The Members Aries Agro Limited
Your Directors have pleasure in presenting their 46th Annual Report on the operationsof the Company together with the Audited Financial Statements for the Financial Year ended31st March 2016.
| || || |
(Rs. In Lakhs)
| ||STANDALONE ||CONSOLIDATED |
|PARTICULARS ||AS AT 31.03.2016 ||AS AT 31.03.2015 ||AS AT 31.03.2016 ||AS AT 31.03.2015 |
|Total Revenue (including ||23080.52 ||23563.47 ||28593.90 ||30609.31 |
|Other Income) || || || || |
|Profit Before Tax Interest & ||3273.41 ||3820.50 ||4728.85 ||5646.98 |
|Depreciation || || || || |
|Less: Finance Costs ||2058.92 ||2129.65 ||2454.84 ||2413.04 |
|Depreciation & Amortisation Expense ||175.63 ||181.72 ||1058.04 ||985.48 |
| ||2234.55 ||2311.37 ||3512.88 ||3398.52 |
|Profit Before Tax ||1038.86 ||1509.13 ||1215.97 ||2248.46 |
|Tax Expense ||365.00 ||555.50 ||365.00 ||555.50 |
|Deferred Tax ||13.10 ||(260.70) ||13.10 ||(260.70) |
| ||378.10 ||294.80 ||378.10 ||294.80 |
|Profit for the year before Minority ||660.76 ||1214.33 ||837.87 ||1953.66 |
|Interest || || || || |
|Minority Interest ||- ||- ||93.71 ||234.46 |
|Profit for the year (PAT) ||660.76 ||1214.33 ||744.16 ||1719.20 |
|Exceptional Items ||21.61 ||33.04 ||21.61 ||33.04 |
|Balance Brought Forward ||6332.82 ||6249.42 ||9896.50 ||9197.81 |
|Amount available for appropriation ||6971.97 ||7430.71 ||10619.05 ||10883.97 |
|WDV of Assets Written off having zero remaining useful life due to change in method of Depreciation in line with Companies Act 2013 ||- ||684.55 ||- ||684.55 |
|General Reserve ||50.00 ||100.00 ||50.00 ||100.00 |
|Legal Reserves ||- ||- ||28.12 ||35.59 |
|Proposed Dividend ||195.06 ||260.09 ||195.06 ||260.09 |
|Tax on Proposed Dividend ||39.71 ||53.25 ||39.71 ||53.25 |
|Surplus Carried Forward to Balance Sheet ||6687.20 ||6332.82 ||10306.16 ||9750.49 |
During the year under review the Earnings Before Interest Depreciation and Tax wasRs. 3273.41 Lakhs compared to Rs. 3820.50 Lakhs in the previous year. The Total Revenue(excluding Other Income) for the year net of excise duty was Rs. 22937.93 Lakhs asagainst Rs. 23411.19 Lakhs in the previous year. Profit after tax for the year was Rs.639.16 Lakhs compared to Rs. 1181.28 Lakhs in the previous year.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standards (AS)-21 on Consolidated FinancialStatements the Audited Consolidated Financial Statement is provided in the Annual Report.
The Consolidated Profit Before Interest Depreciation Exceptional
Items and Taxes (EBITDA) of the Group was Rs. 4728.85 Lakhs in the Financial Year2015-16 compared to Rs. 5646.98 Lakhs in the previous year. Consequently theConsolidated Profit Before Exceptional Items and Taxes (PBT) was Rs. 1215.97 Lakhs in theFinancial Year 2015-16 compared to Rs. 2248.46 Lakhs in the previous year.
The Profitability from operations was adversely affected due to extremely erraticagricultural season requiring additional promotions excessive discounts to retain marketshare including higher cash discounts to recover market outstandings. By choosing to incurthese costs the Company managed to retain revenue at the cost of Profitability. It wasfelt prudent to do so since in a highly competitive market loss of market share would bediffi cult to recover. Similar demand constraints was faced in the overseas market as wellwith subdued rainfall conditions in other western and pacifi c markets. During theprevious financial year the Company took several steps to reduce cost and retain itsmarket share despite adverse agricultural season and purchasing power conditions. Aftergreat effort of staff and support of Aries customers the Company managed to maintain itsrevenue at almost the same level as of the previous Financial Year with a marginal 2%percent reduction. However Profitability did reduce signifi cantly due to increasediscounts in selling expenses required to maintain market share.
After considering earnings requirement for funds and with the objective of rewardingthe Shareholders the Directors have recommended a Dividend of 15% being Rs. 1.50 perEquity Share of Rs. 10/- each (previous year 20% being Rs. 2/- per Equity Share of Rs.10/- each) subject to your approval at the ensuing Annual General Meeting. The Dividendif approved will result in an outfl ow of Rs. 234.78 Lakhs including DividendDistribution Tax.
TRANSFER TO RESERVES
Your Directors propose to transfer Rs. 50.00 Lakhs to the General Reserve out of thecurrent years Profit and the balance aggregating to Rs. 6687.20 Lakhs is proposedto be retained in the Profit and Loss Account.
