Kaveri Seed Company Limited
The Directors have pleasure to present their 29th Annual Report and the auditedAnnualAccounts for the Year ended 31st March 2016.
| || ||Rs in Lakhs |
|Particulars ||Year ended ||Year ended |
| ||31 March 2016 ||31 March 2015 |
|Total Income ||86491.17 ||113117.74 |
|Profit before Depreciation ||20775.49 ||32171.88 |
|Profit before Tax ||18282.46 ||30944.00 |
|Profit After Tax ||17712.20 ||30184.30 |
|Transfer to General Reserve ||1000.00 ||1000.00 |
In the face of low precipitation of monsoon condition and the consequent to severecompetitive pressures your company strengthened its presence in the Seed Industry andimproved its marketing reach. During the financial year your Company posted a net profitafter tax of Rs 17712.20 Lakhs as compared to previous year PAT of Rs 30184.30 Lakhs(41.31% decline). An overall deficit monsoon in the Kharif season 2015 resulted in theCompanys turnover of Rs 84895.50 Lakhs compared to Rs 111555.51 Lakhs forthe previous year (decline 23.89%)
During the financial year the consolidated revenue from operations of Rs 89277.90Lakhs against the previous year Rs 116094.47 Lakhs (23.09% decline) and theConsolidated net profit of Rs 17268.46 Lakhs compared to previous year PAT of Rs 30095.77Lakhs (decline by 42.62%).
FUTURE PROSPECTS& OUT LOOK
Agriculture plays an integral role in Indias economy. Over 58% of ruralhouseholds depend on agriculture as their primary means of livelihood. As per estimates bythe Central Statistics Office (CSO) the share of agriculture and allied sectors(including agriculture livestock forestry and fishery) was 15.35% of the Gross ValueAdded (GVA) during 201516 at 201112 prices. According to the Department ofIndustrial Policy and Promotion (DIPP) the Indian agricultural services and agriculturalmachinery sectors have cumulatively attracted Foreign Direct Investment (FDI) equityinflow of about US$ 2261 million from April 2000 to December 2015. The countrysagriculture sector is expected to grow by 6% in FY 2016-17 if normal monsoon prevailsduring the June-September 2016.
Indias seed industry is growing at a compound growth rate (CAGR) of 8.4% involume terms from FY 2009 to FY 2015 to reach 3.5 million tonnes in consumption(Source: ICRA). The industry is expected to increase significantly on account of improvedseed replacement ratio (SRR) and rising adoption of high-yielding hybrid seeds. TheGovernment of Indias favourable policy environment aimed at supporting the usage ofseeds through the National Seeds Plan and bolstering agricultural productivity through theNational Food Security Mission (NFSM) also augur well for the industry.
During the financial year 2015-16 your Company has declared and paid an InterimDividend of Rs 2.50 per equity share. Your Directors have not recommended any finaldividend for the financial year 2015-16. An amount of Rs 10.00 Crores has been transferredto general reserve as per the provisions of Companies Act 2013 and Rules there under.
RESEARCH AND DEVELOPMENT
The Companys R&D comprises state-of-the-art Bio-technology lab modern seedtesting lab company owned central research farm for generation and evaluation of breedingmaterial and several satellite farms for crop specific research seed production research(SPR) breeder seed production (BSP) and GOT. Our R&D is recognized by the Departmentof Scientific and Industrial Research (DSIR) and is manned by a competent team ofqualified breeders and trained technicians. The Company has large collection of cropspecific germ plasm well documented and conserved in Gene Bank.
Your Company has equipped with state-of-the-art Seed testing laboratory at Pamulaparthyplant for quick and reliable method of testing of seed lots. Seed lots are thoroughlychecked by the quality control department for genetic and physical purity germination.The company has set quality benchmarks based on Indian Minimum Seed CertificationStandards(IMSCS) to supply quality seed of premier hybrids for ensuring better seedlingemergence.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the provisions of the Companies Act 2013 and the AccountingStandards AS-21 and AS-27 on consolidated financial statements read with the AccountingStandard AS-23 on Accounting for Investments in Associates your Directors have pleasurein attaching the consolidated financial statements for the financial year ended March 312016 which forms part of the Annual Report.
The Company has 4 subsidiaries as of 31 March 2016. There was no material change in thenature of the business carried on by the subsidiaries. As per the provisions of Section129 of the Companies Act 2013 read with Companies (Accounts) Rules 2014 a separatestatement containing the salient features of the financial statements of the subsidiaryCompanies is prepared in Form AOC-1 and is attached to the Financial Statements ofthe Company.
