Mar 31, 2018
To the Members,
The Directors have pleasure in submitting their Twenty Third Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2018.
BUSINESS:
Karuturi Global Limited is the worldâs largest producer of cut roses and having a global presence in Asia, America and Europe. The company has its operations in India, Ethiopia, Dubai & Kenya, diversified into agriculture, floriculture and food processing producing Pulses, Oil seeds, Maize, Rice, Sugar, Cut roses, Plants production and distribution, Gherkins, Baby corn, Jalapenos, and Bottled pickles.
FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY:
The Companyâs financial performance for the year under review along with previous year figures is given hereunder:
(Amount in Rs. Lakhs)
Particulars |
For the Year ended 31-03-2018 |
For the Year ended 31-03-2017 |
Net Sales /Income from Business Operations Other Income Total Income Less: Depreciation Profit after depreciation and other expenses Less: Current Income Tax Less: Deferred Tax Net Profit after Tax Earnings per share (Basic) Earnings per Share (Diluted) |
22,959.12 2,391.15 25,350.26 3,277.35 5,003.55 0.03 (15.81) 5,195.61 0.35 0.35 |
22,612.76 8.942.24 31,555.00 4,356.56 8.816.25 74.98 (384.34) 9,057.80 0.61 0.61 |
RESULTS OF OPERATIONS
During the financial year ended March 31, 2018 total revenue of the Company was Rs.25,350.26 lakhs as against the revenue for the previous year which was Rs. 31,555.00 lakhs. The Company has during the year under review has posted a net profit of Rs. 5,195.61 lakhs against net profit of Rs. 9,057.80 lakhs in the previous year.
SHARE CAPITAL
During the year, No Equity Shares to the shareholders have been issued. On March 31, 2018, the companyâs share capital stood at Rs. 1,49,75,31,526 divided into equity shares of Rs. 1/- each.
RESERVES
Changes in reserves is been disclosed in Notes to Accounts refer 2.2 table.
DIVIDEND
Your Directors do not recommend any dividend on the shares of the Company for the year under review.
TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND
The company will transfer the amount to Investor Education and protection Fund on due date as mentioned in the notice of the AGM, no unclaimed dividend is due for transfer to Investor Education and protection Fund.
DEPOSITS
The Company has neither accepted nor renewed any deposits during the year under review DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL
The Board is duly constituted with Six present Directors of the Company are as below:
a.Sai Rama Krishna Karuturi
b.Anitha Karuturi
c.Yeshoda Karuturi
d.Mahendra Kumar Sunkara
e.Sunil Gupta
f.Ananth Chandrakanth Darshan
Ms. Yeshoda Karuturi retires at this Annual General Meeting and being eligible offer herself for re- appointment. DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all Independent Directors of the Company confirming that they meet with the criteria of independence, as prescribed under Section 149 of the Companies Act, 2013 and Regulation 25 of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Companyâs code of conduct. Key Managerial Personnel
Mrs. Khushboo Sharma was appointed as the Company Secretary during the year under review.
Mr. Ashok Herur, Independent Director of the Company resigned from the Board.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Company had 7 Board meetings during the financial year under review.
Sl. No. |
Date of Board Meeting |
1. |
30 May 2017 |
2. |
12 Jul 2017 |
3. |
15 Aug 2017 |
4. |
14 Nov 2017 |
5. |
02 Feb 2018 |
6. |
13 Feb 2018 |
7. |
27 Mar 2018 |
SUBSIDIARY COMPANIES:
1. Karuturi Floritech Pvt Ltd. India
2. Karuturi Foods Pvt Ltd., India *
3. Karuturi Flower Express Pvt Ltd., India
4. Karuturi Overseas Ltd , Dubai
5. Flower Xpress FZE, Dubai
6. Yeshoda Investments Ltd, Kenya
7. Rhea Holdings Ltd, Kenya
8. Surya Holdings Ltd, Kenya
9. Karuturi Sports Ltd, Kenya.
10. Karuturi Hospital Ltd, Kenya
11. Ethiopian Meadows Plc, Ethiopia
12. Karuturi Agro Products Plc., Ethiopia
13. Surya Blossoms Plc. Ethiopia
14. Shiv Pack PLC, Ethiopia
*In the process of Winding up
MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Company occurred between the ends of the financial year to which these financial statements relate on the date of this report.
SIGNIFICANT AND MATERIAL ORDERS
Karuturi Limited is Kenya is wound up pursuant to court order. Apart from it there is no other order passed by any regulators which has impacted the going concern status and operations of the company.
POLICY ON DIRECTORâS APPOINTMENT AND REMUNERATION DETAILS
The Nomination and Remuneration Board committee overseas the Companyâs Nomination process for Independent Directors and in that connection to identify screen and review individuals qualified to serve as an independent Director on the Board.
STATUTORY AUDITORS
M/s H.Muralidhar & Co were appointed as Statutory Auditor of the Company until the conclusion of this Annual General Meeting.Due to their preoccupation they have resigned.The Board recommends appointment of Messer K.G. Rao & Co., as Statutory Auditor of the Company at its Board Meeting held on 08.08.2018 from the conclusion of this Annual General Meeting upto the conclusion of 28th AGM in terms of the section 139(1) of the Companies Act,2013.The Company has received a confirmation from the said Auditors that they are not disqualified to act as the Auditors and are eligible to hold the office as Auditors of the Company.The appointment norms are being complied with the section 141 and other applicable provisions of Companies Act,2013
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The brief outline of the Corporate Social Responsibility (âCSRâ) initiatives undertaken by the Company on CSR activities during the year are set out in Annexure -B required under the provisions of Section 135 and schedule VII of the Companies Act, 2013. The CSR policy is available on the website of the Company.
The Company was in the process of evaluating the focus areas / locations of intervention for CSR activities to cater to the pressing needs of society and deliver optimal impact. As a socially responsible company, your Company is committed to increase its CSR impact and spend over the coming years, with its aim of playing a larger role in Indiaâs sustainable development by embedding wider economic, social and environmental objectives.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS IN THEIR REPORTS
a. The revised VAT returns during the first quarter, company could not file within the given time frame. However, Company is focused on statutory compliance to file on time.
SECRETARIAL AUDITOR
The Company had appointed Mr. Ajay Behera & Associates Company Secretaries, New Delhi, to conduct its Secretarial Audit for the financial year ended March 31, 2018. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of applicable corporate laws. The Report does contain certain qualification, reservation or adverse remark. The Secretarial Audit Report is annexed to this report.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE SECRETARIAL AUDITORS IN THEIR REPORTS
a. Company will take necessary steps to publish notice in newspaper.
b. The company had sent returns to Authorised dealer bank but due to want of information there was delay in filing returns with RBI.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan during the year 2006. Through this, the Company allotted 7,47,416 Equity Shares of Re. 1 each were allotted on exercise of options granted to the eligible employees of the Company into Equity Shares during the year 2012-13, for 2014-15 - Nil ,2015-16 - Nil, 2016-17-Nil and 2017-18 Nil.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY
The Company does not have any Risk Management Policy as the element of risk threatening the Companyâs existence is very minimal.
INTERNAL FINANCIAL CONTROLS OVER FINANCIAL STATEMENTS AND COMPLIANCE OF LAWS
The Company during the year has reviewed its internal financial control systems and has contributed to establishment of more robust and effective IFC framework, prescribed under section 134(5) of Companies Act, 2013. The Board of Directors is of the view that the existing financial controls adopted with reference to financial statements within the Company are adequate. The Company has a adequate systems and process to monitor and ensure compliance with applicable laws, rules and guidelines.
AUDIT COMMITTEE
The Audit Committee constituted by the Company meets the requirement of Section 177 of the Companies Act, 2013 as well as that of Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements,)Regulations 2015 and the details of its composition are furnished in the Corporate Governance Report attached. There was no instance during the year where the Board had not accepted any recommendation of the Audit Committee
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee constituted by the Company meets the requirement of Section 178 of the Companies Act, 2013 as well as that of Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements,)Regulations 2015 and the details of its composition are furnished in the Corporate Governance Report attached. The company is appointing one additional Independent Director and one Executive Director to fulfill all the obligations required under statute.
VIGIL MECHANISM
The Code of Conduct and vigil mechanism applicable to Directors and Senior Management of the Company is available on the Companyâs website at www.karuturi.com.
ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure A and is attached to this Report.
CORPORATE GOVERNANCE
Pursuant to Regulation 34 of the Listing Regulations executed with the stock exchange, a management discussion and analysis, Corporate Governance report and Auditorâs Certificate regarding compliance of conditions of corporate Governance forms part of the annual report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Particulars of loans, guarantees and investments form part of Note no 2.13, 2.12, 2.19, and 2.1 respectively to the financial statements provided in the full version of the Annual Report.
RELATED PARTY TRANSACTION
All arrangements / transactions entered by the Company with its related parties during the year were in ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any arrangement / transaction with related parties which could be considered material in accordance with the Companyâs Policy on Related Party Transactions and accordingly, the disclosure of Related Party Transactions in Form AOC 2 is not applicable. However, names of Related Parties and details of transactions with them have been included in Note no. 2.3C, 2.18, and 3.6 to the financial statements provided in the full version of the Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has not actively engaged in the consumption of energy or absorption of technology. The Company is however aware of its responsibilities and has at every available opportunities, used and implemented such measures so as to enable energy conservation. There has been no technology absorption involved.
The total Foreign Exchange Inflow and Outflow during the year under review is as follows:
Total Foreign Exchange Earnings Rs. 24,475.31 lakhs
Total Foreign Exchange Outgo Rs. 19,276.15 lakhs
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:â
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors has led down internal financial controls to be followed by the Company and such internal controls are adequate and operating effectively; and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. Some of the key criteria considered while conducting evaluation such as degree of fulfilling the key Responsibilities, effectiveness of Board process, information and functioning, Board dynamics and efficacy of communication with external stakeholders.
Independent Directors
A separate meeting of the independent Directors was convened, which reviewed the performance of the Board (as a whole), the non- independent directors and the Chairman.
Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.
The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is furnished in Annexure to MGT-9
Particulars of Employees
In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employeesâ particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
While the Company has set up a Committee to look into the complaints under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, no complaint relating to sexual harassment at work place has been received during the year.
Details in respect of frauds reported by auditors under Section 143
The statutory auditors of the Company have not reported any fraud as specified under section 143 of the Companies Act, 2013 (including any statutory modification(s) or re-enactment for the time being in force)
ACKNOWLEDGEMENTS
Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Date: 14/08/2018 Sai Ramakrishna Karuturi Anitha Karuturi
Place: Bangalore Managing Director Director
Mar 31, 2016
BOARDS'' REPORT
To the Members,
The Directors are pleased to present Twenty First Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2016.
