for the year ended 31st March 2017
Your Directors have pleasure in presenting their Twenty Third Annual Report togetherwith the Audited Accounts for the year ended 31st March 2017.
FINANCIAL SUMMARY HIGHLIGHTS
Rs. in Lakhs
|Particulars ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Profit before finance cost and Depreciation ||801.90 ||2850.11 |
|Less : Finance Cost ||661.78 ||691.48 |
|Profit before Depreciation ||140.12 ||2158.63 |
|Less : Depreciation ||886.17 ||953.01 |
|Profit/(Loss) before Exceptional Items ||(746.05) ||1205.62 |
|Exceptional Items ||- ||- |
|Profit/(Loss) before Taxation ||(746.05) ||1205.62 |
|Less : Provision for current Taxation || || |
|Current year ||- ||300.00 |
|Earlier Years ||- ||100.00 |
|Deferred Taxation adjustment ||191.00 ||(151.84) |
|Profit/(Loss) After Taxation ||(555.05) ||957.46 |
|Add : Balance brought forward ||486.99 ||450.36 |
|Transfer from General Reserve ||156.39 ||- |
|Profit available for appropriation ||88.33 ||1407.82 |
|Appropriated as under : || || |
|General Reserve ||- ||700.00 |
|Dividend on Equity Shares || || |
|Interim Dividend (2016- 25%) ||- ||183.48 |
|Final Dividend Proposed (2017- 10%) ||73.39 ||- |
|Tax on Dividend ||14.94 ||37.35 |
|Balance carried forward ||- ||486.99 |
| ||88.33 ||1407.82 |
During the year under review:
a. No Equity shares have been issued with differential voting rights. Hence nodisclosure is required in terms of Rule 4 (4) of Companies (Share Capital and Debentures)Rules 2014.
b. No issue of Sweat Equity Share has been made. Hence no disclosure is required interms of Rule 8 (13) of Companies (Share Capital and Debentures) Rules 2014.
c. There was no issue of Employee Stock Option. Hence no disclosure is required interms of Rule 12 (9) of Companies (Share Capital and Debentures) Rules 2014.
d. There was no provision made by the Company for any money for purchase of its ownshares by employees or by trustees for the benefit of employees. Hence no disclosure isrequired in terms of Rule 16 (4) of Companies (Share Capital and Debentures) Rules 2014.
e. The issued subscribed and paid up share capital of the Company as on 1st April2016 at ' 733.93 lakh divided into 36696475 of ' 2 each remained unchanged as on 31stMarch 2017.
APPROPRIATION OF PROFIT AFTER TAX FOR TRANSFER TO RESERVES
As per Audited Accounts of the Company profit after tax has resulted in a loss. Inview of this no amount is available for appropriation for the Financial Year 2016-2017for transfer to Reserves.
However considering the loss for the year as a temporary phenomenon for the Companyyour Directors considered it appropriate to declare dividend out of past profitstransferred to General Reserve. Accordingly an amount of ' 156.39 lakhs has been retrievedfrom General Reserve for payment of dividend as per second proviso to Section 123 (1) ofthe Companies Act 2013 ("the Act") read with Rule 3 of the Companies(Declaration and Payment of Dividend) Rules 2014.
Report of the Board of Directors
Your Directors are pleased to recommend to the Members for their approval a dividendof ' 0.20 per Equity Share of ' 2 each in the Company for the year ended 31st March 2017.
THE STATE OF COMPANY'S AFFAIRS
The gross revenue from operations of your Company including sale of Tea avionicsequipment receipts from technical and support services and sale of food and beverages byKebab Xpress together with other income were slightly higher at ' 16682.25 lakhs for theyear under review as against ' 16636.67 lakhs in the previous year.
The Directors' view with satisfaction the performance of Rossell Tea Division for thefinancial year 2016-17. Despite it being a difficult year in more ways than one theDivision continued to reinforce its USP of a quality product through the year. Wecontinued to produce benchmark teas as we have done all these years.
