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Goodricke Group

BSE: 500166|NSE: GOODRICKE|ISIN: INE300A01016|SECTOR: Plantations - Tea & Coffee
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Directors Report Year End : Mar '17    Mar 16

The Directors have pleasure in presenting their Forty-first Annual Report and Accounts for the year ended 31st March, 2017.

FINANCIAL RESULTS (Rs. in millions)

Year ended (31.3.2017)

15 months Period ended (31.03.2016)

Revenue from Operations

6803.69

7332.42

Profit before Taxation

488.99

28.45

Tax Expense

157.67

149.85

Profit/(Loss) for the year / period

331.32

(121.40)

Other Comprehensive Income (net of tax)

(44.09)

(4.63)

Total Comprehensive Income

287.23

(126.03)

Other Equity at year end

2702.83

2519.59

The above figures are for 12 months and 15 months respectively, hence not comparable.

SHARE CAPITAL

During the year under review:

a. No Equity shares have been issued with differential voting rights. Hence, no disclosure is required in terms of Rule 4 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

b. No issue of Sweat Equity Share has been made. Hence, no disclosure is required in terms of Rule 8 (13) of the Companies (Share Capital and Debentures) Rules, 2014.

c. There was no issue of Employee Stock Option. Hence, no disclosure is required in terms of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014.

d. There was no provision made by the Company for any money for purchase of its own shares by employees or by trustees for the benefit of employees. Hence, no disclosure is required in terms of Rule 16 (4) of the Companies (Share Capital and Debentures) Rules, 2014.

e. The issued, subscribed and paid up share capital of the Company as on 1st April, 2016 stood at Rs. 216 million divided into 21600000 Equity Shares of Rs.10/- each remained unchanged as on 31st March, 2017.

TRANSFER TO RESERVE

Your Directors do not propose to transfer any amount to the General Reserve for the financial year ended 31st March, 2017.

DIVIDEND

Your Directors have recommended a dividend of Rs. 4.50 per share (45 %). On approval at the forth coming Annual General Meeting, Dividend will be paid to those members whose names are recorded in the Register of the Company at the close of business on 20th July, 2017, subject, however to the provision of Section 126 of the of the Companies Act, 2013. This equity dividend has not been included as a liability in the financial statement.

OPERATIONS

The Company performed creditably by harvesting a crop of 15.92 million Kgs. in Dooars whilst in Assam the same was 2.41 million kgs. and Darjeeling harvested 0.45 million kgs. over the 12 months period.

Substantial early rainfall combined with judicious usage of our excellent irrigation facilities as well as the good controls exercised over pest activity were the key factors that contributed to this achievement. Mother nature was kind and no garden suffered on account of hail storm as was the case in the previous year.

The out-sourced leaf segment registered lower volumes than expected on account of the fact that operations had to be scaled down in order to not jeorpardise quality of our own produce in the light of the higher than targeted harvest levels from our gardens.

The profitability of the garden operations in Dooars was affected on account of the following factors :-

1) The confusion created on account of the chaotic implementation of the pan India auction led to couple of sales being cancelled on account of non-participation of buyer community in the peak cropping months of September/October and there was a deliberate withdrawal of part of the buying community from the auctions till sanity was restored by Tea Board.

2) Extended pre-bonus agitation, post bonus absenteeism caused upheavel in plucking operations leading to gardens having to skiff tea areas due to extended plucking rounds.

3) Demonitization related upheaval in Siliguri Auction where at least 75% of our Dooars produce is sold post 2nd flush. The tertiary markets collapsed on account of demonitization which led to large scale withdrawal of the buying community for North India and this led to collapse of the market with only a handful of buyers operating at much lower levels than anticipated for lower and selected volumes of teas.

Unfortunately this also coincided with the high cropping months of October and November wherein Puja flush is harvested and good rainfall in October had resulted in substantially increased harvest levels in these two months as well. This resulted in over supply of teas in a market which was already financially strapped and very subdued. All of which led to price levels depressing beyond economic threshold levels for a large volume of teas sold at Siliguri across the spectrum.

