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Norben Tea & Exports Ltd.

BSE: 519528 Sector: Agri and agri inputs
NSE: NORBTEAEXP ISIN Code: INE369C01017
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Norben Tea & Exports Ltd. (NORBTEAEXP) - Director Report

Company director report

TO THE MEMBERS

Your Directors are pleased to present the Twenty Seventh Annual Report together withthe Company's Audited Accounts for the Financial Year ended 31st March 2017.

FINANCIAL SUMMARY OR HIGHLIGHTS

The financial performance of the Company for the year ended on 31st March2017 is summarized below:- FINANCIAL SUMMARY

Year Ended March 312017 Year Ended March 312016
Rs. in thousand Rs. in thousand
Total Revenue 51140 48931
Prior Period Charges 2564
Profit before Finance Cost Depreciation and Taxation 10734 7383
Less : Finance Cost 4725 4290
Profit/ (Loss) before Depreciation and Tax 6009 3093
Less : Depreciation 3551 2549
Profit/ (Loss) before tax 2458 544
Less/(Add) : Current Tax 1250 304
Provision of Deferred Tax Charge/(Credit) 107 (91)
Profit/ (Loss) after tax 1101 331
Add : Balance brought forward from previous year 17121 16789
Surplus available for Appropriation 18222 17121
Appropriations
Transferred to General Reserve 7500 _
Balance Carried to Balance Sheet 10722 17121

STATE OF COMPANY'S AFFAIRS

During the year there is again same increase in own production of tea crop and thistrend should continue as the Company's plantations mature and yield more leaves. Pricerealizations for Norben teas have remained almost same as previous year in a decliningmarket.

Huge increase in minimum wages in a labour oriented industry with stagnant tea pricesrealizations is pushing its adverse impact by which the tea growing and manufacturingindustry in India in North East in Bengal may end into serious problems as gardens unableto meet and are closed or are on the verge of closure.

TRANSFER TO GENERAL RESERVE

Appropriation amounts of Rs. 7500000/- proposed to be transferred to General Reserve.

DIVIDEND

The Board has not recommended any dividend for the financial year 2016-17 in view ofretaining cash for your Company's growth prospects.

EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 in accordance with section 92(3) of theCompanies Act 2013 read with Rules made thereunder is annexed herewith as Annexure A inthe Annexure forming part of this Report.

NO. OF MEETINGS OF THE BOARD

The Board of Directors have met 6 (six) times during the financial year. Details ofmeeting are given in the "Corporate Governance Report" of the Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of the Section 134(3)(c) & 134(5) of theCompanies Act 2013 your Directors confirm that:

1. Applicable accounting standards have been followed in the preparation of the AnnualAccounts for the year ended 31st March 2017 with proper explanation relatingto material departures.

2. Accounting policies have been selected and applied consistently and judgments andestimates have been made which are reasonable and prudent and have been applied so as togive a true and fair view of the state of affairs of the Company in respect of thefinancial year ended 31st March 2017 and of the profit of the Company for thatperiod.

3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

4. Annual Accounts for the year ended 31st March 2017 have been prepared onthe basis of going concern concept.

5. The Directors have laid down the internal financial controls to be followed by theCompany detailing the policies and procedures and these internal financial controls areadequate and are being operated effectively.

6. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

Every Independent Director has at the first meeting of the Board and also at the firstmeeting of the Board after his/her appointment in the financial year 2016-2017 given adeclaration as required u/s.149 of the Companies Act 2013 that he/she meets the criteriaof Independence.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION ETC.

The Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided u/s.178(3) of the Companies Act 2013 is given as Annexure B in theAnnexure forming part of this Report.

DIRECTORS

At present your Board is duly constituted comprising of 4 (Four) Directors Mr. ManojKumar Daga (DIN: 00123386) Mr. Ranjan Kumar Jhalaria (DIN: 05353976) Mrs. Swati Sharma(DIN: 06804522) and Ms. Sweta Patodia (DIN: 06869426). In accordance with the provisionsof the Companies Act 2013 and the Articles of Association of the Company Ms. SwetaPatodia retires by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for re-appointment.

