Kaveri Seed Company Limited
The Directors have pleasure to present their 30th Annual Report and the audited AnnualAccounts for the Year ended 31st March 2017.
|FINANCIAL RESULTS: || ||Rs. in Lakhs |
|Particulars ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Total Income ||70424.00 ||72819.78 |
|Profit before Depreciation ||11286.50 ||20234.00 |
|Profit before Tax ||8437.29 ||17735.71 |
|Profit After Tax ||7847.12 ||17227.96 |
|Transfer to General Reserve ||- ||1000.00 |
A prolonged period of volatility was created in the market in 2015 following severedrought across large parts of India. However a relatively better monsoon in 2016 enabledus to gain a favourable position backed by several effective interventions. During thefinancial year your Company posted a net profit after tax of Rs.7847.12 Lakhs as comparedto previous year PAT of Rs.17227.96 Lakhs (54.45% decline). An overall deficit monsoon inthe Kharif season 2016 resulted in the Company's turnover of Rs.66989.10 Lakhs compared toRs.71652.95 Lakhs for the previous year (decline 6.50%)
During the financial year the consolidated revenue from operations of Rs.70635.76Lakhs against the previous year Rs.74530.27 Lakhs (5.23% decline) and the Consolidated netprofit of Rs.7783.34 Lakhs compared to previous year PAT of Rs.16788.41Lakhs (decline by53.64%). As per the agreement with M/s. Mahyco Monsanto Biotech India Limited during thefinancial year the company has made a provision of Rs.5923.80 Lakhs for payment of royaltyagainst the short provided royalty in the previous years. In this regard the issue hasbeen settled in arbitration with the above said technical provider.
FUTURE PROSPECTS & OUT LOOK:
India's economy is largely dependent on the country's agricultural sector. Aftersluggish growth of agricultural production due to the consecutive weak monsoon optimismhas returned in FY 2016-17 with a good monsoon. It led to substantial recovery for theoverall agri-input space.
According to Indian Meteorological Department (IMD) the Kharif season is likely toreceive normal or above average level rainfall in FY 2017-18. Besides the sector islikely to gain better momentum owing to further investments in agriculturalinfrastructure such as irrigation facilities warehousing and cold storages. The demandfor food and agricultural products is anticipated to increase. It would invariably lead toa surge in production of commercial seeds.
India's seed industry is projected to thrive in the coming days. Market growth will befacilitated by the growth of modern retail channels -- the foraying of prominent nationaland multinational brands. Moreover amplifying demand due to increased subsidies and theGovernment's focus on the use of high yielding varieties is likely to provide impetus tothe overall seed market in India. Enhancement in seed replacement rate (SRR) and farmersopting for hybrid seeds are further expected to bolster the growth. On the one hand thedemand for crops is rising whereas on the contrary the area of arable land available inthe country remains limited. Hence today quality seeds have become a crucial componentto augment the agricultural production and productivity.
Your Directors have not recommended dividend during the year 2016-17.
BUYBACK OF EQUITY SHARES:
The Board of Directors of the Company at its meeting held on 27th March 2017 hasapproved buyback up to 2962963 Equity Shares of Rs.2/- each on a proportionate basisat a price of Rs.675/- per equity share payable in cash for an aggregate consideration notexceeding Rs.200.00 Crores excluding transaction costs viz. brokerage applicable taxessuch as securities transaction tax service tax stamp duty etc. by way of a Tender offerroute through Stock Exchange Mechanism. This is in accordance with the provisions of theCompanies Act 2013 and the Securities and Exchange Board of India (Buy Back of Securitas)Regulations 1998 and other applicable laws and regulations.
The buyback is a capital allocation decision taken with the objective of seeking afairer valuation of the company's stock while improving the company's Return on Equity andincreasing shareholder value in the longer term. The offer size of the buyback is withinthe prescribed limit of 25% of the aggregate of paid up capital and free reserves of thecompany and represents 4.29% of the total issued and paid up equity share capital of thecompany as on 31st March 2016.
RESEARCH AND DEVELOPMENT
Your Company has consistently invested in R&D initiatives to strengthen ourportfolio. Moreover realising the immense potential of biotechnology in fostering andfortifying traditional breeding we have formulated an integrated programme of molecularbreeding. We have developed research collaborations with several national andinternational institutions for product development in line with evolving consumerpreferences; and in view of developing tolerance to biotic and abiotic stresses and thelooming threat of climate change. Our relentless innovation has helped to enhance farmeryields enormously and earned us goodwill among farmers and distributors. Our multi-cropportfolio superior R&D brand salience human capital efficiencies laid firmfoundation for long-term success.
