DIRECTORS ' REPORT Your Directors have pleasure in presenting the Annual Report together with the audited accounts of the Company for the year ended March 31, 2015. PERFORMANCE This financial year witnessed an assorted fortune for the Indian Tea Industry. All India tea production registered a drop by 1.3% from previous year on account of crop loss in Assam and Darjeeling. Harvest in Assam was severally affected on account of late m onsoon and pest infestation whilst South India reported substantially higher corp. The domestic market remained selective with premium quality teas maintaining or even exceeding previous year's price level but medium blends were left at the whims of the market forces. Export market was also selective on quality issues. Likewise, your company also recorded mixed opulence in performance. Gross turnover of the company was Rs. 102.17 cr. during the financial year as against Rs. 100.82cr. for the previous year ended on 31st March 2014. Although the quantity of tea sold during the year was 51.87 lac kgs which was lower compared to 54.37 lacs kgs sold during the previous year, the increase in revenue was achieved due to favorable pric e variances of made tea from own leaves which fairly surpassed previous year' levels by Rs. 10 per kg. and also increase in the price levels of made tea from bought leaves by Rs. 12 per kg. compared to previous year. The increase in sale price was offset by sharp escalation in the cost of fuel, oil, electricity and fertilizers. Further steep escalation in wages cost d ue to up ward revision in the rate twice during the year under review and impact of higher depreciation on account of revised rates in terms of Schedule II of the Companies Act'2013 (hereinafter the Act' have adversely affected the profit margins. As a result your company registered a pretax profit of 9.41 cr. for the financial year under review as compared to the Rs. 12.32 cr. during the last financial year. OPERATIONS The company registered lower crop at 53.55 lacs Kgs. during the year compared to 56.77 lacs Kgs. during previous financial year. The company was unable to meet the budgeted production level due to drought persisted during beginning of the season and early withdrawal of monsoon in Assam. Production from outsourced leaf was lower due to the company's policy of selective purchase in order to maintain quality. However, crop loss, which lead to lower saleable crop resulting in lower volume of sale was compensated by considerable increase in the tea prices fetched by the company both from own and outsourced leaf which exceeded 2013-14 levels by fair margins. This could be achieved in as much as the company continued to make quality tea which were in greater demand throughout the year. The CTC market was good for all categories and for premium blends it remained buoyant throughout the year. The average price realization from combined sale of own leaf and b ought leaf of the comp any during the year was Rs. 196.79 per kg, as against Rs. 185.41 per kg, during the last year which reaffirms the market preference for quality teas produced by your company. However, as mentioned above, multiple cost escalations in key input material prices and impact of increased wages cost has resulted in higher operating cost by Rs. 17 per kg of made tea compared to previous year. The company has invested considerable amount on development expenditure during the year and continues to avail Tea Board's replanting/rejuvenation subsidy schemes for replacement of old plantation. The efforts over the years have resulted in improvement in the yield and consistent improvement in the quality of teas manufactured. In terms of Corporate Governance disclosure under clause 49 of the Listing Agreement with Bombay Stock Exchange, (hereinafter the Listing Agreement) the Management Discussion and Analysis Report annexed with the Directors Report which forms part of this Annual Report gives a detailed analysis of your company' operations and performance vis-a-vis industry structure and developments. TRANSFER TO RESERVES The company has not transferred any amount to any reserves out of the current year's profit. DIVIDEND Your Board of Directors is pleased to recommend a dividend of 30 % on equity share capital of the Company for the financial year 2014-15. The distribution of dividend will result in payout of Rs. 93 lacs excluding tax on dividend. FUTURE PROSPECTS The prospect of tea business of the current year appears to be encouraging. With strong demand for quality CTC tea, premium blends will continue to fetch excellent prices. However, medium and starker category of tea will attract squat