The financial year 2016-17 began on the back of excellent winter rains in 2015 intoearly 2016. In April at the start of the fiscal 2016-17 very wet and dull conditionswere experienced especially in upper Assam. This led to severe pest attacks and onset offusarium an airborne fungus leading to crop losses and damage to large tea-bearingareas. This had a major impact on land productivity in terms of lower crops on Estatespushing up the cost of production.
The start of the season initially saw very large offerings of CTC teas carried overfrom the financial year 2015-16 due to a very high levels of production in March 2016. Onarrival in the marketplace CTC prices were pushed down to levels not seen for many years.The depressed prices continued through the season especially for quality CTCs. Change inthe buying pattern of major packeteers was also responsible for this. Ironically themedium CTC continued to rule firm at their earlier levels.
Due to low CTC prices producers moved to leverage this by increasing Orthodoxcapacities. The Orthodox came into a firm market except that levels for top quality wholeleaf was lower. Medium Orthodox continued to rule firm.
Our Orthodox average for the period under review is ' 235.39 and the Assam districtaverage of ' 212.80. For the CTC category also for the same reasons our prices this yearwere ' 187.00 per kg whilst overall Assam CTC average was ' 142.57. Close to 18% or moreOrthodox was produced in Assam during 2016. In both categories Orthodox and CTC ouraverages were significantly higher than Assam averages.
On the export front the challenges continued to be present. In Iran LCs were takinglonger than usual and payments were taking even longer. This caused producer-exporters todivert exportable teas to the auction system which turned out to be beneficial. YourCompany exported a total of 0.89 million kgs. We are optimistic that in the financial year2017-18 we should be able to export 1.50 million kgs. or near thereto.
Our selling policies remained as before with our produce of quality CTC and Orthodoxteas. With the market for CTC teas being weak we maximized production of the Orthodoxcategory and despite overall lower production in 2016-17 we produced 3.18 million kgs ofOrthodox against 2.52 million kgs in the previous year.
Thus prudent production mix allowed us to realize the best possible value for ourteas. Our policy of prudent cost management despite rising wages and burgeoning cost ofproduction helped us to realize the best possible margins under adverse conditions.
The Company continued with its programmed upgrades of its field assets and allprogrammes for uprooting and replanting were met in totality. The Company's capitalexpenditure programme was also completed on schedule. Rossell continued to focus on itsprogrammes and investments in the area of workers' housing and hygiene. Irrigation isalways a focus area and we are pleased to report that all Estates are now adequatelyequipped with Irrigation infrastructure. Modernization of factories remains our prioritiesas usual.
Aviation Products and Services
Aerotech Services Division continues to provide techno-logistic support under 4different long term contracts. The work requirement continues to be the same of providingsupport services to the global Original Equipment Manufacturers (OEMs) for its equipmentfitted on various Indian platforms. The support services are provided to IAF Indian NavyIndian Army and Hindustan Aeronautics Ltd. as and when they require. The Field ServiceEngineers (FSEs) strive to achieve the highest standards in knowledge and work execution.
In the Financial year 2016-2017 Rossell Techsys has grown by over 100% in its exportbusiness. It has also strengthened its' order book with a total potential of close to USD100 Million to be executed over the next five to seven years. It has achieved significantcredibility and reputation in the Aerospace business. It has the distinction of beingnominated in three consecutive years 2014 2015 and 2016 as the 'Boeing Supplier of theyeah. It won this award for the year 2015. Further it is also the recipient of the"Boeing Performance Excellence Award" two years in a row the Gold category in2015 and Silver category in 2016. The Division was also the recipient of the"Excellence in Aerospace Indigenization Award" instituted by SIATI (Society forIndian Aerospace and Technologies Industries) for the projects executed for the Indian Airforce resulting in significant foreign exchange savings for the country. The Divisioncontinues to maintain very high customer ratings on quality and delivery and maintains AS:9100 ISO: 9001 ISO: 27 0 01 and BS: 18001 (OHSAS) certifications. It has also embarkedon getting ISO 31000 compliance another first to its credit. The Division operates out oftwo buildings in the same vicinity in the total area aggregating to 87000 Sq. ft.
During the year under review Kebab Xpress added three outlets one each in NoidaSouth Delhi and North Delhi taking the total count to 13 outlets with revenues enhancementof 15% from ' 1150.85 lakhs in the preceding financial year to ' 1325.02 lakhs in thecurrent financial year. Energies were engaged to consolidate the business across outletsand focused approach towards delivery is yielding encouraging trends.