During 2016-17 however the Company expects good growth due to favourable monsoonconditions and this will boost the revenue and Profits during the current fi scal 2016-17.In order to secure confi rmed order book the Company (for the fi rst time in agribusiness in India) conducted All India Flash Sale and Booking Bazaar on 19th and 20thApril 2016 at the Bombay Stock Exchange Convention Hall Mumbai. Record breaking orderswith payment instruments were collected totaling to Rs. 201.78 Crores within a 30 minuteFlash Sale period. This will ensure that the Company is able to plan inventories andproduction as well as timely supplies to more than 400 No. of dealers who participated inthis unique one of its kind booking bazaar. In the past the Company has conducted similarfl ash sales on the state level and the average conversion of bookings to orders wasapproximately 75% to 80%. Assuming similar conversion on all India basis this bookingbazaar will result in defi nite increase in sales during the fi rst half of the FinancialYear. The Company is also increasing focus on non rain dependant activities includingsales to aquaculture farmers plantations and perennial crops in irrigated districts ofthe country.
The Company introduced only two new products namely K-phonic and Mobomin during thecurrent Financial Year. However it will focus on growing sales of the three new productslaunched towards the end of 2015-16 namely Arisil Calcomag and Calpro.
The Companys financial discipline is refl ected in the credit ratings ascribed byrating Agency as given below: CRISIL Rating: Long Term BBB+/Stable(Reaffi rmed)(Facilitieswith this rating are considered to have moderate degree of safety regarding timelyservicing of financial obligations. Such Facilities carry moderate credit risk)adequateand Short Term A2(Reaffi rmed) ( Facilities with this rating are considered to have strongdegree of safety regarding timely payment of financial obligations. Such Facilities carrylow credit risk). There was no change in the Credit Rating of the Company during the year.
CHANGES IN NATURE OF BUSINESS AND REVISION IN THE BOARDS REPORT
There is no change in the nature of business of the Company during the year. There isno revision made in the Boards Report and whatever submitted herewith is the fi nalReport.
SAFETY AND HEALTH
The health and safety of the employees across its operations remains the highestpriority for the Group. All endeavours are being taken to enhance safety standards andprocesses towards minimising safety risks in all operations in the Company.
USE OF IPO PROCEEDS
Your Company made its . IPO in January 2008 for the purposes as stated in theProspectus dated 26th December 2007. The IPO proceeds have been utilized in accordancewith the schedule of the Prospectus and variation approved by the shareholders at theirAnnual General Meeting held on 29th September 2009 by passing a Special Resolution.However the renovation/extension of existing Offi ce Building at Mumbai is pendingcompletion.
The Company has not accepted any deposits from the Public within the meaning of Section73 of the Companies Act 2013 and Members (other than Directors) during the year underreview and as such no amount on account of Principal or Interest on Deposits from Publicand Members (other than Directors) was outstanding as on 31st March 2016.
SUBSIDIARIES & ASSOCIATE COMPANIES
Your Company has fi ve Subsidiaries out of which three non-material Indian Subsidiariesviz Aries Agro Care Private Limited Aries Agro Equipments Private Limited Aries AgroProduce Private Limited and two foreign subsidiaries namely Golden Harvest Middle East FZCand a Step Down Subsidiary viz Amarak Chemicals FZC at UAE. The operations of Aries AgroCare Pvt. Ltd. commenced in the Financial Year 2008-09 but discontinued the activity inthe financial year 2012-13 and had no business activity in the financial year 2015-16 .The Company incurred expenses to the tune of Rs. 0.37 Lakhs. The business operations ofAries Agro Equipments Pvt. Ltd. commenced in the year 2009-10 in agricultural sprayers butdiscontinued the activity in the financial year 2013-14. During the Financial Year 2015-16the Company did not have any Income and incurred expenses of Rs. 0.29 Lakhs.
The above two Companies are Wholly Owned Subsidiaries of the Company. There was nobusiness activity in other Subsidiary namely Aries Agro Produce Pvt. Ltd. During theFinancial Year 2015-16 the Company has incurred expenses of Rs. 0.27 Lakhs.
As regards the overseas subsidiary M/S. Golden Harvest Middle East FZC with aninstalled capacity of 10800 MT p.a. in their Eighth Year of operation has generated atotal sale of AED 95.80 Lakhs(INR 1679.00 Lakhs) with a Loss of AED 5.84 Lakhs(INR 102.74Lakhs) for the year 2015-16.
M/s. Amarak Chemicals FZC which is a Step Down Subsidiary of Aries Agro Limited withan installed capacity of 60000 MT p.a. in their Fourth Full Year of operation hasgenerated a total sale of AED 273.08 Lakhs(INR 4786.12 Lakhs) with a Profit of AED 15.59Lakhs(INR 272.91 Lakhs) for the year 2015-16.
Your Company has four Group Companies viz Aries East-West
Nutrients Private Limited Aries Marketing Limited Blossoms International Limited andSreeni Agro Chemicals Limited. There were no business activities in any of these Companiesduring the Financial Year 2015-16. As required under Section 129(3) of The Companies Act2013 annexed hereto are the Audited Financial Statements for the Year ended 31stMarch 2016 of Golden Harvest Middle East FZC. Amarak Chemicals FZC.Aries Agro CarePrivate Limited Aries Agro Equipments Private Limited and Aries Agro Produce PrivateLimited. A Statement in Form AOC-1 of Subsidiary Companies as prescribed under Section129(3) of The Companies Act 2013 read with Rule 5 of Companies(Accounts) Rules 2014 isannexed and is forming part of the Annual Report. Apart from the above statement a list ofSubsidiary & Group Companies is given in Note No. 27-A of the Notes to Accounts isforming part of the Annual Report.
