Your Directors have pleasure in presenting the Annual Report together with the auditedfinancial statements of the company for the financial year ended 31st March 2017.
Financial results of the company are summarized below:
| || ||(in Rs. lac) |
| ||2016-17 ||2015-16 |
|Net Sales ||10298.11 ||10985.90 |
|Other Income ||70.75 ||78.02 |
|Total Revenue ||10368.86 ||11063.92 |
|Increase/(decrease) in stock ||331.09 ||86.56 |
|Total Expenditure ||9763.48 ||9554.54 |
|Profit before Depreciation and Interest ||936.47 ||1595.94 |
|Finance Charges ||323.04 ||343.20 |
|Profit after Finance Charges ||613.43 ||1252.74 |
|Depreciation ||244.23 ||232.68 |
|Profit before Tax ||369.20 ||1020.05 |
|Provision for Tax || || |
|Current Tax ||120.00 ||242.89 |
|Deferred Tax ||(33.96) ||2.82 |
|Profit after Tax ||283.16 ||774.34 |
|Appropriations || || |
|Proposed Dividend ||93.00 ||93.00 |
|Corporate Dividend Tax ||15.31 ||18.93 |
|Amount carried to General Reserve ||-- ||-- |
|Balance carried to Balance Sheet ||-- ||662.41 |
Net sales dropped from the previous financial year by 6.26 %. Profit before Taxationstood at Rs. 369.20 lac for the year as against a profit of Rs. 1020.05 lac in theprevious year. The Earnings per Share (EPS) for the year stood at Rs. 9.13 as against Rs.24.98 in the previous year.
Performance and Operations
The weather conditions of Assam remained very unfavorable as the season started withincessant rainfall which lead to flood like situation in some areas. It was followed byprolonged dry period which adversely affected the crop. But after September onwardsweather was favorable and the gardens were able to harvest good back to end crop. By theend of the season the company's gardens were marginally ahead in terms of crop withrespect to previous year.
The price of company's made tea from own leaf remained lower in the auctions throughoutthe year as good category teas were impacted seriously due to slack demand. In factauction averages for CTC leaf and dusts in Assam dipped to Rs. 146 per kg. in the currentyear from Rs. 152 in the previous year.
The price of company's made tea from bought leaf also suffered as medium quality teasinitially did not find any takers in the auctions. The bought leaf market gained someground in November onwards but demand from the pinnacle buyers remained very lowthroughout the year.
The following table will depict our operating position as on 31st March 2017.
|Particulars ||2016-17 ||2015-16 ||Particulars ||2016-17 ||2015-16 ||Particulars ||2016-17 ||2015-16 |
|A. Production ||(Lac Kgs) ||(Lac Kgs) ||B. Sales ||(Lac Kgs) ||(Lac Kgs) ||C. Selling Price (Per kg) ||(Rs.) ||(Rs.) |
| || || || || || || || || |
|a. Own Leaf ||39.56 ||38.19 ||a. Own Leaf ||34.33 ||36.54 ||a. Own Leaf ||222.00 ||231.00 |
|b. Bought Leaf ||17.30 ||18.22 ||b. Bought Leaf ||19.47 ||18.12 ||b. Bought Leaf ||137.00 ||141.00 |
|Combined Total ||56.86 ||56.41 ||Combined Total ||53.80 ||54.66 ||Combined Total ||191.00 ||201.00 |
The profitability of the company was affected during the year due to continuousincrease in input costs particularly in the area of wages manure and withdrawal of foodsubsidy which has resulted in higher operating cost of Rs. 15 per kg. compared to previousyear. The average realization from per kg of tea sold during the year was lower by Rs. 10per kg. compared to previous year. These negative variances have adversely impacted theprofitability compared to previous year.
It will be heartening to note that while auction average if CTC teas of Assam wasRs.146 per kg. your company average stood at Rs. 191 per kg. which was significantlyhigher and contributed towards absorbing additional cost to some extent.
Your company being quality producer of CTC teas over the years suffered due to what hasbeen stated above.
