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United Nilgiri Tea Estates Company Ltd.

BSE: 530470 Sector: Agri and agri inputs
NSE: UNITEDTEA ISIN Code: INE458F01011
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United Nilgiri Tea Estates Company Ltd. (UNITEDTEA) - Director Report

Company director report

Your Directors have pleasure in presenting the 95th Annual Report on theperformance of the Company together with the Audited Financial Statements for thefinancial year ended 31st March 2017.

FINANCIAL RESULTS :

Rs. in lakhs

2016-2017 2015-2016
Profit before Finance Cost Depreciation and Tax 1434.63 1623.08
Finance Cost 0.29
Depreciation 264.29 266.88
Profit Before Tax 1170.34 1355.91
Provision for Taxation (including Deferred Tax) 303.42 333.19
Profit for the year 866.92 1022.72

Dividend:

Your Directors have recommended a Final Dividend of Rs.1.70 per share (17%) whichtogether with an Interim Dividend of Re.1/- per Share (10 %) already paid makes a totaldividend of Rs.2.70 per share (27%) for the year ended 31st March 2017[Previous year Rs.2.70 per Share (27 %)].

Transfer to Reserves :

A transfer of Rs.700 lakhs has been made to the General Reserve which now stands atRs.6700 lakhs.

Operations :

The total quantity of tea manufactured during the year was 2442018 Kgs as against2926635 Kgs during the previous year. Rainfall during the year was 779 mm as against1326 mm during the previous year.

Adverse weather and poor rainfall have affected the crop severely leading to raise incost of production and the profit before tax for the year was lower at Rs.1170.34 lakhsas against Rs.1355.91 lakhs last year.

The total exports during the year was 1372489 kgs as against 1616193 kgs during theprevious year.

Your Company continues to focus on adoption of mechanized harvesting of green leaves atthe plantations greater automation of factories to ensure better quality production atlesser cost. Efforts are on continually to improve sales both in the domestic and exportfronts.

Directors and Key Managerial Personnel :

Of the Directors liable to retire by rotation Ms.Mallika Srinivasan andMr.N.Srinivasan will retire by rotation at the forthcoming Annual General Meeting. Theyare eligible for re-election and offer themselves accordingly.

Mr. R. Subramaniyan retired during the year. The Board acknowledges his contributionover a long period of his association with the Company.

Mr.D.Hegde and Mr.T.G.B.Pinto Whole-time Directors Mr.S.Raghuraman Chief FinancialOfficer and Mr.K.Guruswamy Company Secretary are the key managerial personnel of theCompany.

The policy regarding performance evaluation of Board of Directors and its Committeesand Independent Directors is available in the Company's web-site www.unitednilgiritea.com.

Annual evaluation of the Board of Directors its committees and that of the individualDirectors had been performed in accordance with the Company's policy on performanceevaluation in this regard and in compliance with the Companies Act2013 and SEBI (ListingObligation & Disclosure Requirements) Regulations2015.

Directors Responsibility Statement :

As required by sub-section 5 of Section 134 of the Companies Act 2013 your Directorsconfirm that :

(a) in the preparation of the Annual Accounts for the year ended 31st March2017 the applicable Accounting Standards have been followed along with proper explanationrelating to material departures;

(b) such accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2017 and of theprofit of the Company for the year ended on that date;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 tosafeguard the assets of the Company and to prevent and detect fraud and otherirregularities;

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

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

(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and were operating effectively.

Auditors:

The audit report issued by the Statutory Auditors on the Financial Statements of thefinancial year does not contain any qualification reservation or adverse remark.

M/s. Fraser & Ross Statutory Auditors (Firm Registration Number: 000829S) of theCompany retire at the ensuing Annual General Meeting and are not eligible forre-appointment by virtue of Section 139(2) of the Companies Act 2013.

The Board records its appreciation of their role and their valuable assistance sinceinception of the Company.

The Board at its meeting held on 17th May 2017 has accepted therecommendations of the Audit Committee to appoint M/s.K.S.Aiyar & Co. CharteredAccountants Coimbatore (Firm Registration Number 10186W) as Statutory Auditors of theCompany for a term of five years including the current financial year 2017-18.Theirappointment requires the shareholders' approval at the ensuing Annual General Meeting ofthe Company.

Your Directors commend the resolution proposed for your approval.

Particulars of Loan Guarantees or Investments under Section 186 :

The Company has not given any loan or guarantee or made investments in any bodycorporate in terms of Section 186 of the Companies Act 2013 during the financial year2016-17.

Related Party Transactions :

The Company has only one related party which is an Associate with which it had notransaction during the year except consolidating its audited accounts for the year ended31st March 2017 with the Company to the extent of share of investment. Sinceno transaction has been carried out with any related party Form AOC 2 is not attached.

Material changes and Commitments between 31st March 2017and date of this report:

There are no material changes and commitments affecting the financial position of thecompany which have occurred between 31st March 2017 and the date of thisreport.

Risk Management:

The Company has a robust risk management system. The strategic risks are integratedwith the business plan with mitigation measures.High impact operational and financialrisks are reviewed by the management periodically and discussed at the board quarterly.

