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JK Agri Genetics Ltd.

BSE: 536493 Sector: Others
NSE: N.A. ISIN Code: INE690O01011
BSE LIVE 15:40 | 16 Aug 1019.90 -10.30
(-1.00%)
OPEN

1011.00

HIGH

1080.00

LOW

990.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 1011.00
PREVIOUS CLOSE 1030.20
VOLUME 2173
52-Week high 1233.00
52-Week low 393.15
P/E 27.93
Mkt Cap.(Rs cr) 367
Buy Price 0.00
Buy Qty 0.00
Sell Price 999.95
Sell Qty 39.00
OPEN 1011.00
CLOSE 1030.20
VOLUME 2173
52-Week high 1233.00
52-Week low 393.15
P/E 27.93
Mkt Cap.(Rs cr) 367
Buy Price 0.00
Buy Qty 0.00
Sell Price 999.95
Sell Qty 39.00

JK Agri Genetics Ltd. (JKAGRIGENETICS) - Director Report

Company director report

TO THE MEMBERS

Your Directors have pleasure in presenting the Annual Report together with the AuditedFinancial Statements of the Company for the financial year ended 31st March2016.

FINANCIAL RESULTS (Rs. in Crore)
Sales & Other Income 190.20
Profit before Finance Cost & Depreciation (PBIDT) 24.15
Profit before Depreciation 13.09
Profit before Tax 9.08
Profit after Tax 8.02
Surplus brought forward 14.28
Amount available for appropriation 22.30
Appropriations
- Dividend (incl. tax on Dividend) 1.30
- General Reserve -
- Surplus carried to Balance Sheet 21.00
22.30

DIVIDEND

Your Directors are pleased to recommend a dividend of ' 3/- per Equity Share of ' 10/-each (i.e. 30%) on the Equity Share Capital of ' 3.60 crores for the financial year ended31st March 2016. The Dividend outgo will be ' 1.30 crores (inclusive ofdividend tax of ' 0.22 crores).

OPERATIONS

During the year ended 31st March 2016 the Company achieved a turnover of '190.20 crores. EBIDTA of the Company during the year was ' 24.15 crores and Profit beforeTax was ' 9.08 crores.

Operations of the Company were negatively impacted due to two years of continuousfailed monsoons leading to failure of four crop cycles. Not only has this led to hardshipsfor the farmer but also has substantially reduced his affordability and cash flow. On topof it regulatory uncertainty added to the challenges faced in the year gone by.Combination of all these led to a slow-down in the industry and slow recovery of paymentsfrom the farmers. Hopefully the expected good monsoon this year will help companiesinvolved in the Agri economy as well as the farming community.

RESEARCH AND DEVELOPMENT

Over the years R&D spend of the Company has been significant. During the year2015-16 around 7% of its turnover was invested in R&D activities. The Company hasdeveloped and markets a number of its own hybrids across the crops of Cotton Corn PaddySunflower Bajra Jowar etc. Over the last few years the vegetable breeding programme hasalso produced leading hybrids in the areas of Okra Tomato and Chillies amongst others.

With this portfolio of products the Company has been able to access new marketsegments across the country. Apart from being an important player in cereal and cashcrops the Company is emerging as a strong player in the field of vegetables with someleading hybrids in Okra and Tomato having significant market shares in various regions ofIndia and neighbouring countries.

The Company continues to focus on its research programme as its backbone for growth. Inorder to speed up the product development cycle and stay ahead of competition yourCompany is using advanced techniques like Double Haploid Embryo Rescue DNA based methodsetc. Farmers’ growing expectations towards disease and pest tolerance has created newavenues in Vegetable Hybrid development where desired characters are being successfullytransferred from wild species into new hybrids.

To build a continuous pipe-line of products a dedicated team of scientists atdifferent locations are working on more than 100 hybrids that have new improved attributeswhich are in different stages of evaluation right from Multi-location testing to minikittrials and demonstration plots.

INDUSTRY OVERVIEW

The poor monsoons over the last two years during Kharif coupled with unseasonal rainsin the Rabi season has created havoc in the agricultural economy leading to dwindlingproductivity and large crop losses. The deficit monsoon during the year gone by hascompounded the problems of the farming community who were already reeling under thepressures of the previous bad monsoons. Since a large part of Indian agriculture is stillrain-dependent water scarcity has a significant impact on the crop output in these areas.Two years of back to back rain fall deficit coupled with lower subsidies and relativelynon-remunerative prices for their produce has put financial pressure on the farmers. Theskewed crop patterns and absence of advanced agronomy practices have added to the problemsof the farmers in States like Haryana Punjab Eastern Uttar Pradesh etc. where theycontinue to grow water intensive crops.

