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Warren Tea Ltd.

BSE: 508494 Sector: Agri and agri inputs
NSE: WARRENTEA ISIN Code: INE712A01012
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OPEN 133.95
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VOLUME 881
52-Week high 183.25
52-Week low 100.40
P/E
Mkt Cap.(Rs cr) 162
Buy Price 135.50
Buy Qty 50.00
Sell Price 136.95
Sell Qty 10.00
OPEN 133.95
CLOSE 134.00
VOLUME 881
52-Week high 183.25
52-Week low 100.40
P/E
Mkt Cap.(Rs cr) 162
Buy Price 135.50
Buy Qty 50.00
Sell Price 136.95
Sell Qty 10.00

Warren Tea Ltd. (WARRENTEA) - Director Report

Company director report

Your Directors present their Fortieth Annual Report to the Members together with theAudited Financial Statements for the year ended 31st March 2017.

Extract of Annual Return

Pursuant to Section 92(3) of the Companies Act 2013 read with rule 12(1) of theCompanies (Management and Administration) Rules 2014 extract of the Annual Return isannexed as Annexure A.

Board Meetings

The Board of Directors met 5 (Five) times in 2016-17. The details of the Meetings andAttendance of the Directors whereat are available in Annexure H to this Report.

Directors' Responsibility Statement

In terms of Section 134(5) of the Companies Act 2013 the Directors would like to statethat:

(a) in preparation of the annual accounts the applicable accounting standards had beenfollowed alongwith proper explanation in case of material departures;

(b) the Directors had selected such accounting policies and applied them consistentlyand made judgements and estimates 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 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.

Independent Directors

The declarations required under Section 149(7) of the Companies Act 2013 from theIndependent Directors of the Company confirming that they meet the criteria ofindependence as under Section 149(6) of the Companies Act 2013 were duly received by theCompany.

Nomination and Remuneration Policy

The Policy of the Company on Directors' appointment and remuneration including criteriafor determining qualification positive attributes and independence of a Director andother associated matters including remuneration of employees is appended as Annexure B tothis Report.

Particulars of loans guarantees and investments

The particulars of loans made by the Company are furnished in Notes 13 & 17 of theNotes to the Financial Statements.

The Company has not given any guarantee.

Particulars of investments made by the Company is given in Note 11 of the Notes to theFinancial Statements.

Related Party Contracts

The particulars of contracts or arrangements made with related parties is attached tothis Report as Annexure C.

State of the Company's Affairs

Current Year Previous Year
( Rs in Lakhs) ( Rs in Lakhs)
Profit/(Loss) before Depreciation and Tax (2163.35)

946.28

Less: Depreciation and Amortization 361.91

332.20

Profit/(Loss) before Tax (2525.26)

613.98

Tax Expense
Current Tax -

125.00

Deferred Tax (1008.38)

30.65

Profit/(Loss) for the year (1516.88)

458.33

Balance brought forward from Previous Year 7456.93

6998.60

Balance carried to Balance Sheet 5940.05

7456.93

The major accounting policies as narrated in the Notes to the Financial Statements inNote 26 in conformity with the Accounting Standards specified in the Companies Act 2013and the Rules framed thereunder have been followed as usual in the course of preparing andpresenting these Accounts. In accordance with Accounting Standard 10 as amended teabushes have been recognized as an item of Property Plant and Equipment as detailed inNote 26(2) of the Notes to the Financial Statements.

There were no companies which have become/ceased to be Subsidiaries Joint Ventures andAssociate Companies during the year.

Maple Hotels & Resorts Limited (‘Maple') continues to remain an AssociateCompany. During the year ended 31st March 2017 Maple recorded an increase ofabout 6.75% in its turnover to Rs 1537.08 Lakhs from Rs 1439.95 Lakhs in the previous yearas well as a profit before depreciation/ amortization and tax of Rs 1438.81 Lakhs(including net gain of Rs 1277.79 Lakhs from sale of investments) as against Rs 33.42Lakhs in the previous year.

As required under Section 129(3) of the Companies Act 2013 consolidated FinancialStatements together with a statement containing the salient features of the FinancialStatements of Maple forms a part of this Annual Report.

