TO THE MEMBERS
Your Directors have pleasure in presenting the Annual Report together with the AuditedFinancial Statements of the Company for the financial year ended 31st March2017.
|FINANCIAL RESULTS ||(Rs. in Crores) |
|Sales & Other Income ||193.54 |
|Profit before Finance Cost & || |
|Depreciation (PBIDT) ||27.63 |
|Profit after Tax ||12.09 |
|Surplus brought forward ||21.00 |
|Surplus carried to Balance Sheet ||33.09 |
Your Directors are pleased to recommend a dividend of Rs. 4/- per Equity Share of Rs.10/- each (i.e. 40%) on the Equity Share Capital of Rs. 3.60 crores for the financial yearended 31st March 2017. The Dividend outgo will be Rs. 1.74 crores ( inclusiveof dividend tax of Rs. 0.29 crores).
During the year ended 31st March 2017 the Company achieved a turnover ofRs. 193.54 crores. EBIDTA of the Company grew by 14.40% from Rs. 24.15 crores to Rs. 27.63crores and Profit After Tax increased from Rs. 8.02 crores to Rs. 12.09 crores anincrease of 50% over previous year.
The revenues of the Company could have been higher if the Government had not reducedthe Maximum Sale Price for cotton seed. Short term impact of demonetisation also affectedthe purchasing power of the farmer during the Rabi season. Steep reduction in prices ofvegetables also negatively impacted the buying power of the farmers during the lastquarter of the Financial Year. During these headwinds the Company spent time inconsolidating its operations and focusing on the bottom-line.
Your Company works across segments of field crops like Jowar Bajra Wheat RiceCotton etc. and vegetable segments like Okra Tomato Chillies Cabbage Gourds etcwith a number of products suitable for both Kharif and Rabi seasons. This robust portfoliohas been further segmented into products to meet the diverse agro-climatic conditions inthe country as well as specific farmer and end-consumer preferences.
During the year the Company launched a number of innovative products across segments.For example in the area of Cotton JK Agri's innovative product - JK PAAS PAAS has beenfinding favour with the farmers due to its unique characteristic of being suited for highdensity planting mechanical harvesting and higher yield. Going forward paucity of farmlabour would drive demand for mechanical harvesting oriented products like Pass Pass.
In our Bajra portfolio also 3 newly launched products have been well accepted by thefarmers. In fact one of the products stood at first place in independent trials at AICRPand ICRISAT for both Kharif and Rabi seasons. Highly compact cob and non-lodging propertyalong with high plant height and higher fodder and grain yields are characteristics ofsome of our hybrids making them popular among the farmers.
In Paddy too where yield has been stagnant products that improve the economicviability of the farmer is the need of the hour. One of your Company's products - JKRH 401Suraksha offers the farmer better tolerance to diseases reducing the cost of pesticideswhile offering higher yield per acre.
The newly launched Tomato hybrid JK Ratan offers the farmer a number of features and issuitable across various states of India.
RESEARCH AND DEVELOPMENT
One of the strengths and backbone of your Company is its Research and Development(R&D) programme. While the Company has been able to launch a number of products duringthe year its R&D teams continue to develop new hybrids in the areas of Cotton CornPaddy Bajra and new varieties in Mustard Wheat and Paddy. The focus of the vegetablebreeding and R&D teams has started yielding results enabling the Company to introduceleading hybrids in Okra Tomato and Chillies. Some promising hybrids have also beenidentified in the areas of Gourd and Cucurbits. Some of these products are also makinginroads in markets beyond Indian boundaries. The R&D teams continue their efforts toenhance the economic yield of the farming community by a combination of better yields andby reducing biotech and abiotic stresses and curtailing the need of other costly inputslike pesticides etc. Biotech integrated crop breeding and product development are helpingthe Company to enhance speed in precision achieving these objectives.
There are many positive indications in the agricultural sector and agriculturalproduction in the country today. The importance of agriculture in the Indian economy isunderscored by the fact that 54.6% of India's population is engaged in agriculture andcontributes 17% to GDP.
