REPORT OF THE DIRECTORS Dear Shareholders, We present the 70th Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March 2016. EQUITY DIVIDEND The Board is pleased to recommend the distribution of dividend of Rs. 1/- on face value of Rs. 5/- per share same as was paid last year. The dividend tax including surcharge and education cess amounting to Rs. 23.02 lac shall be payable by the company on the said dividend. SHARE CAPITAL During the year ended 31st March, 2016 there is no change in the issued and subscribed capital of your Company. The outstanding capital as on 31st March, 2016 is Rs. 1443.87 lac comprising of 2,88,77,488 equity shares of Rs. 5/- each. REVIEW OF PERFORMANCE The Indian economy has performed well despite turmoil in various developed countries. The consumer price inflation is well under control and WPI is in negative territory. There were interest rate cut and liquidity enhancement in the market. The per capita income of average Indian is on increase, raising their buying capacity. This augurs well for the tea, sugar and fertilizer industries. Indian tea production was down at 1191 mn. Kg compared to 1207 mn kg. last year. The production of Cachar, South India and Dooars was down. The production of Upper Assam was higher to an extent. The market continued to remain upward for quality tea and price concertina between best quality and medium varieties widened further across all segments of tea. The long term goal of your company to focus on quality tea is getting its momentum day by day and is well recognized in the market. All your tea estates are in top brackets of quality in their area of operation. The major factors attributing to the operations of the company are: i) Increase in total crop of the company with higher crop in Dooars/Terai, Cachar and Assam. ii) Sharp fall in prices and crop of South India in line with the industry iii) Further improvement in quality standard of Upper Assam & Dooars . iv) Improvement in yield and recovery percentage and increase in price of sugar. v) Poor rains and heat wave in West Bengal affecting sale of Single Super Phosphate. Tea Estates All India production in 2015 was down at 1191 million kg. compared to 1207 million kg. in 2014. Total production in India of Cachar, South India and Dooars was down. However, Upper Assam production was slightly up. Global crops from major countries like Kenya, Uganda and Sri Lanka was down. Prices of good quality Assam tea was higher. However, Cachar, South India and Dooars witnessed weaker prices for most of the year. Prices at Mombassa auction improved a lot as the offerings reduced with effect from May 2015. Worldwide more and more consumers are preferring quality tea and it commands high premium to medium varieties tea. Sale of premium packets shows a positive increase. Your company has eleven ISO 22000 certified factories with Certificate of Rainforest Alliance. The process of Rainforest Alliance for other factories is on. Your company's own production was higher at 173.95 lac kg compared to 167.17 lac kg. last year. The bought leaf production was 49.64. lac kg. as against 46.23 lac kg. last year. The overall price realization of your company was almost same at last year levels. Assam, Dooars and Terai prices were up by Rs. 4/- per kg., Darjeeling was down by Rs. 14/- per kg. and South India by Rs. 12/- per kg. Cachar maintained last year level. There is no material change or commitment affecting the financial position of the company occurred between the end of the financial year and the date of this report. The Jay Shree Chemicals & Fertilisers, Khardah Your Company's sale of single superphosphate was higher compared to last year because of better marketing efforts. Two consecutiveyears of deficit monsoon in West Bengal has burdened the industry with excess inventory and blockade of working capital. Further, the government has reduced the subsidy on phosphatic and potassic (P&K) fertilizers, the impact of which is Rs. 830/- per M.T. on sale of SSP. The industry has the limited ability to increase prices to compensate for the reduction in subsidy, which in turn, increases its dependence on monsoons. The company is exploring all possibilities to maintain viability of the unit The Jay Shree Chemicals & Fertilisers, Gurgaon The production and sale of Sulphuric acid remained almost the same in the current year. Margins depend upon the sale price fixed by smelter units for whom this is a by-product Sugar During the year, your company produced 40,334 tonnes of white sugar compared to 45,154 tonnes in season 2014-15. The sugarcane crushed was 4,22,084 tonnes compared to 4,84,700 tonnes in season 2014-15. The recovery this year was 9.54% compared to 9.32% in season 2014-15. Total cane crushed in the financial year 2014-15 was 6,19,211 tonnes and the production was 55,412 tonnes. On all operational parameters, your mill is considered to be one of the best operated mills of Bihar. Your company is continuously doing cane development work in its reserved area and good quality seeds are made available to farmers to improve their yields. Efforts are being made to increase early maturing varieties of cane which will help in improved recovery percentage in years to come. The Sugar production in 2015-16 was 25 million