Your Directors are pleased to present their Thirty Third Annual Report and theCompanys audited financial statement for the financial year ended 31st March 2016.
The Companys financial performance for the year ended March 31 2016 issummarized below:
|Particulars || |
| ||2016 ||2015 ||2016 ||2015 |
|Profit Before Bad Debt Finance Cost Depreciation and Tax ||676.15 ||602.22 ||682.76 || |
|Less: Bad Debt ||252.36 ||- ||252.36 || |
|Profit Before Interest Depreciation and Tax ||423.79 ||602.22 ||430.40 || |
|Less: Interest ||78.35 ||110.26 ||78.35 || |
|Gross Profit for the year ||345.44 ||491.96 ||352.05 || |
|Less: Depreciation ||113.15 ||151.85 ||113.15 || |
|Profit Before Tax ||232.29 ||340.11 ||238.90 || |
|Less: Provision For- || || || || |
|Net Current Tax ||58.32 ||57.73 ||58.55 |
|Provision for MAT Credit Entitlement ||(8.01) ||(15.97) ||(8.01) |
|Provision for Tax for earlier years ||5.60 ||- ||5.60 |
|Deferred Tax ||(4.65) ||(10.61) ||(4.65) |
|Profit/(Loss) After Taxation ||181.03 ||308.96 ||187.41 |
|Add: Balance Brought Forward from Last Account ||1644.37 ||1454.49 ||1644.37 || |
| ||1825.40 ||1763.45 ||1831.78 || |
|Less: Transfer to General Reserve ||18.10 ||30.90 ||18.10 || |
|Less: Proposed dividend ||88.18 ||70.23 ||88.18 || |
|Less: Dividend Distribution Tax ||17.95 ||17.95 ||17.95 || |
|Less: Dividend for earlier years ||17.95 ||- ||17.95 || |
|Balance Carried to Balance Sheet ||1683.22 ||1644.37 ||1689.60 || |
Results of Operations and the State of the Companys Affairs
With an increase in production of own tea and tea made from bought leaves by 141176 kgsand 156230 kgs compared to previous year the Companys working results during theyear had shown slight improvement.
However the Companys decision to create provision for bad debt on fifty per centof unsecured loan and entire interest receivable lying outstanding with Kanco EnterprisesLimited has reduced the profit of the Company by Rs 252.36 lacs. The profit before taxsubsequent to this provision for bad debt stood at Rs 232.29 Lacs compared to Rs 340.11Lacs for the previous year.
Your Company continued to take advantage of the Special Purpose Tea Fund Schemeannounced by the Tea Board of India. In the financial year 2015-2016 24.19 hectares24.10 hectares and 23.65 hectares of the plantation area were replanted rehabilitated anduprooted respectively. Investment in factory machinery has also been made to upgrade themachineries and also to enhance quality of teas.
The production of tea in the current season is more or less at par with the last year.However with better rainfall during the year your Company anticipates increase in teaproduction in the current year also.
The north India auction average price for the month of April 2016 for new season teasis lower by 1.85% compared to corresponding period in the previous year. Your Companybeing producer of premium quality teas expects to be less affected by fall in tea pricesas compared to medium and low quality producers. The increase in wage will hit the bottomline. The thrust on irrigation and replanting under SPTF will continue.
The quality management system of Mackeypore Tea Estate Kanco Tea & IndustriesLimited bearing ANZSIC Code: 2180 has been assessed and found to meet the requirements ofISO 9001:2008.The certificate no. IN/QMS/00270 is valid for manufacturing of black teafrom green tea leaves till 14/09/2018.
The food safety systems of Mackeypore Tea Estate Kanco Tea & Industries Limitedbearing ANZSIC Code: 2180 has been assessed and found to meet the requirements of HACCP(Hazard Analysis and Critical Point). The certificate no. IN/HACCP/00027 is valid formanufacturing of black tea from green tea leaves till 19/05/2019.
The food safety systems of Mackeypore Tea Estate Kanco Tea & Industries Limitedhas been assessed and found to meet the requirements of ISO 22000:2005 (Food SafetyManagement System). The certificate no. IN/FSMS/00065 is valid for manufacturing of blacktea from green tea leaves till 20/05/2019.
