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Diana Tea Company Ltd.

BSE: 530959 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE012E01035
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VOLUME 13262
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52-Week low 16.00
P/E 10.72
Mkt Cap.(Rs cr) 28
Buy Price 0.00
Buy Qty 0.00
Sell Price 18.55
Sell Qty 95.00
OPEN 19.45
CLOSE 19.30
VOLUME 13262
52-Week high 33.20
52-Week low 16.00
P/E 10.72
Mkt Cap.(Rs cr) 28
Buy Price 0.00
Buy Qty 0.00
Sell Price 18.55
Sell Qty 95.00

Diana Tea Company Ltd. (DIANATEA) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting their 105th Annual Report along with theAudited Accounts for the Fifteen months period ended 31st March 2016.

Financial Results

The summarized Financial results of your Company are given in the table below. (Rs. inLakhs)

Particulars 15 Months Period Ended 31st March 2016 12 Months Period Ended 31st December 2014
Profit before Depreciation and Amortization Expense Finance Costs & Taxation (771.74) 462.58
Less : Depreciation and Amortization Expense 114.04 95.06
Finance Costs 158.55 103.77
Profit/ (Loss) before Tax (1044.33) 263.75
Less : Provision for Tax Expenses (net) (46.39) 47.21
Profit/ (Loss) after Tax (997.94) 216.54
Add : Balance brought forward from previous year 226.37 150.31
Add : Transfer from General Reserve 1050.00 -
Less : Depreciation Adjusted as per revised calculation 7.69 -
Amount available for appropriation 270.74 366.85
Appropriations :
Proposed Dividend 37.48 37.48
Provision for tax on Proposed Dividend 3.05 3.00
Transfer to General Reserve - 100.00
Balance carried forward 230.21 226.37
270.74 366.85

Note: The above Financial Results for the fifteen months period ended 31st March 2016have been prepared to comply with Section 2 (41) of the Companies Act 2013 and hence theprevious year figures are not comparable.

State of Company's Affairs

The year under review had started with yet another year of uncertain weather conditionwherein drought persisted till end of April with high pest infestation. However withprudent practices followed by the company like 100% irrigation as well as good pestmanagement our company's own crop was higher by 72000 kgs. during the season. Wecontinued to have a selective approach towards procurement of bought leaf keeping qualityin mind. Hence our production from bought leaf was restricted to 253384 kgs. with highermargin.

In 2015 the Indian tea production was more or less at par with last year. Marketsentiments throughout the year was sluggish which was reflected in the average pricerealization of Siliguri Auction Centre for the year which was lower by ' 6/- per kg. whencompared to last year. However gap between quality and non-quality tea continued to widenwherein the quality tea continued to sell readily at firm levels whereas medium to poorquality tea struggled to sell in the market. Your company's effort to make quality teashad paid dividend by way of higher realization of ' 147/- for 15 months when compared toSiliguri Auction average realization of ' 119.21 per kg. and our last year's averagerealization of ' 145/- per kg. Cost burden on tea industry is increasing year by year byway of higher wages salaries and cost of inputs. Droughty condition has increased thecost of irrigation as well as pest management which has put immense pressure on theprofitability of the tea companies. In case of our company since we have decided to changethe financial year of our company from December ending to March ending in compliance withthe provisions of section 2(41) of Companies Act 2013 the additional cost burden ofthree unproductive months from January to March 2016 has resulted in huge loss of ' 997.94Lakhs for the entire period of January 2015 to March 2016. Your company continued withthe policy of improving the yields of tea estates by way of regular developmental workthrough uprooting and replanting of old tea bushes with new ones and improvisation of itsquality by modernizing its factory. This has helped us in improving our quality as well aseconomy of our tea estates. Our gardens have 100% irrigation facility to take care ofdroughty conditions which has become a regular phenomena every year.

