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Goodricke Group Ltd.

BSE: 500166 Sector: Agri and agri inputs
NSE: GOODRICKE ISIN Code: INE300A01016
BSE 12:09 | 16 Aug 258.00 4.95
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NSE 05:30 | 01 Jan Goodricke Group Ltd
OPEN 257.90
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VOLUME 9232
52-Week high 545.00
52-Week low 221.10
P/E 33.46
Mkt Cap.(Rs cr) 557
Buy Price 258.05
Buy Qty 4.00
Sell Price 260.75
Sell Qty 15.00
OPEN 257.90
CLOSE 253.05
VOLUME 9232
52-Week high 545.00
52-Week low 221.10
P/E 33.46
Mkt Cap.(Rs cr) 557
Buy Price 258.05
Buy Qty 4.00
Sell Price 260.75
Sell Qty 15.00

Goodricke Group Ltd. (GOODRICKE) - Director Report

Company director report

The Directors have pleasure in presenting their Forty-second Annual Report and Accountsfor the year ended 31st March 2018.

FINANCIAL RESULTS

(Rs. in millions)
Year ended (31.3.2018) Year ended (31.03.2017)
Revenue from Operations 7305.74 6803.69
Profit before taxation 488.55 488.99
Tax Expense 171.33 157.67
Profit for the year 317.22 331.32
Other Comprehensive Income (net of tax) (50.81) (44.09)
Total Comprehensive Income 266.41 287.23
Other Equity at year end 2852.25 2702.83

SHARE CAPITAL

During the year ended 31st March 2018 there is no change in the issued subscribed andpaid up share capital of the Company. The paid up capital as on 31st March 2018 stood atRs. 216 million divided into 21600000 Equity Shares of Rs.10/- each.

TRANSFER TO RESERVE

Your Directors do not propose to transfer any amount to the General Reserve for thefinancial year ended 31st March 2018.

DIVIDEND

Your Directors have recommended a dividend of Rs. 4.50/- per share (45%). On approvalat the forthcoming Annual General Meeting dividend will be paid to those members whosenames are recorded in the Register of the Company at the close of business on 20 th July2018 subject however to the provision of Section 126 of the of the Companies Act 2013.This equity dividend has not been included as a liability in the financial statement.

INDUSTRY STRUCTURE AND DEVELOPMENT OPPORTUNITIES & THREATS OUTLOOK RISK ANDCONCERN

The production of World Tea Crop was 5686 Million kgs (Provisional) in 2017 as comparedto 5561 million kgs in 2016. Indian Tea Crop was approx. 1278 Million kgs; against 1267million kgs. last year the increase resulting from well distributed rain fall. (source:International Tea Committee)

Global consumption of tea is likely to grow because of growing population andperception of the Consumer towards tea as natural health and wellness beverage.

Tea Industry is cyclic in nature and largely depends on weather conditions. Henceanything that affects tea industry will have its one off effect on the business.

Industry is experiencing rising input cost rising workers wage and related expenseswhich is a challenge. Such increase in cost can only be set off by focused mechanizationof estates operations and improving the quality which will also result in global demand.

There is a continuous process for identifying evaluating and managing significantrisks faced through risk analysis process designed to identify the key risk factors. Therole of insurance and other measures used in managing risks is also reviewed. The AuditCommittee has continued its monitoring role. During the year no major risks were noticed.

OPERATIONS

The Company recorded a crop of 18.83 million (kgs) which is at the same level ofprevious year despite prolonged strike in Darjeeling gardens where we lost 0.3 millionkgs. crop.

DOOARS : An all time record crop of 16 million kgs. was made during the year. With100% commitment to Quality producing such high crop was a big achievement. Your Company'slong term plan of development work has also helped as there has been a sustained effortto uproot unproductive areas and replace them with better yielding varieties and clones.

ASSAM : Good crop of 2.45 million kgs. was made this figure also was the highestin the last 8 years. A creditable achievement considering 75 percent crop was convertedinto good quality Orthodox teas.

DARJEELING : The region was rocked by political turbulence as a result of which allestates remained closed for five months from July to November during peak second flushperiod. Loss in crop to the tune of 0.3 million kgs was incurred. This resulted insubstantial loss of revenue by your Company during the period.

PURCHASED LEAF : An all time record crop of 5 million kgs was manufactured duringthe year which added to the Company's profits. A new Bought leaf factory of 1 million kgcapacity was commissioned during the year at your Danguajhar Tea Garden. We are nowplanning to expand this capacity by adding more machinery to produce 2 million kgs in2018.

