Tata Global Beverages Ltd.
|BSE: 500800||Sector: Agri and agri inputs|
|NSE: TATAGLOBAL||ISIN Code: INE192A01025|
|BSE 16:01 | 21 Aug||240.60||
|NSE 15:59 | 21 Aug||240.55||
|Mkt Cap.(Rs cr)||15,184|
|Mkt Cap.(Rs cr)||15184.27|
Tata Global Beverages Ltd. (TATAGLOBAL) - Director Report
Company director report
To the Members of Tata Global Beverages Limited
Your Directors are pleased to submit their fifty fifth report together with the auditedfinancial statements of the Company for the year ended 31st March 2018.
Rs. in Crores
State of Company's Affairs
The Consolidated Revenue from operations at Rs. 6815 Crores grew by 1% during FY2017-18. However excluding the impact of sale and restructuring of Group businesses theincrease is 2% in constant currency. Improved performances were recorded mainly in thebranded business. Non- branded business had a challenging year mainly due to abnormal andextreme weather conditions. Profit before exceptional items at Rs. 774 Crores was higherby 18% as compared to the previous year despite the adverse non-branded performancedriven by improved operating performance by the branded business good cost managementrestructuring benefits and lower finance costs . Post the impact of exceptional items tax
and share of profits of joint ventures and associates the profit for the year 2017-18at Rs. 557 Crores grew by 22%.
The standalone revenue from operations for FY 2017-18 at Rs. 3217 Crores increased by5% over the previous year. Revenue increase has been witnessed due to volume growth acrossall the major brands within our national and regional portfolio. Profit before tax at Rs.723 Crores reflected a robust growth of 87% over previous year mainly due to improvedoperating performance good cost management non-recurring items higher investment incomeincluding dividend from subsidiaries and profit on sale of our stake held in anassociate/subsidiary.
We had a smooth transition into the GST era with the rates on most of our productsbeing in line with the erstwhile regime. Our operation and supply chain models have beenrestructured wherever necessary to make it efficient and compliant to the GSTrequirements.
Your Directors are pleased to recommend for the approval of the shareholders a higherdividend of Rs. 2.50 per share on the equity share capital of the Company for the yearended 31st March 2018. The total outgo on account of dividend inclusive oftaxes for FY 2017-18 will be Rs. 190.21 Crores which represents a pay-out of 36% of theCompany's standalone profits. On a consolidated basis the payout represents 38%.
Pursuant to Regulation 43A of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations) thedividend distribution policy duly approved by the Board has been put up on the website ofthe Company and can be accessed at the link: http://tataglobalbeverages.com/investors/governance/policies
Transfer to Reserves
The Board of Directors has decided to retain the entire amount of profits for FY2017-18 in the profit and loss account. During FY 2017-18 the Company had transferred anamount of Rs. 27.60 Crores to the General Reserves which was approved for transfer out ofthe profit of FY 2016-17.
The paid up Equity Share Capital as at 31st March 2018 was Rs. 63.11 Crorescomprising of 631129729 equity shares of Re. 1 each. During FY 2017-18 your Companyhas not issued any shares including shares with differential voting rights nor has grantedany stock options or sweat equity. As at 31st March 2018 none of theDirectors of the Company hold instruments convertible into equity shares of the Company.
Your Company has embarked on a journey towards voluntarily adopting the IntegratedReporting framework developed by the International Integrated Reporting Council. This isbeing implemented in a phased manner.