Prospects

Current year looks to be a very challenging for the tea industry as the year hasstarted with a robust production in Northern Indian wherein crop till end of April ishigher by 15 million kgs. when compared to last year. The higher production has resultedin negative sentiments prevailing in

the tea market with sluggish demand. However quality tea continues to attract demandfrom various segments whereas non-quality tea is being neglected. In addition to that costescalation on account of longer period of irrigation and pest control alongwith increasedwages & salaries is puffing lot of pressure on the margins of tea industry. Global teaproduction is ahead by 50 million kgs. and most of it is being contributed by Kenya. Allthese factors combined together has created a bearish sentiment in the market. Howeverwith domestic consumption growing steadily at 3% CAGR and appetite for quality tea bypacketers is increasing because of their increasing market share the realization forquality tea is expected to be firm. During the current year your company's production tillMay is higher by more than 50000 kgs. with improved realization when compared tocorresponding last year.

We expect the market to be firm particularly in quality segment where participation ofall segments are visible. However non-quality tea could continue to suffer.

Plant protection code has been introduced by Tea Board and your company's policy is tofollow the same. Your company is taking full advantage of various subsidies provided byTea Board.

Your company is determined to pursue with their developmental work in the field byuprooting and replanting the old tea bushes with new ones and modernizing its factories byreplacing obsolete machineries with latest technology plant and machinery with a view ofmaking quality tea and reduce costs. Our average yield of the gardens are 22 quintals whencompared to 17 quintals for the district which put us in a strong position. Furthermorehigher realization compared to district average gives us immense advantage when compred toothers. Every effort is being made by your company to improve its performance in thecoming years.

Change in nature of business if any

There has been no change in business and the Company continues to concentrate on theirown business.

Change in Financial Year

In compliance with the provisions of Section 2(41) of the Companies Act 2013 yourCompany at the Board Meeting held on August 14 2015 decided to change its financial yearfrom 'January-December' to 'April-March'. Accordingly the last financial year of yourCompany was extended up to March 31 2016 covering a period of fifteen months commencingfrom January 1 2015. Your Company shall henceforth follow its Financial Year commencingfrom April 1 and ending on March 31 every year.

Transfer to Reserves

Your Directors do not propose to transfer any amount to the General Reserves.

Transfer from Reserves

Due to absence of profit during the financial period the Company has decided to meetthe dividend payment obligation out of the accumulated profits from previous years incompliance with section 123 of the Companies Act 2013 and other applicable Rules thereto.

Dividend

Your Board has recommended a dividend of ' 0.25 per Equity Share (i.e. 5%). Suchdividend on approval will be paid to those Members whose names are recorded in theRegister of the Company at the close of business on the date of Annual General Meeting.

Details of Board meetings

During the fifteen months period 5 Board meetings were held details of which aregiven below:

Date of the meeting No. of Directors attended the meeting
27.02.2015 5
11.05.2015 5
14.08.2015 5
14.11.2015 4
12.02.2016 5

Share Capital

During the financial period ended 31st March 2016 there is no change in the issued andsubscribed capital of your Company. The outstanding capital as on 31st March 2016 is '749.55 lakhs comprising of 14991000 equity shares of ' 5/- each.

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92(3) of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 forming a part of this Report attached as Annexure "A".

Committees of Board

The details of composition of the Committees of the Board of Directors are as under:-

a. Audit Committee

Sl. No. Name Chairman/ Members
1. Mr. H.M. Parekh Chairman
2. Mr. Sandeep Singhania Member
3. Mr. Gautam Bhalla Member
4. Mr. N.F Tankariwala Member

• During the fifteen months period the Committee had met 5 times as on February27 2015 May 11 2015 August 14 2015 November 14 2015 and February 12 2016.

Recommendation by audit committee:

There is no recommendation of audit committee which has not been accepted by the Boardduring the fifteen months period.

