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United Nilgiri Tea Estates Company Ltd.

BSE: 530470 Sector: Agri and agri inputs
NSE: UNITEDTEA ISIN Code: INE458F01011
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United Nilgiri Tea Estates Company Ltd. (UNITEDTEA) - Director Report

Company director report

Your Directors have pleasure in presenting the 97th Annual Report on theperformance of the Company together with the Audited Financial Statements for the yearended 31st March 2019.

FINANCIAL RESULTS : Rs. in lakhs
31-03-2019 31-03-2018
Profit before finance cost depreciation and tax 1815.08 1802.45
Finance Cost 7.14 6.83
Depreciation 271.46 265.54
Profit before exceptional item and tax 1536.48 1530.08
Exceptional Item Profit on sale of investment in associate 163.62
Profit before tax 1700.10 1530.08
Tax Expense including deferred tax (262.87) (315.04)
Profit for the year 1437.23 1215.04
Other Comprehensive Income 1007.70 450.47
Total Comprehensive Income 2444.93 1665.51

Indian Accounting Standards (Ind AS)

In the preparation of financial statements the Company has followed the IndianAccounting Standards (Ind AS) and the financial results have been prepared in accordancewith the recognition and measurements principles laid down in the said standards.

Dividend

Your Directors have recommended a final dividend of Rs.1.70 per share (17%) whichtogether with an interim dividend of Re. 1/- per share (10%) already paid makes a totaldividend of Rs.2.70 per share (27%) for the year ended 31st March 2019[previous year Rs.2.70/-per share (27%)]. The proposed final dividend of Rs.1.70 per share(17%) for the year amounting to Rs. 8494162/- will be accounted in the financial year2019-20 in accordance with Ind AS 10 Events after the reporting period .

Transfer to Reserves

The Directors have proposed to transfer a sum of Rs.3300 Lakhs to the General Reservewhich will be accounted in the financial year 2019-20 in accordance with Ind AS 10 Eventsafter the reporting period .

Operations

The total quantity of tea manufactured during the year was higher at 3091002 kgs asagainst 2996514 kgs during the previous year. The rainfall during the year was 1194 mmas against 1082 mm during the previous year.

Your Company has recorded a sale of 3165290 kgs (previous year 3000344 kgs) of teawhich is the highest ever in the history of the Company. The average price realized duringthe year was marginally higher when compared to the previous year.

Profit before tax for the year was higher at Rs.1700.10 lakhs as against Rs.1530.08lakhs during the previous year.

The total exports during the year was 1865911 kgs as against 1466671 kgs during theprevious year.

Outlook

With an extended dry period and a very low rainfall the first quarter is likely tohave low crop compared to last year. With more area under organic tea cultivation thesale of organic tea would be higher than last year. We are undertaking a significantexpansion at Korakundah factory to increase organic tea production capacity that will helpto achieve improved sales as well as profitability.

Share Capital

The paid up capital of the Company as at 31st March 2019 remains unchanged.

Directors Responsibility Statement

As required by sub-section 5 of Section 134 of the Companies Act 2013 your Directorsconfirm that:

(a) in the preparation of Annual Accounts for the year ended 31st March2019 the applicable Indian Accounting Standards have been followed without any materialdepartures;

(b) such accounting policies have been selected and applied consistently and judgmentand estimates have been made 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 2019 and of theprofit of the Company for the year then ended;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 tosafeguard the assets of the Company and to prevent and detect fraud and otherirregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) proper internal financial controls to be followed by the Company have been laiddown and that the financial controls are adequate and were operating effectively;

(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and were operating effectively.

Directors and Key Managerial Personnel

Mr.D.Hegde and Mr.T.G.B.Pinto were re-appointed as Whole-time Directors of the Companyby the members on 21st January 2019 through postal ballot for a period ofthree years with effect from 01.01.2019.

Mr.N.Srinivasan resigned from the Board with effect from 1st April 2019 dueto age limit prescribed by SEBI. The Board places on record its appreciation ofMr.N.Srinivasan s involvement and valuable contribution for the growth of the Companyduring his tenure. The term of Mr.R.Srinivasan as Independent Director ended on 31stJanuary 2019.The Board places on record its appreciation for the valuable services ofMr.R.Srinivasan to the Company during his tenure as an Independent Director.

Of the Directors liable to retire by rotation Ms.Mallika Srinivasan will retire at theforthcoming Annual General Meeting. She is eligible for re-election and offers herselfaccordingly.

The tenure of Mr.Sankar Datta Independent Director will end on 9th November2019.It is proposed to re-appoint him as an Independent Director for a period of 5 yearswith effect from 10th November 2019.

The Board of Directors and the Nomination & Remuneration Committee are of theopinion that having regard to his credentials and vast experience in business advisoryservices audit and accounts his re-appointment as a Non-Executive Independent Directorwould be beneficial to the Company and this will enable the Board to discharge itsfunctions and duties effectively.

Accordingly the Board recommends his re-appointment for a second term of five years tothe members for their approval at the ensuing Annual General Meeting.

Particulars of Loan Guarantees or Investments under Section 186

The Company has not given any loan or guarantee or made investments in any BodyCorporate in terms of Section 186 of the Companies Act 2013 during the financial year2018-19.

Particulars of Contracts or arrangements made with related parties

Particulars of contracts or arrangement with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed form AOC-2 is appended as Annexure 2to this report.