Pursuant to the Scheme of Arrangement approved by the Hon'ble Gauhati High Court by itsOrder dated 16th December 2013 realignment of interest of Promoters of Warren TeaLimited (‘WTL') took place. Consequent on the same Maple being part of WTL'sPromoter Group acquired 1076664 equity shares of the Company during the year as a resultof which your Company has become an Associate Company of Maple.

Deposits

The Company has not accepted any deposits within the meaning of Chapter V of theCompanies Act 2013.

Regulatory Orders

There have been no significant and material orders passed byRegulators/Courts/Tribunals impacting the going concern status and Company's operation infuture.

Internal Control Systems

Your Company continues to have an adequate internal audit system carried out by firmsof practising Chartered Accountants who submit Reports upon completion of audit forconsideration by the Directors. The details of the Internal Control System and theiradequacy are set out in the Management Discussion and Analysis Report forming part of theBoard's Report.

Auditors' Report

Messrs B M Chatrath & Co. LLP Statutory Auditors have submitted their Report inrespect of the financial year 2016-17 under Section 143 of the Companies Act 2013. Forthe year ended 31st March 2016 the Cost Audit had been completed by Messrs Shome andBanerjee Cost Accountants. The Cost Audit Report had been submitted by the Cost Auditorsto the appropriate authorities within the stipulated time on 6th October 2016.

Secretarial Audit

During the year the Board appointed Messrs MKB & Associates Practising CompanySecretaries as the Secretarial Auditor of the Company to carry out the Secretarial Auditfor the year 2016-17 under the provisions of Section 204 of the Companies Act 2013.

The Secretarial Audit Report given by Messrs MKB & Associates Company Secretariesin Practice is annexed to this Report as Annexure D which is self-explanatory and hence donot call for any further explanations.

Resum of Performance

During the year under review less favourable climatic conditions together with severepest attack on the tea bushes resulted in considerable decline in the volume of cropproduced which adversely impacted the unit cost of production; the same coupled withlower unit price realizations resulted in substantial decline in your Company's revenue toRs 11231.21 Lakhs from that of Rs 14314.07 Lakhs in the previous year. On accountof such decline in revenue coupled with increasing cost of inputs there has been loss ofRs 1516.88 Lakhs for the year under review.

Crop

Your Company's saleable crop was recorded at 6.09 Million Kgs. as compared to theprevious year's production of 7.18 Million Kgs.

Comparative Crop figures during the past five years for its seven tea estates are givenbelow:

Year Saleable Crop
Ended on In Million Kgs.
31.03.2017 6.09
31.03.2016 7.18
31.03.2015 6.58
31.03.2014 7.77
31.03.2013 6.46

Sales

Proceeds from sale of tea amounted to Rs 10878.26 Lakhs for the year under review asagainst

Rs 13711.00 Lakhs in the previous year for reasons mentioned earlier.

Quality

Your Company continues with its policy of manufacture only from its own leaf whichcoupled with maintaining sound agricultural practices ensure Quality.

Your Directors continue to ensure that teas of your Company are produced in a sociallyresponsible way. All tea estates of your Company continue to be participants of theEthical Tea Partnership Programme (ETP) of UK. This is further reaffirmed by all the seventea estates of your Company having obtained Rainforest Alliance Certification as well asISO 22000:2005 Certification. Further your Company's Integrated Pest Management Policyfor agro inputs conforms not only to the Plant Protection Code of the Tea Board of Indiabut also to the stringent conditions of the European Commission of the European Union(EU). Your Company continues with its emphasis on the critical issues of Maximum(Permissible Chemicals) Residue Limits (MRLs).

Exports

Exports for the year was Rs 953.88 Lakhs against Rs 1673.72 Lakhs for the previousyear.

Prospects

Your Directors are confident that better growing conditions and agricultural practiceswould improve the quality and volume of your Company's produce which would result inimproved performance.

Shareholders

Your Directors are of the view that considering the performance for the year it wouldnot be prudent to declare any dividend for the year under review.

Material changes and commitments consequent to year end

There were no material changes and commitments affecting the financial position of theCompany between the end of the financial year to which the financial statement relates andthe date of this report.