Markets for Orthodox teas though remained comparatively more buoyant on account of export queries and commitments. Your garden in Mangaldai, Assam recorded hither to unattained levels of Orthodox production resultant of which the profit levels of these gardens witnessed sharp rise.

Produce of the Darjeeling estates of the group featured amongst the top marks in price realization and despite market trends was able to derive attractive price levels.

It is with some level of satisfaction that one would like to record here that the Company’s exports touched a figure of 5.6 million kgs. in the year.

The Instant Tea Plant at Aibheel Tea Estate continued to perform very satisfactorily and as an EOU contributed close to 300 MT in export volumes.

Branded Tea business was the single largest contributor to the overall profits of the Company in the year and currently the Goodricke brand holds the largest market share in Madhya Pradesh. In the Darjeeling tea segment the Company’s brands have the largest market share in Kolkata urban market. This is seen as a prime growth area for the company, with a presence in all three growing regions of North India, the company has a large bouquet of Tea to be offered to the consuming public.

CHANGE IN NATURE OF BUSINESS, IF ANY

There has been no change in the nature of business and the Company continues to concentrate on its own business with growth plans in short to medium terms.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Your Board of Directors at its Meeting held on 23rd May, 2017 appointed Mr. Atul Asthana, as an Additional Director to be designated as Whole time Director & Chief Operating Officer (COO) with effect from 1st June, 2017. A notice has been received from a member under Section 160 (1) of the Companies Act, 2013 proposing the appointment of Mr. Atul Asthana as a Director at the ensuing Annual General Meeting. The Board has also re-appointed Mr. Arun Narain Singh as Managing Director & CEO for another period of three months with effect from 1st January, 2018. The Board recommends the appointment / re-appointment of the aforesaid Directors on the ensuing Annual General Meeting.

The following persons continued as Key Managerial Personnel of the Company in compliance with the provisions of Section 203 of the Companies Act, 2013.

(a) Mr. A. N. Singh, Managing Director & CEO

(b) Mr. A. Sengupta, Vice President and CFO

(c) Mr. S. Banerjee, Sr. General Manager & Company Secretary

STATEMENT OF DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS

All the Independent Directors have given declaration as per Section 149 (7) of the Companies Act, 2013 confirming that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act 2013.

REPORT ON CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and as stipulated in Listing Regulations. A Report on Corporate Governance along with the Auditor’s Certificate regarding Compliance of Corporate Governance are attached as Annexure II and Annexure III respectively, forming part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility (CSR) Committee consist of three directors namely, Dr. (Mrs) S. Kaul, Chairperson and Independent Director, Mr. A. N. Singh, Managing Director & CEO and Mr. K. Sinha, Independent Director as members with Mr. S. Banerjee, Sr. General Manager & Company Secretary as its Secretary. The broad terms of reference of the Corporate Social Responsibility Committee are :

— To formulate and recommend to the Board the Corporate Social Responsibility policy.

— Recommend the amount of expenditure to be incurred on the activities undertaken.

— Monitor the Corporate Social Responsibility of the Company from time to time.

— Review the performance of the Company in the areas of Corporate Social Responsibility including the evaluation of the inputs of the Company’s Corporate Social Responsibility activities.

— Review the Companies decisions on Corporate Social Responsibility matters.

The initiatives under taken by the Company on Corporate Social Responsibility activities during the year have been annexed as Annexure IV to the report.

DETAILS OF BOARD MEETINGS

The Board of Directors met 4 (four) times during the year on various dates as given herein below:

Sl. No.

Date of the meeting

No. of Directors attended the meeting

1.

23rd May, 2016

5

2.

8th August, 2016

6

3.

10 th November, 2016

5

4.

13 th February, 2017

6

Further details on Board of Directors are provided in the Corporate Governance Report.

COMMITTEES OF THE BOARD

a. Audit Committee

Sl. No.

Name

Category of Director

Chairman/Members

1.

Mr. K. Sinha

Non-Executive- Independent

Chairman

2.

Mr. P. K. Sen

Non-Executive - Independent

Member

3.

Mrs. S. A. Walker

Non-Executive - Non-Independent

Member

Further details of Audit Committee are given in the Corporate Governance Report.

