Aspinwall & Company Ltd.
|BSE: 533030||Sector: Others|
|NSE: ASPINWALL||ISIN Code: INE991I01015|
|BSE 05:30 | 01 Jan||Aspinwall & Company Ltd|
|NSE 00:00 | 18 Oct||133.00||
Aspinwall & Company Ltd. (ASPINWALL) - Director Report
Company director report
To the members
We are pleased to present the Report on our business and operations forthe year ended March 31 2019.
1. RESULTS OF OUR OPERATIONS
2. CORPORATE GOVERNANCE
The Company's philosophy on Corporate Governance oversees businessstrategies and ensures fiscal accountability ethical corporate behaviour and fairness toall stakeholders comprising regulators employees customers vendors investors and thesociety at large. Pursuant to the SEBI (Listing Obligations and Disclosure Requirements)2015 the Corporate Governance Report with the Auditor's Certificate thereon areattached and form part of this Report.
3. MANAGEMENT DISCUSSION & ANALYSIS (M.D.&A.)
This report includes M.D.& A as appropriate so that duplication andoverlapping between Board's Report and the entire material is provided in a compositeand comprehensive document.
4. BUSINESS PORTFOLIOS AND PERFORMANCE:
Our Company is a multi-line business organization and is engaged inLogistics services Coffee processing and trading Rubber plantations manufacture andtrading of Natural Fibre products.
Coffee is seasonal especially the Division's Monsooned coffeebusiness. Monsooned Coffees are Specialty Coffees from India that are considered Specialtyowing to its unique processing method physical traits and Cup quality.
Monsooned coffees are produced only in the Malabar coast especially inMangalore. It is listed under the GI products. Mangalore which experiences the South WestMonsoon rains in abundance during June Septem-ber became an established region forprocessing of Monsooned Coffee owing to the humid climatic conditions that was ideal forrecreating Monsooned Coffees. There are two types of Monsooned Coffees Arabica& Robusta. The primary processing is done during the Monsoon period i.e. June-September months. Our processing unit is ideally located to produce the finest quality ofMonsooned coffees.
Harvesting of coffee will take place between the months of Dec-Mar. Wehave to procure raw coffee for monsooning during Dec-July to take care of our 11 monthsshipments i.e. from October to next year Septem-ber. Monsooned coffees cannot be boughtoff the shelf as and when it is required for the shipments. Our sales take place in thefirst half around 30-35% and the balance 65-70% will take place in the second half.
During the year 2018-19 the Division has recorded the highest volumeand turnover inspite of the substantial reduction of prices in Coffee. The price ofCoffee reached the lowest in 13 years and therefore the Division could not achieve theGross Profit levels as compared to the previous two years. The year under review hastherefore been an year with normal Gross Profit level.
Natural Fibre Division:
During the year under review export of coir products from India hasdecreased as compared to the previous year. However there was substantial growth in theexport of Geotextiles and power loom mats. The wide applicability and eco friendlyproperty of coir geotextiles are promoting growth in this segment. There was little to nogains for the standard PVC Tufted doormats of the division.
In contrast the turnover for the division for the year under reviewwas the highest till date both in export as well as domestic sales. The division wassuccessful in achieving marked increase in profits compared to the previous year as aresult of increased sales coupled with tight cost controls and the favorable exchangerates.
Selling margins were slightly reduced during the period under reviewdue to severe pressure from business partners however this was in effect compensated withincreased business.
It is also to be noted that the period under review saw marked increasein operating expenses due to increase in raw materials costs. However the collectiveefforts taken to control raw materials usage and minimize wastage at all levels helpedthe division close the year with improved results.
Product and process quality control measures were strictly monitored inline with control of raw materials usage to avoid wastage and quality issues. There wereno quality issues/claims reported during the period under review.
The profit margins would have seen further improvement if printing ofdoor mats at Pollachi Tamil Nadu factory was not disrupted by local agitation during thepeak shipment period. Corrective action was taken by the division to move all painting toAlleppey based vendors. Although there was considerable increase in processing andtransportation costs the division managed to meet our delivery commitments without even asingle failure. A strategy is being developed to address printing issues at our factory inconsultation with the local Administration and the Pollution Control Board.
NFD has also articulated a vision to grow beyond its traditionaldoormat business by widening its scope to Natural products sourced from South India in thecoming years. We have already started exploring opportunity products like Virgin Coconutoil Lemongrass oil Coconut Barbecue briquettes Cotton and Jute textiles CoirMattresses Coir Pith products etc. for overseas markets under the Aspinwall brand name.Domestic sales are also showing good gains and poised for further growth. Setting up ofour own office and a marketing person in USA (as we did for Europe) is also on thepriority list.