This year all our factories received Trust Tea Certification which will give consumersthe required assurance of responsible production. Further the new tea factory at Sangsuatea estate is ready for commercial production.
In terms of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI LODR) the Management Discussion and Analysis Reportannexed with the Directors Report which form part of this Annual Report gives a detailedanalysis of your company's operations and performance vis--vis industry structure anddevelopments.
Transfer to Reserves
The Company has not transferred any amount to any reserves out of the current year'sprofit.
Your Board of Directors is pleased to recommend a dividend of 30 % on equity sharecapital of the company for the financial year 2016-17. The distribution of dividend willresult in payout of Rs. 93 lac excluding tax on dividend.
The prospect for Indian Tea Industry remains somewhat somber on concerns regardingproduction declining prices rising input cost wages and weather related issues.
In CY 2016 all India production had increased by 2.5 percent from 1209 million kgs. to1239 million kgs. In January this year production was up by almost 6%. Initial reportsfrom Assam also support prospects of another good year in terms of production.
Tea prices have constantly plummeted in CY 2016 due to carryover stock and dull demandfor premium teas. The producers have been facing challenges on rising cost of productionand competition from other beverages. All major tea producers are much concerned with thedeclining prices and have taken firefighting measures to interact with the buyers andconsumers to curb further drop in prices.
Your company is consistently thriving on effective cost control and improving theproductivity by spending substantial amount in development expenditure in its tea estates.Your Directors feel that better yield in the production and firm price realization byincreasing quality will be key factors for sustainable growth.
The Company's subsidiary B&A Packaging India Ltd which is engaged in theproduction of high quality paper sacks and flexible laminates performed commendablyduring the financial year ended 31st March 2017 and surpassed its previous results. Duringthe financial year ended 31st March 2017 the company registered a gross turnover of Rs.54.13 cr. (previous year 47.95 cr.) and a pre-tax profit of 5.41 cr. (previous year 4.84cr.). The Board of Directors of the subsidiary company has recommended a dividend of Re.0.50 per equity share (previous year Re.0.50 per equity share) for the financial yearended 31st March 2017. Growth trends and financial performance of the subsidiary companyhave been included under para 3.3 in the Management Discussion and Analysis Report.
Extract of Annual Return
Pursuant to section 92(3) of the Companies Act' 2013 (hereinafter the Act) read withrule 12 (1) of the Companies (Management and Administration) Rules 2014 extract of AnnualReturn of the company for the financial year ended 31st March 2017 is attached withBoard's Report as Annexure - A.
Corporate Social Responsibility
The Corporate Social Responsibility (CSR) Policy of the company which was recommendedby the CSR Committee of Directors and approved by the Board of Directors is available atthe website of the company at the web link https://www.barooahs.com. The constitution ofthe CSR Committee and particulars of meetings of the Committee held during the year aredisclosed in Corporate Governance Section of the Annual Report.
In terms of rule 9 of the Companies (Accounts) Rules 2014 read with rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 Annual Report on CSR isattached as Annexure- B and forms part of the Director's Report.
The Company has no outstanding deposit as on 31st March 2017.
Directors and Key Managerial Personnel
The Company's directorate consists of nine directors five of them are independent.Mrs. A. Farley continues to be the Chairman of the Board. No new director was appointedduring the year and none of the existing directors have resigned from the Board. Thecomposition of the directorate is in conformity with the provisions of the Act' alliedrules and SEBI (LODR). The particulars of the directorate and the key managerial personnelare given under Part I of the Corporate Governance Report which forms part of this AnnualReport.
By virtue of Section 152 of the Act' Mr. B.K. Mahanta Director retires by rotation inthe ensuing Annual General Meeting and is eligible for re-appointment.
A brief resume expertise and shareholding in your company together with details ofother directorships of Mr. Mahanta is given in the Corporate Governance Section of theAnnual Report.
