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Jay Shree Tea & Industries Ltd.

BSE: 509715 Sector: Agri and agri inputs
NSE: JAYSREETEA ISIN Code: INE364A01020
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VOLUME 13223
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OPEN 51.00
CLOSE 50.45
VOLUME 13223
52-Week high 79.00
52-Week low 39.95
P/E
Mkt Cap.(Rs cr) 142
Buy Price 49.25
Buy Qty 500.00
Sell Price 49.25
Sell Qty 500.00

Jay Shree Tea & Industries Ltd. (JAYSREETEA) - Director Report

Company director report

Dear Shareholders

We present the 73rd Annual Report of the Company together with the Audited Statementsof Accounts for the year ended 31st March 2019.

FINANCIAL RESULTS

(? in Lakhs)

31st March 2019 31st March 2018
Total Revenue 58913 57911
Profit before finance costs depreciation and tax 6059 5108
Less : Finance costs 3958 3356
: Depreciation/Amortisation expenses 1593 1454
Profit/(Loss) before tax 508 298
Less: Tax expense
a) Current Tax 117 -
b) Deferred Tax Charge / (Credit) 242 (41)
c) Tax related to earlier period (161)
Profit/(Loss) for the year 310 339

EQUITY DIVIDEND

The Board is pleased to recommend the distribution of dividend @ 7% on face value of '5/- per share as compared to 10% paid last year. The dividend tax including surcharge andeducation cess shall be payable by the company on the said dividend as and when paid.

SHARE CAPITAL

During the year ended 31st March 2019 there is no change in the issued and subscribedcapital of your Company. The outstanding capital as on 31st March 2019 is ' 1443.87 lakhcomprising of 28877488 equity shares of ' 5/- each.

REVIEW OF PERFORMANCE

The annual output of tea was 1350 mn Kg compared to 1322 mn kg. last year. Theproduction of North India was higher by 37 mn kg. and South India lower by 9 mn Kg. Theincrease was even after the Tea Board Directive to the manufacturers to stop plucking bymid December 2018 which sucked out approx 25 mn kg. of poor variety teas.

All India Auction average realization increased during the year by around 4%. Plainerteas were sold well. Price concertina between Plain-Medium and Good narrowed downwards.There was slowdown in the economy particularly rural India. Money market condition wasvery tight affecting all commodity markets.

There was a sharp decline in the prices of Assam Teas towards the end of the season onaccount of quality. Dust prices for Assam and Dooars / Terai BLF better than comparableBroken over last three years. There was improvement in the average price of DarjeelingTea but the demand for speciality tea was negligible.

In South India prices declined till June and firmed up later on particularly becauseof decline in production in the aftermath of the floods in Kerala.

The major factors attributing to the operations of the company are:

i) Increase in total crop of the company with higher output in Assam CacharDarjeeling and South India

ii) Sharp increase in input cost particularly for labour & energy with nocorresponding increase in the prices of teas

iii) Substantial cost cuffing measures taken in all tea estates and units yielded goodresult

iv) Downward trend in export with shortfall in CIS Countries and Europe

v) Improvement in quality standard of all your tea estates with marked improvement inAssam

vi) All time record performance & profitability in the Single Superphosphate plantat Khardah West Bengal and sulphuric acid plant at Pataudi Haryana

Tea Estates

All India production in 2018 was higher at 1350 million kg. compared to 1322 millionkg. in 2017. Overall Global Tea production witnessed an increase of 2% driven by anincrease in the crop of Kenya . Due to increase in the Kenyan crop prices in Mombassaauction corrected by around 12%. Higher volume exports from Kenya and the uncertainty indemand from Iran due to economic sanction adversely affected Indian bulk tea exportperformance particularly of high quality orthodox teas.

Your company's own production was higher at 183.94 lakh kg compared to 170.33 lakh kglast year. The bought leaf production decreased to 37.79 lakh kg against 38.76 lakh kglast year. The overall price realization of your company was up by ' 5/- per Kg. Assamprice was down by ' 10/- per kg and Darjeeling was down by ' 226/- per kg. Dooars andTerai was up by ' 6/- per kg South India prices were up by ' 13/- per kg.

There is no material change or commitment affecting the financial position of thecompany occurred between the end of the financial year and the date of this report.

