Your Directors are pleased to present the Thirty Third Annual Report of the Companytogether with the Audited Accounts for the financial year ended March 31 2019.
|Particulars ||2018-19 ||2017-18 |
|Income from Operations ||330.40 ||300.22 |
|Other Income ||3.87 ||12.02 |
|Total Income ||334.27 ||312.24 |
|Profit before tax for the year ||30.07 ||32.98 |
|Less : Provision for taxation || || |
|Current Tax || || |
|In respect of current year ||8.25 ||11.70 |
|In respect of prior year ||(1.00) ||- |
|Deferred Tax ||1.71 ||(0.11) |
|Profit after tax ||21.10 ||21.39 |
|Add: OCI classified to Retained Earnings ||(0.58) ||0.08 |
|Add: Surplus brought forward ||36.08 ||31.95 |
|Less: Unrealised Fair Value gains not available for appropriation ||1.29 ||4.33 |
|Total Amount available for dividend payout |
|55.31 ||49.09 |
|Interim Dividend (20%) paid on equity shares ||3.05 ||3.05 |
|Tax on Interim Dividend ||0.62 ||0.62 |
|Transfer to General Reserve ||10.00 ||10.00 |
|Final Dividend on Equity Shares paid for earlier year ||3.05 ||3.05 |
|Tax on Final Dividend ||0.62 ||0.62 |
|Net Amount available for dividend payout ||37.97 ||31.75 |
|Surplus carried Forward to balance sheet ||39.26 ||36.08 |
Proposed dividend on equity shares and tax on dividend has not been recognised as adistribution of profit in the current year's accounts in accordance with the IndianAccounting Standard
Total income increased from Rs.312.24 crores in 2017-18 to Rs.334.27 Crores in 2018-19with an increase of 7.06%. Profit after Tax for the year 2018-19 is Rs.21.10 Crores(previous year 2017-18: Rs. 21.39 Crores) showing a decrease of 1.34%.
With Fixed Assets of Rs. 98.23 Crores (previous year 2017- 18 -Rs.84.47 crores) ourAsset Turnover ratio is a healthy 3.36% with Return on Sales of 10.37%.
Your Directors are pleased to recommend a final dividend of Re.0.20 per share (20%)with face value of Re.1/- each on Equity Share Capital for the year ended 31.03.2019amounting to Rs 304.57 Lakhs excluding dividend tax. During the year the Board declaredan Interim Dividend of Re.0.20 per share (20%) with face value of Re.1/- each amountingto Rs.304.57 Lakhs excluding dividend tax. The aggregate of dividend declared during theyear was Re.0.40 per share (40%) with face value of Re.1/- each amounting to Rs.609.14Lakhs excluding dividend tax.
TRANSFER TO GENERAL RESERVE
Your directors are pleased to transfer a sum of Rs.10 crore to the General Reserve
Cash and bank balances as at 31st March 2019 was Rs.867.34 lakhs (previousyear Rs.664.83 lakhs). The Company continues to focus on judicious management of itsworking capital receivables inventories and other working capital parameters and whichwere kept under strict check through continuous monitoring.
During the year the Company has obtained the Term loan of Rs.15 crore from the FederalBank Limited which is given in the note No.14 to the financial statements.
The wind mill of the Company located at Kokkampalayam village Dharapuram Taluk ErodeDistrict Tamil Nadu generated 960721 units of electricity in the year
2018- 19 against 998609 units generated in 201718. The Company utilised the entire960721 units generated as captive consumption during 2018-19 for its Satyamangalamplant.
The Board of Directors met five times during the financial year. The details of theBoard meeting are given in the Corporate Governance report. The intervening gap betweenthe meetings were within the period stipulated under the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
AUDIT COMMITTEE MEETING
The Audit Committee of the Company met five times during the current financial year.The details of the
Audit Committee meetings are given in the Corporate Governance report. The interveninggap between the meetings were within the period stipulated under the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013 and Schedule V of the Securities Exchange Board ofIndia (Listing Obligations and Disclosure Requirement) Regulations 2015 except the'Corporate Guarantee' given on behalf of AVT Tea Services Ltd. London and to AVT NaturalS.A. DE C.V. Mexico which is given in the note No.33 to the financial statements. Thedetails of investments made by the Company are given in the note No.5 to the financialstatements.
