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Assam Company India Ltd.

BSE: 500024 Sector: Agri and agri inputs
NSE: ASSAMCO ISIN Code: INE442A01024
BSE LIVE 14:11 | 05 Dec 4.85 -0.06
(-1.22%)
OPEN

4.92

HIGH

4.92

LOW

4.84

NSE LIVE 14:17 | 05 Dec 4.90 0
(0.00%)
OPEN

4.90

HIGH

4.95

LOW

4.80

OPEN 4.92
PREVIOUS CLOSE 4.91
VOLUME 83130
52-Week high 8.13
52-Week low 4.10
P/E
Mkt Cap.(Rs cr) 150.25
Buy Price 4.85
Buy Qty 4848.00
Sell Price 4.90
Sell Qty 3253.00
OPEN 4.92
CLOSE 4.91
VOLUME 83130
52-Week high 8.13
52-Week low 4.10
P/E
Mkt Cap.(Rs cr) 150.25
Buy Price 4.85
Buy Qty 4848.00
Sell Price 4.90
Sell Qty 3253.00

Assam Company India Ltd. (ASSAMCO) - Director Report

Company director report

ASSAM COMPANY INDIA LIMITED (FORMERLY KNOWN AS ASSAM COMPANY LIMITED) ANNUAL REPORT 2009 DIRECTOR'S REPORT Your Directors have pleasure in presenting their Thirty-Third Annual Report and Accounts for the year ended 31st December, 2009. Financial Results: Year ended Year ended 31.12.2009 31.12.2008 Rs. Rs. Profit before Taxation, 56,05,87,845 30,47,54,517 Depreciation & Exceptional Item Less:Depreciation 12,04,57,775 10,39,09,667 44,01,30,070 20,08,44,850 Less:Exceptional Item 19,68,87,328 3,51,85,220 24,32,42,742 16,56,59,630 Add/(Less):Provision for Taxation: Current Tax (Net) (4,15,51,000) (2,70,00,000) Deferred Tax - (3,67,12,493) Net Profit for the year 20,16,91,742 10,19,47,137 Add/(Less):Balance brought 46,15,29,727 41,94,43,305 forward from previous year Available for appropriation 66,32,21,469 52,13,90,452 Your Directors propose the following appropriation: Proposed Dividend 6,19,52,193 4,64,64.144 Dividend Tax thereon 1,02,89,485 78,96,581 Transfer to General Reserves 1,51,50,000 55,00,000 Balance Carried Forward 57,58,29,791 46,15,29,727 66,32,21,469 52,13,90,452 1. Dividend: Your Directors are pleased to recommend for the approval of the shareholders a dividend of 20% on the paid up equity share capital of the Company. 2. Performance: Gross sales grew from Rs. 184.25 Cr to Rs. 226.17 Cr, thus recording an overall increase by 22.75%. The total manufactured crop was 149.84 Lac Kgs in 2009 as compared to 146.83 Lac Kgs in 2008. The increase in crop is attributable mainly to 'bought leaf' operation. The production of Orthodox Tea has been emphasized upon as the market response is favourable to this variety. Stress has been laid upon capital expenditure to augment the capacities in factories for Orthodox Tea production. Tea prices firmed up during the year due to subdued production levels globally. The average sales realization at Rs. 134.41 per Kg was better than the previous year of Rs. 111.53 per Kg. Quality teas continue to attract premium, although sales prices have increased generally across the wide spectrum of other tea varieties. Overhead costs of inputs like fuel and power, fertilizers, increased wage rate, were controlled to minimize the cost of production which resulted in improved productivity. The manufacture of quality teas which is renowned in the domestic and overseas market has been maintained through implementation of optimum agricultural practice and this continues to be the focus of the Management. Exports: The year under review saw stable exports when 38.80 Lac Kgs were exported at gross value of Rs. 63.68 Cr as compared to Rs. 66.07 Cr in 2008. Research and Development: The Company's R & D Unit dedicated to Scientific Research & Development programmes in Assam is recognized by the Ministry of Science and Technology, Govt. of India. OIL & GAS DIVISION: The year 2009 was primarily engaged to carry on PSDM and Reservoir Characterization study by various internationally recognized agencies to verify the interpretation of 3-D Seismic acquisition which can give a better lead in next drilling campaign with a view to ensure higher success. During the year 2009, the Consortium had pursued the Gas compressions project including dual drilling operation in Well No. 11 for re-injection of gas. In Well No. 11, three zones-Main Barail, Mid Barail and Basement of oil and gas deposit were discovered. During the year 2009, the performance of oil and gas business was subdued on account of PSDM study and ongoing installation of the Gas Re-injection Plant. The revenue from oil & gas saw a drop from Rs. 32.73 Cr in 2008 to Rs.18.35 Cr, while the sale volume of oil & gas which was 54914 BBLS and 20122 MCM in 2008 reduced to 39817 BBLS and 17367 MCM respectively in 