A good monsoon in 2016 brought relief to Indian farmers who were reeling under thepressure of poor monsoon over the last two years helping them to achieve a near-recordproduction of most kharif crops in FY 2016-17. Overall the agriculture sector recorded arobust growth of 4.1 per cent in 2016-17 as against the previous year's drought-impactedgrowth rate of 1.2 per cent.
Although 2016 monsoon seemed to be normal with rains of 97% however the geographicaldistribution and timing were erratic across the country. Many agriculture belts likeKarnataka & Tamil Nadu remained rain deficient. In fact several areas witnesseddrought like conditions leaving the farmer in dire straits.
The agriculture sector in India is expected to gather momentum over the next few yearsdue to increased investments in agricultural infrastructure such as irrigation facilitieswarehousing and cold storage etc. Factors such as reduced transaction costs and timeimproved post-harvest management and better fiscal incentives would contribute to thesector's growth. Furthermore the growing use of genetically modified crops will improvethe yield for Indian farmers. The 12th Five-Year Plan estimates the food grainsstorage capacity to expand to 35 MMT. The Prime Minister's stated objective of doublingfarmers' income by the year 2022 will also give impetus to this sector.
Some schemes announced by the government to enhance farmer income are:
The total allocation for rural agricultural and allied sectors for 2017-18stand at Rs. 187223 crores which is 24% higher than last year's allocation.
The Cabinet has approved extension of tenure of loans under Credit LinkedSubsidy Scheme of the Pradhan Mantri Awas Yojana from 15 to 20 years
The government will issue soil health cards and will setup a mini lab in KrishiVigyan Kendras.
Fasal Bima Yojana will be increased to 40 percent from the current 30 percent.
A dedicated micro-irrigation fund will be set up by NABARD to achieve the goalof Per Drop More Crop'. Its initial corpus will be Rs. 5000 crores.
Dairy processing infrastructure fund will be set up under NABARD with a fund ofRs. 8000 crores.
Normal monsoon in 2017 will give agriculture a onetime growth kicker because of the lowbase effect of the last two years. This should boost up sluggish rural demand adding toagriculture sector growth and to overall GDP growth.
Considering forecast of a normal monsoon the government has also targeted a recordfood grain production during the 2017-18 crop year beginning July. The agricultureministry has set a production target of 273 million tonnes of grains and pulses during theyear marginally higher than the 272 million tonnes estimated for the year 2016-17.
Growth is expected to gather momentum as the government continues to undertakestructural reforms. Centre is planning on reforming agricultural markets to realize thegoal of "One Nation One Market" and also aim to cover 40% of land holdingsunder the revamped crop insurance scheme. In the event of a normal monsoon and higherproduction agricultural growth is expected to be around 4% in 2017-18.
OPPORTUNITIES THREATS RISK AND CONCERNS Opportunities
Agriculture will remain an integral part of the Indian economy. With its rich andfertile land mass India
has the potential not only to be self-sufficient but also an exporter of agriculturalproducts too. It remains the largest employer of India's population. However our averageproductivity per acre remains sub-par compared to a number of other agriculturalEconomies. In order to overcome the declining productivity a shift from wheat-ricerotation cycle to other cereals pulses and vegetables is needed.
Last year your Company and Gujarat government jointly promoted the concept of cropdiversification in the tribal dominated areas of the state and it was a resoundingsuccess. The project envisaged working with nearly 40000 BPL tribal farmers to promotediversification in their cropping habits and boost their incomes. We are hopeful ofcontinuing the same in future too.
Changing food preferences and increased intake of better quality grains and vegetablesoffers an opportunity to increase crop diversification. The nascent food processingindustry as well as increased demand for "ready-to-eat" and packaged food canfurther catalyze agricultural sector growth. Your Company too continues to enter newproduct categories like sweet corn root crops and even some horticultural segments.
