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Directors Report of McLeod Russel (India) Ltd.

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

“Rainforest 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 –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 60%

(v) McLeod Russel Middle East DMCC – 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 – 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%

(v) Gisovu Tea Company Limited, Rwanda – controlling stake of Borelli being 60%

(vi) McLeod Russel Middle East DMCC – 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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