Review of Subsidiaries Associates and Joint Venture Companies
Pursuant to Section 129(3) of the Companies Act 2013 the consolidated financialstatements of the Company and its subsidiaries associates and joint ventures prepared inaccordance with the relevant Accounting Standards specified under Section 133 of theCompanies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014 form part ofthis Annual Report. Pursuant to the provisions of the said section a statement containingthe salient features of the financial statements of the Company's subsidiaries associatesand joint ventures in Form AOC-1 is given in this Annual Report. Further pursuant to theprovisions of Section 136 of the Companies Act 2013 the standalone financial statementsconsolidated financial statements and the relevant consolidated financial statements andseparate audited financial statements along with other relevant documents in respect ofsubsidiaries are available on the website of the Company
Your Company has adopted a policy for determining material subsidiaries in terms ofRegulation 16(1)(c) of the Listing Regulations. The policy as approved may be accessed onthe Company's website at the link: http://tataglobalbeverages.com/investors/governance/policies
Performance highlights of key operating subsidiaries associates and joint ventures
Tata Global Beverages Group Ltd UK substantially reflects the financial performance ofthe Tetley business and a few other international brands. Excluding the impact ofacquisition and disinvestment the minor decline in the consolidated revenue during FY2017-18 is reflective of a strong sterling with adverse translation impact and highercompetitive intensity in some markets. The markets are generally characterised by highcompetitive intensity decline in every day black but with strong growth in specialtycategories. During the year the Company benefited from the full year impact of conversionof an overseas joint venture to a subsidiary and restructuring of its Russia operations.Profit before tax and exceptional items improved despite BREXIT driven by highercommodity cost largely due to good control over costs and benefits of restructuring ofthe operations. Profit after tax however was impacted mainly due to one-time non-recurringrestructuring costs and one-time credits in the previous year relating to conversion of anoverseas joint venture to a subsidiary. The Company has in principle approvedrestructuring of certain operations relating to its business in Eastern Europe.
Tata Coffee Limited had a difficult year with performance lower than the previous yearin both the plantation and extraction businesses. The company's plantation operations wereimpacted by crop loss due to abnormal and extreme weather conditions and lower terminalprices for Robusta Coffee whilst the coffee extraction operations were impacted due tolower sales.
Out of the various awards and recognitions which Tata Coffee has received during theyear it is noteworthy that in the second edition of the Ernesto Illy International CoffeeAward in New York for the Year 2017 Nullore and Coovercolly Estates have received theaward for their excellence in quality. Nullore Estate in Coorg is best known for its 'TheTata Nullore Estate microlot' - the first Indian microlot to be featured last year inStarbucks Reserve stores in Seattle USA.
The Board of Tata Coffee Limited have recommended a dividend of Rs. 1.50 per share(face value of Re. 1 per share) for the year ended 31st March 2018.
Eight O'Clock Coffee (EOC) registered a good performance with topline growth mainly inpods and private label sales. During the year the company negotiated and renewed itscontract with Keurig resulting in EOC having the benefit of direct sales of pods in mostof the channels in which it operates and consequently the margins as opposed to a royaltyagreement which was prevailing earlier. Profit before tax and exceptional item wasimpacted mainly due to higher Arabica Coffee commodity costs partially offset by savingsdue to internal restructuring lower spends and margin improvement on the renewed Keurigcontract. Profit after tax was significantly ahead of the previous year mainly due to alower tax incidence on account of the benefit of reduction in the US tax rates.
Tata Tea Extractions Inc. the Company's subsidiary in the US had a stable performanceduring the year.
Amalgamated Plantations Private Limited (APPL) India reported higher revenue of 5%with improvements in sales from both own and purchased crops further enhanced with ahigher orthodox mix to drive higher realisations. Improvement in price realisations wasvisible over the entire tea portfolio riding on quality improvements across many estates.Operating losses were reduced due to higher realisation and good control over expensesdespite increase in wages.
Kanan Devan Hills Plantations Company Private Limited reported a topline growth of 7%over the previous year. The production for the year was the second highest ever since theformation of the company with an all-time record yield. The company also improved itsrealisations despite depressed tea auction prices in South India due to improved productmix. However profit before and after tax was impacted because of higher wage cost whichhas been partially offset by improved realisations and good cost management.
