Dhunseri Tea & Industries Ltd Directors Report.

We have pleasure in presenting the 22nd Annual Report together with the Financial Statements of the Company for the year ended 31st March, 2019.

1. Financial Results : (र.in lakhs)
Particulars

Standalone

Consolidated

Accounting year ended

Accounting year ended

31.03.2019 31.03.2018 31.03.2019 31.03.2018
1 Income
a Revenue from Operations 18,081.27 17,701.63 32,428.83 29,605.93
b Other Income 280.22 186.31 477.69 241.83
Total Income from Operations 18,361.49 17,887.94 32,906.52 29,847.76
2 Expenses
a Cost of Materials Consumed # 4,151.02 3540.84 4,362.94 3,698.88
b Changes in Inventories of finished goods (191.53) 126.22 (507.06) (69.86)
c Changes in Inventories of biological assets 9.86 (12.62) (431.44) 34.69
d Employee benefits expense 7,143.52 6270.31 8,610.68 7667.14
e Finance costs 286.04 446.76 727.01 899.73
f Depreciation and amortization expense 750.04 743.90 1,866.15 1744.99
g Other expenses 5,938.32 6111.45 14,124.06 13,055.79
Total expenses 18,087.27 17226.86 28,752.34 27,031.36
3 Profit / (Loss) before tax (1-2) 274.22 661.08 4,154.19 2,816.40
Tax expense
- Current Tax 145.53 130.06 813.23 486.03
- Deferred Tax (7.07) (292.37) 530.59 (570.03)
4 Tax expense (credit) 138.46 (162.31) 1,343.82 (84.00)
5 Profit / (Loss) for the period (3-4) 135.76 823.39 2,810.36 2,900.40
Items that will not be reclassified to profit or loss
Re measurement of post employment benefit obligations (113.62) 131.02 (113.62) 131.02
Fair valuation of equity investments 245.41 850.07 245.41 850.07
Income Tax relating to these items (108.21) (139.98) (108.21) (139.98)
Items that will be reclassified to profit or loss
Exchange differences on translation of foreign operations - - 1469.88 (1167.09)
6 Other comprehensive income for the year (net of tax) 23.58 841.11 1,493.46 (325.98)
7 Total comprehensive income for the period 159.34 1,664.50 4,303.82 2,574.42
8 Paid-up equity share capital 700.50 700.50 700.50 700.50
(Face value Rs.10/- each)
9 Earnings per share (of Rs 10/- each)
(a) Basic (Rs) 1.94 11.75 40.12 41.40
(b) Diluted (Rs) 1.94 11.75 40.12 41.40

# Cost of materials consumed represents Green Leaf purchased from third parties.

2. Dividend:

The Directors recommend a dividend of र.5.00 per equity share i.e. @ 50 % for the financial year ended 31st March, 2019 subject to approval of the shareholders at the ensuing Annual General Meeting. The dividend on equity shares, if approved by the members would involve a cash outflow of र. 422.24. lakhs including dividend tax.

3. Transfer to reserves:

The directors have decided to retain the entire amount of र. 44,417.16 lakhs in the retained earnings.

4. Operations:

The total tea manufacturing in respect of the Indian operations for the year under review was 10.33 mn kg as against 10.07 mn kg in the previous year and the total sales were 10.18 mn kg as against 10.12 mn kg in the previous year. The total production and sale from the Indian operations during the year were comparatively more in comparison to the previous year and the average realization was almost similar to the previous year.

The total tea manufacturing in respect of the African operations for the year under review was 9.52 mn kg as against 8.70 mn kg in the previous year and the total sales were 8.92 mn kg as against 8.52 mn kg in the previous year. The total production and sale for the African operations during the year were comparatively more in comparison to the previous year and the average realization was more by about 15% in comparison to the previous year.

The production of macadamia in terms of volume was about 0.41 mn kg as against 0.30 mn. Kg in previous year and the sales were 0.37 mn kg as against 0.28 mn kg in the previous year. The production, sales as well as the average realizations of macadamia were higher in comparison to the previous year.

5. Subsidiary Companies:

The Companys has six wholly owned subsidiaries as on March 31, 2019 :

i) Dhunseri Petrochem & Tea Pte Ltd. (DPTPL)

ii) Makandi Tea & Coffee Estates Ltd. (MTCEL)

iii) Kawalazi Estate Company Ltd. (KECL)

iv) A.M. Henderson & Sons Ltd. (AMHSL)

v) Chiwale Estate Management Services Ltd. (CEMSL)

vi) Dhunseri Mauritius Pte Ltd. (DMPL) The entire share capital of the subsidiary AMHSL & CEMSL are held by MTCEL and that of MTCEL, KECL and DMPL are held by DPTPL and that of DPTPL is held by the Company making them 100% wholly owned subsidiaries incorporated outside India.

There has been no material change in the nature of the business of the subsidiaries.

There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

Pursuant to provisions of Section 129(3) of the Act, a statement in Form AOC-1 containing the salient features of the financial statements of the Companys subsidiaries is attached to the financial statements of the Company. Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

6. Listing:

The equity shares of the Company are listed on BSE and NSE.

