DIRECTORS REPORT AND MANAGEMENT DISCUSSION & ANALYSIS
TO THE MEMBERS
Your Directors have pleasure in presenting the Annual
Report together with the Audited Financial Statements of the Company for the FinancialYear ended 31st March 2018.
|FINANCIAL RESULTS || |
| ||( Rs. in Crore) |
|Sales & Other Income ||202.89 |
|Profit before Finance Cost & ||27.38 |
|Depreciation (PBIDT) || |
|Profit after Tax ||11.99 |
|Surplus brought forward ||32.67 |
|Surplus carried to Balance Sheet ||42.92 |
Your Directors are pleased to recommend a dividend of Rs. 4/- per Equity Share of Rs.10/- each (i.e. 40%) for the Financial Year ended 31st March 2018. The Dividendoutgo subject to approval at the ensuing Annual General Meeting will be Rs. 1.74 crore(inclusive of Dividend Distribution Tax of Rs. 0.30 crore).
During the Financial Year ended 31st March 2018 the Company achieved aturnover of Rs. 202.89 crore an increase of 6% over previous year. EBIDTA of the
Company during the year was Rs. 27.38 crore.
During the year the Company recorded significant improvement in its field crop andcotton seeds business clocking high double digit growth in both the categories. TheCompany is very hopeful that this growth will continue in the coming years also. Theincrease in the Minimum Support Price (MSP) of key crops along with prediction of a normalmonsoon augurs well for the Agri Economy. This will help create a conducive environmentfor increased investment in agriculture inputs including seeds by the farmer directlybenefitting the Companys business.
During the year the farm gate prices of most of the commodities especially vegetablesremained supressed due to factors like over production and sudden stoppage of exports offresh vegetables to some of our neigh bouring countries creating a situation of glut inthe domestic market. This had a negative impact on the vegetable seeds business whichhitherto has been growing at a very healthy rate.
We are very hopeful that this situation will change for the better in the coming year.
We expect that in coming times there will be a redistribution of crop acreages basedon economic returns. The expected hike in the MSPs of various crops will also have abearing on this decision. The Company is very well prepared to handle these likely changesowing to its diversified product portfolio and also an R&D program which is capable ofcoming out with new products in response to the changing market requirements.
Your Company continues to work across segments in field crops like Jowar Bajra WheatRice Cotton etc. in addition to vegetables like Okra Tomato Chillies Cabbage Gourdsetc.
The effort of the Company is to widen the portfolio by way of launching products foreach of the micro-segments in the market.
This year saw the market share expansion of our Bajra & Cotton hybrids especiallyin North and Central
Indian Markets. One new Tomato hybrid - JK Ratan continues to make good strides and weare hopeful that this hybrid will grow manifold in the coming seasons.
RESEARCH AND DEVELOPMENT
R&D is the key driving force for growth of any company in agriculture. It is thepotential factor to turnaround the entire business and propels growth of the Company.
While the Company has been focusing on growth
R&D has always acted as a propeller in the ocean of agriculture industry. TheR&D team has delivered good hybrids of Cotton Corn Paddy Bajra and new varieties inMustard and Wheat. These varieties have helped in strengthening the overall brand equityof your Company. Vegetable R&D also continues to come up with a number of hybrids inOkra Tomato & Chili. Along with it the Company has also launched some hybrids ofGourds and Cucurbits especially Melons and Cucumbers.
The Companys R&D team is working to come up with solutions to resolve theproductivity challenges surpassing the biotic and abiotic stress & reducing thedependency of farming community on pesticide and other Agri inputs.
Agriculture plays a vital role in Indias economy. Two third of the Countryspopulation depends primarily on agriculture for their livelihood. Continued subduedperformance of the Agricultural sector with abysmally low average growth rate of 2.2% perannum during last four years does not augur well for the Economy.
The Government in the recent budget announced various programmes for the farmingcommunity. It announced MSP of 1.5 times of the input cost of farmers for the kharifcrops. Further increased allocation for rural credit and fertilizer subsidy along withirrigation reforms as well as full implementation of eNAM system (online agriculturemarket place) has been announced. Development and up-gradation of agriculture marketinginfrastructure in 22000 Grams and 58 APMCS will also help the farmers. The Government hasalso set aside Rs. 500 Crore for "Operation Green" to address price volatilityin perishable commodities. A special focus on food processing sector coupled withincreased allocation towards crop insurance would help the farmers. In additioninitiatives like supply of subsidized fertilizer to farmers through Direct Benefit
Scheme supply of urea at statutorily controlled price are steps in the right directionto double the farmers income. Favourable monsoon forecast by IMD and Skymetexpected hike in MSP rates possibility of higher yield coupled with above mentionedinitiatives taken by the government augurs well for the farming community to boost upagricultural growth thereby reviving rural consumption.