• The Company has established a vigil mechanism / whistle blower mechanism which oversees through the Audit Committee and addresses the genuine concerns expressed by the employees and other Directors. The Company has also made provisions for adequate safeguards against victimization of its employees and Directors who express their concerns. The Chairman of the Audit Committee can be directly accessed by any employee for reporting issues which need to be brought to the notice of the Board.

The vigil mechanism / whistle blower policy of the Company has been uploaded on the website of the Company and can be accessed at Company’s weblink www.goodricke.com/ corporate/Goodricke -whistle-blower - policy.

b. Nomination & Remuneration Committee

Sl. No.

Name

Category of Director

Chairman/Members

1.

Mr. K. Sinha

Non-Executive- Independent

Chairman

2.

Mr. P.J. Field

Non-Executive

Member

3.

Mr. P. K. Sen

Non-Executive - Independent

Member

4.

Dr. (Mrs.) S. Kaul

Non-Executive -Independent

Member

Further details of Nomination and Remuneration Committee are given in the Corporate Governance Report.

c. Corporate Social Responsibility Committee

Sl. No.

Name

Chairperson /Members

1.

Dr. (Mrs.) S. Kaul

Chairperson

2.

Mr. K. Sinha

Member

3.

Mr. A. N. Singh

Member

Further details of Corporate Social Responsibility are available in the Report on Corporate Governance.

The Committee has approved the Corporate Social Responsibility (CSR ) Policy and the Budget for the Financial Year 2016 - 17 prepared in accordance with the provisions of Section 135 (5) of the Companies Act, 2013. The earmarked fund was fully spent on or before 31st March, 2017.

d. Stakeholders Relationship Committee

Sl. No.

Name

Chairperson/Members

1.

Dr. (Mrs.) S. Kaul

Chairperson

2.

Mr. K. Sinha

Member

3.

Mr. A. N. Singh

Member

Further details of Stakeholders Relationship Committee are available in the Report on Corporate Governance.

e. Risk Management Committee

Your Board at its meeting dated 14th November, 2014 has voluntarily constituted the following Risk Management Committee of the Board as per Listing Regulations.

Sl. No.

Name

Chairman/Members

1.

Mr. K. Sinha

Chairman

2.

Mr. P.K. Sen

Member

3.

Mr. A. N. Singh

Member

4.

Mr. S. Banerjee

Member

Further details of Risk Management Committee are available in the Report on Corporate Governance.

ANNUAL PERFORMANCE EVALUATION

A Board Evaluation Framework was adopted as per the guidance note issued by SEBI dated 5th January, 2017 for evaluating the performance of the Board as a whole, Committees of the Board and also performance of the Individual Directors.

As per the said Evaluation Framework, the Board evaluated the performance of the Board, its Committees and the Individual Directors for the year 2016-17. The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors, based on the criteria such as attendance and participation in the meetings, preparedness on the issues to be discussed, suggestions on how risk factors may be handled etc. In addition, the chairman was also evaluated on the above aspects by the independent directors.

The Independent Directors also carried out the performance evaluation in terms of Part VII (3) ( c) of Schedule IV of the Companies Act 2013 in their Meeting held on 23rd May, 2017.

ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 forming a part of this Report, attached as Annexure V.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Clause (c) of sub section 3 of Section 134 of the Companies Act 2013 your Directors confirm that :

(a) in the preparation of the annual accounts, for the year ended 31st March 2017, the applicable accounting standards have been followed along with the proper explanation relating to material departure, if any.

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the year ended 31st March 2017 and of the profit and loss of the Company for that period;

(c) the Directors had taken proper and sufficient care 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;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS AND AUDIT REPORT

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W / W-100018) were appointed as the Statutory Auditors of the Company in the last Annual General Meeting held on 28th July, 2016 in terms of Section 139 of the Companies Act 2013 till the conclusion of the Annual General Meeting to be held in 2021, subject to ratification by the Shareholders at every subsequent Annual General Meeting of the Company.

The Statutory Audit Report does not contain any qualification, reservation or adverse remarks.