BUSINESS:
Karuturi Global Limited is the world''s largest producer of cut roses and having a global presence in Asia, America and Europe. The company has its operations in India, Ethiopia, Dubai & Kenya, diversified into agriculture, floriculture and food processing producing Pulses, Oil seeds, Maize, Rice, Sugar, Cut roses, Plants production and distribution, Gherkins, Baby corn, Jalapenos, and Bottled pickles.
FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY:
The Company''s financial performance for the year under review along with previous year figures is given hereunder:
(Amount in Rs. Lakhs)
Particulars |
For the Year ended 31st March, 2016 |
For the Year ended 31st March, 2015 |
Net Sales /Income from Business Operations |
33,149.77 |
26,622.73 |
Other Income |
1,491.60 |
3,938.59 |
Total Income |
34,641.37 |
30,561.32 |
Less: Depreciation |
4,316.32 |
2,709.09 |
Profit after depreciation and other expenses |
2158.01 |
1,700.87 |
Less: Current Income Tax |
24.38 |
0.40 |
Less: Deferred Tax |
87.56 |
(109.82) |
Net Profit after Tax |
14,904.83 |
3,246.88 |
Earnings per share (Basic) |
1.46 |
0.40 |
Earnings per Share (Diluted) |
1.46 |
0.40 |
RESULTS OF OPERATIONS
During the financial year ended March 31,2016 total revenue of the Company was Rs. 34,641.37 lakhs as against the revenue for the previous year which was Rs. 30,561.32 lakhs. The Company has during the year under review has posted a net profit of Rs.14, 904.83 lakhs against net profit of Rs. 3,246.88 lakhs in the previous year.
SHARE CAPITAL
During the year, the company has issued 21 crores Equity Shares to Rhea Holdings Private Limited. On March 31, 2016, the company''s share capital stood at Rs. 101,97,26,648/-, divided into equity share of Rs.1/- each.
RESERVES
Changes in reserves is been disclosed in Notes to Accounts refer 2.2 table.
DIVIDEND
Your Directors do not recommend any dividend on the shares of the Company for the year under review.
TRANSFER OF AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND
The company will transfer the amount to Investor Education and protection Fund on due date as mentioned in the notice of the AGM, no unclaimed dividend is due for transfer to Investor Education and protection Fund.
DEPOSITS
The Company has neither accepted nor renewed any deposits during the year under review
DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL
The Board is duly constituted with Six present Directors of the Company are as below:
a. Sai Rama Krishna Karuturi
b. Anitha Karuturi
c. Man Mohan Agrawal
d. Mahendra Kumar Sunkara
e. Sunil Gupta
f. Ananth Chandrakanth Darshan
Ms. Anitha Karuturi Director retiring by rotation at this Annual General Meeting and being eligible offer herself for reappointment.
Declaration by Independent Directors
The Company has received declarations from all Independent Directors of the Company confirming that they meet with the criteria of independence, as prescribed under Section 149 of the Companies Act, 2013 and Listing Regulations. The Independent Directors have also confirmed that they have complied with the Company''s code of conduct.
Key Managerial Personnel
No directors were appointed or resigned during the year under review. Mr. Shireesh Jain CFO of the Company resigned during the year under review.
NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Company had 4 Board meetings during the financial year under review.
Sl. No. |
Date of Board Meeting |
1. |
30th May 2015 |
2. |
14th August 2015 |
3. |
13th November 2015 |
4. |
13th February 2016 |
SUBSIDIARY COMPANIES:
1. Karuturi Floritech Pvt Ltd. India
2. Karuturi Foods Pvt Ltd., India
3. Karuturi Flower Express Pvt Ltd., India
4. Karuturi Overseas Ltd , Dubai
5. Flower Xpress FZE, Dubai
6. Yeshoda Investments Ltd, Kenya
7. Rhea Holdings Ltd, Kenya
8. Surya Holdings Ltd, Kenya
9. Karuturi Sports Ltd, Kenya.
10. Karuturi Hospital Ltd, Kenya
11. Gambella Green Valley Plc , Ethiopia
12. Ethiopian Meadows Plc, Ethiopia
13. Karuturi Agro Products Plc., Ethiopia
14. Surya Blossoms Plc. Ethiopia
15. Karuturi Greens and Marketing Private Limited., India
16. Karuturi Vegproducts Private Limited., India
17. Karuturi Farm Fresh Products Private Limited., India
18. Shiv Pack PLC, Ethiopia
19. Karuturi Holdings Ltd, Dubai
MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Company occurred between the ends of the financial year to which these financial statements relate on the date of this report.
SIGNIFICANT AND MATERIAL ORDERS
Karuturi Limited is Kenya is wound up pursuant to court order. Apart from it there is no other order passed by any regulators which has impacted the going concern status and operations of the company.
POLICY ON DIRECTOR''S APPOINTMENT AND REMUNERATION DETAILS
The Board Nomination and Remuneration committee overseas the Company''s Nomination process for Independent Directors and in that connection, to identify screen and review individuals qualified to serve as an independent Director on the Board.
STATUTORY AUDITORS
M/s. S Bhat & Associates., Chartered Accountants (Registration Number 014925S), were appointed as the Statutory Auditors of the Company, holds office till the conclusion of this Annual General Meeting. The Board recommends the appointment of M/s G.G. Patil and Co., as a statutory auditor of the Company from the conclusion of the Annual General Meeting up to the conclusion of 26th Annual General Meeting in terms of the section 139(1) of the Companies Act, 2013. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The brief outline of the Corporate Social Responsibility (âCSRâ) initiatives undertaken by the Company on CSR activities during the year are set out in Annexure -B required under the provisions of Section 135 and schedule VII of the Companies Act, 2013. The CSR policy is available on the website of the Company.
The Company was in the process of evaluating the focus areas / locations of intervention for CSR activities to cater to the pressing needs of society and deliver optimal impact. As a socially responsible company, your Company is committed to increase its CSR impact and spend over the coming years, with its aim of playing a larger role in India''s sustainable development by embedding wider economic, social and environmental objectives.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS IN THEIR REPORTS
Point no 1: The Company''s Sales and Purchase transactions are normally supported by valid documents such as P.O''s., D.C., G.R.N. etc. However, in view of some unique and unconventional trade practices including barter systems and not having/not using bank accounts which are peculiar to agricultural business, all the transactions are not as per the procedures suggested by the Auditors. The Company has substantially improved upon the documentation and continues to do so. It is also submitted that apart from certain intricacies related to the sectoral business there is no material misstatement.
Point no 2: The Company had initially transferred an amount of 98,12,261.90 US$ (INR 4,555,088,130.75) as Share Application Money/loan to Karuturi Overseas Ltd, Dubai. This amount has been outstanding and shown in books as âShare Application Money pending allotmentâ under âOther Non Current Assetsâ / as ''Loans'' under ''Loans and Advances''. Out of this, 7,500,000 US$ has been utilized to allot shares of Karuturi Overseas Limited and the corresponding exchange gain of INR 14,88,84,929 has been transferred from FCMTR account to Profit & Loss account as per AS-11 âThe Effects of Changes in Foreign Exchange Ratesâ.
Point no 3: The decrease is as per the calculations provided to the auditors and it is mainly due to fluctuation in the USD.INR parity.
Point no 4: The access to the books of accounts of Rhea Holdings Limited, Surya Holdings Limited & Yeshoda Investments Limited received to us late Mid May, due to which we could not had sufficient time to conduct audit before board meeting.
Point no 5: Company has received the forensic audit report of Karuturi Limited for the period from February 2014 to August 2015. With the intention of fair disclosure to share holders we have included the said report in the consolidated financial statement.
SECRETARIAL AUDITOR
The Company had appointed Mr. Vijayakrishna KT Company Secretary, Bangalore, to conduct its Secretarial Audit for the financial year ended March 31, 2016. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of applicable corporate laws. The Report does contain certain qualification, reservation or adverse remark. The Secretarial Audit Report is annexed to this report.
EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE SECRETARIAL AUDITORS IN THEIR REPORTS
a. The company will file all the returns with Registrar of Companies
b. The company had sent returns to Authorized dealer bank but due to want of information there was delay in filing returns with RBI.
c. The company has appointed Company Secretary on August 12th 2016.
d. Company will take necessary steps to publish notice in newspaper.
e. The company will file all the returns with Registrar of Companies
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan during the year 2006. Through this, the Company allotted 7,47,416 Equity Shares of Re. 1 each were allotted on exercise of options granted to the eligible employees of the Company into Equity Shares during the year 2012-13, for 2014-15 - Nil & for 2015-16 - Nil.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY
The Company does not have any Risk Management Policy as the element of risk threatening the Company''s existence is very minimal.
INTERNAL FINANCIAL CONTROLS OVER FINANCIAL STATEMENTS AND COMPLIANCE OF LAWS
The Company during the year has reviewed its internal financial control systems and has contributed to establishment of more robust and effective IFC framework, prescribed under section 134(5) of Companies Act, 2013. The Board of Directors is of the view that the existing financial controls adopted with reference to financial statements within the Company are adequate. The Company has a adequate systems and process to monitor and ensure compliance with applicable laws, rules and guidelines.
AUDIT COMMITTEE
The Audit Committee constituted by the Company meets the requirement of Section 177 of the Companies Act, 2013 as well as that of Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements,)Regulations 2015 and the details of its composition are furnished in the Corporate Governance Report attached. There was no instance during the year where the Board had not accepted any recommendation of the Audit Committee
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee constituted by the Company meets the requirement of Section 178 of the Companies Act, 2013 as well as that of Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements,)Regulations 2015 and the details of its composition are furnished in the Corporate Governance Report attached.
VIGIL MECHANISM
The Code of Conduct and vigil mechanism applicable to Directors and Senior Management of the Company is available on the Company''s website at www.karuturi.com.
ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure A and is attached to this Report.
CORPORATE GOVERNANCE
Pursuant to Regulation 34 of the Listing Regulations executed with the stock exchange, a management discussion and analysis, Corporate Governance report and Auditor''s Certificate regarding compliance of conditions of corporate Governance forms part of the annual report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Particulars of loans, guarantees and investments form part of Note no 2.13, 2.12, 2.19, and 2.1 respectively to the financial statements provided in the full version of the Annual Report.