Declaration by Independent Directors
All independent directors have given declaration to the company stating theirindependence in terms of section 149 (6) of the Act' and the same have been placed andnoted in the meeting of the Board of Directors held on 27th May 2017.
Meeting of the Board of Directors
The particulars of the meetings of the Board of Directors held during the financialyear ended 31st March 2017 have been furnished under para (i) of section I of theCorporate Governance Report forming part of the Annual Report.
Committees of the Board of Directors
The Board had constituted Audit Committee' Nomination and RemunerationCommittee' Corporate Social Responsibility Committee' and StakeholdersRelationship Committee' of Directors in terms of respective provisions of the Act' andSEBI (LODR). The constitution terms of references and policies of these committees havebeen discussed in detail in Corporate Governance section of the Annual Report. There havebeen no instances where the Board has not accepted the recommendations of the AuditCommittee.
Compliance with Corporate Governance norms
In terms of the SEBI (LODR) a certificate from a Practicing Company Secretary oncompliance of corporate governance has been attached and forms part of Annual Report.
Directors' Responsibility Statement
Pursuant to the provisions of section 134(5) of the Act' the Directors state that:
i) In the preparation of the annual accounts the applicable accounting standards havebeen followed;
ii) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of your company as at 31st March 2017 and of the profit of yourcompany for the financial year ended 31st March 2017.
iii) They have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act' for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
iv) The accounts have been prepared on a going concern' basis.
v) They had laid down internal financial controls to be followed by the company andsuch internal financial controls are adequate and were operating effectively.
vi) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Adequacy of Financial Controls
In terms of section 134 (3) (q) of the Act' read with rule 8 of the Companies(Accounts) Rules 2014 details of adequacy of financial control have been discussed atlength in para 5 of the Management Discussion and Analysis Report which forms part theDirector's Report.
Particulars of Contract and Arrangement with Related Parties
A policy on related party had been devised by the Board of Directors which is inconformity with Regulation 23 of SEBI (LODR) for determining the materiality oftransactions with related parties and strategy for dealing with the same. The said policyis available at the website of the company at https://www.barooahs.com.
In terms of section 134 of the Act' read with rule 8(2) of the Companies (Accounts)Rules 2014 particulars of contracts/arrangements entered into by the company during thefinancial year under review in form AOC-2 is attached as Annexure - C and formspart of the Director's Report.
Nomination and Remuneration Policy of the company as recommended by Nomination andRemuneration Committee of Directors and approved by the Board of Directors had beenformulated in compliance with the provisions of section 178 (3) of the Act. The saidpolicy is available at the website of the company at https://www.barooahs.com.
Disclosure in terms of section 197 of the Act' read with rule 5 of the Companies(Appointment & Remuneration) Rules 2014 regarding remuneration paid to Directors andKey Managerial Personnel for the financial year ended 31st March 2017 is given para 2(f)of part II in the Corporate Governance section of the Annual Report.
Particulars of top ten employees in terms of remuneration drawn during the financialyear ended 31st March 2017 is produced in the Corporate Governance section of the AnnualReport.
In terms of section 177 (10) of the Act' and regulation 22 of the SEBI (LODR) thecompany had established a vigil mechanism to report and to deal with genuine concern bywhistle blowers. The said policy is available at the website of the company athttps://www.barooahs.com.
In terms of section 134 (3) of the Act' the Board of Directors framed Risk ManagementPolicy of the company to identify the key risk areas/elements with regards to its teabusiness. Detailed discussions on companies Risk Mitigation Plan has been made under para4.2 of the Management Discussion and Analysis Report which forms part of this Director'sReport. The Risk Management Policy is available at the website of the company athttps://www.barooahs.com.
Evaluation of Board's Performance
In terms of section 134 (3) of the Act' read with SEBI (LODR) the company had laiddown the criteria for reviewing the performance of its Board of Directors Committees ofthe Board and the individual Directors. These criteria are available at the website of thecompany at https://www.barooahs.com.
The Board evaluated its own performance including that of its Committees at the meetingof the Board of Directors held on 27th May 2017.
