Firm Registration No. 301112E). Kolkata, have been the
Auditors for 13 years (including 3 years of transitional period) and accordingly they are not eligible for reappointment as the Auditors at the ensuing Annual General Meeting. It is now proposed to appoint Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as the Statutory Auditors of your Company. Messers. Deloitte Haskins & Sells LLP, have consented to be appointed as the Statutory Auditors of the Company and have confirmed that their appointment , if made, would be in compliance with the provision of Sections 139 and 141 of the Companies Act, 2013 and Rules framed thereunder.
The Audit Committee and the Board, at their respective Meetings held on 30th May, 2017 has recommended appointment of Messrs. Deloitte Haskins & Sells LLP, Chartered Accountants as the Statutory Auditors of the Company for a period of five consecutive years form the conclusion of the 19th Annual General Meeting until the conclusion of the 24th Annual General Meeting.
There is no qualification, reservation or adverse remark made by Messrs. Price Waterhouse, the Statutory Auditors of the Company in their Report pertaining to the year ended 31st March 2017.
The Board wishes to place on record its sincere appreciation for the valuable services rendered by Messers. Price Waterhouse as the Statutory Auditors during their long association with the Company.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
A statement giving details of conservation of energy, technology absorption and foreign exchange earnings & outgo in accordance with Section 134(3)(m) of the Act read with Rule 8
(3), of the Companies (Accounts) Rules, 2014, is attached to this Report as Annexure X.
RISK MANAGEMENT
The Company has adopted and implemented a Risk Management Policy after identifying various risks which the Company encounters with during the course of its business none of which in the opinion of the Board may threaten the very existence of the Company itself. The Company maintains a Risk Register where the particulars of the risks identified are entered. The Company has taken adequate measures to mitigate various risks encountered by the Company.
PARTICULARS OF EMPLOYEES
The ratio of the remuneration of each Director to the median employee''s remuneration and other particulars or details of employees pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached to this Report as Annexure XI.
EMPLOYEE RELATIONS
The Company''s large work force continues to remain the backbone of its operations and their welfare has remained a prime area of focus. Up gradation and introduction of new housing facilities, water supply and sanitation, medical infrastructure etc. have been given priority. The new Wage/ Salary agreement for workers and Staff has been implemented.
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 Committees for its workplaces. During the year, no complaint regarding sexual harassment was received by the said Committees.
Your Board of Directors wish to place on record its sincere appreciation for the dedicated services rendered by the executives, staff and workers at all levels for smooth functioning of all the estates.
For and on behalf of the Board
A. Khaitan K. K. Baheti
Managing Director Whole time Director & CFO
Place: Kolkata
Date: 30th May 2017
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Annual Report with the
audited Accounts of your Company, for the financial year ended 31st
March 2014.
Review of Performance
The financial results of the Company for the year ended 31st March 2014
are summarized below:
2013-14 2012-13
Rs. in lakhs Rs. in lakhs
Profit before finance costs,
depreciation, Exceptional
Items and Taxation 31465 33245
Less : Finance costs 5605 4478
Less : Depreciation and
amortisation expenses 2408 2872
Profit before exceptional
items and tax 23452 25895
Less : Exceptional items 298 233
Profit before tax 23154 25662
Tax expense : Current tax 4423 4965
MAT Credit Entitlement (1088) (1780)
Provision/(Write back) relating
to earlier years (35) (592)
Deferred tax (957) 499
Profit for the year 20811 22570
Balance brought forward from
previous year 12787 10181
Balance available for appropriations 33598 32751
Proposed Dividend 7662 7662
Tax on proposed dividend 1135 1302
Transfer to general reserve 10000 11000
Balance carried forward 14801 12787
During the year under review, the Company achieved 11.37% higher
production at 871 lakh kgs as compared to the previous year. The
revenue from Operations was also 7% higher at Rs. 147506 lakhs. The
post tax profit however was 7.8% down as compared to the previous year,
primarily on account of lower sales realization per kg of tea sold,
increase in cost of materials consumed, higher employee costs and
higher costs of power and fuel.
Dividend
Your Directors are pleased to recommend maintenance of same dividend as
last year i.e. Rs. 7/- per equity share on 10,94,55,735 fully paid up
equity shares of Rs.5/-each.
Review of Operations
During the financial year, your Company produced 871 lakh Kgs tea as
compared to 782 lakh Kgs in the previous year. Favourable weather and
an improved Pest Management resulted in crop increase over last year.
Uprooting and Replanting Policy of the Company was maintained. This has
resulted in an improvement of the age profile of tea. Your Company now
has approximately 75% of the tea area under fifty years of age. A good
standard of Young tea has been established. All tea estates have Clonal
Nurseries with the requisite, approved Clonal Blend. Shade Nurseries
also have adequate number of plants.
The Company''s focus has always been to produce quality teas, which
continues to command a premium both in the domestic and international
market. As part of an upgradation and modernization programme of
factories withering capacity was increased on fifteen estates. Eighteen
CTC machines were replaced, fifteen CFMs, four VFBDs, five Boilers,
nine Milling Machines, nine Chasing Lathes, two Colour Sorters were
installed in various factories. Extension of factory buildings was
undertaken to accommodate additional machinery and withering troughs. A
Continuous Withering Machine was put on trial at one of the Tea Estates
in Assam. To augment Standby Power generating capacity fifteen
generating sets and ten Transformers were installed. Non-conventional
energy, in the form of Solar Power to generate 100 KW is also being
installed at Attareekhat Tea Estate in Assam. Three new JCB Excavators
were purchased to improve drainage outlets.
The Company has forty seven ISO 22000 certified factories. Your Company
also has four estates certified as "Fairtrade" and thirty five estates
certified as
ÂRainforest Alliance. The Nilpur Blending Unit is a HACCP Certified
unit. Your Companyalso participates in Ethical Tea Partnership, a
global initiative.
The average price realization for the Company''s tea for the year was
Rs. 168 per kg as compared to Rs. 171 per kg realized in the previous
year.
The Company saw a total export quantum of 236 lakh kgs during the year
with an overall export turnover of over Rs. 46525 lakhs. Favourable
feedback was received from the buyers both in terms of quality and
deliveries.
Subsidiary Companies and Consolidated Financial Statements
The Company has one wholly owned subsidiary namely, Borelli Tea
Holdings Limited, U.K. (Borelli) and six step down subsidiaries.
Borelli is inter alia engaged in the business of investing funds in
various Companies engaged in tea production, blending marketing and
investment activities. As at the end of the year on 31st March 2014
Borelli had the following subsidiaries in different countries:-
(i) Phu Ben Tea Company Limited, Vietnam - controlling stake of Borelli
being 100%
(ii) Rwenzori Tea Investments Limited, Uganda - controlling stake of
Borelli being 100%
(iii) McLeod Russel Uganda Limited - 100% subsidiary of Rwenzori
(iv) Gisovu Tea Company Limited, Rwanda - controlling stake of Borelli
being 6o96
(v) McLeod Russel Middle East DMCC, UAE - controlling stake of Borelli
being 100%
(vi) McLeod Russel Africa Limited, Kenya - controlling stake of Borelli
being 100%
As Rwenzori Tea Investments Limited (Rwenzori) does not have any
business activity, steps have been taken to amalgamate Rwenzori with
McLeod Russel Uganda Limited. The approval of the amalgamation is
awaited from the concerned Department of Government of Uganda.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept for inspection at the Registered Office of
the Company and that of the respective subsidiary companies. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies. A Statement containing
brief financial details of the Subsidiary Companies is included in the
Annual Report after the Consolidated Financial Statements. The
performance of the major Subsidiaries are summarized below for your
information.
As required under the Listing Agreement with the Stock Exchanges,
Consolidated Financial Statements of the Company, its six Subsidiaries
and one Associate Company namely, D1 Williamson Magor Bio Fuel Limited
prepared in accordance with the applicable Accounting Standards issued
by The Institute of Chartered Accountants of India are attached.
Borelli Tea Holdings Limited
Borelli Tea Holdings Limited (Borelli) has invested in its subsidiaries
in Vietnam, Uganda, Rwanda, Dubai and Kenya. During the year ended 3lst
March 2014, Borelli has achieved higher profit after tax equivalent to
Indian Rs. 5525 lakhs as compared to Rs. 3876 lakhs earned in the
earlier year. Its Board has recommended payment of dividend at the rate
300% on its equity capital held by your Company.
Phu Ben Tea Company Limited
Phu Ben Tea Company Limited made a highest ever Crop of 69.23lakh kgs
including 49-78lakh kgs from own plantation and 19.45 lakh kgs from out
growers. Sales and shipment in 2013 ended at 56.86lakh kgs compared to
62.46lakh kgs in 2012. Average selling price was USD 1.94/kg as
compared to USD 1.96 per kg last year.
Phu Ben acquired a new factory known as Khanh Hoa Tea factory in May
2013 which contributed 600,000 kgs of high quality Orthodox black tea
and diversified Phu Ben''s range of products including black CTC, green
CTC, green orthodox & black orthodox teas.
During this period the Company recorded a net profit equivalent to
Indian Rs. 640 lakhs on a sale turnover of Rs.6584 lakhs. The Company
continues to lay stress on quality control in both field and factory
and adheres to GAP for plantation activities, along with IPM for pest
control.
All Phu Ben estates and factories including Van Linh are accredited ISO
9000: 2008 and ISO 22000: 2005, GMP & Halal. Rainforest Alliance
certificate is granted to all Phu Ben estates i.e. Phu Tho, Ha Hoa and
Doan Hung estates.
The Company, which has a dedicated working team of 4,405 farmers,
workers and staffs, was recognised for its effort and contribution in
2013 with the following awards:
- The Company was recognized as a model Business Enterprise in Phu Tho
province.
- Phu Ben was awarded for good implementation of tax policies.
- Phu Ben received the Golden Leaf Cup in Thai Nguyen Tea International
Festival (2nd time).
- Phu Ben was felicitated as the Company for community service for its
contribution to students and the poor.
Mcleod Russel Uganda Limited
During the financial year of the Company ended 31st December 2013,
McLeod Russel Uganda Limited (MRUL) earned a post-tax profit equivalent
to Indian Rs. 3339 lakhs as against Rs. 6261 lakhs in the year 2012.
The saleable Production during the year was higher at 161.78 lakh kgs
as compared to 156.02 lakh kgs achieved during the previous year,
recording an increase of 5.76 lakh kgs. However, the sales realisation
for the company has gone down by 17 cents per kg compared to last year.
The sales realisation for the year 2013 was USD 1.89 per kg as compared
to USD 2.06 for last year. The reduction in profit was primarily due to
lower sales realisation during 2013. The Company has declared a
dividend equivalent to Indian Rs. 2557 lakhs against a dividend
equivalent to Indian Rs. 2584 lakhs declared in the earlier year.
The first four months of 2013 witnessed excellent rainfall and growth
conditions. Thereafter a prolonged dry spell was experienced, followed
by weak second rains. Bought leaf intake was consciously scaled down to
address quality issues. The Yield of Tea averaged 3905 kgs/ha. As a
comparative, the main tea producing companies of Kenya averaged a yield
of 3935 kgs/ha.
The development of Machine Harvesting and Single Operator Harvesters
continued as programmed accounting for 55% of all leaf harvested with
about 2096 from the latter method.
Enhancing of factory capacity as commenced in 2010, allowed for intake
of large daily volumes harvested in the year''s first half. The
factories that were expanded earlier saw improvement in the product,
with higher absorption at competitive prices. However, overall prices
were severely depressed and Mombasa average Private and Contract sale
prices were similarly affected.
The factory project commenced in 2012 at Ankole was completed and in
the course of the year the 3rd and final line upgraded to 52 inch. CTC
workshops were provided with new milling and chasing machinery.
Towards year end Processing area expansion was undertaken at Mwenge
with up-grade of one more line to 52 inch. Construction of new
withering trough building was also commenced.
The acquisition of additional land for Tea and Fuel wood expansion
covered 320 hectares at Kisaru and a 49 year renewable land lease
granted by the District Land Board. An additional area of 27 ha was
acquired near Kiko, on similar lease for the establishment of Fuel wood
plantations. At both locations ground rent payment for next ten years
has been made to the treasury.