Mackeypore Tea Estate & Lakmijan Tea Estate has been issued verificationcertificate bearing no. TS-VC/CUC/03/ 834385/14 & TS-VC/CUC/04/8347386/14 undertrustea code for sustainable tea in India by Control Union. The trustea code coverssocial agronomic food safety occupational health & safety and environmentalcriteria. The certificates are valid till 22/12/2016.
Appropriations Transfer to reserves
Rs 18.09 Lacs has been transferred to general reserve and Rs 38.76 Lacs has beenretained in surplus.
The Directors of your Company has recommended a dividend of Rs 7/- and Rs 5/ (Last YearRs 7 /- and Rs 5/-) per Preference Share of Face Value of Rs 100/- and Equity Share ofFace Value of Rs 10/-share respectively for the year under review.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form No. MGT-9 asrequired under Section 92 of the Companies Act 2013 is annexed herewith marked asAnnexure A to this report.
In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. Govind Ram Banka (DIN: 00207385) as Non-Executive Non-Independent Directorretires by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for reappointment.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed both undersub-section (6) of Section 149 of the Companies Act 2013 read with the Companies(Appointment and Qualification of Directors) Rules 2014 and the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
The Company has devised a Policy for Performance evaluation of Independent DirectorsBoard Committees and other Individual Directors which includes criteria for performanceevaluation of the non-executive directors and executive directors and is annexed herewithmarked as Annexure B to this report.
The performance evaluation of the Chairman and the non-independent Directors wascarried out by the Independent Directors. On the basis of the Policy the PerformanceEvaluation of Independent Directors Board Committees and other individual Directors werecarried. The Board of Directors expressed their satisfaction with the evaluation process.
Policy on Directors Appointment Remuneration etc
Pursuant to Section 178(3) of the Companies Act 2013 Nomination and RemunerationCommittee has formulated the criteria for identification and selection of the suitablecandidates for various positions in senior management and also candidates who arequalified to be appointed as director on the Board of the Company. The Committee alsorecommended a policy relating to the remuneration for the directors key managerialpersonnel and other senior management personnel and a process by which the performance ofthe directors could be evaluated and the same is annexed herewith marked as Annexure B tothis report.
Key Managerial Personnel
The following persons are the Key Managerial Personnel (KMP) of the Company incompliance with the provisions of Section 203 of the Companies Act 2013:
a) Mrs. A. Kanoria (DIN:00081172) Whole-time Director
b) Mr. A. K. Gangopadhyay Company Secretary (resigned w.e.f 14/01/2016)
c) Ms. Charulata Kabra Company Secretary (w.e.f. 15/02/2016)
d) Mr. S. K. Parhi Chief Financial Officer
Number of Meetings of the Board
Five meeting of the Board of Directors were held during the year.
The Audit Committee comprises of Independent Directors namely Mr. Navin Nayar(Chairman) and Mr. Golam Momen and Mr. Govind Ram Banka Non-Executive Director. All therecommendations made by the Audit Committee were accepted by the Board.
Directors Responsibility Statement
The Directors hereby confirms that
a) in the preparation of the annual accounts the applicable accounting standards readwith requirements set out under Schedule III to the Act have been followed and there areno material departures from the same;
b) they had selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2016 and of the profit ofthe Company for the year ended on that date;
c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) they had prepared the annual accounts on a going concern basis;
e) they had laid down internal financial control to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively; and
f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Messrs. Jain & Co. Chartered Accountants Registration No. 302023E StatutoryAuditor of the Company hold office till the conclusion of the ensuing Annual GeneralMeeting and are eligible for re-appointment. They have expressed their willingness tocontinue as Statutory Auditors of the Company if so appointed by the members. YourCompany has received the consent and certificate from Messrs. Jain & Co. CharteredAccountants to the effect that their reappointment if made would be within the limitsprescribed under the section 141 of the Companies Act 2013 read with rules and that theyare not disqualified for reappointment within the meaning of Section 141 of the CompaniesAct 2013. They have also confirmed that they hold a valid peer review certificate asprescribed under regulation 33(1)(d) of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.
Statutory Auditors Report
The report by the Auditors is self-explanatory and has no qualification reservationadverse remark or disclaimer; hence no explanation or comments by the Board were required.
Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed P.S. & Associates a firm of Company Secretaries in Practice to undertake theSecretarial Audit of the Company. The Report of the Secretarial Auditor is annexedherewith marked as Annexure C to this report.
Further this report has no qualification reservation adverse remark or disclaimer;hence no explanation or comments by the Board were required.
Particulars of Loans Guarantees or Investments by Company
Particulars of investments made by the Company are provided in note nos. 12 &15 tothe financial statements.
The Company has neither given any loan & guarantee nor provided any security duringthe financial year under review. The particulars of loan as on 01/04/2015 and 31/03/2016are provided in note no. 13 to the financial statements.
Contracts and Arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an armslength basis.
Material Changes and commitments occurred between the end of the Financial Year underReview and the date of this report.
No material changes and commitments have occurred between the end of the financial yearunder review and the date of this report.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
A statement pursuant to Section 134(3) (m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 on conservation of energy technologyabsorption foreign exchange earnings and outgo is annexed herewith marked as Annexure Dto this report.
As per requirement of Section 134(3) (n) of the Companies Act 2013 the Board ofDirectors in its meeting held on 9th May 2014 has approved the Risk Management Policy.The Board envisaged the following elements of risks which may threaten the existence ofthe Company-
Nature Related Risk
Tea being an agricultural produce is affected by the vagaries of weather. Weather playsa major role in determining the final output of produce. Both excess and scarcity ofrainfall play havoc with the final output of produce. KTIL has carried out extensivedrainage network to deal with the problem arising out of excess rainfall. KTIL has adetailed plan of action for bringing its plantation areas under irrigation and more than70% of its plantation areas are under irrigation now.
Tea bushes are prone to attack by various pests like cater pillars Loppers Red SlugsRed Spiders Helopeltis Thrips Green Fly etc. KTIL has experienced competent seniorpersonnel in the garden who controls pest by way of timely detection and spray ofagro-chemicals. KTIL has also a policy of keeping adequate agro chemicals in stock inanticipation of pest attack during a particular month based on past behavior of pests.KTIL is working out on a plan on integrated pest management which will promote the use ofphysical biological and mechanical control methods and the least possible use ofagrochemicals.
Tea being a labour intensive industry is prone to loss of output due to labour unrest.KTIL provides its entire workforce employed in the estate along with their families accessto drinking water food housing and basic medical care as per the guideline of PlantationLabour Act 1951 and Assam Plantation Labour Rules. Workers are paid the official agreedwage as per the agreement entered into between the recognised trade union and KTIL. KTILfollows a strict Non-Discrimination Policy on the basis of race creedgender political opinion and membership of trade union. KTIL always aim to maintaincordial relationship with its workforce.
The tea prices are volatile and affected by the conditions prevailing in the market.The inferior quality teas are affected more by volatility in prices in comparison to topquality teas. KTILs thrust on making top quality teas minimized the risk due tovolatility in prices.
Bought Leaf Operation
KTIL purchases green leaves from outside suppliers and produces it under a differentmark called Lakmijan to protect its own mark Mackeypore. KTIL processes the bought leavesseparately from its own leaves. The physical segregation of own tea leaves and boughtleaves manufacturing process is clearly visible. The Company is vulnerable to volatilityin selling price of tea made from bought leaves.
Risks due to Fire Accident Theft Etc.
KTIL has taken appropriate insurance policy to safeguard itself against loss that mayarise from risks associated with fire earthquake etc.
Risk due to Fraud
KTIL has installed adequate internal control measures to minimise the occurrence offraud and internal audit is also conducted at regular intervals by an external agency.
Risk of Doubtful and Bad Debt
The credit worthiness of sundry debtors is checked by the senior management to fix thecredit period if any to be given. The background check of new party is also carried outbefore deciding on the credit period.
Corporate Social Responsibility
The Corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities tobe undertaken by the Company which has been approved by the Board.