Tata Starbucks Private Limited our joint venture with Starbucks has been recognised asone of the Top Ten India's Best Workplaces in Retail in FY 2017-18. During the year TataStarbucks celebrated the opening of its 100th store located in Mumbai and itsfive-year anniversary in India with a series of strategic initiatives that reaffirm itslong-term commitment to the market. During the year the business also entered Kolkata inWest Bengal and has opened 3 stores till date in the city. The Company's sales increasedby 28% driven by better in store performance coupled with new stores added during theyear. For the first time since inception the company recorded a positive EBITDA.
NourishCo Beverages Limited our joint venture with PepsiCo reported an increase of 8%in sales driven by growth across its portfolio i.e. Tata Gluco Plus Tata Water Plus andHimalayan mineral water. The growth has been aided by achieving improved volume throughdistribution expansion. For the first time since inception the Company is close to breakeven levels due to improved sales and structural improvements to the cost base by reducinglogistics and manufacturing costs.
Companies which have become or ceased to be Subsidiaries Associates and Joint Ventures
The following are the changes in subsidiaries associates and joint ventures during FY2017-18:
Zhejiang Tata Tea Extractions Company Limited China ceased to be a subsidiaryconsequent to sale of stake
Sunty LLC and Tea Trade LLC ceased to be subsidiaries and Coffee Trade LLCbecame a subsidiary consequent to the restructuring of our Russian business
Estate Management Services Private Limited Sri Lanka ceased to be an Associateconsequent to sale of stake
There were no other changes during FY 2017-18.
For further analysis on the consolidated performance attention is invited to thesection on Management Discussion and Analysis notes to the consolidated financialstatements and Form AOC 1.
Human Resources and Industrial Relations
During the year under review industrial relations remained harmonious at all ouroffices and establishments.
Corporate Governance and MD&A
A detailed report on Corporate Governance which forms part of this Annual Report isprovided separately. The Management Discussion and Analysis (MD&A) forms an integralpart of this report and also covers the consolidated operations reflecting the globalnature of our business.
Vigil Mechanism / Whistle Blower Policy
The Company's vigil mechanism allows the Directors and employees to report theirconcerns about unethical behaviour actual or suspected fraud or violation of the code ofconduct /business ethics. The vigil mechanism provides for adequate safeguards againstvictimisation of the Director(s) and employee(s) who avail this mechanism. All Directorsand employees have access to the Chairman of the Audit Committee. The said policy isavailable on the website of the Company at
Internal Financial Controls
The Company has adequate and robust systems for Internal Financial Controls whichincludes operational controls and internal financial controls over financial reporting.These are detailed in the MD&A.
The Company's governance guidelines on Board effectiveness cover aspects relating tocomposition and role of the Board Chairman and Directors Board diversity definition ofindependence term of Directors retirement age and committees of the Board.
The guidelines also cover key aspects relating to nomination appointment inductionand development of Directors Directors remuneration oversight on subsidiaryperformances code of conduct Board effectiveness reviews and various mandates of Boardcommittees.
Selection and Procedure for Nomination and Appointment of Directors
The Company has a Nomination and Remuneration Committee (NRC) which is responsible fordeveloping competency requirements for the Board based on the industry and strategy ofthe Company. The Board composition analysis reflects in-depth understanding of theCompany including its strategies environment operations financial condition andcompliance requirements.
The NRC makes recommendations to the Board in regard to appointment of new Directors.The role of the NRC encompasses conducting a gap analysis to refresh the Board on aperiodic basis including each time a Director's appointment or re-appointment isrequired. The NRC is also responsible for reviewing the profiles of potential candidatesvis-a-vis the required competencies undertake a reference and due diligence and meetingof potential candidates prior to making recommendations of their nomination to the Board.The appointee is also briefed about the specific requirements for the position includingexpert knowledge expected at the time of appointment.
Criteria for determining qualifications positive attributes and independence of aDirector
In terms of the provisions of Section 178(3) of the Companies Act 2013 and Regulation19 of the Listing Regulations the NRC has formulated the criteria for determiningqualifications positive attributes and independence of Directors the key features ofwhich are as follows:
Qualifications - The Board nomination process encourages diversity of thoughtexperience knowledge age and gender.
