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Goodricke Group Directors Report, Goodricke Group Reports by Directors
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Goodricke Group
BSE: 500166|NSE: GOODRICKE|ISIN: INE300A01016|SECTOR: Plantations - Tea & Coffee
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Directors Report Year End : Dec '13    « Dec 12
The Directors have pleasure in presenting their Thirty-eighth Annual
 Report and Accounts for the year ended 31st December 2013.
 
 
 
 
 
 
 
 FINANCIAL RESULTS                For the year ended 31st December
 
                                        2013            2012
                                         (Rs. in millions)
 
 GROSS SALES                        5,783.10         5,383.81
 
 PROFIT BEFORE TAXATION               486.18           274.44
 
 Less: Provision for Taxation (net)   152.61            74.45
 
 PROFIT AFTER TAX                     333.57           199.99
 
 Add: Profit brought 
 forward from last year                48.67            49.10
 
                                      382.24           249.09
 
 APPROPRIATIONS:
 
 Dividend                              97.20            86.40
 
 Tax on Dividend                       17.19            14.02
 
 Transfer to General Reserve          220.00           100.00
 
 Balance carried forward               47.85            48.67
 
 The turnover for the year 2013 increased by over 7.40% to Rs. 5,783
 million from Rs.5,383 million in the previous year essentially due to
 increased crop and improved prices.
 
 OPERATIONS
 
 The total manufactured crop was higher at 22.29 million kgs. against
 20.73 million kgs in 2012. Favourable weather conditions coupled with
 augmented irrigation facilities were the major contributing factors.
 Out sourced leaf procurement recorded some decline due to our own high
 production.
 
 All India tea production increased by 6.5 percent to 1200 million kgs
 in 2013 against 1126.33 million kgs in 2012. Majority of the increase
 came from North India although South Indian crop also was ahead of
 previous year.
 
 Average CTC tea prices were lower in all auction centers compared to
 previous year. Markets were polarized at the top and bottom with top
 teas seeing attractive levels with virtually 100% sales. But medium and
 plainer sorts saw outlots with lower prices. Our Group averages however
 were higher than last year in both Dooars and Assam. Orthodox prices
 were also higher than last year.
 
 All India Bulk tea Export figures were higher than 2012. Exports to
 Iran increased substantially with Rupee Letter of Credit being opened.
 Our Company''s exports also increased to 4.20 million kgs from 3-28
 million kgs in the previous year.
 
 The domestic sales were positive and indicated future growth potential.
 In Packet tea division, attractive incentives were offered to maintain
 steady growth of business. A new brand named Goodricke Khaass was
 launched during the year at Kolkata which was very well accepted in the
 market. A new central packaging unit along with storage facility was
 inaugurated in Dewas, Madhya Pradesh to strengthen logistics and cut
 down on multiple units/inventory.
 
 Our endeavours of converting the three Darjeeling gardens namely
 Barnesbeg, Badamtam and Thurbo into organic have been successfully
 completed. All three gardens as also the two Assam gardens continue to
 be certified under the global Rainforest Alliance.
 
 The Company continues to avail Tea Board''s replanting/ rejuvenation
 subsidy schemes for replacement of old tea areas with quality planting
 material. These have been helpful in ensuring sustained growth and to
 improve productivity along with the quality profile of the Company.
 
 In terms of Corporate Governance disclosure under Clause 49 of the
 Stock Exchange Listing Agreement, the Management discussion and
 analysis report is given in Annexure E forming part of the report.
 
 CORPORATE SOCIAL RESPONSIBILITY (CSR)
 
 The Companies Act 2013 which has been assented by the President of
 India on 29th August 2013 suggests for specific provisions for spending
 on Corporate Social Responsibility (CSR), which is yet to come into
 effect. It stipulates expenditure of 2% of the average profit of past
 three years on CSR activities. It further requires the Board''s report
 to give a note on such activities and in the event of shortfall from
 the specified quantum, the reasons for the same to be explained
 therein. A Committee of the Board has already been constituted with Dr.
 Sudha Kaul, an Independent Director as its Chairperson.
 
 Your Company is a constituent of Camellia Pic, U.K., one of the largest
 global producer of tea with interests in other plantation crop,
 agriculture, engineering and private banking. It is committed to CSR in
 its global operation. The Statement of Business Principles of the U. K.
 Principal, as well as norms followed by global bodies like Rainforest
 Alliance (RA) and Fair Trade Practices (FTP) are in place for
 environment sustainability.  The policies adopted as standing operating
 procedures covers:-
 
 - Health & Safety - Social
 
 - Waste Management - Environment
 
 Some of the major activities covered under the above groups are:-
 
 -  Primary Hospitals at all gardens.
 
 -  Group Hospital with specialized equipment at Dooars, North Bengal
 
 -  Tracking of family health status at the gardens.
 
 -  Camps for sterilization, reconstructive surgery by overseas Doctors,
 eye surgery and child immunization programmes.
 
 -  Malaria prevention schemes for residents of Garden and adjoining
 villages.
 
 a Primary schools at all gardens and buses for school children to go to
 the Secondary schools.
 
 -  Self help centres for vocational training.
 
 -  Afforestation / vegetation on non-tea areas.
 
 G Scholarship scheme for meritorious students of the tea garden
 employees.
 
 -  Packing of teas by physically challenged students at The Indian
 Institute of Cerebral Palsy (IICP), as part of vocational training.
 
 -  Green initiative for sustainable operation through use of dual fired
 boilers to use woody biomass instead of coal.
 