ISO 22000 and Rainforest Alliance certification was maintained at all
locations; Muzizi and Bugambe Out- growers were also recertified.
Mwenge and Bugambe achieved Fairtrade Certification effective May 2013.
The momentum of CSR activities continued with Primary school
refurbished at Ankole and Mwenge. The company collaborated with
Mountains of the Moon University at Fort Portal for the establishment
of a Soil Testing Laboratory. A new maternity wing was added at the
Mwenge Clinic for the benefit of residents and the community.
MRUL was appointed onto the Executive Council of Federation of Uganda
Employers. Salary structure and revision of terms was put in place for
management and wage negotiation conclude with workers union, for a one
year period effective July 2013. Good relations prevailed with
employees as well as with neighboring communities.
Gisovu Tea Company Limited
The year experienced weather variables which was very wet during the
rainy season and with a prolonged dry season. This was further
compounded by Hail in August. Gisovu produced 20.24 lakh Kgs of tea and
this was as per trends of the Rwandan crop pattern where all factories
lost crop.
The African tea market was not supportive and prices fell for all marks
and continued to slide down through the year. Gisovu continued to
manufacture teas of the highest standard in East Africa and realized
the highest African average sales price of $3.54 against the previous
year''s price of $3.68 while the Rwandan average (auction) for the year
of operation was $2.72. This was achieved by selling 6o96 of the
production on a forward contract basis. On a turnover equivalent to
Indian Rupees 4139 lakhs the Company earned a post tax profit of Rs.
981 lakhs during the year ended 31st December, 2013. The Company has
declared a dividend equivalent to Indian Rs. 326 lakhs against a
dividend equivalent to Indian Rs. 503 lakhs declared in the earlier
year.
The Factory expansion project continued. The Factory now has another
new 42" CTC machine with a new 18" Rotorvane and a new McLoy drier of
650 kgs capacity. The new workshop has been equipped with a new Lathe
and an Auto Axis Milling machine. A new transformer was installed
catering for the ultimate factory. A new panel board has been installed
which gives better flexibility. A new Cummings Alternator was sourced
from Uganda and installed. Withering was enhanced by adding 8 new
troughs.
Gisovu was Rainforest Alliance certified during the year, it is already
ISO 9001 certified. The Factory cleared the ISO 22000 Audit and is now
duly certified.
Gisovu Tea Company Limited has endeavored to maintain CSR activities in
its area of operation. The Company has been repairing Roads and
Bridges, used by the Public, from the Estate to the main road head at
Kibuye, without which all in the area suffer specially in the rains.
Cordial Industrial relations were maintained with the Government of
Rwanda, local Cooperatives and workers of the Estate.
Mcleod Russel Middle East DMCC
The Company changed its accounting year from April-March to
January-December during 2013. Consequently, the accounts reflect
transactions for a period of nine months. During the period April 2013
- December 2013 company''s turnover was equivalent to Indian Rupees 1409
lakhs compared to Rupees 2076 lakhs during the financial year 2012-13.
The company is in the process of establishing its presence in UAE
market apart from exploring new territories. During the period the
Company incurred a loss equivalent to Indian Rupees 158 lakhs compared
to a loss equivalent to Indian Rupees 82 lakhs incurred in the earlier
financial year.
D1 Williamson Magor Bio Fuel Limited
D1 Williamson Magor Bio Fuel Limited (D1WML) has abandoned its
plantations in the North East on account of excessive growth of weed
damaging Jatropha plantation to a great extent. In view of this, the
Company has surrendered the land allocated to it by Assam Industrial
Development Corporation for setting up oil expeller in Assam. The
Plantation carried out in Jharkhand however, is gradually becoming
productive. Long gestation period of the Plantation is a global
phenomenon and Jatropha Plantation is going through similar phase in
all parts. The Company has made appropriate provision in the accounts
based on the uncertainty ofw the business.
Change in Company Law
The Companies Act, 2013 (''the Act'') has been passed replacing the age
old Companies Act, 1956 and a large portion of the Act has already
become effective. Several Rules under various Sections of the Act have
also been notified. Your Company is taking necessary steps to comply
with the requirements of the new Act. The Company has already formed,
reconstituted and renamed various Committees in terms of the
requirements of the Act and also adopted the Terms of Reference for the
said Committees as prescribed in the Act. Steps are in hand to
implement various other provisions of the Act to ensure compliance at
the appropriate time.
Pursuant to the General Circular 08/2014 No. l/19/2013-CL-V dated 4th
April, 2014 issued by the
MinistryofCorporateAffairs,theFinancialStatements and documents
attached thereto, the Reports of the Auditors and the Board of
Directors in respect of the Financial Year ended 31st March, 2014 have
been prepared in accordance with the provisions of the Companies Act,
1956. With respect to the provisions of the Act, appropriate references
have been made in this report in respect of certain provisions which
have become applicable.
Corporate Social Responsibility
Your Company is conscious of its social responsibilities and the
environment in which it operates. It has continued with its welfare
activities for development in the field of education, culture and other
welfare measures and to improve the general standard of living in and
around the Tea estates. The emphasis is on improvement of health,
development of education, culture and sports. Medical assistance was
also provided to the nearby villages through medical camps. Your
Company facilitated successful cataract operation camps for around 300
patients from North Bank who were operated at Shankardev Netralaya,
Guwahati and around 450 such patients from South Bank operated upon at
civil hospitals in Tinsukia and Dibrugarh. Your Company continues to
support the Moran Blind School like earlier years.
Williamson Magor Education Trust with generous donations from your
Company has awarded over 130 scholarships to deserving students
selected by an Expert Committee and Selection Board.
A high standard of medical care is provided to the work force through
well-equipped individual estate hospitals and specialized treatment at
the Central hospitals. The Mother''s club is being given wide spread
recognition.
The Assam Valley School has emerged as a premier public school of the
country and continues to provide excellent opportunity to the children
of the planting community and the North East in terms of academics and
all round development. The school is now rated amongst the best
residential schools in India, and the first in North East with
Pan-Indian recognition.
With the Company''s continued support The Assam Valley Literary Award is
being felicitated each year. This year the award was conferred on an
eminent Assamese writer Sri. Atulananda Goswami, in acknowledgement of
his contribution in the field of Assamese literature. Scholarship was
provided to meritorious students from the North East and this was
funded by the Williamson Magor Education Trust.
The Company has tied up with Bhagwan Mahaveer Viklang Sahyata Samiti,
Jaipur, an Organization which carries out the work of a rubber based
prosthetic leg more popularly known as ''Jaipur Leg'' for people with
below-knee amputations by way of organized camps. Currently the
Company is planning to organize a camp with Bhagwan Mahaveer Viklang
Sahyata Samiti at Guwahati in the first week of June 2014 with a target
to serve a significant number of physically disabled people.
Besides the above, the Company has also undertaken an activity called
"Operation Smile" involving fixation of Clefts/Pallets above the lips
of the people, suffering from facial deformation. A few patients have
already been operated upon at the Dooars Hospital at Siliguri, West
Bengal in the last year with around 15 more such operations to be
performed in near future in the current year.
The Company gives importance to preservation of the Eco system and
natural habitats around its Tea Estates and engages in several
activities to preserve the bio- diversity in its surrounding areas.
Your Company has also been supporting Heritage conservation over a long
period of time.
The Company is continuing with its support to Bodo Handloom Scheme in
Mangaldai, Assam which leads to empowerment of women and promotion of
local handicrafts, both at the Estate and village level. The Company
also supports a programme for financial assistance towards education of
under- privileged children in Kolkata and also contributes to a
recognized institution in Kolkata, which addresses the needs of
children challenged by Cerebral Palsy.
In terms of the requirements of Section 135 of the Companies Act, 2013
and rules made thereunder, the Board of Directors has formed a CSR
Committee and has adopted a CSR Policy for the Company. The Company
will continue with its CSR activities in terms of the CSR Policy.
Directors
The Company being a listed company, is required to have at least one
third of the total number of Directors as Independent Directors
according to Section l49(4) of the Companies Act, 2013 (''the Act''). In
the opinion of the Board, Dr. R. Srinivasan, Mr. B. Bajoria, Mr. R.
Sen, Mr. U. Parekh and Mrs. R Nirula, non-executive Directors, who
besides Mr. S. N. Menon, are also Independent Directors in terms of the
Listing Agreements and meet the criteria of independence in terms of
Section 149(6) of the Act, should be considered for appointment as
Independent Directors of the Company under Sections 149, 150 and 152
read with Schedule IV of the Act. Accordingly resolutions will be
placed at the ensuing Annual General Meeting (AGM) for their
appointment as Independent Directors from the date of the ensuing AGM
upto the expiry of five consequitive years or the date of the 2lst AGM,
whichever is earlier. After such appointment the said Directors will no
longer be liable to retire by rotation during their tenure as
Independent Directors.
In view of expiry of the terms of appointment of Mr. A. Khaitan as the
Managing Director and Mr. R Takru, Mr. A. Monem and Mr. K. K. Baheti as
Wholetime Directors on 31st March, 2014, considering their satisfactory
performance, the Board of Directors by its resolutions passed on 28th
March, 2014 re-appointed Mr. A. Khaitan as the Managing Director and
each of Mr. R Takru, Mr. A Monem and Mr. K. K. Baheti as Wholetime
Director for a fresh term of three years in each case commencing from
1st April, 2014. Approval of the Members to the said re-appointments as
also to the remuneration payable to the Managing Director and the
Wholetime Directors will be sought at the ensuing Annual General
Meeting.
In accordance with the provisions of the Articles of Association of the
Company read with Section 152 of the Act, Mr. D. Khaitan and Mr. A.
Monem will retire by rotation at the forthcoming Annual General Meeting
and beinehgible, offer themselves for re-appointment.
Cost Audit
In terms of an order dated 24th January, 2012 issued by The Ministry of
Corporate Affairs (MCA), Government of India, the Company was required
to arrange Audit of the Cost Accounts maintained by it in respect of
the Plantation Product. In terms of the said Order, Cost Audit for the
year ended 31st March, 2013 was conducted by four Firms namely, M/s.
Mani & Co. (Reg. No. 00004), M/s. SPK Associates. (Reg. No. 00040),
M/s. Kumar & Associates. (Reg. No. 00250), M/s. DGM & Associates.
(Reg. No. 00038) Cost Accountants, appointed with the approval of MCA.
The due date for filing the Cost Audit Reports for the Financial Year
ended 31st March 2013 with the Central Government was 27th September,
2013 and the said Reports were filed by the Cost Auditors on 16th
September, 2013.
The above mentioned firms have been appointed by the Board at its
Meeiting held on 29th April, 2013, with the approval of MCA to conduct
audit of Cost Accounting records maintained by the Company for the year
ended 31st March, 2014.
For the current financial year beginning on 1st April,
2014 and ending on 31st March, 2015, the Board of Directors, based on
the recommendation of the Audit Committee, has appointed the aforesaid
firms 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 the
Companies (Audit and Auditors) Rules, 2014, as maybe applicable.
As required under Section 148 of the Companies Act, 2013 read with Rule
14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration
payable to the Cost Auditors for the year ending 31st March,
2015 will be placed before the Members at the ensuing Annual General
Meeting for ratification.
Auditors
Messrs. Price Waterhouse, Chartered Accountants, hold office as the
Auditors of the Company upto
the conclusion of the forthcoming Annual General Meeting and are
eleigible, for re-appointment. The Company has received a letter from
them to the effect that their re-appointment, if made, would be within
the prescribed limits under the Companies Act, 2013 and that they are
not disqualified for re-appointment.
Management Discussion & Analysis Report and Report on Corporate
Governance
As required in terms of the Listing Agreement with the Stock Exchanges,
a Management Discussion and Analysis Report and a Report on Corporate
Governance are annexed forming part of this Report.
Directors'' Responsibility Statement.
Pursuant to Section 2l7(2AA) of the Companies Act, l956 the Directors
state as follows:
1. That in the preparation of the annual accounts for the financial
year ended 31st March 2014, the applicable accounting standards had
been followed with no material departures;
2. That 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 at the end of the financial year and of the
profit or loss of the Company for that period;
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities;
4. That the Directors had prepared the annual accounts on a going
concern basis.