Major producers Sri Lanka and Kenya have had a very poor start to their 2017 season.Till March Sri Lanka was 3.90 million kgs behind the previous year. Kenya too has builtup a deficit of 49.50 million kgs over 2016. The Indian tea belt in Assam where all ourEstates are located has had a steady start to the season where crops have been stable andprices too are superior to 2016 so far. Overall fundamentals are strong.
As it appears prices tend to settle down after the first flush in May going into thesecond flush. As far as the market is concerned as of now we expect prices to be stable.There is one discerning factor last year for the first time top quality teas CTC andOrthodox actually showed a decline in their value in the market place while medium teasappreciated within their price bands. This year we expect a reversal of this trend withprices for quality teas being higher.
Exports have always been a critical area of performance and we have a fair idea ofquality and quantity trends in the sophisticated continental markets. In Iran a morerobust trading platform for Indo-Iranian trade needs to be set in place. The threat of USsanction against Iran continues to be a dampener. However with a new government in placein Iran we expect a smoother year of trade.
Finally we have indications from arrivals at the auction centers that Orthodoxproduction out of Assam is likely to be significantly higher than last year indicatingyear on year increase in this category for 3 years in succession. Thus there are all themore reasons that tea trade between India and Iran has to be smooth.
Aviation Products and Services
Aerotech Services Division expect a new long term contract to be finalized in the nextfew months. The Division has achieved all the laid down milestones. Foreign OEMs continueto appreciate the work done by FSEs in completing complex tasks to the satisfaction of thecustomer.
Rossell Techsys Division expect to witness significant increase in revenue in thefinancial year 2017-18 through financial years 2021-22 not only on account of variousstrategic agreements signed with its existing customers and also increased traction withnew customers in the domain. The Division has also won its first contract in the build toprint of electrical panel assemblies that is expected to fuel in-house competency growthin small sheet metal and precision machining.
The Division has appointed Ernst and Young (EY) to conduct a detailed study on theformat including competition analysis and draw out a map for revenue enhancement startingJune 2017 across all outlets. They shall also be looking at critical cost parameters andprocesses.
All the outlets are on a cusp of delivering significant revenue enhancement in view ofcritical changes like increase in portion sizes new Kebab Xpress look introduction ofnew products renewed Menu presentation price revision of core products bundling fooditems and customer loyalty programme.
CHANGE IN NATURE OF BUSINESS IF ANY
There has been no change in any business and all the Divisions of the Company continueto concentrate on their own business with growth plans in short to medium terms.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The following persons continued as Key Managerial Personnel of the Company incompliance with the provisions of Section 203 of the Act :
a) Mr. H. M. Gupta - Chief Executive Officer (CEO)
b) Mr. C.S. Bedi - Managing Director and
c) Mr. N. K. Khurana - Chief Financial Officer-cum- Company Secretary
However at the Board Meeting held on 25th May 2017 Mr. C. S. Bedi Managing Directorsought retirement from his office with effect from 1st September 2017 for personalreasons. Accordingly Mr. Bedi has given the Notice of 3 Months' to the Company to bemade effective from 1st June 2017 as per terms of service. This Notice was duly acceptedand taken on record by the Board of Directors.
At the same Meeting upon the recommendation of the Nomination and RemunerationCommittee the Board decided to elevate Mr. N. K. Khurana Chief FinancialOfficer-cum-Company Secretary to the Board with effect from 1st September 2017 with thedesignation Director (Finance) and Company Secretary subject to the approval from theMembers of the Company in the General Meeting. A Notice has also been received underSection 160 (1) of the Act along with the requisite deposit from one of the Members ofthe Company signifying their intention to propose the appointment of Mr. N. K. Khurana asa Director of the Company. Accordingly appointment of Mr. N. K. Khurana as a Director andWhole time Director have been included as Special Business in the Notice calling theforthcoming Annual General Meeting of the Company.
Remuneration and other details of the Key Managerial Personnel for the Financial Yearended 31st March 2017 are mentioned in the Extracts of the Annual Return in Form MGT-9which is enclosed as Annexure - 3 and forms part of this Report.