tonnes i.e. about 9% less than last year and below earlier projections. The drop has been mainly due to dry weather in Maharashtra & Karnataka. Domestic consumption is expected to be at the same level. The Central Government has supported sugar mills by providing interest free loans to clear cane dues and mandating compulsory exports to tackle the high sugar stocks in the market. In September 2015, the centre had notified the minimum indicative export quota MIEQ for sugar mills to export 4 million MT of sugar during the ongoing sugar year. The mills fulfilling 80% of the target were made eligible for subsidy. Your Company fulfilled its export obligation of sugar under the Scheme. The industry contracted export worth around 2 million M.T. against this quota. With renewed focus on ethanol blending programme and mandatory ethanol blending having been revised from 5 to 10 percent, the new fixed pricing mechanism for ethanol supplied to OMCs and removal of Central Excise duty is expected to augur well for the industry by way of improved realization for ethanol and balancing of domestic sugar surplus. The sugar prices after touching a seven year low have been on a rising trend since August, 2015 in anticipation of stock clearance backed by exports and lower production in Maharashtra & Karnataka because of drought. However, the much needed aspect of linking sugar and by-product realizations with cane costs is yet to be fully addressed by the Government authorities. Further, going forward the sustainability of the upward trend in sugar prices remains critically dependant on sugar exports for sugar year 2016-17 as well as downfall in sugar production as expected. Export of Tea Indian export at 218 million kg. in 2015 showed a welcome increase of around 10 million kg. over 2014. Exports to USA shows a steady rise as Indian teas gain popularity there. Export to Iran and Bangladesh was higher but to UAE and Egypt lower. Shipments to Pakistan increased on the back of higher Kenyan Prices. Your Company exported tea worth Rs. 76.56 crore as against Rs. 84.73 crore last year. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS As per guidelines of the Ministry of Corporate Affairs (MCA), Government of India the Balance sheet, Statement of Profit & Loss and other documents of subsidiary companies North Tukvar Tea Company Limited, Jayantika Investment & Finance Ltd., Majhaulia Sugar Industries Pvt. Ltd. and offshore investment arm Birla Holdings Limited UAE, are not being attached with the Balance Sheet of the company. These documents are kept for inspection at the registered office of the company and those of respective subsidiary companies. Any member interested to obtain copy of the same may write to the Company separately. These documents shall be made available either in physical form or electronic mode as per Green Initiative of the MCA. Pursuant to section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of Subsidiary Companies & Joint Venture is given in Form AOC-1 and forms an integral part of the Annual Report. Birla Holdings Limited (BHL) is a wholly owned subsidiary of the company in Dubai (UAE). Kijura Tea Company Limited and Bondo Tea Estates Limited, Uganda are stepdown subsidiaries of BHL. Kijura Tea Estate owned by these companies manufactured 16.81 lac kg. of tea compared to 12.78 lac kg. last year. The average sale price realized was USD 1.43 per kg. against USD 1.33 per kg. last year. During the year the company recorded operating profit of USD 5,84,656 (INR 387.33 lac) on sales turnover of USD 2.343 mn. (INR 1,552.24 lac) as against last year operating loss of USD 2,58,184 (INR 161.39 lac) on sales turnover of USD 1.81 mn. (INR 1,129.18 lac). Tea Group Investment Company Limited (TGIC), Dubai, a joint venture company with Rwanda Mountain Tea SARL, Rwanda, in East Africa owning 60% stake in Mata Tea Company Limited & Gisakura Tea Company Limited collectively manufactured 37.11 lac kg. tea during 2015 against 36.88 lac kg. in last year and the average price realization was USD 3.01 per kg. against USD 2.17 per kg. last year for Mata and USD 2.81 per kg. against USD 2.01 per kg. last year for Gisakura. Mata Tea Company Limited declared a dividend of RWF 8,00,000 thousand (equivalent to USD 1.06 mn) out of retained profit RWF 8,28,849 thousand and Gisakura Tea Company Limited declared a dividend of RWF 1,00,000 thousand (equivalent to USD 0.132 mn) out of its retained earnings of RWF 1,17,493 thousand against nil dividend last year. CORPORATE GOVERNANCE As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate Governance is enclosed as a part of this Annual Report. A certificate from the Auditors of the Company regarding compliance as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the Report on Corporate Governance. The declaration by the Managing Director stating that all the Board members and Senior Management personnel have affirmed their compliance with the Company's Code of Conduct for the year ended 31st March 2016 is forming part of this Annual Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) BIRLA GROUP is well known for its contribution to the Society in the sphere of promotion of education, employment enhancing vocational skills, social business projects etc. The company