In accordance with the provisions of the Companies Act 2013 the Balance SheetStatement of Profit and Loss and other documents of the subsidiary companies are beingmade available on the website of the Company and are not attached with the Annual Accountsof the Company. The Company will make available the Annual Accounts of the subsidiarycompanies and the related information to any member of the Company who may be interestedin obtaining the same. The annual accounts of the subsidiary companies will also be keptopen for inspection by any member at the Registered Office of the Company and that of therespective subsidiary companies.
INDIAN ACCOUNTING STANDARDS IFRS CONVERGE STANDARDS
The Ministry of Corporate Affairs vide its notification dated 16th February 2015 hasnotified the Companies (Indian Accounting Standards) Rules 2015. In pursuance of the saidnotification the Company will adopt Indian Accounting Standards with effect from 01stApril 2016 with the comparatives for the period ending 31st March 2015. Theimplementation of Indian Accounting Standards (IAS) is a major change process for whichthe Company has set up a dedicated team and is providing desired resources for itscompletion within the time frame. The impact of the change on adoption of said IAS isbeing assessed.
STATUTORY AUDITORS & AUDITORS REPORT
M/s. P.R.Reddy & Co. Chartered Accountants (Firm Registration No. 003268S) who areStatutory Auditors of the Company hold office up to the forthcoming Annual General Meetingand recommended for re-appointment to audit the accounts of the Company for the financialyear 2016-17. As required under the provisions of Section 139 of the Companies Act 2013the Company has obtained written confirmation from M/s. P.R.Reddy & Co. that theirappointment if made would be in conformity with the limits specified in the saidsection.
The statutory auditors report is annexed to this report. There are nospecifications reservations adverse remarks on disclosure by the statutory auditors intheir report. They have not reported any incident of fraud to the Audit Committee of theCompany during the year under review.
The Board of Directors of the Company has appointed a professional firm of M/s.M.Bhaskar Rao & Co. Chartered Accountants to conduct internal audit of the Companyfor the financial year ended 31 March 2017.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has laid down set of standards which enables to implement internalfinancial control across the organization and ensure that the same are adequate andoperating effectively. The Audit Committee of the Board of Directors actively reviews theadequacy and effectiveness of the internal control systems and suggests improvements tostrengthen the same. The Audit Committee of the Board of Directors Statutory Auditors andFinance Heads are periodically apprised of the internal audit findings and correctiveactions taken. Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the internal Audit function reports to the Chairman of the Audit Committee.
INTERNAL FINANCIAL CONTROLS
The internal financial controls (IFC) framework at Kaveri Seeds encompasses internalcontrols over financial reporting (ICOFR) as well as operational controls that have beenput in place across all key business processes of the Company. The internal controls aredesigned to facilitate and support the achievement of the Companys businessobjectives and such controls do enable the Company to adapt to changing and operatingenvironment to mitigate risks to acceptable levels and to support sound decision makingand good governance.
Details in respect of adequacy of internal financial controls with reference to thefinancial statements are briefly iterated below:
a. The Company maintains all its major records in ERP System.
b. The Company has appointed internal auditors to examine the internal controlswhether the workflow of the organization is being done through the approved policies ofthe Company. In every quarter during the approval of financial statements internalauditors present the internal audit report and the management comments on the internalaudit observations; and
c. The Board of Directors of the Company has adopted various policies such as relatedparty transactions policy whistle blower policy policy to determine materialsubsidiaries and such other procedures for ensuring the orderly and efficient conduct ofits business for safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(C) of the Companies Act 2013 your Directors confirm that:
i) The applicable accounting standards have been followed in the preparation of theAnnual Accounts.
ii) Such Accounting policies have been selected and applied consistently and judgmentsand estimates made when required that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period.
iii) Proper and sufficient care has been taken 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.
iv) The Directors have prepared the annual accounts on a going concern basis.
v) Proper Internal Financial Controls were in place to be followed by the Company andthat the financial controls were adequate and were operating effectively.
vi) Proper systems devised to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
Changes in Directors and Key Managerial Personnel:
Resignation of Director:
Mr. R. Venumanohar Rao tendered resignation as the Director and Whole time Director ofthe Company effective from 01 April 2016. Your directors place on record their sincereappreciation of the valuable contribution made by him during his tenure as Director of theCompany.
Re-appointment of MD & Whole Time Directors:
The re-appointments of Mr. G.V.Bhaskar Rao Chairman cum Managing Director Mrs.G.Vanaja Devi Mr. C. Vamsheedhar and Mr. C.Mithunchand Whole time Directors are beingproposed at the ensuing Annual General Meeting.