INDEPENDENT DIRECTOR'S DECLARATION
The Declarations required under Section 149(7) of the Act from the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed under Section 149(6) of the Act was duly received by the Company.
The Company has complied with the Corporate Governance requirements under the Act andas stipulated under Regulations 17 to 27 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI Listing Regulations) read with schedule II thereof.A separate report on Corporate Governance in terms of Regulation 34(3) read with Clause Cof Schedule V of the SEBI Listing Regulations along with certificate from the PracticingCompany Secretary confirming the compliance is annexed as Annexure-1 and forms part ofthis Report.
DETAILS OF BOARD MEETINGS
The Board of Directors met 7 (Seven) times during the financial year 2016-2017 onvarious dates as given here-in-below:
|Date of the meeting ||No. of Directors attended the meeting |
|1st April 2016 ||7 |
|30th May 2016 ||7 |
|3rd August 2016 ||7 |
|19th September 2016 ||7 |
|11th November 2016 ||7 |
|31st January 2017 ||7 |
|29th March 2017 ||7 |
Further details on Board of Directors are provided in the Corporate Governance Report.
COMMITTEES OF THE BOARD a. Audit Committee
The Board has constituted the Audit Committee which comprises of the followingDirectors:
|Name ||Category of Director ||Chairman/ Members |
|Dr. S. S. Baijal ||Non-Executive-Independent ||Chairman |
|Mr. H. M. Parekh ||Non-Executive-Independent ||Member |
|Mr. V. P. Agarwal ||Non-Executive-Independent ||Member |
|Ms.Nayantara Palchoudhuri ||Non-Executive Non-Independent ||Member |
During the year under review the Board accepted all the recommendations made by theAudit Committee.
Further details of Audit Committee related to dates of Meeting held during the yearattendance of Directors etc. are given separately in the attached Corporate GovernanceReport. b. Nomination and Remuneration Committee
The Nomination and Remuneration Committee of the Board has been constituted by thefollowing Directors:
|Name ||Category of Director ||Chairman/ Members |
|Mr. H. M. Parekh ||Non-Executive-Independent ||Chairman |
|Dr. S.S. Baijal ||Non-Executive-Independent ||Member |
|Mr. V. P Agarwal ||Non-Executive-Independent ||Member |
Further details of Nomination and Remuneration Committee related to dates of Meetingheld during the year attendance of Directors etc. are given separately in the attachedCorporate Governance Report. c. Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee of the Board has been constituted by thefollowing Directors:
|Name ||Chairman/ Members |
|Dr. S. S. Baijal ||Chairman |
|Mr. V. P Agarwal ||Member |
|Mr. C. S. Bedi ||Member |
Further details of Corporate Social Rresponsibility Committee related to dates ofMeeting held during the year attendance of Directors etc. are given separately in theattached Corporate Governance Report.
The Committee had framed the CSR Policy and the same was approved by the Board at itsMeeting held on 6th August 2014. The CSR Policy is available on Company's website at www.rossellindia.com . The CSR budget for thefinancial year 2016-2017 was prepared in accordance with the provisions of Section 135 (5)of the Act read with the Company's CSR Policy. The amount so budgeted was fully spent onor before 31st March 2017 the detailed report on CSR Activities/ Initiatives is enclosedas Annexure-2 which forms part of this Report.
d. Stakeholders' Relationship Committee
The Stakeholders Relationship Committee of the Board has been constituted by thefollowing Directors:
|Name ||Chairman/ Members |
|Mr. H. M. Parekh ||Chairman |
|Mr. V. P Agarwal ||Member |
|Mr. C. S. Bedi ||Member |
Further details of Stakeholders Relationship Committee related to dates of Meeting heldduring the year attendance of Directors etc. are given separately in the attachedCorporate Governance Report.
e. Risk Management Committee
Your Board has voluntarily constituted the Risk Management Committee in the mannerprescribed in Regulation 21 of the SEBI Listing Regulations consisting of the followingDirectors:
|Name ||Chairman/ Members |
|Mr. H. M. Parekh ||Chairman |
|Ms. Nayantara Palchoudhuri ||Member |
|Mr. C. S. Bedi ||Member |
Further details of Risk Management Committee related to dates of Meeting held duringthe year attendance of Directors etc. are given separately in the attached CorporateGovernance Report.
