DIRECTORS' REPORT Dear Members, The Directors of the Company present their 33rd Annual Report and Company's Audited Accounts for the year ended 31st March,2016. RESERVES & SURPLUS The Balance in Reserves & Surplus stands at Rs. 9921 Lacs (Previous year Rs. 13,335 Lacs]. The Company has transferred Rs. 100 Lacs to General Reserve. DIVIDEND Your Directors are pleased to recommend a payment of Dividend of Rs. 0.50 per Equity Share on face value of Rs. 10/- each (Previous year Rs. 0.50 per Equity Share] for the year ended 31st March, 2016 amounting to Rs. 54 lacs (inclusive of tax of Rs. 9 lacs] subject to the approval of members at the ensuing Annual General Meeting. OPERATIONS TEA DIVISION During the year under review, your Company achieved a production of 22.17 lac kgs of Black Tea as compared to 20.59 lac kgs in the previous year. The production of own green tea leaves was higher by 9.96%, the Company procured more outsourced leaves than last year by 2.40%. The performance of the Tea Division in the current year is far better than expected due to increase in production and higher realization from sale of tea. The average sale price for CTC tea in auction centres was higher as compared to previous year and accordingly the average realisation of your tea estate was also higher by about Rs 15/- per kg due to production of quality tea which was in good demand in the market and fetched attractive prices. There has been an all round increase in wages, power and fuel and other input costs. The current season has seen a mixed weather condition as a result of which the crop intake is similar to that of last year. However of late there has been improvement in weather condition which has started resulting in good crop. Further, there has been increase in wage and salary cost following industry vide agreement with unions. Tea market is expected to remain subdued due to good crop in India and globally. Good quality CTC tea being in short supply will continue to attract premium and considering the above scenario, the performance of tea division is expected to be satisfactory. TEXTILE DIVISION PERFORMANCE AND REVIEW OF OPERATION: During the year under review, in spite of better production and other operational parameters, the Textile Division has incurred loss before tax of Rs. 893 lakhs against Rs. 680 lakhs in the previous year. The Division has achieved turnover of Rs. 16802 lakhs against Rs. 17320 lakhs in the previous year. Continued recession in textile industry has adversely affected both top and bottom lines of the Division. The demand from domestic market as well as from overseas market was very sluggish. Cotton yarn export from India (particularly to China] has registered a negative growth consecutively in second year. As a result, there was a pressure on selling prices and margins of cotton yarn. Cotton prices were more or less stable throughout the year and were lower than the previous year, but reduction in selling prices of cotton yarn was much higher than reduction in cotton prices. With a view to improve the profitability of the Division, the Division has scrapped its loss making synthetic (polyester/cotton blended] yarn section comprising of 7104 spindles with effect from 1.01.2016. The Division is concentrating on increasing production of fabric wherein margins are better. The Division is making all efforts to optimize various costs to improve profitability. Fire broke out in the Cotton Godown of Textile Division on 07.11.2015 and 26.01.2016. The stocks were adequately insured. The Textile division had filed insurance claim of Rs. 73.52 lacs with the Insurance Company. Net loss due to fire is estimated to be Rs. 10.60 lacs mainly because of deduction on account of 'Excess Clause" as per terms of policy. MODERNISATION AND PROSPECTS During the year under review, the Division has added one new comber and replaced an old lap former with a new high speed lap former in its spinning department. This would result in lower feed on combers leading to reduction in wastage, improvement in quality of yarn and consequently reduction of cost of production of yarn. For the textile industry, the global focus is shifting from China to India due to cost and stability factors. The government's positive steps are expected to help this shift. The consumption of the textile products in the domestic market is expected to increase in the years to come. The Indian economy is expected to grow by 7-8% in coming few years. The world economy is also on revival path. In view of this, the Textile Division is expected to give better performance in coming years. RECENT DEVELOPMENTS & FUTURE PLANS Company's Property at Dholka, Gujarat The land development work and provision of basic amenities is in progress and is expected to be completed by September 2016. In all, 20 plots would be available for sale and would be floated in the market shortly. Sale proceeds there from are expected in the next two financial years. Company's Land at Kolkata The Company was exploring the possibility of developing its property at Kolkata. However the plan has been dropped due to regulatory issues. It cannot be commercially exploited because of the stipulations imposed by Ministry of Defence. Accordingly the Revaluation Reserve is being written back to reflect the Market value of land on "as is where is basis." MATERIAL CHANGES OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR UNDER REVIEW AND THE DATE OF THE REPORT There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of the report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report for the year under review, as stipulated under SEBI (LODR] Regulations, 2015 with the Stock Exchange, is set out in the annexure forming part of the Annual Report marked as Annexure - "A". CORPORATE GOVERNANCE REPORT The Report on Corporate Governance in accordance with the SEBI (LODR) Regulations, 