Natural Rubber plantation industry in India was badly affected bytorrential rains and floods hitting the state of Kerala in the month of August 2018.Theunexpected floods have pushed the sector into more trouble especially when it was passingthrough a critical phase due to low prices climate vagaries high wages etc. Thetorrential rains have taken a heavy toll on the rubber output in India the world'ssixth-biggest producer and second-largest consumer.
India's natural rubber production fell by 7.5% to 6.9 lac tonnesin 2018-19 even as consumption went up by 9% to 12.1 lac tonnes compared to 2017-18. Asper Rubber Board's provisional data production was the second lowest in recent timesafter the FY 2015-16.
According to the Association of Natural Rubber Producing Countries(ANRPC) world production of natural rubber (NR) also has experienced a fall of 10.1%.
Our plantation could harvest a crop of 788477 Kgs only against a budgetof 950000 Kgs mainly on account of the heavy rains and landslide calamity. The Divisionhas taken maximum efforts to bring in more cost efficiency in its operations.
Despite of the adverse conditions the division could register aslender operational profit by cutting down costs generating additional income enhancingproductivity and improving the sales premium through better quality/services. The divisionhas successfully started a new venture utilizing the improved brand image and salespremium. The newly launched Bought Latex operations is making good strides by generatingadditional revenue enlarging the customer base apart from helping in combating thenegative effects of low market price. The division is also exploring the possibility ofinter-cropping like Coffee etc. The Wage Settlement is under negotiation and adequateprovision has been considered in the financials to take care of estimated rise in wages.
The price situation may slightly improve in the FY 2019-20 on accountof the increasing demand - supply gap and expected rise in crude oil prices due to obviousreasons which could in turn boost synthetic rubber prices.
During 2018-19 the division has handled new commodities viz. Met CokeRiver Sand Bauxite & Raw Cashews through its Mangalore Branch.
The Division is specialised in food grains import through its majorbulk-cargo handling locations. The volumes of the said cargo are largely controlled by theGovernment policies and therefore can vary from time to time. The performance of theDivision is not strictly comparable with the previous year which was an exceptionallygood year considering the large volumes of wheat and fertilizers which were handledduring the said year. This has also led to the substantial higher income from warehousesat our major Bulk cargo handling locations for the previous year.
5. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:
The Company has in place adequate systems of internal controlcommensurate with its size and the nature of its operations. These have been designated toprovide reasonable assurance with regard to recording and providing reliable financial andoperational information complying with applicable statutes safeguarding assets fromunauthorised use executing transactions with proper authorisation and ensuring complianceof corporate policies.
The Company has appointed M/s.Suri & Co. Chartered Accountants tooversee and carry out internal audit of its activities. The audit is based on an internalaudit plan which is reviewed every year in consultation with the Statutory Auditors andthe Audit Committee.
The Audit Committee of the Board of Directors of the Company reviewsthe Audit Reports submitted by the internal auditors. Suggestions for improvement areconsidered and the Audit Committee follows up on corrective action and reviews thepositive remedial actions taken.
Certain statements made in this Report relating to the Company'sobjectives projections outlook expectations estimates and others may constituteforward looking statements' within the meaning of applicable laws andregulations. Actual results may differ from such expectations whether expressed orimplied. Several factors could make significant difference to the Company'soperations. These include climatic and economic conditions affecting demand and supplygovernment regulations and taxation natural calamities over which the Company does nothave any direct control.
6. PERFORMANCE OF THE COMPANY:
The revenue from operations for the FY 2018-19 was at Rs.27242 lacswhich was marginally lower in comparison to the previous year's figure of Rs.28094lacs. EBITDA (before exceptional items) was Rs.967 lacs during the FY 2018-19 as comparedto the EBITDA of Rs.2658 lacs (before exceptional items) in the FY 2017-18. During theyear the total comprehensive income was Rs.738 lacs as against Rs.1317 lacs for the lastyear.
Transfer to Reserves
The Company proposes to transfer Rs.450 lacs to the General Reserve outof the amount available for appropriation and an amount of Rs.1643 lacs is proposed to beretained in the profit and loss account (excluding Other Comprehensive Income).
The Board of Directors are pleased to recommend a first and finaldividend of Rs.3/- per equity share for the year 2018-19 as compared to Rs.3.5/- perequity share for the year before.
7. DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS:
Human potentials has been perceived as powerful resource right fromfounding stage of Aspinwall wherein Company makes continuous and concerted efforts togroom its HR to meet with the present and future challenges in the field of Technology andManagement functions and also focuses on providing an environment conducive for groomingemployees to enable them to contribute on a continuous basis for the growth of theorganization and also to meet with the rapidly changing industrial scenario.
The company is deeply concerned about its Human Resource (HR) which isa prime asset for improvement and enhancement of productivity and profitability. Veryharmonious cordial and healthy industrial relations prevailed throughout the year.
The total strength of human asset of the Company as on March 31 2019was 776.
8. WHOLLY-OWNED SUBSIDIARIES:
The Company has four wholly-owned subsidiaries as on March 31 2019.There are no associate companies or joint venture companies within the meaning of Section2 (6) of the Companies Act 2013 ("Act"). There has been no material change inthe nature of business of the subsidiaries. Pursuant to the provisions of the Section 129(3) of the Act a statement containing the salient features of the financial statements ofthe Company's subsidiaries in Form AOC-1 is attached to the financial statements ofthe Company. Further pursuant to the provisions of the Section 136 of the Act thefinancial statements of the Company consolidated financial statements along with therelevant documents and separate audited accounts in respect of subsidiaries are availableon the website of the Company.
Following are the brief description of the wholly-owned subsidiaries ofthe Company:
8.1 Aspinwall Technologies Ltd
The main activities of the Company are the development and trading ofbusiness automation systems and programmes in software for Aspinwall and Company Limitedand its subsidiaries.
8.2 Malabar Coast Marine Services Pvt. Ltd.
The main activities of this Company are stevedoring and freightforwarding. Stevedoring is carried out mainly in the port of Mormugao (Goa). Freightforwarding is carried out in locations like Goa Bangalore and Mangalore.
8.3 Aspinwall Geotech Ltd.
Aspinwall Geotech Limited was formed for carrying on the business ofGeotextiles. However a major fire accident in the year 2002 had damaged a criticalmachinery and since then no commercial activity has been possible.
8.4 SFS Pharma Logistics Private Limited
SFS Pharma is engaged in the business of specialized logistics serviceand provides service for Door to door transportation of temperature/time sensitiveshipments in India and abroad.
SFS Pharma handles clinical trial/Pharmaceuticals/Biological sample andother temperature sensitive ship- ments by providing a validated VIP packaging as well asdata loggers.
The company has made made improvements in operations during the lasttwo years FY 2017-18 and 2018- 19 which is very encouraging and likewise the Company isconfident to make decent margins in the years to come.
The company has a plan to further invest in infrastructure manpowerpackaging etc in this FY2019-20 to strengthen its capability.
9. DIRECTORS' RESPONSIBILITY STATEMENT
i. in the preparation of the annual accounts the applicable accountingstandards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of the affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
iii. they have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv. the directors have prepared the annual accounts on a going concernbasis;
v. the directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively;
vi. they have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
10. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Changes in Directors
During the year under review Mr.Venkitraman Anand (DIN: 07446834)Executive Director resigned from the Board of Directors of the Company effective fromthe close of business hours of August 31 2018.
Mr.Adithya Varma (DIN: 02213375) retires by rotation and beingeligible has offered himself for re-appoint- ment.
Mr.Mahadev Lakshminarayanan (DIN:05003710) was appointed as anAdditional Director under the Independent category by the Board of Directors effectivefrom May 01 2018. The shareholders at the AGM held on August 01 2018 had regularisedthe said appointment by passing a Special Resolution for a period of five yearseffective from May 01 2018.
Pursuant to the provisions of Section 203 of the Act the KeyManagerial Personnel ("KMP") of the Company as on the end of the FY 2018-19 are Mr.Rama Varma Managing Director Mr.T.R.Radhakrishnan Chief Financial OfficerMr.Rajesh.S Chief Executive Officer and Mr.Neeraj R Varma Company Secretary.
The following were the changes to the list of KMPs of the Companyduring the FY 2018-19:
a) Mr.Venkitraman Anand Executive Director resigned from the Board ofDirectors of the Company effec- tive from the close of business hours of August 31 2018.
b) Mr.Rajesh.S was appointed as CEO of the Company effective fromNovember 12 2018.
The Independent Directors of the Company have submitted a Declarationunder Section 149 (7) of the Act declaring that they meet the criteria of independenceunder the said Act.
