You are here » Home » Companies » Company Overview » Harrisons Malayalam Ltd

Harrisons Malayalam Ltd.

BSE: 500467 Sector: Agri and agri inputs
NSE: HARRMALAYA ISIN Code: INE544A01019
BSE LIVE 12:24 | 21 Aug 76.80 0.55
(0.72%)
OPEN

77.10

HIGH

78.75

LOW

76.50

NSE 12:08 | 21 Aug 77.35 1.25
(1.64%)
OPEN

76.10

HIGH

78.75

LOW

76.10

OPEN 77.10
PREVIOUS CLOSE 76.25
VOLUME 6737
52-Week high 102.45
52-Week low 55.25
P/E
Mkt Cap.(Rs cr) 142
Buy Price 76.80
Buy Qty 170.00
Sell Price 77.45
Sell Qty 469.00
OPEN 77.10
CLOSE 76.25
VOLUME 6737
52-Week high 102.45
52-Week low 55.25
P/E
Mkt Cap.(Rs cr) 142
Buy Price 76.80
Buy Qty 170.00
Sell Price 77.45
Sell Qty 469.00

Harrisons Malayalam Ltd. (HARRMALAYA) - Director Report

Company director report

The Directors have pleasure in presenting the Annual Report and Audited Accounts ofHarrisons Malayalam Limited for the year ended March 31 2016.

1. Financial Highlights

Rs. in Lacs

Year ended Standalone Consolidated
31.03.2016 31.03.2015 31.03.2016 31.03.2015
Revenue from Operations 28485.55 32663.86 28485.55 32663.86
Other Income 316.06 326.46 316.06 326.46
Income from discontinued operations 58.28 445.74 58.28 445.74
Total Income 28859.89 33436.06 28859.89 33436.08
Profit / (Loss) before Tax (4568.24) (3525.87) (4566.79) (3525.87)
Profit / (Loss) after Tax (4568.24) (3525.87) (4566.79) (3525.87)
Surplus brought forward from previous year 5876.19 9402.06 5874.74 9400.61
Profit available for appropriation 1307.95 5876.19 1307.95 5874.74
Appropriations
General Reserve - - - -
Proposed Dividend - - - -
Dividend Tax - - - -
Balance carried forward 1307.95 5876.19 1307.95 5874.74

2. Dividend

The Board of Directors has not recommended dividend for the year ended March 31 2016in view of the losses incurred by the Company.

3. Performance

During the year under review the Company has recorded a revenue of '284.85 crore fromits operations as compared to '326.64 crore for the previous year. The total revenueincluding other income and income from discontinued operations for the financial year2015-16 was '288.59 crore compared to '334.36 crore for the previous year. The lossincurred by the Company for the financial year 2015-16 was '45.68 crore. There was a 17day industry wide strike in the plantations in Kerala during September- October 2015which had a severe impact on the performance of the Company.

Tea:

Tea harvested from own gardens during Financial Year 2015-16 is 9620 MT (12068 MT inthe Financial Year 2014-15). Bought leaf operations in tea for Financial Year 2015-16 is3838 MT (4455 MT in Financial Year 2014-15). Together with the Bought Operations thetotal production was 13458 MT as compared to the total production of 16523 MT in theFinancial Year 2014-15. For the year ended March 2016 the average price realized per kgof tea was '107.05 as against '96.29 realized during the Previous Year. Tea exported was3794 MT as against 2525 MT exported last year.

Rubber:

Rubber harvested from own gardens stood at 4666 MT during Financial Year 2015-16 and isslightly higher than 4638 MT achieved during Financial Year 2014-15. Bought operations inRubber for Financial Year 2015-16 at 4184 MT which is lower than the 4930 MT of FinancialYear 2014-15 by 15%. For the year ended March 2016 the average price realized per kg ofrubber was '136.66 as against '149.72 realized during the previous year. Income fromRubber Tree felling for the season 2015-16 could not be accounted due to the ban order onfelling of Rubber trees issued by the Special Officer appointed by the Government ofKerala.

140 hectares in Kumbazha Rubber Estate encroached by trespassers continue to remainuntapped.

Update on HML Land Matters

The Company continued to be in the news - misquoting land law violations amongst otherallegations. We would like to reiterate to all our stakeholders that the Companylegitimately holds all its lands with valid title deeds and the required approvals. TheCompany and its predecessors have been in absolute possession and enjoyment of these landsfor over 100 years. All these lands are subjected to payment of Land Tax (which theCompany has been paying since the early 1900s when the lands were originally acquired)and would never fall under the Kerala Land Conservancy Act which in any case excludesregistered land holders and tax paid lands from the definition therein of "Propertyof the Government".