The CSR policy can be viewed at http://kancotea.in/pdf/CSR%20POLICYPDF
The Companys CSR activities shall primarily include one or more of the itemscovered under Schedule VII to the Act as detailed below: -
(i) eradicating hunger poverty and malnutrition promoting health care includingpreventive health care and sanitation and making available safe drinking water;
(ii) promotion of education including special education and employment enhancingvocation skills especially among children women elderly and the differently abled andlivelihood enhancement projects;
(iii) promoting gender equality empowering women setting up homes and hostels forwomen and orphans; setting up old age homes day care centers and such other facilitiesfor senior citizens and measures for reducing inequalities faced by socially andeconomically backward groups;
(iv) ensuring environmental sustainability ecological balance protection of flora andfauna animal welfare agroforestry conservation of natural resources and maintainingquality of soil air and water;
(v) protection of national heritage art and culture including restoration of buildingsand sites of historical importance and works of art; setting up public libraries;promotion and development of traditional arts and handicrafts;
(vi) measures for the benefit of armed forces veterans war widows and theirdependents;
(vii) training to promote rural sports nationally recognized sports Paralympic sportsand Olympic sports;
(viii)contribution to the Prime Ministers National Relief Fund or any other fundset up by the Central Government for socio-economic development and relief and welfare ofthe Scheduled Castes the Scheduled Tribes other backward classes minorities and women;
(ix) contribution or funds provided to technology incubators located within academicinstitutions which are approved by the Central Government;
(x) rural development projects.
(xi) slum area development
Preference shall be given to Companys Business and areas around CompanysTea Estates for spending the amount earmarked for CSR.
During the year the Company has spent Rs 1274000/- (includes Rs 886737/- unspentin the previous year 20142015). The unspent amount of Rs 405043/- for which no plan ofexpenditure was presented by Kanco CSR Trust will be spent in the financial year2016-2017. The Annual Report on CSR activities is annexed herewith marked as Annexure E tothis report.
Subsidiaries Joint Ventures and Associate Companies
As on 31st March 2016 we have one wholly owned subsidiary namely Winnow Investmentsand Securities Private Limited. During the year the Board of Directors reviewed theaffairs of the subsidiary. In accordance with Section 129(3) of the Companies Act 2013we have prepared the consolidated financial statement of the company and its subsidiarywhich form part of the Annual Report. The revenue and profit after tax of the subsitiaryfor the financial year ended 31st March 2016 was Rs 995833/- and Rs 638660/-respectively. The total asset of the subsidiary as on 31st March 2016 was Rs10273006/- Further a statement containing the salient features of the financialstatement of our subsidiary in the prescribed format AOC-1 is annexed to the financialstatements.
During the year the following companies ceased to be Companys associatecompanies:
- B.T Investments Private Limited
- E.T Resources Private Limited
- Facitcon Investments Private Limited
During the year under review the Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014.
Material Orders Passed by the Regulators /Courts/ Tribunals
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and companys operations in future.
The Company has an effective Internal Control system with reference to FinancialStatements. The Audit Committee of the Board of Directors reviews the adequacy andeffectiveness of the Internal Control System. The Companys internal Control Systemis commensurate with its size scale and complexities of its operations.
The Company has a Vigil Mechanism / Whistle Blower policy to report genuine concernsand grievances. Protected disclosures can be made by a whistle blower through an email ordedicated telephone line or a letter to the Chairman of the Audit Committee.
Website: http://kancotea.in/pdf VIGIL%20MECHANISM-WHISTLE%20BLOWER%20POLICY.PDF
The Companys equity shares are listed at the Calcutta Stock Exchange Limited(Scrip Code-10014107). The Companys equity shares are traded at the Bombay StockExchange Limited (Scrip Code- 590130) as per MOU signed between CSE and BSE. Listing Feesfor the financial year 2016-2017 has been paid.
The Corporate Governance provisions as stipulated under the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 is notapplicable to the Company.
Management Discussion and Analysis
Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(3) read with Schedule V to Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed herewithmarked as Annexure F to this report.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
No complaints have been received during the year under review by the respectiveInternal Complaints Committee.