Your Company has equipped with the state - of - the - art Seed Technology laboratory atPamulaparthy plants. Our supply chain management involves meticulous planning andexecution of maintenance breeding of basic seed seed production field production ofhybrid seed transportation of inbound raw materials plant processing of the productssending it to storage and delivering finished quality products to domestic and exportmarkets. We are producing high-quality seeds with focus on time to market to enhanceproductivity of farms.
STATUTORY AUDITORS & AUDITORS' REPORT
The statutory auditors report is annexed to this annual report. There are no adverseremarks on disclosure by the statutory auditors in their report. They have not reportedany incident of fraud to the Audit Committee of the Company during the year under review.Pursuant to Section 139(2) of the Companies Act 2013 read with Companies (Audit andAuditors) Rules 2014 the Company at its 27th Annual General Meeting (AGM) held on 18thSeptember 2014 had appointed M/s. P.R. Reddy & Co. Chartered Accountants asStatutory Auditors for a period of 3 years i.e. up to the conclusion of the 30th AGM to beheld in the year 2017. The present term of M/s. P.R.Reddy & Co.Statutory Auditorswould expire at the conclusion of the ensuing AGM.
The Board of Directors of the Company has proposed the appointment of M/s. M. BhaskarRao & Co. Chartered Accountants (Firm Registration No. 000459S) are proposed toappoint as Statutory Auditors of the Company to hold office from the conclusion of 30thAGM until the conclusion of 35th AGM of the Company based on the recommendation of AuditCommittee. The Company has received written confirmation from M/s. M. Bhaskar Rao &Co. Chartered Accountants confirming that they are eligible for appointment if madewould be in conformity with the limits specified in the said section and subject to theapproval of the Members of the Company.
The Board of Directors of the Company has appointed a professional firm of M/s. M.Anandam & Co. Chartered Accountants to conduct internal audit of the Company for thefinancial year ended 31st March 2018. The Internal Audit Reports are being reviewed by theAudit Committee of the Company.
TRANSFER TO RESERVE:
The Company has not transferred any amount to general reserve out of the profits of theyear.
The Company has 4 subsidiaries as of March 31 2017. There was no material change inthe nature of the business carried on by the subsidiaries. As per the provisions ofSection 129 of the Companies Act 2013 read with Companies (Accounts) Rules 2014 aseparate statement containing the salient features of the financial statements of thesubsidiary Companies is prepared in Form AOC-1 and is attached to the FinancialStatements of the Company.
In accordance with the provisions of the Companies Act 2013 the Balance SheetStatement of Profit and Loss and other documents of the subsidiary companies are beingmade available on the website of the Company and are not attached with the Annual Accountsof the Company. The Company will make available the Annual Accounts of the subsidiarycompanies and the related information to any member of the Company who may be interestedin obtaining the same. The annual accounts of the subsidiary companies will also be keptopen for inspection by any member at the Registered Office of the Company and that of therespective subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the provisions of the Companies Act 2013 and the AccountingStandards AS-21 and AS-27 on consolidated financial statements read with the AccountingStandard AS-23 on Accounting for Investments in Associates your Directors have pleasurein attaching the consolidated
financial statements for the financial year ended March 31 2017 which forms part ofthe Annual Report. The company has placed separately the audited accounts of itssubsidiaries on its website www.kaveriseeds.in in compliance with the provisions ofSection 136 of the Companies Act 2013.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has laid down set of standards which enables to implement internalfinancial control across the organization and ensure that the same are adequate andoperating effectively. The Audit Committee of the Board of Directors actively reviews theadequacy and effectiveness of the internal control systems and suggests improvements tostrengthen the same. The Audit Committee of the Board of Directors Statutory Auditors andFinance Heads are periodically apprised of the internal audit findings and correctiveactions taken. Audit plays a key role in providing assurance to the Board of Directors.Significant audit observations and corrective actions taken by the management arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the internal Audit function reports to the Chairman of the Audit Committee.
INDIAN ACCOUNTING STANDARDS IFRS CONVERGE STANDARDS
The Ministry of Corporate Affairs vide its notification dated 16th February 2015notified under Section 133 of the Companies Act 2013 read with Companies (IndianAccounting Standards) Rules 2015. In pursuance of the said notification your Company hasprepared the financial statements to comply in all material respects in accordance withthe applicability of Indian Accounting Standards.