2009. Amguri Field has been producing oil and gas since April, 2006. The well produces high quality crude oil which commands premium value over 'Bonny Light'. The oil and gas pool from where currently the production of oil and gas is generated, was found to be of retrograde gas reservoir and steps have been initiated for an integrated project to ensure adequate pressure and also a full scale gas plant for separating LPG to be sold at a premium. The first phase of the project is under execution at an investment of US$ 10 million and is expected to be completed by July, 2010. On commissioning of this Project, it is expected that the production of oil/oil condensate will be increased considerably from the current level of production. The PSDM and Reservoir Characterization study have already thrown many highly prospective zones in Amgun Field where the drilling activities can commence from 2010. It is expected that in Phase I about three wells (two Barail and one Tipam wells) will be completed by December, 2010 by deployment of two rigs. Considering the new Geological data, the Consortium expects high level success which will accrue significant revenue to both the partners under Consortium. In coming next 2-3 years, the Consortium will drill development wells in phases as part of Full Scale Development Plan, which will further augment revenue and cash flow. In respect of AA-ON/7 Exploration Block, comprising of 787 Sq. Km. (Assam- 468 Sq. Km. and Nagaland-319 Sq. Km), the Company has made further investments in drilling exploratory wells during the current year and it has plans to drill more exploratory wells in this Block during the exploration phase. During the exploratory phase in Assam belt, the joint venture has made significant progress in condensating geological leads which will facilitate in finalising the drilling location in Nagaland. As per the geological interpretation, this area has been found to be highly prospective zone in the North East. Since this Block is still in exploratory phase, exploratory activities will continue to be undertaken till a major discovery of oil and gas is made which is normal in any E&P operations. With regard to operations in Marginal Discovered Fields, having made investments in work over operations in Laxmijan and Barsilla and having established oil and gas reserve, the Company made strong representation before ONGC seeking amendment of commercial terms to make the operation economically viable due to increased cost of operation. Since the operation was not economically viable, the Management has decided to treat these Marginal Fields as abandoned and subsequently surrendered these Fields back to ONGC. AA-ONN-2005/1-Assam-Arakan Basin has been awarded against NELP-VII with ONGC and Oil India Ltd. as partners. ONGC being the Operator has already initiated various minimum work programs that will be completed during 2010- 11. Overseas Assets: Austin Exploration Limited (AEL): The Company through its WOS, Duncan Macneill Natural Resources Limited holds shares in AEL which has assets in the US and South Australia. AEL currently maintains working interest and net revenue interests in five key oil and gas assets:two in Australia-namely PEL 105 and PEL 73 and three in the U.S.A. namely Polecat Creek, Park City Project and The Moses Austin Projects. 3. Financial: The quarterly financial results as well as the Limited Review Report were published and submitted to the Stock Exchanges within the requisite time. Capital Expenditure was incurred towards upgradation of factory buildings, tea machineries and equipments, utility services, irrigation and infrastructure facilities like housing, roads, electrification etc. at its tea estates. Capital Expenditure as per the approved work programme has been incurred towards Oil and Gas Project at Amguri and AA-ON/7. The Company has financial arrangement in place to take care of its future Capital Expenditure programme. 