demand; as a result demand and prices of teas from gardens which do not adhere to quality production will be driven by market forces. Your company has preferred quality over quantity and teas manufactured in all gardens have been commanding premium in the market for successive years. The management is continuously striving to improve the quality of its harvest by introducing modernized and improvised techniques in its gardens like, rain water harvesting and utilizing modern spraying equipments to drought prone areas. Further its upcoming state of art modern tea factory in Sangsua tea estate which is expected to be operational by end of this year will further boost its production. The management is optimist that the market preference for its quality teas will continue in coming years and the company will strengthen its position in terms of revenue and profit barring unforeseen adverse climatic conditions and/or any other unforeseen circumstances beyond the control of the management. Your Directors feel that in the milieu of slower off take of production and further proposed sharp increase in wages along with the continuing clamor for ^minimum wages in tea industry' and consistent increase in input cost, higher yield, increase in production and higher price realization by further improving quality will be key factors for a sustainable growth of the company. SUBSIDIARY COMPANY The company s subsidiary, B&A Packaging India Ltd., which is engaged in the production of high quality paper sacks and flexible laminates has made commendable performance during the financial year ended 31st March, 2015. During the year, the subsidiary company recorded a production of 134.50 lacs pieces of paper sacks (previous year 147.16 lacs) and 4.62 lacs kgs of flexible laminates (previous year 2.72 lacs kgs). During the financial year ended 31st March, 2015 the company registered a turnover of Rs. 47.09 cr. (previous year 40.70cr.) and a pre-tax profit of 3.66 cr. (previous year 2.43 cr.). The company has declared a dividend of 50 paise per equity share (previous year 25 paise per equity share) for the financial year ended 31st March 2015. Growth trends and financial performance of the company is further available under clause 3.3 in the Management Discussion and Analysis Report. EXTRACT OF ANNUAL RETURN Pursuant to section 92(3) read with rule 12 (1) of the Companies (Management & Administration) Rules 2014 extract of annual return of the company for the financial year ended 31st March 2015 is attached with Boards Report and marked as Annexure-A. CORPORATE SOCIAL RESPONSIBILITY The Board has constituted Corporate Social Responsibility (CSR) committee of Directors to recommend the Board inter alia, the CSR Policy and connected activities to be undertaken. The CSR policy as recommended by the CSR committee was approved by the Board in its meeting held on 26th March 2015. The said policy is available at the website of the c om p a ny a t th e web l i nk, <https://www.barooahs.com>. The constitution of the CSR committee and particulars of meetings of the committee held during the year are disclosed in Corporate Governance Section of the Annual Report. In terms of rule 9 of the Companies (Accounts) Rules 2014 read with rule 8 of the Companies (Corporate Social Responsibility Policy) Rules 2014, Annual Report on CSR is annexed and marked as Annexure-B and forms part of the Director's Report. FIXED DEPOSITS In terms of section 78 of the Companies Act'2013 the company has repaid all existing fixed deposits during the year under review. DIRECTORS AND KEY MANAGERIAL PERSONNEL This is the 2nd year of operation of the company after the death of Hemendra Prasad Barooah, the Founder Chairman of the company. The Board and the Management felt the vacuity of his monumental p resence at every step. However, under able stewardship of Mrs. Farley and active participation of all the Directors and professional managers the company has been able to consolidate its operations as will be evident from the financial results for the year under review. During the year Mr. B.K. Mahanta, Managing Director of Assam Tea Brokers Pvt. Ltd was introduced in the Board as Additional Director. By virtue of section 161 of the Act' he retires in the ensuing Annual General Meeting and is eligible for reappointment. Mr. A. Ghosh, Mr. R.K. Bhuyan and Mr. P.K. Datta, existing rotational directors were appointed as Independent directors'in terms of section 149 of Act in a meeting of the Board of Directors held on 26th March 2015 for a term upto 31st March 2020. Their appointments are subject to the approval of the shareholders in the ensuing