ASSAM COMPANY INDIA LIMITED
(FORMERLY KNOWN AS ASSAM COMPANY LIMITED)
ANNUAL REPORT 2009
Your Directors have pleasure in presenting their Thirty-Third Annual Report
and Accounts for the year ended 31st December, 2009.
Year ended Year ended
Profit before Taxation, 56,05,87,845 30,47,54,517
Depreciation & Exceptional
Less:Depreciation 12,04,57,775 10,39,09,667
Less:Exceptional Item 19,68,87,328 3,51,85,220
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
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
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
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
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
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.
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
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
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
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
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-
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
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
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
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.
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
(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
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.
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
CONSERVATION OF ENERGY:
A. Power & Fuel Consumption:
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 per Ltr. of diesel 2.84 2.83
Cost/Unit (Rs.) 11.62 11.75
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
Quantity (Scum) 8367005 6590337
Total Cost (Rs.) 43247575 34871564
Rate (Rs./Scum) 5.17 5.29
B. Consumption Per Unit
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
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
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:
d) Total R&D expenditure as a percentage of total turnover:
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:
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
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.
* Crude oil production during 2009-10 was 33.68 MT, compared to 33.50 MT in
* Refinery production in terms of crude throughput was 160.03 MT in 2009-
* 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.
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.
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.