INSTANT TEA PLANT : The Instant Tea Plant at Aibheel Tea estate is now consistentlyperforming well and contributing to over 335 MT per year in exports alone.

BRANDED TEA : Driving the branded business through Company's consumer divisioncontinues to be a priority and all efforts have been made to expand retail distributionand improve the profits earned by the division. Besides popular CTC category the Companyhas registered impressive growth in Ultra premium Darjeeling category of teas. Company hasacquired the tea business of cigarette major Godfrey Phillips in October 2017 that isexpected to provide a wider reach through multiple brands under the "Tea City"umbrella across all price points and by this addition we expect significant growth involumes which will increase profitability.

SEGMENTWISE OR PRODUCTWISE PERFORMANCE DOMESTIC

The domestic sales for this year is 31.70 million kgs compared to previous year's 28.71million kgs.

Consumer Division of the Company dealing with branded retail business registered apositive growth of 15% in value off take and 12% in volume off take in the packet teacategory and maintained its market share. The main brand of the business "GoodrickeChai" grew by 17%. In the Darjeeling category where major consumption is in KolkataMetro Goodricke registered growth of 10% and continued to be the market leader with animpressive market share of 56%. Company continues to be preferred supplier of its teas toAIR India Jet Airways Spicejet airline Costa Coffee Tirupati Temple besides premiumluxury hotels in the country.

EXPORT

Total exports for the year stood at 5.33 million kgs as compared to 5.59 million kgs inthe previous year due to lower Darjeeling segment exports.

Volume of Instant Tea grew 22.93% over the corresponding period of last year andoverall exports increased by 62932 kgs. Newer markets in Ireland and Australia have beentapped and supplies have started in these new areas. Markets remain very protective andcompetitive and the plant continues to look at areas where cost can be reduced.

FINANCIAL WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company maintained healthy profit and production level in line with the previousyear.

Export sales of bulk tea and instant tea continued to contribute to the growth of theCompany's business alongwith an improved margin in branded teas.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Internal Control System of the Company is adequate and commensurate with its sizeof operation. The systems are regularly reviewed for effectiveness.

The Internal Audit is carried out by firms of Chartered Accountants alongwith the ChiefInternal Auditor.

The Audit Committee of the Board looks into the Audit reviews which is deliberated uponand corrective actions taken therein are reviewed.

CHANGE IN NATURE OF BUSINESS IF ANY

There has been no change in the nature of business and the Company continues toconcentrate on its own business with growth plans in short to medium terms.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. A.N. Singh was the Managing Director and CEO of the Company since 2006relinquished office on 31st March 2018. Mr. A.N. Singh at the helm of affairs of theCompany has provided exceptional leadership which resulted in the all round growth of theCompany during his tenure.

The Board wishes to place on record its deep sense of appreciation for the servicesrendered by Mr. A. N. Singh. Thereafter considering his vast experience the Boardappointed Mr. Singh as an Additional Director on 6th April 2018 to be designated as ViceChairman of the Company with effect from 1st May 2018.

Mr. Atul Asthana the Wholetime Director & Chief Operating Officer of the Companywas elevated by the Board at their meeting held on 13th February 2018 as ManagingDirector & CEO for a period of three years with effect from 1st April 2018.

Mr. Arjun Sengupta Vice President & CFO was appointed by the Board at theirmeeting held on 7th August 2017 as Wholetime Director & CFO of the Company for aperiod of three years w.e.f. 1st September 2017.

In terms of Section 161 of the Companies Act 2013 Mr. Yashpal Levin was inducted by theBoard as an Additional Director in the capacity of Non-Executive Director for a period of1 year w.e.f. 1st April 2018.

The following persons are the Key Managerial Personnel of the Company in compliancewith the provisions of Section 203 of the Companies Act 2013.

(a) Mr. A. Asthana Managing Director & CEO

(b) Mr. A. Sengupta Wholetime Director and CFO

(c) Mr. S. Banerjee Sr. General Manager & Company Secretary

Mr. P.J. Field retires by rotation and being eligible offer himself for re-appointment.

Mr. P.K. Sen was appointed as an Independent non-executive director by the Shareholderstill conclusion of the Annual General Meeting of 2020. SEBI (LODR) (Amendment) Regulations2018 vide notification dated 9th May 2018 has prescribed the maximum age limit fornon-executive Directors to 75 years and they may continue in office by passing a specialresolution. Since Mr. Sen has attained such age and consented to continue in office hencea resolution to that effect has been proposed.