Material changes and Commitments between 31st March 2019 and date of thisreport

There are no material changes and commitments affecting the financial position of thecompany which have occurred between 31st March 2019 and the date of thisreport.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Details pertaining to Conservation of Energy Technology Absorption and ForeignExchange earnings and outgo are given in Annexure-1.

Transfer to Investor Education and Protection Fund (IEPF)

The Company has transferred during the year unclaimed dividends amounting toRs.354941/- to the Investor Education and Protection Fund.

Pursuant to the applicable provisions of the Companies Act 2013 read with IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 the Company transferred7350 shares during the year in respect of which dividend has not been claimed for 7consecutive years or more to the demat account of IEPF Authority. The transfer waseffected after sending notices to the concerned shareholders. The details are given in theReport on Corporate Governance forming part of this report.

Annual Return

Extract of Annual Return in Form MGT-9 is given as Annexure-5 to this report.

Number of meetings of the Board

Six meetings of the Board were held during the year the details of which are furnishedin the Report on Corporate Governance which forms part of this report.

Declaration by Independent Directors

The Company has received declarations from all the independent directors confirmingthat they meet the criteria of independence as prescribed both under the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Policy on appointment and remuneration of Directors

The Company s policy on Directors appointment and remuneration remains unchanged whichcan be accessed on the Company s website www.unitednilgiritea.com.

Committees of the Board

The Company has four Committees as mentioned below:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders Relationship Committee

4. Corporate Social Responsibility Committee

A detailed note on the composition of the Board and its Committees and the meetingsheld during the financial year is provided in the Report on Corporate Governance.

Auditors

There are no qualifications reservations or adverse remarks or disclaimers made byK.S.Aiyar & Co. Statutory Auditors in their report.

K.S. Aiyar & Co. Chartered Accountants Coimbatore were appointed as the StatutoryAuditors of the Company for a period of 5 years from the conclusion of the 95thAnnual General Meeting held on 4th August 2017 till the conclusion of the 100thAnnual General Meeting. Pursuant to the Companies (Amendment Act) 2017 with effect fromMay 7 2018 the ratification of appointment of Statutory Auditors at every Annual GeneralMeeting by the members has been dispensed with.

Secretarial Audit Report

Secretarial Audit has been carried out by L. K. & Associates Practicing CompanySecretaries and their report is annexed herewith (Annexure-7). There are noqualifications reservations or adverse remarks.

Risk Management

The Company has a robust risk management system. The strategic risks are integratedwith the business plan with mitigation measures. High impact operational and financialrisks are reviewed by the management periodically and discussed at the Board quarterly.

Corporate Social Responsibility (CSR)

CSR Policy and the annual report on CSR activities are given in Annexure-3. The Companys policy on Corporate Social Responsibility is also available on the Company s websitewww.unitednilgiritea.com.

Besides supporting the orphanage and the public medical scheme administered by theCompany in the area of rural development and tribal welfare your Company has beenassociated with United Nilgiri Conservative Society (UNCS). UNCS since its establishmentin 2013 has built confidence and trust for people in Kotagiri and Ooty through its effortto achieve better standard of life through community development works.

Board Evaluation

The details are furnished in the Report on Corporate Governance which forms part ofthis report. The policy regarding performance evaluation of the Board of Directors and itsCommittees and Independent Directors is available on the Company s websitewww.unitednilgiritea.com.

Report on Corporate Governance

A Report on Corporate Governance forms part of this report. The Auditors certificate onCorporate Governance is enclosed as an Annexure.

Management Discussion and Analysis Report

Management Discussion and Analysis Report is given separately which forms part of thisReport (Annexure-6).

Particulars of Employees

Particulars of employees as required under Section 197 (12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are given in Annexure-4.

A statement showing the remuneration of employees who were in receipt of remunerationas prescribed under Rule 5(2) and Rule 5 (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report and will beprovided to any member on a written request to the Company Secretary.

Awards and Distinctions

Chamraj and Korakundah estates have once again bagged four awards at the Golden LeafIndia Awards held in Ahmedabad in April 2019.

Environmental Protection

The Company has been certified by the Rain Forest Alliance and UTZ in the area ofenvironmental protection. To ensure sustainability and environmental protection yourCompany has undertaken planting of trees around 100 acres every year. This will ensureenvironmental protection and sustainable source of firewood to our factories.

Industrial Relations

Industrial relations have been cordial during the year.

Public Deposits

The Company has not accepted or renewed any public deposit during the year.

Vigil Mechanism

The Company has a vigil mechanism details of which can be accessed at the Company swebsite www.unitednilgiritea.com. No complaints have been received during the year underreview.

Sexual Harassment of Women at Workplace

The Company s policy on Sexual Harassment of women employees can be accessed at theCompany s website www.unitednilgiritea.com. An Internal Complaints Committee has beenconstituted to redress the grievances of women at workplace. No complaint was reportedduring the year under review.

Cost Records

The Company maintains cost records for its products in the books of accounts as per therequirement of Section 148(1) of the Companies Act 2013 read with Companies (Cost recordsand audit) Rules 2014.

Others

There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and the Company s future operations.

Acknowledgement

The Board of Directors acknowledges the support received from the promotersshareholders bankers suppliers customers and employees at all levels.

For and on behalf of the Board
Place:Chennai MALLIKA SRINIVASAN
Date: 29th May 2019 CHAIRMAN