Even after the petition filed by the Kerala Government seeking to declare theCompany's lands as Government lands was dismissed by the High Court of Kerala in 2013the Revenue Department of the Government has been continuing with its proceedings againstthe Company. Various steps initiated by the Special Officer under the Kerala LandConservancy Act against the properties held by the Company including orders banning thefelling of rubber trees was challenged before the High Court of Kerala. The Company hasthrough proper legal remedies successfully resisted all attempts to resume its lands andthe status quo order passed by the High Court against resumption of Company's lands isstill in force. The issues are now pending consideration before a Division Bench of theHigh Court of Kerala.

We wish to reiterate and assure that all operations of your Company are within theframework of law and that all its lands are supported by valid title deeds. The Company isconfident that it will be able to successfully establish its credentials and legitimacy ofits operations in the Court of law.

4. Listing

The equity shares of the Company are listed in the Bombay Stock Exchange Limited andNational Stock Exchange of India Limited. Cochin Stock Exchange where the shares of theCompany were listed has ceased to operate as a stock exchange vide the exit order issuedby Securities Exchange board of India dated December 23 2014.

5. Fixed Deposits

The Company does not have any Fixed Deposit as on March 31 2016.

6. Particulars of Loans Guarantees or Investments

In terms of the provisions of Section 186(11) of the Companies Act 2013 theprovisions of Section 186(4) requiring disclosure in the financial statements of the fullparticulars of loans given investments made or guarantees given or securities providedand purpose thereof is not applicable to the Company.

7. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

Information relating to conservation of energy research & development technologyabsorption and foreign exchange earnings and outgo as required under Section 134 of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 is given as Annexureforming a part of this Report (Annexure A).

8. Corporate Governance

A report on Management Discussion and Analysis is attached herewith (Annexure B). Aseparate Report on Corporate Governance (Annexure C) along with Additional ShareholderInformation (Annexure D) as prescribed under the SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 is annexed as a part of this Report along with thepracticing Company Secretary's Certificate.

9. Subsidiary Companies

As at March 31 2016 the Company had three wholly owned subsidiary companies namelyHML Engineering Company Limited* Enchanting Plantations Limited (EPL) and HarmonyPlantations Limited (HPL). As EPL and HPL were incorporated specifically to facilitate theComposite Scheme of Arrangement and Amalgamation the investments held by the Company inthese companies are treated as current investments and hence have not been considered inthe consolidation of financial statements. No Companies have become or ceased to besubsidiaries joint ventures or associate Company during the year.

As per sub section (3) of Section 129 of the Companies Act 2013 read with Rule 5 ofthe Companies (Accounts) Rules 2014 a statement containing salient features of thefinancial statements and performance of the Company's subsidiaries for the year endedMarch 31 2016 is included as per the prescribed format in this Annual Report. The AnnualAccounts of these subsidiaries are uploaded on the website of the Company. The AnnualAccounts of these subsidiaries and the related detailed information will be made availableto any Member of the Company seeking such information at any point of time and are alsoavailable for inspection by any Member at the Registered Office of the Company.

*Struck off w.e.f. June 1 2016.

10. Consolidated Financial Statements

In accordance with Section 129(3) of the companies Act 2013 and Regulation 34 of theSEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 the ConsolidatedFinancial Statements of the Company including the financial details of all the subsidiarycompanies of the Company forms part of this Annual Report. The Consolidated FinancialStatements have been prepared in accordance with the Accounting Standards issued by theInstitute of Chartered Accountants of India.

11. Directors

In terms of the provisions of Section 152 of the Companies Act 2013 and article 105of the Articles of Association of the Company Mr. Sachin Nandgaonkar (DIN- 03410739)retires by rotation at the forthcoming Annual General Meeting and being eligible offershimself for reappointment. Ms. Surbhi Singhi has been appointed as an Additional Directorat the meeting of the Board of Directors held on November 6 2015 consequent to theresignation of Ms. Sucharita Basu on September 2015. Ms. Surbhi has been confirmed as anIndependent Director by the Shareholders through Postal Ballot as on February 9 2016. Mr.Dharmaraj was reappointed as a Whole-time Director by the last Annual General Meeting tohold office from January 1 2016 to September 30 2016. He is proposed to be reappointedas the Whole-time Director to hold office till September 30 2017 at the ensuing AnnualGeneral Meeting.