Conservation of Energy and Technology Absorption
A statement giving details of conservation of energy and technology
absorption in accordance with the Companies (Disclosure of Particulars
in the report of the Board of Directors) Rules, 1988, is annexed.
Particulars of Employees
A statement of particulars of employees as required under section
2l7(2A) of the Companies Act, 1956, read with the Rules made thereunder
forms a part of this report as a separate Annexure.
Employee Relations
The Company has a large work force employed on tea estates. The welfare
and wellbeing of the workers are monitored closely and harmonious
relations with its employees are being maintained.
The Industrial relations remained cordial throughout the year and your
Board of Directors wish to place on record its sincere appreciation for
the dedicated services rendered by the executives, staff and workers at
all levels and for the smooth functioning of all estates. The policy of
transparency and recognition inspired the employees to contribute their
best efforts for the Company.
For and on behalf of the Board
Place: Kolkata A. Khaitan K. K. Baheti
Date: 23rd May 2014 Managing Director Wholetime Director & CFO
Mar 31, 2013
The Directors have pleasure in presenting the Annual Report with the
audited Accounts of your Company, for the financial year ended 31st
March 2013.
Review of performance
Te financial Results of the Company for the year ended 31st March 2013
are summarized below:
Rs. in lakhs
2012-13 2011-12
Profit before finance costs,
depreciation, exceptional Items 33245 34713
and Taxation
Less : Finance costs 4478 4724
Less : Depreciation and
amortisation expenses 2872 2940
Profit before exceptional items and tax 25895 27049
Less : Exceptional items 233 1382
Profit before tax 25662 25667
Tax expense : Current tax 4965 5150
Less : MAT credit (1780) (1022)
Provision/(Write back)
relating to earlier years (592) (607)
Deferred tax 499 119
Profit for the year 22570 22027
Balance brought forward
from previous year 10181 10099
Balance available for appropriations 32751 32126
Proposed dividend 7662 6567
Tax on proposed dividend 1302 1065
Transfer to general reserve 11000 14313
Balance carried forward 12787 10181
Te Board is pleased to report that despite loss of crop during the year
under review your Company earned higher Sales Revenue of Rs.137802
lakhs as against Rs.123783 lakhs earned in the previous year. Tis was
possible for higher price realisation per kg. of tea produced by the
Company. Profit after tax was also higher at Rs.22570 lakhs as against
Rs.22028 lakhs in the previous year. Te profit would have been higher
but for steep rise in some input costs like employee expenses and power
and fuel.
Dividend
Your Directors are pleased to recommend for approval of the
shareholders a dividend of Rs.7/-per equity share on 10,94,55,735 fully
paid up equity shares of Rs.5/- each being 140% on the paid up value of
the equity shares of the Company for the year ended 31st March 2013 as
against 120% (Rs.6/- per share) paid for the earlier year.
Review of operations
During the Financial year under review, your Company produced 782 Lakh
Kgs tea as compared to 793 Lakh Kgs in the previous year. Unfavorable
weather, with early season drought and thereafter excessive rain with
low temperature during the peak harvest months contributed towards the
decline in Crop.
Te Uprooting and Replanting Policy of your Company has further improved
the profile of tea under fifty years which now stands at approximately
75% of the area. All tea Estates have established good Clonal Tea
nurseries with requisite, approved Clonal Blend. Te shade nurseries are
also of a good standard.
It has always been Your Company''s focus to produce quality teas, which
continued to command a premium both in the domestic and international
market. As part of an up- gradation and modernization programme of
factories withering capacity was increased on seven estates. One
Withering Machine is being put on trial. Ten Rotorvane feeders, eleven
Rotorvanes, fifteen CTC machines, twelve CFM''s, eight VFBD''s, three
coal stoves, two boilers, twenty three Milling machines, sixteen lathe
machines were purchased
and installed in various factories. In some factories civil
construction work was undertaken to install additional sorting
machinery. To improve and monitor quality three colour sorters for
Orthodox sorting were purchased. One Vacpac machine and thirteen
De-humidifiers for the tea storage bins were installed. To augment the
standby generating capacity fifteen diesel generating sets, five Gas
generating sets, ten cooling towers for generating sets and nine new
transformers were also installed. For making river embankment and for
deepening of outlet drains two new JCB Excavators were purchased. To
facilitate weighment and recording of bought leaf six weighbridges, ten
easy log based weighment system were commissioned. For Field operations
one hundred forty six plucking machines and eighty three pruning
machines were purchased. With changing weather pattern, additional
irrigation equipment was augmented on eighteen Estates. Transport
fleet was upgraded on Estates with the purchase of twenty nine new
tractors.
Te Company''s HACCP certified factories are all in the process of being
upgraded to ISO 22000. Your Company also has four estates certified as
"Fairtrade" and fourteen estates certified as "Rainforest Alliance." Te
Nilpur Blending Unit is a HACCP Certified unit. An additional twenty
one Estates are being prepared for Rainforest Alliance Certification.
Te average price realization for the Company''s tea for the year was Rs.
171/- per kg. as compared to Rs.150/- realized in the previous year.
Te Company saw a total export quantum (both Direct as well as Deemed)
of 251 lakh kgs in 2012-13 with an overall turnover of Rs. 47938 lakhs.
Favourable feedback was received from the buyers both in terms of
quality and deliveries.
Subsidiary Companies and Consolidated Financial Statements
Te Company has one wholly owned subsidiary namely, Borelli Tea Holdings
Limited, U.K. (Borelli) and five step down subsidiaries. Borelli is
inter alia engaged in the business of investing funds in various
Companies engaged in tea production, blending, marketing and investment
activities.
As at the end of the year on 31st March 2013 Borelli had the following
subsidiaries in different countries:- (i) Phu Ben Tea Company Limited,
Vietnam Âcontrolling stake of Borelli being 100%
(ii) Rwenzori Tea Investments Limited, Uganda  controlling stake of
Borelli being 100%
(iii) McLeod Russel Uganda Limited  100% subsidiary of Rwenzori
(iv) Gisovu Tea Company Limited, Rwanda  controlling stake of Borelli
being 60%
(v) McLeod Russel Middle East DMCC Â controlling stake of Borelli being
100%
Borelli has set up a new Company in Kenya known as McLeod Russel Africa
Limited which was granted Certificate of Incorporation on 20th May
2013. Tis Company initially proposes to engage itself in Tea Trading
activities in Africa.
Olyana Tea Holdings LLC, a step-down subsidiary of the Company in USA
was closed in the year under review for not having any business
activity.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. Te Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. Te annual accounts of the subsidiary
companies will also be kept for inspection at the Registered Office of
the Company and that of the respective subsidiary companies. Te
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies. A Statement containing
brief financial details of the subsidiary companies is included in the
Annual Report in the Chapter containing Consolidate Financial
Statements. Te performance of the major subsidiaries are summarized
below for your information.
As required under the Listing Agreement with the Stock Exchanges,
Consolidated Financial Statements of the
Company, its five subsidiaries and one Associate Company namely D1
Williamson Magor Bio Fuel Limited prepared in accordance with the
applicable Accounting Standards issued by Te Institute of Chartered
Accountants of India are attached.
Borelli Tea Holdings Limited Borelli Tea Holdings Limited (Borelli) has
invested in its subsidiaries in Vietnam, Uganda, Rwanda and Dubai.
During the year ended 31st March 2013, Borelli has achieved higher
profit after tax equivalent to Indian Rs.3876 lakhs as compared to
Rs.2937 Lakhs earned in the earlier year. Its Board has recommended
payment of dividend at the rate 300% on its equity capital held by your
Company.
Phu Ben Tea Company Limited During the financial year of the Company
ended 31st December 2012, Phu Ben Tea Company Limited (Phu Ben) earned
a net profit equivalent to Indian Rs.427 Lakhs on a sales turnover
equivalent to Rs.6468 Lakhs.
Phu Ben achieved a total production of 58.97 lakh kgs. and made sales &
shipment of 62.46 lakh kgs. with average selling price of USD 1.95/kg
which was 10% higher than last year.
Total production from plantations was 43.81 lakh kgs. with average
yield of 2,911 kgs/hectares - another record in terms of quantity and
yield. Implementations of improved field and cultural practices and
favourable weather conditions contributed to this achievement.
Purchased leaf production at 18.52 lakh kgs. is an increase by 24% over
previous year.
Capacity expansion of factories by installation of an additional CTC
line at Phu To, Ha Hoa and Doan Hung has improved the operational
efficiency and contributed to increase in production
Te company continues to lay stress on quality control in both field and
factory and adheres to GAP for plantation activities, along with IPM
for pest control.
All Phu Ben estates, with an exception of Van Linh factory, are
accredited with Rainforest Alliance, ISO 9000: 2008 and ISO 22000:
2005, GMP & Halal.
Te Company, which has a dedicated working team of 4,405 farmers,
workers and staffs, was recognised for its effort and contribution in
2012 as a Model Business Enterprise in Phu To province and a
Prestigious Exporter by Ministry of Industry & Commerce. In addition,
Phu Ben Tea Company was awarded for special achievement and
contribution to the development of Vietnam Tea Industry and for good
implementation of tax policies by Phu To province.
McLeod Russel Uganda Limited During the financial year of the Company
ended 31st December 2012, McLeod Russel Uganda Limited (MRUL) earned a
post tax profit equivalent to Indian Rs.6261 Lakhs as against Rs.7949
lakhs in the year 2011. Te production during the year was 156.30 lakh
kgs. compared to 162.50 lakh kgs. during the previous year, recording a
decline of 6.2 lakh kgs. However, the sales realisation was higher at
USD 2.06 per kg. as compared to USD 1.95 per kg. realised in 2011. Te
reduction in profit was primarily due to lower production in 2012. Te
Company has declared a dividend equivalent to Indian Rs.2584 lakhs
against a dividend equivalent to Indian Rs.2301 lakhs declared in the
earlier year.
Te year 2012 began with a promising start on account of good rainfall
in the last few months of the previous year. Towards end January
however commenced the advent of extreme dry conditions not witnessed
since the drought of 2006. Te drought intensified and lifted only
towards early April. With the onset of delayed rains, crops picked up
and all locations registered steadily rising levels. Te years finish
was strong and MRUL was able to achieve a yield of 3867 kgs/hectares,
positioning itself as 2nd highest among all tea companies in East
Africa; a creditable accomplishment in a difficult year starting with
severely inclement weather. Bought leaf production was scaled down by
10% to allow development at Ankole factory.
Developments in Machine harvesting continued as planned with Single
Operator Harvesters covering 17% of area, up from 7% in previous year.
Machine pruning was further strengthened and all estates moved up to a
4 year pruning cycle without recourse to crop control. In-house trails
permitted the reduction of fertilizer application with resultant
environmental and financial benefits. Extension planting covered 27
hectares at 2 locations and a clonal blend was introduced. Eucalyptus
extension covered 24 hectares within grant area and an additional 6
hectares on out grower holdings.
Two factory projects, commenced in the first year of company''s
operations, were completed in time for the season under review and
maximum benefit was gained from equipping of these plants with new
processing machinery. In addition old mono-rails were replaced at 3
other locations. Stand-by power augmentation reduced down time and
plants were geared for more efficient processing with the
institutionalization of Low Season Machinery Maintenance. Forward
sales registered increased volumes and acceptance levels. Additional
3rd Line Factory project with Withering Troughs upgrade was undertaken
at Ankole and progressed to near completion. Tis will enable additional
bought leaf intake in years to come.
Vehicle replacement and Workers housing, conservancy and facilities
continued with momentum developed in the initial year of operations. A
Nursery School was completed at Mwenge and measures for augmenting
water supply, rain-water harvesting and energy conservation continued.
Rainforest Alliance and ISO 22,000 standards were maintained and
Fairtrade certification applied for and audit undertaken in respect of
Mwenge and Bugambe Tea Estates.
Acquisition of customary tenure land from holders neighboring Kisaru
Division for tea extension process commenced and is now advancing to
stage of land lease approved by District Land Boards.