RELATED PARTY TRANSACTION
All arrangements / transactions entered by the Company with its related parties during the year were in ordinary course of business and on an arm''s length basis. During the year, the Company had not entered into any arrangement / transaction with related parties which could be considered material in accordance with the Company''s Policy on Related Party Transactions and accordingly, the disclosure of Related Party Transactions in Form AOC 2 is not applicable. However, names of Related Parties and details of transactions with them have been included in Note no. 2.3C, 2.18, and 3.6 to the financial statements provided in the full version of the Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Company has not actively engaged in the consumption of energy or absorption of technology. The Company is however aware of its responsibilities and has at every available opportunities, used and implemented such measures so as to enable energy conservation. There has been no technology absorption involved.
The total Foreign Exchange Inflow and Outflow during the year under review is as follows:
Total Foreign Exchange Earnings Rs. 31,517.62 lakhs
Total Foreign Exchange Outgo Rs. 26,513.49 lakhs
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement:â
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors has led down internal financial controls to be followed by the Company and such internal controls are adequate and operating effectively; and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit committee, Nomination & Remuneration committee, Stakeholder Relationship Committee and Corporate Social Responsibility Committee. Some of the key criteria considered while conducting evaluation such as degree of fulfilling the key Responsibilities, effectiveness of Board process, information and functioning, Board dynamics and efficacy of communication with external stakeholders etc.
Independent Directors
A separate meeting of the independent Directors was convened, which reviewed the performance of the Board (as a whole), the non- independent directors and the Chairman.
Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.
The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is furnished in Annexure to MGT-9
Particulars of Employees
In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013
While the Company has set up a Committee to look into the complaints under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, no complaint relating to sexual harassment at work place has been received during the year.
Details in respect of frauds reported by auditors under Section 143
The statutory auditors of the Company have not reported any fraud as specified under section 143 of the Companies Act, 2013 (including any statutory modification(s) or re-enactment for the time being in force)
ACKNOWLEDGEMENTS
Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Date: 12/08/2016 Sai Ramakrishna Karuturi Anitha Karuturi
Place: Bangalore Managing Director Director
Mar 31, 2014
The Members Karuturi Global Limited Bangalore
The Directors are pleased to present the Nineteenth Annual Report
along with the audited accounts of the Company for the financial year
ended 31st March, 2014.
FINANCIAL RESULTS:
On a consolidation basis, the financial results for the year under
report of your Company stood as follows:
(Rs. in lakhs)
Particulars 2013-14 2012-13
Total Income 51,749.93 56,780.19
Profit before depreciation & tax 7,773.35 14,578.08
Less: Depreciation 3,889.21 3,296.08
Less: Provision for tax (886.04) 4.74
Add: Deferred Tax - Credit 1,465.96 4,180.01
Net Profit after Tax 6,909.18 10,813.54
COMPANY PERFORMANCE:
All of you are aware of the unfortunate developments in Kenya last
year. Due to continued non-cooperation of various stake holders,
Company is unable to complete consolidation of financials beyond
31.12.2013 Company had experienced extremely hostile situation and
despite great efforts, found resistance in debt raising. Now, the
Company has found a sudden change of fortune with the Govt of Ethiopia
offering debt and christening the Company''s project as National
Project. Also, the Company has generated significant liquidity with
sale of surplus assets.
With the lower Oil price the Company expects a huge sustained saving in
its freight cost. This, it is hoped, will more than compensate for the
weaker Euro.
Income;
Sales - The sales in financial year 2013-14 were Rs. 49,305.70 lakhs as
against Rs. 56,069.62 lakhs in financial year 2012-13.
Expenditure;
Material Expenses: In financial year 2013-14 the raw material expenses
/ purchases amounted to Rs. 13,133.67 lakhs constituting 26.63 % of net
sales while raw material expenses in 2012-13 were Rs. 12,655.49 lakhs,
constituting 22.57 % of net sales.
Manufacturing, Administrative & Selling Expenses: The Manufacturing,
Administrative and Other Manufacturing Expenses comes to Rs. 20,155.15
lakhs in financial year 2013-14 as compared to Rs. 21,081.45 lakhs in
financial year 2012-13. As a percentage of net sales it is increased to
40.88% in financial year 2013-14 from 37.60% in financial year 2012-13.
Employee Expenses - The employee expenses decreased to Rs. 3,426.09
lakhs in financial year 2013-14 from Rs. 4,973.48 lakhs in financial
year 2012-13. As a percentage of net sales it has decreased from being
8.87% of net sales in financial year 2012-13 to 6.95% of net sales in
financial year 2013-14.
Financial Charges - Financial charges amounted to Rs. 7,261.68 in
financial year 2013-14 as compared Rs. 3.491.66 lakhs in financial
2012-13. As a percentage of net sales, the financial charges expenses
increased from 6.23% in
2012- 13 to 14.73% in 2013-14.
Depreciation - Depreciation amounted to Rs. 3,889.21 lakhs in financial
year 2013- 14 as compared to Rs 3,296.08 lakhs in financial year
2012-13, representing an increase of 17.99%.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) -
The Company recorded EBIDTA of Rs. 15,035.03 lakhs in financial year
2013- 14 as against an EBIDTA of Rs. 18,069.77 lakhs in financial year
2012-13, with EBIDTA margin decreasing to 30.49% in financial year
2013-14 from 32.23% in financial year 2012-13. Net Profit after tax and
prior period adjustment - Our Net Profit for the financial year 2013-14
stood at Rs. 6,909.18 lakhs as against Rs.10,813.54 lakhs for
financial year 2012-13.
DIVIDEND:
In view of the aggressive ongoing expansion programs and considering
the requirement of funds, Directors have decided not to recommend
payment of dividend for the financial year 2013-14.
MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS:
BUSINESS REVIEW:
During the financial year 2013 -14, your Company was able to maintain
its position in the Floriculture Industry during continued European
Crisis which is its key market. The Company continued to make steady
progress in its Agricultural foray developing Land in Ethiopia.
AGRICULTURE:
Company continued its efforts to develop the agriculture farm. Major
crops expected are corn, pulses, sugarcane, oil seeds and paddy.
Company has been focusing on wet cultivation during the monsoons.
Agriculture during the dry seasons will be driven by construction of
canals and implementation of over 90 high performance pumps to draw
water from the river Baro. Water supply will be further augmented by
bore wells.
The Company works with expert farming companies from South America,
USA, South Africa and India who have been contributing immensely to the
farming operations in Gambella. Karuturi is synonymous with responsible
and good business in Ethiopia.
FLORICULTURE:
The cut flower business had a stable beginning this year with the Euro
remaining around 1.35 to a dollar. This has added stability towards
margins of the company. The weather conditions also remained helpful to
the flower business.
The Company continued its efforts for sustainable initiatives like
cutting edge biological controls like Phytoselius (Predatory Mites). We
have eliminated spraying for two spotted red spider mites by 95%.
Moving to Hydroponics resulted in 10% improvement in production with
30% reduction in consumption of water & fertilizers. Keeping in mind
its responsibility towards environment, the Company has stopped all
cultivation on riparian land and is in complete compliance with all
local regulations.
The Company has established an earth worm project on an area of 2000
square meters and is consulting organic scientists from the University
of Nairobi for further refining the leachate. This project has reduced
the fertilizer cost by 10-12%.
The above efforts have considerably reduced the operational costs and
are making floriculture business sustainable for a longer period.
FOOD PROCESSING:
Karuturi Foods Private Limited (KFPL) continued its efforts to maintain
its top line in food processing during the year. The weather conditions
in the region have been a little unfavorable and hence the growth could
not be achieved to the maximum. The Company continued its reach to
Africa, Greece, South America and East European countries besides its
main markets in Russia & Ukraine Regions. In the year under report, the
Company has been trying to spread its market across various countries
to reduce its dependency on Russia which is a very price sensitive and
volatile market.
To strengthen the Agri Operations, the Company had gone to non-
traditional Gherkin growing areas to improve the yield as well as to
source higher volumes to avoid field competition.
The Company''s factory has been certified by BRC (British Retail
Consortium) besides HACCP, FDA & KOSHER, as all customers expect these
Certifications as a pre-requisite for placing the Orders with KFPL.
OUTLOOK:
Your Company has a strategic goal to bring a larger area under
Agricultural Production and simultaneously continues to create new
opportunities in its Floriculture and Food Processing businesses.
REPLY TO AUDITORS''S QUALIFICATIONS Dtd 14.02.2015
Point No. 1: Karuturi Limited and its associate companies have
vigorously contested the receivership in the Kenyan Court and the
Management is hopeful of a result in favor of the company.
Point No.2 & 3: The Company''s Sales and Purchase transactions are
normally supported by valid documents such as P.O., D.C., G.R.N. etc.
However, in view of some unique and unconventional trade practices
including barter systems and not having / not using bank accounts which
are peculiar to agricultural business, all the transactions are not as
per the procedures suggested by the Auditors. The Company has
substantially improved upon the documentation and continues to do so.
It is also submitted that apart from certain intricacies related to the
sectoral business there is no material misstatement.
Point No.4: The Company had initially transferred an amount of
98,012,261.90 US$ (INR 4,555,088,130.75) as Share Appplication Money /
loan to Karuturi Overseas Ltd, Dubai. This amount has been outstanding
and shown in books as "Share Application Money pending allotment"
under "Other Non Current Assets" / as ''Loans'' under ''Loans
and Advances''. Out of this, 12,500,000 US$ has been utilized to allot
shares of Karuturi Overseas Limited and the corresponding exchange gain
of INR 203779048 has been transferred from FCMTR Account to Profit &
Loss Account as per AS-11 "The Effects of Changes in Foreign Exchange
Rates.
Point No.5: The records and documents for the stock taking were
provided for auditing. Since the subsidiary is in Agriculture domain,
stock taking is an elaborate exercise which was getting done only once
a year; however based on the recommendation of the auditors, the same
has been started on quarterly basis, which further needs to be
strengthened. It may, however, be noted that there is no variation from
the accounting policies followed by the Company.
Point No.6: The increase is as per the calculations provided to the
auditors and it is mainly due to very high fluctuation in the USD / INR
parity.
PAID UP CAPITAL:
The total Paid-up Capital of the Company continued to remain at Rs.
80,97,26,648/- as on 31.03.2014.