 - The third and final phase of expansion of the Goodricke School for
 Special Education at Siliguri, North Bengal, was inaugurated on 15th
 April 2013, providing for additional classrooms and Hydro therapy
 facility.
 
 DIVIDEND
 
 The Board recommends a dividend of Rs. 4.50/- per share (45%). Such
 dividend, on declaration, will be paid to those members recorded in the
 Registers of the Company at the close of business on the date of Annual
 General Meeting, subject, however to the provision of Section 206A of
 the Companies Act, 1956.
 
 FINANCE AND ACCOUNTS
 
 The higher crop and overall increase in prices had a favourable effect
 on the profitability and cash flow of the company. However, due to the
 high utilization of bank borrowings for most of the months, the
 interest remained on the higher side.  The Debt/Equity and the interest
 covers are healthy.
 
 Cost Audit u/s 233 of the Companies Act 1956 is being carried out by
 Messrs Shome & Banerjee, Cost Accountants appointed with the approval
 of the Minsitry of Corporate Affairs, Government of India.
 
 PROSPECTS
 
 Tea market is expected to remain strong in 2014 due to negative carry
 forward of old season stocks. Good quality CTC teas will continue to
 attract premiums and could reach new thresholds in 2014. With easing of
 sanctions on Iran, prospect for Orthodox teas also look bright.
 
 The price trends at the auctions and private sales have been attracting
 premium prices for quality teas. This is evident from the prices
 commanded by the Company''s teas as compared to the auction averages.
 Barring unforeseen adverse weather conditions, the Company is expected
 to strengthen it''s profitability in future years with upgraded
 factories and renewed tea areas.
 
 However, this should be viewed against the backdrop of sharp increase
 in wages and cost of inputs together with social costs which are to be
 reckoned with in the coming years, the next wage revision is due from
 1st April, 2014.
 
 CORPORATE GOVERNANCE & AUDIT COMMITTEE
 
 Clause 49 of the Listing Agreement on Corporate Governance in terms of
 quarterly and annual results etc.  were complied with during the year.
 A certificate from the Statutory Auditors of your Company regarding the
 compliance by the Company of the conditions stipulated under Clause 49
 of the Listing Agreement is also attached with this report.
 
 The Audit Committee of the Board was set up in 1997 well before it
 became mandatory. The Committee has played an important role during the
 year. It co-ordinated with the Statutory Auditors, Internal Auditors
 and other key personnel of the Company and has rendered guidance in the
 areas of Corporate Governance, internal audit, finance and accounts.
 
 The Code of Conduct for the Directors and Senior management personnel
 is being complied with and Risk Profile Analysis is being carried out
 from time to time. In terms of Clause 49 of the Listing Agreement,
 disclosures under Corporate Governance are given in Annexure - ''F'' of
 the report.
 
 Enterprise Resource Planning (ERP)
 
 The Company has implemented ERP which was the decision of the Board of
 Directors. It is a significant paradigm shift for the organization into
 a new age of digitilised enterprise.
 
 The successful implementation of ERP was possible only because of the
 hard work put in by the Management at Head Office and estates,
 especially the computer operators at the up-country level.
 
 ERP integrates the various functions within the organization and
 presents in a greater manner the transparency of the transactions of
 the organization. It has also brought about better controls and
 efficiency in the various processes. This is the first tea Company in
 India to use ERP.
 
 SHAREHOLDERS'' / INVESTORS'' GRIEVANCE COMMITTEE
 
 The Committee has met regularly in course of the year. With the
 compulsory dematerialization of the Company''s shares and electronic
 mode of transfers, postal despatches which led to usual complaints,
 have been minimized. At the year end 97.81% of the total shares were
 dematerialized with no unresolved pending investor grievances.
 
 REMUNERATION COMMITTEE
 
 The Remuneration Committee met twice during the year to review and
 recommend annual increment and payment of commission to Managing
 Director within the terms of appointment.
 
 PERSONNEL
 
 Majority of the gardens are located in remote areas away from towns and
 cities. Inspite of these isolated locations and disturbed political
 environment in some areas, the morale of the managerial staff and other
 personnel were high throughout the year. There were no major
 disruptions of work at the garden or any other establishment of the
 Company during the year.
 
 Group activities were organized during the course of the year like
 football, golf, tennis, flower show and cultural programme for greater
 team work in the gardens amongst the Company''s managerial and other
 personnel.
 
 Your Directors place on record the co-operation received and dedication
 of all employees at the gardens and other establishments of the
 Company.
 
 PARTICULARS IN TERMS OF SECTION 217 OF THE COMPANIES ACT, 1956
 
 The particulars of Conservation of Energy and Technology absorption in
 terms of Section 217(l)(e) are given in Annexures A and B. The
 particulars of employees attracting the provisions of Section 217(2A)
 are given in Annexure C. Directors'' Responsibility Statement, in
 terms of Section 217(2AA), is given in Annexure D. All the Annexures
 form part of the Report.
 
 DIRECTORS
 
 There has been no change in the Board of Directors of the Company
 during the year under report.
 
 Mr. K. Sinha and Mr. P. J. Field, retire by rotation and being eligible
 offer themselves for re-appointment subject to approval of the General
 Body.  Your Board of Directors commends the reappointments.
 
 AUDITORS
 
 The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire
 and are eligible for reappointment.
 
                                       On behalf of the Board
 
                                       A. N. Singh
 
                                       Managing Director
 
                                       S. Kaul
 
                                       K. Sinha
 
 Kolkata P.K. Sen
 
 26th February, 2014                   Directors
Source : Dion Global Solutions Limited
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