Annual General Meeting. By virtue of Section 152 of the Act' Mrs. A. Farley, retires by rotation in the ensuing Annual General Meeting and is eligible for reappointment. A brief resume, expertise, shareholding in your company and details of other directorship of each of these directors to be appointed/ reappointed, are given in the Corporate Governance Report. The company has received notices from shareholders pursuant to section 1 60 of the Act proposing appointments of Mr. Mahanta, Mr. Ghosh, Mr. Datta and Mr. Bhuyan. Suitable resolutions seeking their appointments/re-appointments has been incorporated in the notice convening the Annual General Meeting. The particulars of the Directorate and the Key Managerial Personnel are given under Part I of the Corporate Governance Report which forms part of this Annual Report. DECLARATION BY INDEPENDENT DIRECTORS All Independent Directors have given declaration to the company stating their independence in terms of section 149 (6) of Act' and the same have been placed and noted in the meetings of the Board of Directors held on 24th May 2014 and 26th March 2015. BOARD MEETINGS The details of the meetings of the Board of Directors held during the financial year ended 31st March 2015 have been furnished under clause (ii) of section I of the Corporate Governance Report forming part of the Annual Report. COMMITTEES OF BOARD The Board has constituted 'Audit Committee', IM omination and Remuneration Committee'' Corporate Social Responsibility Committee' and 'Stakeholders Relationship Committee' of Directors in terms of respective provisions of the Act' and the Listing Agreement. The constitution, terms of references, policies of these committees have been discussed in detail in Corporate Governance section of the Annual Report. There have been no instances where the Board has not accepted the recommendations of the Audit Committee. COMPLIANCE OF CORPORATE GOVERNANCE NORMS In terms of the Listing Agreement, certificate from Secretarial Auditors on compliance of Corporate Governance has been attached and forms part of Annual Report. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the provisions of section 134(5) of the Act' the Directors state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed; ii) They have selected such accounting policies and applied them consistently, and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your company as at 31st March 2015 and of the profit of your company for the financial year ended 31st March 2015. iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act' for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. iv) The accounts have been prepared on a 'going concern 'basis. v) They had laid down internal financial controls to be followed by the company and such internal financial controls are adequate and were operating effectively. vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. ADEQUACY OF FINANCIAL CONTROLS In terms of section 134 (2) (q) of the Act' read with rule 8 of the Companies (Accounts) Rules 2014 details of adequacy of financial control have been discussed at length in clause 5 of the Management Discussion and Analysis Report which forms part the Director's Report. PARTICUALRS OF CONTRACT AND ARRANGEMENT WITH RELATED PARTIES In terms of clause 49 of the listing agreement a policy on related party has been devised by the Board of Directors at its meeting held on 7th Movember 2014 for determining the materiality of transactions with related parties and strategy for dealing with the same. The said policy is available at the website of the company at <https://www.barooahs.com>. In terms of section 134 of the Act 'read with rule 8(2) of the Companies (Accounts) Rules 2014 particulars of contracts/arrangements entered into by the company during the financial year under review is annexed in form AOC-2 and marked as Annexure-C and forms part of the Director's Report. PARTICUALRS OF LOANS, GUARANTEES AND INVESTMENTS The company has not given any loan, guarantee or made any investment exceeding the limits as prescribed in section 186 of the Act. REMUNERATION POLICY A nomination and remuneration policy of the company as recommended by Nomination & Remuneration Committee of Directors has been formulated in compliance with the provisions of section 178 (3) of the Act and approved by the Board of Directors. The said policy is available at the website of the company at <https://www.barooashs.com>. Disclosure in terms of section 197 of the Act' read with rule 5 of the Companies (Appointment & Remuneration) Rules 2014 with regards to remuneration paid to Directors and Key Managerial Personnel