Your Directors are pleased to present the Thirty Fourth Annual Report of the Companytogether with the Audited
Accounts for the financial year ended March 31 2020.
(Rs. in Crores)
|Particulars ||2019-20 ||2018-19 |
|Income from Operations ||385.00 ||330.40 |
|Other Income ||7.32 ||3.87 |
|Total Income ||392.32 ||334.27 |
|Profit before tax for the year ||48.55 ||30.07 |
|Less : Provision for taxation || || |
|Current Tax || || |
|In respect of current year ||13.70 ||8.26 |
|In respect of prior year ||Nil ||(1.00) |
|Deferred Tax ||(2.95) ||1.71 |
|Profit after Tax ||37.80 ||21.10 |
|Add: OCI classified to Retained ||(0.37) ||(0.58) |
|Earnings || || |
|Add: Surplus brought forward ||39.26 ||36.08 |
|Less: Unrealised Fair Value gains not available for appropriation ||(1.62) ||1.29 |
|Total Amount available for dividend payout ||75.07 ||55.31 |
|Less: || || |
|Interim Dividend (25%) paid on equity shares ||3.81 ||3.05 |
|Tax on Interim Dividend ||0.78 ||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 ||56.81 ||37.97 |
|Surplus carried Forward to balance sheet ||58.43 ||39.26 |
Proposed dividend on equity shares and tax on dividend has not been recognized as adistribution of profit in the current year's accounts in accordance with the IndianAccounting Standard.
Total income increased by 17.37% to Rs.392.32 crores in 2019-20 from Rs.334.27 crores .The Profit after Tax for the year 2019-20 is Rs.37.80. crores (previous year 2018-19: Rs.21.10 crores) showing an increase of 79.11%. With Property Plant and Equipmentsincluding right of use assets. of Rs.99.20 crores (previous year Rs.98.23 crores) ourProperty Plant and Equipments ratio is healthy at 3.88% with Return on Sales of 13.78%.
Your Directors are pleased to recommend a final dividend of Re.0.35 per share (35%)with face value of Re.1/- each on Equity Share Capital for the year ended 31.03.2020amounting to Rs.532.99 Lakhs. During the year the Board declared an Interim Dividend ofRe.0.25 per share (25%) with face value of Re.1/- each amounting to Rs.380.71 Lakhsexcluding dividend tax. The aggregate of dividend declared during the year was Re.0.60 pershare (60%) with face value of Re.1/- each amounting to Rs.913.70 Lakhs excludingdividend tax in respect of interim dividend.
TRANSFER TO GENERAL RESERVE
Your directors are pleased to transfer a sum of Rs.10 crore for the year 2019-20(previous year Rs.10 crore) to the General Reserve.
Cash and bank balances as at 31st March 2020 was Rs.1402.69 lakhs (previousyear Rs.867.34 lakhs). The Company continues to focus on the judicious management of itsworking capital receivables inventories and other financial parameters and which werekept under strict check through continuous monitoring.
The outstanding term loan from Federal Bank Limited as on 31st March 2020 isRs.13.50 crore which is given in the note No.15 & 20 to the financial statements.
The wind mill of the Company located at Kokkampalayam village Dharapuram Taluk ErodeDistrict Tamil Nadu generated 848988 units of electricity in the year 2019-20 against960721 units generated in 2018-19. The Company utilised the 799180 units generated ascaptive consumption during 2019-20 for its Satyamangalam factory.
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 financial year. Thedetails of the Audit Committee meetings are given in the Corporate Governance report. Theintervening gap between the meetings were within the period stipulated under the CompaniesAct 2013 and 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 theCorporate Guarantee' given on behalf of its wholly owned subsidiary companies viz.AVT Natural Europe Limited London (formerly AVT Tea Services Limited) and to AVT NaturalS.A. DE C.V. Mexico which is given in the note No. 36 to the financial statements.
The details of investments made by the Company are given in the note No.6 to thefinancial statements.
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 2021 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 approval by the Department of Scientific and Industrial
Research (DSIR) New Delhi for the Company's R&D facilities situated at SouthVazhakulam Aluva Kerala and the Manchenahaili Village Kasabe Hobari Bangalore arevalid upto 31.03.2022.