COST AUDITORS

In terms of Sub Section (3) of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, M/s. Shome & Banerjee, Cost Accountants (Firm Registration No. 000001) has been appointed by the Board of Directors in its meeting held on 23rd May, 2017 as the Cost Auditor of the Company for the financial year 2017-18 based on the recommendation of the Audit Committee. The remuneration to be ratified by the Members in the ensuing Annual General Meeting.

The Cost Audit Report does not contain any qualification, reservation or adverse remarks.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. A. K. Roy & Co., Practicing Company Secretaries FCS 5684, CP No. 4557 had been appointed Secretarial Auditors of the Company for the year ended 31st March, 2017. The report of the Secretarial Auditors is enclosed as Annexure- VI to this report. The Report does not contain any qualification, reservation or adverse remark or disclaimer, which requires any further comments or explanations.

PARTICULARS OF COMPLIANCE OF CONTRACTS OR ARRANGMENTS MADE WITH RELATED PARTIES

The related party transactions entered during the year were in ordinary course of business and also on arm’s length basis in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations. 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 of the interest with the Company at large. All related party transactions are presented to the Audit Committee and the Board, if required for approval. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The Policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website at the web link: www.goodricke.com/policy-on-related-party-transactions.

Accordingly, disclosures of related party transactions in terms of Clause (h) of sub section (3) of Section 134 of Companies Act, 2013 read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 in Form AOC - 2, is not applicable. Transactions with related parties, as per requirements of Accounting Standard are disclosed in the notes to the accounts annexed to the financial statements.

LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees or investments made under section 186 of the Companies Act, 2013 are covered in the notes of the Financial Statement for the year ended 31st March, 2017.

HUMAN RESOURCES

Tea being a labour intensive industry the Company has employed large number of work force at the tea estates. Industrial Relations at all the units of the Company remain satisfactory and there was no major disruption of work at the garden or any other establishment of the Company during the year under review.

The total remuneration drawn by MD & CEO and other Key Managerial Personnel form part of Extract of the Annual Return in Form MGT - 9 to this Report enclosed as Annexure V .

In terms of requirements of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formed Internal Complaints Committee for its workplaces. During the year, no complaint regarding sexual harassment was received by the said Committee.

RISK MANAGEMENT POLICY

In terms of the requirement of the Companies Act, 2013 and Listing Regulations the Company has developed and implemented the Risk Management Policy. The Risk Management Committee of the Board reviews the same periodically.

The Company has under taken adequate measures to mitigate various risk encountered. In the opinion of the Board there is no such risk which may threaten the present existence of the Company.

NOMINATION AND REMUNERATION POLICY

The Company’s Policy relating to appointment of Directors, payment of managerial remuneration, Directors’ qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 and Listing Regulations is attached to this report as Annexure VII.

The details of Programme for familiarization of Independent Directors with the Company , nature of Industry and other related matters are available on the weblink : www.goodricke.com/corporate/familiarisation-program-for-independent-directors

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There is no significant or material order passed by any Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

INTERNAL FINANCIAL CONTROL

Your Company has adequate Internal Financial Control System at all levels of Management and they are reviewed from time to time. The Internal Audit is carried out in house as well as by firms of Chartered Accountants. The Audit Committee of the Board looks into Auditors’ review which is deliberated upon and corrective action taken, wherever required.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company transferred such amount of dividend lying unpaid or unclaimed for a period of seven years from the date of such dividend became due for payment to Investor Education and Protection Fund (IEPF).

DEPOSITS

Your Company has not accepted any deposits from public in terms of provisions contained in Chapter V of the Companies Act, 2013.

PARTICULARS OF EMPLOYEES

The ratio of the remuneration of each Director to the median employees’ remuneration and other particulars or details of employees pursuant to Section 197(12) of the Companies Act, 2013 along with the names of top

10 employees in terms of remuneration drawn read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended are attached to this Report as Annexure VIII.

POLICY ON PREVENTION OF INSIDER TRADING

Your Company has adopted a code of conduct for Prevention of Insider Trading with a view to regulate trading in Equity Shares of the Company by the Directors and designated employees of the Company.