7. Directors Responsibility Statement:

Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same; (ii) that they have 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; (iii) that they have 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; (iv) that they have prepared the annual accounts on a ‘going concern basis.

(v) that they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively.

(vi) that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The work performed by the internal auditor, statutory auditor and secretarial auditor and the reviews performed by management and the audit committee, the board is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2018-19.

8. Directors & Key Managerial Personnel:

Mr. Chandra Kumar Dhanuka (DIN: 00005684) was appointed Managing Director of the Company w.e.f 9th September, 2014 and will be completing his five year term on 8th September, 2019. It is proposed to reappoint Mr. Chandra Kumar Dhanuka as Managing Director of the Company on revised terms for a period of five (5) years w.e.f. 9th September, 2019 subject to the approval from the members of the Company at the ensuing 22nd AGM.

Mr. Basudeo Beriwala (DIN: 00119319) an independent director had resigned on conclusion of the board meeting held on 21st May, 2018.

Prof. Ashoke Kumar Dutta (DIN: 00045170) was appointed as an Additional Director (designated as Non-executive Independent Director) of the Company at the Board Meeting held on 21st May, 2018 and subsequently at the 21st AGM held on 7th August, 2018 Prof. Dutta was appointed as an Independent Director of the Company for a consecutive period of five years w.e.f. 21st May, 2018.

Mr. Bharat Bajoria (DIN: 00109241) and Ms. Nandini Khaitan (DIN: 06941351) both Independent Directors of the Company will be completing their first term of five years of independent directorship on 7th September, 2019 and 8th September, 2019 respectively. It is proposed to reappoint them as Independent Directors of the Company for a second term of five consecutive years w.e.f 8th September, 2019 and 9th September, 2019 respectively subject to the approval from the members of the Company at the ensuing 22nd AGM. Section 149(13) states that the provisions of sub-section (6) and (7) of Section 152 in respect of retirement of directors by rotation shall not be applicable to independent directors. The Company has received declarations from the Independent Directors under Section 149(7) confirming that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013.

Mr. Mrigank Dhanuka (DIN: 00005666) , retires by rotation at the ensuing 22nd Annual General Meeting and being eligible offers himself for reappointment.

9. Number of Meetings of the Board:

The Board met four times during the financial year 2018-19. The details have been provided in the Corporate Governance Report in terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 which is annexed to this Report.

10. Board evaluation:

An annual performance evaluation of the Board as a whole and that of its various committees and that of the individual directors was undertaken during the year on the basis of the criteria such as the composition, structure, functioning, effectiveness of the Board, the Committee Meetings, the contribution and preparedness of individual directors to the board and committees etc after seeking inputs from all the directors.

In a separate meeting of the Independent Directors the performance of non-independent directors, the Chairman and the Board as a whole was evaluated.

11. Policy on directors appointment and remuneration and other details:

The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report.

12. Internal financial control systems and their adequacy:

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of the Corporate Governance Report.

13. Audit committee:

The details pertaining to composition of audit committee are included in the Corporate Governance Report.

14. Auditors:

M/s. Lovelock & Lewes, Chartered Accountants the retiring auditors will cease to be auditors of the Company on conclusion of this 22nd AGM.

Accordingly, the Board of Directors on the recommendation of the Audit Committee, after receipt of necessary consent vide letter dated 27th June, 2019 from M/s.S. R. Batliboi & Co. LLP, Chartered Accountants, (ICAI Firm Registration No.301003E/E300005) having their office at 22, Camac Street, 3rd Floor, Block B, Kolkata-700016 propose to appoint M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company for a period of five (5) years from the conclusion of this 22nd AGM until the conclusion of the 27th AGM of the Company to be held in the year 2024 on such remuneration as may be determined in consultation with the auditors.

Your directors recommend the said appointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants as the Statutory Auditors of the Company.

15. Auditors Report and Secretarial Auditors Report

The auditors report and secretarial auditors report are self-explanatory and does not contain any qualifications, reservations or adverse remarks and have been annexed to the report.

16. Risk Management

Although the requirement of Risk Management Committee is not mandatory for your Company. the management has to constantly monitor the risks and functions and systematically address them through mitigating actions on a continuous basis. The audit committee has additional oversight in the area of financial risks and controls.

The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of the Corporate Governance Report.

17. Particulars of loans, guarantees and investments:

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

18. Transactions with Related Parties:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

Your Directors draw attention of the members to Note No. 40 to the financial statement which sets out related party disclosures.

19. Management Discussion and Analysis Report

The Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 , forms part of the Corporate Governance Report.

20. Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the Companys website : www.dhunseritea.com.

21. Extract of Annual Return

As stipulated under Section 92(3) of the Act, an extract of the annual return is given in Annexure II in the prescribed Form MGT-9, which forms part of this report.