Similar agro-climatic conditions in other parts of the world like Asia and Africa alsooffer growth opportunities for Company's involvement in agriculture. Your Company too isexploring opportunities in our neighboring countries as well as some African countries.
Withdrawal of new technologies by a leading multinational has created a huge vacuum andblocked technical innovation in the area of cotton. Since a large part of Indianagriculture requires improved technology it is both a challenge and opportunity for theIndian private seed companies as well as for Government Agriculture Institutes to developappropriate technology to meet the needs of the sector.
Threats Risk and Concerns
Since a large part of Indian Agriculture is rain fed the vagaries of Monsoon includingerratic scanty untimely and uneven distribution of rain continue to be the biggest riskfactor causing a great deal of uncertainty. High degree of unpredictability invariablyforces the farmer to shift their crop choices at the last moment causing furtheruncertainty in the industry.
The Government of Indias increasing focus and impetus on programmes involvingriver linking and irrigation projects would mitigate these risks. The Govt. policesregarding minimum support prices and subsidies schemes influence farmer preferences andcropping pattern in the short term.
Scarcity of farm labour coupled with ever increasing cost is negatively impacting theprofitability of farmers. Renewed strategy of the Company to widen its portfolio of cropsthat address the needs of Kharif and Rabi seasons as well as varying farmer preferencesacross the country coupled with exploration of new markets would further help mitigationof risks.
HUMAN RESOURCE DEVELOPMENT
People are the key assets that are instrumental in driving the company's performanceyear on year. Their passion commitment sense of ownership and team work has enabled theCompany to grow even in unpredictable and uncertain environment.
Your Company has been focusing on improving the Quality of Talent in the ManagementCadre by hiring people from Management Institutes as well as by conducting focusedManagement Development Programmes. Efforts are also being made to enhance the functionaland technical skillsets through initiatives like customised training programme.
Strengthening employee involvement through communication meetings encourage employeeinvolvement through CFT's young leader forums suggestion schemes involvement incarrying CSR activities has imparted to the growth.
With a mission of creating sustainability building strong agile culture and tomaintain employment engagement levels we constantly evaluate our standard throughparticipation in external employee survey's and also benchmark with other talentcompetitors and best workplaces.
The Company strives to offer a positive supportive open and high performance workculture where innovation and risk taking is encouraged. Performance is recognised andemployees are motivated to realise their full potential.
INTERNAL CONTROL SYSTEMS
The Company has in place an adequate internal control system under which its InternalAuditor carries out extensive audit covering all significant areas of Company's operationsthroughout the year. The Internal Auditor regularly reviews the adequacy and effectivenessof Company's internal control systems. Reports of the Internal Auditor are placed beforethe Audit Committee on quarterly basis for review. Further an enterprise wide LegalCompliance Monitoring Software Tool has been implemented to monitor and ensure timelycompliances of all applicable statutory requirements.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financialcontrols with reference to financial statements. No material reportable weakness wasobserved in the system during the previous financial year. Further the Company hasestablished adequate internal financial controls commensurate with its size complexityand nature of its operations. These are designed to ensure adherence to the Company'spolicies safeguarding of its assets & interests prevention & detection of frauds& errors and accuracy & completeness of financial records. The Company also has arobust management Information System for the timely preparation of reliable financialinformation.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2017 in the prescribed FormMGT-9 is attached as Annexure - 1 to this report and forms part of it.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the financialstatements.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2017 all the contracts orarrangements or transactions entered into by the Company with the Related Parties were inthe ordinary course of business and on arm's length basis and were in compliance with theapplicable provisions of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015
Further the Company has not entered into any contract or arrangement or transactionwith the related parties which could be considered material in accordance with the policyof the Company on materiality of Related Party Transactions. In view of the abovedisclosure in Form AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on thewebsite of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Smt. Swati Singhania and Shri S.K. Gupta retire by rotation and being eligible offersthemselves for reappointment at the forthcoming AGM. The Board recommends theirre-appointment.
