CCL Products (India) Ltd Directors Report.

Particulars 2017 - 2018 2016 - 2017
Revenue from operations 1,13,800 98,316
Profit for the year after meeting all expenses (before Interest, Depreciation & Tax) 24,374 23,334
Less:
Interest 783 1,117
Depreciation and other write offs 3,408 3325
Provision for Taxation 5,369 5,435
Net Profit 14,813 13,456

Your Company, along with its 100% subsidiaries as a Group, posted good financial results during the year under review. Turnover of the Group is Rs 1,13,800 Lakhs and the net profit of the Company is Rs 14,813 Lakhs.

Performance of the Company

Your directors submit their report for the financial year ended 31.03.2018:

Particulars 2017 - 2018 2016 - 2017
Revenue from operations 82,466 71,406
Profit for the year after meeting all expenses (before Interest, Depreciation & Tax) 16,867 17,061
Less:
Interest 620 683
Depreciation and other write offs 1122 1067
Provision for Taxation 5,349 5,431
Net Profit 9,776 9,897

Turnover of the Company is Rs 82,466 Lakhs and the net profit of the Company is Rs 9,776 Lakhs.

Transfer of amount to General reserve

No amount has been transferred to reserves during the year.

Dividend

Your Directors are pleased to recommend a dividend of Rs 2.50/- per equity share of Rs 2/- each for the year 2017-18 subject to the approval of shareholders. The Company has framed a Dividend Distribution Policy and the same is herewith annexed as ‘Annexure I to this report. The Dividend Distribution Policy is posted on the website of the Company and the web link is http://cclproducts.com/dividend-distribution-policv.pdf

Subsidiaries

Jayanti Pte limited (Singapore)

Jayanti Pte Limited is a wholly owned subsidiary of the Company incorporated in Singapore for the purpose of promoting instant coffee projects in various countries. This is only an investment Company, hence no operational performance is reported.

Grandsaugreen SA (Switzerland)

Grandsaugreen SA is a wholly owned subsidiary of Jayanti Pte Limited and step down subsidiary of the Company incorporated in Switzerland. This is an agglomeration and packing unit and a brief operational performance of the Company is as below:

(Rs in Lakhs)

Particulars 2017 - 2018 2016 - 2017
Revenue from operations 7,707 2,282
Profit for the year after meeting all expenses (before Interest, Depreciation & Tax) 569 (54)
Less:
Interest 7 14
Depreciation and other write offs 473 483
Provision for Taxation 26 21
Net Profit/Loss 63 (572)

Ngon Coffee Company Limited (Vietnam)

Ngon Coffee Company Limited is a wholly owned subsidiary, jointly owned by CCL and Jayanti Pte Limited. This is an instant coffee manufacturing unit and a brief operational performance is as below:

(Rs in Lakhs)

Particulars 2017 - 2018 2016 - 2017
Revenue from operations 29,707 26,353
Profit for the year after meeting all expenses (before Interest, Depreciation & Tax) 7,511 6,711
Less:
Interest 156 421
Depreciation and other write offs 1,800 1,774
Provision for Taxation - -
Net Profit/Loss 5,555 4,516

The Board has decided to wind up M/s. Jayanti Pte Ltd by transferring the shares held by it in M/s.Grandsaugreen SA and M/s. Ngon Coffee Company Limited, to the parent Company, there by making both the Companies directly owned by CCL as 100% Subsidiaries.

Continental Coffee Private limited

Continental Coffee Private Limited is a wholly owned subsidiary of the Company, which has been established with an objective of promoting instant coffee brands of the Company in the domestic market and a brief operational performance is as below:

(Rs in Lakhs)

Particulars 2017 - 2018 2016 - 2017
Revenue from operations 2367 277
Profit for the year after meeting all expenses (before Interest, Depreciation & Tax) (573) (371)
Less:
Interest

-

-
Depreciation and other write offs 14 -
Provision for Taxation

-

Net Profit/Loss (587) (371)

The statement containing the salient features of the financial statement of subsidiaries as per sub-section (3) of Section 129 of the Companies Act, 2013 in Form AOC-1 is herewith annexed as ‘Annexure II to this report.

Corporate Social Responsibility

The Company as part of its Corporate Social Responsibility (CSR) initiative, undertook many projects like promotion of education in rural areas, infrastructure and sanitation development, welfare of girl child, facilitating pure drinking water to the identified rural areas in and around the factory at Duggirala, Guntur District, Andhra Pradesh and also rural women empowerment and rural youth skill development programmes in rural areas around Hyderabad.