2015 with the Stock Exchange, approved by the Board together with a Certificate from Statutory Auditors M/s Jain & Co., Chartered Accountants, regarding compliance with the conditions of Corporate Governance are set out in the annexure forming part of the Annual Report marked as Annexure - "B". Your Company has taken adequate steps for strict compliance with Corporate Governance guidelines, as amended from time to time. EXTRACT OF THE ANNUAL RETURN Extract of the Annual Return in Form No. MGT-9 is attached pursuant to Section 134(3) of the Companies Act, 2013 as Annexure - "C". BOARD MEETINGS During the year under review 4 meetings of the Board of Directors were held on 8th May, 2015, 8th August, 2015, 7th November, 2015 and 6th February, 2016. Apart from meeting of the Board of Directors different committees met several times during financial year ended 31st March, 2016. DIRECTORS' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134(3)(c) OF THE COMPANIES ACT, 2013 The Directors hereby confirm that - a) in the preparation of the annual accounts for the Financial Year ended 31st March, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) they had selected such accounting policies and applied them consistently and made judgements and estimates 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 and loss of the Company for that period; c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) they had prepared the annual accounts on a going concern basis; e) they 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) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION BY INDEPENDENT DIRECTORS Independent Directors namely, Mr. Golam Momen (DIN: 00402662), Mr. Dhirendra Kumar (DIN: 00153773) and Mr. Abhijit Datta (DIN: 00790029) have given declarations confirming that they comply with the requirements of Section 149(6) of the Companies Act, 2013. DIRECTORS Mrs. Shubha Kanoria (DIN : 00036489) retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself, for re-appointment in compliance with the provisions of the Companies Act, 2013. Subject to the approval of the members in the general meeting, the Board of Directors on 20th May, 2016 have proposed to re-appoint Mr. Adarsh Kanoria (DIN : 00027290) as Managing Director and Mr. Kailash Prasad Khandelwal (DIN : 00914834) as the Whole-time Director of the Company w.e.f. 1st January, 2017 for a period of 3 years on such terms as set out in the Notice dated 20th May, 2016. Mr. Ashutosh Bhagat (DIN : 00059842) and Mr. Navin Nayar (DIN : 00136057) Directors of the Company, are being proposed to be appointed as Independent Directors for five consecutive years as per the provisions of Section 149 and other applicable provisions of Companies Act, 2013. The Company has received requisite notices in writing from them proposing their appointment as Independent Directors. The Board recommends their appointment as Independent Directors. Brief resume of the Directors , nature of their expertise in specific functional areas and details of their directorship and membership/chairmanship of Board/ Committees, as stipulated under SEBI (LODR] Regulations, 2015 has been provided in the Annexure to the Notice of the 33rd AGM of the Company. KEY MANAGERIAL PERSONNELS The following persons are the Key Managerial Personnels (KMP] of the Company in compliance with the provisions of the Companies Act, 2013: a] Mr. Adarsh Kanoria, (DIN: 00027290], Managing Director b] Mr. Kailash Prasad Khandelwal, (DIN: 00914834], Wholetime Director c] Mr. Atul Doshi, Chief Financial Officer d] Mrs. Sunita Shah, Company Secretary Remuneration and other details of the KMP's for the year ended 31st March, 2016 are mentioned in the Extracts of the Annual Return attached as Annexure 'C' and forms part of this Report of the Directors. NOMINATION & REMUNERATION POLICY Pursuant to Section 178(3] of the Companies Act, 2013, Nomination and Remuneration Committee formulated the criteria for determining qualification, positive attributes and independence of a director. The Committee has also recommended to the Board a policy relating to the remuneration for directors, key managerial personnel and other employees. The details of the Nomination and Remuneration Policy is given in the Corporate Governance Report. BOARD EVALUATION The Companies Act, 2013 states that formal evaluation needs to be done by the Board of its own performance and that of its Committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. SEBI (LODR] Regulations, 2015 vide Regulation 25(3] requires a meeting of Independent Directors to evaluate the performance of the Non Independent Directors. Accordingly, a meeting of Independent Directors was held on 6th February, 2016 wherein the performance of the non-independent directors, including the Chairman was evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Corporate Governance Report section in this Annual Report. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee. PUBLIC DEPOSITS During the year 2015 - 2016, your Company did not accept/renew any deposits and as such, no amount of principal or interest was outstanding as on 31st March, 2016. AUDITORS AND AUDITORS' REPORT M/s. Jain & Co., (Firm Regn. No. 302023E] Chartered Accountants, were appointed as Statutory Auditors of the Company, to hold office for a period of 3 years from the conclusion of the 31st Annual General Meeting till the conclusion of the 34th Annual General Meeting of the Company. In terms of the first proviso to Section 139(1] of the Companies Act, 2013 the matter relating to appointment of M/s. Jain & Co., Statutory Auditors of the Company has been placed for ratification by members. The Company has received letter from the Auditors to the effect that their re-appointment, is within the prescribed limits under the Companies Act, 2013 and that they are not disqualified. The Board recommends the ratification of their appointment. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. There is no qualification, adverse remarks or disclaimer made by the Statutory Auditors. SECRETARIAL AUDIT REPORT A report made by Mr. H.M. Choraria, (CP No. 1499, Membership No. FCS 2398] of M/s H. M. Choraria & Co. Practising Company Secretaries of 14/2, Old China Bazar Street, 4th Floor, Room No. 401, Kolkata 700 001, pursuant to Section 204(1] of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014 is attached as Annexure - "D". The report is free of any qualification, adverse remarks or disclaimer. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loans or provided any guarantees under Section 186(1] of the Companies Act, 2013. However, the details of Investments under Section 186(1] of the Companies Act, 2013 have been provided at Note No. 15 of the Financial Statements for the year ended 31st March, 2016. PARTICULARS OF RELATED PARTY TRANSACTIONS During the year there was no material related party transaction with promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company. The Company has formulated a policy on Related Party Transactions. The link of the policy is <http://bengaltea.com/pdf/BTFL_RELATED> PARTY TRANSACTION POLICY_8.112014.pdf. All related party transactions entered during the financial year were in ordinary course of the business and on arm's length basis which have been disclosed in the Notes to the Accounts. No material related party transactions were entered during the Financial Year 2015-16 byyour Company. Accordingly, the disclosure of related party transactions as required under Section 134(3] of the Companies Act, 2013 in Form AOC 2 is not applicable to your Company. COST AUDIT In accordance with the provisions of Section 148 of the Companies Act, 2013 and the Companies (Audit & Auditors] Rules, 2014 the Company is required to appoint a Cost Auditor to audit the cost records of the applicable products of the Company relating to the Tea and Textile Division. PARTICULARS OF COST AUDITORS APPOINTED FOR THE FINANCIAL YEAR 2015-16 The Company has appointed the following Cost Auditors for Tea &Textile Division for the year ended 31st March, 2016: Details of Cost :Auditor Name: N.D. Birla & Co. Address: A-3, Nirant Society, Opposite Town Hall, Near Karnavati Hospital, Ellisbridge, Ahmedabad Gujarat- 380006 Registration No. allotted by ICWAI: 000028 Unit Audited :Textile Division Bengal Tea & Fabrics Ltd. Asarwa Mills – Ahmedabad Details of CostAuditor : Name: D. Radhakrishnan & Co. Address: 11A, Dover Lane, Flat B1/34, Kolkata- 700029 Registration No. allotted by ICWAI: 000018 Unit Audited :Tea Division Bengal Tea & Fabrics Ltd. Ananda Tea Estate - Assam PARTICULARS OF EMPLOYEES The Company had no employee who is in receipt of more than Rs. 60 lacs per annum during the year ended 31st March, 2016 or of more than Rs. 5 Lacs per month during any part thereof, so no information under Rule 5(2] of the Companies (Appointment and Remuneration ofManagerial Personnel] Rules, 2014 is required to be given. However, the information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1] of the Companies (Appointment and Remuneration of Managerial Personnel] Rules, 2014 has been annexed as Annexure - "E". CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as per Section 134 (3](m] of the Companies Act, 2013 read with Rule 8 (3] of Companies (Accounts] Rules, 2014, is set out in the annexure forming part of the Annual Report marked as Annexure - "F". RISK MANAGEMENT POLICY As per requirement of Section 134(3](n] of the Companies Act, 2013 the Board ofDirectors in its meeting held on 10th May, 2014 has approved the Risk Management Policy. As of now the Directors do not envisage any element of risk which may threaten the existence of the Company. INTERNAL CONTROL SYSTEMS Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board and suitable steps have been taken to strengthen the controls. CORPORATE SOCIAL RESPONSIBILITY (CSR) Pursuant to Section 135 of the Companies Act, 2013, the Company vide its Board Meeting dated 21st June, 2014 has formed a CSR Committee and formulated a CSR Policy vide Board Meeting dated 9th August, 2014. The details of the same together with the CSR expenditure have been annexed in the prescribed format as Annexure - "G". TRANSFER OF AMOUNTS TO THE INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of Section 124 of the Companies Act, 2013, the declared dividends which remain unpaid or unclaimed for a period of seven years have been duly transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government under Section 125 of the said Act. Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 8th August, 2015 (date of last Annual General Meeting) on the Company's website (www.bengaltea.com ) and also on the Ministry of Corporate Affairs' website. The dividend for the undernoted years, if unclaimed for seven years, will be transferred by the Company to IEPF: NAME OF COMPANIES WHICH HAVE CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR None DISCLOSURE UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place Internal Complaints Committee for the Registered Office, Tea Division and Textile Division. The following is the summary of Sexual Harassment complaints received and disposed off during the year 2015-16. No. of Complaints received : NIL No. of Complaints Disposed off : NIL ACKNOWLEDGEMENT The Directors place on record their sincere appreciation for the assistance and co-operation extended by Banks, its employees, its investors and all other associates and look forward to continue fruitful association with all business partners ofthe Company. For and on behalf of the Board Bengal Tea & Fabrics Ltd. ADARSH KANORIA Managing Director DIN : 00027290 KAILASH PRASAD KHANDELWAL Whole-time Director DIN : 00914834 Place: Kolkata Dated : 20th May, 2016 |