22. Particulars of employees

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Non-executive Directors Remuneration for the Year ended 31.03.2019 (र.) Ratio to median remuneration
1. Mr. R. K. Sharma 30,000 0.41 : 1
2. Mr. Bharat Bajoria 65,000 0.89 : 1
3. Mr. Basudeo Beriwala (till 21.05.2018) 25,000 *
4. Ms. Nandini Khaitan 30,000 0.41 : 1
5. Mr. Vivek Goenka 80,000 1.10 : 1
6. Mr. Ashoke Kumar Dutta (from 21.05.2018) 15,000 *
Executive Directors
1. Mr. C. K. Dhanuka 24,84,009 34.03 : 1
2. Mr. Mrigank Dhanuka 18,28,520 25.05 : 1

* Since this information is for part of the year, the same is not comparable.

The median remuneration of employees for financial year 2018-19 is र.0.73 lacs. b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
1 Mr. C. K. Dhanuka, Managing Director -15.44
2. Mr. Mrigank Dhanuka, Executive Director #
3 Mr. Bharat Bajoria No change
4. Mr. Basudeo Beriwala (till 21.05.2018) *
5. Ms. Nandini Khaitan No change
6. Mr. R. K. Sharma No change
7 Mr. Vivek Goenka No change
8 Mr. Ashoke Kumar Dutta (from 21.05.2018) *
9. Mr. P. C. Dhandhania, Chief Executive Officer 0.73
10 Mr. Vikash Jain #
11 Mr. R. Mahadevan 0.62

* Since this information is for part of the year, the same is not comparable.

# During previous year the remuneration paid to the Director and to the KMP were for part of the year. c. The percentage increase in the median remuneration of employees in the financial year:19.67%. d. The number of permanent employees on the rolls of Company: 4973 e. Average percentile increase / decrease already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase / decrease in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentile increase / decrease already made in the salaries of employees other than the managerial personnel in the financial year 2018-19 was 15.01% and in the case of managerial remuneration the increase / decrease was -15.45 %. The remuneration payable to executive directors has variable component which is dependent on the profit of the Company and other employees remuneration has fixed pay which depends on his/ her performance. f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms remuneration is as per the remuneration policy of the Company. g. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is set out in Annexure IV forming part of this report.

23. Disclosure requirements:

As stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the corporate governance report along with the auditors certificate thereon and management discussion and analysis are attached, which form part of this report.

i) The code of conduct for the Board of Directors and the senior management adopted by the Company is available on the Companys website (http://dhunseritea.com/ investors-investors/code-of-conduct/) ii) Details of the familiarization programme of the independent directors are available on the Companys website (http://dhunseritea.com/wp-content/ uploads/ 2015/ 06/Familiarisation-Programme-of-Independent-Directors.pdf). iii) Policy for determining material subsidiaries of the Company is available on the Company s website (http://dhunseritea.com/ wp-content/ uploads/ 2015/03/policy-for-determining-material-subsidiary.pdf). iv) Policy on dealing with related party transactions is available on the Companys website (http:// dhunseritea.com/wp-content/uploads / 2015 /04/ Related-party-transaction-policy.pdf).

v) The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 and the said policy is available on the Companys website (http://dhunseritea.com/wp-content/uploads/2015/03/vigil-mechanism.pdf).

24. Deposits from public:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

25. State of Companys affairs:

The present state of the Companys affairs is progressive enough viz-a-viz the industry and there is no any development which could result in an adverse situation for the Company in the near future. There is neither any change in the nature of business of the Company nor any significant and material orders was passed by any regulator or court or tribunal impacting the going concern status affecting the Companys operation in future.

26. Reporting of frauds by Auditors:

During the year under review, the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013 any instances of fraud committed against the Company by its officers or employees, the details of which need to be mentioned in the Boards report.

27. Secretarial Standards:

The Company complies with all applicable secretarial standards.

28. Material changes and commitments, if any, affecting the financial position of the Company:

The Company has entered into a non-binding term sheet to sell its branded tea business presently undertaken under the brands "LALGHORA" and "KALAGHORA" for an aggregate consideration of Rs 101 crore to Tata Global Beverages Limited. The proposed sale shall be subject to due-diligence by the buyer including definitive binding agreements and applicable statutory and regulatory approvals.

29. The particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure III which forms part of this report.

30. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company has set up Internal Complaints Committee (ICC) under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were neither any outstanding complaints in the beginning / end of the year nor any complaints were received and /or disposed off during 2018-19. The Committee met once during the year.

31. Green Initiatives:

As part of our green initiative, the electronic copies of this Annual Report including the Notice of the 22nd AGM are sent to all members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of this Annual Report including the Notice of the 22nd AGM are sent by permitted mode.

The Company is providing e-voting facility to all its members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014. The instructions for e-voting is provided in Note 10 annexed to the Notice.

32. Acknowledgement:

Your Directors take this opportunity to express their grateful appreciation for the excellent assistance and cooperation received from the banks and other authorities. Your Directors also thank the employees of the Company for their valuable service and support during the year. Your Directors also gratefully acknowledge with thanks the cooperation and support received from the shareholders of the Company.

For and on behalf of the Board of Directors
Kolkata C.K.DHANUKA
1st July, 2019 Chairman