• Vigil mechanism

The Company has established a Vigil Mechanism / Whistle Blower Policy which overseesthrough the Audit Committee and addresses genuine concerns expressed by the employees andother Directors. The Company has also made provisions for adequate safeguards againstvictimisation of its employees and Directors who express their concerns. The Chairman ofAudit Committee can be directly accessed by any employee for reporting issues which needto be brought to the notice of the Board. The Vigil Mechanism / Whistle Blower Policy ofthe Company has been uploaded on the website of the Company: www.dianatea.in .

b. Nomination & Remuneration Committee

Sl. No. Name Chairman/ Members
1. Mr. H.M Parekh Chairman
2. Mr. N.F. Tankariwala Member
3. Mr. Gautam Bhalla Member

During the fifteen months period the Committee had met 2 times as on February 27 2015and August 14 2015.

c. Stakeholders Relationship Committee

Sl. No. Name Chairman/ Members
1. Mr. N.F.Tankariwala Chairman
2. Mr. Gautam Bhalla Member
3. Mr. Sandeep Singhania Member
4. Mrs. Sarita Singhania Member

During the fifteen months period the Committee had met 12 times as on January 152015 January 22 2015 February 5 2015 February 19 2015 March 4 2015 March 122015 March 19 2015 April 23 2015 May 7 2015 May 28 2015 July 23 2015 and March17 2016.

Corporate Social Responsibility (CSR)

Your Company considers Corporate Social Responsibility as an important aspect of doingbusiness. As a good corporate citizen your Company shall initiate appropriate actiontowards various social causes in the future. Presently the provisions of Section 135 ofthe Companies Act 2013 are not applicable to the Company.

Management Discussion and Analysis

As per Listing Regulations Management Discussion and Analysis Report is attached asAnnexure "B" forming part of this report.

Directors' Responsibility Statement

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 your Directors confirm that:

(a) in the preparation of the annual accounts for the financial period ended 31stMarch 2016 the applicable accounting standards had been followed along with properexplanation relating to material departures except gratuity liability being accounted foras and when paid/payable;

(b) the directors had 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 for the financial period ended 31stMarch 2016 and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of 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;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

Your Company attaches considerable significance to good Corporate Governance as animportant step towards building investor confidence improving investor's protection andmaximizing long term shareholders value. A report on Corporate Governance together withthe certificate of the Auditors confirming compliance of conditions of CorporateGovernance as stipulated under Schedule V(E) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 of the Stock Exchangeis annexed as Annexure "C".

Related party transactions

The related party transactions entered into during the period were in ordinary courseof business and also on arm's length basis in compliance with the applicable provisions ofthe Companies Act 2013 and SEBI Listing Regulations. There are no materially significantrelated party transactions made by the Company with Promoters Directors or Key ManagerialPersonnel etc. which may have potential conflict of the interest with the Company atlarge. All related party transactions are presented to the Audit Committee and the Boardif required for approval. Omnibus approval is obtained for the transactions which areforeseen and repetitive in nature. The Policy on Related Party Transactions as approved bythe Board is uploaded on the Company's web link: www.dianatea.in/Policy-on- Related-Partytransactions_7.pdf.

Details of conservation of energy technology absorption foreign exchange earnings andoutgo

The particulars as prescribed under sub-section (3)(m) of the Section 134 of theCompanies Act 2013 read with The Companies (Accounts) Rules 2014 are given at Annexure"D" to the Directors' Report

Particulars of Employees

The ratio of the remuneration of each Director to the median employee's remunerationand other particulars or details of employees pursuant to Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are attached to this Report as Annexure "E".

The information required under Section 197(12) of the Companies Act 2013 read withRule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are not applicable to the company.

There is no directors who is in receipt of any commission from the company as well asfrom its holding company as per section 197 (14) of the Companies Act 2013.