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) Re-appointment of Independent Director
Mr. A.D. Bopana Independent Director of the Company is proposed to be re-appointed foranother term of 5 consecutive years under section 149 read with schedule IV of theCompanies Act 2013 who is not liable to retire by rotation offer himself forre-appointment.
ii) Appointment of Independent Woman Director
The Board in its meeting held on 12.02.2020 has appointed Mrs. Kavitha Vijay as anIndependent (Additional) Woman Director of the Company for a period of 5 consecutiveyears. Necessary resolution is being placed before the members for their approval.
iii) Director retiring by rotation
In accordance with the provisions of Companies Act 2013 and the Articles ofAssociation of the Company Mrs. Shanthi Thomas Director retires by rotation at the 34thAnnual General Meeting and being eligible offers herself for re-appointment.
iv) Declaration from Independent Directors on Annual Basis
The Company has received necessary declarations from all the four Independent Directorsof the Company under Section 149 of the Companies Act 2013 that the Independent Directorsof the Company meet with the criteria of their Independence laid down in Section 149 ofthe Companies Act 2013 and Regulation 25(8) of the SEBI (LODR) Regulations 2015.
v) Re-Appointment of Manager'
The Board in its meeting held on 12.02.2020 has reappointed Mr. M.N. Satheesh KumarPresident & CEO as the Manager' under section 203 (1) of the Companies Act 2013for a period of 1 (one) year w.e.f. 01.04.2020 to 31.03.2021. Necessary resolution isbeing placed before the members for their approval.
vi) 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.
PERFORMANCE Of SUBSIDIARY/JOINT VENTURE / ASSOCIATES
a) AVT Natural SA DE C.V. Mexico (AVTN)
AVT Natural SA DE C.V Mexico is establish with an aim to capture market for theAnimal Nutritional products in South American market and other markets.
The paid up capital of the Company as on 31st March 2020 is Mexican Peso(Mxn) 0.95 million. AVTN is the marketing arm of your Company for the animal nutritionproducts. The AVTN recorded sales of Rs. 2.17 crores and Loss of Rs.3.33 crores for theyear 2019-20. AVTN recorded sales of Rs. 1.29 Crores and Loss of
Rs. 2.18 crores for the Mexican financial year period from 02.01.2019 to 31.12.2019.
b) AVT Natural Europe Limited UK (AVTNEL)
During the year the Company has changed its name as AVT Natural Europe Limited fromits original name AVT Tea Services Limited with effect from 4th March 2020. TheBoard consists of Mr. Ajit Thomas Mr. Richard Darlington and Mr. M.A. Alagappan asDirectors.
The paid up capital of the Company as on 31st March 2020 is Pound Sterling(GBP) 1 million. AVTNEL is the marketing arm of your Company for de-caffeinated tea andinstant tea. The AVTNEL recorded sales of Rs.59 crores (previous year Rs.79 crores) andprofit of Rs.1.15 crores (previous year Rs.0.52 crores) for the year 2019-20.
c) Step down subsidiary Companies
AVT Natural Europe Limited London incorporated a stepdown Subsidiary Company AVTNatural North America Inc. on 25.03.2020 under the laws of the Delaware U.S.A as itswholly owned subsidiary Company.
The AVTNEL also has an another wholly owned subsidiary viz. AVT Tea Services NorthAmerica LLC.
d) Accounts of subsidiaries
Pursuant to Section 136 of the Companies Act 2013 a copy of the audited financialstatements of AVT Natural Europe Ltd. & AVT Natural S.A. DE C.V. for the periodended 31.03.2020 shall be provided to any shareholder free of cost on their request. TheAudited financial statements are also available on the website of the Company. TheConsolidated financial statements audited by the statutory auditors of the Company havebeen attached to this Report. Pursuant to Section 129(3) of the Companies Act 2013 astatement containing the salient features of the financial statements of AVTN AVTNEL& its step-down subsidiary in the prescribed Form AOC-1 is provided in the Page No.114 of Annual report.
e) Joint Venture / Associate Company
The Company does not have any Joint Ventures / Associate Companies
f) Policy for determining material subsidiary
The Company has a Policy for determining Material Subsidiary which is hosted on theCompany website under the link www.avtnatural.com/investor_relations.
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 a CSR Committeecomprising Board of Directors was formed to recommend i. the policy on Corporate SocialResponsibility (CSR) and ii. implementation of the CSR Projects Annual Report on CSR inthe prescribed format is enclosed as Annexure - II. The CSR policy of the Company has beenuploaded on the web site: www.avtnatural.com/ investor_relations.