Terms and Conditions of Service for unionisable employees were reviewed
with NUPAW and revised for a term of 2 years. Sporting and Cultural
activities continued and industrial relationships remained cordial at
all times. Training programmes, including industrial safety
orientation, were organized for Senior and Middle level Management
under the aegis of Federation of Ugandan Employees, Uganda
Manufacturing Association and Management for Development Uganda. MRUL
was featured in the
February 2013 issue of the African Business Review and Food Digital
magazine. Te Company received Best Employer Award in Hoima, Mityana and
Fort Portal regions, from the National Social Security Fund.
Gisovu Tea Company Limited Te Management of Gisovu Tea Company Limited
in Rwanda was taken over by Borelli Tea Holdings Limited, U.K. the
wholly owned subsidiary of the Company on 24th February 2011. In its
first full year of operation in 2012 under the new Management, Gisovu
recorded significant improvement both on production and price front. In
2012, the Company achieved highest ever production of 22.89 lakh kgs.
in a declining production scenario in Rwanda, the Company''s Estate was
one of the three Estates to have recorded improvement in production.
Te Company''s sale price recorded a significant jump, from USD 3.39 per
kg. in 2011 to USD 3.71 in 2012. During the year the Company achieved a
post tax profit equivalent to Indian Rs.1477 Lakhs compared to Indian
Rs.1074 Lakhs earned in the earlier year. Gisovu has declared a
dividend equivalent to Indian Rs.503 Lakhs for the year 2012.
Te area under tea has improved, with implementation of good field
practices and this will be continued. Eucalyptus forestry used for
firing the factory boilers was recycled and consolidated where there
was no regeneration of plants.
Te new machinery ordered against the Factory expansion project was
installed and Gisovu now has a 42" CTC machine with a 18" Rotorvane. A
new workshop was equipped with a Lathe and an Auto Axis Milling
Machine. Te Transformer was uploaded to cater for the ultimate factory
production and a new Panel Board was installed to give greater
flexibility. Te Withering area was enhanced by adding 8 new troughs and
an additional 4.5 ton Boiler was installed along with radiators in the
withering troughs. Gisovu achieved Rainforest Alliance certification
during the year. Te Estate is in the process of obtaining an ISO 22000
certification. Gisovu Tea Company has endeavoured to maintain CSR
activities in its area of operations. Vocational training and schools
are being supported by the Company. Good relations both with the local
Cooperatives and the Government of Rwanda has been maintained.
McLeod Russel Middle East DMCC During the year 2012-13, the Company
completed its first full year of operations. It expanded its trading
activities to new markets as well as strengthened its business in the
existing markets. Te Company''s turnover improved from an amount
equivalent to Indian Rs.234 Lakhs to Indian Rs.2076 Lakhs. However,
Company''s operations are in a fledgling state and it is expected to
turn around in the current year. Te Company incurred a net loss of an
amount equivalent to Indian Rs.82 Lakhs compared to a loss of Indian
Rs.99 Lakhs incurred in the earlier period.
D1 Williamson Magor Bio Fuel Limited D1 Williamson Magor Bio Fuel
Limited (D1WML) was incorporated under a 50:50 joint venture agreement
between Williamson Magor & Co. Limited (WML) and D1 Oils Trading Ltd.
UK to facilitate development of Jatropha plantation under contract
farming arrangements for production of bio diesel from Jatropha
oilseeds. Being an associate of WML your Company presently holds 34.30%
of the equity capital of D1WML.
D1WML has abandoned most of the plantations in the North East on
account of excessive growth of weed damaging Jatropha plantation to a
great extent. Te Plantation in Jharkhand however is gradually becoming
productive. It is now expected that the Company is likely to procure
oil seeds at sub-commercial scale till 2015 and on a commercial scale
thereafter mainly at Jharkhand. Te longer gestation period of Jatropha
plantation and the poor yield as compared to initial indication has
been a global phenomenon and most of the Companies engaged in this
business are adversely affected. In view of abandonment of the
plantations in the North East your Company has made an appropriate
provision in the Accounts against the investments made by it in D1 WML.
Corporate Social Responsibility
Your Company is conscious of its social responsibilities and
the environment in which it operates. Te Company has, over the years,
successfully formulated a methodology for improving the environment,
which surround the units of the Company and thereby enriching the
society.
Te Company continued with its welfare activities for development in the
field of education, culture and other welfare measures to improve the
general standard of living in and around the Tea Estates. Te emphasis
was on improvement of health, development of education, culture and
sports. Medical assistance was also provided to the nearby villages
through medical camps. Te Company also conducts out-reach programmes to
cover the medical needs of certain remote areas accessible from its Tea
Estates. Te Company continues to render assistance both monetarily and
with man power, to hold regular camps for eye-related needs. In this
iniative the Company receives immense support from Sri Sankardeva
Nethralaya and District Health Departments. Tere were around 1000
persons who underwent cataract operations in the year under review.
Your Company continues to support the Moran Blind School like earlier
years.
Te Tea Estates of the Company have Schools of varying capacities, both
in terms of numbers and quality. Tis is an endeavour which your Company
tries to improve upon ceaselessly. It also assists Schools in and
around its business units.
Te Williamson Magor Education Trust was formed for development of
education. Over the years, the Trust with generous donations from your
Company has awarded over 125 scholarships to deserving students
selected by the autonomous Expert Committee and Selection Board. With
its main objective of spreading education, the Trust had set up Assam
Valley School several years ago. Te school is now rated amongst the
best residential schools in India, and the first in the North East with
Pan-Indian recognition.
Each year under the aegis of Assam Valley Literary Award, the Trust
confers upon an eminent living Assamese litterateur, an award
consisting of a trophy, citation and a cash award. Tis year the award
was conferred on an eminent Assamese writer
Shri Sameer Tanti in acknowledgement of his contributions in the field
of Assamese literature.
Te Company gives importance to preservation of the natural habitat
around its Tea Estates and engages in several programmes and
initiatives to preserve the bio-diversity in its surrounding areas. Te
Company has undertaken a tree planting and soil preservation programme
and participates in the Ethical Tea Partnership programmes, a global
initiative. Your Company is also sensitive to the requirements of
world bodies which regulate cultivation and manufacturing practices. A
small but significant social measure is the Heritage conservation,
which your Company has been supporting over a long period of time.
Te Company is continuing with its support to Bodo Handloom scheme in
Mangaldai which leads to gradual empowerment of women and promotion of
local handicrafts both at the Tea Estates and village level. Te Company
also supports a programme for financial assistance towards education of
some under-privileged children in Kolkata and also contributes to a
recognised institution in Kolkata, which addresses the needs of
children challenged by Cerebral Palsy. Your Company also takes active
interest in promotion of art and has been generously contributing
towards promotion of Kolkata Museum of Modern Art (''KMOMA''), a museum
of international standard being set up at Kolkata.
Directors
Since the last Report there was no change in the Board of Directors of
the Company. In accordance with the provisions of the Articles of
Association of the Company Mr. B. M. Khaitan, Dr. R. Srinivasan, Mr.
B. Bajoria and Mr. R. Sen will retire by rotation at the forthcoming
Annual General Meeting and being eligible, offer themselves for
re-appointment.
Cost Audit
Te Ministry of Corporate Affairs, Government of India by an Order
directed audit of the Cost Accounts maintained by the Company under
Section 209(1) (d) of the Companies Act, 1956 in respect of the
Plantation Product on a yearly basis. In terms of the said Order Cost
Audit is conducted by
four firms of Cost Accountants appointed with the approval of the
Ministry of Corporate Affairs (''MCA''). In terms of the General Circular
No.15/2011 dated 11th April, 2011 issued by MCA, full particulars of
the Cost Auditors as also other details pertaining to the Cost Audit
are given in the Annexure forming part of this Report.
Auditors
Messrs. Price Waterhouse retire as the Auditors at the conclusion of
the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-appointment.
Management Discussion & Analysis Report and Report on Corporate
Governance As required in terms of the Listing Agreement with the Stock
Exchanges, a Management Discussion and Analysis Report and a Report on
Corporate Governance are annexed forming part of this Report.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956 (''the
Act'') the Directors state as follows:
1. Tat in the preparation of the annual accounts for the financial
year ended 31st March 2013, the applicable accounting standards had
been followed with no material departures;
2. Tat 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 at the end of the financial year and of the profit or
loss of the Company for that period;
3. Tat the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. Tat the Directors had prepared the annual accounts on a going
concern basis.
Conservation of Energy and Technology
Absorption
A statement giving details of conservation of energy and technology
absorption in accordance with the Companies(Disclosure of Particulars
in the report of the Board of Directors) Rules, 1988, is annexed.
Particulars Of Employees
A statement of particulars of employees as required under section
217(2A) of the Act read with the Rules made thereunder forms a part of
this report as a separate Annexure.
Employee Relations
Te Company has a large work force employed on tea estates. Te welfare
and well being of the workers are monitored closely and harmonious
relations with its employees are being maintained.
Te Industrial relations remained cordial throughout the year and your
Board of Directors wish to place on record its appreciation for the
dedicated services rendered by the executives, staff and workers at all
levels and for the smooth functioning of all estates. Te policy of
transparency and recognition inspired the employees to contribute their
best for the Company.
For and on behalf of the Board
Place : Kolkata A. Khaitan  Managing Director
Date : 27th May 2013 K. K. Baheti  Wholetime Director & CFO
Mar 31, 2012
The Directors have pleasure in presenting the Annual Report with the
audited Accounts of your Company, for the financial year ended 31st
March 2012.
Review of Performance
The financial results of the Company for the year ended 31st March 2012
are summarised below:
2011-12 2010-11
Rs.in lakhs Rs.in lakhs
Profit before finance costs,
depreciation, exceptional Items and
Taxation 34713 34292
Less: Finance costs 4724 3381
Less: Depreciation and amortisation
expenses 2940 2754
Profit before exceptional items and tax 27049 28157
Less: Exceptional items 1382 -
Profit before tax 25667 28157
Tax expense:
Current tax 5150 5150
Less: MAT credit (1022) (839)
Provision/ (Write back) relating to
earlier years (607) 23
Deferred tax 119 600
Profit for the year 22027 23223
Balance brought forward from previous
year 10099 9237
Balance available for appropriations 32126 32460
Proposed dividend 6567 5473
Tax on proposed dividend 1065 888
Transfer to general reserve 14313 16000
Balance carried forward 10181 10099
The Board is pleased to report that during the year under review your
Company has earned highest ever sales revenue of Rs.120289 lakhs as
against Rs.106895 lakhs earned in the previous year. However, the
profit after tax was lower by 5.15% primarily on account of significant
increase in cost of materials, employee expenses and provision for
diminution in value of investment, an exceptional item.
Dividend
Your Directors are pleased to recommend for approval of the
shareholders a dividend of Rs.6/- per equity share on 10,94,55,735
fully paid up equity shares of Rs.5/- each being 120% on the paid up
value of the equity shares of the Company for the year ended 31st March
2012 as against 100% (Rs.5/- per share) paid for the earlier year.
Review Of Operations
During the financial year, your Company produced 793 lakh kgs tea as
compared to 749 lakh kgs in the previous year. Favourable weather
conditions spurred growth between April and October 2011. From November
2011 onwards the weather in the North Bank of Assam and Dooars became
dry leading to an early closure of the season and a reduced harvest in
March 2012.
The Uprooting and Replanting activity of your Company has further
improved. The percentage of tea under fifty years is approximately 75%
of the total area. This has contributed to an increase in an average
yield of estates, which is higher than the Industry average. A good
standard of nurseries with the required Clonal Blend are being
maintained.
The Company's focus has always been to produce quality teas, which
commanded a premium both in the domestic and international market. As
part of an upgradation and modernisation programme of factories
withering capacity was increased on four estates. Thirty four Rotorvane
feeders, fifteen Rotorvanes, fourteen CTC machines, twenty CFM's,
twelve VFBD's, four coal stoves, six boilers, sixteen milling machines,
five lathe machines were installed in various factories. In some
factories extension of building was undertaken to accommodate
additional sorting machinery. To improve and monitor quality, six
Colour Sorters for Orthodox Sorting and six Sinar Moisture Meters were
purchased.
To augment the standby generating capacity eight diesel generating sets
and two gas generating sets were installed. Six new transformers were
also installed. For undertaking river embankment work bordering tea
estates and deepening outlet drains four new JCB Excavators were
purchased. To facilitate weighing of leaf, fertilisers, ration among
others six new weighbridges were installed. 44 new plucking machines
are being put on trial. With drought prevalent annually, additional
irrigation equipment was augmented on 14 estates. Transport fleet was
upgraded on estates with the deployment of 58 new tractors.