The Financial Statements of the Subsdiary Companies and related information shall beuploaded on the website of your Company which can be accessed using the linkhttp://www.ariesagro.com and the same are available for inspection by the members at theRegistered Offi ce of your Company during business hours on all working days exceptSaturdays and Sundays upto the date of the Annual General Meeting as required underSection 136 of the Act. Any Member desirous of obtaining a copy of the said FinancialStatements may write to the Company Secretary at the Registered Offi ce Address. All theabove Indian Subsidiary and Group Companies are un-listed and non-material Companies asdefi ned under Listing Regulations.
All properties and assets of your Company are adequately insured covering allconceivable risks.
DIRECTORS & KEY MANAGERIAL PERSONNEL DIRECTORS
There is no change in the Composition of the Board of Directors during the year underreview.
Pursuant to the provisions of Section 152(6) of the Companies Act 2013 Dr. RahulMirchandani Director retires by rotation and being eligible offers himself forre-appointment. Accordingly his re-appointment forms part of the Notice of ensuing AnnualGeneral Meeting. All the Independent Directors have submitted declarations to the effectthat each of them meets the criteria of Independence as provided in Section 149(6) of theCompanies Act 2013 and Listing Regulations and there has been no change in thecircumstances which may affect their status as Independent Director during the year.
During the year the Non-Executive Directors of the Company had no pecuniaryrelationship of transactions with the Company. Familiarisation Programme for IndependentDirectors---- Though there is no formal Policy for familiarization but the Company inorder to familiarize the Independent Directors with the business of the Companypresentation was made by the Chief Financial Offi cer covering nature and scope ofbusiness nature of industry in which Company operates Profitability and future plans.Regularly at meetings updates are given to the Board. Directors are also taken for theFactory visits and they also attended the Annual Sales Meet. House Journal as and whenpublished is also sent to all the Directors and their feedback are considered.
KEY MANAGERIAL PERSONNEL
There is no change in the Key Managerial Personnel during the year under review. Allthe Key Managerial Personnel have submitted disclosures and declaration required under theCompanies Act 2013 and Listing Regulations.
MEETINGS OF BOARD
Five Meetings of the Board of Directors were held during the year. For further detailsplease refer Report on Corporate Governance of this Annual Report.
The Audit Committee comprises Prof. R. S. S. Mani (Independent Director as Chairmanupto 31-3-2016) Shri. B. V. Dholakia(Independent Director) and Dr. Rahul Mirchandani asMembers. Shri. B. V. Dholakia(Independent Director) is the Chairman effective 01-04-2016with Prof. R. S. S. Mani and Dr. Rahul Mirchandani as Members. All the recommendationsmade by the Audit Committee were accepted by the Board during the year under review.
The CSR Committee comprises Dr. Jimmy Mirchandani(Chairman) Dr. Rahul Mirchandani andShri. B. V. Dholakia as other Members.
The Board of Directors have carried out an Annual Evaluation of its own performance andindividual Directors pursuant to provisions of the Act and Corporate Governancerequirements as prescribed by Regulation 17(10) of the SEBI(LODR) Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of criteria such as the Board Composition and StructureEffectiveness of Board Process Information and Functioning etc.
In a separate Meeting of the Independent Directors performance of Non-IndependentDirectors Performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS
The Policy on Directors Appointment and Remuneration including criteria for determiningqualifi cations positive attributes independence of Director and also Remuneration forKey Managerial Personnel and other Employees are contained in the Nomination andRemuneration Policy which is hosted at the web site of the Company at www.ariesagro.com.
DIRECTORS RESPONSIBILITY STATEMENTS
Pursuant to the requirements of Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confi rm that:
1. in preparation of the Annual Accounts applicable Accounting Standards have beenfollowed and that there are no material departures;
2. they have selected such Accounting Policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the State of the Affairs of the Company at the end of the financial year and ofthe Profit of the Company for that year;
3. they have taken proper and suffi cient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
4. they have prepared the Annual Accounts on a going concern basis; 5. theyhave laid down Internal Financial Controls to be followed by the Company and such InternalFinancial Controls are adequate and operating effectively; 6. they have devised propersystems to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES & RELATED DISCLOSURES
The information required under Section 197 of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are as under:
1. The ratio of the remuneration of each Director to the median remuneration ofthe employees of the Company for the financial year;
|Non-Executive Directors ||Ratio to median Remunerations |
|Mrs . Nitya Mirchandani ||0.48 |
|Prof. R. S. S. Mani ||0.83 |
|Mr. Chakradhar Bharat Chhaya ||0.62 |
|Mr. Bhumitra Vinodchandra Dholakia ||0.84 |
|Executive Directors || |
|Dr. Jimmy Mirchandani ||22.05 |
|Dr. Rahul Mirchandani ||23.48 |
2. The percentage increase in remuneration of each Director Chief FinancialOffi cer Company Secretary or Manager if any in the financial year;
|Directors Chief Financial Offi cer and Company Secretary ||% increase in Remuneration in the Financial Year |
|Dr. Jimmy Mirchandani ||-25.95 |
|Dr. Rahul Mirchandani ||-24.40 |
|Mr. S. Ramamurthy Chief Financial Offi cer ||4.59 |
|Mr. Qaiser P. Ansari Company Secretary ||7.98 |
3. The percentage increase in the median remuneration of employees in thefinancial year; 16.04 %
4. The number of permanent employees on the rolls of Company; 748
5. The explanation on the relationship between average increase in remunerationand Company performance; The reward Philosophy of the Company is to provide marketcompetitive total reward opportunity that has a strong linkage to and drives performanceculture. Every year the salary increases for the Company are decided on individualperformance parameters . The fi nal salary increases given are a function of
Companys market competitiveness in this comparator group as well as overallbusiness affordability. During the year similar approach was followed to establish theremuneration increases to the Employees. Variable compensation is an integral part of ourtotal reward package and is directly linked to an individual performance rating andbusiness performance. Salary increase during the year were in line with Companysperformance as well as per Companys market competitiveness.
6. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company;
|Aggregate Remuneration of Key Managerial Personnel(KMP) in Financial year 2015-16(Rs. Lakhs ||58.83 |
|Revenue(Rs. Lakhs) ||22937.93 |
|Remuneration of KMPs(as % of Revenue) ||0.26% |
|Profit Before Tax(PBT) (Rs. Lakhs) ||1038.87 |
|Remuneration of KMPs(as % of PBT) ||5.66% |
7. Variations in the market capitalisation of the Company price earnings ratioas at the closing date of the current financial year and previous financial year;
|Particulars ||31st March 2016 ||31st March 2015 ||% Change |
|Market Capitalization(Rs. Crores) ||11716.91 ||13745.59 ||-14.76 |
|Price Earnings Ratio ||17.73 ||11.32 ||56.65 |
8. Percentage increase or decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last public offerin case of listed companies and in case of unlisted companies the variations in the networth of the company as at the close of the current financial year and previous financialyear;
|Particulars ||31st March 2016 ||January 2008(IPO) ||% Change |
|Market Price(BSE) ||90.10 ||130.00 ||-30.69 |
|Market Price(NSE) ||90.15 ||130.00 ||-30.65 |
9. Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justifi cation thereof and pointout if there are any exceptional circumstances for increase in the managerialremuneration;
The average annual increase was around 7.25% after accounting for promotions andother event based compensation revision. Though the Chairman & Managing Director andthe Executive Director were re-appointed for a term of 3 years each their Remunerationremained 5% of the Profit as calculate as per the Companies Act 2013 however due to dropin the Profit the Managerial Remuneration for the Year decreased as compared to PreviousYear.
10. Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the Company;
| ||Dr. Jimmy Mirchandani Chairman & Managing Director ||Dr. Rahul Mirchandani Executive Director ||Mr. S. Ramamurthy Chief Financial Offi cer ||Mr. Qaiser P. Ansari Company Secretary |
|Remuneration- ||60.13 ||64.02 ||35.16 ||23.67 |
|FY-2015-16 (Rs. In Lacs) || || || || |
|Price Earnings Ratio || ||17.73 || |
|Revenue(Rs. In Lakhs) || ||22937.93 || |
|Remuneration as % of revenue ||0.26% ||0.28% ||0.15% ||0.10% |
|Profit Before Tax(PBT) (Rs in Lakhs) || ||1038.87 || |
|Remuneration as % of PBT ||5.79% ||6.16% ||3.38% ||2.28% |
11. The key parameters for any variable component of remuneration availed by theDirectors; The Non-Executive Directors do not get any remuneration (includingCommission) except the Sitting Fee. The Executive Directors are entitled for Commissionwithin the overall limit of
10% and individually 5% as per the Act only from the Company and not from itsSubsidiary Companies.
12. The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year; None
13. Affi rmation that the remuneration is as per the Remuneration Policy of theCompany.
The Company affi rms remuneration is as per the Remuneration Policy of the Company.The Statement containing Particular of Employees as required under Section 197(12) of theCompanies Act 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 drawing remuneration in excess of thelimits set out in the said Rules are provided in the Annual Report.
Information in accordance with the provisions of Section 197(12) of the Companies Act2013 ("Act") read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are as under:
PARTICULARS OF EMPLOYEES IN TERMS OF SECTION 197(12) OF THE COMPANIES ACT 2013 READWITH RULE 5(2) AND 5(3) OF THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014 DRAWING REMUNERATION NOT LESS THAN Rs. 60 Lakhs p.a./Rs. Five Lakhsp.m. DURING THE YEAR 2015-16
|SR. No. ||NAME ||DESGINATION ||REMUNERATION RECEIVED ||NATURE OF EMPLOYMENT ||OTHER TERMS & CONDITIONS ||NATURE OF DUTY ||QUALIFICATION & EXPERIENCE ||DATE OF COMMENCEMENT ||AGE ||Last Employment held ||% of Equity Shares held as on 31.03.2016 ||Whether Relative of any Director or Manager and Name of such Director or Manager |
|1 ||DR. JIMMY MIRCHANDANI ||CHAIRMAN AND MANAGING DIRECTOR ||6013000 ||CONTRACTUAL ||N.A. ||MANAGING THE AFFAIRS OF THE COMPANY ||B. Sc. (Vet); LLB ||15.01.1976 ||60 ||N.A. ||27.11 ||Brother of Dr. Rahul Mirchandani & Brother in Law of Mrs. Nitya Mirchandani |
|2 ||DR. RAHUL MIRCHANDANI ||EXECUTIVE DIRECTOR ||6401762 ||CONTRACTUAL ||N.A. ||MANAGING THE AFFAIRS OF THE COMPANY ||B. Com; CFA; MBA; Ph.D ||02.02.1994 ||40 ||N. A. ||20.17 ||Brother of Dr. Jimmy Mirchandani & Husband of Mrs. Nitya Mirchandani |
The Company has not offered any ESOPS scheme to its Employees or Directors.