ANNUAL PERFORMANCE EVALUATION
In terms of the relevant provisions of the Act and SEBI Listing Regulations the Boardhad carried out an annual evaluation of its own performance and that of its Committees aswell as individual Directors.
A structured questionnaire was prepared in terms of the criteria specified by SEBI videits Circular No. SEBI/HO/CFD/CMD/ CIR/P/2017/004 dated 5th January 2017. TheQuestionnaire for the Evaluation of the Board as a whole the Questionnaire for theEvaluation of the Committees of the Board and the Questionnaire for the Evaluation ofIndividual Director were circulated to all the Directors and feedback obtained. Aftertaking into consideration different views expressed by the Directors covering variousaspects of the Board's functioning such as adequacy of the Board's composition andstructure Board's culture execution and performance of specific duties obligations andgovernance effectiveness of Board processes etc. the evaluation of the Board wasconducted.
The performance of the Committees was evaluated by the Board based on the aforesaidQuestionnaire seeking inputs from the Committee Members on the basis of the criteria suchas the composition of Committees effectiveness of Committee Meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Directors on the basis of the criteria as mentioned above. In addition theExecutive Chairman was also evaluated on the key aspects of his role.
The Independent Directors also carried out the Performance Evaluation in terms ofClause VII (3) of Schedule IV to the Act read with Regulation 25(3) of the SEBI ListingRegulations at their separate Meeting held on 31st January 2017.
EXTRACT OF ANNUAL RETURN
Pursuant to section 92(3) of the Act read with Rule 12(1) of the Companies (Managementand Administration) Rules 2014 extract of Annual Return is given as Annexure- 3.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Pursuant to Section 177(9) of the Act read with Regulation 22 of the SEBI ListingRegulations your Company has duly established Vigil Mechanism for Directors and employeesto report concerns about unethical behavior actual or suspected fraud or violation ofCompany's Code of Conducts or ethics Policy. The Audit Committee of the Board monitors andoversee the vigil mechanism.
The detailed Policy related to this vigil mechanism is available in the Company'swebsite at www.rossellindia.com .
DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of Section 134(3) (c) read with Section 134(5) of the Act and confirm that:
(a) in the preparation of the Annual Accounts for Financial Year ended 31st March2017 the applicable Accounting Standards had been followed along with proper explanationrelating to material departures if any;
(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 Year ended 31st March2017 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 this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(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.
STATUTORY AUDITORS THEIR REPORT AND NOTES TO FINANCIAL STATEMENTS
In terms of Section 139(2) of the Act M/s. S. S. Kothari & Co. CharteredAccountants existing Statutory Auditors of the Company have completed their tenure of twoterms of five consecutive years at the commencement of the Act on 1st April 2014 and anadditional period of 3 years as stipulated under third proviso of Section 139(2) read withRule 6 of the Companies (Audit and Auditors) Rules 2014. Accordingly they will vacatethe office at the conclusion of the forthcoming Annual General Meeting.
In view of above the Company is proposing to appoint M/s. Khandelwal Ray & Co.Chartered Accountants Kolkata (Firm Regn. No. 302035E) as the Statutory Auditors for aperiod of 5 years commencing from the conclusion of the 23rd Annual General Meeting tillthe conclusion of the 28th Annual General Meeting. M/s. Khandelwal Ray & Co. havegiven their consent to the said appointment and confirmed that their appointment if madewould be within the limits mentioned under Section 141(3) (g) of the Act.
The Audit Committee and the Board recommend the appointment of M/s. Khandelwal Ray& Co. Chartered Accountants as Statutory Auditors of the Company for a period of 5years commencing from the conclusion of the 23rd Annual General Meeting till theconclusion of the 28th Annual General Meeting.
The Board places on record its appreciation for the contribution of M/s. S. S. Kothari& Co. Chartered Accountants during their tenure as the Statutory Auditors of yourCompany.