The details of familiarisation programmes imparted to independent directors can beaccessed at the website of the Company at link http://www.harrisonsmalayalam.com/newsite/pdf/familarisation_policy.pdf

The criteria of making payments to non-executive directors can be accessed website ofthe Company at link http://www.harrisonsmalayalam.com/newsite/pdf/Nomination_Remuneration_Policy.pdf

In compliance with Regulation 36 of the SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 brief resume of the Director proposed to be re-appointedis attached along with the Notice to the ensuing Annual General Meeting.

Five meetings of the Board of Directors were held during the year.

11.1 Declaration by Independent Directors

Pursuant to sub section (6) of Section 149 of the Companies Act 2013 the IndependentDirectors of the Company viz. Mr. Haigreve Khaitan (DIN- 00005290) Mr. G Momen (DIN-00402662) Mr. J M Kothary (DIN- 00015254) and Ms. Surbhi Singhi (DIN- 03275338) havegiven declaration to the Company that they qualify the criteria of independence asrequired under the Act.

11.2 Board Evaluation

The Board has carried out an annual evaluation of its own performance the directorsand also committees of the Board based on the guideline formulated by the Nomination &Remuneration Committee. Board composition quality and timely flow of informationfrequency of meetings and level of participation in discussions were some of theparameters considered during the evaluation process.

Further the Independent Directors of the Company met once during the year to reviewthe performance of the Nonexecutive directors and performance of the Board as a whole.

11.3 Policy on Remuneration to Directors KMP and Senior Management Personnel

The Board based on the recommendation of the Nomination and Remuneration Committee hasformulated a policy on remuneration of Directors Key Managerial Personnel and SeniorManagement of the Company. The policy covers the appointment including criteria fordetermining qualification positive attributes independence and remuneration of itsDirectors Key Managerial Personnel and Senior Management Personnel. The Nomination andRemuneration Policy is annexed as Annexure E to this report.

12. Auditors

Messrs Price Waterhouse Chartered Accountants were re-appointed as Statutory Auditorsto hold office from the conclusion of the Thirty Seventh Annual General Meeting held onSeptember 26 2014 till the conclusion of the Fortieth Annual General Meeting to be heldin 2017 subject to ratification by the Members at the Thirty Eighth and Thirty NinthAnnual General Meeting of the Company. The same was ratified by the members at the ThirtyEighth Annual General Meeting. Accordingly the Notice convening the Thirty Ninth AnnualGeneral Meeting includes a resolution seeking such ratification by the members of there-appointment of the Auditors.

There is no qualifications in the Statutory Auditors Report for the Financial Year2015-16.

The Company has received a letter from the Statutory Auditors to the effect that theratification of their re-appointment if made at the forthcoming Annual General Meetingwould be in accordance with the limits prescribed under 141(3)(g) of the Act.

13. Cost Audit

Messrs. Shome & Banerjee Cost Accountants were appointed as Cost Auditors of theCompany for conducting Cost Audit for the year ended March 31 2016. The CentralGovernment has duly approved their appointment.

Cost Audit Report and the Compliance Report for the year ended March 31 2015 werefiled with the Central Government on October 21 2015. The due date for filing the CostAudit Report was October 27 2015.

14. Secretarial Audit

Secretarial Audit of the secretarial and related records of the Company was conductedduring the year by SVJS & Associates Company Secretaries and a copy of thesecretarial audit report is annexed as Annexure F which forms part of this report. Theobservation in the Secretarial Audit Report is self explanatory.

15. Corporate Social Responsibility

Consequent to the losses incurred by the Company during the previous 2 years theaverage profit of the previous 3 years is negative. Hence the Company is not required toincur any expenditure on CSR under the purview of the Act. However the Company continuesto carry on its various CSR activities which is contained in this Annual Report. Themembers of the Committee are Mr. Golam Momen Mr. Sachin Nandgaonkar Mr. P Rajagopalanand Mr. N Dharmaraj. The committee has met once in the Financial Year on February 112016. The CSR Policy can be accessed at the website of the Company at link http://www.harrisonsmalayalam.com/newsite/pdf/CSR_policy_HML_FINAL.pdf

16. Whistle Blower Policy

Pursuant to Section 177 of the Companies Act 2013 and Regulation 22 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has adopted vigilmechanism in the form of Whistle Blower Policy to deal with instances of fraud ormismanagement if any. The Policy can be accessed at the website of the Company at linkhttp:// www.harrisonsmalayalam.com/newsite/pdf/vigil_mechanism_policy.pdf.

17. Related Parties Transactions

There was no materially significant contract or arrangement or transaction with theCompany's Promoters Directors Management or their relatives that could have had apotential conflict with the interests of the Company.

