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Aspinwall & Company Ltd.

BSE: 533030 Sector: Others
NSE: ASPINWALL ISIN Code: INE991I01015
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Aspinwall & Company Ltd. (ASPINWALL) - Director Report

Company director report

To the members

We are pleased to present the Report on our business and operations for the year ended31 st March 2016.

1. RESULTS OF OUR OPERATIONS

Particulars 2015-16 2014-15
Rs In Lakhs Rs In Lakhs
Revenue from Operations 23786 22253
Other Income 440 452
Expenses 23004 22245
Profit Before Tax (1+2-3) 1222 460
Tax Expense 454 40
Profit for the year (4-5) 768 420
Surplus - Opening Balance 442 412
Depreciation on transition to Schedule II of the Companies Act 201C Nil 21
Appropriations:
Dividend
Interim 195 -
Final (Proposed if any) - 141
Total 195 141
Dividend Tax 39 28
Transfer to General Reserve 500 200
Surplus - Closing balance 476 442
(6+7-8-10-11-12)
Reserves:
The position of Reserves as on 31st March 2016 will then be:
General Reserve 9700 9200
Surplus in Statement of Profit and Loss 476 442
Hedging Reserve 127 70
TOTAL (15+ 16+ 17) 10303 9712
EPS 9.82 5.37

2. LISTING STATUS

Based on the decision taken by the Board of Directors at their meetings held on 06thFebruary 2015 and 12th August 2015 the Company has applied to National Stock Exchangeof India Limited ("NSE") on 03rd February 2016 to get the 7818288 equityshares of the Company listed. Presently the listing application filed by the Company isunder process at NSE.

3. CORPORATE GOVERNANCE.

The Corporate Governance at Aspinwall is a value-based framework to manage our Companyaffairs in a fair and transparent manner. As a responsible corporate citizen we use thisframework in all our affairs and employ democratic and open processes in all theactivities/transactions of the Company. The report on Corporate Governance forms part ofthis Annual Report.

4. MANAGEMENT DISCUSSION & ANALYSIS (M.D.&A.)

This report includes M.D.&A as appropriate so that duplication and overlappingbetween Board’s Report and the entire material is provided in a composite andcomprehensive document.

5. BUSINESS PORTFOLIOS AND PERFORMANCE:

Our Company is a multi-line business organization and is engaged in Coffee processingand trading Rubber plantations Manufacture and trading of Natural fibre products andLogistics.

Coffee Division:

Coffee exports from India grew by 12.36% and stood at 3.18 Lakhs MT against the 2.83Lakhs MT for the previous year. Global coffee consumption is increasing steadily and itstood at 91.26 lakhs MT compared to previous year’s 90.18 lakhs MT.

The Coffee division has been consistently contributing to the Company’s profit forthe past 7-8 years.

In spite of the Coffee prices being lower than that of the previous year the divisionachieved a turnover of Rs.10556 lakhs. The division reported a Gross Profit of Rs.1231lakhs in a very volatile market. It is worth mentioning here that the export incentivesfor the year under review was lower by 2% than the preceding year.

We have promoted about 14 large size farmers under the Nespresso AAA CoffeeSustainability Programme and all efforts are being made to increase the number of farms inthe Sustainability Programme.

We have also entered into a business agreement with Ecom Gill (ECOM GILL is a leadingglobal commodity merchant and sustainable supply chain management company) for procurementof AAA certified Arabica Cherry coffee for Monsooning and supply to Nespresso.

Aspinwall leads the awards tally as ‘Best Speciality Coffee Exporter" bywinning the award nine times consecutively.

Rubber Division:

The rubber plantation sector in all producing countries is passing through the worstcrisis in its history with prices nose-diving to one of the lowest in the last six years.The economic crisis in China coupled with the crash in crude oil prices and theconsequent decreasing prices of Synthetic Rubber has made a dampening impact on the demandand price of Natural Rubber.

India’s Natural Rubber production in 2015-16 has dropped by 13%. Our plantationharvested a crop of 877250 Kgs against a budget of 950000 Kgs showing a deficit of 7.7 %.The main reason for this drop in production was the 18 days of state-wide labour strike.

Plantation labour wages have been revised by 20% with effect from July 2015. Thoughthe final government notification is awaited provision has been made in the book ofaccounts for the current year covering all aspects of the wage increase. The totalprovision is a sizeable amount of Rs 117 lakhs resulting in an enhancement of Cost ofProduction ("COP") which otherwise has been largely within limits.

The low prices increase in COP due to wage hike and loss of crop due to strike haveresulted in an operational loss for the current year.

On the sales and marketing fronts Aspinwall has made good strides by developing newcustomers getting premium over market prices and by achieving high customer satisfaction.The strategy of selling latex in tanker lorries has helped in bringing down the packingcost for this grade.