The report of the Statutory Auditors during the year under review does not contain anyqualification reservation or adverse remark or disclaimer which requires any furthercomments or explanations in this report. The Notes to the Financial Statements are alsoself-explanatory and do not call for any further comments.
Pursuant to Section 148 of the Act read with Rule 4 of the Companies (Cost Records andAudit) Amendment Rules 2014 your Company is required to have the audit of its costaccounting records relating to products manufactured by Rossell Tea Division and RossellTechsys Division. M/s. Shome & Banerjee Cost Accountants conducted this audit forthe previous Financial Year ended 31st March 2016 and submitted their report to theCentral Government on 2nd September 2016.
In terms of Section 148(3) of the Act read with the Companies (Cost Records and Audit)Rules 2014 the Board of Directors of the Company has on the recommendation of the AuditCommittee re-appointed M/s. Shome & Banerjee Cost Accountants as the Cost Auditor ofthe Company for the Financial Year 2017-2018.
Their remuneration is required to be ratified by the Members in the ensuing AnnualGeneral Meeting.
In terms of Section 204 of the Act read with Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the Board of Directors had appointed M/s. A.K. Labh& Co. Practicing Company Secretaries as the Secretarial Auditors of the Company forthe Financial Year 2016-2017. The report of the Secretarial Auditors in Form MR-3 isenclosed as Annexure-4 to this report.
The report confirms that the Company had complied with the statutory provisions listedunder Form MR-3 and the Company also has proper Board Processes and Compliance Mechanism.The Report does not contain any qualification reservation or adverse remark ordisclaimer which requires any further comments or explanations in this report.
RELATED PARTY TRANSACTIONS
All the Related Party Transactions are entered on arm's length basis and are incompliance with the applicable provisions of the Act and SEBI Listing Regulations. Thereare no materially significant Related Party Transactions made by the Company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the Company at large. All Related Party Transactions are presented tothe Audit Committee and the Board if required for approval. Omnibus Approval is obtainedfor the transactions which are foreseen and repetitive in nature. Policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website at the weblink: http://www.rossellindia.com/financialresult/Policy%20on%20Related%20Party%20Transactions.pdf.
Necessary disclosure of Related Party Transactions in terms of Clause (h) ofsub-section (3) of Section 134 of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014 is given in Form AOC-2 as Annexure-5 to this Report.
LOANS GUARANTEES OR INVESTMENTS
Your Company has not provided any Guarantee for any party. During the year underreview neither any inter-corporate loan was granted by the Company nor any investmentmade in terms of the provisions of Section 186 of the Act. Particulars of existingInvestments made by the Company as required to be disclosed in terms of Section 134 (1)(g) of the Act is given in the accompanying Financial Statement (Note No. L).
STATEMENTS OF SUBSIDIARIES / JOINT VENTURES
The wholly owned subsidiary CAE Rossell India Limited did not carry out any activityduring the year under review. Your Company has a Joint Venture entity named RV EnterprisesPte. Ltd. Singapore in which Company holds 26% Equity Share.
Accompanying Consolidated Financial Statement contains details financials of theSubsidiary / Joint Venture.
RISK MANAGEMENT POLICY
Your Company's business faces various risks - strategic as well as operational inrespect of all its Divisions. The Company has an adequate risk management system whichtakes care of identification assessment and review of risks as well as their mitigationplans put in place by the respective risk owners. The risks which were being addressed bythe Company during the year under review included risks relating to market conditionsenvironmental information technology etc. The Company has developed and implemented theRisk Management Policy with an objective to provide a more structured framework forproactive management of all risks related to the business of the Company and to make itmore certain that growth and earnings targets as well as strategic objectives are met.
The major risks and concerns being faced by various business segments of the Companyare discussed in report on Management Discussion and Analysis forming part of thisReport.
Your Company has constituted Risk Management Committee of the Board in the mannerstated in Regulation 21 of the SEBI Listing Regulations. The Risk Management Committeereviews the risk assessment and minimization procedure in the light of the Risk ManagementPolicy of the Company.