The Jay Shree Chemicals & Fertilisers Khardah

There was all-round improvement in performance with higher production and betterrealization. The quality standard was maintained and your product was well appreciated bythe market. The unit enjoy very high reputation in terms of quality and so having highestmarket share for sale of Single Super Phosphate (SSP) in West Bengal. Last year theGovernment introduced direct benefit transfer of subsidy based on acknowledged sale atretail point and this process is not yet smooth which delays the release of subsidycausing blockage of working capital.

The figures of production and despatches are as under:

Production (M.T.)

Despatch (M.T.)

2018-19 2017-18 2018-19 2017-18
Single Super Phosphate 92745 77834 76091 88635

The Jay Shree Chemicals & Fertilizers Gurugram

There was all round improved performance by this unit since its inception with recordprofitability. There was scarcity of sulphuric acid in the market rallying up the prices.The unit is focusing on battery acid market as under Solar technology in power sectorbattery demand is increasing every year. This should improve our market share in future.

The figures of production and despatches are as under:

Production (M.T.)

Despatch (M.T.)

2018-19 2017-18 2018-19 2017-18
Sulphuric Acid 30743 29703 30301 30058
Oleum 1517 1446 1465 1581

Export of Tea

India usually exports 20% of its tea production every year and it exports play a vitalrole in maintaining overall demand-supply balance in the domestic market. In the currentyear India's tea export have declined to 240 mn kg. compared to 257 mn kg. last year.Export volumes saw decline as the crop from Kenya was

higher. Going forward the ability to maintain healthy export volumes at remunerativeprices would continue to be a key factor in determining the overall performance of thedomestic tea industry. Your Company registered sale of ' 75.83 crore as against ' 92.64crore last year.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The Balance sheet Statement of Profit & Loss and other documents of subsidiarycompanies Majhaulia Sugar Industries Pvt. Ltd North Tukvar Tea Company Limited JayantikaInvestment & Finance Ltd. and offshore investment arm Birla Holdings Limited U.A.Eare not being attached with the Balance Sheet of the company. These documents are kept forinspection at the registered office of the company and those of respective subsidiarycompanies. Any member interested to obtain copy of the same may write to the Companyseparately. These documents shall be made available either in physical form or electronicmode as per Green Initiative of the MCA. Pursuant to section 129(3) of the Companies Act2013 read with Rule 5 of the Companies (Accounts) Rules 2014 a statement containingsalient features of the financial statements of Subsidiary Companies & Joint Ventureis given in Form AOC-1 and forms an integral part of the Annual Report.

Majhaulia Sugar Industries Pvt Ltd-in its sugar mill produced 55946 tonnes of whitesugar in the financial year and 64488 tonnes of white sugar in sugar season 2018-19compared to 54481 tonnes in financial year and sugar season 2017-18. The sugarcane crushedwas 55486 tonnes in financial year and 645119 tonnes in sugar season 2018-19 compared to605131 tonnes in financial year and sugar season 2017-18. The recovery in financial yearwas 10.22% and 10.00% in sugar season 2018-19 as compared to 9% in financial year andsugar season 2017-18.

The sugar output in the 2018-19 marketing year (October- September) has been pegged at33 million tonnes. Unprecedented increase in production has severely hit sugar prices inthe domestic market. The Government stepped in with a slew of measures and introducedquota system for sale of sugar fixed Minimum Sale Price (MSP) and provided exportincentive. India's sugar production is likely to decline 8.4% to 30.3 million tonnes forthe year 2019-20 because of a likely fall in sugarcane output particularly inMaharashtra. Lower than expected cane production in next season coupled with a netreduction in the national average sugar recovery rate will reduce cane availability fordirect crush to sugar and proportionately moderate sugar output as well. Furthersuccessive benefits from the dedicated supply of cane juice/B heavy molasses for fuelethanol production will further incentivize mills to divert excess sugar to produce fuel

ethanol and thus improve sugar viability.

The Indian market is flooded with excess sugar and there seems to be no other way butto increase exports to get rid of the surplus. Exports of 7-8 million tonnes is a must in2019-20 in order to bring about stability in the domestic market. In view of the recordopening stock and an estimated production of 30.30 million tonne the price stability andpayment of cane dues will depend upon the export figure. India had sent it's team toBangladesh Malaysia China Indonesia and South Korea to explore the export of sugar on aGovernment to Government basis. Further there is good scope for raw sugar export as itsquality is better than Brazil & Thailand. However exports are impossible withoutGovernment subsidies due to lower Global prices compared with domestic prices.

Your Company has set up a most modern distillery unit of 45 KLPD expandable to 60 KLPDat its sugar plant with incinerator boiler for operation of 330 days a year. All theparameters adopted for this unit are of highest standard and more than meet the pollutionBoard requirements. This unit will change the financial dynamics of the Companydrastically in years to come.