RISK MANAGEMENT AND INTERNAL FINANCIAL CONTROLS
Company has elaborate Risk Management Procedure which is based on three Pillars.Business Risk Assessment Operational Controls Assessment and Policy Compliance processes.Major Risks identifi ed by the Business and Functions are systematically addressed throughmitigating actions on continuing basis. The Key risks are also discussed at the AuditCommittee.
The Companys Internal Financial Control Systems are commensurate with the natureof its business and the size and complexity of its operations. These are routinely testedand certifi ed by the Statutory as well as Internal Auditors covering all Offi ces
Factories and Key Business areas. Signifi cant Audit Observations and Follow Up Actionsthereon are reported to Audit Committee. The Audit Committee reviews adequacy andeffectiveness of the Companys Internal Control environment and monitors theimplementation of the audit recommendations. Based on the framework of Internal FinancialControls and Compliance Systems established and maintained by the Company work performedby the Internal Statutory and Secretarial Auditors and review performed by the Managementand the relevant Board Committees including the Audit Committee the Board is of theopinion that the Companys Internal Financial Controls were adequate and effectiveduring the Financial Year 2015-16.
Pursuant to Sections 101 and 136 of the Companies Act 2013 the Company will be sendingAnnual Report through electronic mode(email) to all the shareholders who have registeredtheir email addresses with the Company or with the Depository to receive the Annual Reportthrough electronic mode and initiated steps to reduce consumption of paper.
Humans are considered as one of the most critical resources in the business which canbe continuously smoothened to maximize the effectiveness of the Organization. Humanresources build the Enterprise and the sense of belonging would inculcate the spirit ofdedication and loyalty amongst them towards strengthening the Companys Polices andSystems. All personnel continue to have healthy cordial and harmonious approach therebyenhancing the contributory value of the Company.
The Equity Shares of the Company are listed at BSE Limited (BSE) and National StockExchange of India Limited(NSE).
The Company has made all the compliances of Listing Agreement including payment ofAnnual Listing Fees upto 31st March 2017 to both the Stock Exchanges.
The Company has complied with the various requirements under the Corporate Governancereporting system. A detailed Compliance Report on Corporate Governance is annexed to thisReport as required by the Listing Regulations. The Auditors Certifi cate onCompliance with the conditions of Corporate Governance is also annexed to this report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Managements Discussion and Analysis Report for the year under review asstipulated under Regulation 34(2)(e) of the SEBI(LODR) Regulations 2015 of the ListingAgreement with the Stock Exchanges is also annexed to this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING & OUTGO
Particulars in respect of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo as required to be disclosed by the Companies(Accounts) Rules2014 and forming a part of the Directors Report are as under: -
I. Conservation of energy
The Company accords great importance to conservation of energy. The main focus of theCompany during the year was:
a. Energy Conservation measures taken:-
i. Close monitoring of consumption of electricity LPG Diesel and water.
ii. Optimum use of Energy by Switching off Machines Lights Fans Air Conditioners andExhaust Systems whenever not required.
iii. Creating awareness among Workmen to conserve energy.
iv. Aries has installed its fi rst Solar Power Generation System at its manufacturingunit in Hyderabad. Impact of measures taken for reduction of energy consumption andconsequent impact on the cost of production of goods
- Due to measures taken as described above the overall power and fuel oil consumptionat plants and offi ce has reduced. However the cost of production on account of power hasincreased due to increase in cost per unit.
b. Total energy consumption and energy consumption per unit of production
Form for disclosure of Particulars with respect to Conservation of Energy.
| || ||Current Year 2015-2016 ||Previous Year 2013-2015 |
|(a) 1. ||Purchased: - || || |
|I ||Electricity || || |
|(i) ||Unit (KWH) ||862373 ||861366 |
|(ii) ||Total Amount (Rs.) ||8422432 ||8015893 |
|(iii) ||Rate/Unit (Rs.) ||9.77 ||9.31 |
|II ||Piped Gas || || |
|(i) ||Unit (M3)* ||275063 ||277884 |
|(ii) ||Total Amount (Rs.) ||10067553 ||11923491 |
|(iii) ||Rate/Unit (Rs.) ||1.29 ||42.91 |
*Gas Supply started from 22.12.2012 from Sabarmati Gas Limited
|(b) 2. ||Own Generation: - || || |
|(i) ||Coal ||Not Applicable ||Not Applicable |
|(ii) ||Furnace Oil - Kl ||3422 ||16737 |
|(iii) ||Internal Generation Units ||12996 ||59658 |
|(iv) ||Solar ||104667 ||60969 |
II. Form for disclosure of particulars with respect to Technology Absorption Researchand Development (A) RESEARCH AND DEVELOPMENT:
1. Specifi c Areas in which Research and Development was carried out by theCompany.
There is a continuous focus on University research on specialty plant nutritionwhich continues across India.
Our team of extension offi cers conducts continuous fi eld demonstrations andextension work including large scale soil sampling which provides constant updates ondefi ciency levels across all states in India.
The Companys R&D at Mumbai is ISO 9001 certifi ed and works on newproduct development and continuous quality checks. The manufacturing unit at Hyderabad hasbeen equipped with a state of art laboratory to keep pace with the Companysexpansion in that region.
2. Benefi ts derived as a result of the above efforts.
Improvement in productivity/quality and reduction in cost of production ofCompanys Plants and at Customers end.
Cost reduction import substitution safer environment and strategic resourcemanagement.
Meeting the statutory requirements.
3. Future Plan of Action :
Identifying customized formulations for new states where Aries is entering tosell their product range.