Number of meetings of the Board
Four meetings of the Board of Directors were held during the year. Fordetails of the meetings of the Board including the attendance details please refer tothe Corporate Governance Report which forms part of this report.
The Board of Directors has carried out an annual evaluation of its ownperformance Board Committees and individual directors pursuant to the provisions of theAct and the Corporate Governance requirements as prescribed by SEBI (LODR) Regulations2015 and based on the Guidance Note on Board Evaluation issued by SEBI. The performance ofthe Board was evaluated by the Board after seeking inputs from all the Directors on thebasis of the criteria such as composition of committees effectiveness of committeemeetings etc. The Board and the Nomination and Remuneration Committee reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc.
In addition the Chairman was also evaluated on the key aspects of hisrole. In a separate meeting of the independent directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into the views of the Managing Director and Non-Executive Director. Thesame was discussed in the Board Meeting that followed the meeting of the independentdirectors at which the performance of the Board its committees and individual directorswas also discussed. Performance evaluation of independent directors was done by the entireBoard excluding the independent director being evaluated.
Policy on directors' appointment and remuneration and otherdetails
The brief description of the Company's policy on Director'sappointment and remuneration and other matters has been disclosed in the CorporateGovernance Report which forms part of this Report.
The details pertaining to composition of Audit Committee are includedin the Corporate Governance Report which forms part of this Report.
Pursuant to the provisions of the Companies Act 2013 the Company atits AGM held on August 02 2017 had appointed M/s.BSR & Associates LLP CharteredAccountants (Firm Registration No.116231W/W-100024) as the Statutory Auditors of theCompany for a period of five years till the conclusion of the 102nd AGM of the Company tobe held in the year 2022.
M/s BBS & Associates Cost Accountants (Registration No.00273)were the Cost Auditors of the Company for the FY 2018-19. The Board of Directors at theirmeeting held on May 27 2019 has approved the reappointment of the said firm as the CostAuditors of the Company for the FY 2019-20 and has also recommended the Audit Fee payableto them. As per the provisions of the Companies Act 2013 read with Companies (Audit andAuditors) Rules 2014 audit fee payable to the Cost Auditors is to be ratified by themembers of the Company.
M/s BVR & Associates Company Secretaries LLP (AAE-7079) wereappointed as the Secretarial Auditors of the Company for the FY 2018-19.
Auditor's Report and Secretarial Audit Report
The Auditor's report and the Secretarial Audit Report does notcontain any qualifications reservations or adverse remarks. The report of the SecretarialAuditor is given as an Annexure which forms part of this Report.
12. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company has not advanced any loans/guarantees under section 186 ofthe Act during the year. The details of the loans granted by the Company to itswholly-owned subsidiaries of the Company is given as an Annexure to this Report.
13. TRANSACTIONS WITH RELATED PARTIES
None of the transactions with related parties falls under the scope ofSection 188 (1) of the Act. Information on transactions with related parties pursuant toSection 134 (3) (h) of the Act read with Rule 8 (2) of the Companies (Accounts) Rules2014 are given as an Annexure in Form AOC-2 and the same forms part of this Report.
14. CORPORATE SOCIAL RESPONSIBILITY
The brief outline of the Corporate Social Responsibility (CSR) Policyof the Company and the initiatives undertaken by the Company on CSR activities during theyear are set out as an Annexure of this Report in the format prescribed in the Companies(Corporate Social Responsibility) Rules 2014. For other details of the CSR Committeeplease refer to the Corporate Governance Report which forms part of this report. ThePolicy is available on the website of the Company (URL:http://aspinwall.in/corporate-governance.php).
15. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Act the extract ofthe Annual Return is given as an Annexure in the prescribed Form MGT-9 which forms partof this Report.
16. PARTICULARS OF EMPLOYEES
There are no employees drawing remuneration more than the prescribedlevels as mentioned under Section 197 of the Act read with Rule 5 (1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 and the subsequentamendments thereto. The other information required under the said provisions are givenbelow: a) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year:
*The remuneration for Non-Executive/Independent Directors are theSitting Fees paid to them for attending the Board/Committee meetings held during the year.The same varies based on their attendance at the meetings.
#Inducted to the Board of Directors w.e.f. May 01 2018.
