Goodricke Group Directors Report, Goodricke Group Reports by Directors

Goodricke Group

BSE: 500166|NSE: GOODRICKE|ISIN: INE300A01016|SECTOR: Plantations - Tea & Coffee
Jan 18, 10:14
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Directors Report Year End : Dec '14    « Dec 13
Dear Members,
 The Directors have pleasure in presenting their Thirty-ninth Annual
 Report and Accounts for the year ended 31st December 2014.
 FINANCIAL RESULTS                   For the year ended 31st December
                                                  2014         2013
                                                 (Rs. in millions)
 GROSS SALES                                  6,001.63     5,783.10
 PROFIT BEFORE TAXATION                         290.39       486.18
 Less: Provision for Taxation (net)              68.00       152.61
 PROFIT AFTER TAX                               222.39       333.57
 Add: Profit brought forward from last year      47.85        48.67
                                                270.24       382.24
 Dividend                                        97.20        97.20
 Tax on Dividend                                 19.43        17.19
 Transfer to General Reserve                    110.00       220.00
 Balance carried forward                         43.61        47.85
 The turnover for the year 2014 marginally increased by over 3.78% to
 Rs. 6,001.63 million from Rs5,783 million in the previous year
 essentially due to improved prices.
 The total manufactured crop was slightly lower at 22.09 million kgs
 vis-a-vis 22.29 million kgs for 2013 on account of the severe drought
 in the early part of the year. Augmented irrigation facilities enabled
 the gardens to minimize crop loss vis-a-vis the rest of the region.
 Outsourced leaf production was higher than 2013 as concerted efforts
 were made in order to maximize this very remunerative operation.
 Withdrawal of monsoon by early October denied chances of a prolific
 backend harvest resultant of which the gardens were unable to attain
 the budgeted crop levels by minor margin. The increase in sale price
 did not substantially improve the profitability due to steep escalation
 in the cost of coal, fuel, oil, electricity, fertilizer, agrochemicals
 etc. Fresh wage agreements which would come into effect retrospectively
 from 1st April 2014 have also impinged on profitability levels in West
 Bengal gardens.
 All India tea production decreased by 1.33 percent to 1184 million kgs
 in 2014 against 1200 million kgs in 2013.
 The markets remained selective with the price levels of better quality
 teas maintaining and even surpassing 2013 levels by a fair margin. But
 the medium and plainer category of teas attracted only tepid demand
 resultant of which marks / gardens / producers who did not adhere to
 quality production were left at the mercy of market forces. Export
 markets were also selective with Iran especially being apprehensive of
 the adverse media reporting on proliferation of chemically tainted teas
 being produced in India.
 Nonetheless, the Company as a whole did manage to attain 2013 export
 levels in 2014 and the buoyant price levels attained in auction centers
 for all its marks did enable the Company to enhance its turnover over
 The Packet Tea Division continued to make inroads into the major
 established brands'' traditional domain
 and the newly launched Goodricke Khaass brand is currently recognized
 as a major rival to the established brands in the premium segment.
 As a part of our endeavour to adhere to global standards, four of our
 gardens in Dooars have been certified under the Rainforest Alliance
 regime. Goodricke is the first major tea manufacturer to attain this
 norm in Dooars. The certification of the balance gardens of Dooars will
 be pursued in the year ahead. The rest of the Dooars gardens are in the
 process of being certified under ISO 22000.
 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.
 Your Company is a constituent of Camellia Plc., 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
 Primary schools at all gardens and buses for school children to go to
 the Secondary schools.
 Special School for making difference in the lives of physically
 challenged students at Siliguri.
 Self help centres for vocational training.
 Afforestation / vegetation on non- traditional tea areas in order to
 improve the Micro-environment.
 Scholarship scheme for meritorious students of the tea garden
 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 thereby lowering
 consumption of carbon fuel and reducing methane emission.
 Water harvesting and Creation of Waterbodies to charge underground
 water table.
 Encourage use of smokeless chullas.
 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 21st March, 2015,
 subject, however to the provision of Section 206A of the Companies Act,
 1956/Section 126 of the Companies Act, 2013.