GROUP COMPANIES:
The following persons constitute the group coming within the definition
of Group as defined in the Monopolies and Restrictive Trade
Practices Act, 1969, who exercise or are established to be in a
position to exercise control, directly or indirectly over the Company
[Section 2(ef)] as on 31.03.2014:
1. Mr. Sai Ramakrishna Karuturi
2. Ms. Anitha Karuturi
3. Karuturi Floritech Pvt Ltd. India
4. Florista India Pvt. Ltd. India
5. Karuturi Flower Express Pvt. Ltd. India
6. Karuturi Foods Pvt Ltd., India
7. Karuturi Overseas Ltd., Dubai
8. Flower Xpress FZE, Dubai
9. Yeshoda Investments Ltd, Kenya
10. Rhea Holdings Ltd, Kenya
11. Surya Holdings Ltd, Kenya
12. Karuturi Sports Ltd, Kenya.
13. Karuturi Ltd, Kenya
14. Karuturi Hospital Ltd, Kenya
15. Ethiopian Meadows Plc, Ethiopia
16. Karuturi Agro Products Plc., Ethiopia
17. Surya Blossoms Plc. Ethiopia
18. Shiv Pack PLC, Ethiopia
19. Karuturi Greens and Marketing Private Limited
20. Karuturi Vegproducts Private Limited
21. Karuturi Farm Fresh Products Private Limited
22. Karuturi Holdings Ltd, Dubai
DIRECTORS:
Mrs. Anitha Karuturi , Director, retires by rotation and being
eligible, offers herself for re-appointment.
AUDIT COMMITTEE:
Audit Committee constituted by the Board of Directors with requisite
composition to fall in line with the prevailing laws, continued to
discharge its functions during the year under review.
PERSONNEL:
The Directors wish to place on record their sincere appreciation for
the services rendered by the employees of the Company at all levels
both placed in India and Overseas.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company had commissioned its maiden Employees Stock Option Plan
during the year 2006. Through this, the Company allotted 7,47,416
Equity Shares of Re. 1 each on exercise of Options granted to the
eligible employees of the Company to convert into Equity Shares during
the year 2012-2013. (For 2013-14: NIL)
DEPOSITS:
The Company has not accepted any deposits from the public falling under
the purview of Section 58A of the Companies Act, 1956.
AUDITORS:
Messrs YCRJ & Associates, Chartered Accountants, Bangalore, the
existing Auditors, are not being reappointed at the ensuing Annual
General Meeting. Hence based on requisition from shareholders, your
Directors recommend Messrs S. Bhat & Associates as the Statutory
Auditors for the year 2014-15 in the ensuing Annual General Meeting.
FOREIGN EXCHANGE EARNINGS & OUTFLOW:
The Company earned Rs.431.97 Lakhs in Foreign Exchange for the year
ended 31.03.2014 as compared to Rs.1,431.75 lakhs for the year ended
31.03.2013.
The out flow in foreign exchanges was Rs.0.35 lakhs during the year
under report as compared to Rs.90.74 lakhs during the previous year.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, CEO&CFO certification on the financials of the Company,
Report on Corporate Governance, and Auditors'' Report on compliance
with the Corporate Governance requirements have been included as
Annexure to this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Directors state:
i) That in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanations
relating to material departure;
ii) 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 the
profit of the Company for the period;
iii) 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.
iv) That the Directors had prepared the annual accounts on a going
concern basis.
INSURANCE COVERAGE:
The Board reports that the Company has adequately insured all the
assets of the Company.
ACKNOWLEDGEMENTS:
Your Directors acknowledge with gratitude the confidence reposed on the
Company by the Shareholders, Bankers, Statutory Authorities, Customers,
Vendors and all others who deal with the Company and also wish to thank
all the employees, both India and Overseas, for extending their sincere
and unstinted support, and expect the same for the years to come.
By the Order of the Board
Place: Bangalore Sai Ramakrishna Karuturi
Date: 14th Feb 2015 Chairman and Managing Director
Mar 31, 2013
To The Members of Karuturi Global Limited
Bangalore
The Directors have pleasure in presenting the Eighteenth Annual Report
along with the audited accounts of the Company for the financial year
ended 31st March, 2013.
FINANCIAL RESULTS:
On a consolidation basis, the financial results for the year under
report of your Company stood as follows:
(Rs. in lacs)
Particulars 2012-13 2011-12
Total Income 56780.19 58925.88
Profit before depreciation & tax 14578.11 17674.85
Less: Depreciation 3296.08 3,867.98
Less: Provision for tax 4.74 139.62
Add: Deferred Tax  Credit 4180.01 17.08
Net Profit after Tax 10813.57 15632.35
COMPANY PERFORMANCE:
Income:
Sales  The sales in fiscal 2013 were Rs. 55,986.10 lakhs as against
Rs. 56,314.26 lakhs in fiscal 2012.
Expenditure:
Material Expenses - In fiscal 2013 the raw material expenses /
purchases amounted to Rs. 32,631.69 lakhs constituting 58.29 % of net
sales while raw material expenses in 2012 were Rs. 30,858.30 lakhs,
constituting 54.80 % of net sales.
Selling & Administrative Expenses - The administrative expenses
decreased to Rs 1743.29 lakhs in fiscal 2013 as compared to Rs 2,326.11
lakhs in fiscal 2012. As a percentage of net sales it to 3.11 % in
fiscal 2013 from 4.13 % in fiscal 2012.
Employee Expenses - The employee expenses decreased to Rs.1,240.31
lakhs in fiscal 2013 from Rs.3,993.83 lakhs in fiscal 2012. As a
percentage of net sales it has decreased from being 7.09% of net sales
in fiscal 2012 to 2.22% of net sales in fiscal 2013.
Financial Charges - Financial charges amounted to Rs. 3491.29 lakhs in
fiscal 2013 as compared Rs.1,257.89 lakhs in fiscal 2012. As a
percentage of net sales, the financial charges expenses increased from
2.23 % in 2012 to 6.24% in 2013.
Depreciation - Depreciation amounted to Rs 3296.08 lakhs in fiscal 2013
as compared to Rs.3867.98 lakhs in fiscal 2012, representing a decrease
of 14.29%.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) Â
The Company recorded EBIDTA of Rs. 18,069.40 lakhs in fiscal 2013 as
against an EBIDTA of Rs. 18,932.74 lakhs in fiscal 2012, with EBIDTA
margin decreased from 33.62 % in fiscal 2012 to 32.27% in fiscal 2013.
Net Profit after tax and prior period adjustment  Our Net Profit for
the fiscal 2013 stood at Rs.10,813.57 lakhs as against Rs.15,632.35
lakhs for fiscal 2012.
DIVIDEND:
In view of the aggressive ongoing expansion programs and considering
the requirement of funds, Directors have decided not to recommend
payment of dividend for the financial year 2012-13.
MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS :
BUSINESS REVIEW:
During 2012 -13, your Company was able to maintain its position in the
Floriculture Industry in the midst of the European Crisis which is its
key market. The Company continued to make steady progress in its
Agricultural foray developing 35,000 Acres of Land in Ethiopia.
AGRICULTURE:
Karuturi has harvested its maiden 21,000 tonnes of Maize crop
cultivating on 10,000 Acres in Ethiopia.
Karuturi is at the threshold of planting 12,500 Acres this April ÂMay
2013. Apart from corn, other crops which will form a part of our agro
portfolio will be sugarcane, oil seeds and paddy. While wet
cultivation during the monsoons is being maximized, agriculture during
the dry seasons will be driven by construction of canals and
implementation of over 90 high performance pumps to draw water from the
river Baro and further irrigate over 35,000 hectares. This is augmented
by bore wells.
The Company now work with expert farming companies from South America,
USA, South Africa and India who have been contributing immensely to the
farming operations in Gambella. Karuturi is synonymous with
responsible and good business in Ethiopia.
FLORICULTURE:
The cut flower business has had a strong and vibrant beginning this
year with the Euro surging to 1.35 from 1.27 to a dollar last year.
This has added significant margin to our already comfortable margin of
27% taking it to 32%.
The excellent weather this year has helped to have a very buoyant
flower market. This was the best Valentine the Company had in 10 years
with record price surges, the top seller Red variety from Ethiopia
fetched Euro 0.81/stem (INR 58) and Kenya fetched 0.46 (INR 33).
The Company adopted sustainable initiatives like cutting edge
biological controls like Phytoselius (Predatory Mites) we have
eliminated spraying for two spotted red spider mites by 95%. Also
moving to Hydroponics entailed 10% improvement in production with 30%
reduction in consumption of water & fertilizers. Keeping our
environmental responsibilities in mind the company has stopped all
cultivation on riparian land and is in complete compliance with all
regulations.
The Company has established a earth worm project on an area of 2000
square meters and we are consulting organic scientists from the
University of Nairobi with view to further refining the leachate. This
project has reduced our fertilizer cost by 8-10%.
The operational costs have considerably reduced by 28.57% adding an
additional $ 5 million to the bottom-line for 2013.
FOOD PROCESSING:
This food Processing business at Karuturi Foods Private Limited (KFPL)
has shown about 29 % growth in the top line during the year. The
Company has expanded its reach to newer markets to Africa, Greece ,
South America and East European countries besides its main markets in
Russia & Ukraine Regions. The Company has invested in some new
machinery to increase the efficiency level of its processing to
increase line speed. In the current year your Company plans to spread
its market across various countries to reducing its dependency on
Russia which is a very price sensitive & volatile market.
To strengthen the Agri Operations, Your company had gone to
nontraditional Gherkin growing areas to improve the yields as well as
to source higher volumes to avoid the field competition.
KFPL has participated in the Moscow Food Fair and ANUGA at Cologne,
Germany and PLMA, Amsterdam.
KFPL Plans to increase its processing capacity again in the next year
by installing another pasteurizer, boiler and material handling
equipment.
The factory has been certified by BRC (British Retail Consortium)
besides HACCP, FDA & KOSHER as all customers expect these
Certifications as pre requisite for placing the Orders with KFPL.
OUTLOOK:
Your Company''s Strategic Goal this year would be to bring a larger area
under Agricultural Production and continue to create new opportunities
in its Floriculture & Food Processing.
INCREASE IN PAID UP CAPITAL:
The total Paid up Capital of the Company as on 31.03.2013 was Rs.
80,97,26,648/- as compared to Rs. 808,979,232/- as on 31.03.2012. This
increase in Capital is pursuant to allotment of 7,47,416 Equity Shares
of Re1/- each to the Employees as per ESOS.
Preferential Allotment of Fully Convertible Debentures
The statutory approvals are awaited and hence the allotment is pending.
The allotment of the aforesaid Fully Convertible Debentures shall be
made within 15 days from the date of passing of the resolution subject
however to the applicable statutory regulatory provisions and the
Guidelines by the Securities Exchange Board of India.
The Fully Convertible Debentures will be compulsorily convertible into
Equity Shares with face value of Re. 1/- each before expiry of 18
months from the date of such allotment.