@Resigned from the Board of Directors w.e.f. August 31 2018.
b) The percentage increase in remuneration of each Director ChiefFinancial Officer Chief Executive Officer and Company Secretary in the financial year:
* The remuneration for Non-Executive/Independent Directors are theSitting Fees paid to them for attending the Board/Committee meetings held during the year.The same varies based on their attendance. Also the Sitting Fee for theNon-Executive/Independent Directors was increased during the FY 2018-19 with theapproval of shareholders at the Annual General Meeting.
** Inducted as Additional Director w.e.f. August 17 2017.
# Inducted as Additional Director during the FY 2018-19.
$ Resigned from the Board of Directors w.e.f. August 31 2018.
& Decrease is due to the reduction in Variable Pay component.
@ The increase is due to the Variable Pay component as per the Policyof the Company and due to the annual increments.
c) The percentage increase in the median remuneration of employees inthe financial year: -2.03%
d) The number of permanent employees on the rolls of the Company as onMarch 31 2019: 776.
e) Average percentile increase already made in the salaries ofemployees other than the managerial personnel in the last financial year and itscomparison with the percentile increase in the managerial remuneration and justificationthereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration:
The average annual increase made in the salaries of employees otherthan managerial personnel was 13.28%.
Increase in the remuneration of managerial personnel for the year was7.50% (the said variation is due to the Variable Pay component based on the Policy and thechange in the eligibility criteria of the said Policy).
f) The Company affirms that the remuneration is as per the remunerationpolicy of the Company.
g) The top 10 employees of the Company in terms of the remunerationdrawn during the year 2018-19 are enclosed as Annexure to this Report.
17. DEPOSITS FROM PUBLIC
As reported last year the Company has stopped accepting/renewing FixedDeposits and has repaid all the Fixed Deposits as on March 31 2015. The unclaimedinterest amounts relating to the earlier Fixed Deposits are lying in the Interest WarrantBank Account of the Company and is being transferred to the Investors' Education andProtection Fund ("IEPF") as and when it is due to be transferred pursuant tothe provisions of the Act.
18. FOREIGN EXCHANGE EARNINGS AND OUTGO
(a) Export activities initiatives taken to increase export etc.
Coffee and Coir are the major export oriented business of the Company.
Our representative based at Netherlands over the past several years hasbeen able to promote the activities of the Company across Europe. His efforts along withthe visits of senior executives from India have helped the Company to retain and improvethe customer base across Europe. During the year the Companies' Executives alongwith our representative in Europe have participated/attended various exhibitions/tradefairs.
(b) Total foreign exchange used and earned
During the year under review the Company's foreign exchangeearnings amounted to Rs.13249 lacs compared to Rs.12623 lacs in the previous year. Thetotal outgo of foreign exchange amounted to Rs.72 lacs as against Rs.42 lacs in theprevious year.
The Company has not contemplated any buy-back of shares.
There has been no change in the share capital of the Company during theFY 2018-19.
20. CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGYABSORPTION
The particulars as prescribed under Section 134 (3) (m) of the Actread with the Companies (Accounts) Rules 2014 are not applicable to your Company.
21. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the Regulatorsor Courts or Tribunals impacting the going concern status and the Company'soperations in future.
22. ENTERPRISE RISK MANAGEMENT
The Board of Directors had also formulated a Risk Management Policy foridentification assessment monitoring mitigation and reporting procedures of enterpriserisks. The Risks have been categorised under Strategic Operational Financial Complianceand Project headings.
23. MENTORSHIP AND SUCCESSION PLANNING POLICY
The Board of Directors has formulated a comprehensive policy forestablishing a structured approach to ensure an internal supply of competent employees whocan take up key positions when necessary. The roles eligibility time frame integrationwith other Human Resource functions and Succession Planning process for the seniormanagement has been spelt out in the Policy.
24. VIGIL MECHANISM/WHISTLE-BLOWER POLICY
Vigil Mechanism is created pursuant to the provisions of Section 177 ofthe Act which is an instrument through which genuine complaints regarding the Companycan be reported by both the Directors as well as Employees of the Company to an authority.The Audit Committee has been identified for this purpose. The mode of operation of VigilMechanism has been defined by the Audit Committee. Adequate safeguards againstvictimisation of persons who use Vigil Mechanism to make a direct access to the Chairmanof the Audit Committee is provided.
Your Directors take this opportunity to thank our customersshareholders suppliers bankers business partners/ associates financial institutionsand Central and State Governments for their consistent support and encouragements to theCompany. We would also place on record our sincere appreciation to all employees of theCompany for their hard work and commitment.
The Directors appreciate and value the contributions made by everyemployee of the Aspinwall family.