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

(A) Conservation of energy

(i) The steps taken or impact on conservation of energy:

There is increase in global focus on the issue of climatic control. Consumption andconservation of energy are an integral part of such focus. Your Company having beensensible to the same for many years continues with its efforts to regulate consumption andthereby conserve energy. Apart from the ecological aspect energy cost is one of the twomajor components of production cost the other being manpower. Your Company with a view tolimit such costs has continually made efforts to explore avenues to reduce consumption ofenergy and thereby reduce costs.

As a continuous process old and existing equipment are replaced by newer/alternateenergy efficient equipment. Not only equipment are replaced but processes are reviewed andchanges carried out with a view to continue consumption and conserve energy. The processof replacing incandescent bulbs with CFL/LED bulbs continue. The Company also continues toreplace conventional gas burners with economical burners having IPRS (Integrated PressureRegulating System) which reduces consumption of gas utilized in production. All theCompany's Tea Estates are making efforts with a view to optimize utilization of machinecapacity resulting in power saving.

(ii) The steps taken by the Company for utilizing alternate sources of energy:

During the year under review no steps have been taken for utilizing alternate sourcesof energy by your Company.

(iii) The capital investment on energy conservation equipment:

Your Company continues in its investments resulting in energy conservation. FurtherVFBD (Vibro Fluid Bed Drier) and CFM (Continuous Fermenting Machine) together witheconomic burners along with IPRS have been installed in some of the Tea Estates. Also newConveyor Systems have been put in place all of which is designed to increase productionefficiency and thereby leading to reduction in energy consumption as well as in mandayswhich also reduces costs. As before the Company continues in its coordination with theState Electricity Board for improving availability of Grid Power.

(B) Technology absorption:
(i) The efforts made towards technology absorption;
(ii) The benefits derived like product improvement cost reduction product development or import substitution;
(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;
(b) the year of import;
(c) whether the technology been fully absorbed;
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and

(iv) The expenditure incurred on Research and Development

The Company did not carry out any Research & Developmental activities on its own.However during the year the Company subscribed a sum of Rs 20.01 Lakhs to TeaResearch Association (‘TRA') which has been set up for the purpose of carrying outresearch aimed at improving various aspects of tea plantations who derive benefit fromsuch detailed work carried out by TRA. The expenses for such work are collectively borneby TRA from the contributions made by various tea companies.

(C) Foreign exchange Earnings and Outgo:
Foreign exchange - Earned (Gross) - Rs 962.39 Lakhs
- Outgo - Rs 24.43 Lakhs

Risk Management

The Company continues in its endeavours of managing business risks and has in place aRisk Management Policy and Plan towards the same. Particulars relating to the RiskManagement Committee are set out in the Corporate Governance Report at Annexure H to thisReport.

Corporate Social Responsibility

Pursuant to Section 135 of the Companies Act 2013 and the Relevant Rules the Boardhas constituted the Corporate Social Responsibility Committee presently comprising of MrsS Barman as Chairperson and Mrs A K Bindra Mr Vinay K Goenka and Mr S K Ghosh as Memberswith President-Legal & Company Secretary as its Secretary. The broad terms ofreference of the Corporate Social Responsibility (CSR) Committee are:

- Formulate and recommend to the Board the CSR Policy

- Recommend the amount of expenditure to be incurred on the activities undertaken

- Monitor the CSR Policy of the Company from time to time

- Review the performance of the Company in the area of CSR including the evaluation ofthe impact of the Company's CSR activities

- Review the Company's disclosure of CSR matters

The CSR Policy is available on Company's website at www.warrentea.com. The CSR Policyand related matters together with details of the Committee has been annexed as Annexure Eto this Report.

Board Evaluation

The Nomination and Remuneration Committee has earlier approved the Board EvaluationPolicy. All the Directors including Independent Directors and the Non-IndependentDirectors have continued to contribute their inputs in the process of evaluation of theDirectors. The Independent Directors and the Nomination and Remuneration Committee Membershave continued to review the performance of all the Directors including the Chairman andthe Managing Director and thence the performance of the Board as a whole. The Board inturn with such inputs have carried out annual evaluation of its own performance itsCommittees and individual Directors.