Birla Holdings Limited (BHL) is a wholly owned subsidiary of the company in Dubai(UAE). Kijura Tea Company Limited and Bondo Tea Estates Limited Uganda are step downsubsidiaries of BHL. Kijura Tea Estate owned by these companies manufactured 31.00 lakhkg. of tea compared to 26.49 lakh kg. last year. The average sale price realized was USD1.18 per kg. against USD 1.70 per kg. last year. During the year the company recorded aloss of USD 173667 (INR 120.59 lakh) on sales turnover of USD 3.39 mn. (INR 2351 lakh) asagainst last year operating profit of 784984 (INR 511.57 lakh) on sales turnover of USD4.41 mn. (INR 2874 lakh).

Tea Group Investment Company Limited (TGIC) Dubai a joint venture company with RwandaMountain Tea SARL Rwanda in East Africa owning 60% stake in Mata Tea Company Limited& Gisakura Tea Company Limited collectively manufactured 42.43 lakh kg. tea during2018 against 39.44 lakh kg. in last year and the average price realization was USD 2.88per kg. against USD 3.21 per kg. last year for Mata and USD 2.75 per kg. against USD 3.05per kg. last year for Gisakura. Mata Tea Company Limited declared a dividend of RWF1195448 thousand (equivalent to USD 1.328 mn) being 70% of its retained profit andGisakura Tea Company Limited declared a dividend of RWF 358744 thousand (equivalent toUSD 0.399 mn) being 45% of its retained profit.

CORPORATE GOVERNANCE

As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate report on corporate Governance isenclosed as a part of this Annual Report. A certificate from the Auditors of the

Company regarding compliance as per SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is annexed to the Report on Corporate Governance.

The declaration by the Managing Director stating that all the Board members and SeniorManagement personnel have affirmed their compliance with the Company's Code of Conduct forthe year ended 31st March 2019 is forming part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Birla Group are considered pioneer in the field of education healthcare sportspeople empowerment and employment. Accordingly the Company has been helping variousschools and health care centers in adjoining areas of its operation. It has fully equippedhospital at tea estates to provide best health care to the people of the region. It isalso helping self help centres for vocational training programmes. The company is doingafforestation/vegetation on non-tea areas.

The composition of the members of CSR Committee remains the same namely: Mrs. JayashreeMohta Chairperson alongwith Mr. S.K. Tapuriah Mr. Vikash Kandoi and Mr. D.P.Maheshwarias members.

CSR Policy is placed on the website of the company "www. jayshreetea.com".The average net profit/(loss) of the last 3 financial years was ' (872.94) lakhs andprescribed expenditure is Nil. However the company has spent ' 9.70 lakhs under CSRactivities during the year as per the Annexure forming part of this Report.

PROSPECTS

At a macro level the outlook is expected to remain positive. Latest estimates on GDPgrowth rate indicate a 7% plus growth. There is strong purchasing managers index readingsfor both manufacturing & services sector and low inflation indicate a healthy businessenvironment. Rising per capita income stability of the government post-election increasein consumer expenditure pattern are the factors which augurs well for the tea industry.

Some factors may continue to give a cause of concern such as rise in wages liquidityconstraints in the market and rising trade tension between US & China.

Partial strike in Sri Lanka aids Indian Orthodox prices and exports. Further the highprice of Sri Lankan Orthodox compared to that of India works to our advantage.

The Indian and Global tea production is likely to be maintained at last year level. Thedemand for tea is increasing every year by around 3% and the supply shall remain limited.So good quality tea should continue to fetch its deserving price.

In single super phosphate plant at Khardah the Company is constantly trying to increaseits market share in West Bengal and has achieved higher production and sales year afteryear. With continuous cost reduction exercise in place the viability of the unit hasimproved a lot. Your Haryana unit has broken its previous record and likely to repeat itsperformance in coming years.

With all these factors you can take reasonably optimistic view about the future of thecompany.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors would like to inform members that the audited accounts containing thefinancial statements for the year 201819 are in conformity with the requirements of theprovisions of Section 134(3)(c) read with Section 134(5) and all other applicableprovision of the Companies Act 2013 and they believe that the financial statementsreflect fairly the form and substance of transactions carried out during the year andreasonably present the Company's financial condition and results of operations. TheStatutory Auditors S.R. Batliboi & Co. LLP Chartered Accountants Kolkata haveaudited these financial statements.