The number of Equity Shares to be allotted shall be dependent on the
pricing determined under SEBI Regulations and other factors shall be
determined at the time of conversion to equity.
The pricing of the resultant Equity Shares shall be determined as per
SEBI (ICDR) Regulations which at present is as follows:
Higher of the following:
The average of the weekly high and low of the closing prices of the
related equity shares quoted on the recognised stock exchange during
the six months preceding the relevant date; or n The average of the
weekly high and low of the closing prices the related equity shares
quoted on a recognised stock exchange during the two weeks preceding
the relevant date. For the aforesaid purpose, ''''Relevant date'''' as per
regulation 71(b) of SEBI (ICDR) regulations means the date in case of
preferential issue of convertible securities, a date thirty days prior
to the date on which the holders of convertible securities become
entitled to apply for equity shares.
GROUP COMPANIES:
The following persons constitute the group coming within the definition
of ''''Group'''' as defined in the Monopolies and Restrictive Trade Practices
Act, 1969, who exercise or are established to be in a position to
exercise control, directly or indirectly over the Company [Section
2(ef)]:
1 Mr. Sai Ramakrishna Karuturi
2 Ms. Anitha Karuturi
3 Karuturi Floritech Pvt Ltd. India
4 Karuturi Foods Pvt Ltd., India
5 Karuturi Overseas Ltd , Dubai
6 Flower Xpress FZE, Dubai
7 Yeshoda Investments Ltd, Kenya
8 Rhea Holdings Ltd, Kenya
9 Surya Holdings Ltd, Kenya
10 Karuturi Sports Ltd, Kenya.
11 Karuturi Ltd, Kenya
12 Karuturi Hospital Ltd, Kenya
13 Ethiopian Meadows Plc, Ethiopia
14 Karuturi Agro Products Plc., Ethiopia
15 Surya Blossoms Plc. Ethiopia
16 Karuturi Greens and Marketing Private Limited
17 Karuturi Vegproducts Private Limited
18 Karuturi Farm Fresh Products Private Limited
19 Shiv Pack PLC, Ethiopia
Karuturi Telecom Pvt Ltd., India (upto 19.04.2013)
DIRECTORS:
Mr. Raja Vara Prasad Bommidala and Mr. Mahendra Kumar Sunkara
Directors, retire by rotation and being eligible, offer themselves for
re-appointment.
AUDIT COMMITTEE:
Audit Committee constituted by the Board of Directors with requisite
composition to fall in line with the prevailing laws, continued to
discharge its functions during the year under review.
PERSONNEL:
The Directors wish to place on record their sincere appreciation for
the services rendered by the employees of the Company at all levels
both placed in India and Overseas.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan
during the year 2006. Through this, the Company allotted 7,47,416
Equity Shares of Re. 1 each were allotted on exercise of options
granted to the eligible employees of the Company into Equity Shares
during the year 2012-2013.
DEPOSITS:
The Company has not accepted any deposits from the public falling under
the purview of Section 58A of the Companies Act, 1956.
AUDITORS:
Messrs Hari Bhakti & Co., Chartered Accountants, the existing Auditors
have resigned. Hence based on requisition from shareholders, your
Directors recommend Messrs YCRJ & Associates, Chartered Accountants,
Bangalore as the statutory auditors for the year 2013-14 in the ensuing
Annual General Meeting.
FOREIGN EXCHANGE EARNINGS & OUTFLOW:
The Company earned Rs. 1,431.75 Lakhs in Foreign Exchange for the year
ended 31.03.2013 as compared to Rs. 2,102.11 lakhs for the year ended
31.03.2012.
The out flow in foreign exchanges was Rs 90.74 lakhs as compared to Rs.
4.75 lakhs during the previous year.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, CEO&CFO certification on the financials of the Company,
Report on Corporate Governance, and Auditors'' Report on compliance with
the Corporate Governance requirements have been included as Annexures
to this Report.
DIRECTORS'' RESPONSIBILITY STATEMENT:
Directors state:
I) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanations
relating to material departure;
ii) 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 the
profit of the Company for the period;
iii) 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.
iv) that the Directors had prepared the annual accounts on a ''going
concern'' basis.
INSURANCE COVERAGE:
The Board reports that the Company has adequately insured all the
assets of the Company.
ACKNOWLEDGEMENTS:
Your Directors acknowledge with gratitude the confidence reposed on the
Company by the Shareholders, Bankers, Statutory Authorities, Customers,
Vendors and all others who deal with the Company and also wish to thank
all the employees both India and Overseas for their sincere and
unstinted support extended and expects the same for the years to come.
By the Order of the Board
Place : Bangalore Sai Ramakrishna Karuturi
Date : 12th August,2013 Chairman and Managing Director
Mar 31, 2012
The Directors have pleasure in presenting the Seventeenth Annual
Report along with the audited accounts of the Company for the financial
year ended 31st March, 2012.
FINANCIAL RESULTS:
On a consolidation basis, the financial results for the year under
report of your Company stood as follows:
(Rs. in lacs)
Particulars 2011-12 2010-11
Total Income 56,304.67 63,872.65
Profit before depreciation & tax 19,622.82 21,821.78
Less: Depreciation 3,867.98 6,186.55
Less: Provision for tax 139.62 104.49
Add: Deferred Tax à Credit -17.08 33.30
Net Profit after Tax 15,632.30 15,497.44
COMPANY PERFORMANCE:
Income:
Sales à The sales in fiscal 2012 were Rs. 56,304.67 lakhs as against
Rs. 63,872.65 lakhs in fiscal 2011.
Expenditure :
Material Expenses à In fiscal 2012 the raw material expenses /
purchases amounted to Rs.21,374.16 lakhs constituting 37.96% of net
sales while raw material expenses in 2011 were Rs.21,329.25 lakhs,
constituting 33.39% of net sales.
Selling Administrative Expenses à The administrative expenses increased
to Rs.1,4,193.40 lakhs in fiscal 2012 as compared to Rs.13,921.71 lakhs
in fiscal 2011. As a percentage of net sales it increased to 25.21% in
fiscal 2012 from 21.80% in fiscal 2011
Employee Expenses à The employee expenses increased from Rs.5,964.15
lakhs in fiscal 2011 to Rs.4,422.87 lakhs in fiscal 2012. As a
percentage of net sales it has decreased from being 9.34% of net sales
in fiscal 2011 to 7.86% of net sales in fiscal 2012.
Financial Charges à Financial charges amounted to Rs.1,257.78 lakhs in
fiscal 2012 as compared Rs.1,736.60 lakhs in fiscal 2011. As a
percentage of net sales, the financial charges expenses decreased from
2.72% in 2011 to 2.23% in 2012.
Depreciation à Depreciation amounted to Rs.3,867.96 lakhs in fiscal
2012 as compared to Rs.6,186.55 lakhs in fiscal 2011, representing an
decrease of 2.82%.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) Ã
The Company recorded EBIDTA of Rs.20,880.60 lakhs in fiscal 2012 as
against an EBIDTA of Rs. 23,558.51 lakhs in fiscal 2011, with EBIDTA
margin decreased from 37.90% in fiscal 2011 to 37.09% in fiscal 2012.
Net Profit after tax and prior period adjustment à Our Net Profit for
the fiscal 2012 stood at Rs.15,632.30 lakhs as against Rs.15,497.45
lakhs for fiscal 2011.
DIVIDEND:
In view of the aggressive on going expansion programs and considering
the requirement of funds, Directors have decided not to recommend
payment of dividend for the financial year 2011-12.
MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS :
BUSINESS REVIEW:
During 2011 -12, your Company was able to maintain its position in the
Floriculture Industry in the midst of the European Crisis which is its
key market. The Company continued to make steady progress in its
Agricultural foray developing 1,00,000 Ha of Land in Ethiopia.
AGRICULTURE :
Your Company has procured wide range of machinery and equipment, for
sowing, harvesting, spraying and other processes, like high end
Tractors of 250 HP and 450 HP, Mulch Rippers, Trailers, Disc plough,
cultivators, maize planters, puddling wheels for the plantation
purpose. These equipments have been procured from all over the world
from companies like CASE, John Deere, Great Plains, Doosan, Volvo, CRI,
JCB, Ashok Leyland etc.
Your Company had planted more than 10000 Ha last year in June but
suffered a setback due to flash floods which had damaged the crops.
Subsequently dykes were rebuilt with a larger base of 9 meters width at
the bottom, 3 meters width at the top and a height of 3 meters. Dykes
spreading over 110 KM has been built and the same is being expanded to
all areas. This will prevent any flooding in future.
Your Company has made substantial progress in setting up irrigation
systems and is building a network of canals and pumping water from Baro
river.
This season 5000 Ha of Maize and some trial crop of Paddy has been
planted and the same is growing very well. A good harvest is expected.
Drought in America and increased demand has resulted in the price of
Maize quoting at a very encouraging level. The Sugarcane Nursery is
being expanded to cover about 200 Ha.
Your Company has engaged a team of Farmers from Uruguay, South America
and Farmers National Company, USA to provide the necessary expertise
for Large Scale Farming. These farmers have over 20 years of experience
in doing Large scale farming using high end farm equipments. These
farmers have been engaged on a success based model extending its scheme
of engaging with various specialists for Key functional and support
areas.
FLORICULTURE:
The flagship floriculture business has been affected largely by the
volatility of the Euro and the Euro zone events. During Valentine this
year both the quantities and prices were affected due to extreme
weather condition going down to à 20 degrees in most parts of the
markets in Europe. The Company has managed to keep the impact of the
Euro Zone crisis at the minimum level.
In its Kenyan operations the Company continues to focus on green
initiatives which include Bio gassifiers to generate electricity,
expanding the vermi licheate program and also a further extension of
the green planet program.
The Company has also planted new varieties in the farms which have good
potential acceptability.
FOOD PROCESSING:
This food Processing business at Karuturi Foods Private Limited(KFPL)
has shown about 30% growth in the topline shipping about 260 containers
during the year. The Company has expanded its reach to newer markets in
South America and East European countries besides its main markets in
Russia and USA. The Company has invested in some new machinery to
increase the efficiency levels of its processing. In the current year
your Company plans to spread its market across various countries
reducing its dependence on Russia which is a volatile market.
The factory has been certified by BRC (British Retail Consortium)
besides HACCP, FDA & KOSHER.
KFPL has participated in the Moscow Food Fair and ANUGA at Cologne,
Germany and PLMA, Amsterdam. KFPL plans to increase its processing
capacity again in the next year by installing another pasteurizer,
boiler and material handling equipments.