Annual Evaluation of Board's Performance

During the financial period the Board evaluated its own performance as well as that ofits Committees and individual Directors. The exercise was carried out covering variousaspects of the Boards functioning such as composition of the Board & committeesqualification experience & competencies performance of specific duties &obligations governance issues etc. Separate exercise was carried out to evaluate theperformance of Non-Independent Directors. The performance of Independent Directors hasbeen evaluated based on the guidelines as provided under Schedule IV of the Act. Theevaluation of the Independent Directors was carried out by the entire Board except by theDirector being evaluated. The directors were satisfied with the evaluation results whichreflected the overall engagement of the Board and its Committees with the Company.

Auditors and Audit Report

M/s. Das & Prasad Chartered Accountants were appointed as the Statutory Auditorsof the Company in the last Annual General Meeting held on June 26 2015 to hold officefrom the conclusion of the Hundred and Fourth Annual General Meeting until the conclusionof the Hundred and Seventh Annual General Meeting. Ratification of appointment ofStatutory Auditors is being sought from the members of the Company at the ensuing AGM.

Further the report of the Statutory Auditors along with notes to Schedules is enclosedto this report. The observations made in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.

Secretarial audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. MR & Associates Company Secretaries in Practice (CP No.2551) toundertake the Secretarial Audit of the Company for the financial year ending 31st March2017. The Secretarial Audit Report for the financial period ended 31st March 2016 isannexed herewith as Annexure "F" to this Report. The Secretarial Audit Report isself-explanatory and does not contain any adverse qualification reservation or remark.

Cost Audit

As per Section 148 of the Companies Act 2013 read with Rule 4 of Companies (CostRecords and Audit) Rules 2014 the Company is required to maintain cost records for thefinancial year 2016-17. However the company is not required to appoint Cost auditor toconduct the audit of cost records for the financial year 2016-17.

Human Resources

Your Company treats its "human resources" as one of its most importantassets.

The Company has a large work force employed at the tea estates. There were no majordisruptions of work at the garden or any other establishment of the Company during theperiod under review. The correct recruitment practices are in place to attract besttalent. Industrial relations at all the units remained satisfactory.

Material changes and commitments

No material changes and commitments have occurred during the fifteen months periodwhich might affect the financial position of the company.

Disclosure under Sexual Harassment of women at workplace (Prevention Prohibition &Redressal) Act 2013

Your Company is committed to provide a work environment which ensures that every womanemployee is treated with dignity respect and equality. There is zero-tolerance towardssexual harassment and any act of sexual harassment invites serious disciplinary action.

No complaint has been brought to the notice of the Management during the financialperiod ended on 31st March 2016.

RISK MANAGEMENT

In terms of the requirement of the Companies Act 2013 and Listing Regulations theCompany has developed and implemented the Risk Management Policy. The Company has takenadequate measures to mitigate various risk encountered. In the opinion of the Board thereis no such risk which may threaten the present existence of the Company.

Declaration by independent directors

Necessary declarations have been obtained from all the Independent Directors that theymeet the criteria of Independence as laid down under Section 149(6) of the Companies Act2013 and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Remuneration Policy

The remuneration policy of the Company aims to attract retain and motivate qualifiedpeople at the Board levels. The remuneration policy seeks to employ people who not onlyfulfil the eligibility criteria but also have the attributes needed to fit into thecorporate culture of the company. The remuneration policy is consistent with the 'pay-for-performance' principle.

Executive Directors

The Nomination and Remuneration Committee takes into account experience qualificationand prevailing industry practices before giving its recommendation to the Board. Onrecommendation of the Nomination and Remuneration Committee the Board decidesremuneration to be paid to Executive Directors subject to approval of shareholders interms of provisions of the Companies Act 2013 read with Schedule V thereof. TheCommittee aims towards rewarding on the basis of performance and reviews on a periodicalbasis.

Non-Executive Directors

The Company has formulated Criteria for making payment to Non Executive Directors whichis available in Company's weblink: http://www.dianatea.in/Criteria%20of%20making%20payment%20to%20non-executive%20 directors_6.pdf. As per the criteriaNon-Executive Directors are paid siffing fees for attending the meetings of the Board ofDirectors and Committees.