STATEMENT OF DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

All the Independent Directors have given declaration as per Section 149 (7) of theCompanies Act 2013 confirming that they meet the criteria of independence as laid downunder Section 149 (6) of the Companies Act 2013.

REPORT ON CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated in Listing Regulations. A Report on Corporate Governancealongwith the Auditor's Certificate regarding Compliance of Corporate Governance areattached as Annexure I and Annexure II respectively forming part of this Report.

DETAILS OF BOARD MEETINGS

The Board of Directors met 5 (five) times during the year on various dates as givenherein below:

Sl. No. Date of the meeting No. of Directors attended the meeting
1. 23rd May 2017 6
2. 7th August 2017 6
3. 17th October 2017 3
4. 10 th November 2017 8
5. 13 th February 2018 8

Further details on Board of Directors are provided in the Corporate Governance Report.

COMMITTEES OF THE BOARD

a. Audit Committee

Sl. No. Name Category of Director Chairman/Members
1. Mr. K. Sinha Non-Executive- Independent Chairman
2. Mr. P. K. Sen Non-Executive-Independent Member
3. Mrs. S. A. Walker Non-Executive-Non-Independent Member

Further details of Audit Committee are given in the Corporate Governance Report.

The Company has established a vigil mechanism/whistle blower mechanism which overseesthrough the Audit Committee and addresses the genuine concerns expressed by the employeesand other Directors. The Company has also made provisions for adequate safeguards againstvictimisation of its employees and Directors who express their concerns. The Chairman ofthe Audit Committee can be directly accessed by any employee for reporting issues whichneed to be brought to the notice of the Board.

The vigil mechanism/whistle blower policy of the Company has been uploaded on thewebsite of the Company and can be accessed at Company's weblinkwww.goodricke.com/corporate/Goodricke-whistle- blower-policy.

The details of Programme for familiarization of Independent Directors with the Company nature of Industry and other related matters are available on the weblink :www.goodricke.com/corporate/familiarisation- program-for-independent-directors

b. Nomination & Remuneration Committee

Sl. No. Name Category of Director Chairman/Members
1. Mr. K. Sinha Non-Executive-Independent Chairman
2. Mr. P.J. Field Non-Executive Member
3. Mr. P. K. Sen Non-Executive-Independent Member
4. Dr. (Mrs.) S. Kaul Non-Executive -Independent Member

Further details of Nomination and Remuneration Committee are given in the CorporateGovernance Report.

The Company's Policy relating to appointment of Directors payment of managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 andListing Regulations is attached to this report as Annexure VI.

c. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

In terms of Section 135 of the Companies Act 2013 read with Companies (CorporateSocial Responsibility Policy) Rules 2014 the CSR Committee of the Board has beenre-constituted as follows :

Sl. No. Name Category of Director Chairman/Members
1 Dr.(Mrs.) Sudha Kaul Non Executive-Independent Chairperson
2 Mr. K. Sinha Non-Executive-Independent Member
3 Mr. A. Asthana Managing Director & CEO Member

The role of the CSR committee inter-alia includes :

a) To formulate and recommend to the Board a Corporate Social Responsibility Policy;

b) To recommend the amount of expenditure to be incurred on the activities undertaken.

c) To monitor the Corporate Social Responsibility Policy of the Company from time totime.

d) Review the performance of the Company in the areas of Corporate SocialResponsibility activities.

e) Review the Companies decisions on Corporate Social Responsibility matters.

The Committee has framed and the Board has approved the Company's Corporate SocialResponsibility Policy relating to the CSR activities to be undertaken by the Company asspecified in Schedule VII to the Companies Act 2013 and the expenditure thereonexcluding activities undertaken in the normal course of business of the Company. The saidCSR policy is available at the company's weblinkwww.goodricke.com/corporate/Corporate-Social-Responsibility. The details about the policydeveloped and implemented by the Company on CSR initiatives undertaken during the year areenclosed as Annexure-III to the Board's Report forming part of this Annual Report.

During the year under review the CSR Committee met once i.e. on 23rd May 2017.

All the members of the Committee were present.

d. Stakeholders Relationship Committee

Sl. No. Name Chairperson/Members
1. Dr. (Mrs.) S. Kaul Chairperson
2. Mr. K. Sinha Member
3. Mr. A. Asthana Member

Further details of Stakeholders Relationship Committee are available in the Report onCorporate Governance.