Enthused by the positive monsoon predictions the food grain production in the comingyear is expected to surpass the record production of the previous year.
While monsoon continues to be crucial for Kharif crops however increasing productionin the Rabi season has also helped in reducing over dependence on monsoon during Kharifseason. Rising global temperatures due to climate change is also having an impact oncropping patterns and farm incomes. Irrigation is the best insurance for climate change.Approximately 35% of the total cropped area is under irrigation leaving a large part ofIndia to the mercy of monsoons. Over the last few years improved canal connectivity andmicro irrigation to some extent has helped improve productivity especially in the statesof Uttar Pradesh Haryana Punjab and Maharashtra. However relatively poor irrigation andlow reservoir levels in Southern states continue to be a matter of concern.
In a nutshell in the above backdrop and due to overall positive sentiments theagricultural sector is poised for a decent double digit growth in the coming years.
OPPORTUNITIES THREATS RISK AND CONCERNS
Indias burgeoning population and rising need for food grains increasing GDPcoupled with increasing seed replacement rate better awareness among the farmingcommunity about the benefitsof using certified seeds has led to a spur in demand forHybrid seeds over the past few years.
With rising disposable income and change in the lifestyle and food habits of Indiansthe demand for fruits and vegetables has increased the need for quality vegetable seeds.The low hybridisation in Vegetable Segment presents ample opportunity for the seed sectorto grow multi-fold in next few years.
Continued economic growth and increasing demand for food in many emerging economiesespecially in African and Asian continent has opened new markets for quality seeds. Beingin similar agro-climatic conditions and the potential adaptability of Indian Hybrid seedsin these regions is opening up new vistas to expand geographically.
Escalation in hybridisation rate in some of the under penetrated crops coupled withapproval for GM in food crops in future has the potential to accelerate the growth of theindustry.
Increasing role of the organized sector post demonetization and GST implementationgrowth in contract farming increased mechanization easy availability of credit and ahost of recent measures initiated by the Government will further help catalyse the growthof the Indian seed industry.
Threats Risk and Concerns
Erratic and unpredictable monsoons uneven and skewed distribution of rain surgingcost of production availability of labour and varying commodity prices are some of theareas of concern to the farmers.
In addition increasing incidence of pest and Pink Boll worm attacks risingcompetition saturated market in certain crops working capital requirement and labourcost also pose challenges for the industry. Frequent regulatory intervention restrictingMRPs in certain crops and lack of a strong regulatory regime for protection of patentetc. also cause uncertainty.
All the above factors pose a challenge to the sustainable and healthy growth of theindustry.
HUMAN RESOURCE DEVELOPMENT
The success of our HR Strategy will depend in part on our ability to retain motivatedevelop and continue to attract employees with the skills and experience to help thecompany master challenges and make the most of opportunities. Investing in our employeesremains of paramount importance. This enables in translating our strategic priorities intoaction and is reflected in our organizational culture diversity and inclusion talent anddevelopment talent acquisition compensation and benefits managing change andcollaboration with our social partners.
The role of HR has changed over the years. More than ever it operates in partnershipwith senior management across all functions. It has a key role in strategic development ofthe goals of the Company and helps its teams to build capabilities to deliver. The Companyhas been working with internal and external faculty including exposing people acrosssegments to training programmes at leading institutions like IIMs at Lucknow KozhikodeBengaluru etc. The team also closely works with internal mentors and has beenparticipating in quality movements as well as innovation initiatives. Various teams havealso been involved in CSR activities undertaken by the Company like farmer education etc.The HR team continues to work with the leadership in building capabilities across theorganisation to help it achieve a sustainable growth agenda. The Company continues to worktowards providing an encouraging work culture where performance and innovation areencouraged and recognised.
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
Companys operations through-out the year. The
Internal Auditor regularly reviews the adequacy and effectiveness of Companysinternal control systems. Reports of the Internal Auditor are placed before the AuditCommittee on quarterly basis for review. There are adequate checks & balances inplace wherein deviation from the systems laid-out are clearly identified and correctiveactions are taken in the respective areas wherever required. Further the LegalCompliance Monitoring Software Tool also performed satisfactorily during the year tomonitor and ensure timely compliances of all applicable statutory requirements.