Statutory and Cost Auditors
M/s. Ghosal Basu & Ray Chartered Accountants Kolkata (FRN 315080E) wereappointed as Statutory
Auditors of the company for a term of five years in the annual general meeting held on15th September 2015. As per provisions of section 139 of the Act' the appointment ofAuditors is required to be ratified by members at every annual general meeting.
The Report given by the Statutory Auditors on the financial statements of the companyfor the financial year ended 31st March 2017 forms part of the Annual Report. There hasbeen no qualification reservation adverse remark or disclaimer in the report.
M/s. Mou Banerjee & Co. Cost Accountants (FRN 00266) were appointed Cost Auditorsto carry out the Cost Audit of applicable business of the company for the financial yearended 31st March 2017.
The Board of Directors has appointed them for the financial year 2017-18.
Mr. Tarun Chatterjee Practicing Company Secretary carried out the Secretarial Audit ofthe company for the financial year 2016-17. The Audit Report is attached with the Board'sReport as Annexure - D. There has been no qualification reservation or adverseremark in the report.
Details of the Material and Significant Orders
There has been no material order against the company by any Regulator Court orTribunal impacting the going concern status of the company. However one shareholder ofthe company has instituted a suit against the company under section 397/398 of theCompanies Act' 1956 which is pending adjudication before National Company Law Tribunal andbeing defended by the company.
A Scheme of Amalgamation between the company and Buragohain Tea Company Ltd has beenapproved by the Hon'ble Gauhati High Court. However it is challenged and is pendingadjudication before appellate side of of the said Court.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Pursuant to section 134 (3) of the Act' read with Companies (Accounts) Rules 2014 theinformation relating to conservation of energy technology absorption and foreign exchangeearnings and outgo is attached with the Board's Report as Annexure - E.
Material Changes and Commitments
Your Directors confirm that there are no material changes and commitments affectingthe financial position of the company which has occurred between the end of the financialyear of the company and the date of this report.
The employee relations has remained harmonious throughout the year and your Board ofDirectors wishes to place on record its sincere appreciation for the dedicated servicesrendered by the executives staff and workers at all levels.
| ||For and on behalf of the Board of Directors |
|Place : Kolkata ||Anuradha Farley |
|Date : 27th May 2017 ||Chairman |
ANNEXURE TO DIRECTORS REPORT ANNEXURE - C
Form No. AOC - 2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014) Form for disclosure of particulars ofcontracts/arrangements entered into by the company with related parties referred to insub-section (1) of section 188 of the Companies Act 2013 (hereinafter the Act') includingcertain arm's length transactions under third proviso thereto:
1. Details of contracts or arrangements or transactions not at arm's length basis:
|Names of the related party and nature of relation ship ||Nature of contracts/ arrangements/ transactions ||Duration of the contracts/ arrangements/ transactions ||Salient terms of the contracts/ arrangements/ transactions including value if any ||Justification for entering into such contract or arrangements or transactions ||Dates of approval by the Board ||Amount paid as advance if any ||Date on which the special resolution was passed |
|Barooahs & Associate s Pvt. Ltd (BAPL) ||Service charges paid to BAPL by the company during financial year ended 31st March 2017 ||From 1st April 2016 to 31st March 2017 ||Transaction upto Rs. 3.25 cr. for the financial year ended 31st March 2017 on account of service charges availed for management of tea estates of the company arranging supply of stores machineries packaging materials etc. at competitive prices and arranging for sale of company's teas. ||The Company operates seven tea estates in Assam and various services relating to management of its gardens are required on regular basis. BAPL has got necessary personnel and expertise to render the services as enumerated above at competitive prices and has been rendering such services for a long time in terms of an agreement. Since these services are unique in nature market rates are not readily available. ||13th August 2016 ||-- ||Since the transactions do not exceed the prescribed limits no special resolution was required to be passed under 1st provisio of section 188 of the Act. |