LISTING WITH STOCK EXCHANGES
The Company Shares are continued to be listed in both BSE Limited (BSE) and theNational Stock Exchange of India Limited (NSE). The Company has paid listing fees up to 31stMarch 2020 to both the BSE Limited (BSE) and the National Stock Exchange of India Limited(NSE).
DSIR APPROVAL FOR IN-HOUSE R&D FACILITY AT SOUTH VAZHAKULAM AND BANGALORE
The recognition by the Department of Scientific and Industrial Research (DSIR) NewDelhi for the Company's both R&D facilities situated at South Vazhakulam AluvaKerala and the Manchenahaili Village Kasabe Hobari Bangalore were valid upto 31stMarch 2019 and the same was subsequently renewed upto 31.03.2022.
COMMERCIAL PRODUCTION IN 100% EOU TIPTUR
The Commercial production in the 100% EOU unit at Tiptur has commenced w.e.f. 4thSeptember 2018 and the said plant is dedicated to Marigold products.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes or events that have occurred since the date of theBalance Sheet which could have any effect on the financial position of the Company
DIRECTORS & KEY MANAGERIAL PERSONNEL
i) Director retiring by rotation
In accordance with the provisions of Companies Act 2013 and the Articles ofAssociation of the Company Mr. Ajit Thomas Director retires by rotation at the 33rdAnnual General Meeting and being eligible offers himself for re-appointment.
ii) Re-appointment of Independent Directors
Mr. M.A. Alagappan and Mr. P. Shankar Independent directors of the Company areproposed to be re-appointed for another term of 5 consecutive years under section 149 readwith schedule IV of the Companies Act 2013 who are not liable to retire by rotationoffer themselves for appointment.
ii) Declaration from Independent Directors on Annual Basis
The Company has received necessary declarations from all the three IndependentDirectors of the Company under Section 149(7) of the Companies Act 2013 that theIndependent Directors of the Company meet with the criteria of their Independence laiddown in Section 149(6) of the Companies Act 2013.
iii) Key Managerial Personnel
Mr. M.N. Satheesh Kumar President and CEO Mr. A. Ramadas Sr. Vice President and CFOand Mr. Dileepraj. P Company Secretary are the Key Managerial Personnel of the Company.
During the year the Company conducted postal ballot and the results of the same wereannounced on 27.03.2019 for passing three Special Resolutions for continuation of Mr.M.A. Alagappan Mr. P. Shankar and Mr. A.D. Bopana as the Non-Executive & IndependentDirectors of the Company who attained the age of 75 years.
performance of subsidiary/joint venture /
a) AVT Natural SA DE C.V. Mexico (AVTN)
During the year your Company incorporated a wholly owned subsidiary Company in thename and style AVT Natural SA DE C.V Mexico with an aim to establish and capture marketfor the Animal Nutritional products in South American market to start with. The saidCompany has come into existence on January 02 2019. The total authorized capital of thesubsidiary is MXN. peso $ 1000000/- (approx. USD 52000/-) consisting of 1000000equity shares with face value of MXN $1 each. The paid up capital for the period as on31.3.2019 was MXN $ 200000/- (approx. USD 11000/-) and out of which 199999 shares areheld in the name of AVT Natural Products Limited and one share is held in the name of Mr.Ajit Thomas.
b) AVT Tea Services Ltd. London UK (AVTTSL)
During the year the Company has re-constituted the Board of Directors of the AVTTSLwith the induction of Mr. M.A. Alagappan Independent Director. The re-constituted Boardconsists of Mr. Ajit Thomas Mr. Richard Darlington and Mr. M.A. Alagappan as Directorsand the re-constituted Board came into existence from 1.4.2019.
The present authorized share capital of the Company is Pound Sterling (GBP) 1 million.The paid up capital of the Company as on 31st March 2019 is Pound Sterling(GBP) 1 million. AVTTSL is the marketing arm of your Company for de-caffeinated tea andinstant tea. The AVTTSL recorded sales of Rs.79 Crores (previous year Rs.106 crore) andprofit of Rs.0.52 crore (previous year Rs.1.31 crore) for the year 2018-19.
There is a significant growth in the Instant Tea business of your Company which is theresult of continued and persistent marketing strategy pursued by them.
Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the financial statements of AVTN AVTTSL & its step-downsubsidiary in the prescribed Form AOC-1 is provided in the Page Nos. 101 102 & 103 ofAnnual report.
c) Accounts of subsidiaries
Pursuant to Section 136 of the Companies Act 2013 a copy of the audited financialstatements of AVT Tea Services Ltd. London & AVT Natural SA DE CV Mexico for theperiod ended 31.03.2019 the overseas subsidiary of your Company shall be provided to anyshareholder free of cost on their request. The Audited financial statements are alsoavailable on the website of the Company. The Consolidated financial statements audited bythe statutory auditors of the Company have been attached to this Report.
There were no commercial transactions made by the AVTN Mexico during the period ended31.3.2019.
d) Joint Venture / Associate Company
The Company does not have any Joint Venture / Associate Company
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars prescribed by the section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology Absorption Foreign Exchange earnings and outgo are furnished in the Annexure-Ito this Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 CSR Committee ofthe Board of Directors was formed to recommend
a. the policy on Corporate Social Responsibility (CSR) and
b. implementation of the CSR Projects to be undertaken by the Company as per the CSRPolicy for consideration and approval by the Board of Directors.
Annual Report on CSR in the prescribed format is enclosed as Annexure - II. The CSRpolicy of the Company has been already uploaded in the web site:HREF="http://www.avtnatural/">www.avtnatural . com /investor_relations.
CONTENTS OF CSR POLICY
The Company's commitment to CSR projects and programs will be the focus on holisticdevelopment of host communities and create social environmental and economic value to thesociety. CSR initiatives of the Company are such that it stimulate well-being in thecommunity and fulfil the role as responsible corporate citizen.
To Company's commitment to CSR projects and programs will be by investing resourcesinto any of the areas like Development of Skilling among various sections of societyDevelopment of Infrastructure Empowerment of Women Promotion of Health Care Old agehomes / day care facilities for Senior Citizens Promotion of Education Swatch bharathand all other activities envisaged in the Schedule VII of the Companies Act 2013.
The Company has won NIPM Kerala Best Corporate Citizen Award 2018 (under Category II)for those companies with CSR Minimum Budget between Rs. 51 Lakhs and Rs. 99 Lakhs. The aimof the award was to identify and recognize the efforts of companies in integrating andinternalizing Corporate Social Responsibility (CSR) into their core business operations.The award acknowledges efforts of the companies which engage in CSR in a strategic andsystematic manner and integrate it with their overall corporate strategy.
Pursuant to section 139 and 142 of the Companies Act 2013 the members in their 31stAnnual General Meeting held on 10.8.2017 appointed M/s PKF Sridhar & Santhanam LLPChartered Accountants KRD Gee Gee Crystal 7th Floor 91-92 Dr.Radhakrishanan Salai Mylapore Chennai - 600004 (Firm's Registration No. 003990S /S200018) the Statutory Auditors of the Company for a period of 5 years till theconclusion of the 36th Annual General Meeting. In view of the amendment to theCompanies Act 2013 notified by the Ministry of Corporate Affairs dated 7th May2018 no longer their appointment to be ratified by the Members.
There are no qualifications or adverse remarks mentioned in the Auditors' report. Thenotes to accounts forming part of financial statements are self-explanatory and needs nofurther clarification.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. V. Suresh Practising Company Secretary (C.P No.6032) Chennai - 600 018 toundertake the Secretarial Audit of the Company.
The Secretarial Audit Report in form MR-3 submitted by the Secretarial Auditors forthe financial year 2018-19 is annexed to this report as Annexure - III and forms anintegral part of this Report.
There is no secretarial audit qualification reservation or adverse remarks in theSecretarial Report for the period under review.
During the year the Company has complied with the Secretarial Standard 1 (SS-1) andSecretarial standard 2 (SS-2) issued by the Ministry of Corporate Affairs.
COST AUDIT REPORT
Cost Audit is not applicable to the Company as per the Companies (Cost Records &Audit) Rules 2014 however the cost records are maintained by the Company.
REPORTING OF FRAUD
The Auditors of the Company have not reported any fraud as specified under section 143(12) of the Companies Act 2013.