The Company now has 45 Hazard Analysis Critical Control Point (HACCP)
certified factories. Your Company also has 4 estates certified as
'Fairtrade' and 14 estates certified as "Rainforest Alliance." The
Nilpur Blending Unit is a HACCP Certified unit.
The average price realisation for the Company's tea for the year was
Rs.150/- which is higher than the North Indian auction average of
Rs.117/-.
The Company saw a total export quantum of 236 lakh kgs. in 2011-12 with
an overall export turnover of over Rs.40134 lakhs. Favourable feedback
was received from the buyers both in terms of quality and deliveries.
Subsidiary Companies and Consolidated Financial Statements
The Company has one wholly owned subsidiary namely, Borelli Tea
Holdings Limited, U.K. (Borelli) and six step down subsidiaries.
Borelli is inter alia engaged in the business of investing funds in
various Companies engaged in tea production, marketing and investment
activities. As on 31st March 2012 Borelli had the following
subsidiaries in different countries:-
(i) Phu Ben Tea Company Limited, Vietnam à controlling stake of Borelli
being 100%
(ii) Rwenzori Tea Investments Limited ('Rwenzori'), Uganda Ã
controlling stake of Borelli being 100%
(iii) McLeod Russel Uganda Limited à 100% subsidiary of Rwenzori
(iv) Olyana Tea Holdings LLC ('Olyana'), USA Ã controlling stake of
Borelli being 95%
(v) Gisovu Tea Company Limited, Rwanda à controlling stake of Borelli
being 60%
(vi) McLeod Russel Middle East DMCC Ã controlling stake of Borelli
being 100%
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the
Balance Sheet, Profit and loss Account and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. The Company will make available the Annual Accounts of the
subsidiary companies and the related detailed information to any member
of the Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept for inspection
at the Registered Office of the Company and that of the respective
subsidiary companies. The Consolidated Financial Statements presented
by the Company include the financial results of its subsidiary
companies. A Statement containing brief financial details of the
subsidiary companies is included in the Annual Report in the Chapter
containing Consolidated Financial Statements. Olyana, for not having
any business, is in the process of being dissolved. The performance of
the major subsidiaries are summarised below for your information.
As required under the Listing Agreement with the Stock Exchanges,
Consolidated Financial Statements of the Company, its seven
Subsidiaries and one Associate Company namely D1 Williamson Magor Bio
Fuel Limited prepared in accordance with the applicable Accounting
Standards issued by The Institute of Chartered Accountants of India are
attached.
Borelli Tea Holdings Limited
Borelli Tea Holdings Limited has invested in its Subsidiaries in
Vietnam, Uganda, Rwanda, USA and Dubai. During the year ended 31st
March 2012, Borelli earned a net profit equivalent to Indian Rs.2937
lakhs and has recommended payment of dividend at the rate of 200% on
its equity capital held by your Company.
Phu Ben Tea Company Limited
Phu Ben Tea Company Limited (Phu Ben) during the financial year of the
Company ended 31st December 2011 earned a net profit equivalent to
Indian Rs.15 lakhs on its sales turnover equivalent to Rs.4366 lakhs.
Phu Ben achieved a total production of 54 lakh kgs. Sales for the year
was 49 lakh kgs. which was sold at an average price of USD 1.74/kg.
Yield from own plantation was pegged at 2798 Kgs/Made Tea/Hectare which
was a record. Implementation of improved field and cultural practices
and favourable weather conditions attributed for this improvement.
Capacity expansion by way of additional trough at Van Linh and
systemisation of operational procedures at all the units were
reinforced.
The Company continues to lay stress on quality control in both field
and factory and adheres to GAP for plantation operational developments,
along with IPM measures for Pest control.
The plantations of the Company were "Rainforest Alliance Certified" in
2011.
The Company employs 3,920 farmers, workers and staff and maintained
good Industrial relations.
Phu Ben is considered to be the top most Tea Company in Vietnam and is
called upon by the Provincial and Central Government authorities to
impart training and partake in community development programmes along
with the Local Authorities. The Company was involved by way of
providing technical advice to a French Government aided AFD project to
develop the fields of the local farmers.
Phu Ben was awarded for Quality and Best GMP & GAP practices by the
Provincial Government at the National Tea Convention in February 2011
held at Phu Tho Province. Phu Ben was also the winner of the "Golden
Leaf Award" for best Black Tea in Vietnam at the International Tea
Convention held at Thai Ngyuen Province in November, 2011. In addition,
awards & certificates were also received from both Central Government
agencies and Provincial Authorities for Environmental Protection,
contribution to the development of the Tea Industry in Vietnam and Phu
Ben was cited as a Model Business Venture.
McLeod Russel Uganda Limited
During the financial year of the Company ended 31st December 2011
McLeod Russel Uganda Limited (MRUL) earned a post tax profit equivalent
to Indian Rs.7949 lakhs as against Rs.2504 lakhs in the year 2010. This
was achieved due to higher price realisation from USD 1.84 per kg. in
2010 to USD 1.95 per kg. in 2011, an increase of 11 cents per kg.
During the year the Company also received Income Tax exemption for a
period of ten years with effect from 2007.
Production in 2011 was lower at 163 lakh kgs. compared to 168 lakh kgs.
in 2010, due to insufficient rainfall at the beginning of the year.
However, the increase in prices compensated for the reduction in
production. The Company declared dividend equivalent to Indian Rs.2301
lakhs during the year as against Rs.1967 lakhs in 2010.
Weather conditions were unfavorable at the commencement of the year
with rainfall receding by December 2010 and becoming active only in end
March 2011. As a consequence 1st quarter factory crop was in deficit
against previous year by 38%. However, with resumption followed by
normal rainfall levels, the Company was able to recoup and the year
finished with factory deficit of 4% only against an all-time record in
2010.
Extension Tea planting was strengthened. This activity was carried out
early in the year and minimal vacancy was recorded 12 months after
planting. Eucalyptus extension was carried out. A Vegetative
Propagation Unit for fuel wood trees was established and 4 new clones
were generated at commercial level. Single Operator Harvesters were
deployed at all locations and area under mechanical harvesting
registered an increase to 56%. All fields were harvested on shorter
rounds and no crop control was resorted to.
Factory expansion to 3 lines and increase of Withering capacity was
completed at Mwenge and Bugambe. The renovated factories now have
capacity to complete manufacture of peak season volumes within 16
hours. Private sales quantum increased and new markets were accessed
in the Middle East. The Company achieved ISO 22000 FSMS certification
and maintained RA standards.
Construction of resident workers housing (6 units) and infrastructure
was completed on schedule and to high standards. A water supply project
was commenced at Mwenge to provide filtered potable water for all
residents. Under the Company's commitment to CSR and community
upliftment, 2 primary school blocks were constructed and handed over to
local Government authority.
The Company's commitment to, and success with, USAID sponsored Health
in the Work-Place Program was acknowledged by a visit of Ms. Lois Quam,
Executive Director, US Global Health Initiative accompanied by H. E.
Jerry Lanier the US Ambassador to Uganda. MRUL remained the country's
largest tea producer and exporter. Presidential, Parliamentary and
Local Government election took place nation-wide in February/March
2011, during which time estates remained calm and orderly. Good
industrial relations were maintained and strengthened by the Company's
initiatives in the fields of sport and culture.
Gisovu Tea Company Limited
The Management of Gisovu Tea Company Limited (Gisovu) Rwanda was taken
over by Borelli on 24th February 2011. During the year, formalities
relating to acquisition of 60% shares of Gisovu from the Government of
Rwanda were completed. The Company earned a post tax profit equivalent
to Indian Rs.1074 lakhs from the date of acquisition till end of the
year.
Improvement of cultivation practice coupled with favorable weather,
Gisovu achieved record production of 19 lakh kgs of made tea. An
increase of 15.09% compared with the previous highest crop ever
recorded in Gisovu.
Gisovu continued to manufacture teas of the highest standard in East
Africa and realised the highest African average sales price of USD 3.39
against the previous year's price of USD 3.16. Rwandan average
(auction) for the year of operation was USD 2.71. The Company was
acclaimed and awarded the prize for the best sale samples in East
Africa, an award presented by President Kibaki of Kenya at the East
African Tea Conference held in Mombasa.
The Factory expansion project was sanctioned in December. Machines have
been ordered and will reach the Estate shortly.
Gisovu was 'Rainforest Alliance' certified during the year. It is
already IS0 9001 certified.
Gisovu has endeavored to maintain CSR activities in its area of
operation. Removal of child labour was accomplished and these children
are now either in vocational training or schools supported by the
Company. The Company has also been instrumental in arranging
educational material in the local sector schools and has distributed
these free of cost. Arrangements have also been made for teaching
material for vocational courses like Carpentry and Masonry kits.
Good Industrial relations with the local Cooperatives were maintained.
McLeod Russel Middle East DMCC
McLeod Russel Middle East DMCC (MRME) was incorporated on 9th May 2011
in Dubai, UAE as a wholly owned subsidiary of Borelli. The principal
business of the Company is trading in tea. During the period ended 31st
March 2012, the Company incurred a net loss equivalent to Indian Rs.99
lakhs, being the first year of its operations. The Company commenced
its trading business from the second half of the financial year. MRME
is expected to perform better during the financial year 2012-13.
D1 Williamson Magor Bio Fuel Limited
D1 Williamson Magor Bio Fuel Limited (D1WML) was incorporated under a
50:50 joint venture agreement between Williamson Magor & Co. Limited
(WML) and D1 Oils Trading Ltd. UK to facilitate development of Jatropha
Plantation under contract farming arrangements for production of bio
diesel from Jatropha oilseeds. Being an associate of WML your Company
presently holds 34.30% of the equity capital of D1WML.
The plantation developed by the Company under contract farming
arrangements has been undergoing through initial gestation period at
various levels of maturity. The farmers in North East are finding it
difficult to maintain the plantation with excessive weed growth. In
view of this the Company has scaled down the level of activities in
North East and abandoned the plantation in Tripura. The plantation in
Jharkhand, though has delayed growth is gradually becoming productive
and there has been notable increase in oilseed harvest. The Company has
focused its operation in Jharkhand. The longer gestation period of
Jatropha plantation and the poor yield as compared to initial
indication has been a global phenomenon for which all companies are
adversely affected.
In view of this the Company has decided to process Jatropha Oilseed on
third party installation and defer the investment in manufacturing
facilities until the volume increases for commercial processing.
Accordingly, the Company has surrendered the land taken on lease from
Assam Industrial Development Corporation, for factory in Industrial
Growth Centre, Balipara, Assam. The Company has reduced its overhead
cost to the present scale of operation to manage the plantation and the
working capital with the fund available in the Company.
Corporate Social Responsibility
The philosophy of your Company towards fair governance going
hand-in-hand with social responsibilities is deeply embedded in its day
to day working. The Company has, over the years, successfully
formulated a methodology aimed towards improving the environment, which
surround the units of the Company and thereby enriching the society.
Your Company has continued with and improved upon the already
commendable standard of medical care to the families of its employees,
as also to the population resident around its tea estates. The Company
also conducts out-reach programmes to cover the medical needs of
certain remote areas accessible from its tea estates. The Company
continues to render assistance both monetarily and with man power, to
hold regular camps for eye-related needs. Your Company received immense
support from Sri Sankardeva Nethralaya and District Health Departments
in this initiative. There were around 1,000 persons who underwent
Cataract Operation. About 20 persons were also treated under 'Operation
Smile' for their Cleft Lip. Your Company continues to support the Moran
Blind School as in previous years. Your Company is, in a small way,
also assisting an organisation which is providing service in the form
of education and health-care for children who are challenged with
hearing problems.
The tea estates of the Company have Schools of varying capacities, both
in terms of numbers and quality. This is an endeavour which your
Company tries to improve upon ceaselessly. It also assists Schools in
and around its business units.