INTERNAL FINANCIAL CONTROLS
The internal financial controls (IFC) framework at Kaveri Seeds encompasses internalcontrols over financial reporting (ICOFR) as well as operational controls that have beenput in place across all key business processes of the Company. The internal controls aredesigned to facilitate and support the achievement of the Company's business objectivesand such controls do enable the Company to adapt to changing and operating environment tomitigate risks to acceptable levels and to support sound decision making and goodgovernance. Details in respect of adequacy of internal financial controls with referenceto the financial statements are briefly iterated below:
a. The Company maintains all its major records in ERP System. b. The Company hasappointed internal auditors to examine the internal controls whether the workflow of theorganisation is being done through the approved policies of the Company. In every quarterduring the approval of financial statements internal auditors present the internal auditreport and the management comments on the internal audit observations; and
c. The Board of Directors of the Company has adopted various policies such as relatedparty transactions policy whistle blower policy policy to determine materialsubsidiaries and such other procedures for ensuring the orderly and efficient conduct ofits business for safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 134(3)(C) of the Companies Act 2013 your Directors confirm that:
i) The applicable accounting standards have been followed in the preparation of theAnnual Accounts.
ii) Such Accounting policies have been selected and applied consistently and judgmentsand estimates made when required that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit of the Company for that period.
iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities.
iv) The Directors have prepared the annual accounts on a going concern basis.
v) Proper Internal Financial Controls were in place to be followed by the Company andthat the financial controls were adequate and were operating effectively.
vi) Proper systems devised to ensure compliance with the provisions of all applicablelaws and that such systems are adequate and operating effectively.
Changes in Directors and Key Managerial Personnel:
During the year under review there was no change in the Directors or Key ManagerialPersonnel.
Appointment of Dr. G.Pawan Director as Vice Chairman of the Company:
Dr. G. Pawan Director has been appointed as Vice Chairman (Non-Executive) of theCompany with effect from 24th May 2017. He has completed Doctor of Medicine (MD) fromIllinois State University Chicago USA. His services are very much needed to assist theChairman & Managing Director in strategic issues and long term business plans of theCompany and to repose confidence with investors employees and all other stake holders forfurther betterment of the company. His active involvement on strategic issues and longterm business plans and operations of the company will surely bring in to the Company anew blend of flavor to promote to further level.
Director(s) retiring by rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. C. Vamsheedhar retires by rotation at the ensuringAnnual General Meeting and being eligible offers himself for re-appointment.
DECLARATION FROM INDEPENDENT DIRECTORS
The independent directors have submitted the declaration of independence as requiredpursuant to section 149(6) &(7) of the Companies Act 2013 stating that they meet thecriteria of independence as provided in subsection.
The Company recognizes and embraces the importance of a diverse board in its success.The Board has adopted the Board Diversity Policy which sets out the approach to diversifyof the Board of Directors. The Board Diversity Policy is available on the Company'swebsite www.kaveriseeds.in
NOMINATION AND REMUNERATION COMMITTEE:
Your Company has a Nomination and Remuneration Committee and further details are setout in the Corporate Governance Report forming part of the Directors' Report. The Boardhas on the recommendation of the Nomination & Remuneration Committee framed a policyfor selection and appointment of Directors Key Managerial Persons (KMP) SeniorManagement and their remuneration. The Nomination and Remuneration Policy as adopted bythe Board is placed on the Company's website: www.kaveriseeds.in
A detailed Report on Corporate Governance prepared in substantial compliance with theprovisions of Schedule V (C) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed as a separate section forming part of this report.
The Certificate issued by M/s. P.R.Reddy & Co. Chartered Accountants Hyderabadwith regard to compliance of conditions of Corporate Governance as stipulated underSchedule V (E) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed to the Report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS:
Management's Discussion and analysis Report for the year under review as stipulatedunder Regulation 34(2)(e)of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatesection forming part of the Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. There are no material related partytransactions during the year under review with the Promoters Directors or Key ManagerialPersonnel. The company has developed a Related Party Transactions frame work throughstandard operation procedures for the purpose of identification and monitoring of suchtransactions.
All Related Party Transactions are placed before the Audit Committee as also to beBoard for approval. The particulars of contracts or arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 disclosed in Form No. AOC 2 and is set out as Annexureand forms part of this report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 asrequired under Section 92 of the Companies Act 2013 is included in this Report asAnnexure A and forms on integral part of this report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed M/s. L.D.Reddy & Co. a firm of CompanySecretaries in Practice (C.P.No.3725) to undertake the Secretarial Audit of the Company.The Secretarial Audit Report is included as
Annexure B and forms on integral part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) committee composed of Mr. G.V.Bhaskar Rao as Chairman Mrs.G.Vanaja Devi and Mr. M. Srikanth Reddy as members. The Committee is responsible forformulating and monitoring the CSR Policy of the Company the Report on CSR Activitiesforms part of this Report as "Annexure - C."
During the year the Board has approved and incorporated a separate company in the nameof Kaveri Bhaskar Rao Charitable Trust' under Section 8 of the Companies Act 2013to undertake charitable activities under Corporate Social Responsibility policy and otherrelated activities.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Information on conservation of energy technology absorption foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 forms part of this report as Annexure D.