The Company continues to carry adequate insurance for all assets against unforeseeableperils.
RELATED PARTY TRANSACTIONS
All transactions entered with related parties for the year under review were at arm'slength basis and in the ordinary course of business and that the provisions of Section 188of the Companies Act 2013 are not attracted. There were no transactions exceeding 10% ofthe annual consolidated turnover as per the last audited financial statements with anyrelated party during the year.
Further there were no material related party transactions during the year under reviewwith the Promoters Directors or Key Managerial Personnel or other designated personswhich may have a potential conflict with the interest of the Company at large except thepayment of remuneration of directors relative exceeding Rs.30 lakhs per annum which wasapproved by the shareholders in its meeting held on 10.08.2017. The disclosure of RelatedParty transactions to be provided under section 134 (3)(h) of the Companies Act 2013 readwith Rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC -2 is given in theAnnexure - IV forming part of this report.
As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 allthe related party transactions were placed before the Audit Committee and also the Boardof Directors The Prior omnibus approval of the Audit Committee was obtained on yearly /quarterly basis for the transactions entered with related parties except with the whollyowned subsidiary Companies whose accounts are consolidated with the Company. Thetransactions entered into pursuant to the omnibus approval so granted has been placedbefore the Audit Committee and the Board of Directors for their approval on a quarterlybasis.
The Company is having both the Related Party Transaction policy and the Policy fordetermining Material Subsidiary which are hosted in the website of the Company under thelinkHREF="http://www.avtnatural.com/investor_relations">www.avtnatural.com/investor_relations.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS AND COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT - 9 isenclosed herewith as Annexure - V.
The annual return of the Company has been uploaded in the web site and the same can beaccessed with the web site link www.avtnatural.com/investor_relations .
The information under section 197 of Companies Act 2013 and pursuant to rule 5 (2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aregiven in the Annexure - VI.
The information required under section 197 (12) of the Companies Act 2013 read withrule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of the Company have been given in the Annexure - VII.
The statement containing remuneration paid to employees and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in aseparate annexure forming part of this report. Further the report and the accounts arebeing sent to the members excluding the aforesaid annexure. In terms of Section 136 of theAct the said annexure is open for inspection at the Registered Office of the Companyduring business hours on working days of the Company upto the date of the forthcomingAnnual General Meeting. Any member interested in obtaining a copy of the same may write tothe Company Secretary and the same will be provided free of cost to the member.
Your Company during the year under review enjoyed cordial relationship withtechnicians/workers and employees at all levels.
NOMINATION AND REMUNERATION POLICY
The Board on the recommendation of the Nomination & Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management Personnel KeyManagerial Personnel and their remuneration etc. A copy of the policy is uploaded in theweb site of the Company and the website link is www. avtnatural.com/investor_relations.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism / Whistle Blower Policy in place pursuant to Section177 (9) of the Companies Act 2013 and as per the Regulation 22 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The said policy is available inthe website of the Company which can be accessed from the link -www.avtnatural.com/investor_relations . During the year no instances of unethical behaviorwere reported.
Pursuant to Section 134 (3) (n) of the Companies Act 2013 and the Regulation 21 (5) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hadlaid down the procedures to inform Board members about the risk assessment and mitigationprocedures.
The Company is having in place a 'Risk policy and risk management Procedures'. Mr. A.Ramadas Sr. Vice President and CFO has been assigned the task of informing the Boardabout the various risks and its mitigation by the Company from time to time. At presentthe Company has not identified any element of risk which may threaten the existence of theCompany.
ADEQUACY OF INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROL
The Company has in place adequate Internal Audit and Internal Financial Controls withreference to the financial statements which is evaluated by the Audit Committee as perPart C of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Apart from Statutory Audit your Company in compliance with Section 138 of theCompanies Act 2013 had engaged M/s Varma & Varma Chartered Accountants BuildingNo. 53/333 Off.Subash Chandra Bose Road Vytilla Post Kochi - 682 019 Kerala as theInternal Auditors of the Company for the financial year 2018-19. Findings and observationsof the Internal Auditors are discussed and suitable corrective actions are taken as
per the directions of the Audit Committee on an on-going basis to improve efficiency inoperations.