Director(s) retiring by rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompanys Articles of Association Dr. G. Pawan retires by rotation at the ensuringAnnual General Meeting and being eligible offers himself for re-appointment.
Appointment of Chief Operating Officer:
Mr. G. S. Satish has been appointed as Chief Operating Officer of the Company witheffect from 11 May 2015. He is an Agriculture graduate from G B Pant University ofAgriculture and Technology with Management Education from Indian Institute of Management(IIM) Ahmedabad having more than two decades of experience in Seeds and Crop protectionindustry working with leading seeds and crop protection multi-national companies.
APPOINTMENT/RESIGNATION OF CHIEF FINANCIAL OFFICER AND KEY MANAGERIAL PERSONNEL:
Mr. K. V. Chalapathi Reddy tendered resignation as the Chief Financial Officer of theCompany effective from 10th May 2016 due to his personal reasons. Your Directors place onrecord their sincere appreciation of the valuable contribution made by him during histenure as CFO of the Company.
Mr. G. Vijaya Kumar has been appointed as Chief Financial Officer of the Companyeffective from 10 May 2016. Mr. G.Vijay Kumar a Chartered Accountant & CostAccountant and has around 21 years of experience and in the past associated with reputedcompanies in senior positions.
DECLARATION FROM INDEPENDENT DIRECTORS
The independent directors have submitted the declaration of independence as requiredpursuant to section149(6) & (7) of the Companies Act 2013 stating that they meet thecriteria of independence as provided in subsection.
The Company recognizes and embraces the importance of a diverse board in its success.The Board has adopted the Board Diversity Policy which sets out the approach to diversifyof the Board of Directors. The Board Diversity Policy is available on the Companyswebsite www.kaveriseeds.in
NOMINATION AND REMUNERATION COMMITTEE:
Your Company has a Nomination and Remuneration Committee and further details are setout in the Corporate Governance Report forming part of the Directors Report. TheBoard has on the recommendation of the Nomination & Remuneration Committee framed apolicy for selection and appointment of Directors Key Managerial Persons (KMP) SeniorManagement and their remuneration. The Nomination and Remuneration Policy as adopted bythe Board is placed on the Companys website : www.kaveriseeds.in
A detailed Report on Corporate Governance prepared in substantial compliance with theprovisions of Schedule V (C) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed as a separate section forming part of this report.
The Certificate issued by M/s. P. R. Reddy & Co. Chartered Accountants Hyderabadwith regard to compliance of conditions of Corporate Governance as stipulated underSchedule V (E) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed to the Report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS:
Managements Discussion and analysis Report for the year under review asstipulated under Regulation 34(2)(e)of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatesection forming part of the Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered with Related Parties for the year under review were onarms length basis and in the ordinary course of business. There are no materialrelated party transactions during the year under review with the Promoters Directors orKey Managerial Personnel. The company has developed a Related Party Transactions framework through standard operation procedures for the purpose of identification andmonitoring of such transactions.
All Related Party Transactions are placed before the Audit Committee as also to beBoard for approval. The particulars of contracts or arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 disclosed in Form No. AOC 2 and is set out as Annexureand forms part of this report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 asrequired under Section 92 of the Companies Act 2013 is included in this Report as Annexure A and forms on integral part of this report
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed M/s. L.D.Reddy & Co. a firm of CompanySecretaries in Practice (C.P.No.3725) to undertake the Secretarial Audit of the Company.The Secretarial Audit Report is included as Annexure B and forms on integralpart of this Report.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) committee composed of Mr. G.V.Bhaskar Rao as ChairmanMrs. G.Vanaja Devi and Mr. M. Srikanth Reddy as members. The Committee is responsible forformulating and monitoring the CSR Policy of the Company the Report on CSR Activitiesforms part of this Report as Annexure C.
ENERGY CONSERVATION TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Information on conservation of energy technology absorption foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 forms part of this report as Annexure D.
PARTICULARS OF EMPLOYEES
Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule5(2) & (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended forms part of this report.In terms of Section 136 of the Companies Act 2013 the same is open for inspection at theRegistered Office of the Company. Copies of this statement may be obtained by the membersby writing to the Company Secretary at the Registered Office of the Company. The ratio ofthe remuneration of each Director to the median employees remuneration and otherdetails in terms of Section197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areenclosed in Annexure E and forms part of this Report.
PERFORMANCE EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its committees.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments in the business operations of the Companyfrom the financial year ended March 31 2016 to the date of signing of the DirectorsReport.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meeting of the Board and Committees held during theFinancial Year 2015-16 forms part of the Corporate Governance Report.
PARTICULARS OF LOANS GURANTEES OR INVESTMENTS BY COMPANY
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements.