ISP:
The ISP business being carried on under Karuturi Telecom Private
Limited (KTPL) was stable with the said Company growing its capacity by
about 20% in terms of delivery of Bandwidth and VOIP minutes. The
Company saw pressure on the margins due to fall in prices. The Company
has acquired some new customers in various geographies and also
continues to grow its business with its existing key customers. Stable
growth is expected in the current year.
OUTLOOK:
Your Company's Strategic Goal this year would be to bring a larger area
under Agricultural Production during the year and continue to create
new opportunities in its Floriculture, Food Processing and IT
businesses.
INCREASE IN PAID UP CAPITAL:
The total Paid up Capital of the Company as on 31.03.2012 was Rs.
80,89,79,232/- as compared to Rs. 80,55,07,010/- as on 31.03.2011. This
increase in Capital is pursuant to allotment of 3,472,222 Equity Shares
of Re1/- each to the strategic investors.
GROUP COMPANIES:
The following persons constitute the group coming within the definition
of "Group" as defined in the Monopolies and Restrictive Trade Practices
Act, 1969, who exercise or are established to be in a position to
exercise control, directly or indirectly over the Company [Section
2(ef)]:
1. Mr. Sai Ramakrishna Karuturi
2. Ms. Anitha Karuturi
3. Karuturi Telecom Pvt Ltd., India
4. Karuturi Floritech Pvt Ltd. India
5. Karuturi Foods Pvt Ltd., India
6. Karuturi Overseas Ltd , Dubai
7. Flower Xpress FZE, Dubai
8. Yeshoda Investments Ltd, Kenya
9. Rhea Holdings Ltd, Kenya
10. Surya Holdings Ltd, Kenya
11. Karuturi Sports Ltd, Kenya.
12. Karuturi Ltd, Kenya
13. Karuturi Hospital Ltd, Kenya
14. Gambella Green Valley Plc , Ethiopia
15. Ethiopian Meadows Plc, Ethiopia
16. Karuturi Agro Products Plc., Ethiopia
17. Surya Blossoms Plc. Ethiopia
18. Karuturi Greens and Marketing Private Limited
19. Karuturi Vegproducts Private Limited
20. Karuturi Farm Fresh Products Private Limited
DIRECTORS:
Mrs. Aslesha Madappa and Mr. Man Mohan Agrawal, Directors, retire by
rotation and being eligible, offer themselves for re-appointment. Mr.
Raaj Sah, a very eminent professor in USA, was inducted to the Board
during the year as Additional Director is recommended to be appointed
as Director.
AUDIT COMMITTEE:
Audit Committee constituted by the Board of Directors with requisite
composition to fall in line with the prevailing laws, continued to
discharge its functions during the year under review.
PERSONNEL:
The Directors wish to place on record their sincere appreciation for
the services rendered by the employees of the Company at all levels
both placed in India and Overseas.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan
during the year 2006. Through this, the Company has converted 3,910,166
Stock options granted to the eligible employees of the Company into
Equity Shares during the year 2009 -2010 & 2010-2011.
DEPOSITS:
The Company has not accepted any deposits from the public falling under
the purview of Section 58A of the Companies Act, 1956.
AUDITORS:
Messrs Ishwar & Gopal, Chartered Accountants, the existing Auditors,
have expressed their inability to be reappointed at the ensuing Annual
General Meeting. Hence, based on requisition from a Shareholders, your
Directors recommend Messrs Haribhakti & Co, Chartered Accountants,
Bangalore as the statutory auditors for the year 2012-13 in the ensuing
Annual General Meeting.
FOREIGN EXCHANGE EARNINGS & OUTFLOW:
The Company earned Rs.2,480.16lakhs in Foreign Exchange for the year
ended 31.03.2012 as compared to Rs. 2,564.49 lakhs for the year ended
31.03.2011.
The out flow in foreign exchanges was Rs.4.75 lakhs as compared to
Rs.7.51 lakhs during the previous year.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, CEO&CFO certification on the financials of the Company,
Report on Corporate Governance, and Auditors' Report on compliance with
the Corporate Governance requirements have been included as Annexures
to this Report.
DIRECTORS' RESPONSIBILITY STATEMENT:
Directors state:
i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanations
relating to material departure;
ii) 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 the
profit of the Company for the period;
iii) 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.
iv) that the Directors had prepared the annual accounts on a 'going
concern' basis.
INSURANCE COVERAGE:
The Board reports that the Company has adequately insured all the
assets of the Company.
ACKNOWLEDGEMENTS:
Your Directors acknowledge with gratitude the confidence reposed on the
Company by the Shareholders, Bankers, Statutory Authorities, Customers,
Vendors and all others who deal with the Company and also wish to thank
all the employees both India and Overseas for their sincere and
unstinted support extended and expects the same for the years to come.
By the Order of the Board
Place:Bangalore Sai Ramakrishna Karuturi
Date :4th September,2012 Chairman and Managing Director
Mar 31, 2011
To
The Members
Karuturi Global Limited
Bangalore
The Directors have pleasure in presenting the Sixteenth Annual Report
along with the audited accounts of the Company for the financial year
ended 31st March, 2011.
FINANCIAL RESULTS:
On a consolidation basis, the financial results for the year of your
Company stood as follows:
(Rs. in lacs)
Particulars 2010-11 2009-10
Total Income 63,872.65 53,381.82
Profit before
depreciation
& tax 21,821.78 19,837.44
Less:
Depreciation 6,186.55 5,562.30
Less:
Provision for
tax 104.49 8.64
Add:
Deferred Tax 33.30 (71.97)
Net Profit
after Tax 15,497.44 14,338.47
COMPANY PERFORMANCE:
Income:
Sales à The sales in fiscal 2011 were Rs. 63,872.65 lakhs as against Rs
5,3381.62 lakhs in fiscal 2010
Expenditure :
Material Expenses à In fiscal 2011 the raw material expenses /
purchases amounted to Rs. 21,292.82 lakhs constituting 33.34 % of net
sales while raw material expenses in 2010 were Rs. 16,689.84 lakhs,
constituting 31.26% % of net sales.
Selling Administrative Expenses à The administrative expenses increased
to Rs.14,506.48 lakhs in fiscal 2011 as compared to Rs. 13,633.31 lakhs
in fiscal 2010. As a percentage of net sales it increased to 22.71 % in
fiscal 2011 from 25.54 % in fiscal 2010.
Employee Expenses - The employee expenses increased from Rs. 3,860.73
lakhs in fiscal 2010 to Rs. 4,240.53 lakhs in fiscal 2011 . As a
percentage of net sales it has decreased from being 7.23% of net sales
in fiscal 2010 to 6.64% of net sales in fiscal 2011.
Financial Charges - Financial charges amounted to Rs.2,660.45 lakhs in
fiscal 2011 as compared Rs. 649.48 lakhs in fiscal 2010. As a
percentage of net sales, the financial charges expenses increased from
1.22% in 2010 to 4.17% in 2011.
Depreciation - Depreciation amounted to Rs. 6,186.55 lakhs in fiscal
2011 as compared to Rs.5,562.29 in fiscal 2010, representing an
increase of 11.22% The increase is on account of additional capital
expenditure in Ethiopia.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) Ã
We recorded EBIDTA of Rs. 24,482.23 lakhs in fiscal 2011 as against an
EBIDTA of Rs. 20,486.92 lakhs in fiscal 2010, with EBIDTA margin
increased from 37.50% in fiscal 2010 to 37.90 % in fiscal 2011 .
Net Profit after tax and prior period adjustment à Our Net Profit for
the fiscal 2011 stood at Rs.15,497.44 lakhs as against Rs. 14,338.47
lakhs for fiscal 2010 .
DIVIDEND:
Continuing with the policy of sharing the profits with the shareholders
and keeping in mind the ongoing aggressive expansions programs, your
Board is pleased to recommend Dividend of Re 0.10 per Equity Share of
Re.1/- each (10%).
MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS :
BUSINESS REVIEW :
During 2010-11, your Company continued to consolidate its leadership
position in floriculture globally, increased presence in our retail and
processed foods business and were on track on our ambitious project of
developing 1,10,000 Ha (1st Phase) of agricultural land in Ethiopia
across two sites in Gambela and Bako.
AGRICULTURE :
During the year 2010-11 your Company made substantial progress in the
Agriculture project implementation at the sites at Bako and Gambela in
Ethiopia.
Your Company has cleared and developed over 50000 Ha of Land in total
out of which over 20000 Ha of land is ready for sowing and additional
10000 ha is being made ready. The cultivation of paddy and maize has
already commenced on more than 12000 Ha.
Your Company has procured Wide range of Machinery and Equipment for
Land Development, Sowing, Harvesting, Spraying and other processes like
Mulch Rippers, Trailers, Disc plough, cultivators, maize planters,
Paddy Planters, puddling wheels etc.. These equipments have been
procured from all over the world USA, China, India, Israel, Korea,
Japan from Companies like John Deere, Case, Great Plains, Doosan,
Volvo, CRI, JCB, Ashok Leyland etc. The company has made a substantial
progress in setting up irrigation systems. Over 50km of drainage has
been established, 40km of dykes and over 50 KM of Canals for Irrigation
have been built. Pumping system for water from Baro River with 22000
LPS capacity has been setup. Company is developing Infrastructure like
Roads, Storage, Housing etc.
Sowing maize has started since June 2011 on over 10000Ha. Sugarcane
nursery has been set up on 100Ha which shall be doubled to 200ha.
In Bako, over 2300Ha of Land is under the process of sowing, spraying
and weeding. Maize has been planted in Bako.
In Gambella, a nursery was established for Palm, which currently has
500,000 Palm plants ready for transplanting on 3 - 4,000 Ha of land
with each hectare having a potential of yielding 5,000 Kgs of crude
oil.
Your Company has engaged experts from various fields to assist the
project implementation with their technical knowhow and insights. Bruce
Crabb from Scotland is working on the Oil palms, Water watch & WAPCO
team is handling Irrigation and Drainage, Dr. Kaironthe, Former head of
Cotton research Institute, Nagpur is associated with the cotton
project, while Mr. Daves from Swaziland is advising on the Equipment
selection, I-maritime Marine consultancy group has designed the
logistics for transporting grains from Gambella to Southern Sudan,
Northern Sudan, Uganda and Kenya. Dr. Biksham from Switzerland is
guiding the company on SRI and SSI techniques in rice and sugarcane.
Work has been initiated to take care of the social and environmental
obligations as per our detailed environmental Impact study that was
carried out earlier.
Sensing the need for value creation along the agro supply chain, your
Company is in the process of establishing joint ventures for setting up
agro processing plants near the farming area. Rice processing unit of 8
tons per hour, Sugar mill with 5000 tons crushing capacity per day and
Oil extraction units for oil palm have been planned for the initial
phases of our harvest.