The Company's internal control systems are well established and commensurate with thenature of its business and the size and complexities of operations and adequate withreference to the financial statements as envisaged under the Companies Act 2013.
Your directors endorse that during the year under review there were no reportablematerial weaknesses in the present systems or operations of internal controls.
ENVIRONMENT AND Safety
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances environmental regulations and preservation ofnatural resources.
The Board of Directors has made a formal annual evaluation of its own performance andthat of its committees individual Directors & CEO pursuant to the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation2015. The evaluation was done based on the evaluation criteria formulated by Nominationand Remuneration Committee which includes criteria such as fulfilment of specificfunctions prescribed by the regulatory framework adequacy of board meetings attendanceand effectiveness of the deliberations etc.
Each Board member completed a questionnaire providing feedback on the functioning andoverall level of engagement of the Board and its committees on the parameters such as thecomposition execution of specific duties contribution of new ideas/insights qualityquantity and timeliness of flow of information deliberations at the meetingindependence/non-partisan approach in decision making etc.
Independent Directors met on 14th February 2019 to review performanceevaluation of Non-Independent Directors and the entire Board of Directors including theChairman Non-Executive Directors etc. The Independent Directors were satisfied with theoverall functioning of the Board flow of information to the Board its various Committeesand also of the performance of other Non-executive Directors and the Chairman of Board
DISCLOSURE OF ACCOUNTING TREATMENT
The Company has adopted the Indian Accounting Standards (Ind AS) with effect from 1stApril 2017 and the Ind AS 115 with effect from 1st April 2018 and all itsfinancial statements are made according to the said standards. Further in the preparationof the financial statements
the Company has followed the Accounting Standards referred to in Section 133 of theCompanies Act 2013. The significant accounting policies which are applied are set out inthe Notes to the Financial Statements.
Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 27 read with Part E of Schedule II and Schedule V of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 on corporate Governance. The ManagementDiscussion & Analysis Report Report on Corporate Governance with Auditors'Certificate on compliance with conditions of Corporate Governance have been Annexed VIIIIX and XI to this Report.
Disclosure under the Sexual Harassment of Women at work place (Prevention Prohibitionand Redressal) Act 2013.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Act and that an Internal Complaints Committee has been set up for redressal ofcomplaints and that all employees (permanent contractual temporary trainees) arecovered under this policy.
During the year the Company has not received any complaint under Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013.
Statements in this Directors' Report & Management Discussion and Analysis Reportdescribing the Company's objectives projections estimates expectations or predictionsmay be 'forward looking statements' within the meaning of applicable securities laws andregulations. Actual results could differ materially from those expressed or implied.Important factors that could make difference to the Company's operations include rawmaterial availability and its prices cyclical demand and pricing in the Company'sprinciple markets changes in Government regulations Tax regimes economic developmentswithin India and the countries in which the Company conducts business and other ancillaryfactors.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 (3) (c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:
1. In the preparation of the accounts for the financial year ended 31stMarch 2019 the applicable accounting standards had been followed along with properexplanation relating to material departures;
2. The Directors have 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 at the end of the financial year and ofthe profit of the Company for that period;
3. 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;
4. The Directors have prepared the accounts for the financial year ended 31stMarch 2019 on a 'going concern' basis.
5. The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.
6. The directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
Your Directors take this opportunity to thank and place on record their sincereappreciation for the continued co-operation and support extended by the customerssuppliers farming community bankers BSE Limited (BSE) the National Stock Exchange ofIndia Limited (NSE) other stake holders etc. Furthermore grateful to the shareholdersof the Company who reposed their faith in the establishment and its management.
Your Directors also wish to place on record their sincere appreciation for thecontribution commitment support and continued co-operation extended by the employees atall the levels.
| ||For and On behalf of the Board |
|Place : Chennai ||Ajit Thomas |
|Date : 28th May 2019 ||Chairman |
4. Expenditure on R&D (in Rupees)
| ||2018-19 ||2017-18 |
|I Capital ||3333923 ||5078650 |
|Ii Recurring ||67224155 ||39255455 |
|iii Total ||70558078 ||44334105 |
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
During the year under review foreign exchange earnings were Rs 300.11 crores (previousyear Rs.263.84 crores) and foreign exchange outgo was Rs.99.20 crores (previous yearRs.105.86 crores).