Increase the nutrients range to include silicon based products.
Identify more organic / natural source of plant nutrients and allied products.
4. Expenditure on R & D
|Description ||For the year ended 31st March 2016 ||For the year ended 31st March 2015 |
| ||(Rupees) ||(Rupees) |
|(I) Capital ||332799 ||59131 |
|(II) Recurring ||4171522 ||3845961 |
|(III) TOTAL ||4504321 ||3905092 |
|(IV) Total R & D expenditure as a || || |
|% of || || |
|a. Gross Turnover ||0.19 ||0.16 |
|b. Net Turnover ||0.20 ||0.17 |
B1. Technology Absorption Adaptation and Innovation The Management has focused onproductivity and Total Quality Management [TQM] in order to optimize manufacturing costs.
B2. Benefi ts
This has helped in achieving optimum manufacturing costs improved quality of productsand consequently enhanced customer satisfaction. The Company uses indigenous technology.
B3. The has not imported any technology during the year under review.
C. Foreign Exchange Earnings and Outgo
1. Activities relating to exports initiatives taken to increase exportsdevelopment of new export markets for products and services and export plans:International sales have commenced in Australia Brazil Ecuador New Zealand PakistanSpain Singapore Sri Lanka Taiwan Trinidad United Kingdom United States of AmericaVietnam and Zambia with supplies from Indian and UAE factories. Distributors have beenappointed in Brazil Cambodia Ecuador New Zealand Sri Lanka and Vietnam and we expectexport and global sales to grow and form around 15% of the group revenues of the Companyby Financial Year 2015-17.
2. Total Foreign Exchange used and earned: Used : Rs. 207651380/- Earned: Rs.12212499/-
3. Initiative for Exports
Following import substitution and commencement of manufacturing of certain productsin the Indian factories previously being produced in our UAE facilities the Company hasapplied for the required export license to enable direct export of such products fromIndia to the existing global buyers. This will ensure that every customer is servicedeffectively. Export development from India in addition to from the UAE factories shallfurther boost prospects in international business.
As regards the items of the Notice of the AGM relating to Special Business theresolutions incorporated in the Notice and the
Explanatory Statement relating thereto fully indicate the reasons for seeking theapprovals of members to those proposals. Your attention is drawn to these items andExplanatory Statement annexed to the Notice.
The Vigil Mechanism of the Company which also incorporates a Whistle Blower Policy interms of the Listing Regulations is in place. Protected disclosures can be made by aWhistle Blower in writing or through an e-mail to the Chairman of the Audit Committee.The Policy on Vigil Mechanism and Whistle Blower Policy may be accessed on theCompanys website www.ariesagro.com.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN & SECURITIESPROVIDED
Particulars of Loans given Investments made Guarantees given and Securities providedalong with the purpose for which the Loan or Guarantee or Security is proposed to beutilized by the recipient are provided in the Standalone Financial Statements.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
None of the transactions with Related Parties falls under the scope of Section 188(1)of the Companies Act 2013. Information on transactions with Related parties pursuant toSection 134(3) (h) of the Companies Act 2013 read with Rule 8(2) of theCompanies(Accounts) Rule 2014 are given in Annexure-I in Form AOC-2 and the same formspart of this Report.
CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure-II of this Report in the format prescribed in the Companies(CorporateSocial Responsibility Policy) Rules 2014. The Policy is available on the Web-Site of theCompany.
Your Company continues to demonstrate a strong commitment towards providing productswhich do not hamper the soil and crop eco systems. A detailed Report on Corporate SocialResponsibility is annexed to this Report.
EXTRACTS OF ANNUAL RETURN
As provided under Section 92(3) of the Companies Act 2013 the Extract of the AnnualReturn is given in Annexure-III in prescribed Format MGT-9 which forms part ofthis Report.
AUDITORS & AUDITORS REPORTS Statutory Auditors
M/s. Kirti D. Shah & Associates Chartered Accountants Mumbai(Membership No.32371 and having Peer Review Certifi cate issued by the Institute of Chartered Accountantsof India) were appointed as the Statutory Auditors of the Company for a period of3(three) years at the Forty Fourth Annual General Meeting of the Company held on 26thSeptember 2014.
As per the provision of Section 139(1) of the Act their appointment for the abovetenure is subject to ratifi cation by Members at every AGM. Accordingly ratifi cation ofthe Members is being sought for proposal contained in the Resolution set out at item No. 4of the Notice.
The Statutory Auditors Report does not contain any qualifi cation reservation oradverse remark. Further that there was no fraud reported by Auditors under sub-section (2)of Section 143 of the
Companies Act 2013 other than those reportable to the Central Government.
The Company had appointed M/s. R. Nanabhoy & Co. Cost Accountants to conduct theAudit of Cost Accounting Records of its products for the financial year 2014-2015. The duedate for fi ling the Cost Audit Reports in XBRL mode for the financial year ended March31 2015 was originally 27th September 2015 which was later extended.The Cost AuditReports were fi led by the Cost Auditor on 7th October 2015 within the extended due date.Further M/s. R. Nanabhoy & Co. Cost Auditors were re-appointed as the Cost Auditor ofthe Company for the year ending 31st March 2016 by the Board of Directors attheir meeting held on 28th May 2015 after ensuring their eligibility andobtaining the letter of eligibility from them. The Companys Cost Audit for theFinancial Year 2015-16 is completed and the Cost Audit Report has been received and thesame will be fi led with the Ministry of Corporate Affairs Government of India within thestipulated time. The Cost Audit Report does not contain any qualifi cation reservation oradverse remark.