To tap the local and international markets for supply of produce, your
Company has been actively building a strong customer network through
Trade shows and marketing across Ethiopia, South Sudan, Sudan,
Djibouti, Kenya Tanzania, UGANDA, Middle East. Associations have been
established for supply of produce to Ethiopian Commodity Exchange,
USAID's World Food Program and several other regional and other
international food processing companies.
The Company agricultural initiatives will not only have a major long
term impact on the country but also the entire Africa continent. Its
ability to produce over a little over half a million tons of cereals
and 100,000 tons of palm oil will significantly alter the demand
situation in favor of the African consumer.
FLORICULTURE :
Your Company currently enjoys a 9% market share in the European cut
rose industry and with plans to add another 25 Ha at Wolliso in
Ethiopia under green houses by 2012. Company has been focusing on
bringing higher efficiency and developing new markets in the
Floriculture business. The Company has gained access to new markets in
the East European Block and Scandinavian countries. These markets have
given a good response to its Hybrid Tee varieties from Ethiopia. It has
also seen growth in its Middle East markets. It has long term contracts
with the global retailing chains for retailing its produce across
Europe.
In its Kenyan operation the Company has focused on green initiatives
which include:
Back to Earth program, Recycling of farm green cuttings into organic
mulch and compost, leading to savings in fertilizers and energy
requirements.
Bio Gasifiers to convert all uprooted root stalk and plant pruning's
into electricity through conversion of trapped gases, with a current
planned capacity to generate 30000 units of electricity per month and
100000 units per month in future, use of earthworms to produce 360000
litres of vermin leacheate per annum. Capacity expansion planned to
touch 500000 litres per annum so as to bring in additional savings in
fertilizer usage. Green Planet Program to plant 100,000 drought
resistant African species of plants on track.
FOOD PROCESSING :
Karuturi Foods Pvt. Ltd. (KFPL) a 100% subsidiary of Karuturi Global
Lmited is working on doubling its processing capacity. KFPL has added a
vegetable filling machine which will increase the capacity of bottling
to double. KFPL has won the bid and has been given the LOA to take over
on PPP basis 3 farms of the Karnataka Government to develop and grow
horticultural crop. This will give a big boost to the processing
business. The factory has been certified by HACCP, FDA and Kosher and
has also got certified for BRC (Global Standard for Food Safety) which
will give a big boost to access the USA and Europe markets.
KFPL has participated in leading Food Trade Fairs in Germany, Middle
East, Russia and Africa and will be participating in the coming year
too along with USA trade fair as soon as BRC certification is in place.
The company has achieved a status as multi product, multi pack company
in the international market. KFPL has developed and exported products
like Pickled Gherkins, Jalapenos, Cherry Tomatoes, Sliced and Diced
Gherkins and other vegetables. KFPL has successfully exported products
in glass jars, cans/tins, pails, drums and even glass jars with shrink
wrapped form.
KFPL has also entered into domestic markets under its private label as
well as with other brands for selling into Retail and Food Services.
ISP :
The Internet Service business started looking up after facing a
downside last year due to the recessionary trends. Pressure on margins
continues to haunt all the service providers since there has been
severe budgetary constraints among the customers especially the IT
companies who are one of the largest consumers of Internet bandwidth
and other solutions.
The focus continued in expanding our business within the areas where
the Company has presence and has created some local POP's in states
like Gujarat/Tamil Nadu etc to increase the reach on a franchisee
model. VOIP business continues to be one of the focus areas to address
the corporate for both their office and remote needs.
Data center business has been identified as a growth area and efforts
are on to formalize the same and start offering the services from
middle of next year. Services could not start from the current year due
to challenges in terms of availability of requisite power, which can be
scaled up based on the needs.
Company has strategize to offer retail broadband and a few operators
with their own cable network have been identified to start the services
in Bangalore on a pilot.
OUTLOOK :
Our strategic goals this year will be, to increase land productivity in
agriculture through innovation, continue to build leadership and expand
our markets in cut flower exports, create new opportunities for our
food processing and broadband businesses.
INCREASE IN PAID UP CAPITAL:
The total Paid up Capital of the Company as on 31.03.2011 was Rs.
80,55,07,010/- as compared to Rs. 48,93,05,325/- as on 31.03.2010. This
increase in Capital is pursuant to conversion of Warrants to the extent
of Rs. 21.87 crores of Re.1 each, FCCB conversions to the extent of
Rs.1,25,52,918, conversion of 8,58,666 Employee Stock Options into
Equity Shares , issue of 3,63,90,101 shares under private equity
transaction and 4,77,00,000 under laying shares of the GDR issue of USD
22 Mln.
GROUP COMPANIES:
The following persons constitute the group coming within the definition
of "Group" as defined in the Monopolies and Restrictive Trade Practices
Act, 1969, Who exercise or are established to be in a position to
exercise control, directly or indirectly over the Company [Section
2(ef)]:
1. Mr. Karuturi Sai Ramakrishna
2. Ms. Karuturi Anitha
3. Mr. Karuturi Surya Rao (Since demised)
4. Karuturi Telecom Pvt Ltd., India
5. Karuturi Floritech Pvt Ltd. India
6. Karuturi Foods Pvt Ltd., India
7. Karuturi Flower Express Pvt Ltd, India
8. Karuturi Overseas Ltd , Dubai
9. Flower XPress FZE, Dubai
10. Yeshoda Investments Ltd, Kenya
11. Rhea Holdings Ltd, Kenya
12. Surya Holdings Ltd, Kenya
13. Karuturi Sports Ltd, Kenya.
14. Karuturi Ltd, Kenya
15. Karuturi Hospital Ltd, Kenya
16. Gambella Green Valley Plc , Ethiopia
17. Ethiopian Meadows Plc, Ethiopia
18. Karuturi Agro Products Plc., Ethiopia
19. Surya Blossoms Plc. Ethiopia
DIRECTORS:
The Directors, Mr. Raja Varaprasad Bommidala and Mr.Mahendra Kumar
Sunkara, retire by rotation and being eligible, offer themselves for
re-appointment.
AUDIT COMMITTEE:
Audit Committee constituted by the Board of Directors with requisite
composition to fall in line with the prevailing laws, continued to
discharge its functions during the year under review.
PERSONNEL:
The Directors wish to place on record their sincere appreciation for
the services rendered by the employees of the Company at all levels
both placed in India and Overseas.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan
during the year 2006. Through this the Company has converted 30,51,500
Stock options granted to the eligible employees of the Company into
Equity Shares during the year 2008 - 09 & 2009 - 10 and for the year
ended 31.03.2011 the company has converted 8,58,666 stock options into
Equity Shares.
DEPOSITS:
The Company has not accepted any deposits from the public falling under
the purview of Section 58A of the Companies Act, 1956.
AUDITORS:
Messrs ISHWAR & GOPAL, Chartered Accountants, the existing Auditors,
have expressed their willingness to get reappointed at the ensuing
Annual General Meeting.
The Board of Directors recommends their appointment.
FOREIGN EXCHANGE EARNINGS & OUTFLOW:
The Company earned Rs 2,564.49 lakhs in Foreign Exchange for the year
ended 31.03.2011 as compared to Rs. 2,021.75 lakhs for the year ended
31.03.2010.
The out flow in foreign exchanges was Rs.7.51 lakhs as compared to
Rs.5.64 lakhs during the previous year.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, CEO&CFO certification on the financials of the Company,
Report on Corporate Governance, and Auditors' Report on compliance with
the Corporate Governance requirements have been included as Annexures
to this Report.
DIRECTORS' RESPONSIBILITY STATEMENT:
Directors State:
i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanations
relating to material departure;
ii) 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 the
profit of the Company for the period;
iii) 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.
iv) that the Directors had prepared the annual accounts on a 'going
concern' basis.
INSURANCE COVERAGE:
The Board reports that the Company has adequately insured all the
assets of the Company.
ACKNOWLEDGEMENTS:
Your Directors acknowledge with gratitude the confidence reposed on the
Company by the Shareholders, Bankers, Statutory Authorities, Customers,
Vendors and all others who deal with the Company and also wish to thank
all the employees both India and Overseas for their sincere and
unstinted support extended and expects the same for the years to come.
By the Order of the Board
Place : Bangalore Sai Ramakrishna Karuturi Anitha Karuturi
Date : August 12, 2011 Managing Director Director
Mar 31, 2010
The Directors have pleasure in presenting the Fifteenth Annual Report
along with the audited accounts of the Company for the financial year
ended 31st March, 2010.
FINANCIAL RESULTS:
On a consolidation basis, the financial results for the year under
report of your Company stood as follows:
(Rs. in lacs)
Particulars 2009-10 2008-09
Total Income 54,670.59 45,983.61
Profit before depreciation & tax 19,837.44 13,942.49
Less: Depreciation & Amortization 5,562.30 2,127.90
Less: Provision for tax 8.64 15.46
Add: Deferred Tax - (Credit) (71.97) 44.09
Net Profit after Tax 14,338.47 11,737.61
COMPANY PERFORMANCE: Income:
Sales - The sales in fiscal 2010 were Rs.53,381 Lakhs as against Rs.
44,310 lakhs in fiscal 2009. In the fiscal
2009 the Company had initiated modernization of the existing facilities
and had also started exploring new markets in Russia and European
countries. As a result of successful execution of above initiatives
sales rose by about 20.4%
Expenditure :
Material Expenses - In fiscal 2010 the raw material expenses /
purchases amounted to Rs. 16,689 lakhs constituting 31.3% of net sales
while raw material expenses in 2009 were Rs. 14,240 lakhs ,
constituting 32.1% of net sales.
Selling & Administrative Expenses - The administrative expenses is
increased to Rs. 12,236 lakhs in fiscal
2010 as compare to Rs. 11,375 lakhs in fiscal 2009. As a percentage of
net sales it decreased to 22.9% in fiscal 2010 from 25.7 % in fiscal
2009.
Employee Expenses - The employee expenses increased from Rs. 5,257
lakhs in fiscal 2009 to Rs. 4,925 lakhs in fiscal 2010. As a percentage
of net sales it has decreased from being 9.8% of net sales in fiscal
2009 to 11.1% of net sales in fiscal 2010.
Interest & Bank Charges - Interest expenses amounted to Rs.649 lakhs in
fiscal 2010 as compared Rs.1,498 lakhs in fiscal 2009. As a percentage
of net sales, the interest expenses decreased from 3.4% in 2009 to 1.2%
in 2010.