Aspinwall has bagged the State Pollution Control Award (3rd prize) in thecategory of medium scale industries.

The price situation is likely to be better in the FY 2016-17 in view of the expecteddrop in production in the major rubber producing countries. To combat price volatility andto ensure sustainability the division is aiming at improving labour productivitymechanization of field operations better revenue from contract tapping and better salesrealization through superior quality and services.

Natural Fibre Division:

During the year under review the exports of Coir and Coir Products from India haveshown an increase of 17% in terms of quantity and 10% in terms of value. The majorincrease shown is for Coir Pith mainly from Tamil Nadu which is 29% in quantity and 46% invalue. Most of the other products including coir mats and mattings curled coir coir ropeetc have shown a reduction or no growth.

There is an increase in exports turnover for the division this year but the drop inthe domestic sales made a net reduction to the tune of Rs 50 lakhs in the overallturnover. With a reduction in the operating as well as overheads expenses and also withstrict cost control methods initiated the division has improved its bottomline andachieved a net profit of Rs 40 lakhs.

During the year the division has exported 80% of its production from the PollachiUnit compared to 70% during the previous year. The value of the PVC tufted mats exportedcomes to 65% of the total exports compared to 45% for the previous year.

Logistics Division:

The Company has handled a variety of new products this year like Coal Pet cokeGypsum Boulders Soda Ash Sulphur MRPL Pet coke by rakes; as opposed to onlyfertilisers coal food grains and containers being handled in previous years. Theperformance for the year was far better than previous years showing around * 50%improvement in Gross Profit.

The Department of Fertilisers Government of India has made it mandatory to coat Ureawith "neem oil" before sales and hence we have installed 3 urea neem coatingunit at our various godowns.

The demand for fertilisers was very poor due to various reasons which resulted in slowmovement of cargo from the warehouses. This in turn helped our Company to generateadditional income in warehousing charges.

The proposed rise in Port Labour wages Godown rents and increase in Railway Sidingcharges may affect the profitability of the division for the year 2016-17.

The Ministry of Shipping Government of India has introduced the New Stevedoring Policywhich is to be effective from June 2016 and hence the Port has to charge Royalty on cargofor Stevedoring work (Profit sharing basis) which will further affect the profitabilityof the Division.

We have been able to turn around the performance of Mumbai Chennai and Trivandrum inthe FY 2015-16. Your Company has inducted fresh talents and is confidant of turning roundthe rest of the forwarding branches during the fiscal 2016-17.

6. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

The Company has established good internal control systems in all its functions. Thesenior management regularly reviews the control systems and makes necessary correctionswherever required. M/s Suri & Co. Chartered Accountants the Company’s InternalAuditors for the financial year 2015-16 have done periodical inspection of all locationsand submitted reports on the control systems procedures etc. Positive remedial actionshave been initiated on these reports.

7. PERFORMANCE OF THE COMPANY :

The Profit before tax for 2015-16 is Rs.1222 lakhs as compared to Rs.460 lakhs for theprevious year. The total revenue from operations at Rs.23786 lakhs was up by 7% from thatof the previous year.

Your Directors propose to transfer an amount of Rs.500 lacs to the General ReserveAccount out of the profits available for appropriation which is in accordance with theprovisions of Companies Act 2013.

8. DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

Harmonious cordial and healthy industrial relations prevailed throughout the year. Inorder to contribute towards the growth of the Company and to meet the rapidly changingbusiness environment and to communicate and direct the employees towards a performanceoriented culture we had introduced Variable Pay from the year 2014-15 which is beingcomputed based on the performance of the employee and Branch/Division in which he/she ispart.

This has helped the Company to improve team work while at the same time creating acompetitive spirit amongst the employees. This has also helped us to identify theperformers and eliminate inefficiencies from the system.

The total personnel strength of the Company as on March 312016 was 753.

9. WHOLLY-OWNED SUBSIDIARIES:

9.1 Aspinwall Technologies Ltd

The main activities of this Company are the development and trading of businessautomation systems and programmes in software for Aspinwall and Company Limited and itssubsidiaries.

9.2 Malabar Coast Marine Services Pvt. Ltd.

The main activities of this Company are stevedoring and freight forwarding. Stevedoringis carried out mainly in the port of Mormugoa (Goa). Freight forwarding is carried out inlocations like Goa Vizag Hyderabad Bangalore and Mangalore.

9.3 Aspinwall Geotech Ltd. '

Aspinwall Geotech Limited was formed for carrying on the business of Geotextiles.However a major fire accident in 2002 damaged critical machinery and since then nocommercial activity has been possible.

9.4 SFS Pharma Logistics Private Limited

SFS Pharma Logistics Private Limited is engaged in the business of logisticsassistance in India and abroad relating to clinical trial shipments pharma products andother temperature sensitive cargo. SFS Pharma was outsourcing its entire requirementsduring the initial years as the Company wanted to understand and evaluate the marketpotential.