ANNUAL PERFORMANCE EVALUATION

A Board Evaluation Framework was adopted as per guidance note issued by SEBI dated 5thJanuary 2017 for evaluating the performance of the Board as a whole Committees of theBoard and also performance of the Individual Directors.

As per the said Evaluation Framework the Directors evaluated the performance of theBoard as a whole its Committees and each other for the year 2017-18. The Board and theNomination and Remuneration Committee reviewed the performance of the individualdirectors based on the criteria such as attendance and participation in the meetingspreparedness on the issues to be discussed suggestions on how risk factors may be handledetc. In addition the chairman was also evaluated on the above aspects by the IndependentDirectors.

The Independent Directors also carried out the performance evaluation in terms of PartVII (3) ( c) of Schedule IV of the Companies Act 2013 in their Meeting held on 24th May2018.

ANNUAL RETURN

A copy of Annual Return pursuant to the provisions of Section 92 of the Companies Act2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014forming a part of this Report attached as Annexure IV.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Clause (c) of sub section 3 of Section 134 of theCompanies Act 2013 your Directors confirm that :

(a) in the preparation of the annual accounts for the year ended 31st March 2018 theapplicable accounting standards have been followed alongwith the proper explanationsrelating to material departure if any.

(b) the Directors had 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 for the year ended 31st March 2018 and ofthe profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

AUDITORS AND AUDIT REPORT

M/s. Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) were appointed as the Statutory Auditors of the Company in the AnnualGeneral Meeting held on 28th July 2016 subject to ratification in each year in terms ofSection 139 of the Companies Act 2013 till the conclusion of the Annual General Meeting tobe held in 2021 subsequently vide the Companies (Amendment) Act 2017 the provision forratification of appointment has been omitted.

The Statutory Audit Report does not contain any qualification reservation or adverseremarks.

COST AUDITORS

In terms of Sub Section (3) of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 M/s. Shome & Banerjee CostAccountants (Firm Registration No. 000001) has been appointed by the Board of Directors inits meeting held on 24th May 2018 as the Cost Auditor of the Company for the financialyear 2018-19 based on the recommendation of the Audit Committee. The remuneration to beratified by the Members in the ensuing Annual General Meeting.

The Cost Audit Report for the year ended 31st March 2017 does not contain anyqualification reservation or adverse remarks.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 M/s. A. K. Roy & Co.Practicing Company Secretaries FCS 5684 CP No. 4557 had been appointed SecretarialAuditors of the Company for the year ended 31st March 2018. The report of the SecretarialAuditors is enclosed as Annexure-V to this report. The Report does not contain anyqualification reservation or adverse remark or disclaimer which requires any furthercomments or explanations.

DISCLOSURE AS PER SECRETARIAL STANDARD (SS-1)

In terms of the requirement of Secretarial Standard (SS-I) at the meetings of the Boardof Directors it is confirmed that the Company has complied with applicable SecretarialStandards.

PARTICULARS OF COMPLIANCE OF CONTRACTS OR ARRANGMENTS MADE WITH RELATED PARTIES

The related party transactions entered during the year were in ordinary course ofbusiness and also on arm's length basis in compliance with the applicable provisions ofthe Companies Act 2013 and Listing Regulations. There are no materially significantrelated party transactions made by the Company with Promoters Directors or Key ManagerialPersonnel etc. which may have potential conflict of interest with the Company at large.All related party transactions are presented to the Audit Committee and the Board ifrequired for approval. Omnibus approval is obtained for the transactions which areforeseen and repetitive in nature. The Policy on Related Party Transactions as approved bythe Board is uploaded on the Company's website at the web link:www.goodricke.com/policy-on-related-party-transactions

Accordingly disclosures of related party transactions in terms of Clause (h) of subsection (3) of Section 134 of Companies Act 2013 read with Rule 8 (2) of the Companies(Accounts) Rules 2014 in Form AOC-2 is not applicable. Transactions with related partiesas per requirements of Accounting Standard are disclosed in the notes to the accountsannexed to the financial statements.

LOANS GUARANTEES OR INVESTMENTS

The particulars of loans guarantees or investments made under section 186 of theCompanies Act 2013 are covered in the notes of the financial statement for the year ended31st March 2018.

HUMAN RESOURCES DEVELOPMENT

Tea Industry is highly labour intensive. Your Company has employed over 23400 personnelat its tea estates and other establishments in India.

