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Kaveri Seed Company Ltd.
BSE CODE: 532899   |   NSE CODE: KSCL   |   ISIN CODE : INE455I01029   |   04-Dec-2024 Hrs IST
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1201
March 2015

DIRECTORS' REPORT

Dear Members, Kaveri Seed Company Limited

The Directors have pleasure to present their 28th Annual Report and the audited Annual Accounts for the Year ended 31st March 2015.

PERFORMANCE REVIEW

Your Company achieved an all time high performance both in turnover and its profits. The Gross revenues touched Rs.111552.48 Lakhs which is 11.28% is more than last year and the Profit before depreciation and taxes recorded was Rs.32171.88 Lakhs which is also up by 40.04% as compared to previous year. During the year your Company's business has significantly improved in all aspects - revenues, operating income, profit before tax, and profit after tax, earnings per share. The consolidated revenue from operation was higher over the previous year by 14.85% at Rs.1,16,123.25 Lakhs in the year under review as against Rs.1,01,110.54 Lakhs in the previous year. Consolidated net Profit is Rs.30095.77 Lakhs was higher by 44.02% over Rs.20,895.60 Lakhs of the previous year. It is a new all time high for your Company translating to EPS of Rs.43.68 as compared to Rs.30.40 of last year.

FUTURE PROSPECTS:

The Indian seeds industry has grown dramatically over the last decade, with farmers increasing the usage of branded seed over seed saved from the previous harvest. The future looks equally promising with significant under-penetration of hybrids and onset of productivity improving technologies - RR Flex, High Density Planting and Mechanical Harvesting.

The sector prospects are clearly visible; however, growth will have to be balanced with environmental sustainability as the available natural resources are limited. While the increasing population will result in an improved food demand, it will also lead to higher urbanization thereby reducing arable land and placing biodiversity resources under stress. This highlights the importance of superior quality seeds, which have been a mainstay of the Kaveri success story.

Going forward, we will continue to focus on developing high quality hybrids and using frontier seed technologies with an eye on future growth as well as farmer prosperity. Our superior R&D, diversified product, strong product launch capabilities, brand salience, farmer relationships, human capital efficiencies, and strong financial position are cornerstone of a sustainable platform for long term success.

DIVIDEND:

Your Directors have proposed a final dividend of 125% i.e., Rs.2.50 per equity share and together with the 1st and 2nd Interim Dividend of 250% i.e. Rs.5/- per equity share, the total dividend for the financial year 2014-15 comes to 375% i.e. Rs.7.50 per share on the equity shares of Rs.2/- each against 240% i.e. Rs.4.80 per share paid in the previous year. An amount of Rs.10.00 Crores has been transferred to General Reserve as per the existing provisions of Companies Act, 2013 and rules there under.

The Final Dividend, if approved at the ensuing 28th Annual General Meeting, will be paid to those shareholders whose names appear on the register of members of the Company as on the date of book closure.

CONSOLIDATED FINANCIAL STATEMENTS

In compliance with Clause 32 of the Listing Agreement entered into with the Stock Exchanges and in compliance with the provisions of the Companies Act, 2013 and the Accounting Standards AS-21 and AS-27 on consolidated financial statements, read with the Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors have pleasure in attaching the consolidated financial statements for the financial year ended March 31, 2015, which forms part of the Annual Report.

SUBSIDIARY COMPANIES

The Company has 4 subsidiaries as of March 31, 2015. There was no material change in the nature of the business carried on by the subsidiaries. As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies is prepared in Form AOC-1 and is attached to the Financial Statements of the Company.

In accordance with the provisions of the Companies Act, 2013, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are being made available on the website of the Company and are not attached with the Annual Accounts of the Company. The Company will make available the Annual Accounts of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any member at the Registered office of the Company and that of the respective subsidiary companies

STATUTORY AUDIT

M/s. P.R.Reddy & Co. Chartered Accountants (Firm Registration No. 003268S) who are Statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and recommended for re-appointment to audit the accounts of the Company for the financial year 2015-16. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. P.R.Reddy & Co., that their appointment, if made, would be in conformity with the limits specified in the said section.

INTERNAL AUDITORS

The Board of Directors of the Company has appointed M/s. Momchuri and Associates to conduct internal audit of the company for the financial year ended 31st March 2016.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has laid down set of standards which enables to implement internal financial control across the organization and ensure that the same are adequate and operating effectively. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors, Statutory Auditors and Finance Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the internal Audit function reports to the Chairman of the Audit Committee.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 134(3)(c) of the Companies Act, 2013 your Directors confirm that:

i) The applicable accounting standards have been followed in the preparation of the Annual Accounts.

ii) Such Accounting policies have been selected and applied consistently and judgments and estimates made when required that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period.

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv) The Directors have prepared the annual accounts on a going concern basis

v) Proper internal financial controls were in place to be followed by the Company and that the financial controls were adequate and were operating effectively.

vi) Proper systems devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

DIRECTORS RETIRING BY ROTATION

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company's Articles of Association, Mr. R.Venu Manohar Rao, Mr. C.Vamsheedhar and Mr. C.Mithun Chand, Whole time Directors retres by rotation of the forthcoming Annual General Meeting and being eligible offers themselves for re-appointment.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

At the Board meeting held on 29th May 2014, Mr. G.V.Bhaskar Rao, Managing Director, Mrs. G.Vanaja Devi, Mr. R. Venu Manohar Rao, Mr. C.Vamsheedhar, C. Mithun Chand, Whole time Directors and Mr. K.V.Chalapathi Reddy, Chief Financial Officer and Mr. V.R.S.Murti, Company Secretary of the Company were designated as "Key Managerial Personnel" of the Company pursuant to Section 2(51) and 203 of the Companies act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

STATEMENT ON DECLARATION GIVEN BY ZTORS UNDER SUB-SECTION (6) OF SECTION 149

The independent directors have submitted the declaration of independence, as required pursuant to section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub section.