STATUTORY AUDITORS

M/s. L.K.Bohania & Co. Chartered Accountants bearing ICAI Firm Registration Number317136E was appointed as the Statutory Auditors of the Company for a period of 5consecutive years.

In terms of the first proviso to Section 139(1) of the Companies Act 2013 the matterrelating to appointment of M/s. L.K.Bohania & Co. Statutory Auditors of the Companyhas been placed for ratification by the shareholders of the Company at the ensuing 27thAnnual General Meeting.

The Company has received written consent from Auditor to such continued appointment andalso certificate to the effect that their reappointment if ratified would be inaccordance with the conditions prescribed under the Companies Act 2013. The Boardrecommends the ratification of their appointment.

AUDITORS REPORT

The report by the Auditors is self explanatory and has no qualification reservationadverse remark or disclaimer; hence no explanation or comments by the Board were required.There has been no fraud reported by the Auditor under sub-section (12) of section 143.

SECRETARIAL AUDIT

Secretarial Audit for the FY 2016-17 was done by CS Deepak Kumar Khaitan PractisingCompany Secretary in accordance with the provisions of Section 204 of the Companies Act2013. The Secretarial Audit Report is annexed herewith as Annexure C in the Annexureforming part of this Report. The Secretarial Audit Report has no qualificationreservation adverse remark or disclaimer; hence no explanation or comments by the Boardwere required.

DETAILS OF LOANS GUARANTEES OR INVESTMENTS BY THE COMPANY

During the year there was no loans guarantees or investments made by the company u/s186 of the Companies Act 2013 during the year under review and hence the said provisionis not applicable.

RELATED PARTY TRANSACTION

During the year under review the Company has entered into transactions covered undersection 188(1) of the Companies Act 2013 with related party as defined under section2(76) of the Act which were in ordinary course of business and on arm's length and inaccordance with the provisions of the Act and Rules made thereunder. Disclosure requiredu/s 134(3)(h) of the Act is given in Form AOC- 2 as Annexure D in the Annexure formingpart of this Report.

MATERIAL CHANGES COMMITTMENTS

There are no material changes or commitments affecting the financial position of thecompany which has occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report CONSERVATION OF ENERGYABSORPTION OF TECHNOLOGY FOREIGN EXCHANGE EARNINGS AND OUTGO The information pursuant toSection 134(3)(m) of the Companies Act 2013 and Rule 8 of Companies (Accounts) Rules2014 is given as Annexure E in the Annexure forming part of this Report.

RISK MANAGEMENT POLICY

The Board of Directors of the Company has developed and implemented a risk managementpolicy for the Company including identification therein of elements of risk which in theopinion of the Board may threaten the existence of the Company. The Board monitors andreviews periodically various aspects of Risk Management policy. At present no particularrisk whose adverse impact may threaten the existence of the Company is visualized.

POLICY ON CORPORATE SOCIAL RESPONSIBILITY

The level of operations of the Company does not conform to the minimum threshold ofCorporate Social Responsibility reporting. FORMAL ANNUAL EVALUATION OF BOARD

Formal annual evaluation by the Board of its own performance and that of its committeesand individual directors had been done during the year in the manner stated in theCriteria for Performance Evaluation of the Directors of the Company as framed by theNomination and Remuneration Committee of the Company an given as Annexure Fin the Annexureforming a part of this Report.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of Business of the Company during the reportedfinancial year.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNEDDURING THE YEAR

There has been no change in the composition of the Board of Directors during thefinancial year. The details of Key Managerial Personnel who were appointed or haveresigned during the financial year are as follows and details thereto are also coveredunder the Report on Corporate Governance.

Managing Director : No Change
Company Secretary : Resignation of Mr.Pawan Kothari from the post of Company Secretary of the Company with effect from the close of the business hours on 30.11.2016. Appointment of Ms. Mira Halder as Company Secretary w.e.f.1.12.2016 at Board of Directors Meeting held on 12th November 2016.
Chief Financial Officer : No Change

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINT VENTURESOR ASSOCIATE COMPANIES DURING THE YEAR

As on 31st March 2017 your company has no subsidiaries joint ventures orassociate Companies.

PUBLIC DEPOSITS

The Company has not accepted/renewed any fixed deposits during the year.