There were no disruptions at work at the garden except for the bandh in Darjeelinghills which kept your Badamtam Barnesbeg and Thurbo Tea gardens closed for 5 months.

Employee relations remained satisfactory and the Company would like to record thededication and support received from the employees at all level in maintaining smoothfunctioning during the said period.

In terms of requirements of Section 4 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the Company has formed InternalComplaints Committee for its workplaces. During the year no complaint regarding sexualharassment was received by the said Committee.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There is no significant or material order passed by any Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.

TRANSFER OF SHARES & DIVIDENDS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company transferred all shares in respect of which dividend lying unpaid orunclaimed for seven or more consecutive years to the Investor Education and ProtectionFund (IEPF) alongwith the respective dividend amount.

DEPOSITS

Your Company has not accepted any deposits from public in terms of provisions containedin Chapter V of the Companies Act 2013.

PARTICULARS OF EMPLOYEES

The ratio of the remuneration of each Director to the median employees' remunerationand other particulars or details of employees pursuant to Section 197(12) of the CompaniesAct 2013 alongwith the names of top 10 employees in terms of remuneration drawn read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014as amended are attached to this Report as Annexure VII.

POLICY ON PREVENTION OF INSIDER TRADING

Your Company has adopted a code of conduct for Prevention of Insider Trading with aview to regulate trading in Equity Shares of the Company by the Directors and designatedemployees of the Company.

The said regulation is available at Company's weblinkwww.goodricke.com/Corporate/Prohibition-of- insider-trading.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

(a) Conservation of energy
(i) The steps taken or impact on conservation of energy i) Installation of low voltage LED lights to reduce Power Consumption.
ii) Installation of Automatic Milling machines to reduce running hours and to reduce cost.
iii) Installation of (Variable Frequency Drier) in machinery R. V. & Irrigation to reduce cost.
iv) Installation of higher efficiency CTC machines with energy efficient motors.
v) Installation of energy efficient DG Sets
vi) Installation of self propelling ventilator fans.
(ii) The steps taken by the company for utilizing alternate sources of energy i) Effective usage of firewood in boilers of Gandrapara & Aibheel to reduce dependence on fossil fuel.
ii) Effective running of CPC Solar unit in ITP.
iii) Proposed installation of 100 KW Hydel Project in Badamtam T.G. in 2019.
(iii) The capital investment on energy conservation equipments i) Proposed installation of 100 KW Hydel Project in 2019 at Badamtam-20 million
ii) Installation of LED lights-0.3 million
iii) Installation of energy efficient motors & CTC machines-6.5 million
iv) Installation of Pollution Control Devices-5 million.
v) Proposed installation of Gas firing in lieu of coal in Thurbo/Barnesbeg-Cleaner & cheaper fuel-3 million
(b) Technology absorption
(i) The efforts made towards technology absorption a) Introduction of VFD in Rotorvane and Irrigation.
b) Dependence on Hydro Electric Plant to run factories.
c) Installation of high efficiency humidification system.
d) Usage of low voltage LED lights.
e) Usage of self propelling ventilator fans.
(ii) The benefits derived like product improvement cost reduction product development or import substitution a) Reduction of Pollution of Air.
b) Reduction in Power Cost.
c) With the introduction of efficient humidification system the better quality of teas could be produced.
d) With the introduction of VFD in Rotorvane Irrigation Power cost could be reduced.
e) With the introduction of Energy efficient DG Set the consumption of HSD could be reduced.
(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year).
(a) the details of technology imported a) Condair humidification system from UK
(b) the year of import; b) 2017
(c) whether the technology been fully absorbed c) Yes fully absorbed
(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof
(iv) the expenditure incurred on Research and Development Rs. 15.24 million

(c) Foreign exchange earnings and Outgo

During the year the foreign exchange outgo was Rs 43.83 Million and the foreignexchange earning was Rs. 1078.11 million.

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.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the Company'sobjectives projections estimates and expectations may be "forward lookingstatements" within the meaning of applicable securities laws and regulations. Actualresults may differ materially from those expressed or implied due to factors beyondcontrol.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all levels who havecontributed to the growth and performance of your Company.

Your Directors also thank the business associates shareholders and other stakeholdersof the Company for their continued support.

On behalf of the Board
A. Asthana
Managing Director & CEO
(DIN 00631932)
A. Sengupta
Wholetime Director & CFO
(DIN 00631842)
K. Sinha
Place : Kolkata Director
Dated : 24th May 2018 (DIN 00123811)