|Heritage North East Pvt. Ltd. (HNE) ||Receipt of lease rentals for letting two bungalows at Sangusa and Gatoonga Tea Estates to HNE during the financial year ended 31st March 2017 ||From 1st April 2016 to March 2017 ||Transaction of Rs. 2 lacs for the financial year ended 31st March 2017 on account of receipt of annual lease rental from HNE for use of two bungalows at Sangsua and Gatoonga Tea Estates ||The Company has two bungalows at Sangsua and Gatoonga Tea Estates which has been leased to HNE for conducting its tourism activity which have been continuing for years. Since the Bungalows are located amidst the tea gardens market rate for the lease rentals are not available. ||13th August 2016 ||-- ||As above |
|Kazirang a Golf Club Pvt. Ltd. (KGCL) ||Temporary advance made ||From 1st April 2016 to 31st March 2017 ||Transaction of Rs. 40 lacs for the financial year ended 31st March 2017 on account of termporary advance ||The Company's golf course in Sangsua Tea Estate is operated by KGCL. To meet the exigencies of KGCL the company makes temporary advance from time to time repayable by KGCL on demand. ||13th August 2016 ||-- ||As above |
2. Details of material contracts or arrangements or transactions at arm's lengthbasis :
There was no transaction contract or arrangement entered by the company during thefinancial year ended 31st March 2017 which was material is nature and was at arm's lengthbasis.
Transactions with a related party is construed as material if thetransaction/transactions to be entered individually or taken together with previoustransactions entered during the financial year exceeds ten percent of the annualconsolidated turnover of the company.
ANNEXURE TO DIRECTORS REPORT ANNEXURE - E
Conservation of Energy Technology Absorption & Foreign Exchange Earnings and Outgo
(Pursuant to clause (m) of sub-section (3) of section 134 of the Act and Rule 8(3) ofthe Companies (Accounts) Rules 2014)
a) Conservation of Energy
|(i) Steps taken or impact on conservation of energy ||(i) Online conveyorisation of manufacturing process which resulted in reduction of idle running time of machineries less time consumption thereby saving energy and increasing efficiency. |
| ||(ii) Replacement of old electrical motors by new energy efficient motors in phased manner. |
| ||(iii) Purchase of energy efficient farm equipments. |
| ||(iv) Installation of CFLs and LEDs. |
| ||(v) Policy of regular service of heating and cooling equipments. |
| ||(vi) Phased replacement of old gensets. |
| ||(vii) Replacement of old air conditioners with new ones. |
| ||(viii) Optimizing factory running hours and machinery usage to achieve high load factor and avail minimum tariff. |
| ||(ix) Maintaining water bodies to reduce power consumption. |
| ||(x) Installation of new CTC machine in Sangsua Factory. |
|(ii) Steps taken by the company for utilizing alternate sources of energy ||The company's operation extends to large areas where usage of alternative energy is rather difficult. However the company has undertaken feasibility study. |
|(iii) Capital investment made on energy saving equipments ||The company had not made separate capital investment during the year in energy conserving equipments. |
|b) Technology Absorption || |
|(i) The efforts made towards technology absorption ||i. Use of low wattage LED in place of high wattage convention lamps. |
| ||ii. Online conveyorisation of flow process |
| ||iii. Use of hygienic flooring system in new Sangsua factory |
|(ii) The benefits derived like product improvement cost reduction product development or import substitution ||i) Reduction in power cost |
| ||ii) Higher worker's outrun resulting in reduced cost of production |
|(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) ||Nil |
|a) The details of technology imported || |
|b) The year of import || |
|c) Whether the technology have been fully absorbed || |
|d) If not fully absorbed areas where absorption has not taken place and the reasons thereof || |
|(iv) Expenditure incurred on research and development ||The Company has incurred Rs. 9.54 lac (previous year Rs. 6.12 lac) for the financial year ended 31st March 2017 on account of research and development. |
Foreign Exchange Earning and Outgo- During the period foreign exchange earning wasNil (previous year nil) and outgo in foreign exchanges was nil (Previous year nil).