In the opinion of the Board there is no such element of risk which may threaten thepresent existence of the Company. REMUNERATION POLICY
The Company follows a policy on Remuneration of Directors and Senior ManagementEmployees. The policy is approved by the Nomination and Remuneration Committee and theBoard. Further details on the same have been given in the Report on Corporate Governancewhich forms part of this Report.
The required disclosure under Section 197 (12) of the Act read with Rule 5 (1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given asAnnexure- 6 to this Report.
Your Company treats its "human resources" as one of the most importantassets. The Management of the Company lays continuous focus on human resources who aretrained and updated on various issues from time to time to attain the required standards.The correct recruitment practices are in place to attract the best technical manpower toensure that the Company maintains its competitive position with respect to execution. YourCompany continuously invests in attraction retention and development of talent on anongoing basis.
Industrial relations at all the units remain satisfactory your Company employed 6278personnel on its roll as on 31st March 2017.
For the year under review the particulars of the Executive Chairman who was inreceipt of remuneration which in the aggregate was not less than rupees one crore twolakh and employed throughout the financial year is given in Annexure- 7 to this Report.There was no other employee in this category. Thus particulars of other top 9 employeesare not required to be disclosed.
The Company did not have any employee on its payroll who:
a. if employed for a part of the Financial Year was in receipt of remuneration for anypart of that year at a rate which in the aggregate was not less than Eight Lakh FiftyThousand rupees per month;
b. if employed throughout the Financial Year or part thereof was in receipt ofremuneration in that year which in the aggregate or as the case may be at a rate whichin the aggregate is in excess of that drawn by the Managing Director or Whole-TimeDirector or Manager and holds by himself or along with his spouse and dependent childrennot less than two percent of the Equity Shares of the Company.
The total remuneration drawn by the Managing Directors and Key Managerial Personnelforms part of Extracts from the Annual Return in Form MGT-9. Mr. H. M. Gupta ExecutiveChairman in his capacity as the Chairman and Managing Director of BMG Enterprises Ltd.the Holding Company drew a remuneration of ' 6.00 lakhs as consolidated salary pursuant toSection 197 (14) of the Act.
AWARDS AND RECOGNITION
Your Directors are pleased to advise that during the year under review Rossell TechsysDivision of the Company received the following awards:
> Emerging Company of the Year 2017 by the International Aerospace Magazine (SAPMedia).
> Excellence in Aerospace Indigenization - 2016 by SIATI (Society for IndianAerospace Technologies and Industries)
> Boeing Performance Excellence Award (BPEA)-2016 - Silver Category.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There is no significant or material order passed by any Regulators or Courts orTribunals impacting the going concern status and Company's operations 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 firms of Chartered Accountants for all the Divisions of the Company. The AuditCommittee of the Board looks into Auditor's review which is deliberated upon andcorrective action taken whereever required.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
In compliance with the provisions of Section 124 (5) of the Act read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 the following amounts were transferred to Investor Education and Protection Fund ofthe Central Government during 2016-2017:
a) A sum of ' 122881 being the dividend lying unclaimed out of the dividend declaredby the Company for the Financial Year 2008-2009 were transferred to the IEPF on 3rdSeptember 2016.
b) A sum of ' 64384 being the dividend lying unclaimed out of the interim dividenddeclared by the Company for the Financial Year 2009-2010 were transferred to IEPF on 15thDecember 2016.
Equity Shares corresponding to the dividend unclaimed for seven consecutive years willalso be transferred to the IEPF Suspense Account in terms of Section 124 and 125 of theAct read with Rule 6 of the Investor Education and Protection Fund Authority (AccountingAudit Transfer and Refund) Rules 2016. Further details in this respect are givenseparately in the attached Corporate Governance Report marked as Annexure-1 of thisReport.
Your Company has not accepted any deposits from public in terms of provisions containedin Chapter V of the Act or in terms of corresponding provisions of the Companies Act1956.