The Williamson Magor Education Trust was formed with the purpose of
advancement of Education in India. This broad objective encompassed the
intent to assist with scholarships, stipends and other aid, and to
assist and maintain Schools, Colleges, Hostels established by the
Trust. Also embedded in the objectives, was assistance towards
maintenance of libraries, reading rooms and the advancement of
Literature in general. Over the years, the Trust with generous
donations from your Company has awarded over one hundred scholarships
to well- deserving students selected by an autonomous Expert Committee
and Selection Board. These students have since moved ahead in life, and
have been able to improve their standard of living as also of people
around them. Your Company regularly provides financial and other
assistance to the Trust to enable it to achieve its noble objectives.
It is with this philosophy that Assam Valley School was formed by the
Trust several years ago. The School is now rated amongst the top
residential Schools in India, and the first in the North East with
Pan-Indian recognition.
Each year under the aegis of Assam Valley Literary Award, the Trust
confers upon an eminent living Assamese litterateur, an award
consisting of a Trophy, citation and a cash award. The Annual Awards
function, which is organised by your Company in association with the
Trust, is regarded as one of the important social events of Assam. This
year the award was bestowed upon Shrimati Purobi Bormudoi a prominent
writer with large readership in Assam. The selection, as in earlier
years, was made by a completely autonomous Committee of Assam's most
famous writers and poets. A truly notable initiative, The Assam Valley
Literary Award has become one of the most prestigious functions in
Assam, attended by a cross-section of society comprising eminent
litterateurs, prominent personalities, Government Officials,
representatives from trade and commerce, tea industry and the press.
The function is widely covered by print and electronic media.
The Company gives importance to the preservation of the natural habitat
around its tea estates and engages in several programmes and
initiatives to preserve the bio- diversity in its surrounding areas.
The Company has a commendable tree planting programme, soil
preservation programme and participates in the Ethical Tea Partnership
Programmes, which is a global initiative. Your Company is sensitive to
the requirements of world bodies which regulate cultivation and
manufacturing practices which in turn benefits the environment and
thereby the society at large. The future of the world depends on
preservation, and your Company exercises extreme care towards this end.
A smaller but significant social measure is the Heritage conservation,
which your Company has been supporting over a long period of time.
Your Company is continuing its support to the Bodo Handloom Scheme in
Mangaldai which leads to gradual empowerment of women and promotion of
local handicraft both at the tea estates and village level. It also
supports a programme for financial assistance towards education of some
under-privileged children in Kolkata, as also makes suitable
contributions to a recognised Institution in Kolkata, which addresses
the needs of children challenged by Cerebral Palsy. The Company has
been generously contributing towards promotion of Kolkata Museum of
Modern Art ('KMOMA'), a Museum of international standard being set up
at Kolkata.
Directors
Since the last Report Mrs. Ramni Nirula was appointed as an Additional
Director with effect from 15th September 2011. In terms of Article
120(1) of the Articles of Association of the Company read with Section
260 of the Companies Act, 1956 Mrs. Nirula holds office up to the date
of the forthcoming Annual General Meeting of the Company. The Company
has received a Notice in writing pursuant to Section 257(1) of the
Companies Act, 1956 from a Member signifying his intention to propose
Mrs. Nirula for appointment to the office of Director at the ensuing
Annual General Meeting.
In accordance with the provisions of the Articles of Association of the
Company, Mr. R. Takru, Mr. K. K. Baheti and Mr. S. N. Menon will
retire by rotation at the forthcoming Annual General Meeting and being
eligible, offer themselves for re-appointment.
Cost Audit
The Company is required to get its cost accounts maintained under
section 209(1)(d) of the Companies Act, 1956 in respect of plantation
products audited in terms of an Order issued by the Ministry of
Corporate Affairs (MCA). The cost audit of the Company is conducted by
four firms of Cost Accountants appointed with the approval of MCA in
the manner provided in the General Circular No.15/2011 dated 11th April
2011 issued by MCA. In terms of the said Circular, full particulars of
the Cost Auditors as also other details pertaining to the cost audit
are annexed.
Auditors
Messrs. Price Waterhouse retires as the Auditors at the conclusion of
the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-appointment.
Management Discussion & Analysis Report and Report on Corporate
Governance
As required in terms of the Listing Agreement with the Stock Exchanges,
a Management Discussion and Analysis Report and a Report on Corporate
Governance are annexed forming part of this Report.
Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956 (the Act) the
Directors state as follows:
1. That in the preparation of the annual accounts for the financial
year ended 31st March 2012, the applicable accounting standards had
been followed with no material departures;
2. That 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 at the end of the financial year and of the
profit or loss of the Company for that period;
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. That the Directors had prepared the annual accounts on a going
concern basis.
Conservation of Energy and Technology Absorption
A statement giving details of conservation of energy and technology
absorption in accordance with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988, is annexed.
Particulars of Employees
A statement of particulars of employees as required under section
217(2A) of the Act forms a part of this Report as a separate Annexure.
In terms of section 219(1)(b)(iv) of the Act, this Report is being sent
to all Members without the said Annexure. Any Member interested in
taking inspection or obtaining a copy of the statement may contact the
Secretary of the Company at its Registered Office during working hours.
Employee Relations
The Company has a large work force employed on tea estates. The welfare
and well being of the workers are monitored closely and harmonious
relations with its employees are being maintained.
Industrial relations remained cordial throughout the year and your
Board of Directors wish to place on record its appreciation for the
dedicated services rendered by the executives, staff and workers at all
levels and for the smooth functioning of all estates. The policy of
transparency and recognition inspired the employees to contribute their
best efforts for the Company.
For and on behalf of the Board
A. Khaitan K. K. Baheti
Managing Director Wholetime Director
Place : Kolkata
Date : 28th May 2012
Mar 31, 2011
The Directors have pleasure in presenting the Annual Report with the
audited Accounts of your Company, for the financial year ended 31st
March 2011.
REVIEW OF PERFORMANCE
The Financial Results of the Company for the year ended 31st March 2011
are summarized below:
2010-11 2009-10
Rs.ln Lakhs Rs.ln Lakhs
Profit before Interest,
Depreciation and Taxation 32,746.19 36,331.32
Less: Interest and Exchange
Fluctuation (Net) 1,834.78 2,526.80
30,911.41 33,804.52
Less: Depreciation & amortization 2,754.18 2,711.72
Profit before Taxation 28,157.23 31,092.80
Taxation Charge
Current Tax 5,173.34 6,561.00
MAT Credit (839.00) -
Deferred-Tax 600.00 498.89
Profit after Taxation 23,222.89 24,032.91
Balance brought forward from
previous year 9,236.53 4,309.02
Balance available for Appropriations 32,459.42 28,341.93
Proposed Dividend 5,472.79 4,378.23
Tax on Proposed Dividend 887.82 727.17
Transfer to General Reserve 16,000.00 14,000.00
Balance carried forward 10,098.81 9,236.53
The Board is pleased to report (hat despite loss of crop in the early
part of the season, the Company managed to have almost the same
turnover as in the previous year which was possible for higher prices
of Tea prevailing in the market during the year under review. The net
profit for the year was marginally down at Rs.23,223 Lakhs despite
significant increase in input costs.
DIVIDEND
Your Directors are pleased to recommend for approval of the
shareholders a dividend of Rs.5/- per equity share on 10,94,55,735
fully paid up equity shares of Rs.5/- each being 100% on the paid up
value of the equity shares of the Company for the year ended 31st March
2011 as against 80% (Rs.4/- per share) paid for the previous year.
REVIEW OF OPERATIONS
During the financial year, your Company produced 749 Lakh Kgs tea as
compared to 772 Lakh Kgs in the previous year. Unfavorable weather and
unprecedented pest attack in the South Bank resulted in a decrease in
crop over last year. During the beginning of the year the Dooars
estates had severe hail damage which also resulted in a decline in
harvest.
As a result of the ongoing Uprooting and Replanting Policy, the age
profile of the tea has improved. Your Company now has about 75% of the
area under 50 years of age. A good standard of young tea was
established. The average yield of the last three years Is close to 2100
kgs per hectare which is much higher against an Industry average of
1700 kgs per hectare. All tea estates have good clonal nurseries with
the requisite clonal blend.
Your Companys focus has always been to produce quality teas, which
continues to command a premium both in the domestic and international
market. As part of the upgradation and modernization programme of
factories, withering capacity was increased on eight estates. Ten
Rotorvanes, four Rotorvane feeders, twenty-one CTC machines, three
Continuous Fermenting Machine (CFM), three Vibro Fluid Bed dryers
(VFBD), three coal stoves, one mini boiler, eight milling machines,
nine chasing lathes, nine Sinar moisture meters and three colour
sorters were purchased and installed in various factories. In some
factories extension of building was undertaken to accommodate
additional sorting machinery and create additional storage space for
packed tea. To augment the standby generating capacity one new 380 KVA
gas generating set and one 30 KVA diesel generating set were installed.
For undertaking river embankment work bordering tea estates and
deepening outlet drains one new JCB Excavator was purchased. Seven new
weigh bridges were installed to facilitate the weighment of green leaf,
ration, fertiliser, coal, etc. An additional blending drum was
commissioned in the Nilpur Blending Unit. As blending operations are
expected to increase, an additional storage space of 13,500 square feet
has been constructed.
The Company has forty five Hazard Analysis and Critical Control Points
(HACCP) certified factories. Your Company also has four estates
certified as "Fairtrade" and fifteen estates certified as "Rainforest
Alliance.- The Nilpur Blending Unit is a HACCP Certified unit.
The average price realization for the Companys tea for the year was
Rs. 145.11 which is higher than the North Indian auction average of Rs.
124.18.
The Company saw a total export quantum of 210 Lakh kgs with an overall
turnover of Rs.32,981 Lakhs. Favourable feedback was received from the
buyers both in terms of quality and deliveries.
D1 WILLIAMSON MAGOR BIO FUEL LIMITED
D1 Williamson Magor Bio Fuel Limited (D1 WML) was incorporated under a
joint venture agreement between Williamson Magor & Co, Limited (WML)
and D1 Oils Trading Ltd. UK to facilitate development of Jatropha
Plantation under contract farming arrangements for production of bio
diesel from Jatropha oilseeds. Being an associate of WML your company
presently holds 33.93% of equity capital of D1WML.
The price of crude petroleum has firmed up during the year and so also
the price of bio fuel being the supplement to fossil fuel. The demand
for bio fuel is globally quite strong and there is acute shortage of
feedstock to meet the demand. DIWMLs effort to develop bio diesel
feedstock, once established, is likely to fetch market premium. In
addition, D1 Oils pic has developed poultry feed from de-oiled bio mass
which has been patented in UK.
The plantation developed by D1WML under contract farming arrangements
has been going Ihrough initial gestation period at various levels of
maturity. The farmers in some areas of the North East have faced
difficulties in maintaining the plantation because of excessive weed
growth, but have been able to maintain plantation on about 25,000
hectares which is likely to be productive. The company has also been
promoting the plantation in more areas where farmers are positive and
undertaking due upkeep. The company has re-engineered the plantation
management with focus on poducl.ve plantation and sizable cost
reduction.
The quantity of oilseed harvest by the farmers during the year had not
been adequate to manufacture oil on a commercial basis and therefore
stored for use in 2011-12. The initial gestation period is longer than
the estimate and this has been experienced across the world. The longer
gestation period on contract farming model results in shrinkage of
productive area. However, D1WML has re-worked the business plan based
on present productive area. It expects sub commercial crop during 2011
and 2012 and final commercial production in 2013.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
Borelli Tea Holdings Limited {Borelli), the wholly owned subsidiary
of the Company in U.K. is inter alia engaged in ihe business of
investing unds in va.ious Companies and as al Ihe end of Ihe year on
31st March 2011 had :he following Subsidiaries in different countries
:-
(i) Phu Ben Tea Company Limited. Vietnam - controlling stake of Borelli
being 100%
(ii) Rwenzori Tea Investments Limited (Rwenzori). Uganda -
controlling stake of Borelli being 100%
(iii) McLeod Russel Uganda Limited - 100% subsidiary of Rwenzori
(iv) Olyana Tea Holdings LLC, (Olyana) USA - controlling stake of
Borelli being 95%
Olyana had submitted a bid with the Government of Rwanda for
acquisition of 60% stake of Gisovu Tea Company Limited (Gisovu").