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

During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals impacting the going concern status and company'soperations in future.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS

Being a listed entity the financial statements are passing through the Audit Committeeand the processes of Internal and External (Tax Cost and Statutory) Audits before beingapproved at the meeting of the Board of Directors of the Company. The financial statementsare regularly updated on the Company's website and available to all stakeholders.

AUDIT COMMITTEE AS REQUIRED U/S 177(8) OF COMPANIES ACT 2013

The composition of the Audit Committee is covered under the report on CorporateGovernance and which is a part of this report. Further during the year there was norecommendation of the Audit Committee which had not been accepted by the Board.

VIGIL MECHANISM (WHISTLE BLOWER POLICY)

In pursuance to the provisions of section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees of the Company to report genuine concernshas been established. The Vigil Mechanism (Whistle Blower Policy) has been uploaded on theCompany's website at www.norbentea.com/pdf/vigil-blower.pdf.

PARTICULARS OF DIRECTORS' REMUNERATION U/S.197 (12) OF THE COMPANIES ACT 2013 READWITH RULE 5(1) OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014

S.No. Name Designation % increase in remuneration Ratio of the remuneration of each director : median remuneration of the employees
1 Manoj Kumar Daga Mg.Director NIL 7.04 : 1
2 Ranjan Kumar Jhalaria Director NIL 0.33 : 1
3 Swati Sharma Director NIL 0.29 : 1
4 Sweta Patodia Director NIL 0.07 : 1
5 Pawan Kothari # Company Secretary NIL -
7 Dipa Chatterjee Sarkar CFO 10.38 -
8 Mira Halder * Company Secretary NIL -

# Mr. Pawan Kothari resigned from the post of Company Secretary of the Company witheffect from the close of the business hours on 30.11.2016.

* Ms. Mira Halder was appointed as Company Secretary w.e.f.1.12.2016 at Board ofDirectors Meeting held on 12h November 2016. The Company has 103 employees ason 31st March 2017.

Percentage increase in the median remuneration of employees in the financial year :7.02%

Average percentile increase in the salaries of employees compared with percentileincrease in managerial remuneration is 0.68:1.

Wages of the Tea Garden employees are decided through a Tripartite Agreement betweenWorkers Associations State Government and Representatives of the Tea Industry.Remuneration paid to other Employees are fixed. No variable remuneration is paid.Remuneration paid is as per the Remuneration Policy of the Company.

PARTICULARS OF EMPLOYEES

As on March 312017 the Company did not have any employee in the category specified inRule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.

MANAGEMENT DISCUSSION AND ANALYSIS

a) Industry Structure & Developments

Tea production has hit a 3 years high at 1250.49 million kg. in 2017 an increase of1.4% from 1233.14 million kg. in 2015-16. North India's annual production jumped 4.67% to1043.11 million kg. compared with 981.09 million kg. a year ago.

Bengal produced 357.47 million kg. against 324.5 million kg. in the preceeding year.The entire production growth over the past years has come from small growers or farmersoperating outside the regulating framework of Plantation Labour Act.

The stagnation in average price for tea per kg. during the last few years compled withall time high increase in minimum wages in a labour oriented industry has had a hugeadverse impact on tea industry.

b) Opportunities Threats Risks & Concerns

Because of the very small size of production the Company's teas are readily accepted inniche market for "NORBEN" created over the years.

All the plantations of Norben are of high yielding clones producing bright liquoringteas.

The age of the plantations is very young and provides a great advantage in terms ofcost due to less disease and low maintenance cost due to vigorous health of the bush.

The Company has in place systems of Internal Control commensurate with the size of theCompany and the nature of its business which ensures that transactions are recordedauthorized and reported correctly apart from safeguarding its assets against loss fromwastage unauthorized use and removal.

The Internal Control System is supplemented by documented policies guidelines andprocedures. An extensive programme of review is carried out by the Company's Managementcum Internal Audit team which submits detailed reports periodically to the Management.

Tea continues to enjoy the status of being the most popular beverage in the World.

The Tea Industry is largely dependent on the vagaries of nature. The Industry is highlylabour intensive and is subject to stringent labour laws. Comparatively high labour costshigh social cost over most other tea producing countries high infrastructure costs remainthe major problems for the Indian Tea Industry. Shortage of labour during peak season isalso a cause for concern.