All Independent Directors of the Company have given declarations that they meet thecriteria of independence as provided in Section 149(6) of the Companies Act 2013 andRegulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 is annexed to this Report as Annexure - 2 and forms part of it.
The Company has neither invited nor accepted any deposits from the public.
(a) Statutory Auditors and their Report
As per the provisions of Section 139 of the Companies Act 2013 the term of office ofM/s Lodha & Co. Chartered Accountants as Statutory Auditors of the Company willconclude from the close of the forthcoming Annual General Meeting of the Company.
The Board of Directors places on record its appreciation for the services rendered byM/s Lodha & Co. as the Statutory Auditors of the Company.
Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/s BGJC & Associates LLP Chartered Accountants (ICAIFirm Registration Number- 003304N) as the Statutory Auditors of the Company for a periodof 2 years commencing from the conclusion of 17th Annual General Meeting tillthe conclusion of 19th Annual General Meeting pursuant to Section 139 of theCompanies Act 2013.
Requisite Resolution regarding their appointment is included in the Notice of ensuingAnnual General Meeting for approval by the Members.
The observations of the Auditors in their Report on Accounts and the financialstatements read with relevant notes are self-explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2016-17. TheReport given by him for the said financial year in the prescribed format is annexed tothis Report as Annexure-3. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each director to the median employee'sremuneration and other requisite details pursuant to Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed to this Report as Annexure - 4. FurtherParticulars of Employees pursuant to Rule 5(2) & (3) of the above Rules form part ofthis Report. However in terms of provisions of Section 136 of the said Act the Reportand Accounts are being sent to all the members of the Company and others entitled theretoexcluding the said particulars of employees. Any member interested in obtaining suchparticulars may write to the Company Secretary. The said information is available forinspection at the Registered Office of the Company during working hours.
CORPORATE SOCIAL RESPONSIBILITY
Your Company believes in the process of giving back to the society and aims tocontribute to sustainable growth of the society at large. Besides undertaking projects foroverall development and welfare of the society your Company has been working closely withthe farming community in areas of imparting agricultural knowledge promoting preventivehealthcare skill development and livelihood enhancement projects.
The Company has requisite Corporate Social Responsibility (CSR) Policy in accordancewith the provisions of the Companies Act 2013 and rules made thereunder. The contents ofthe CSR Policy are disclosed on the website of the Company.
The Annual Report on the CSR activities undertaken by the Company during the financialyear under review in the prescribed format is annexed to this Report as Annexure- 5.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review there were no significant and material orderspassed by the regulators or Courts or Tribunals which would impact the going concernstatus of the Company and its future operations.
Your Company reaffirms its commitment to good corporate governance practices. Pursuantto Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Management Discussion and Analysis Corporate Governance Report and Auditors'Certificate regarding compliance of conditions of Corporate Governance are made a part ofthis Annual Report.
The Corporate Governance Report which forms part of this Report also covers thefollowing:
a) Particulars of the four Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofDirectors.
c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.
d) The details with respect to Composition of Audit Committee and establishment ofVigil Mechanism.
e) Details regarding Risk Management
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.
"Management's Discussion & Analysis Report" contains forward lookingstatements which may be identified by the use of the words in that direction orconnoting the same. All statements that address expectation or projections about thefuture including but not limited to statements about the Company's strategy for growthproduct development market position expenditures and financial results are forwardlooking statements. The Company's actual results performance or achievements could thusdiffer materially from those projected in such forwardlooking statements. The Companyassumes no responsibility to publicly amend modify or revise any forward - lookingstatements on the basis of any subsequent development information or events.
Your Directors wish to acknowledge and place on record the commitment and dedication onthe part of the employees of your Company in achieving good results.
Your Directors would also like to acknowledge and record their appreciation of thecontinued support and assistance received by the Company from its valued CustomersDealers Suppliers Shareholders Banks and various Central and State Government Agencies.
|On behalf of the Board of Directors || |
|Date:10th May 2017 ||Bharat Hari Singhania |
|Place: Hyderabad ||Chairman |