for the financial year ended 31st March 2015 is given clause 2 (e) of Section II in the Corporate Governance Section of the Annual Report. VIGIL MECHANISM In terms of section 177 (10) of the Act' and clause 49 of the Listing Agreement the company has established a vigil mechanism to report and to deal with genuine concern by whistle blowers. The said policy is available at the w ebsite of the com pa ny a t <https://www.barooahs.com>. RISK MANAGEMENT In terms of section 134 (3) of the Act' read with clause 49 of the Listing Agreement the Board of Directors of the Company has framed a risk management policy of the company to identify the key risk areas/elements with regards to its tea business. Detailed discussions on companies Risk Mitigation Plan has been made under clause 4.2 of the Management Discussion and Analysis Report which forms part of this Director's Report. The Risk Management Policy is available at t h e w e b s i t e of th e c om p a n y a t <https://www.barooahs.com> FORMAL EVALUATION OF BOARD'S PERFORMANCE In terms of section 134 (3) read with clause 49 of the Listing Agreement the company has laid down the criteria for reviewing the performance of the Board, its committees and individual directors. These criteria are available at the website of the company at <https://www.barooahs.com>. The formal evaluation of its own performance for the financial year 2014-15 was made by the Board in its meeting held on 26th May 2015. AUDITORS M /s. Ghosal, Basu & Ray, Chartered Accountants, Kolkata, (FRN 315080E) were appointed as Statutory Auditors of the company vide Extraordinary General Meeting held on 5th January 2015 to fill the casual vacancy caused due to resignation given by M/s. P.K. Nandy & Associates. M/s. Ghosal, Basu & Ray, retires at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company is required to carry out cost audit under section 148 of the Act' read with Companies (Cost Record and Audit) Amendment Rules, 2014 relating to its business of tea. Accordingly M/s. Mou Banerjee & Co., Cost Accountants (FRN 00266), were appointed for auditing the cost accounts of the company for the financial year ending 31st March 2016. Pursuant to Companies (Audit & Auditors) Rules, 2014 remuneration payable to the Cost Auditor was approved by the Audit Committee and the Board of Directors and is subject to the approval of the shareholders in the ensuing Annual General Meeting. Pursuant to rule 13 of Companies (Accounts) Rules 2014, the Board of Directors has appointed M/s. A.R. Maity & Co., Chartered Accountants, Kolkata, (FRN 307093E), who are eligible for reappointment as Internal Auditors of the company for the financial year 2015-16. Pursuant to the provisions of section 204 of the Act' Mr. Tarun Chatterjee, Practicing Company Secretary (COP 6935) was appointed as the Secretarial Auditor of the company for the financial year 2014-15. The Secretarial Auditor's Report for the financial year ended 31st March 2015 is annexed to the Board's Report and marked as Annexure-D. DETAILS OF THE MATERIAL AND SIGNIFICANCT ORDERS There has been no material order against the company by any regulator, court or tribunal impacting the going concern status of the company. However, one shareholder has instituted a suit against the company under section 397/398 of the Companies Act'1956 before the Company Law Board, Kolkata Bench which is pending adjudication and being defended by the company. Further the Scheme of Amalgamation of Buragohain Tea Company Ltd with the company which received approval from the respective shareholders during previous year has been challenged by the same shareholder and is pending adjudication before Hon'ble High Court at Gauhati. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Pursuant to section 134 (3) of the Act' read with Companies (Accounts) Rules, 2014 the information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo forming part of this Director's Report is annexed and marked as Annexure-E. EMPLOYEE RELATIONS The employee relations has remained harmonious throughout the year and your Board of Directors wishes to place on record its appreciation for the dedicated services rendered by the executives, staff and workers at all levels. None of the employees employed throughout the year or part of the year was in receipt of remuneration the aggregate of which exceeds the limit as prescribed under rule 5 (2) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for disclosure in the report of Board of Directors. For and on behalf of the Board of Directors Somnath Chatterjee Managing Director Anjan Ghosh Director Date : 31st July, 2015 Place : Kolkata |