The Annual Report on CSR activities is annexed herewith as ‘Annexure III to this report. The CSR Policy is posted on the website of the Company and the web link is http://cclproducts.com/csr-policv.pdf

Internal Control Systems & their adequacy

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

Statutory Auditors

The Shareholders in their meeting held on 11th July, 2017 approved the appointment of M/s. Ramanatham & Rao, Chartered Accountants, Hyderabad, as the Statutory Auditors of the Company, to hold office till the conclusion of 61st Annual General Meeting.

Internal Auditors

The Board of Directors based on the recommendation of the Audit Committee have re-appointed M/s. Ramesh & Co., Chartered Accountants, Hyderabad, as the Internal Auditors of your Company. The Internal Auditors are submitting their reports on quarterly basis.

Cost Auditors

In accordance with Section 148(3) and other applicable provisions, if any, of the Companies Act, 2013 and The Companies (Audit and Auditors) Rules, 2014 the Audit Committee has recommended and the Board of Directors had appointed M/s. Kapardi & Associates, Cost Accountants, Hyderabad, being eligible and having sought re-appointment, as Cost Auditors of the Company, to carry out the cost audit of the products manufactured by the Company during the financial year 2018-19 on a remuneration of 1,50,000/-. The remuneration payable to the cost auditor is required to be placed before the Members in the general meeting for their ratification. Accordingly, a resolution seeking members ratification for the remuneration payable to M/s. Kapardi & Associates, Cost Accountants, is included in the Notice convening the Annual General Meeting.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. P.S.Rao & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as ‘Annexure IV to this report.

Directors

The Board of Directors have appointed Mr. Kode Durga Prasad, IPS (Retd.) as an Additional Director of the Company who holds office till the ensuing Annual General Meeting. The Board, based on the recommendation of Nomination and Remuneration Committee considered the appointment of Mr. Kode Durga Prasad as an

Independent Director subject to approval of shareholders. Accordingly a resolution seeking approval of Shareholders for his appointment as an Independent Director for a period of five years is included at Item No.5 of the Notice convening the Annual General Meeting.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Ms. Kulsoom Noor Saifullah and Dr. Lanka Krishnanand, Directors of the Company retire by rotation and being eligible, have offered themselves for re-appointment.

All the Independent Directors have given declarations stating that they meet the criteria of independence as per the provisions of Section 149 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Meetings of the Board

Four meetings of the Board of Directors were held during the year. The details of the Board and Committee meetings and Independent Directors meeting are given in the Corporate Governance Report which form part of this Annual Report.

Audit Committee

The Board has constituted Audit Committee as per the provisions of Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The composition, attendance, powers and role of the Audit Committee are included in Corporate Governance Report. All the recommendation made by the Audit Committee were accepted by the Board of Directors.

Policy on Directors Appointment and Remuneration and other matters

(a) Procedure for Nomination and Appointment of Directors:

The Nomination and Remuneration Committee has been formed pursuant to and in compliance with Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and pursuant to Section 178 of the Companies Act, 2013. The main object of this Committee is to identify persons who are qualified to become directors and who may be appointed in senior management of the Company, recommend to the Board their appointment and removal and shall carry out evaluation of every Directors performance, recommend the remuneration package of both the Executive and the Non-Executive Directors on the Board and also the remuneration of Senior Management, one level below the Board. The Committee reviews the remuneration package payable to Executive Director(s) and recommends to the Board the same and acts in terms of reference of the Board from time to time.

On the recommendation of the Nomination and Remuneration Committee, the Board has adopted and framed a Remuneration Policy for the Directors, Key Managerial Personnel and other employees pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations.

The remuneration determined for Executive/Independent Directors is subject to the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors. The Non-Executive Directors are compensated by way of profit sharing Commission and the Non-Executive Directors are entitled to sitting fees for the Board/Committee Meetings. The remuneration paid to Directors, Key Managerial Personnel and all other employees is in accordance with the Remuneration Policy of the Company.

The Nomination and Remuneration Policy and other matters provided in Section 178(3) of the Act and Regulation 19 of SEBI Listing Regulations have been disclosed in the Corporate Governance Report, which forms part of this Report.

(b) Familiarisation/Orientation program for independent Directors:

A formal familiarization programme was conducted about the amendments in the Companies Act, Rules prescribed thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and all other applicable laws of the Company.

It is the general practice of the Company to notify the changes in all the applicable laws from time to time in every Board Meeting conducted.