Audit Committee

The Audit Committee of the Board consists of three non-executive Independent Directors.Details of the Committee alongwith their terms of reference composition and meetings heldduring the year are provided in the report on Corporate Governance in Annexure H to thisReport.

Vigil Mechanism Committee

The Company has established a Vigil Mechanism for directors and employees to reporttheir genuine concerns which is overseen by the Audit Committee which also acts as theVigil Mechanism Committee. The Vigil Mechanism provides the Whistle Blower to lodgeProtected Disclosure in writing to the Committee in the form of a letter in a closedenvelope or by e-mail to the dedicated address; protection to genuine Whistle Blowerswould be given against any unfair treatment and any abuse of this protection will attractdisciplinary action. The Company has also provided a direct access to the Chairman of theAudit Committee on reporting issues concerning the interests of the employees and theCompany. The Vigil Mechanism/Whistle Blower Policy of the Company has been uploaded on thewebsite of the Company and can be accessed at www.warrentea.com.

Nomination and Remuneration Committee

The Committee consists of Mr S Bhoopal a Non-Executive Independent Director as itsChairman Mrs S Barman and Mr N Dutta Non-Executive Independent Directors as itsmembers;it recommends to the Board the Remuneration Package of Directors and KeyManagerial Personnel. Details of the Committee are set out in the Report on CorporateGovernance in Annexure H to this Report. The Nomination and Remuneration Committee hasformulated a policy for evaluation of Directors which contains evaluation criteria; suchcriteria include contributing to monitoring and reviewing etc. and has acted upon thesame.

Stakeholders Relationship Committee

The Committee consists of Mr S Bhoopal as the Chairman and Mrs A K Bindra Mr Vinay KGoenka and Mr S K Ghosh as members. Details of the Committee are provided in the Report onCorporate Governance in Annexure H to this Report.

Change in nature of Business if any

There has been no change in the business of the Company.

Details of Directors/Key Managerial Personnel

In accordance with the Articles of Association of the Company Mr S K Ghosh (DIN00042335) Managing Director of the Company retires by rotation and being eligible hasoffered himself for reappointment.

Mr Ghosh was reappointed as Managing Director for a period of three years with effectfrom 1st April 2017 subject to approval of the shareholders.

Personnel

In accordance with the provisions of Section 197(12) of the Companies Act 2013 readwith Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the particulars and information of the employees has been set out in Annexure F tothis Report. The welfare and wellbeing of the workers are monitored closely and amicablerelations with the employees are being maintained.

Industrial relations remained peaceful throughout the year and your Board of Directorsalso thank executives staff and workers at all levels for their valuable service andsupport during the year. All estates of your Company are certified under the RainforestAlliance thereby showing firm commitment towards sustainability as well as workers'health hygiene and safety. It is your Company's endeavour to provide safe healthy andsustainable work environment in all the estates. The Company has always believed ina policy against sexual harassment which has also found its place in the governing Codesof Conduct and Ethics applicable to its employees which includes a mechanism to redresssuch complaints. Further the Company has in place Internal Complaints Committees forAssam and Kolkata and during the year under review there were no complaints of sexualharassment at any of the units.

Corporate Governance

In compliance with the disclosures required under the said Regulation 27 of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 a Management Discussion and Analysis Report is provided in Annexure G.

The Report on Corporate Governance as required under the aforesaid Clause is alsoprovided in Annexure H to this Report together with the Declaration affirming compliancewith the Code of Conduct of the Company and Auditors' Certificate on compliance with theconditions of Corporate Governance.

Auditors

The reappointment of Messrs B M Chatrath & Co. since converted to Messrs B MChatrath & Co. LLP Chartered Accountants Statutory Auditors of the Company wasapproved by the Members at the thirty-seventh Annual General Meeting held on 10thSeptember 2014 to hold office till the conclusion of the forty-second Annual GeneralMeeting. The same is being placed for ratification by the Members at the ensuing fortiethAnnual General Meeting as required by the Companies Act 2013.

Messrs Shome & Banerjee Cost Accountants have been reappointed for audit of CostAccounts maintained by the Company for the year ending 31st March 2018 and theirremuneration is being placed for approval of the Shareholders at the forthcoming AnnualGeneral Meeting.

Kolkata Vinay K. Goenka
30th May 2017 Chairman