Depreciation - Depreciation amounted to Rs. 5,562 lakhs in fiscal 2010
as compared to Rs. 2,127 lakhs in fiscal 2009, representing an increase
of 261 %. The increase is on account of additional capital expenditure
in Ethiopia.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) -
We recorded EBIDTA of Rs. 20,486 lakhs in fiscal 2010 as against an
EBIDTA of Rs. 15,439 lakhs in fiscal 2009, with EBIDTA margin increased
from 34.8 % in fiscal 2009 to 38.3 % in fiscal 2010.
Net Profit after tax and prior period adjustment - Our Net Profit for
the fiscal 2010 stood at Rs.14338 lakhs as against Rs. 11737 lakhs for
fiscal 2009.
DIVIDEND:
Continuing with the policy of sharing the profits, with the
shareholders, your Board is pleased to recommend Dividend of Re 0.10
per Equity Share of Re.1/- each.
MANAGEMENT DISCUSSION AND BUSINESS ANALYSIS:
BUSINESS REVIEW:
During 2009, Your Company continued to strengthen its leading market
positions in floriculture globally, increased profitability in our
retail and processed foods business and were on track on our ambitious
project of developing 7,65,000 acres of agricultural land in Ethiopia.
AGRICULTURE:
During the year 2009-10, Your Company made substantial progress in the
Agriculture project implementation at the sites at Bako and Gambella in
Ethiopia.
In Bako more than 5000 Ha of Land was cleared and made ready for
cultivation. Your Company acquired various machinery like High end
Tractors, Excavators, Bore drilling machines, other implements from
India and USA to augment the land development process. A trial
production of maize is also under way . Investment has been made in
building an all weather Road, 12 Km of which is already completed.
Major sowing will take place in October 2010 on this 5000+ Ha besides
developing the rest of the land for yielding production next year.
In Gambella, a nursery was established for Palm, which currently has 2
million Palm plants ready for transplanting on 20,000 Ha of land. Each
hectare is having a potential of yielding 5,000 Kgs of crude oil. If
properly cultivated, using superior seeds, the yield may go up to
15,000 Kgs per ha. A trial run for Paddy cultivation has also been
completed on 11,700 Ha in Bako, Ethiopia which is on the shores of
River Gibe. Each hectare has the potential to produce 7.5 tons of
Paddy. The crop has a gestation period of 5 to 6 months. In Gambella,
our State-of-the-art agricultural machineries have arrived and we have
started developing 20,000 hectares of land for cultivation of maize
with each Ha has the potential to produce 4.5 tons cereals with a
gestation period of 3 to 5 months.
Your company has commissioned well known agencies to do a complete
feasibility study for various crops. A detailed environmental Impact
study has also been done to make sure that social and environmental
obligations are taken care of.
FLORICULTURE:
At present, your Company enjoys a 9% market share in the European cut
rose Imports.With plans to add another 100 Ha at Walliso in Ethiopia
under green houses by 2014, this market share is expected to go up
further.
Currently your Company has 15 flower retail out lets across India
including all major Airports in the country and planning to expand its
net work in the next 2 years. It has long term contracts with the
global retailing chains for its produce across Europe. The Company is
planning to foray into Japanese markets under franchise model. Due to
its strategic operational presence in Kenya and Ethiopia, the Company
has a distinct advantage of marketing its products in Middle East
through Dubai Flower Centre.
This year in an effort to deliver further value to our customers, the
Company proposes to invest on the Ãpeak fresh packaging technologyÃ
that will increase the shelf life of roses from 15 days to as much as 3
months.
FOOD PROCESSING:
During the year under review, Karuturi Foods Pvt Ltd (KFPL) a wholly
owned subsidiary of the Company has vigorously marketed its products in
various countries.
Participating in leading Food trade Fairs in Germany, Middle East,
Russia, France, Africa & USA has enabled the company to develop a wider
product range having added Pickled Jalapenos, Cherry Tomatoes, Sliced
Gherkins and other vegetables. To commercially pack these products, the
factory has added a sophisticated machine to pack Relish, and other
products.
Meanwhile, the packing lines have also been expanded to include packing
in cans and pails. The development of packing in multi-layered plastic
Jars & in plastic Pouches as per the demands of certain markets is
under way.
Your Company is acquiring farms close to the factory where vegetables
will be grown for captive consumption by the factory, as well as for
local markets.
Domestic marketing efforts have resulted in entering select markets
within India under private label, in retail packs. Soon your Company
will be supplying to leading food chains in Food Service pack as well.
KFPL has entered into a contract to sell pickles under its own brand
name in UK, Africa and within India.
Your Company has invested in training the key personnel at factory for
international GMP standards, a program conducted with USFDA trainers.
KFPL is HACCP certified, with OU Kosher and other quality
certifications. BRC certification is underway and with this, your
Company is expected to supply to all major food chains stores in USA &
Europe very soon.
ISP
The Internet Service business faced a downside last year due to the
recessionary trends and there was pressure on margins for all the
service providers.
Our focus continued in expanding our business within the areas where we
have presence and also on the VOIP business where we identified newer
areas and multiple solutions to address the corporate for both their
office and remote needs.
Data center business has been identified as a growth area and efforts
are on to formalize the same and start offering the services sometime
middle of next year.
Your Company is also looking at a strategic tie up with a ILD player to
expand the service portfolio
OUTLOOK:
The strategic goals this year will be, to increase land productivity in
agriculture through innovation, continue to build leadership and expand
our markets in cut flower exports, create new opportunities for our
food processing and broadband businesses.
INCREASE IN PAID UP CAPITAL:
The total Paid up Capital of the Company as on 31.03.2010 was Rs.
4893.05 lakhs as compared to Rs. 4529.09 lakhs as on 31.03.2009. This
increase in Capital is pursuant to conversion of Warrants to the extent
of INR 2.28 crores of Re.1 each, FCCB conversions to the extent of INR
110.63 lakhs and also due to the conversion of 25,33,750 Employee Stock
Options into Equity Shares.
GROUP COMPANIES:
The following persons constitute the group coming within the definition
of ÃGroupà as defined in the Monopolies and Restrictive Trade Practices
Act, 1969, Which exercises or is established to be in a position to
exercise control, directly or indirectly over the Company [Section
2(ef)]:.
1. Mr. Karuturi Sai Ramakrishna
2. Ms. Karuturi Anitha
3. Mr. Karuturi Surya Rao
4. Karuturi Telecom Pvt Ltd., India.
5. Karuturi Floritech Pvt Ltd. India.
6. Karuturi Foods Pvt Ltd., India.
7. Karuturi Flower Express Pvt Ltd, India.
8. Karuturi Overseas Ltd , Dubai.
9. Flower Xpress FZE, Dubai.
10. Yeshoda Investments Ltd, Kenya
11. Rhea Holdings Ltd, Kenya.
12. Surya Holdings Ltd, Kenya.
13. Karuturi Sports Ltd, Kenya.
14. Karuturi Ltd, Kenya.
15. Karuturi Hospital Ltd, Kenya.
16. Gambella Green Valley Pic , Ethiopia.
17. Ethiopian Meadows Pic, Ethiopia.
18. Karuturi Agro products Pic, Ethiopia.
19. Surya Blossoms Pic, Ethiopia.
STATUTORY DISCLOSURES:
The Company has made the application with Govt, of India, Ministry of
Corporate Affairs seeking exemption from attaching the Balance Sheet,
the individual Annual Reports of the subsidiary Companies to its
audited account for the financial year ended 31.3.2010. In anticipation
of the approval from the Ministry, as per the terms of exemption, a
statement containing brief financial details of the Companys
subsidiaries for the year ended 31.3.2010 is included in the Annual
Report. Annual Accounts of these subsidiaries are available for
inspection by any Member at the Registered Offices or at the respective
Head Offices of those subsidiary companies.
DIRECTORS:
The Directors, Mr. Satish Caroli and Ms. Aslesha Madappa, retire by
rotation and being eligible, offer themselves for re-appointment.
AUDIT COMMITTEE:
Audit Committee constituted by the Board of Directors with requisite
composition to fall in line with the prevailing laws, continued to
discharge its functions during the year under review.
PERSONNEL:
The Directors wish to place on record their sincere appreciation for
the services rendered by the employees of the Company at all levels
both placed in India and Overseas. None of the employees employed
during the year was in receipt of remuneration in excess of the
prescribed limit specified in Section 217 (2A) of the Companies Act,
1956.
EMPLOYEE STOCK OPTION PLAN (ESOP):
The Company has commissioned its maiden Employees Stock Option Plan
during the year 2006. Through this the Company has converted 517,750
Stock options granted to the eligible employees of the Company into
Equity Shares during the year 2008.09 and for the year ended 31.03.2010
the Company has converted 25,33,750 stock options into Equity Shares.
DEPOSITS:
The Company has not accepted any deposits from the public falling under
the purview of Section 58A of the Companies Act, 1956.
AUDITORS:
Messrs ISHWAR & GOPAL, Chartered Accountants, the existing statutory
Auditors, have expressed their willingness to get reappointed at the
ensuing Annual General Meeting.
The Board of Directors recommends their appointment.
FOREIGN EXCHANGE EARNINGS:
The Company earned Rs. 2021.75 lakhs in Foreign Exchange for the year
ended 31.03.2010 as compared to Rs. 3097.20 lakhs for the year ended
31.03.2009.
The outflow in Foreign Exchange was Rs. 5.64 lakhs for the year ended
31.03.2010 as compared to 8.35 lakhs during the previous Year.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreements with the Stock
Exchanges, CEO&CFO certification on the financials of the Company,
Report on Corporate Governance, and Auditorsà Report on compliance with
the Corporate Governance requirements have been included as Annexures
to this Report.
DIRECTORS RESPONSIBILITY STATEMENT:
Directors State:
i) That in the preparation of the annual accounts, the applicable
accounting standards had been followed
along with proper explanations relating to material departure;
ii) 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 the profit of the Company for the period;
iii) 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.
iv) That the Directors had prepared the annual accounts on a Ãgoing
concernà basis.
INSURANCE COVERAGE:
The Board reports that the Company has adequately insured all the
assets of the Company.
ACKNOWLEDGEMENTS:
Your Directors acknowledge with gratitude the confidence reposed on the
Company by the Shareholders, Bankers, Statutory Authorities, Customers,
Vendors and all others who deal with the Company and also wish to thank
all the employees both India and Overseas for their sincere and
unstinted support extended and expects the same for the years to come.
On behalf of the Board
Place : Bengaluru Sai Ramakrishna Karuturi Anitha Karuturi
Date : August 18, 2010 Managing Director Director
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