Based on the same your Directors further confirm that according to their information:

i. in the preparation of the annual accounts applicable accounting standards have beenfollowed and there are no material departures;

ii. the accounting policies selected by directors are consistently followed and appliedand judgements and estimates made are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company;

iii. proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv. the annual accounts have been prepared on a going concern basis.

v. that there is adequate proper internal financial controls with reference to thefinancial statement have been laid down for the company and such internal financialcontrols are adequate and were operating effectively.

vi. that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and such systems were adequate and operating effectively.

BUSINESS RESPONSIBILITY REPORT (BR)

In terms of SEBI (LODR) Regulations 2015 Top 500 listed entities

are required to submit as part of their Annual Reports Business ResponsibilityReports describing the initiatives taken by them from an environmental social andGovernance perspective. Your company does not fall under this category. However BR Reporton environment human resources and principle wise performance in short forms part of theManagement discussion and analysis report.

PARTICULARS OF EMPLOYEES

The prescribed particulars of employees required under Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached.

The Information as required under Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are given in the Annexure forming part of the Report. In terms ofSection 136(1) of the Act the report and accounts are being sent to members without theaforesaid Annexure. Any member interested in obtaining a copy of the same may write tothe company.

The aforesaid Annexure is also available for inspection by members at the RegisteredOffice of the company.

PUBLIC DEPOSITS

The company has not accepted or renewed any deposit during the year.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Particulars of loans Guarantees and investment covered under the provisions of Section186 of the Companies Act 2013 is given in the Standalone Financial Statement forming partof the Annual Report.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS

Financial statements are prepared through both manual and automated process to ensureaccuracy of recording all financial transactions during the year. All data pertaining topayment to employees purchases plucking manufacturing selling despatch and others arecomputerized. Internal control system ensures that transactions are executed withmanagement authorization and they are recorded in such a way that permit preparation offinancial statements in conformity with established accounting principles and that theassets are adequately safeguarded against misuse or loss.

The company's internal control system has been established on values of integrity andoperational excellence. The company's internal control systems are periodically tested andsupplemented

by extensive program of internal audit by independent firms of Chartered Accountants.Audits are finalized and conducted based on internal risk management. Significant findingsare brought to the notice of the Audit Committee of the Board and corrective measuresrecommended for implementation

The process of the internal financial control system is still on and the findings ofthe consultants are being implemented for improvement. This formalized system internalcontrol facilitates effective compliance of Section 138 of the Companies Act 2013 thelisting regulations and also the relevant statutes of the land.

RISK MANAGEMENT

The company has laid down the procedures to inform to the Board about the riskassessment and minimization procedures which shall be responsible for framingimplementing and monitoring the risk management plan of the company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURT OR REGULATORS

There have been no significant and material orders passed by the court or regulators ortribunals impacting the going concern status and company's operations. Your attention isdrawn to the Contingent Liabilities and commitments shown in the notes to financialstatements forming part of this Annual Report.

DISCLOSURE OF PARTICULARS WITH REGARD TO CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO

Necessary information on conservation of energy technology absorption foreignexchange earnings and outgo required to be given pursuant to the provisions of Section134 of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 is presentedin Annexure to this Report.

ENVIRONMENT AND SAFETY

The company is conscious of clean environment and safe operations. It ensures safety ofall concerned compliance with environmental regulations and preservation of naturalresources.

As required by the Sexual Harassment of women at Workplace (Prevention Prohibition& Redressal) Act 2013 the company has an internal policy on prevention of sexualharassment at workplace with a mechanism of lodging complaints. During the year underreview no complaints were reported to the Board.

STATUTORY AUDITORS

The auditors S.R. Batliboi & Co. LLP Chartered Accountants were appointed asStatutory Auditors of the company for the year 2018-19 and to hold office from theconclusion of the Annual General Meeting held on 31st July 2017 till the conclusion of

76th Annual General Meeting of the company at a remuneration to be fixed by the Board.No ratification of their appointment is required as per notification dated May 7 2018issued by the Ministry of Corporate Affairs.

COST AUDITORS

The Audit Committee in its meeting held on 28th May2019 has recommended thereappointment of D. Sabyasachi & Co. the Cost Auditor to conduct the cost audit ofthe company for the financial year 2019-20 in terms of section 148(3) of the CompaniesAct 2013. Accordingly the Board appointed the said firm of Cost Accountants to carry outthe cost audit for the year 2019-20 on the remuneration as recommended by the Board to befixed by members in the ensuing Annual General Meeting of the Company.