The operations are active with more domestic cold chain cargo movements. Based on ourexperience in the past couple of years we find huge markets in Life Science Logisticsboth in domestic and international arena. The management has now decided to invest in thenecessary infrastructure to scale up the operations and take it to the next level.

During the year the Board of Directors reviewed the affairs of the subsidiaries. Inaccordance with Section 129 (3) of the Companies Act 2013 we have prepared consolidatedfinancial statements of the Company and all its subsidiaries which form part of theAnnual Report. Further a statement containing the salient features of the financialstatement of our subsidiaries in the prescribed format AOC-1 is appended as Annexure -1 tothe Board’s Report. These documents will also be available for inspection duringbusiness hours at our registered office in Kochi India.

10. APPROPRIATIONS

10.1 Dividend

The Board of Directors at their meeting held on 16th March 2016 hasdeclared an Interim Dividend of Rs.2.50 per equity share amounting to Rs.19545720/-.The record date was fixed at March 16 2016 for the purpose of Interim Dividend 2016.

10.2 Particulars of loans guarantees and investments

Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.

10.3 Transfer to Reserves

We propose to transfer Rs.500 lacs to the General Reserve. An amount of Rs.476 lacs isproposed to be retained in the surplus.

10.4 Fixed Deposits

As reported last year the Company has stopped accepting/renewing Fixed Deposits andhas repaid all the fixed deposits as on 31st March 2015. The unclaimedinterest amounts relating to the earlier Fixed Deposits are lying in the Interest WarrantAccount of the Company and is being transferred to Investors’ Education andProtection Fund ("IEPF") as and when it is due to be transferred pursuant tothe provisions of the Companies Act.

10.5 Particulars of contracts or arrangements made with related parties

Particulars of contracts or arrangements with related parties referred to in Section188 (1) of the Companies Act 2013 in Form AOC-2 is appended as Annexure - 5 to theBoard’s Report. The complete related party transactions pursuant to the AccountingStandard - 18 are shown in the financial statements.

10.6 Material changes and commitments affecting financial position between the end ofthe financial year and date of report

There have been no material changes and commitments affecting financial position of theCompany between the end of the financial year and date of report.

11. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION:

The particulars as prescribed under Sub-section (3) (m) of Section 134 of the CompaniesAct 2013 read with the Companies (Accounts) Rules 2014 are not applicable to yourCompany.

12. FOREIGN EXCHANGE EARNINGS AND OUTGO:

(a) Export activities initiatives taken to increase export etc.

Coffee and Coir are the major export oriented business of the Company.

The Managing Director and Senior Managerial personnel of the Company undertook businesstours to Far East Europe and US for meeting customers and canvassing business.

(b) Total foreign exchange used and earned

During the year under review the Company’s foreign exchange earnings amounted toRs. 10894 lacs compared to Rs. 11447 lacs in the previous year. The total outgo offoreign exchange amounted to Rs.22 lacs as against Rs.38 lacs in the previous year.

13. PARTICULARS OF EMPLOYEES:

A statement containing the names of employees employed throughout the financial yearand in receipt of remuneration of Rs.60 lakh or more or employed for part of the year andin receipt of Rs.5 lakh or more a month under Rule 5 (2) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 is appended at Annexure - 2.

14. DIRECTORS’ RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (3) (c) of the Companies Act 2013the directors hereby confirm that:

(a) In preparation of the annual accounts for the financial year ended March 312016the applicable accounting standards have been followed.

(b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period.

(c) The Directors have taken proper and sufficient care towards the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

(d) The Directors have prepared the annual accounts on a going concern basis.

(e) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.

15. BUY-BACK:

The Company has not contemplated any buy-back of shares.

There has also been no change in the share capital of the Company during 2015-16.

16. DIRECTORS:

As per the Articles of Association and the provisions of the Companies Act 2013Mr.Rama Varma retire by rotation in the ensuing Annual General Meeting and beingeligible seek re-appointment.

Further the Company has received necessary declarations from each Independent Directorunder Section 149 (7) of the Companies Act 2013 that he/she meets the criteria ofindependence laid down in the Section 149 (6) of the said Act.

17. AUDITORS:

Statutory Auditors

At the AGM held on August 112014 Deloitte Haskins & Sells Chartered Accountantswere appointed as the Statutory Auditors of the company to hold office till the conclusionof the AGM to be held in the calender year 2017. In terms of the first proviso to Section139 of the Companies Act 2013 the appointment of auditors shall be placed forratification at every AGM. Accordingly the appointment of Deloitte Haskins & SellsChartered Accountants as Statutory Auditors of the Company is placed for ratification bythe shareholders. In this regard the company has received a certificate from the auditorsto the effect that if they are reappointed it would be in accordance with the provisionsof Section 141 of the Companies Act 2013.