Also during the year pests like White Fly in Punjab and Pink Bollworm in Gujaratcaused extensive damage to the cotton crops in these states resulting in significantlosses to the farmers. This along with lack of farm credit has resulted in trying timesfor the farmers and has reduced their overall affordability. During the year theGovernment also regulated the Cotton seed pricing by fixing the maximum sales price.

Given the growing population in India the Indian Government understands thesignificance of these challenges and its impact on food security. Keeping this in mindthe Government has started a number of schemes to help the farmers some of thesignificant ones being:

• Soil Health Card

• Pradhan Mantri Fasal Bima Yojana

• Rashtriya Krishi Vikas Yojana

• Pradhan Mantri Krishi Sinchai Yojana

• National Agricultural Market

The intent to move subsidies for input and food grain into direct cash transfermechanism is also under consideration which should help plug subsidy leakages and ensuregreater availability of funds in the hands of the farmer as well as for strategic publicinvestments in the areas of irrigation grain storage systems and cold storages.Government’s initiative of crop insurance will also go a long way in providingstability to the farming community.

All these initiatives augur well for the industry in the long run.

OPPORTUNITIES THREATS RISK AND CONCERNS

Opportunities

The global population currently stands at 7.2 billion and is expected to rise to 9.3billion by 2050. This will lead to an increased demand for food. Increasing demand forfood along with reducing arable land will put pressure on Nations across the globe toincrease their Food productivity in turn creating a demand for high quality hybrid seeds.

Around 25% of the global crop output is lost due to attacks by pests weeds anddiseases causing stress for the farming community. This offers an opportunity forimproved technologies both GM and non-GM to face these challenges. Global water shortageis also pushing companies to develop new technologies for crops to consume less water inthe fields.

The opportunities in the agricultural sector are still under exploited. There areimmense opportunities for improving all-round technologies in the entire supply chainright from field to plate. High quality seeds with improved productivity as well as pestresistance capabilities continue to offer good potential. In fact seeds with the abilityto perform under various abiotic stresses are the need of the hour to improve the healthof the agricultural sector in India. Mechanisation and improved farming techniquesincluding crop protection technologies would help this sector grow. The Government’sincreasing budget allocation for the agricultural sector augurs well for the industry.There are new growth opportunities for Indian seed companies to explore markets in theAfrica’s and Asia’s that have agro-climatic conditions akin to India. Thegrowing Indian population and increasing per capita income will need doubling of our foodproduction over the next decade. Hence the industry is at an interesting crossroad whichhas its own set of challenges but also great opportunities ahead.

Threats Risk and Concerns

High reliance on rainfall for irrigation in India frequent intervention by theGovernment both at State and Central levels increasing weather variability and depressedcommodity prices globally overall economic conditions ever increasing cost of manpowerunavailability of skilled labour lack of liquidity in the hands of farmer withdrawal ofgovernment led subsidy schemes continue to pose challenge to the entire AgricultureSector including seed industry.

Even the supply of unprocessed seeds our basic raw material is also subject toproduction risk due to its heavy dependence on climatic conditions. Failure to get the rawmaterial owing to bad monsoon may impact our sale and market share. Better and timelyproduction planning focus on geographical diversity for production has enabled theCompany to minimize the production related risk.

Rising competition intensity rapid introduction of superior Hybrids shifting crop bythe farmer to the alternative crops exposes the company to market volatility and risk.

Your Company has been trying to mitigate its market and weather related risk bydiversifying into large number of crops which can be sold both in Kharif and Rabi season.

HUMAN RESOURCE DEVELOPMENT

Apart from R&D the other important pillar is the people in your Company. YourCompany has been focussing in improving the quality of talent by hiring people from goodmanagement institutes as well as by conducting focussed Management Development Programmesby senior faculties in both the areas of Management and Technical Skills. The Company isalso strengthening employee involvement through communication meetings cross functionalteams Young Leader Forums Suggestion Schemes etc. Members of the team also create asense of community by involving them in various CSR activities of the Company. In themission of creating sustainability and building a strong agile culture the Companyparticipates in employee surveys conducted by external agencies and also benchmarks itselfwith other competitors and best work places. The Company continues to endeavour to offer amotivating but challenging work environment where performance is recognised and employeesare motivated to realise their full potential.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements and no material reportable weakness was observed in the system.Further the Company has in place adequate internal financial controls commensurate withthe size and nature of its operations.

The Company also has robust Budgetary Control System and Management Information System(MIS) which are backbone of the Company for ensuring that your Company’s assets andinterests are safeguarded.

EXTRACT OF ANNUAL RETURN

An Extract of the Annual Return as on 31st March 2016 in the prescribed FormMGT-9 is attached as Annexure - 1 to this report and forms part of it.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

The particulars of loans guarantees or securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the financialstatements.

RELATED PARTY TRANSACTIONS

During the financial year ended 31st March 2016 all the contracts orarrangements or transactions entered into by the Company with the Related Parties were inthe ordinary course of business and on arm’s length basis and were in compliance withthe applicable provisions of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.