CONTENTS Of CSR POLICY
The Company's CSR projects and programs will be the focus on the holistic developmentof host communities to create social environmental and economic value to society. TheCompany will invest resources in any program such as skill development infrastructuredevelopment women empowerment Promotion of Health Care Old age homes/ day carefacilities for Senior Citizens Education Swachh Bharat COVID - 19 and all otheractivities envisaged in the Schedule VII of the Companies Act 2013.
The Company has won the NIPM Kerala Best Corporate Citizen Award 2019 (under CategoryIII CSR expenditure Rs. 50 -100 Lakhs) . The award recognises the efforts ofcompanies in integrating and internalizing
Corporate Social Responsibility (CSR) into their core business operations. The awardacknowledge the efforts of the companies which engage in CSR in a strategic and systematicmanner 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 LLP Chartered Accountants KRD Gee Gee Crystal 7th Floor91-92 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 needs 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 need 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 Practicing 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 Auditor for thefinancial year 2019-20 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 againstunforeseeable perils.
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 hence the provisions of Section188 of the Companies Act 2013 are not attracted. There were no related party transactionsexceeding 10% of the annual consolidated turnover as per the last audited financialstatements 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 in the interest with 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. 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 has a Related Party Transaction policy and the same is hosted in thewebsite of the Company under the link www.avtnatural.com/investor_relations.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS AND COURTS
There are no significant material Regulators / Courts which would impact the goingconcern 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 through 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 Company's Registered Office duringbusiness hours of all the 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 on 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 onthe website of the Company which can be accessed from the link - www.avtnatural.com/investor_relations. During the year no instances of unethical behavior werereported.
Pursuant to Section 134 (3) (n) of the Companies Act 2013 and the Regulation 17 (9) 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 has a Risk policy and risk management Procedures' in place. 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 with reference to the financial statements which isevaluated by the Audit Committee as per Part C of Schedule II of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. Apart from Statutory Audityour Company in compliance with Section 138 of the Companies Act 2013 had engaged M/sVarma & Varma Chartered Accountants
Building No. 53/333 Off.Subash Chandra Bose Road
Vytilla Post Kochi 682 019 Kerala as the Internal
Auditors of the Company for the financial year 2019-20.
Findings and observations of the Internal Auditors are discussed and suitablecorrective actions are taken as per the directions of the Audit Committee on an on-goingbasis to improve efficiency in operations.
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 on12th February 2020 to review performance evaluation of Non-IndependentDirectors and the entire Board of Directors including the Chairman Non-ExecutiveDirectors etc. The Independent Directors were satisfied with the overall functioning ofthe Board flow of information to the Board its various Committees and also of theperformance of other Non-executive Directors and the Chairman of the Board
DISCLOSURE Of ACCOUNTING TREATMENT
The Company has adopted the Indian Accounting Standards (Ind AS) with effect from 1 stApril 2017 the Ind AS 115 with effect from 1st April 2018 & the Ind AS 116with effect from 1 st April 2019 and all its financial statements are made according tothe said standards. Further in the preparation of the financial statements the Companyhas followed the Accounting Standards referred to in Section 133 of the Companies Act2013. The significant accounting policies which are applied are set out in the Notes tothe Financial Statements.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report in compliance with the regulation 34(f) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 have been attached inthe Annexure VIII to this Report.
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 Code of ConductDeclaration by CEO and of Auditors' Certificate Corporate Governance have been Annexed IXX XI and XII to this Report.
DISCLOSUREUNDER 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 lawsand regulations.
Actual results could differ materially from those expressed or implied. Importantfactors that could make difference to the Company's operations include raw materialavailability and its prices cyclical demand and pricing in the Company's principlemarkets changes in Government regulations Tax regimes economic developments withinIndia 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 2020 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 have taken proper and care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
4. The Directors have prepared the accounts for the financial year ended 31stMarch 2020 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.
The Directors sincerely acknowledge the contribution and support from customersshareholders farmers BSE Ltd. National Stock Exchange of India Ltd. Cameo CorporateServices Ltd. National Securities Depository Ltd. Central Depository Services Ltd. andother stakeholders for the co-operation and assistance provided to the Company. TheDirectors also place on record their gratitude to the employees for their continuedsupport commitment dedication and co-operation.
| ||For and On behalf of the Board |
|Place : Chennai ||Ajit Thomas |
|Date : 29th July 2020 ||Chairman |