MANAGEMENT DISCUSSION AND ANALYSIS
A Report on the Management Discussion and Analysis concerning all the business segmentsof the Company is given as Annexure-8 to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
(a) Conservation of energy
|(i) the steps taken or impact on ||Machinery up-gradation and replacement of low performing equipment is an |
|conservation of energy ||ongoing process at the Tea factories of Rossell Tea Division with a view to conserve Fuel Electrical Energy and other resources. Initiatives undertaken during the Financial Year 2016-17 are as follows; |
| ||a) Replacement of old and obsolete Diesel Generators of 365 KVA and 160 KVA respectively has been done with higher capacity sets. The new sets have the ability of better capacity utilization and improved units per Liter of fuel. |
| ||b) Replacement of old inefficient Axial Flow Fans attached to Energy Efficient Motors for higher volumes of air availability with reduced energy consumption has been done at one of the factories. This would be taken up in other factories in phases. |
| ||c) Installation of improved Irrigation facility with underground piping and voltage regulators for full utilization of the sprinklers for greater coverage of command area. |
| ||d) Installation of wind propelled ventilators on factory roof which helps in maintaining the quality of produce and also provide better working environment inside the factory. |
| ||e) Installation of improved gas burners for Dryers at 2 factories which has the ability to operate at low pressures keeping constant temperature with inbuilt safety of operation. |
| ||f) Installation of static Power Capacitors to improve the Plant Power Factor thereby reduce losses incurred in the State Board Power Supply. |
| ||Rossell Hospitality Division has taken the following initiatives since the last few years: |
| ||a) Great deal of focus on OEE (Overall Equipment Efficiency) to optimize productivity. |
| ||b) Driving sustainable development programme for water and power. |
| ||c) Replaced conventional lighting with LED lights which are not only brighter but also save energy and are Eco friendly. |
| ||d) Waste water from RO is saved and stored for flushing and cleaning. |
|(ii) the steps taken by the Company for utilizing alternate sources of energy ||Rossell Tea Division has arranged for alternate source of energy provision for withering and drying of teas by supply of Natural Gas at one of the Factories. This would replace the use of solid fuel thereby reduction of cost. Study of the possibility of using Solar power at two Estates of Rossell Tea Division continues. |
| ||Rossell Techsys Division is constrained to adopt alternative source of energy as it is currently operating from leased premises in Bangalore. The owners of the premises are not motivated enough to invest in these alternative sources of energy. |
|(iii) the capital investment on energy conservation equipments ||All the equipment and machinery are being acquired with energy conservation in view. Hence the extent of investment cannot be separately quantified. However the capital investment during the year under review on acquisition of energy conservation equipment in particular was ' 79.78 Lakhs in Rossell Tea. |
|(b) Technology absorption || |
|(i) the efforts made towards technology absorption ||In-house seminars discussions with experts and training programme were held for innovative ideas of production and to update the staff. The concerned staff members are also sponsored to attain various seminars and workshops for updating themselves in various technological advancements concerning the functioning of the Company. |
|(ii) the benefits derived like product improvement cost reduction product development or import substitution ||There has been an overall improvement in quality of product and labour productivity which results in economy in cost. |
|(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the Financial Year)- ||Not Applicable |
|(a) the details of technology imported ||The Company is a Member of Tea Research Association Kolkata which is registered under Sec. 35 (1) (ii) of the Income tax Act 1961. A contribution of ' 14.59 lakhs during the year towards subscription by Rossell Tea Division. |
|(b) the year of import; || |
|(c) whether the technology been fully absorbed ||All the Research and Development work done in Rossell Techsys Division is customer specific and for their exclusive purpose. Thus the cost thereof is absorbed by the respective project cost and not required to be accumulated separately. |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof || |
|(iv) the expenditure incurred on Research and Development || |
(c) Foreign Exchange Earnings and Outgo
During the year the total foreign exchange used was ' 104.15 lakhs on account ofvarious expenses and ' 2619.99 lakhs for imports of raw materials stores as well ascapital goods. The total foreign exchange earned was ' 6409.17 lakhs (Note No. 10 to theFinancial Statements)
MATERIAL CHANGES AND COMMITMENTS
You Directors confirm that there are no material changes and commitments affecting thefinancial position of the Company which has occurred between the end of the Financial Yearof the Company and the date of this Report.
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 business associates shareholders and other stakeholdersof the Company for their continued support.
| ||For and on behalf of the Board |
| ||Rossell India Limited |
|Place : Delhi ||H.M.Gupta |
|Date : 25th May 2017 ||Executive Chairman |