18. Anti-Sexual Harassment Policy

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013 covering all employees of the Company. Internal complaints committee set up forthe purpose did not receive any complaint for redressal during the year.

19. Extract of Annual Return

An extract of the Annual Return as required to be attached is annexed as Annexure G andforms a part of this report.

20. Risk Management

The Company has constituted a Risk Management Committee. The details of the committeeand its terms of reference are set out in the Corporate Governance Report. The Company hasalso adopted a Risk Management Policy in accordance with the provisions of the Act and17(9) & 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation2015.

21. Internal Control Systems & their Adequacy

The Company has a well placed proper and adequate Internal Control environmentcommensurate with the size scale and complexity of its operations. This environment interalia:

• provides assurance on orderly and efficient conduct of operations;

• security of assets;

• prevention and detection of frauds/errors;

• accuracy and completeness of accounting records; and

• timely preparation of reliable financial information.

The Internal Financial Controls in the Company are implemented in the framework of theMulti Level Control and Monitoring system which includes :

(i) Management Control

(ii) Review by Senior Management

(iii) Supervision By Board of Directors and Audit Committee

The above procedures are further strengthened by independent audits being carried outby Statutory audit Tax audit Cost audit and Secretarial audit.

22. Awards & Achievement

During the year under review the Company achieved accreditations and awards for itsbest manufacture practices. The major recognition include CII- Excellence Award inEnvironment Health & Safety (EHS) for the year 2015-16 for Kumbazha and WentworthEstate - Kerala State Pollution Control Board Award 2015-16 for sustained efforts incontrolling Pollution and Environment Protection - Mooply Centrifuge Latex Factory.

In continuation of the Company's pursuit for excellence Chundale Tea Factory in Wynaadreceived the prestigious Safety Award from the Department of Factories and BoilersGovernment of Kerala for the year 2015. HMLs Surianalle Estate has received theprestigious TGLIA 2016 (The Golden Leaf India Award) Award for its superior quality in CTCTeas. Also the Wentworth Pattumallay and Lockhart Factories of the Company has securedeight awards in the orthodox Tea category in the TGLIA competition held at Dubai in April2016.

23. Particulars of Employees

The information as required in accordance with Section 134 of the Companies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed as Annexure H and forms a part of this report.

The information required under Rule 5(i) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is annexed as Annexure I and forms a part of thisreport.

24. Prospects

Plantation business is largely influenced by external factors like weather andvolatility of primary markets. The company continues to be a strong player in the SouthIndian plantation industry and hopes to enlarge its operations through processingpurchased raw material and trading in both tea and rubber. Sustained efforts to improvelabour productivity should to some extent alleviate escalating labour cost - a majorconcern for all South Indian plantations.

Realizations from both tea and rubber are expected to improve in view of the Company'scontinued focus on product quality coupled with encouraging market outlook for tea in thecoming months. Financial Year 16-17 is expected to be significantly better in terms ofperformance as initiatives started earlier make positive contributions.

25. Directors’ Responsibility Statement

The Board of Directors would like to affirm that the Financial Statements of theCompany for the year under review conform in their entirety to the requirements of theCompanies Act 2013.

In terms of clause (c) of sub-section (3) and sub-section (5) of Section 134 of theCompanies Act 2013 the Directors of the Company hereby state and confirm that:

1. In the preparation of annual accounts for the financial year ended March 31 2016the applicable accounting standards have been followed along with proper explanationrelating to material departure if any;

2. The Directors had selected such accounting policies and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company in the balance sheet as at March 31 2016 andthe statement of profit and loss for the period from April 1 2015 to March 31 2016;

3. 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;

4. The Directors had prepared the annual accounts for the financial year ended March31 2016 on a going concern basis;

5. Directors have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and are operating effectively; and

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

26. Industrial Relations

Plantation workers in the State of Kerala went on a 17 day strike demanding an increasein wages.

Acknowledgements

The Board wishes to place on record its sincere appreciation for the continuedassistance and support extended to the Company by its customers vendors bankersGovernment authorities and employees.

Your Directors are also grateful for your continued encouragement and support.