The Board has appointed Mr. A. Sekar Practising Company Secretary to conductSecretarial Audit for the financial year 2015-16. The Secretarial Audit Report for thefinancial year ended March 31 2016 is annexed herewith marked as Annexure-IV tothis Report. The Secretarial Audit Report does not contain any qualifi cation reservationor adverse remark.
As required under the VAT Acts of various States Company has appointed a VAT Auditorto conduct the VAT Audit.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of Equity Shares with differential rights as to dividend voting or otherwise.
3. Issue of Shares (including Sweat Equity Shares) to employees of the Company underany scheme.
4. Buy Back of shares of the Company during the year under review.
5. Neither the Managing Director nor the Whole-time Directors of the Company receiveany remuneration or commission from any of its Subsidiaries.
6. No signifi cant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys operations in future.
7. The Company is not required to submit Business Responsibility Report in pursuance ofRegulation 34(2)(f) SEBI(LODR) Regulations 2015.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013.
The Company has set up an Internal Complaints Committee (ICC) for providing a RedressalMechanism pertaining to Sexual Harassment of Women employees at workplace. There was nocomplaint received during the year under review.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE FINANCIAL YEAR END OF THE COMPANY TO WHICHFINANCIAL RESULTS RELATE
Except as disclosed elsewhere in this report no material changes and commitments whichcould affect the Companys financial position have occurred between the end of thefinancial year of the Company and date of this report.
MATERIAL ORDERS PASSED
No material Orders have been passed by any Authorities in respect of any matters withregards to the business of the Company.
None of the Directors of your Company are disqualifi ed as per provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary Disclosures asrequired under various provisions of the Companies Act 2013 and the SEBI(ListingObligations and Disclosure Requirements) Regulations 2015.
We would like to acknowledge with gratitude the support and co-operation extended byShareholders Vendors Media and Banks and look forward to their continued support. Weappreciate continued co-operation received from various regulatory authorities includingDepartment of Agriculture Department of Corporate Affairs Registrar of CompaniesReserve Bank of India Securities and Exchange Board of India Stock Exchanges andDepositories. We also recognize and appreciate the sincere hard work loyalty and effortsof the employees and look forward to their continued support.
| ||For and on behalf of the Board |
| ||Dr. Jimmy Mirchandani |
|Place: Mumbai ||Chairman & Managing Director |
|Date: 11th August 2016 ||DIN-00239021 |
Annexure-I Form No. AOC-2
(Pursuant to clause(h) of sub-section (3) of Section 134 of the Companies Act 2013 andRule 8(2) of the Companies(Accounts) Rules 2014)
Form for disclosure of Particulars of Contracts/Arrangements entered into by theCompany with Related parties referred to in sub-section(1) of Section 188 of the CompaniesAct 2013 including certain arms length transactions under third provision thereto:
1. Details of Contracts or Arrangements or Transactions not at arms lengthbasis: Aries Agro Limited has not entered into any Contract or Arrangement with itsRelated Parties which is not at arms length during the Financial Year 2015-16.
2. Details of Contracts or Arrangements or Transactions at arms lengthbasis:
|Sr. No. || || || |
|1. ||Name(s) of the Relate Party and nature of Relationship ||Golden Harvest Middle East FZC- 75% Subsidiary ||Amarak Chemicals FZC-Step Down Subsidiary |
|2. ||Nature of Contracts/Arrangements/ Transactions ||Order based Contracts ||Order based Contracts |
|3. ||Duration of Contracts/Arrangements/ Transactions ||Order based Contracts ||Order based Contracts |
|4. ||Salient terms of Contracts/ Arrangements/Transactions including Value if any ||As per the Orders from time to time ||As per the Orders from time to time |
|5. ||Date of Approval by the Board if any ||Not Applicable since the Contract was entered into in the ordinary course of business and on arms length basis ||Not Applicable since the Contract was entered into in the ordinary course of business and on arms length basis |
|6. ||Amount Paid as advances if any ||Rs. 1076.39 Lacs ||Rs. NIL |
| ||For and on behalf of the Board |
| ||Dr. Jimmy Mirchandani |
|Place: Mumbai ||Chairman & Managing Director |
|Date: 11th August 2016 ||DIN-00239021 |
Annexure-II Annual Report on CSR Activities
|Particulars ||Details |
|1. A brief outline of the Companys CSR Policy including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR Policy and projects or programs. ||Our policy on Corporate Social Responsibility of Company is broadly framed taking into account the following measures: - |
| ||a) Welfare measures for the community at large so as to ensure the disadvantaged sections of the Society derived the maximum benefi ts. |
| ||b) Contribution to the society at large by way of social and cultural development imparting education training and social awareness especially with regard to the farming sector for their development and generation of income. |
| ||c) Protection and safeguarding of the environment and maintaining ecological balance through a range of ecologically sustainable and cost effective products. Chairman & Managing Director/Executive Director of the Company shall exercise their delegated powers for according approval for the project within the ceiling limit of said 100% budget. CSR should be broadly executed by Company in the areas in which its operating units are located. CSR committee will frame the CSR Policy and modify from time to time and the Board to implement and monitor CSR activities. The CSR Policy is hosted at www.ariesagro.com in the Investor Relations Section. |
|2. The Composition of the CSR Committee. ||Dr. Jimmy Mirchandani |
| ||Dr. Rahul Mirchandani |
| ||Shri Bhumitra V. Dholakia |
|3. Average Net Profit of the Company for last three Financial Years ||Rs. 164105252/- |
|4. Prescribed CSR Expenditure (two per cent. of the amount as in item 3 above) ||Rs. 3282105/- |
|5. Details of CSR spent during the Financial Year. || |
|(a) Total amount to be spent for the Financial Year; ||Rs. 3282105/- |
|(b) Amount unspent if any; ||NIL || |
|(c) Manner in which the amount spent during the Financial Year. ||Scholarship ||178850 |
| ||Distribution of Books ||52500 |
| ||Farmers Education ||1492599 |
| ||Farmers Call Centre ||237784 |
| ||Infrastructure Support ||1392230 |
| ||TOTAL ||3353963 |
We hereby declare that the implementation and monitoring of CSR Policy is incompliance with CSR Objectives and Policy of the Company."