INTERNAL AUDIT

The Company continued to engage reputed firms of Chartered Accountants as its internalauditors at its units and tea estates. Their scope of work and the plan for audit isapproved by the Audit Committee. The report submitted by them is regularly reviewed andtheir findings are discussed with the process owners and suitable corrective action takenon an ongoing basis to improve efficiency in operations.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Messrs MR & Associates Practicing Company Secretaries to undertake theSecretarial Audit of the company. The report of the Secretarial Audit is annexed herewith.Regarding observations: The company had a pending case under Section 58(A) of theCompanies Act 1956 with the court relating to acceptance of a small amount during theperiod of approval of form by the Board and its filing with ROC and the matter issubjudice

INSURANCE

Adequate insurance cover has been taken for properties of the company includingbuildings plant and machineries and stocks against fire earthquake and other risks asconsidered necessary.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As per provisions of Section 152 of the Companies Act 2013 Mr.Vikash Kandoi (DIN00589438) retires by rotation and being eligible offers himself for reappointment. TheBoard recommends his re-appointment.

The Board appointed Mr.Harsh Vardhan Kanoria (DIN 00060259)

as an Additional Director on 11th February 2019 who shall hold office upto the date ofthe ensuing Annual General Meeting. The Company has received a notice as per theprovisions of Section 160(1) of the Companies Act 2013 from a member proposing hisappointment as a director. Mr. Harsh Vardhan Kanoria a commerce graduate is CMD ofCheviot Company Limited and has held various positions in Indian Chamber of CommerceIndian Jute Mills Association from time to time. It would be prudent to appoint him as anIndependent Director to hold office for five consecutive years until the 78th AnnualGeneral Meeting of the Company. A resolution has been included in the Agenda of theensuing Annual General Meeting of the Company which we recommend.

The independent directors have submitted the declaration of independence as requiredunder Section 149 of the Companies Act 2013 and the Board is of the opinion that they areindependent within the meaning of the said requirement of the Act.

There is no change in the Key Managerial Personnel during the year.

OTHER DISCLOSURES EXTRACT OF ANNUAL RETURN

The details for the financial year ended 31st March 2019 forming part of the extractof the annual return is enclosed.

NUMBER OF BOARD MEETINGS

The Board of Directors met five times during the year ended 31st March 2019. Thedetails of the Board meetings and the attendance of Directors are provided in theCorporate Governance Report.

COMPOSITION OF COMMITTEE OF DIRECTORS

The Board has constituted the following Committees of Directors:

(a) Audit Committee

(b) Nomination & Remuneration Committee

(c) Stakeholder Relationship Committee

The detailed composition of the above Committees along with number of meetings andattendance at the meetings are given in Corporate Governance Report.

(d) Corporate Social Responsibility Committee

The detailed composition of the above Committee is given under the head CorporateSocial Responsibility (CSR).

WHISTLE BLOWER POLICY

The company has formulated Whistle Blower Policy in terms of Section 177(9) of theCompanies Act 2013 the details of which is being provided in the Corporate GovernanceReport. The Whistle Blower Policy has also been posted on the website of the Company.

RELATED PARTY TRANSACTIONS

All the related party transactions for the year under review are entered on arm'slength basis and are in compliance with the Companies Act 2013 and the ListingRegulations. There are no materially significant related party transactions made by theCompany with Promoters Directors or Key Managerial Personnel etc which may havepotential conflict with the interest of the Company at large. All related partytransactions are presented to the Audit Committee and the Board for its approval.

The related party transactions policy as approved by the Board is uploaded on theCompany's website "www.jayshreetea.com".

The details of the transactions with related party is given in the Standalone FinancialStatement forming part of the Annual Report.

EVALUATION OF BOARD'S PERFORMANCE

In compliance with the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the performance evaluation of the Board was carried outduring the year under review. The Board of Directors expressed their satisfaction with theevaluation process. More details on the same is given in the Corporate Governance Report.

AUDITOR'S REPORT & ACCOUNTS

All notes to the Accounts referred to in the Auditors' Report are self-explanatory andtherefore do not call for any further comments.

APPRECIATION

The Board wishes to place on record its appreciation of the efforts put in by yourcompany's workers staff and executives.

Industrial relations at all estates and other units were cordial.

For and on behalf of the Board

D.P.Maheshwari S.K.Tapuriah

(Managing Director)

(Director)

Kolkata 28th May 2019 (DIN:02203749) (DIN:01065278)