4. Subsidiary Companies: Act, 1956, containing details of the subsidiary companies form part of the Accounts. The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with Accounting Standard 21 prescribed by The Institute of Chartered Accountants of India, form part of the Annual Report and Accounts. Gujarat Hydrocarbons and Power SEZ Limited: As reported earlier, Gujarat Hydrocarbons and Power SEZ Limited (GHAPSL), a Wholly Owned Subsidiary of the Company had taken possession of 276-18-13 HA land in GIDC Vilayat-Vagra Industrial Estate in the Bharuch District in Gujarat for setting up of a sector specific SEZ Hydrocarbon and related activities. The Lease Deed for the land was executed between GIDC and GHAPSL on 21st February 2008. GHAPSL also undertook steps for 'Site Clearance' and 'Fencing' of the land acquired in the Lease Deed and almost 13.6 km of 'fencing' was completed during the year. The Company has awarded contract for Rapid Environment Impact Assessment (REIA) for obtaining Environmental Clearance (EC) from Ministry of Environment & Forests (MoEF) and the work is on going. In view of the Panchayat Road which bisects the land, GHAPSL decided to set up two SEZs instead of earlier proposed one SEZ. In this regard, it was decided to earmark the plot north of the Panchayat Road for' Energy including New and Renewable Energy' (108 HA) and the plot south of the Panchayat Road for 'Oil & Gas including its Derivatives (Petrochemicals)' (140 HA). GHAPSL submitted application to MoC&I on 10th October 2008 for conversion of the 'In principle' approval to 'Formal approval' and both applications for North and South Plot were approved by MoC&I on 6th January, 2009. 140 hectares has got notified on 23rd March, 2010, whereas the Company is expecting notification for 108 hectares within 2010. Namburnadi Tea Company Limited: During the year under review, the Company sold 5.32 Lac Kgs. of tea as against 4.31 Lac Kgs. of tea during the previous year. Sales was Rs. 5.56 Cr in 2009 as compared to Rs. 3.78 Cr in 2008. Efforts continue to improvise working of the Company. Average realization per Kg increased from Rs. 88/-to Rs. 105/-in 2009. 5. Environment and Social Concern: The Company emphasizes on energy conservation, waste minimization and conservation of resources through afforestation, control on emissions and effluents. Utmost priority is given to these factors in all the tea Estates and production units. The facilities at each of the gardens, relating to hospitals, primary schools, creches and rations are the core areas through which social responsibilities are executed. All these measures have ensured smooth commercial operations without adversely affecting the environment. 6. Directors: Mr. Umesh Barasia retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for reappointment. Mr. Santosh Bhagat resigned from the Board with effect from 24th November, 2009. Your Directors wish to place on record appreciation of services rendered by him to the Company. Mr. Pradip Tusnial has been appointed as Additional Director with effect from 7th May, 2010. 7. Corporate Governance: A detailed report on Corporate Governance is separately attached together with a report on Management Discussion and Analysis. 8. Directors' Responsibility Statement: Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed: (i) that in preparation of the annual accounts for the year ended 31st December, 2009, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review; (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 accounts for the year ended 31st December, 2009 on a going concern basis. 9. Cost Audit: The Central Government has made it mandatory for the Company to conduct a cost audit and accordingly the Company has appointed BCD & Associates as Cost Auditor. 10. Auditors: Messrs. Lovelock & Lewes, Chartered Accountants, retire at the forthcoming Annual General Meeting and are eligible for re-appointment. 11. Auditors' Observations: The report of the Auditors and the Notes on account is self-explanatory and as such, does not call for any further comments from Directors. 12. Particulars as per Section 217 of the Companies Act, 1956: The information relating to energy conservation, technology absorption, foreign exchange earnings and outgo, pursuant to Section 217 (1) (e) of the Companies Act, 1956 is set out in Annexure 'A' forming part of this Report. Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are set out in Annexure 'B' forming part of this Report. 