The details of such familiarization programmes for Independent Directors are posted on the website of the Company and web link is http://cclproducts.com/familiarization-programme-for-independent-directors.pdf

Annual Evaluation of Board Performance and Performance of its Committees and of Directors

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit and other Committees.

A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

Particulars of Loans, Guarantees and investments

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

Fixed Deposits

Your Company has not accepted any fixed deposits and as such no principal or interest was outstanding as on the date of the Balance sheet.

Capex

Your company has spent the following amounts towards capex during this financial year:

1. At Duggirala plant for Civil works and line balancing of plant & machinery Rs 23 crores

2. At SEZ in Kuvakolli, Chittoor District for establishment of a new freeze dried coffee plant Rs 198 crores

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, your Directors confirm that to the best of their knowledge and belief and according to the information and explanation obtained by them,

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) Such accounting policies as mentioned in the notes to the financial statements have been selected and applied consistently and judgments and estimates that are reasonable and prudent made so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2017-18 and of the profit or loss 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 annual accounts for the year 2017-18 have been prepared on a going concern basis.

v) That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Vigil Mechanism / Whistle Blower Policy

The Company has a Whistle Blower Policy framed to deal with instance of fraud and mismanagement if any, in the Group. The details of the Policy are explained in the Corporate Governance Report and also posted on the website of the Company and the web link is http://cclproducts.com/whistle-blower-policy.pdf

Risk Management

The Company has constituted a Risk Management Committee and formulated a policy on the Risk Management. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. The Risk Management Policy of the Company is posted on the website of the Company and the web link is http://cclproducts.com/risk-management-policy.pdf

Related Party Transactions

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All related party transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the transactions which are of a foreseen and repetitive nature. The Company has developed a Policy on Related Party Transactions for the purpose of identification and monitoring of such transactions.

None of the transactions with related parties falls under the scope of section 188(1) of the Companies Act, 2013. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in ‘Annexure V in Form AOC-2 and forms part of this report.

The policy on Related Party Transactions as approved by the Board is uploaded on the website of the Company and the web link is http://cclproducts.com/policv-on-related-partv-transactions.pdf.

Policy on Material Subsidiaries

The Policy on Material Subsidiaries as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as approved by the Board is uploaded on the website of the Company and the web link is http://cclproducts . com/policy-on-material-subsidiary.pdf

Extract of Annual return

Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and

Administration) Rules, 2014, the details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as ‘Annexure VI to this report.

Management Discussion & Analysis

Pursuant to the provisions of Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a report on Management Discussion & Analysis is herewith annexed as "Annexure VII" to this report.

Particulars of Employees

The information required pursuant to Section 197 of the Companies Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is herewith annexed as "Annexure VIII" to this report.

Business Responsibility Report

A Business Responsibility Report as per Regulation 34 of the Listing Regulations, detailing the various initiatives taken by the Company on the environmental, social and governance front forms an integral part of this Annual Report.

Corporate Governance

The Company has been making every endeavor to bring more transparency in the conduct of its business. As per the requirements of the per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a compliance report on Corporate Governance for the year 2017-18 and a Certificate from the Secretarial Auditors of the Company are furnished, which form part of this Annual Report.

Human Resources

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees.

Policy on Prevention, Prohibition and redressal of Sexual Harassment at Work place

Your Company strongly supports the rights of all its employees to work in an environment, free from all forms of harassment. The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The policy aims to provide protection to Employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where Employees feel secure. The Company has also constituted an Internal Committee, known as Anti Sexual Harassment Committee to address the concerns and complaints of sexual harassment and to recommend appropriate action.

The Company has not received any complaint on sexual harassment during the year.

Energy conservation, technology absorption and foreign exchange earnings and outgo

The information on conservation of energy, technology absorption and 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, is annexed herewith as ‘Annexure IX to this report.

Significant and material orders passed by the regulators or courts

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

Material Changes and Commitments

There were no material changes and commitments affecting the financial position of the Company that have occurred between the end of the Financial Year 2017-18 of the Company and the date of the report.

Acknowledgments

Your Directors take this opportunity to express their sincere appreciation to the shareholders, customers, bankers, suppliers and other business associates for the excellent support and cooperation extended by them.

Your Directors gratefully acknowledge the ongoing co-operation and support provided by the Central and State Governments, Stock Exchanges, SEBI, RBI and other Regulatory Bodies.

On behalf of the Board
Place: Hyderabad Sd/-
Date: 21st May, 2018 Challa Rajendra Prasad
Executive Chairman