Cost Auditors '

The Board of Directors at their meeting held on 26th May 2016 haveapproved the appointment of M/s BBS and Associates Cost Accountants as the Cost Auditorsof the Company for the financial year 2016-17 and also fixed the audit fee payable tothem. As per the provisions of Section 148 of the Companies Act 2013 read with Companies(Audit and Auditors) Rules 2014 audit fee payable to the Cost Auditors is to be ratifiedby the members of the Company. The Board recommends the agreed audit fees payable to thecost auditors.

18. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company’s operations in future.

19. EXTRACT OF ANNUAL RETURN

In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as Annexure - 4 to the Board’sReport.

20. CORPORATE SOCIAL RESPONSIBILITY

As per the Companies Act 2013 all companies having net-worth of Rs.500 Crore or moreor turnover of Rs.1000 Crore or more ora net profit of Rs.5 crore or more during anyfinancial year are required to constitute a Corporate Social Responsibility (CSR)committee of the Board of Directors comprising three or more directors out of which atleast one of whom shall be an independent director and such Company shall spend at least2% of the average net profits of the Company’s three immediately preceding financialyears. Accordingly we spent Rs.16.50 lacs towards our CSR activities during the yearunder review.

Our CSR Committee comprises Rama Varma (Chairman) Vice Admiral Sushil Krishnan Nair(I.N. Retd.) K.R.N.Menon and P.K.Sasidharan. The Committee is responsible for formulatingand monitoring the CSR policy of the Company.

The Committee had formulated a comprehensive CSR policy taking into considerationvarious requirements under the Companies Act 2013 and its Rules. The budget for the CSRspend shall be recommended by the

Committee which shall be kept before the Board for approval. The Policy includes thelist of areas of activities to be undertaken for CSR which is in consonance with theSchedule VII of the Companies Act 2013. The Company has displayed the CSR Policy in thewebsite of the Company namely www.aspinwall.in.

The annual report on our CSR activities is appended as Annexure - 3 to theBoard’s Report.

21. ENTERPRISE RISK MANAGEMENT

The Board of Directors had also formulated a Risk Management Policy for identificationassessment monitoring mitigation and reporting procedures of enterprise risks. The Riskshave been categorised under Strategic Operational Financial Compliance and Projectheadings.

22. MENTORSHIP AND SUCCESSION PLANNING POLICY

The Board of Directors have formulated a comprehensive policy for establishing astructured approach to ensure an internal supply of competent employees who can take upkey positions when necessary. The roles eligibility time frame integration with otherHuman Resource functions and Succession Planning process for the senior management hasbeen spelt out in the policy.

23. NOMINATION AND REMUNERATION POLICY

The Board has also formulated a Nomination and Remuneration Policy with the objectiveof reviewing the structure size and composition of the Board annually assessing theindependence of independent directors recommending policies from time to time relating tothe remuneration for Directors KMPs and other employees as may be referred and otherrecommendations related to the matter.

24. VIGIL MECHANISM/WHISTLE-BLOWER POLICY

Vigil Mechanism is created pursuant to the provisions of Section 177 of Companies Act2013 which is an instrument through which genuine complaints regarding the Company canbe reported by both the Directors as well as Employees of the Company to an authority. TheAudit Committee has been identified for this purpose. The mode of operation of VigilMechanism has been defined by the Audit Committee. Adequate safeguards againstvictimisation of persons who use Vigil Mechanism to make a direct access to the Chairmanof the Audit Committee is provided.

25. HR POLICY AGAINST SEXUAL HARASSMENT

Company had formulated a Human Resource Policy which comprises stringent measuresagainst the em- ' ployees committing Sexual Harassment to the fellow colleagues.

26. KEY MANAGERIAL PERSONNEL - COMPANY SECRETARY

Mr.Neeraj R Varma holding membership no.A29030 from the Institute of CompanySecretaries of India ("ICSI") was appointed as the Secretary of the Companywith effect from 15th June 2015 and is a part of Key Managerial Personnel ofthe Company along with Mr.Rama Varma Managing Director Mr.Venkitraman Anand ChiefExecutive Officer and Mr.T.R.Radhakrishnan Chief Financial Officer pursuant to theprovisions of the Companies Act 2013.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank our customers shareholders suppliersbankers business partners/ associates financial institutions and Central and StateGovernments for their consistent support and encouragement to the Company. We would alsoplace on record our sincere appreciation to all employees of the Company for their hardwork and commitment.

By Order of the Board
Kochi
26th May 2016. Sd/- Sd/-
C. R. R. VARMA RAMA VARMA
Director Managing Director
DIN 00031924 DIN 00031890

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