13. Acknowledgement: Your Directors sincerely thank the Government of India, Ministry of Petroleum and Natural Gas, other Ministries, the Government of Assam, Banks and Financial Institutions, the Consortium Partners, customers, shareholders, vendors and other related organizations for their continued assistance and co-operation. Your Directors also appreciate the industrial harmony at all the tea gardens and other locales and commend the dedicated efforts and services put in by the employees and workmen. On behalf of the Board of Directors Place: Kolkata A.K. Jajodia - Managing Director Date : 7th May, 2010 P. Tusnial - Director ANNEXURE-'A' FORMING PART OF THE DIRECTORS' REPORT: PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO IN TERMS OF SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 FOR THE YEAR ENDED 31ST DECEMBER 2009: FORM 'A' Current Year Previous Year ended ended 31.12.2009 31.12.2008 CONSERVATION OF ENERGY: A. Power & Fuel Consumption: 1. Electricity: a. Purchased Units (KWH) 9429806 10626954 Total Amount (Rs.) 63728684 66932510 Rate per Unit (Rs.) 6.76 6.30 b. Through diesel generator 3557386 3002783 Units (KWH) Units per Ltr. of diesel 2.84 2.83 Cost/Unit (Rs.) 11.62 11.75 2. Coal: Quantity (Tonnes) 3176.23 4370.53 Total Cost (Rs.) 15696376 17608704 Average Rate (Rs./Tonne) 4941.83 4028.97 3. Furnace Oil: Quantity in K. Ltrs. 89.822 119.706 Total Cost (Rs.) 3504684 4472324 Average Rate (Rs./KL) 39018 37361 4. Gas: Quantity (Scum) 8367005 6590337 Total Cost (Rs.) 43247575 34871564 Rate (Rs./Scum) 5.17 5.29 B. Consumption Per Unit of Production: Production of Tea (Kgs.) 14826107 14536195 Electricity (KWH) 0.88 0.94 Furnace Oil (Ltrs.) 0.01 0.02 Coal (Kgs.) 1.29 1.44 Gas (Scum) 0.56 0.45 FORM 'B': RESEARCH AND DEVELOPMENT (R&D): 1. Specific Areas in which R & D carried out by the Company: Tea productivity and quality improvement, implementation of low input sources like biofertilisers, biopesticides and other biocontrol agents for pesticide free organic tea production and environment protection. Regular soil status study, exploitation of natural products from tea. 2. Benefits derived as a result of the above R & D: Tea quality improvement, reduction of risk on pest & disease infestation. Adoption of technology from time to time in accordance with the work done by the Tea Research Association, Institute of Market Ecology and in-house R & D. 3. Future plan of action: Development of suitable biocompost, biofertilisers and extensive usage of biological agents to control disease manifestation. Exploitation of natural ingredients in tea. 4. Expenditure on R & D: a) Capital: Nil b) Recurring: Nil c) Total: Nil d) Total R&D expenditure as a percentage of total turnover: Nil TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION: 1. Efforts in brief made towards technology absorption, improvement, adaptation and innovation.: Efforts are made to improve indigenous cost effective technology for productive and quality improvement. Keeping co-ordination with Tea Research Association Laboratories and Company's in-house R & D Units. 2. Benefits derived as a result of above efforts e.g. product improvement, cost reduction, product development, import substitution etc.: Product improvement and Tea Quality improvement. 3. In case of imported technology (imported during the last five years reckoned from the beginning of the financial year), following information may be furnished: a. Technology imported b. Years of import c. Has technology been fully absorbed NOT APPLICABLE d. If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of action. FOREIGN EXCHANGE EARNINGS AND OUTGO: During the year, foreign exchange outgo was to the extent of Rs. 6.18 Cr. The foreign exchange earnings during the period was Rs. 63.71 Cr. Details of the foreign exchange earnings and outgo have been given in Schedule 13(15) and 13(14) to the Accounts. MANAGEMENT DISCUSSION & ANALYSIS REPORT: Market Synopsis: Tea: The Indian tea industry is on a comeback trail after nearly a decade-long recession with rising demand and prices firming up. India is the world's largest tea producer after China and produced a crop of 979 million Kgs in 2009 compared to 981 million Kgs in the previous year whereas countries like Kenya and Sri Lanka made production of 313.9 million Kgs and 283.10 million Kgs respectively. Assam contributes around 50 percent of India's total tea production and has over 800 tea plantations. Indian Tea overcame the global economic slowdown to fetch export earnings of Rs. 2616.62 Crore during 2009 at 191.49 million Kgs, as against Rs.2282.00 Crore at 196 million Kgs in the previous year. While exports to countries like Germany and Russia dropped compared to 2008, exports to country like Iran improved significantly. The overall mood is vibrant and it is expected that the healthy trend would continue as there is a global shortfall in tea production