Details pertaining to remuneration as required under section 197(12) of the CompaniesAct 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014
The percentage increase in remuneration of each Director Chief Financial Officer andCompany Secretary during the financial year 2015-16 ratio of the remuneration of eachDirector to the median remuneration of the employees of the Company for the financial year2015-16 and the comparison of remuneration of each Key Managerial Personnel (KMP) againstthe performance of the Company are as under:
|Sl. No. Name of Director/ KMP and Designation ||Remuneration of Director/ KMP for financial year 2015-16 ('. In Lacs) ||% increase in Remuneration in the F.Y. 2015-16 ||Ratio of remuneration of each Director to median remuneration of employees ||1 |
|1. Mrs. A. Kanoria Whole-time Director ||29.71 ||16.49% ||21.04 ||The profit before tax decreased by 31.84% compared to previous year due to creation of provision for bad debt amounting to '.252.36 Lacs. The Company has paid fixed part of the salary as per the agreement signed pursuant to passing of resolution by the members at the general meeting. The increase in salary of KMP other than Whole-time Director is as per experience qualification market trends and industry bench mark. |
|2. Mr.A.K.Gangopadhyay Company Secretary (resigned w.e.f. 14/01/2016) ||2.27 ||N.A. ||1.61 |
|3. Ms. C. Kabra Company Secretary ( w.e.f. 15/02/2016) ||1.21 ||N.A. ||0.85 |
|4. Mr. S. K.Parhi Chief Financial Officer ||13.89 ||11.87% ||9.84 |
|5. Mr. U. Kanoria Non-Executive Director ||0.75 ||(6.25%) ||0.53 || |
|6. Mr. G. Momen Independent Director ||0.75 ||15.38% ||0.53 || |
|7. Mr. N. Nayar Independent Director ||0.75 ||6.25% ||0.53 || |
|8. Mr. G. R. Banka Non-Executive Director ||0.45 ||43.75% ||0.32 || |
(ii) The median remuneration of employees of the Company during the financial year wasRs. 141183/-
(iii) the percentage increase in median remuneration of the employees of the Company -21.05 %
(iv) Number of permanent employees on the rolls of the Company - 1570
(v) Explanation on the relationship between average increase in remuneration andcompany performance - The average increase in remuneration is 19.73%. The dip in profit isattributable to creation of provision for bad debt amounting to Rs. 252.36 Lacs. Theincrease in salary which is as per agreement entered into with trade unions at tea estateand in line with the industry bench mark at the registered office is justified.
(vi) Comparison of the remuneration of the Key Managerial Personnel Against theperformance of the Company - The total remuneration of Key Managerial Personnel increasedby 15.02% whereas the profit before tax declined by 31.84%. The drop in profit is mainlyattributable to creation of provision for bad debt amounting to '. 252.36 Lacs. The fixedpart of the salary was paid to Whole-time Director and other KMPs were paid as per theirexperience qualification market trends and industry bench mark.
a) in the market capitalisation of the company- The market capitalisation as on March312016 was '.3601.35 Lacs ('.2219.89 Lacs as on March 31 2015)
b) in the Price Earning Ratio of the Company was 20.32 as at March 312016 and was 7.25as at March 312015.
c) Percentage increase over decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last public offerin the year- Not Applicable.
(viii) Average percentile increase already made in the last financial year
a) In the salaries of employees other than the managerial personnel - 19.89%
b) Percentile increase in the managerial remuneration - 15.02%
c) Justification for such increase in remuneration & exceptional circumstances forincrease in the managerial remuneration - (Please refer point-v)
(ix) Key parameters for any variable component of remuneration availed by the directors- '.Nil for the year under review.
(x) Ratio of remuneration of the highest paid director to that of the employees who arenot directors but receive remuneration in excess of the highest paid director during theyear- Not applicable as there are no employees receiving higher remuneration than thehighest paid director.
(xi) It is hereby affirmed that the remuneration paid to the directors key managerialpersonnel and other employees is as per the remuneration policy of the company.
Note- Liability for gratuity and leave encashment as required by Accounting Standard-15issued by The Institute of Chartered Accountants of India is provided on actuarialvaluation report for the Company as a whole. The amount pertaining to individual employeeis not ascertainable and therefore not included in the above calculation.
B. Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are not applicable.
Your Directors place on record their appreciation for the cooperation and supportextended by the Employees Banks/ Financial Institutions and all other business partners.
| ||For and on behalf of the Board of Directors |
| ||U.Kanoria |
|Kolkata the 14th May 2016 ||Chairman & Director |