INTERNAL FINANCIAL CONTROLS
The Company over the years has strengthened its budgetary control system and internalfinancial controls with reference to financial statements. Further the Company hasadequate internal financial control policies and procedures commensurate with its sizecomplexity and nature of its operations. These are designed to ensure adherence to theCompanys policies safeguarding of its assets & interests prevention &detection of frauds & errors and accuracy & completeness of financial records.
The control & systems of the Company have been made more effective with theimplementation of
ERP (SAP) which connects the plants as well as all offices and marketing offices toensure seamless data and information flow. The Company also has a robust managementInformation System for the timely preparation of reliable financial information. Nomaterial reportable weakness was observed in the system during the previous financialyear.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2018 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 given guarantees or securities provided and investments madeas required under the provisions of Section 186 of the Companies Act 2013 are given inthe financial statements.
RELATED PARTY TRANSACTIONS
During the Financial Year ended 31st March 2018 all the contracts orarrangements or transactions entered into by the Company with the Related Parties were inthe ordinary course of business and on arms length basis and were in compliance withthe applicable provisions of the Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements)
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
During the year Shri Ajay Srivastava and Shri Amar Singh Mehta were appointed asAdditional Directors of the Company w.e.f. 24th October 2017 and 6th February2018 respectively pursuant to Section 161 of the Companies Act 2013 (Act) and theyshall hold office as Directors up to the date of the forthcoming Annual General Meeting(AGM). The Board also appointed them as Independent Directors of the Company for a term offive consecutive years each from the said dates pursuant to the relevant provisions of theAct and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. TheCompany has also received requisite Notice from Members of the Company proposing the nameof Shri Ajay Srivastava and Shri Amar Singh Mehta for appointment as Director at theforthcoming AGM. The Board recommends their appointments as aforesaid.
Shri J.R.C. Bhandari and Shri S.C Sethi Independent Directors resigned from the Boardw.e.f. 14th November 2017 and 27th March 2018 respectively owingto health issues. Shri Bhandari was also Chairman of the Audit Committee and theNomination and Remuneration Committee of Directors and Shri Sethi was Chairman of theStakeholders Relationship
Committee of Directors of the Company. The Board placed on record its sincereappreciation of the valuable contributions made by them during the long tenure of theirassociation with the Company.
Shri Vikrampati Singhania retires by rotation and being eligible offers himself forre-appointment at the forthcoming AGM. The Board of Directors also appointed ShriSinghania as Managing Director of the Company w.e.f. 7th May 2018 for a periodof five years subject to the approval of the Members of the Company at the forthcomingAGM. Shri Vikrampati Singhania also became Key Managerial Personnel of the Companyeffective from the said date. The Board recommends his 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.
Further there were no other changes in the Directors and Key Managerial Personnel ofthe Company in terms of the provisions of the Companies Act 2013 during the period underreview.
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
M/s. BGJC & Associates LLP Chartered Accountants were appointed as StatutoryAuditors of the Company for a term of two consecutive years to hold office from conclusionof the 17th AGM held in the year 2017 till the conclusion of the 19thAGM to be held in the year 2019 subject to ratification of their appointment by themembers at the AGM to be held in the year 2018. However pursuant to the Companies(Amendment) Act 2017 the requirement of ratification of appointment of the Auditors onyearly basis has been dispensed with. The observations of the Auditors in their Report onAccounts and the Financial Statements read with relevant notes are self-explanatory.
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.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year under review the Company has duly complied with theapplicable Secretarial Standards on Meetings of the Board of Directors and GeneralMeetings.
Your Company reaffirms its commitment to best corporate governance practices. Pursuantto Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 a Management Discussion and Analysis Corporate Governance Report and AuditorsCertificate regarding compliance of conditions of Corporate Governance are made a part ofthis Annual Report. The Corporate Governance Report which forms part of this Report alsocovers the following:
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 criteria for determining qualificationspositive attributes independence of a Director etc.
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 state that:-
(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.
"Managements 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 Companys strategy forgrowth product development market position expenditures and financial results areforward looking statements. The Companys actual results performance or achievementscould thus differ materially from those projected in such forward-looking statements. TheCompany assumes no responsibility to publicly amend modify or revise any forward -looking statements 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 || |
|Dr. Raghupati Singhania ||Vikrampati Singhania |
|Director ||Managing Director |
|Date: 7th May 2018 || |
|Place: New Delhi || |