Further the Company has not entered into any contract or arrangement or transactionwith the related parties which could be considered material in accordance with the policyof the Company on materiality of Related Party Transactions. In view of the abovedisclosure in Form AOC-2 is not applicable.

The Related Party Transaction Policy as approved by the Board is available on thewebsite of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Shri Bharat Hari Singhania and Dr. Raghupati Singhania retire by rotation and beingeligible offer themselves for re-appointment at the forthcoming AGM.

The Board of Directors of the Company re-appointed Shri S.K. Gupta as Whole-timeDirector of the Company with the designation “President & Director” for aterm of three years commencing 1st September 2016 subject to the approval ofthe members of the Company at the forthcoming AGM and other requisite approval asrequired.

All Independent Directors of the Company have given declarations that they meet thecriteria of independence as provided in Section 149(6) of the Companies Act 2013 andRegulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 is annexed to this Report as Annexure - 2 and forms part of it.

DEPOSITS

The Company has neither invited nor accepted any deposits from the public.

AUDITORS

(a) Statutory Auditors and their Report

M/s Lodha & Co. Chartered Accountants have been appointed as Auditors of theCompany to hold the office from the conclusion of the 14th Annual GeneralMeeting (AGM) held on 6th September 2014 until the conclusion of the 17thAGM to be held in the year 2017 subject to ratification of their appointment by themembers at the respective AGMs to be held in the years 2015 and 2016. Accordingly beingeligible matter relating to the appointment of the Auditors will be placed forratification by members at the forthcoming AGM. The observations of the Auditors in theirReport on Accounts and the financial statements read with relevant notes areself-explanatory.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2015-16. TheReport given by him for the said financial year in the prescribed format is annexed tothis Report as Annexure -3. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

PARTICULARS OF REMUNERATION

Disclosure of the ratio of the remuneration of each director to the medianemployee’s remuneration and other requisite details pursuant to Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 as amended is annexed to this Report as Annexure -4. Further Particulars of Employees pursuant to Rule 5(2) & (3) of the aboveRules form part of this report. However in terms of provisions of Section 136 of thesaid Act the Report and Accounts are being sent to all the members of the Company andothers entitled thereto excluding the said particulars of employees. Any memberinterested in obtaining such particulars may write to the Company Secretary. The saidinformation is available for inspection at the Registered Office of the Company duringworking hours.

CORPORATE SOCIAL RESPONSIBILITY

Since inception your Company considers itself a responsible corporate citizen and hasbeen involved in undertaking projects and interventions for overall development andwelfare of the society. It has been working closely with the farming community in areas ofimparting agricultural knowledge and promoting preventive healthcare rural developmentand livelihood enhancement projects.

The Company has requisite Corporate Social Responsibility (CSR) Policy in accordancewith the provisions of the Companies Act 2013 and rules made thereunder. The contents ofthe CSR Policy are disclosed on the website of the Company.

The Annual Report on the CSR activities undertaken by the Company during the financialyear under review in the prescribed format is annexed to this Report as Annexure-5

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the financial year under review there were no significant and material orderspassed by the regulators or Courts or Tribunals which would impact the going concernstatus of the Company and its future operations.

CORPORATE GOVERNANCE-including details pertaining to Board Meetings Nomination andRemuneration Policy Performance Evaluation Risk Management Audit Committee and VigilMechanism.

Your Company reaffirms its commitment to good corporate governance practices. Pursuantto Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Management Discussion and Analysis Corporate Governance Report andAuditors’ Certificate regarding compliance of conditions of Corporate Governance aremade a part of this Annual Report.

The Corporate Governance Report which forms part of this Report also covers thefollowing:

(a) Particulars of the four Board Meetings held during the financial year under review.

(b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofDirectors.

(c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.

(d) The details with respect to Composition of Audit Committee and establishment ofVigil Mechanism.

(e) Details regarding Risk Management.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and

(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.

CAUTIONARY STATEMENT

“Management’s Discussion & Analysis Report” contains forward lookingstatements which may be identified by the use of the words in that direction orconnoting the same. All statements that address expectation or projections about thefuture including but not limited to statements about the Company’s strategy forgrowth product development market position expenditures and financial results areforward looking statements. The Company’s actual results performance or achievementscould thus differ materially from those projected in such forward-looking statements. TheCompany assumes no responsibility to publicly amend modify or revise any forward -looking statements on the basis of any subsequent development information or events.

ACKNOWLEDGEMENTS

Your Directors wish to acknowledge and place on record the commitment and dedication onthe part of the employees of your Company in achieving good results.

Your Directors would also like to acknowledge and record their appreciation of thecontinued support and assistance received by the Company from its valued CustomersDealers Suppliers Shareholders Banks and various Central and State Government Agencies.

On behalf of the Board
Date : 2nd August 2016 Bharat Hari Singhania
New Delhi Chairman