It also ensures that the Board has an appropriate blend of functional and industryexpertise.
Positive Attributes - Apart from the duties of Directors as prescribed in theCompanies Act 2013 the Directors are expected to demonstrate high standards of ethicalbehavior communication skills and independent judgment. The Directors are also expectedto abide by the respective Code of Conduct as applicable to them.
Independence - A Director will be considered independent if he / she meets thecriteria laid down in Section 149(6) of the Companies Act 2013 and Regulation 16(1)(b) ofthe Listing Regulations.
Annual Evaluation of the Board its Committees and Individual Directors
The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the CompaniesAct 2013 Listing Regulations and the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India on January 5 2017.
The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc.
In a separate meeting of independent directors performance of non-independentdirectors the Chairman of the Company and the board as a whole was evaluated taking intoaccount the views of executive directors and non-executive directors.
The NRC and the Board reviewed the performance of individual directors on the basis ofcriteria such as the contribution of the individual director to the board and committeemeetings like preparedness on the issues to be discussed meaningful and constructivecontribution and inputs in meetings etc. In the board meeting that followed the meetingof the independent directors and meeting of NRC the performance of the board itscommittees and individual directors was also discussed. Performance evaluation ofindependent directors was done by the entire board excluding the independent directorbeing evaluated.
Pursuant to the provisions of Section 178(3) of the Companies Act 2013 and Regulation19 of the Listing Regulations the NRC has formulated a policy relating to theremuneration for the Directors key managerial personnel (KMP) and other employees. Thephilosophy for remuneration is based on the commitment of fostering a culture ofleadership with trust. While formulating this policy the NRC has considered the factorslaid down in Section 178(4) of the Companies Act 2013 which are as under:
That the level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully;
Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
Remuneration to Directors KMP and senior management involves a balance betweenfixed and incentive pay reflecting short and long-term performance objectives appropriateto the working of the Company and its goals.
The key principles governing the Remuneration Policy are as follows:
Role played by the individual;
Reflective of size of the Company complexity of the sector/industry/ Company'soperations and the Company's capacity to pay;
Consistent with recognised best practices; and
Aligned to any regulatory requirements.
In accordance with the policy the Managing Director Executive Director KMPs andemployees are paid basic salary benefits perquisites allowances and annual incentiveremuneration / performance linked bonus subject to achievement of certain performancecriteria and such other parameters as may be considered appropriate from time to time bythe Board. The performance linked bonus would be driven by the outcome of the performanceappraisal process and the performance of the Company.
Remuneration for Independent Directors and Non-Independent Non-Executive Directors
The Non-Executive Directors including Independent Directors are paid sitting fees forattending the meetings of the Board and committees of the Board. The overall remuneration(sitting fees and commission) should be reasonable and sufficient to attract retain andmotivate Directors aligned to the requirements of the Company including considering thechallenges faced by the Company and its future growth imperatives. The remuneration shouldalso be reflective of the size of the Company complexity of the business and theCompany's capacity to pay the remuneration.
The Company pays a sitting fee of Rs. 30000 per meeting per Director for attendingmeetings of the Board Audit Nomination and Remuneration and Executive Committees (Rs.20000 in case of Mr. N. Chandrasekaran Chairman and Mr. Harish Bhat Director). Formeetings of all other committees of the Board a sitting fee of Rs. 20000 per meeting perDirector is paid (Rs. 10000 in case of Mr. N. Chandrasekaran Chairman and Mr. HarishBhat Director).