Later the Government of Rwanda at its Cabinet Meeting held on 11th
February 2011 decided to sell 60% shares of Gisovu instead of Olyana.
to its holding Company Borelli. In line with the said decision, Borelli
signed an MoU with Rwanda Development Board and Rwanda Tea Authority
and provisionally entered into management and took over control of
Gisovu on 23rd February 2011 pending other formalities which are being
complied with.
Borelli has set up a wholly owned subsidiary in Dubai by the name of
McLeod Russel Middle East DMCC which was granted the requisite license
on 9th May 2011 for doing Tea Trading business in Dubai. With this,
your Company now has one wholly owned subsidiary and five step-down
subsidiary Companies.
As required under the Listing Agreement with the Stock Exchanges,
Consolidated Financial Statements of the Company, its five Subsidiaries
and two Associate Companies namely D1 WML and Babcock Borsig Limited
prepared in accordance with the applicable Accounting Standards issued
by The Institute of Chartered Accountants of India are attached.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company who may be
interested in obtaining the same. The annual accounts of the
subsidiary companies will also be kept for inspection at the Registered
Office of the Company and that of the respective subsidiary companies.
The Consolidated Financial Statements presented by the Company include
the financial results of its subsidiary companies. A Statement
containing financial information of the Subsidiary Companies is
included in the Annual Report in the Chapter containing Consolidated
Financial Statements. The performance of the major subsidiaries are
summarised below for your information.
BOELLI TEA HOLDINGS LIMITED
During the year ended 31st March 2011 Borelli Tea Holdings Limited
earned a net profit in Indian Rs.2,143 Lakhs and has recommended
payment of Dividend @ 100% on its equity capital held by your Company.
PHU BEN TEA COMPANY LIMITED
During the year ended 31st December 2011, Phu Ben Tea Company Ltd
achieved a total production of 46.76 Lakh Kgs. Sales, including carry
forward from the previous year amounted to 47.05 Lakh Kgs which were
sold at an average price of $1.82/kg. This was 3% higher than last
year. The plantations achieved a yield per hectare of 2,656 kgs. Total
production from plantations at 30.96 Lakh kgs was another record, up
from the previous year by 2%.
During this period of the Company recorded a net profit in Indian
Rs.161 Lakhs on a sales turnover of Rs.3,252 Lakhs. The acquisition of
the fourth factory assisted by way of capacity expansion and also
contributed for the increase in production. New withering troughs were
constructed in one factory.
The Company continues to lay stress on quality control in both field
and factory and adheres to GAP for plantation development, along with
IPM measure for the control of pesticides. All the plantations were
"Rainforest Alliance Certified" in 2010. The Company, which employs
2,499 farmers, workers and staff had good Industrial relations and
received awards and certificates from both State Government agencies
and Provincial Authorities for environmental protection, contribution
to the development of the Tea Industry in Vietnam and was cited as a
model business venture.
McLEOD RUSSEL UGANDA LIMITED
McLeod Russel Uganda Limited in its first year of operation under
McLeod Russel Group and blessed with exceptionally favorable weather
conditions that prevailed from December 2009 until October 2010,
achieved an all time record production of 168.39 Lakh kgs of made tea.
Of this 25.37 Lakh kgs were from out grower green leaf purchase and
143.02 Lakh kgs from own crop. The resultant yield of 4347 kg/ha was an
increase of 12% over the previous year. The average sales price
realized was $1.84 against the Ugandan average (auction) of $1.77.
During the year ended 31st December 2010 the Company recorded a net
profit in Indian Rs.2,504 Lakhs on a sales turnover of Rs.11.854 Lakhs.
The area under tea was increased by 7.00 ha of extension clonal
planting and 20.00 ha of eucalyptus forestry plantation were also
added. Factory expansion projects were commenced at two of the Company
estates, to increase processing capacity from 2 to 3 lines at each
location. The Company increased mechanical harvesting to 53% of own
crop, and undertook commercial trials of one man harvesters.
The Company estates were Rainforest Alliance Certified during the year,
and ISO 9001 (QMS) and ISO 14001 (EMS) certifications were renewed.
Good Industrial relations were maintained with the over 6000 strong
work-force. Efforts with regard to health and family welfare were
recognized with an award from USAID/HIPS Project as one of the 10 best
organizations in the country, in Health in the Workplace Programme. The
Company was also awarded the Gold Award in the Presidents Export
Awards, for Tea exports.
CORPORATE SOCIAL RESPONSIBILITY
Your company is conscious of its social responsibilities and firmly
believes that sustainability of an enterprise depends on perfect
harmonization with the environment within which it operates. With this
philosophy in mind, it has continued with its activities in the sphere
of education, health-care, culture, welfare, environment preservation
and building of social infrastructure.
Your Company provides high standard of medical care to its work force
through well equipped individual estate hospitals and specialized
treatment at the Central Hospitals. Apart from this, the Company has
also been reaching out to remote villages by holding medical camps. It
also holds regular eye camps in collaboration with the Sri Sankardeva
Nethralaya, Guwahati and District Health Departments, and complicated
cases are provided specialized medical treatment. It has also been
assisting the Blind School at Moran for several years, as also a school
for hearing impaired children.
The Company has been involved with the promotion of Education for a
long time and provides financial assistance to many schools and
colleges in areas neighbouring its estates, and elsewhere.
The Assam Valley School, established with financial contribution and
other assistance from your Company, has emerged as a premier Public
School of the country and continues to provide excellent opportunity to
the children of the planting community and the North East in terms of
Education and all round development. The School is viewed as a
pan-Indian centre of educational excellence and currently ranked
amongst the top ten Most Respected Residential Schools in India. The
Williamson Magor Education Trust has awarded over a 100 scholarships
since the inception of this scheme in 1991. Many brilliant students
have benefitted from this scheme to pursue higher studies in Management
and specialized disciplines in Engineering.
Being an eco-friendly industry, the Company has provided a vast, clean
and peaceful environment in this cramped, crowded and noisy world. It
has also taken up tree planting schemes at its various locations.
Awareness of the importance of preservation of natural habitat is
instilled in children from an early age, to ensure a clean and green
environment in future. Heritage conservation is a continuing programme
of your Company also.
With the Companys continued support, the Assam Valley Literary Awards
programme constituted to honour stalwarts who have kept alive the
richness of Assamese literary heritage, has now completed twenty one
years. This year the award was conferred upon eminent Assamese writer
Shri Hare Krishna Deka. For the promotion of Assamese language and
literature, the Company, in collaboration with the Asom Sahitya Sabha
and leading publishers, has brought out reprints of old books.
Your company believes in the philosophy that building proper social
infrastructure will result in the betterment of the society. Towards
this end, it has taken certain initiatives. It is continuing to support
the Bodo Handloom Scheme in Mangaldai region of Assam for economic
empowerment of women. The promotion of local handicraft is stressed
upon continuously.
The Company was instrumental in setting up the auditorium at
Vivekananda Kendra in Guwahati. The auditorium is used for discourses,
seminars, yoga sessions and character building classes for the youth of
the region. As a prominent member of the Indian Tea Association, the
Company along with its peers in the Industry and the Government of
Assam has helped in the construction of Pragjyoti, a cultural centre
which is considered as the pride of the North East.
With your company spreading its wings, its corporate social
responsibility activities have also transcended the boundaries of the
nation. Your companys subsidiary, McLeod Russel Uganda Limited (MRUL)
is a major participant in (he USAID project, Health Initiatives for
Private Sector (HIPS), in Uganda. MRUL does commendable work in AIDS
prevention programme in that country. MRUL was ranked among the best
ten companies in Uganda in Health in the workplace programme.
DIRECTORS
Since the last Report Mr. Balaji Swaminathan resigned from the Board
with effect from 23rd March 2011. The Board placed on record its
sincere appreciation for the valuable services rendered by Mr.
Swaminathan during his association with the Company as a Director.
The term of appointment of Mr. A. Khaitan as the Managing Director and
Mr. R. Takru, Mr. A. Monem and Mr. K. K. Baheti as the Wholetime
Directors had expired on 31 st March 2011. Considering their
satisfactory performance, the Board of Directors by its resolution
passed on 1st April 2011 re-appointed Mr. A. Khaitan as the Managing
Director and Mr. R. Takru, Mr. A. Monem and Mr. K. K. Baheti as
Wholetime Directors for a fresh term of three years in each case
commencing from IstApril 2011. Approval of the Members to the said
re-appointments as also to the remuneration payable to the Managing
Director and the Wholetime Directors will be sought at the ensuing
Annual General Meeting.
In accordance with the provisions of the Articles of Association of the
Company, Mr. D. Khaitan, Mr. U. Parekh and Mr. A. Monem will retire by
rotation at the forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment.
COST AUDIT
The Ministry of Corporate Affairs, Government of India by an Order
directed audit of the Cost Accounts maintained by the Company under
Section 209(1) (d) of the Companies Act, 1956 in respect of the
Plantation Product on a yearly basis. In terms of the said Order Cost
Audit is conducted by four firms of Cost Accountants appointed with the
approval of the Ministry of Corporate Affairs (MCA). In terms of the
General Circular No.15/2011 issued by MCA, full particulars of the Cost
Auditors as also other details pertaining to the Cost Audit are given
in the Annexure forming part of this Report.
AUDITORS
Messrs. Price Waterhouse retire as the Auditors at the conclusion of
the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-appointment.
AUDITORS REPORT
With regard to the observation made by the Auditors in their Report
relating to non-ascertainment of value of green leaf consumed,
reference is made to Note 20(b) of Schedule 17 of the Accounts, which
is self-explanatory.
MANAGEMENT DISCUSSION & ANALYSIS REPORT AND REPORT ON CORPORATE
GOVERNANCE
As required in terms of the Listing Agreement with the Stock Exchanges,
a Management Discussion and Analysis Report and a Report on Corporate
Governance are annexed forming part of this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors
state as follows:
1. That in the preparation of the annual accounts for the financial
year ended 31st March 2011, the applicable accounting standards had
been followed with no material departures;
2. That 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 at the end of the financial year and of the
profit or loss of the Company for that period;
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in preventing and detecting
fraud and other irregularities;
4. That the Directors had prepared the annual accounts on a going
concern basis.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
A statement giving details of conservation of energy and technology
absorption in accordance with the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988, is annexed.
PARTICULARS OF EMPLOYEES
A statement of particulars of employees as required under section
217(2A)of the Companies Act, 1956 forms a part of this report as a
separate Annexure. In terms of Section 219(1 )(b)(iv) of the Act, this
Report is being sent to all Members without the said Annexure. Any
member interested in taking inspection or obtaining a copy of the said
statement may contact the Secretary of the Company at its Registered
Office during working hours.
EMPLOYEE RELATIONS
The Company has a large work force employed on tea estates. The welfare
and well being of the workers are monitored closely and harmonious
relations with its employees are being maintained.
The Industrial relations remained cordial throughout the year and your
Board of Directors wish to place on record its appreciation for the
dedicated services rendered by the executives, staff and workers at all
levels and for the smooth functioning of all estates. The policy of
transparency and recognition inspired the employees to contribute their
best efforts for the Company.
For and on behalf of the Board
A. Khaitan - Managing Director
K. K. Baheti - Wholetime Director
Place : Kolkata
Date :30th May 2011
Mar 31, 2010
The Directors have pleasure in presenting the Annual Report with the
audited Accounts of your Company, for the financial year ended 31st
March 2010.