On behalf of the Board of Directors

Sachin Nandgaonkar Kaushik Roy)
Mumbai (DIN- 03410739) (DIN- 06513489)
August 17 2016 Director Director

Particulars as required under Section 134(m) of the Companies Act 2013 (Annexure‘A’ to the Directors’ Report)

Pursuant to Rule 8(3) of the Companies (Accounts) Rules 2014 particulars ofConservation of Energy Technology Absorption etc. for the year ended March 31 2016

A) Conservation of Energy

i) Steps taken or impact on conservation of energy

Multiple energy conservation measures were taken across all manufacturing facilitiessuch as strong vigilance employee awareness and tag on energy waste. The significantenergy conservation measures undertaken by the Company during the year were

Avoiding one number of 7.5 hp Trough in Arrapetta tea factory has resulted in a savingin consumption of 4.8 units per hour. The installation of 100 KVAr Capacitors in ChundaleTea Factory has improved the power factor to

0.94 the Chundale Tea Factory is earning an incentive of '64800/- per year from KeralaState Electricity Board. Installation of energy efficient motors at Achoor Estate have anadvantage of efficiency improvement in induction motors of 6.57 units per hour the yearlycost savings being '204984/-. The load affordability in DG sets at Achoor Tea Factory hasbeen enhanced by adding 120 KVAr Capacitors. Without any improvement in the DG capacitiesby enhancing the load affordability the connected load could be increased by 550 hp.Excess loading DG tripping & other failures are also made affordable with present DGSETS by adding enough Capacitors and its benefits are counted by cost of new 750 KVA DGsets.

ii) Steps taken by the Company to utilize alternate sources of energy

The Scope of implementing the Boot system of solar energy is under study. The datacollection of Effective intensity of light rays roof top area funding from third partyetc. is under progress.

Instead of using firewood & coal which leads to deforestation and pollutionrespectively the Company uses environment friendly Briquettes made from Agri-waste in itsfactories.

B) Technology Absorption

i) Efforts made towards technology absorption and benefits derived thereupon

The existing old version of the transformer at Pattumalay factory would be replacedwith an advanced version of OLTC transformer along with the Automatic power factorcorrection panel. This would ensure steady voltage in the system and maintain the powerfactor at unity in the process help achieve the target of Zero breakdown and improvedproductivity.

Old re-winded motors in factories would be replaced with the latest technology EEmotors in a phased manner which would result in lower power consumption. Conventionalsteel chimneys in tea factories would be replaced with concrete chimneys in a phasedmanner. This would reduce the maintenance costs.

Replacing the existing bulbs / lamps with energy efficient LED lamps across allfactories offices and bungalows in a phased manner would help reduce electricityconsumption and thereby power cost.

ii) Expenditure incurred on R & D

We have initiated studies and are trying to move into the area of Biotechnology awayfrom Chemistry and Biochemistry which will entail a greener foot print. Trials which arebeing conducted using enzymes and beneficial microbes to replace acids and otherchemicals. We have achieved partial success in area of de-proteinisation chemistry andwork is on.

C) Foreign Exchange earnings and Outgo

During the year 2015-16 the foreign exchange earned in terms of actual inflows was'4185.95 lacs and foreign exchange outgo in terms of actual outflow was '24.88 lacs.

FORM A (FORMING PART OF ANNEXURE ‘A’)

POWER AND FUEL CONSUMPTION

TEA

RUBBER

Twelve Twelve Twelve Twelve
Months ended 31-03-2016 Months ended 31-03-2015 Months ended 31-03-2016 Months ended 31-03-2015
1. ELECTRICITY
(a) Purchased
Units (KWH) 9722476 11339020 1659208 2155161
Total Amount (Rs. ) 64801528 72997697 11501228 14921739
Rate/Unit ('/KWH) 6.67 6.44 6.93 6.92
(b) Own Generation
Through Diesel Generator
Units (KWH) 594937 706322 137549 146230
Units per litre of Diesel Oil (KWH) 2.59 2.79 2.15 2.56
Fuel - Cost/Unit ('/KWH) 19.39 21.31 23.92 22.99
2. FIREWOOD
Total Quantity of Firewood (Cu.Mtr) 32107 31900 1855 2555
Total Amount (') 38389543 38344138 2414610 2778295
Rate/Cu.Mtr (') 1195.67 1202.02 1301.51 1087.48
3. OTHERS
HSD Oil for Transport & Material Handling etc.
Quantity (K.Ltr) 77.74 88.17 55.88 87.33
Total Cost (') 4145728 5258218 3002221 5204374
Rate/Unit Cost ('/K.Ltr 53325 59638 53725 59596
Consumption per Unit of Production
Products
TEA/RUBBER (Kgs.) 13458000 16523000 8850000 9568000
Energy Used:
Electricity (incl. own generation) (KWH/Kg) 0.77 0.73 0.20 0.24
Briquetted Fuel (Kgs.) 4874981 4744450 - -
Veneer Waste (Kgs.) 3425950 5466085 - -
Coconut Shells (Kgs.) - - - 9620
Wood Waste (Kgs.) 65724 152805 - -