The said regulation is available at Company’s weblink www.goodricke.com /Corporate/ Prohibition -of-insider-trading.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Listing Regulations Management Discussion and Analysis Report is attached as Annexure I forming part of this report.

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

(a) Conservation of energy

(i) The steps taken or impact on conservation of energy

1) Online Conveyorisation of manufacturing Processes which resulted in reduction of idle running of machineries, less time consumption thereby saving energy and increasing efficiency.

2) Installation of Coal Ratio Controller to reduce consumption of Coal. Approx. 20% saving of coal achieved.

3) Installation of new 7 Pass High Efficiency Coal Heater in New VFBD to dry Teas. To reduce coal consumption.

4) Installation of low wattage LED Lights, to reduce power consumption.

5) Installation of Rain Water Harvesting System to reduce pumping of ground water. To reduce power consumption.

6) Installation of High Efficiency CTC Roller Sharpening Equipment to increase speed of sharpening and thus reduce power cost.

(ii) The steps taken by the company for utilizing alternate sources of energy

1) Proposed up gradation of 100 KW Hydel Project at Thurbo Tea Garden.

2) Use of Firewood in Boiler at Aibheel Tea Garden and Gandrapara Tea Garden to reduce consumption of Coal.

3) Installation of CPC Water Heating System at ITP. Successful installation and implementation of this solar power system helped the Company.

(iii) The capital investment on energy conservation equipments

NIL

(b) Technology absorption

(i) The efforts made towards technology absorption

1) Dependence on Hydel Project to run our Factories.

2) Dependence on Solar Water Heating system to reduce dependence on conventional Energy.

3) Usage of Low wattage LED lights in place of high wattage CFLs.

4) Conversion of Coal Firing system into Gas Firing System using LPG Cylinders in Darjeeling gardens.

5) Use of Hygienic Ucrete Flooring System .

6) Online new conveyorisation of flow processes.

7) Introduction of online Green Tea Panning system to produce Green Tea at Leesh River Tea Garden.

8) Introduction of Variable Frequency Drier System in Fluid Bed Driers to save power

9) Introduction of VFBD in Rotorvane

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution

1) Reduction of Power Cost in Thurbo Tea Garden by 25%.

2) Due to online conveyorisation, Factory achieved higher Worker’s outturn, which ultimately led to reduction in Cost of Production.

3) With the introduction of Boiler and Coal Ratio Controller, uniform temperature could be maintained which resulted in better quality of produce and reduction in coal consumption.

4) With the introduction of VFD in VFBD, the power cost has been reduced in firing of Teas.

5) In our prestigious Instant Tea Plant, using of Solar parabolic panels has helped us to cut down on Coal Consumption by approx. 25%

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year).

(a) the details of technology imported

(b) the year of import;

(c) whether the technology been fully absorbed

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof

N I L

(iv) the expenditure incurred on Research and Development

Rs. 13.50 million

(c) Foreign exchange earnings and Outgo

During the year, the foreign exchange outgo was Rs 30.16 Million and the foreign exchange earning was Rs. 1083.35 million.

MATERIAL CHANGES AND COMMITMENTS

Your Directors confirm that there are no material changes and commitments, affecting the financial position of the company which has occurred between the end of the financial year of the company and the date of this report. The Ministry of Corporate Affairs, Government of India vide its notification dated February 16, 2015 has issued the Companies (Indian Accounting Standard) Rules 2015 which states that Companies should implement Indian Accounting Standard (Ind AS). Every listed Company is required to comply barring some companies with Ind AS in the preparation of their financial statements for accounting period beginning on or after April 1, 2016 with the comparatives for the period ending March 31, 2016. In pursuance of the above notification, your Company though not mandatorily required has voluntarily adopted Ind AS with effect from April, 2016.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company.

Your Directors also thank the business associates, shareholders and other stakeholders of the Company for their continued support.

On behalf of the Board

A. N. Singh (DIN 00620929)

Managing Director & CEO

S. A. Walker (DIN 07225692)

S. Kaul (DIN 00150593)

K. Sinha (DIN 00123811)

Place : Kolkata P.K. Sen (DIN 00160160)

Dated : 23rd May, 2017 Directors

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