PARTICULARS OF EMPLOYEES:
Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended forms part of thisreport. In terms of Section 136 of the Companies Act 2013 the same is open for inspectionat the Registered Office of the Company. Copies of this statement may be obtained by themembers by writing to the Company Secretary at the Registered Office of the Company. Theratio of the remuneration of each Director to the median employee's remuneration and otherdetails in terms of Section197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are enclosedin Annexure E and forms part of this Report.
BUSINESS RESPONSIBILITY REPORT
A detailed Business Responsibility Report in terms of the provisions of Regulation 34of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is availableas a separate section in this Annual Report.
PERFORMANCE EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boardhas carried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its committees.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and the Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments in the business operations of the Companyfrom the financial year ended March 31 2017 to the date of signing of the Director'sReport.
NUMBER OF MEETINGS OF THE BOARD
The details of the number of meeting of the Board and Committees held during theFinancial Year 2016-17 forms part of the Corporate Governance Report.
PARTICULARS OF LOANS GURANTEES OR INVESTMENTS BY COMPANY
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to Financial Statements.
WHISTLE BLOWER POLICY
The Board of Directors has adopted the Whistle Blower Policy which is in compliancewith Section 177(10) of the Companies Act 2013 and Regulation 22 of the SEBI (LODR)Regulations 2015 to report genuine concerns or grievances. The Whistle Blower Policy hasbeen posted on the website of the company. (www.kaveriseeds.in)
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status of the company and its future operations.
During the year there was no change in the Paid-up Share Capital of your Company.
TRANSFER OF UN-PAID AND UN-CLAIMED AMOUNT TO IEPF
The dividends which remain un-paid/un-claimed for a period of seven years have beentransferred on due dates by the company to the Investor Education and Protection Fund(IEPF) established by the Central Government.
Pursuant to Section 124 of the Companies Act 2013 read with Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (theRules') mandates that companies shall apart from transfer of dividend that has remainedunclaimed for a period of seven years from the unpaid dividend account to the InvestorEducation and Protection Fund (IEPF) also transfer the corresponding shares with respectto the dividend which has not been claimed for seven consecutive years or more to IEPF.Accordingly the dividends that remain unclaimed for seven years and also thecorresponding shares would be transferred to IEPF account on due dates.
Your Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the balancesheet.
RISK MANAGEMENT POLICY
In today's economic environment Risk Management is a very important part of business.The main aim of risk management is to identify monitor and take precautionary measures inrespect of the events that may pose risk for the business. Your Company's risk managementis embedded in the business process. The Company has established Enterprise RiskManagement process to manage risks with the objective of maximizing shareholders value.
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances environmental regulations and preservation ofnatural resources.
Kaveri consistently focuses on bringing talent on-board. The Company provides itspeople with relevant training to drive its long-term growth. The Company trains employeeson several developmental programmes to enhance their managerial and behavioural skills.The Company is strengthening employee involvement through communication meetings.
The Company organises regular training programmes for its field staffs to impart themknowledge on crop production quality control agronomy and plant protection amongothers. New employees go through formal induction programme and given interactive sessionswith their line managers. Besides specialised training programmes are conducted forR&D and marketing staff as well as other departments. The Company has introduced areward programme to recognise top performers from various departments.
The leadership team of the Company has wealth of experience in seed and crop productionindustry. It has a team of more than 50 dedicated scientists comprising breedersagronomists biotechnologists and seed technologists along with dynamic sales andmarketing professionals. Currently the workforce includes over 793 members who aredriving the levers of growth.
POLICY ON SEXUAL HARASSMENT
Your Company has constituted an internal committee as per the Sexual Harassment ofWomen at Workplace (Prevention Prohibition & Redressal) Act 2013 and Rules thereunder. The Company has a policy on prevention of Sexual Harassment at work place with amechanism of lodging complaints. The policy provides for protection against sexualharassment of women at workplace and for prevention and redressal of such complaints.During the year under review no complaints have been received under the policy.
The Company enjoyed cordial relations with its employees at all levels. Your Directorsrecord their appreciation of the support and co-operation of all employees and counts onthem for the accelerated growth of the Company.
Your Directors place on record their sincere appreciation for the dedication hard workand commitment of the employees at all levels and their significant contribution to yourCompany's growth. Your Company is grateful to the Distributors Dealers and Customers fortheir support and encouragement. Your Directors thank the Banks Financial InstitutionsGovernment Departments and Shareholders and look forward to having the same support in allour future endeavors.
| ||By Order of the Board of Directors || |
| ||For KAVERI SEED COMPANY LIMITED || |
| ||Sd/- ||Sd/- |
|Secunderabad ||G.V.BHASKAR RAO ||G.VANAJA DEVI |
|24th May 2017 ||Managing Director ||Whole time Director |