Within the ceiling of 1% of net profits of the Company computed under the applicableprovisions of the Companies Act 2013 the Non-Executive Directors including IndependentDirectors are also paid a commission the amount whereof is recommended by the NRC anddetermined by the Board. The basis of determining the specific amount of commissionpayable to a Non-Executive Director is related to his attendance at meetings role andresponsibility as Chairman or member of the Board / Committees and overall contribution aswell as time spent on operational matters other than at the meetings. The shareholders ofthe Company had approved payment of commission to the Non-Executive Directors at theAnnual General Meeting held on 26th August 2014 which is valid up to the yearending 31st March 2019. The Company will be seeking approval of theshareholders for payment of commission to the Non-Executive Directors which shall be validfor all subsequent financial years commencing from 1st April 2019 as providedin Section 197 of the Companies Act 2013 at the forthcoming Annual General Meeting. NoStock option has been granted to the Non-Executive Directors.
Independent Directors' Declaration
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 2013 that he/she meets the criteriaof independence as laid out in Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) of the Listing Regulations.
Familiarisation programme for Independent Directors
All Independent Directors ('IDs') inducted on the Board go through a structuredorientation programme. Presentations are made by Executive Directors and Senior Managementgiving an overview of our operations to familiarise the IDs with the Company's businessoperations. The IDs are given an orientation on the Company's products group structureand subsidiaries Board constitution and procedures matters reserved for the Board andthe major risks including risk management strategy.
The details for familiarisation of the Independent Directors are put up on the websiteof the Company. As required under Regulation 46(2)(i) of the Listing Regulations thedetails of familiarisation programmes conducted during FY 2017-18 is also put on theCompany's website and the same can be accessed at the link:
The Company recognises and embraces the importance of a diverse board in its success.The Company believes that a truly diverse board will leverage differences in thoughtperspective knowledge skill regional and industry experience cultural and geographicalbackground age ethnicity race and gender which will help the Company to retain itscompetitive advantage. The Board has adopted the Board Diversity Policy which sets out theapproach to diversity of the Board of Directors.
Number of meetings of the Board
For seamless scheduling of meetings a calendar is prepared and circulated in advance.
The Board of Directors had held eight meetings during FY 2017-18.
For further details please refer to the Corporate Governance Report which forms partof this Annual Report. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013 and the Listing Regulations.
The details pertaining to composition of Audit Committee are included in the CorporateGovernance Report which forms part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators / Courts thatwould impact the going concern status of the Company and its future operations.
Corporate Social Responsibility (CSR) and Sustainability initiatives
In compliance with Section 135 of Companies Act 2013 the Company has undertaken CSRactivities projects and programs excluding activities undertaken in pursuance of itsnormal course of business.
The Natural Beverages Policy of Tata Global Beverages is the apex Sustainability Policythat defines the aspiration to be the consumer's first choice in sustainable beverageproduction and consumption. The sustainability pillars of the Company are SustainableSourcing Climate Change Water Management Waste Management and Community Development.
Tata Global Beverages aspires to create sustainability leadership in its beveragesproduction units through focus on zero waste to landfill use of renewable energy and rainwater harvesting. All packeting centres globally have focused on zero waste to landfilltarget and only a small fraction of TGB wastes go to landfills mostly due totechno-commercial feasibility. The Eaglescliffe factory utilises about 39% of itselectricity requirement from a 4.6MW solar farm at a nearby location. TGB has alsoinstalled solar photovoltaic plants at its Water factory in Dhaula Kuan and SamplaPacketing Centre in India that account for about 25% of the energy used in thosefactories. Through Project Jalodari Tata Global Beverages supports the right to water foreveryone "to sufficient safe acceptable physically accessible and affordable waterfor personal and domestic uses." The project has established rain water harvestingand recharges structures in all Indian packeting centres.
During the year under review the Company spent Rs. 6.51 Crores (2.12% of the averagequalifying net profits of last three financial years) on CSR activities on projectsqualifying as per Section 135 of the Companies Act 2013 duly approved by the CSRCommittee. In addition to the projects specified as CSR activities under section 135 ofCompanies Act 2013 the Company has also carried out several other sustainability /responsible business initiatives and projects on a global scale.