NOMINATION AND REMUNERATION COMMITTEE:

Your Company has a Nomination and Remuneration Committee and further details are set out in the Corporate Governance Report forming part of the Directors' Report. The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Persons (KMP), Senior Management and their remuneration.

CORPORATE GOVERNANCE:

A detailed Report on Corporate Governance prepared in substantial compliance with the provisions of Listing Agreements with the Stock Exchanges together with the Auditors' Certificate regarding the compliance of conditions of Corporate Governance, forms part of Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS:

Management's Discussion and analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All transactions entered with Related Parties for the year under review were on arm's length basis and in the ordinary course of business. There are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The company has developed a Related Party Transactions frame work through standard operation procedures for the purpose of identification and monitoring of such transactions.

All Related Party Transactions are placed before the Audit Committee as also to be Board for approval. The particulars of contracts or arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 disclosed in Form No. AOC - 2 and is set out as Annexure and forms part of this report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT - 9, as required under Section 92(3) of the Companies Act, 2013, is included in this Report as Annexure - A and forms on integral part of this report

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/s. L.D.Reddy & Co., a firm of Company Secretaries in Practice (C.P.No.3725) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure - B and forms on integral part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has established Corporate Social Responsibility (CSR) committee composed of Mr. G.V.Bhaskar Rao as Chairman, Mrs. G.Vanaja Devi and Mr. M. Srikanth Reddy as members. Corporate Social Responsibility Policy was adopted by The Board of Directors on the recommendation of CSR Committee and it is placed on the Company's website. The Committee is responsible for formulating and monitoring the CSR Policy of the Company Annual Report on CSR Activities forms part of this Report as "Annexure - C".

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Information on conservation of energy, technology absorption, foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this report as Annexure - D.

PARTICULARS OF EMPLOYEES:

Details in respect of remuneration paid to employees as required under Section 197 (12) of the Companies Act, 2013 , read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary at the Registered Office of the Company. The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are enclosed in Annexure - E and forms part of this Report.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company. The remuneration policy as adopted by the Board is placed on the Company's website.

PERFORMANCE EVALUATION OF THE BOARD

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, The Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its committees.

The performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments in the business operations of the Company from the financial year ended March 31, 2015 to the date of signing of the Director's Report.

NUMBER OF MEETINGS OF THE BOARD

The details of the number of meeting of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance Report.

PARTICULARS OF LOANS, GURANTEES OR INVEST­MENTS BY COMPANY

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements.

WHISTLE BLOWER POLICY

The Company has a whistle blower policy to report genuine concerns or grievances. The Whistle Blower Policy has been posted on the website of the company. (www.kaveriseeds.in )

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the company and its future operations.

SHARE CAPITAL

During the year, the paid-up share capital of your Company has been increased by Rs.13,77,92,390/- due to the allotment of 1,53,990 equity shares of Rs.2/- each on exercise of stock options by the eligible employees under Employees Stock Option Scheme.

EMPLOYEE STOCK OPTION SCHEME:

Pursuant to the Employee Stock Option Scheme 2010, the total options 6,85,000 options were granted by the company to the eligible Employees of the Company at a price of Rs.34/- per option. Each option entitles the holder thereof to apply for and be allotted an ordinary share of the Company of the nominal value of Rs.2/- each, upon payment of the exercise price during the exercise period. Some of the employees are exercised their options and 1,53,990 equity shares of Rs.2/- each were allotted during the year. Details of the options up to 31st March 2015 are set out in the Annexure F to this Report, as required under Clause 12 of the Securities and Exchange Board of India (Employee Stock Options Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

PUBLIC DEPOSITS:

Your Company has not accepted any public deposits and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

RISK MANAGEMENT POLICY

In today's economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risk for the business. Your Company's risk management is embedded in the business process. The Company has established Enterprise Risk Management process to manage risks with the objective of maximizing shareholders value.

ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances environmental regulations and preservation of natural resources.

POLICY ON SEXUAL HARASSMENT

As required by the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of Sexual Harassment at work place with a mechanism of lodging complaints. During the year under review, no complaints were reported to the Board.

HUMAN RESOURCES

Your Company is well known for its execution capabilities, marketing and manufacturing strengths, product quality, and ability to keep to its commitment and deliver for its customers. Over the year, organisational strengths have enabled your company to grow faster than the industry average in each of the year. The momentum continued during the year under review with a new high in volume sold, highest over revenues and profit after tax. Your company has been well served by all the employees.

INDUSTRIAL RELATIONS:

The Company enjoyed cordial relations with its employees at all levels. Your Directors record their appreciation of the support and co-operation of all employees and counts on them for the accelerated growth of the Company.

ACKNOWLEDGEMENTS:

Your Directors place on record their sincere appreciation for the dedication, hard work and commitment of the employees at all levels and their significant contribution to your Company's growth. Your Company is grateful to the Distributors, Dealers, and Customers for their support and encouragement. Your Directors thank the Banks, Financial Institutions, Government Departments and Shareholders and look forward to having the same support in all our future endeavors.

By Order of the Board of Directors

For KAVERI SEED COMPANY LIMITED

Sd/- G V BHASKAR RAO

MANAGING DIRECTOR

26.05.2015

Secunderabad