has formulated CSR policy for promotion of education, healthcare, sports, people empowerment, and employment enhancing vocational skills training and ensuring environmental sustainability. The company is providing assistance for setting up schools in adjoining areas of its operation. It has fully equipped hospital at various places to provide best health care to the people of the region. It is also helping self help centres for vocational training programmes. The company is doing afforestation/vegetation on non-tea areas. The composition of the members of CSR Committee remains the same namely: Mrs.Jayashree Mohta, Chairperson alongwith Mr. S. K. Tapuriah, Mr. Vikash Kandoi and Mr. D. P. Maheshwari as members. CSR Policy is placed on the website ofthe company "www.jayshreetea com". The average net profit/(loss) of the last 3 financial years was Rs. 180.23 lac and prescribed expenditure is Rs. 3.60 lac. The company has spent Rs. 8.78 lac under CSR activities during the year as per the Annexure forming part of this Report Keeping in line with Company's philosophy of sustainable operations, a number of initiatives have been undertaken by the Company in all its tea estates to improve quality standard as per requirement of domestic and international buyers. This is helping us to satisfy the customers in a big way, while bolstering our market position in the Industry. So far there is normal rainfall in North India and good prediction for monsoon in the country. The Indian production is likely to be higher than that of last year. Global tea production is likely to remain stagnant within a small range depending upon the weather conditions. The demand for tea is increasing every year by around 3%, and the supply shall remain limited. Indian exports should improve further with stabilisation of Euro and political stability in the importing countries. These factors should boost up the prices in internal as well as overseas market. In sugar there is forecast of lower output and higher local prices. Southwest Monsoon has been deficient in parts of Maharashtra and Karnataka where rainfall has almost half the normal triggering concerns of a large scale drought. International prices also shoot up on forecast of a cut in production in the coming season. The Government should continue to provide export incentive and implement ethanol policy and other measures taken last year, which are essential for long term survival ofthe industry. In SSP there is increase in imported cost of raw materials, because of fluctuation in rupee/dollar exchange rate and reduction in subsidy on sale of SSP by the government. Further, the state of West Bengal is reeling under heat wave damaging paddy field. So, the future of this unit depends on the well spread and good monsoon in West Bengal in coming months. The company is exploring other options to maintain the viability of this unit. With all these factors, you can take reasonably optimistic view about the future ofthe company. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors would like to inform members that the audited accounts containing the financial statements for the year 2015-16 are in conformity with the requirements of the provisions of Section 134(3)(c) read with Section 134(5) and all other applicable provision of the Companies Act, 2013 and they believe that the financial statements reflect fairly the form and substance of transactions carried out during the year and reasonably present the Company's financial condition and results of operations. The Statutory Auditors, Messrs Singhi & Co., Chartered Accountants, Kolkata have audited these financial statements. Based on the same, your Directors further confirm that according to their information:in the preparation of the annual accounts, applicable accounting standards have been followed and there are no material departures; ii. the accounting policies selected by directorsare consistently followed and applied and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company; iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities iv. the annual accounts have been prepared on a going concern basis. v. that there is adequate proper internal financial controls with reference to the financial statement have been laid down for the company and such internal financial controls are adequate and were operating effectively. vi. that proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively. BUSINESS RESPONSIBILITY REPORT (BR) In terms of SEBI (LODR) Regulations 2015, Top 500 listed entities are required to submit as part of their Annual Reports, Business Responsibility Reports, describing the initiatives taken by them from an environmental, social and Governance perspective. Your company does not fall under this category. However, BR Report on environment, human resources and principle wise performance in short forms part of the Management discussion and analysis report. PARTICULARS OF EMPLOYEES The prescribed particulars of employees required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached in Annexure to this Report. The Information as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given in the Annexure forming part of the Report. In terms of Section 136(1) of the Act, the report and accounts are being sent to members without the aforesaid Annexure. Any member interested in obtaining a copy of the same, may write to the company. The aforesaid Annexure is also available for inspection by members at the Registered Office of the company. PUBLIC DEPOSITS The company has not accepted or renewed any deposit during the year. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Particulars of loans, Guarantees and investment covered under the provisions of Section 186 of the Companies Act, 2013 is given in the Standalone Financial Statement forming part of the Annual Report. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS Financial statements are prepared through both manual and automated process to ensure accuracy of recording all financial transactions during the year. All data pertaining to payment to employees, purchases, plucking, manufacturing, selling despatch and others are computerized. Internal control system ensures that transactions are executed with management authorization and they are recorded in such a way that permit preparation of financial statements in conformity with established accounting principles and that the assets are adequately safeguarded against misuse or loss. The company's internal control system has been established on values of integrity and operational excellence. The company's internal control systems are periodically tested and supplemented by extensive program of internal audit by independent firms of Chartered Accountants. Audits are finalized and conducted based on internal risk management. Significant findings are brought to the notice of the Audit Committee of the Board and corrective measures recommended for implementation During the year the internal financial control system were tested by a reputed firm of Chartered Accountants, who have submitted their findings for further improvement in controls. This formalized system internal control facilitates effective compliance of Section 138 of the Companies Act, 2013 the listing regulations and also the relevant statutes of the land. RISK MANAGEMENT The company has laid down the procedures to inform to the Board about the risk assessment and minimization procedures, which shall be responsible for framing, implementing and monitoring the risk management plan of the company. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURT OR REGULATORS There have been no significant and material orders passed by the court or regulators or tribunals impacting the going concern status and company's operations. Your attention is drawn to the Contingent Liabilities and commitments shown in the notes to financial statements forming part of this Annual Report. DISCLOSURE OF PARTICULARS WITH REGARD TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Necessary information on conservation of energy, technology absorption, foreign exchange earnings and outgo, required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is presented in Annexure to this Report. ENVIRONMENT AND SAFETY The company is conscious of clean environment and safe operations. It ensures safety of all concerned, compliance with environmental regulations and preservation of natural resources. As required by the Sexual Harassment of women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the company has an internal policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. During the year under review, no complaints were reported to the Board. STATUTORY AUDITOR The auditors Messrs Singhi & Co., Chartered Accountants, Statutory Auditors of the company were reappointed as Auditors in the Annual General Meeting held on 1st August 2014 for the period until the conclusion of the 71st Annual General Meeting of the Company at a remuneration to be fixed by the Board. Their appointment is to be ratified for the current year by the members in the ensuing Annual General Meeting which we recommend. To ensure smooth transition of Statutory Auditors as per the requirements of the Companies Act 2013, Messrs Jitendra K. Agarwal & Associates, Chartered Accountants are proposed to be appointed as Joint Auditors of the company for the year 2016-17 and to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of 75th Annual General Meeting of the company at a remuneration to be fixed by the Board, which we recommend. COST AUDITOR The Audit Committee in its meeting held on 03.05.2016 has recommended the reappointment of Messrs D. Sabyasachi & Co., the Cost Auditor to conduct the cost audit of the company for the financial year 2016-17 in terms of section 148(3) of the Companies Act, 2013. Accordingly the Board appointed the said firm of Cost Accountants to carry out the cost audit for the year 2016-17 on the remuneration as recommended by the Board to be fixed by members in the ensuing Annual General Meeting of the Company. INTERNAL AUDIT The Company continued to engage reputed firms of Chartered Accountants as its internal auditors at its units and tea estates. Their scope of work and the plan for audit is approved by the Audit Committee. The report submitted by them is regularly reviewed and their findings are discussed with the process owners and suitable corrective action taken on an ongoing basis to improve efficiency in operations. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the company has appointed Messrs MR & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the company. The report of the Secretarial Audit is annexed herewith. Regarding observations : (a) The company had a pending case under Section 58(A) of the Companies Act, 1956 with the court relating to acceptance of a small amount during the period of approval of form by the Board and its filing with ROC and the matter is subjudice, (b) As regards compliance of the Secretarial Standard 1 the company is now in the process of fully complying with the Secretarial Standard 1 (c) The Chairman of the Audit Committee, Stakeholders Relationship Committee, Mr. S. K. Tapuriah and Nomination & Remuneration Committee Mr. B. M. Khaitan could not attend the Annual General Meeting of the company held on 4.8.2015 as both were indisposed. INSURANCE Adequate insurance cover has been taken for properties of the company including buildings, plant and machineries and stocks against fire, earthquake and other risks as considered necessary. DIRECTORS AND KEY MANAGERIAL PERSONNEL As per provisions of Section 152 of the Companies Act, 2013, Mr. Vikash Kandoi (DIN 00589438) retire by rotation and being eligible offer himself for reappointment. The Board recommends his re-appointment. In terms of the provisions of the companies Act, 2013 the Board appointed Mr. Prashant Jhawar as independent director for a term of 5 years upto 31st March 2020. The shareholders at their Annual General Meeting held on 4th August 2015 approved his appointment. Mr. S. S. Kothari resigned from the directorship of the Company with effect from 29th January, 2016. Your Board places on record its appreciation for valuable services rendered by him during the tenure as an independent director of the Company. The independent directors have submitted the declaration of independence as required under Section 149 of the Companies Act, 2013 and the Board is of the opinion that they are independent within the meaning of the said requirement of the Act. There is no change in the Key Managerial Personnel during the year. OTHER DISCLOSURES EXTRACT OF ANNUAL RETURN The details for the financial year ended 31st March, 2016 forming part of the extract of the annual return is enclosed. NUMBER OF BOARD MEETINGS The Board of Directors met four times during the year ended 31st March, 2016. The details of the Board meetings and the attendance of Directors are provided in the Corporate Governance Report. COMPOSITION OF COMMITTEE OF DIRECTORS The Board has constituted the following Committees of Directors: (a) Audit Committee, (b) Nomination & Remuneration Committee. (c) Stakeholder relationship Committee The detailed composition of the above Committees along with number of meetings and attendance at the meetings are given in Corporate Governance Report. (d) Corporate Social Responsibility Committee The detailed composition of the above Committee is given under the head Corporate Social Responsibility (CSR). WHISTLE BLOWER POLICY The company has formulated Whistle Blower Policy in terms of Section 177(9) of the Companies Act, 2013 the details of which is being provided in the Corporate Governance Report. The Whistle Blower Policy has also been posted on the website of the Company. RELATED PARTY TRANSACTIONS All the related party transactions for the year under review are entered on arm's length basis and are in compliance with the Companies Act, 2013 and the Listing Agreement. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc, which may have potential conflict with the interest of the Company at large. All related party transactions are presented to the Audit Committee and the Board for its approval. The related party transactions policy as approved by the Board is uploaded on the Company's website "www.jayshreetea.com The details of the transactions with related party is given in the Standalone Financial Statement forming part of the Annual Report. EVALUATION OF BOARD'S PERFORMANCE In compliance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation of the Board was carried out during the year under review. The Board of Directors expressed their satisfaction with the evaluation process. More details on the same is given in the Corporate Governance Report. AUDITOR'S REPORT & ACCOUNTS Al l other notes to the Accounts referred to in the Auditors' Report are self-explanatory and therefore do not call for any further comments. Regarding auditors emphasis in their report, it is clarified that the carry forward of MAT credit entitlement of Rs. 111.94 lacs is based on the estimate of future taxable income of the company which is to be realized based on profit available in future years. Further, non-provision of diminution in value of investment amounting to Rs. 356.20 lacs and advances and security deposit given to a subsidiary amounting to Rs. 388.35 lacs is because of the reason that the investment is of long term and strategic in nature. APPRECIATION The Board wishes to place on record its appreciation of the efforts put in by your company's workers, staff and executives for their hard work and sincerity. Industrial relations at all estates and other units were cordial. For and on behalf of the Board B. K. birla (Chairman) Place : Kolkata, date : the 3rd day of May, 2016 |