Significant and material orders passed by the regulators

There are no significant and material orders passed by the regulators or courts ortribunals that would impact the going concern status and company in future.

Internal financial controls

Your Company has adequate Internal Financial Control System at all levels of Managementand they are reviewed from time to time. The Internal Audit is carried out in house aswell as by firm of Chartered Accountants. The Audit Committee of the Board looks intoAuditor's review which is deliberated upon and corrective actions taken whereverrequired.

Subsidiaries Joint Venture or Associate Companies

Your Company continues to be the Subsidiary of Diana Capital Limited. Further theCompany has no subsidiaries joint venture and associates for the financial period ended31st March 2016.

Particulars of Loans Guarantees and Investments

The particulars of loans guarantees or investments made under section 186 of theCompanies Act 2013 are covered in the notes to the Financial Statement for the periodended March 31 2016.

Directors and Key Managerial Personnel

As per provisions of Section 149 and 152 of the companies Act 2013 Mr. Gautam Bhallawas appointed as an independent Director who shall hold the office from the conclusion of104th Annual general Meeting upto the expiry of 5 (five) consecutive years or theconclusion of the 109th Annual General Meeting of the Company in the calendar year 2020whichever is earlier.

As per provisions of Section 152 of the Companies Act 2013 Mrs. Sarita Singhania (DIN00343786) is liable to retire by rotation at the forthcoming Annual General Meeting andbeing eligible offer herself for reappointment. The Board recommends her re-appointment.There is no change in Key Managerial Personnel during the financial period.

Deposits

Your Company has not accepted any deposits covered under Chapter V of the companiesAct 2013.

Acknowledgement

Your Directors place on record their appreciation for employees at all levels who havecontributed to the growth and performance of your Company.

Your Directors also thank the clients vendors bankers shareholders and advisers ofthe Company for their continued support.

Your Directors also thank the Central and State Governments and other statutoryauthorities for their continued support.

For and on behalf of the Board

Registered Office Sd/- Sd/-
3B Lal Bazar Street Sandeep Singhania Sarita Singhania
Kolkata - 700 001 (DIN: 00343837) (DIN: 00343786)
Date : May 30 2016 Managing Director Director (Sales & Marketing)

Annexure "D"

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The information under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8(3)of the Companies (Accounts) Rules 2014 for the fifteen months period ended March 31 2016is given here below and forms part of the Directors' Report.

A) Conservation of Energy:

i) In line with the Company's commitment towards conservation of energy all teaestates continue with their efforts in improving energy efficiency. The Steps taken inthis direction at various tea estates are as under:

a) Online conveyorisation of manufacturing process which resulted in optimisation ofcapacity utilization thereby savings in energy and increasing efficiency

b) Installation of coal savers reduce coal consumption

c) Wind turbo ventilators to save power cost

d) Replacement of inefficient motors with energy efficient motors

e) Replacement of obsolete machineries with energy and cost saving machineries

f) Installation of adequate power capacitors to maximise power factor and load factorresulting in minimum transmission loss and reducing per unit cost

g) Installation of LED lights to reduce the consumption of electricity for domesticpurpose.

ii) The steps taken by the company for utilizing alternate sources of energy: Duringthe fifteen months period under review the company has not utilized any other alternatesources of energy for its operation.

iii) The capital investment on energy conservation equipments is ' 61.33 Lakhs.

B) Technology Absorption

i) The efforts made by the Company towards technology absorption during the periodunder review are :

a) Managerial staff are engaged to attend seminars and training programmes foragricultural practices in the field and manufacturing process in the factories

b) Introduction of plucking machines in the field to improvise productivity

c) Online new conveyorisation of flow process in the factory has eventually helped usin optimising capacity utilization and reduce energy cost

d) Usage of low voltage LED light

e) Installation of coal saver to reduce coal consumption

f) Installation of wind turbo ventilators

ii) The benefits derived resulted in increase in productivity and optimization ofcapacity utilization resulting in cost savings in our tea estates.

iii) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year) - NOT APPLICABLE.

iv) The expenditure incurred on Research and Development : The company contributes forthe activities of Tea Research Association regularly. The Company has incurred anexpenditure of ' 7.42 Lakhs for the fifteen months period ended March 31 2016.