WHISTLE BLOWER POLICY
The Board of Directors has adopted the Whistle Blower Policy which is in compliancewith Section 177(10) of the
Companies Act 2013 and Regulation 22 of the SEBI (LODR) Regulations 2015 to reportgenuine concerns or grievances. The Whistle Blower Policy has been posted on the websiteof the company. (www.kaveriseeds.in)
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the company and its future operations.
During the year the Paid-up Share Capital of your Company has been increased by Rs138110190/- due to the allotment of 158900 Equity Shares of Rs 2/- each on exercise ofStock Options by the eligible employees under Employees Stock Options Scheme.
TRANSFER OF UN PAID AND UN CLAIMED AMOUNT TO IEPF
The dividends which remain un-paid/un-claimed for a period of seven years have beentransferred on due dates by the company to the Investor Education and Protection Fund(IEPF) established by the Central Government.
EMPLOYEE STOCK OPTION SCHEME
Pursuant to the Employee Stock Option Scheme 2010 the 685000 options were granted bythe company to the eligible Employees of the Company at a price of Rs 34/- per option.Each option entitles the holder thereof to apply for and be allotted an ordinary share ofthe Company of the nominal value of Rs 2/- each upon payment of the exercise price duringthe exercise period. Some of the employees are exercised their options and 158900 equityshares of Rs 2/- each were allotted during the year. Details of the options up to31st March 2016 are set out in the Annexure F to this Report as requiredunder Clause 12 of the Securities and Exchange Board of India (Employee Stock OptionsScheme and Employee Stock Purchase Scheme) Guidelines 1999.
Your Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.
RISK MANAGEMENT POLICY
In todays economic environment Risk Management is a very important part ofbusiness. The main aim of risk management is to identify monitor and take precautionarymeasures in respect of the events that may pose risk for the business. Your Companysrisk management is embedded in the business process. The Company has establishedEnterprise Risk Management process to manage risks with the objective of maximizingshareholders value.
The Company is conscious of the importance of environmentally clean and safeoperations. The Companys policy requires conduct of operations in such a manner soas to ensure safety of all concerned compliances environmental regulations andpreservation of natural resources.
Your Company is well known for its execution capabilities marketing and manufacturingstrengths product quality and ability to keep to its commitment and deliver for itscustomers. At Kaveri our consistent emphasis is on promoting teamwork and personalizedtraining. Your Company has conducting specialized training and developmental programmes tosharpen our teams communication behavioural and managerial skills. The humanresource department conducts periodic training programmes on motivation and interpersonalbehaviour; and to improve employee skills. Special training programmes are organized forresearch staff faculty to improve their skills in the frontier line of science. Scientistsalso attend seminars and workshops where they interact with public and private sectororganizations. Training initiatives are also undertaken for field staff on seedproduction quality control agronomy and plant protection among others. This improvestheir technical knowledge in quality seed production while for sales and marketing teamto improve their skills in marketing. For the last two years the company has beenfocusing on need-based training. We are taking feedback from managers to understand theirspecific requirements. Accordingly we make a list of things that needs to be addressedand based on that we organize training programmes. The company has introduced a rewardprogramme to recognise top performers from various departments including research anddevelopment seed production sales and marketing among others.
AWARDS & RECOGNITION
The Company was honoured the Bio-Excellence Asia Award 2015" from theDepartment of IT BT and S&T Government of Karnataka.
POLICY ON SEXUAL HARASSMENT
Your Company has constituted an internal committee as per the Sexual Harassment ofWomen at Workplace (Prevention Prohibition & Redressal) Act 2013 and Rules thereunder. The Company has a policy on prevention of Sexual Harassment at work place with amechanism of lodging complaints. The policy provides for protection against sexualharassment of women at workplace and for prevention and redressal of such complaints.During the year under review no complaints have been received under the policy.
The Company enjoyed cordial relations with its employees at all levels. Your Directorsrecord their appreciation of the support and co-operation of all employees and counts onthem for the accelerated growth of the Company.
Your Directors place on record their sincere appreciation for the dedication hard workand commitment of the employees at all levels and their significant contribution to yourCompanys growth. Your Company is grateful to the Distributors Dealers andCustomers for their support and encouragement. Your Directors thank the Banks FinancialInstitutions Government Departments and Shareholders and look forward to having the samesupport in all our future endeavors.
| || ||By Order of theBoard of Directors |
| || ||For KAVERI SEED COMPANY LIMITED |
| ||Sd/- ||Sd/- |
|Secunderabad ||G. V. BHASKAR RAO ||G. VANAJA DEVI |
|10 May 2016 ||Managing Director ||Whole time Director |