These problems need to be addressed by improved productivity. The Tea Industry both inAssam and in West Bengal have discussed with the Trade Unions and implemented productivitylinked wages for the tea workers with a view to regain the Industry's competitiveness inthe global market.

The small tea growers and bought leaf factories form a considerable part of theIndustry in North India. There is a need to regulate these factories to maintain thequality.

c) Segment wise or product wise performance

The Company is a Single Business Segment Company.

d) Outlook

An upsurge in demand from the domestic market should drive tea prices higher.Consumption of tea has increased compared to increase in production which will improverealizations. However India needs to take a number of initiatives to strengthen itsposition in the global market and address emerging markets by further improving thequality as well as packaging standards thereby enhancing product quality.

e) Risks and Concerns

The Tea Industry is largely dependent on the vagaries of nature. The Industry is highlylabour intensive and is subject to stringent labour laws. Comparatively high labour costshigh social cost over most other tea producing countries high infrastructure costs remainthe major problems for the Indian Tea Industry. Shortage of labour during peak season isalso a cause for concern.

These problems need to be addressed by improved productivity. The Tea Industry both inAssam and in West Bengal have discussed with the Trade Unions and implemented productivitylinked wages for the tea workers with a view to regain the Industry's competitiveness inthe global market.

The small tea growers and bought leaf factories form a considerable part of theIndustry in North India. There is a need to regulate these factories to maintain thequality.

f) Internal control system and their adequacy

The Company implemented internal control systems to ensure that all assets aresafeguarded and protected against loss and that transactions are recorded and reportedcorrectly. The internal control system is commensurate with the size and nature of theCompany's business. The systems are regularly reviewed for effectiveness.

g) Discussion on financial performance with respect to operational performance

This has been covered in the Director's report specifically under the section onfinancial results and performance. The financial review for the year has also beenseparately covered in this Annual Report.

h) Material developments in human resources/industrial relations front includingnumber of people employed

The Company emphasizes training and development for optimum results. The Companystrives to maintain healthy industrial relations across its various locations andemployees. The number of persons employed by the Company as on March 312016 was 105.

i) Cautionary Statement

Statements in the Management Discussions and Analysis Report in regard to projectionsestimates and expectations have been made in good faith. Many unforeseen factors may comeinto play and affect the actual results which could be different from what the Directorsenvisage in terms of future performance and outlook. Market data and product informationcontained in this Report have been based on information gathered from various publishedand unpublished reports and their accuracy reliability and completeness cannot beassured.

DISCLOSURE OF ACCOUNTING TREATMENT

These financial statements have been prepared in accordance with the generally acceptedaccounting principles in India (Indian GAAP) to comply with the Accounting Standardsspecified under section 133 of the Companies Act 2013 read with rule 7 of the Companies(Accounts) Rules 2014and relevant provisions of the Companies Act 2013 ("the 2013Act") as applicable. The financial statements have been prepared on accrual basisunder the historical cost convention. The accounting policies adopted in preparation ofthe financial statements are consistent with those followed in the previous year.

AUDITORS' CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

Certificate regarding compliance of conditions of corporate governance is given asAnnexure G in the Annexure forming part of this report.

STOCK EXCHANGE(S)

The Company has completed the paper publications and other formalities for delistingfrom the other Stock Exchanges but is yet to receive their certificates of delisting.

For revocation of suspension in trading of Equity Shares of the Company at Bombay StockExchange the Exchange has demanded a huge amount as reinstatement fees which isapparently not justified in terms of the erstwhile Listing Agreement with the StockExchanges. Therefore the Company has taken legal opinion and as advised has moved thematter at Securities Appellate Tribunal Bombay pending correspondence with Bombay StockExchange to resolve the issue.

APPRECIATION

The Directors wish to place on record their appreciation for the support received fromthe Local Gram Panchayat Government Departments Banks Stakeholders and all others.

By Order of the Board
For NORBEN TEA & EXPORTS LTD.
Regd.Office:
15B Hemanta Basu Sarani Manoj Kumar Daga
3rd Floor Kolkata-700001. (Chairman & Mg.Director)
Date : 26th May 2017. DIN : 00123386