C) FOREIGN EXCHANGE EARNINGS AND OUTGO

During the fifteen months period the foreign exchange outgo was ' 54.87 Lakhs and theforeign exchange earning was NIL.

Annexure "E"

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014

(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the fifteen months period ended March 31 2016 and ratio ofthe remuneration of each Director to the median remuneration of the employees of theCompany for the fifteen months period ended March 31 2016 are as under :

Sl. No. Name of Director/ KMP Designation Remuneration of Director/ KMP for the 15 months period (' in Lakhs ) % increase in remuneration for the 15 months period Ratio of remuneration of each director to the median remuneration of the employees for the 15 months period
1. Sandeep Singhania Managing Director 46.01 36.12 43.41:1
2. Sarita Singhania Wholetime Director 27.81 36.59 26.24:1
3. Manoj Agarwala Company Secretary 7.89 33.96 N.A
4. Ramesh Kumar Jhunjhunwala Chief Financial Officer 5.61 39.55 N.A

The non-executive Independent Directors are entitled to siffing fees only. The detailsof remuneration are provided in Corporate Governance Report.

(ii) The median remuneration of employees of the Company during the fifteen monthsperiod was ' 1.06 Lakhs.

(iii) During the Fifteen months Period there was an increase of 63.08% in the medianremuneration of employees.

(iv) There were 3787 permanent employees on the rolls of Company as on March 31 2016.

(v) Relationship between average increase in remuneration and company performance:Theaverage increase in remuneration of employees 52.42%. Employees are granted incrementsbased on their performance in the Company.

(vi) Comparision of Remuneration of Key Managerial Personnel(s) against the performanceof the Company :

The remuneration of the KMP's are in line with the remuneration policy of the Companyas affirmed in item (xii) below. Their remuneration is determined based on theirindividual performance in the Company.

(vii) Variations in the market capitalisation of the Company on the Bombay StockExchange price earnings ratio as at the closing date of the current Fifteen months periodand previous calendar year and percentage increase over decrease in the market quotationsof the shares of the company as compared to the rate at which the company came out withthe last public offer :

Particulars 31st March 2016 31st December 2014 % Change
Market Capitalisation (' in crores) 26.31 26.98 -2.50

Price Earnings Ratio of the company as at March 31 2016- N.A. as there is no profitand as at December 31 2014 is 12.50

The company has not made any public issue or right issue of securities in the recentpast. The comparison of market quotation of shares with that of the last public offer doesnot arise.

(viii) Average percentage increase made in the salaries of employees other than the keymanagerial personnel in the last financial Period (i.e. 01.01.2015 to 31.03.2016) wasaround 55.16% whereas the increase in the key managerial remuneration for the samefinancial period was 36.31%.

(ix) Comparison of remuneration of the key Managerial Personnel against the performanceof the company:

Remuneration of KMPs is based on their individual performance in the Company.

(x) There are no variable component of remuneration availed by the directors which isbased on the recommendations of the Nomination and Remuneration Committee as per theRemuneration Policy for Directors Key managerial Personnel and other Employees.

(xi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the fifteen months period- There is no employees who receives remunerationin excess of the highest paid director during the fifteen months period; and

(xii) It is hereby affirmed that the remuneration paid is as per the RemunerationPolicy of the Company.