REVIEW OF PERFORMANCE
The Financial Results of the Company for the year ended 31st March 2010
are summarized below:
2009-10 2008-09
Rs.ln Lakhs Rs.ln Lakhs
Profit before Interest,
Depreciation and Taxation 36,331.32 20,672.91
Less: Interest and Exchange
Fluctuation (Net) 2,526.80 7,657.89
33,804.52 13,015.02
Less: Depreciation & amortisation 2,711.72 2,604.37
Profit before Taxation 31,092.80 10,410.65
Taxation Charge
Current Tax 6,561.00 1,015.00
Deferred Tax 498.89 297.06
Fringe Benefit Tax - 220.00
Profit after Taxation 24,032.91 8,878.59
Balance brought forward from
previous year 4,309.02 3,991.58
Balance available for Appropriations 28,341.93 12,870.17
Proposed Dividend 4,378.23 2,189.11
Tax on Proposed Dividend 727.17 372.04
Transfer to General Reserve 14,000.00 6,000.00
Balance carried forward 9,236.53 4,309.02
The Board is pleased to report that in the year under review your
Company has achieved best ever turnover and profits surpassing all
previous records. The sales turnover of your Company for the first time
has crossed Rs. 100000 lakhs during the year reaching at Rs. 107682
lakhs. The Company has earned a profit before interest, depreciation
and taxation (PBIDT) of Rs.36331 lakhs against Rs.20673 lakhs in the
previous year. The net profit for the year was Rs.24033 lakhs which is
higher by 171% as compared to the net profit earned in the previous
year. The considerable growth in turnover and profit is attributable to
significant improvement in tea prices during the year, both in India
and in export market as also increase in the volume of production.
DIVIDEND
Your Directors are pleased to recommend for approval of the
shareholders a dividend of Rs.4/- per equity share on 10,94,55,735
fully paid up equity shares of Rs.5/- each being 80% on the paid up
value of the equity shares of the Company for the year ended 31st March
2010 as against 40% (Rs.2/- per share) paid for the earlier year.
REVIEW OF OPERATIONS
During the financial year, your Company produced 771.80 Lakh Kgs tea as
compared to 748.47 Lakh Kgs in the previous year. Conducive weather
conditions favored growth in the South Bank. During the beginning of
the year the North Bank and Dooars faced drought conditions leading to
a drop in crop.
The Uprooting and Replanting Policy of your Company has proved to be a
success. The percentage of tea under fifty years has been on the rise
thus contributing to an increase in the average yield of estates, which
is higher than the Industry average. A high standard of nurseries with
the required Clonal Blend is being maintained.
Your Companys focus has always been to produce quality teas, which
commanded a premium both in the domestic and international market. As
part of the upgradation and modernization programme of factories,
withering capacity was increased on eight estates. Twelve Rotorvanes,
fourteen CTC machines, one Continuous Fermenting Machine (CFM), six
Vibro Fluid Bed Dryers (VFBD), six coal stoves and one mini boiler were
purchased and installed in various factories. In some factories
extension of building was undertaken to accommodate additional sorting
machinery and create additional storage space for packed tea. To
augment the standby generating capacity three new 500 KVA and one 125
KVA diesel generating sets and two 380 KVA Gas generating sets were
installed. On estates where natural gas was available, seven new bi
fuel kits were installed to facilitate running the generating sets both
on High Speed Diesel (HSD) or Natural gas. For undertaking river
embankment work bordering tea estates and deepening outlet drains, two
new JCB Excavators were purchased. Forty new pruning machines were also
procured to facilitate completion of pruning in time. One new Blending
drum with a capacity of 2000 kgs per hour was installed at Nilpur
Blending Unit as we anticipate an increase in demand for blended tea
during 2010/11.
The Company now has forty five Hazard Analysis and Critical Control
Points (HACCP) certified factories. Your Company also has four estates
certified as "Fairtrade" and ten estates certified as "Rainforest
Alliance." The Nilpur Blending Unit is a HACCP Certified unit.
The average price realization for the Companys tea for the year was
Rs. 137.25 per kg which is higher by Rs.26.22 as compared to the
previous year.
The Company saw a total export quantum of 28.8 million kgs in 2009/10
with an overall turnover of over Rs.425 crore. Favourable feedback was
received from the buyers both in terms of quality and deliveries.
GROWTH THROUGH ACQUISITIONS IN INDIA AND ABROAD
Growth is a continuous process in your Company. Ever since it commenced
its operations as a tea company, it set its growth target on a yearly
basis and so far has been successful in achieving it. During the first
three years growth came by way of acquisition of three renowned tea
companies having plantations in the quality tea belt in Assam.
Subsequently these companies were merged with your Company resulting in
substantial growth in turnover and profitability. Finding opportunities
for further growth being limited in the country, the Company later set
its sight on the overseas tea growing nations. The first Company
acquired abroad was Phu Ben Tea Company Limited, a major tea plantation
Company of Vietnam in 2009 through Borelli Tea Holdings Limited
(Borelli), the wholly owned subsidiary of the Company. Borelli gained
control of the largest tea plantation Company of Uganda namely, James
Finlay (Uganda) Limited (JFUL) in January this year when it bought the
entire share capital of its holding Company. Even after having acquired
five quality tea companies in five consecutive years, your Company
still has the appetite for further growth and is on the look out for
plantations in India and abroad which match with its quality profile.
The Company will be continuously thriving for growth, not only in terms
of volume but also quality.
CORPORATE SOCIAL RESPONSIBILTY
Your Company is conscious of its social responsibilities and the
environment in which it operates. It has continued with its welfare
activities for development in the fields of education, culture and
other welfare measures and to improve the general standard of living in
and around the tea estates. The emphasis is on improvement of health,
development of education, culture and sports. Medical assistance was
also provided to the nearby villages through medical camps. Your
Company facilitated a successful cataract operation camp for two
hundred twenty nine patients at Shankardev Netralaya, Guwahati.
A high standard of medical care is provided to the work force through
well equipped individual estate hospitals and specialized treatment at
the Central hospitals. The Mothers Club is being given wide spread
recognition.
The Assam Valley School has emerged as a premier public school of the
country and continues to provide excellent opportunity to the children
of the planting community and in the North East in terms of academics
and all round development.
With the Companys continued support The Assam Valley Literary Award is
being felicitated each year. This year the award was conferred on an
eminent Assamese writer Sri Imran Shah in acknowledgement of his
contribution in the field of Assamese Literature. Scholarships were
provided to meritorious students from the North East and this was
funded by the Williamson Magor Education Trust.
The Tea Tourism at Balipara in Assam, in partnership with River
Journeys and Bungalows of India Private Limited, is gaining popularity.
The Company is studying the possibility of developing more such
opportunities in other areas of Assam.
D1 WILLIAMSON MAGOR BIO FUEL LIMITED
D1 Williamson Magor Bio Fuel Limited, (D1 WML) was incorporated in July
2006 under a 50:50 joint venture agreement between Williamson Magor &
Co. Limited (WML) and D1 Oils Trading Ltd. U.K. to facilitate
development of Jatropha - plantation under contract farming
arrangements for production of bio diesel from Jatropha Oilseeds. Being
an associate of WML your Company presently holds 33.56% of equity
capital of D1WML.
As a clean fuel, alternate to fossil fuel, the market for bio diesel
has been increasing globally at a faster rate. The global production of
bio diesel during the year 2008 at 11.1 Million MT registered a growth
of 23% over previous year.
There has been an acute shortage of bio diesel feedstock and D1WML has
developed about 132,000 hectares of plantation at different stages of
maturity. The company has observed 2009-10 as the year of consolidation
of plantation and estimates about 60% of the farms are duly maintained
by the farmers to produce commercial crop.
The initial harvest of oilseed on young plantation carried out during
2009-10 is being used for extension and consolidation. D1WML expects
sub commercial harvest during 2010-11 for oil expelling and commercial
harvest in 2011-12. The company has acquired about 28 acres of land in
Balipara Industrial Growth Centre, Assam for setting up a bio diesel
processing unit.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
Borelli Tea Holdings Limited, U.K. (Borelli), the wholly owned
subsidiary of the Company during the year acquired controlling stakes
of the following Companies :-
(i) 75% of the controlling stake of Olyana Holdings LLC (Olyana)
incorporated in USA.
(ii) 100% of the share capital of Rwenzori Tea Investments Limited
(Rwenzori) incorporated in Uganda.
Borelli gained control of James Finlay (Uganda) Limited (JFUL) which is
a 100% subsidiary of Rwenzori Tea Investments Limited. Steps have been
taken to rename JFUL as McLeod Russel Uganda Limited which will take
effect shortly. Earlier Borelli had acquired 100% of the controlling
stake of Phu Ben Tea Company Limited of Vietnam (Phu Ben). Thus your
Company now has five Subsidiaries namely, Borelli, Phu Ben, Olyana,
Rwenzori and JFUL.
Borelli acquired 75% stake of Olyana with the objective of making
investments through this subsidiary in tea plantation and processing
activities in Africa. Olyana had entered into a Share Sale Agreement
with the Government of Rwanda for acquisition of 60% stake in a Company
known as Gisovu Tea Company Limited. Subsequently, some disputes had
cropped up. Finally Olyana has filed an Arbitration Application in
Washington DC with the International Centre for Settlement of .
Investment Disputes, a body constituted by the World Bank and expects
that the application will be disposed of in the next few months.
In January 2010 Borelli acquired 100% of share capital of Rwenzori.
Rwenzori holds 100% of controlling stake of JFUL engaged in cultivation
and manufacture of tea in Uganda. JFUL has six tea estates and five tea
processing factories with an annual production of over 15 million kgs
of tea taking the overall tea produced by your Company and its
subsidiaries to around 96 million kgs per annum. JFUL is a profit
making and dividend paying Company.
During the year ended 31st December 2009 Phu Ben achieved a total
production of 4.43 million kgs of tea. During this period the Company
recorded a net profit in Indian Rs.2.3 crore on a sales turnover of
Rs.26 crore. Phu Ben acquired its fourth factory enhancing its
production capacity and the level of quality.
As required under the Listing Agreement with the Stock Exchanges,
Consolidated Financial Statements of the Company, its five Subsidiaries
and two Associate Companies namely D1WML and Babcock Borsig Limited
prepared in accordance with the applicable Accounting Standards issued
by The Institute of Chartered Accountants of India are attached.
DIRECTORS
Since the last Report there has been no change in the Board of
Directors. In accordance with the provisions of the Articles of
Association of the Company, Mr. B. M. Khaitan, Dr. R. Srinivasan, Mr.
Bharat Bajoria and Mr. Ranabir Sen will retire by rotation at the
forthcoming Annual General Meeting and being eligible, offer themselves
for re-appointment.
COST AUDIT
The Ministry of Corporate Affairs, Government of India by an Order
directed audit of the Cost Accounts maintained by the Company under
Section 209(1 )(d) of the Companies Act, 1956 in respect of the
Plantation Product on a yearly basis. In terms of the said Order Cost
Audit is being conducted by four firms of Cost Accountants appointed
with the approval of the Ministry of Corporate Affairs.
AUDITORS
Messrs. Price Waterhouse retire as the Auditors at the conclusion of
the forthcoming Annual General Meeting and being eligible, offer
themselves for re-appointment.
AUDITORS REPORT
With regard to the observation made by the Auditors in their Report
relating to non-ascertainment of value of green leaf consumed,
reference is made to Note 20(b) of Schedule 17 of the Accounts, which
is self-explanatory.
MANAGEMENT DISCUSSION & ANALYSIS REPORT AND REPORT ON CORPORATE
GOVERNANCE
As required in terms of the Listing Agreement with the Stock Exchanges,
a Management Discussion and Analysis Report and a Report on Corporate
Governance are annexed forming part of this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors
state as follows:
1. That in the preparation of the annual accounts for the financial
year ended 31st March 2010, the applicable accounting standards had
been followed with no material departures;
2. That 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 at the end of the financial year and of the
profit or loss of the Company for that period;
3. That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
4. That the Directors had prepared the annual accounts on a going
concern basis.
CONSERVARION OF ENERGY AND TECHNOLOGY ABSORPTION
A statement giving details of conservation of energy and technology
absorption in accordance with the Companies (Disclosure of Particulars
in the report of the Board of Directors) Rules, 1988, is annexed.
EMPLOYEE RELATIONS
The Company has a large work force employed on tea estates. The welfare
and well being of the workers are monitored closely and harmonious
relations with its employees are being maintained.
The Industrial relations remained cordial throughout the year and your
Board of Directors wishes to place on record its appreciation for the
dedicated services rendered by the executives, staff and workers at all
levels and for the smooth functioning of all estates. The policy of
transparency and recognition inspired the employees to contribute their
best efforts for the Company.
Particulars of employees required under Section 217(2A) of the
Companies Act, 1956 are given in the Annexure forming part of this
Report.
For and on behalf of the Board
A. Khaitan - Managing Director
K. K. Baheti - Wholetime Director
Place : Kolkata
Date :30th May 2010
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