Board and its Committees :

A detailed note on the composition of the Board and its Committees and the meetingsheld during the financial year is provided in the Corporate Governance Report.

Independent Director Declaration :

All the Independent Directors have given declarations that they meet the criteria ofindependence as provided in Section 149(6) of the Companies Act 2013.

Internal Financial Controls :

The Company has effective Internal Financial Controls both at the Entity levels andprocess controls. The system and process which are in place in accordance with therequirement of both the Companies Act 2013 and the guidance note of the Institute ofChartered Accountants of India. The Statutory Auditors have furnished their report onInternal Financial Control which does not contain any adverse remark.

Report on Corporate Governance and Management Discussion:

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the auditors certificate on Corporate Governance is enclosed as annexure to this report.

In terms of Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 Management Discussion and Analysis Report is set out in this report.

Conservation of Energy Technology Absorption Exports and Foreign Exchange Earningsand Outgo :

Details pertaining to the Conservation of Energy Technology Absorption and ForeignExchange earnings are given in Annexure-1.

Corporate Social Responsibility:

The CSR policy and the annual report on CSR activities are given in the Annexure-2.Thepolicy on Corporate Social Responsibility is also available in the Company's websitewww.unitednilgiritea.com.

Particulars of Employees :

Particulars as required by Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are given in Annexure-3.

A statement showing the remuneration of employees who were in receipt of remunerationas prescribed under Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 forms part of this report and will be provided to anymember on a written request to the Company Secretary .

Extract of Annual Return :

Extract of Annual Return of the Company in Form MGT - 9 is given as Annexure 4 to thisReport.

Awards and Distinctions :

At the Golden leaf India Awards held in Cochin in May 2017 Chamraj and Korakundahestates have bagged four awards.

Environmental Protection :

The Company has been certified by the Rain Forest Alliance and UTZ in the area ofenvironmental protection.

Industrial Relations :

Industrial relations have been cordial during the year.

Public Deposits :

The Company has not accepted or renewed any public deposit during the year.

Vigil Mechanism:

The Company has a vigil mechanism details of which can be accessed at the Company'swebsite www.unitednilgiritea.com.

Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act:

The Company's policy on Sexual Harassment can be accessed at the Company's websitewww.unitednilgiritea.com. No complaint was reported in this regard during the year underreview.

Secretarial Audit Report:

A Secretarial Audit Report as required in terms of provisions of Section 204 of theCompanies Act 2013 has been carried out by a firm of Practicing Company Secretaries andtheir report is annexed herewith and such report does not contain any qualificationreservation or adverse remark.

Others :

There is no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.

Acknowledgement :

The Board of Directors acknowledges the support received from the promotersshareholders Bankers suppliers customers and employees at all levels.

(For and on behalf of the Board)
Place : Chennai MALLIKA SRINIVASAN
Date : 17th May 2017 CHAIRMAN

(A) Conservation of Energy :

1. the steps taken or impact on conservation of energy;
2. the steps taken by the Company for utilizing alternate source of energy ; Efforts are taken to conserve energy to the best possible extent.
3. the capital investment on energy conservation equipment; NIL

(B) Technological Absorption :

1. the efforts made towards Technology absorption. UPASI's recommendation with respect to the field practices and manufacturing process are adopted to the extent possible to achieve better results.
2. the benefits derived like product improvement cost reduction product development or import substitution. Improvement in the quality of raw material and the end product which ultimately helps in better realization.
3. Imported technology Nil
4. Expenditure on R & D Nil

(C) Foreign Exchange Earnings and Outgo

Actual Inflow Rs. 284787182
Actual Outflow Rs. 16614843

ANNEXURE - 3

PAYMENT OF REMUNERATION TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

(Pursuant to Secon 197(12) of the Companies Act 2013 and Rule 5 (1) of the Companies{Appointment and Remuneration of Managerial Personnel} Rules 2014)

(i) The ratio of remuneration of each Wholetime Director to the median remuneration ofthe employees of the Company for the financial year :

S.No Name and Designation Remuneration paid during the year 2016–17 (Rs. in lacs) Ratio of the remuneration to Median Remuneration of the employees
1. Mr. D. Hegde Whole-time Director 38.92 11.99
2. Mr. T.G.B.Pinto Whole-time Director 39.24 11.89

(ii) Percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year :

There is no increase in remuneration of each non Whole-time Director. The ChiefFinancial Officer and the two Whole-time Directors were given the normal and usual annualincrement approved by the Board. There is no increase in remuneration of the CompanySecretary.

(iii) Percentage increase in the median remuneration of employees in the financial year:

Percentage increase in the median remuneration of employees in the financial year is8%.

(iv) Number of permanent employees on the rolls of the company :

Number of permanent employees on the rolls of the company as on 31st March 2017 is1167.

(v) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration ;

The average percentage increase of the workmen staff and managers was 8 %. TwoWhole-time Directors were given normal increase of 13 % for the year.

(vi) Affirmation that remuneration is as per the remuneration policy of the company.

It is affirmed that the Remuneration is paid as per the remuneration policy of theCompany.