Form No. MR - 3

SECRETARIAL AUDIT REPORT

FOR THE FIFTEEN MONTHS PERIOD ENDED 31ST MARCH 2016 [Pursuant to section 204(1) of theCompanies Act 2013 and Rule No.9 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014]

To

The Members

Diana Tea Company Limited Sir R. N. M. House

3B Lal Bazar Street

Kolkata - 700 001

1. We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by DIANA TEA COMPANY LIMITED(hereinafter called the company). Secretarial Audit was conducted in a manner thatprovided us a reasonable basis for evaluating the corporate conducts/statutory compliancesand expressing our opinion thereon.

2. Based on our verification of the Company books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit We hereby report that in our opinion the company hasduring the audit period covering the fifteen months period ended on March 31 2016complied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter:

3. We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the fifteen months period ended on March 31 2016according to the provisions of:

i) The Companies Act 2013 (the Act) and the rules made thereunder;

ii) The Securities Contracts (Regulation) Act 1956 ('SCRA') and the rules madethereunder;

iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

iv) Foreign Exchange Management Act 1999 and the rules and regulations made thereunderto the extent of Foreign Direct Investment Overseas Direct Investment and ExternalCommercial Borrowings (Not Applicable to the Company during the Audit Period);

v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ('SEBI Act') :-

(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 1992 and Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009 (Not Applicable to the Company during the Audit Period);

(d) The Securities and Exchange Board of India (Share Based Employee Benefits)Regulations 2014 as applicable (Not Applicable to the Company during the Audit Period);

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008; (Not Applicable to the Company during the Audit Period);

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009; (Not Applicable to the Company during the Audit Period);

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998; (Not Applicable to the Company during the Audit Period);

(i) The Securities and Exchange Board of India (Listing Obligations And DisclosureRequirements) Regulations 2015 and other applicable regulations /guidelines/circulars asmay be issued by SEBI from time to time to the extent applicable.

We further report that having regard to the compliance system prevailing in the Companyand on examination of the relevant documents and records in pursuance thereof the Companyhas complied with the following laws applicable specifically to the Company.

a) Food Safety and Standards Act 2006

b) Tea Act 1953

c) Plantations Labour Act 1951

d) Essential Commodities Act 1955

e) The Tea Waste (Control) Order 1959

f) Tea (Marketing) Control Order 2003

g) Weight And Measurement Act 1976

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries ofIndia effective from 1st July' 2015.

(ii) The Listing Agreements entered into by the Company with Bombay Stock ExchangeLtd. The Calcutta Stock Exchange Ltd. Delhi Stock Exchange Association Ltd. AhmadabadStock Exchange Ltd.;

The Company has applied for delisting of shares from i) The Calcutta Stock ExchangeLtd. ii) Delhi Stock Exchange Association Ltd. and iii) Ahmadabad Stock Exchange Ltd.

We further report that

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 clarifications on the agenda items beforethe meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings were carried out unanimously asrecorded in the minutes of the meetings of the Board of Directors or Committees of theBoard as the case may be.

We further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines.

We further report that during the audit period there are no specific events actionshaving a major bearing on the Company's affairs in pursuance of the laws rulesregulations guidelines standards etc referred to above.

This Report is to be read with our letter of even date which is annexed "AnnexureA" and forms an Integral Part of this Report.

For MR & Associates
Company Secretaries
Sd/-
[M R Goenka]
Partner
Place : Kolkata FCS No.:4515
Date : May 30 2016 COP No.:2551

"Annexure - A"

(TO THE SECRETARIAL AUDIT REPORT FOR THE FIFTEEN MONTHS PERIOD ENDED 31ST MARCH 2016)

To

The Members

Diana Tea Company Limited

Sir RNM House

3B Lal Bazar Street

Kolkata - 700 001

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial Records is the responsibility of the Management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the Audit practices and processes as where appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected inSecretarial Records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required we 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 and standards is the responsibilities of the management. Our examination waslimited to the verification of procedures on test basis.

6. The Secretarial Audit Report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.

For MR & Associates
Company Secretaries
Sd/-
[M R Goenka]
Partner
Place : Kolkata FCS No.:4515
Date : May 30 2016 COP No.:2551