supported by production of good quality teas and increase in overall consumption within the country. Oil and Natural Gas: The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. India has total reserves of 775 million metric tonnes (MT) of crude oil and 1074 billion cubic meters (BCM) of natural gas as on April 1, 2009, according to the Ministry of Petroleum. OIL: * Crude oil production during 2009-10 was 33.68 MT, compared to 33.50 MT in 2008-09. * Refinery production in terms of crude throughput was 160.03 MT in 2009- 10. * The production of natural gas went up to 47.57 billion cubic meters tonnes (BCM) in 2009-10 from 32.84 BCM in 2008-09. India is currently dependent on imports for 68 percent of its oil consumption but at the same time petroleum product exports constitute the country's single largest item of foreign exchange earner. The EIA expects India to become the fourth largest net importer of oil in the world by 2025, behind the United States, China and Japan. A net importer of oil, the Indian government as part of the country's 11th five year plan (2007-2012) has introduced policies aimed at increasing domestic exploration and production (E&P) activities. Economic reform and other efforts to open up the country have led to increased foreign investment in India and private companies have increased their participation and market share in recent years. India is emerging as the global hub for oil refining with capital costs lower by as much as 25 to 50% over other Asian Countries. GAS: India's natural gas demand is expected to nearly double to 320 million standard cubic meters per day by 2015, according to a report released by global consultancy firm McKinsey at the VI Asia Gas Partnership Summit. According to the report, the current demand of 166 million standard cubic metres per day (mscmd) made up of nearly 132 mscmd supplies from domestic fields and the rest from imported LNG is likely to rise to at leas a minimum of 230 mscmd and a maximum of 320 mscmd by 2015. Major discoveries of oil & gas have been made in recent years. However, with large areas of India's sedimentary basins remaining unexplored, the Indian oil scenario is ripe with possibilities. Segment-wise or Product-wise Performance The Company, for the financial year 2009, had operations in two geographical segments-Domestic market and Export market wherein around 69.35 per cent of the Company's turnover is from the Domestic market segment and the balance from Export market segment. The Company has 18 Tea Estates 3 Oil Blocks all in the State of Assam. The Company's revenue from the sale of oil and gas is around Rs. 18.35 Crore, constituting 8.11% of total sales. 39817 BBLS of Oil and 17367 MCM of gas were sold during 2009. In respect of the Tea business, total sales is aggregated to Rs. 207.81 Crores which is 91,89% of the total sales, out of this, domestic sales was 115.81 Lacs Kg amounting to Rs. 144.13 Crores and export sales was 38.80 Lacs Kg amounting to Rs. 63.68 Crores. Internal Control Systems and their Adequacy: Internal audit and review of internal controls is carried out on a regular basis by a firm of Chartered Accountants and the Audit Committee examines the same periodically. The Company has a management information system, which is an integral part of the control mechanism. Financial & Operational performances: In the financial year 2009, total income grew by 20.25 percent and profit after taxation grew by about 97.84 per cent as compared with the financial year 2008. This was largely due to better price realization in Tea in 2009. Material developments in Human Resources/lndustrial Front: Relationship with employees at all levels in the Tea Estates, Oil/Gas Blocks and other locales remained cordial. Cautionary Statement: Certain statements made in the Management Discussion & Analysis Report which seek to describe the Company's objectives, projections, outlook, estimates, expectations, predictions etc., may constitute 'forward looking statements' within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections etc., whether expressed or implied. Several factors could make difference to the Company's operations. These include climatic conditions, economic conditions, auction and private sale regulations, Government regulations, tax laws, other statutes, natural calamity etc., over which the Company does not have any direct control.

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