Salient features of the CSR Policy and details of activities as required underCompanies (Corporate Social Responsibility Policy) Rules 2014 is provided in Annexure 1forming part of this Report. The CSR Policy may be accessed on the Company's website atthe link: http:// tataglobalbeverages.com/investors/governance/policies
Particulars of employees
The information required under Section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in Annexure 2which forms part of this report.
Pursuant to Section 197 (14) of the Companies Act 2013 the details of remunerationreceived by the Managing Director and the Executive Director from the Company's subsidiarycompany during FY 2017-18 are also given in Annexure 2 attached to this report.
Particulars of loans guarantees and investments by the Company
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are provided in Annexure 3 which forms part of this report.
The Board of Directors of the Company has formed a Risk Management Committee to frameimplement and monitor the risk management plan for the Company. The committee isresponsible for reviewing the risk management plan and ensuring its effectiveness. TheCompany has an elaborate Risk Charter and Risk policy defining risk management governancemodel risk assessment and prioritisation process. The Risk Management Committee reviewsand monitors the key risks and their mitigation measures periodically and provides anoversight to the Board on Company's risks outlined in the risk registers.
The Audit Committee has additional oversight in the area of financial risks andcontrols. The major risks identified by the businesses and functions are addressed throughmitigating actions.
Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has adopted zero tolerance for sexual harassment at workplace and hasformulated a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder forprevention and redressal of complaints of sexual harassment at workplace. Awarenessprograms were conducted at various locations of the Company.
During the year the Company received one complaint of sexual harassment which wasresolved by taking appropriate action.
Deposits from public
The Company has not accepted any deposits from the public during the year under review.No amount on account of principal or interest on deposits from public was outstanding ason 31st March 2018.
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 Dr. Asim Kumar Chattopadhyay Company Secretary in Practice to carry out theSecretarial Audit of the Company. The Report of the Secretarial Auditor for FY 2017-18 isattached herewith as Annexure 4. There are no qualifications observations adverseremarks or disclaimer in the said report.
Business Responsibility Report (BRR)
The Listing Regulations mandate the inclusion of the BRR as part of the Annual Reportfor top 500 listed companies based on market capitalisation. In compliance with theListing Regulations the Company has integrated BRR disclosures into the Annual Report.
Extract of Annual Return
As provided under Section 92(3) of the Companies Act 2013 the extract of annualreturn in Form MGT-9 is given in Annexure 5 which forms part of this report.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and ability confirm:
(i) That in the preparation of the accounts for the financial year ended 31stMarch 2018 the applicable accounting standards have been followed and that there are nomaterial departures;
(ii) That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profits of the Company for that period;
(iii) That the Directors have taken proper and sufficient care to the best of theirknowledge and ability for the maintenance of adequate accounting records in accordancewith the provisions of the Companies Act 2013 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
(iv) That they have prepared the accounts for the financial year ended 31stMarch 2018 on a 'going concern basis';
(v) That the Directors have laid down internal financial controls for the Company whichare adequate and are operating effectively;
(vi) That the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and such systems are adequate and are operatingeffectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by the management and therelevant Board committees including the audit committee the Board is of the opinion thatthe Company's internal financial controls were adequate and operating effectively duringthe FY 2017-18.
Related Party Transactions
All related party transactions that were entered into during the financial year were onan arm's length basis and in the ordinary course of business. There are no materialsignificant related party transactions made by the Company during the year that would haverequired shareholder approval under Regulation 23(4) of the Listing Regulations. Thedisclosure in Form AOC-2 under Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 is not applicable. All related partytransactions are reported to the audit committee. Prior approval of the audit committee isobtained on a yearly basis for the transactions which are planned and / or repetitive innature and omnibus approvals are taken as per the policy laid down for unforeseentransactions. The policy on Related Party Transactions as approved by the Board isavailable on the Company's website and may be accessed at the link
The details of the transactions with related parties during FY 2017-18 are provided inthe accompanying financial statements.