 Overall increase in price have compensated to a certain extent the cost
 escalation of most of the inputs.  However the major factor for lower
 profitability is on account of substantial shortage in the Retirement
 Funds due to the negative swing in the Bond yields coupled with the
 proposed increase in labour wages.
 For the Current financial year beginning on 1st January 2015 and ending
 on 31st December, 2015, the Board of Directors, based on the
 recommendation of the Audit Committee, has appointed Messrs. Shome &
 Banerjee, Cost Accountants as the Cost Auditors of the Company to
 comply with the provisions of Section 148 of the Companies Act, 2013
 read with Rule 14 of Companies (Audit and Auditors) Rules 2014, as may
 be applicable.
 As required under Section 148 of the Companies Act, 2013 read with Rule
 14 of the Companies (Audit & Auditors) Rules 2014, the remuneration
 payable to the Cost Auditors for this year ending 31st December, 2015
 will be placed before the members at the ensuing Annual General Meeting
 for ratification.
 Overall prospect of the tea business appears to be encouraging with
 strong demand for CTC teas. The Company is in process of replacing high
 cost coal with alternative fuels i.e., waste wood, bio-mass etc.
 Modernisation of spraying equipments are under process which will
 reduce costs as well as deployment on pest control which had been a
 major drain on revenues over the past decades.
 Barring unforeseen adverse weather conditions, to combat which,
 substantial investment on augmenting irrigation infrastructure has been
 undertaken, the Company is expected to strengthen its profitability in
 future years with upgraded factories and renewed tea areas. The slower
 off-take of Orthodox teas by Iran is a cause for worry as is the
 proposed sharp increase in wages and the continuing clamour for
 minimum wages in tea by some sections of the Unions.
 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.
 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 97.97% of the total shares were
 dematerialized with no unresolved pending investor grievances.
 The Nomination and Remuneration Committee recommends to the Board the
 remuneration Package of Directors, Key Managerial Personnel and other
 The Company has a large work force employed on tea estates which 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.
 Your Directors place on record the co-operation received and dedication
 of all employees at the gardens and other establishments of the
 The particulars of Conservation of Energy and Technology absorption in
 terms of Section 217(1)(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.
 In terms of the provisions of the Companies Act, and the Company''s
 Articles of Association, Mr. A. K. Mathur shall retire by rotation and
 being eligible, offers himself for reappointment. The Board has
 re-appointed Mr.  Arun Narain Singh as Managing Director and CEO for a
 period of three years with effect from 1st January, 2015. The Board
 recommends the appointment/ re-appointment of the aforesaid Directors
 on the ensuing Annual General Meeting.
 Pursuant to Section 149 and other applicable provisions of the
 Companies Act, 2013 the Board of Directors is seeking appointment of
 Mr. K. Sinha, Mr. P. K. Sen and Dr. S. Kaul as Independent Directors
 for a term of five consecutive years i.e. upto the conclusion of the
 forty fourth (44) Annual General Meeting to be held in 2020. Details of
 the proposal for appointment of Mr. K. Sinha, Mr. P.K. Sen and Dr. S.
 Kaul have been mentioned in the statement pursuant to Section 102 of
 the Companies Act 2013 in the Notice of the Annual General Meeting. The
 aforesaid Directors fulfill the conditions specified in the Companies
 Act, 2013 and Rules made thereunder for their appointment as
 Independent Directors.
 The Board is of the opinion that their continued association as
 Independent Directors shall immensely benefit the Company. The Board
 recommends their appointment as Independent Directors by the
 The Auditors, Messrs Lovelock & Lewes, Chartered Accountants, retire
 and are eligible for reappointment.
 Applicability of the Companies Act, 1956
 As clarified by the Govt. of India., Ministry of Corporate Affairs,
 vide its General Circular No. 08/2014 dated 4th April, 2014 the
 information given and contents of this Report are governed by the
 relevant provisions / schedules / Rules of the Companies Act, 1956.
                                             On behalf of the Board 
                                                        A. N. Singh 
                                                  Managing Director 
                                                            S. Kaul 
                                                           K. Sinha
 Kolkata                                                   P.K. Sen
 20th February, 2015                                      Directors
Source : Dion Global Solutions Limited
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