| || ||For and on behalf of the Board || |
| ||Dr. Jimmy Mirchandani ||Dr. Rahul Mirchandani ||B. V. Dholakia |
|Place: Mumbai ||Chairman & Managing Director ||Executive Director ||Director |
|Date: 11th August 2016 ||DIN-00239021 ||DIN-00239057 ||DIN-01871816 |
SECRETARIAL AUDIT REPORT
FOR THE YEAR ENDED MARCH 31 2016
The Members Aries Agro Limited Aries House Plot No. 24 Deonar Govandi(E) Mumbai - 400043
I have conducted the Secretarial Audit of the compliance of applicable statutoryprovisions and the adherence to good Corporate Practices by Aries Agro Limited(hereinafter called the Company). Secretarial Audit was conducted in the manner thatprovided me a reasonable basis for evaluating the corporate conducts / statutorycompliances and expressing my opinion thereon.
Based on my verifi cation of the Companys books papers minute books forms andreturns fi led and other records maintained by the Company and also the informationprovided by the Company its offi cers agents and authorized representative during theconduct of Secretarial Audit I hereby report that in my opinion the Company has duringthe year ended 31st March 2016 complied with the statutory provisions listedhereunder and also that the Company has proper Board processes and compliance mechanism inplace to the extent in the manner and subject to the reporting made hereinafter: I haveexamined the books papers minute books forms and returns fi led and other recordsmaintained by the Company for the year under review according to the provision of :
(i) The Companies Act 2013 ( the Act) and the rules made thereunder;
(ii) The Securities Contract (Regulation) act 1956 ("SCRA") and the rulesmade thereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;(iv) Foreign Exchange Management Act 1999 an the rules and regulations made thereunder tothe extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ("SEBI Act") to the extent they are applicableto the company
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015
(c) The Securities and Exchange Board of India ( Registrars to an Issue and ShareTransfer Agents ) Regulations 1993 regarding the Companies Act and dealing with client;
(vi) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ("SEBI Act") were not applicable to thecompany
(a) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009
(b) The Securities and Exchange Board of India ( Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 read with the SEBI (Share Based EmployeeBenefi ts) Regulations 2014
(c) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008
(d) The Securities and Exchange Board of India ( Delisting of Equity Shares)Regulations 2009; and
(e) The Securities and Exchange Board of India ( Buyback of Securities) Regulations1998;
(vii) Other laws specifi cally applicable to the company namely :-
The Insecticides Act 1968 and
The Fertilizer Control Order 2011
I have also examined compliance with the applicable clauses of the following:
(i) Secretarial Standards Issued by The Institute of Company Secretaries of India
(ii) The Listing Agreements entered into by the Company with BSE Limited and theNational Stock Exchange of India Limited read with the SEBI (Listing Obligations andDisclosure) Regulations 2015.
During the period under review the Company has complied with the provisions of theActs Rules Regulations Guidelines Standards etc. mentioned above :-
I further report that
The The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exists forseeking and obtaining further information and clarifi cations on the agenda items beforethe meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members views arecapture and recorded as part of the minutes.
The company has formulated a Compliance Management System to monitor and ensurecompliance with applicable laws rules regulations and guidelines the implementation ofwhich was completed during the year under review. Prima facie these systems and processesin the company are adequate and are commensurate with the size and operations of thecompany to monitor and ensure compliance with applicable laws rules regulations andguidelines. I further report that during the audit period the company has not undertakenany action having a major bearing on the companys affairs in pursuance of the abovereferred laws.
| ||A SEKAR |
|PLACE : MUMBAI ||COMPANY SECRETARY |
|DATE : 11th August 2016 ||ACS 8649 CP 2450 |
This report is to be read with our letter of even date which is annexed as Annexure Aand forms an integral part of this report.
1. Maintenance of secretarial record is the responsibility of the management of thecompany. My responsibility is to express an opinion on these secretarial records based onmy audit.
2. I have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverifi cation was done on test basis to ensure that correct facts are refl ected insecretarial records. I believe that the processes and practices followed by me provide areasonable basis for our opinion.
3. I have not verifi ed the correctness and appropriateness of financial records Booksof Accounts and records pertaining to direct and indirect taxation of the company which Ibelieve are the domain of other professionals on whom the responsibility is entrusted bythe provisions of the Companies Act 2013.
4. Where ever required I have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. My examination was limited tothe verifi cation of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the effi cacy or effectiveness with which the management has conductedthe affairs of the company.
| ||A SEKAR |
|PLACE : MUMBAI ||COMPANY SECRETARY |
|DATE : 11th August 2016 ||ACS 8649 CP 2450 |