During the year the non-executive directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses as applicable.
Directors and Key Managerial Personnel (KMP)
Mr. N. Chandrasekaran was inducted as an additional director and Chairman of the Boardeffective 3rd July 2017. He was also appointed as a Director by the members atthe Annual General Meeting held on 18th August 2017.
Mr. Harish Bhat had stepped down as Chairman effective close of 2nd July2017.
The Independent Directors on the Board of the Company namely Mrs. Mallika SrinivasanMr. V. Leeladhar Mrs. Ranjana Kumar and Mrs. Ireena Vittal were appointed at the AnnualGeneral Meeting of the Company held on 26th August 2014. Mr. Siraj AzmatChaudhry was appointed as an independent director for five years effective 3rdJuly 2017 at the AGM held on 18th August 2017. All the said IndependentDirectors have given declarations that they meet the criteria of independence as providedin Section 149(6) of the Companies Act 2013 and Regulation 16(1)(b) of the ListingRegulations.
During FY 2018-19 Mr. S. Santhanakrishnan had given a declaration that he meets thecriteria of independence as provided in Section 149(6) of the Companies Act 2013 andRegulation 16(1)(b) of the Listing Regulations. The said declaration was considered by theNRC at its meeting on 11th May 2018 and the Board thereafter at its meeting on11th May 2018 based on the recommendation of the NRC approved there-categorisation of Mr. Santhanakrishnan as an independent director effective 11thMay 2018. Approval of the members for the appointment of Mr. Santhanakrishnan asIndependent Director is being sought at the forthcoming Annual General Meeting.
Mr. Harish Bhat retires by rotation at the forthcoming Annual General Meeting and beingeligible offer himself for re-appointment.
Mr. L. KrishnaKumar was appointed as Executive Director for a period of five yearswhich ended on 31st March 2018. The Board based on the recommendation of theNomination and Remuneration Committee approved the re-appointment of Mr. L. KrishnaKumarfor a further period of five years from 1st April 2018 subject to theapproval of the shareholders. The approval of the shareholders relating to Mr. L.KrishnaKumar's re-appointment and remuneration is being sought at the forthcoming AnnualGeneral Meeting.
Pursuant to the provisions of Section 203 of the Act the KMPs of the Company as on 31stMarch 2018 are: Mr. Ajoy Misra Managing Director & CEO Mr. L. KrishnaKumarExecutive Director Mr. John Jacob Chief Financial Officer and Mr. V. Madan CompanySecretary.
Apart from the above no other Director or KMP were appointed or had retired orresigned during FY 2017-18.
Brief particulars and expertise of directors seeking appointment / reappointmenttogether with their other directorships and committee memberships have been given in theannexure to the notice of the Annual General Meeting in accordance with the requirementsof the Listing Regulations and applicable Secretarial Standards.
Auditors and Auditors' Report
The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso to Section 143(12) of the Companies Act 2013.
The Statutory Auditors' report on the financial statements for FY 2017-18 does notcontain any qualifications reservations adverse remarks or disclaimer.
Your Board has appointed Shome & Banerjee 5A Nurulla Doctor Lane 2ndFloor Kolkata - 700 017 as Cost Auditors of the Company for conducting cost audit for FY2018-19. The members are requested to ratify the remuneration payable to the Cost Auditorsfor FY 2018-19.
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure 6 which forms partof this report.
Pursuant to the Listing Regulations the Report on Corporate Governance along with thecertificate from a Practicing Company Secretary regarding compliance of conditions ofCorporate Governance the Business Responsibility Report and the Dividend DistributionPolicy are attached and are part of this Annual Report.
The Company has devised proper systems to ensure compliance with the provisions of allapplicable Secretarial Standards issued by the Institute of Company Secretaries of India.
The Directors wish to convey their deep appreciation to all the employees of theCompany for their sincere and dedicated services as well as their collective contributionto the Company's performance.