McLeod Russel India : Annual Report 2021 - 22

ANNUAL REPORT

2021 - 22

ANNUAL REPORT 2021-22

CORPORATE INFORMATION

BOARD OF DIRECTORS	Auditors
Mr. Aditya Khaitan	Lodha & Co.
Chairman & Managing Director	14, Government Place East
	Kolkata 700069
Mr. Amritanshu Khaitan
Non - Executive Director	Solicitors
	Khaitan & Co. LLP
Independent Directors
Mrs. Arundhuti Dhar	REGISTERED OFFICE
Mr. Suman Bhowmik	Four Mangoe Lane
Mr. Raj Vardhan	Surendra Mohan Ghosh Sarani
	Kolkata 700001
Wholetime Director	Corporate Identity Number
Mr. Azam Monem	CIN: L51109WB1998PLC087076
	Phone No [phone]/2243-5391/2248-9434/35
Chief Financial Officer	Fax: [phone]-6265
Mr. Pradip Bhar	Email: [e-mail]
	Website : www.mcleodrussel.com
Company Secretary
Mr. Alok Kumar Samant	BANKERS
	Indian Bank (erstwhile Allahabad Bank)
BOARD COMMITTEES	RBL Bank Limited
Audit Committee	Axis Bank Limited
Mrs. Arundhuti Dhar	HDFC Bank Limited
Mr. Suman Bhowmik	ICICI Bank Limited
Mr. Raj Vardhan	State Bank of India
Mr. Aditya Khaitan	UCO Bank
	Punjab National Bank (erstwhile United Bank of India)
Nomination & Remuneration Committee	Yes Bank Limited
Mrs. Arundhuti Dhar	IndusInd Bank
Mr. Suman Bhowmik
Mr. Amritanshu Khaitan	REGISTRAR
	Maheshwari Datamatics Private Limited
Stakeholders' Relationship Committee	23, R. N. Mukherjee Road
Mrs. Arundhuti Dhar	5th Floor, Kolkata 700001
Mr. Suman Bhowmik	Tel: [phone]-5029
Mr. Azam Monem	[phone]
	Fax: [phone]
Corporate Social Responsibility Committee	Email: [e-mail]
Mrs. Arundhuti Dhar
Mr. Aditya Khaitan
Mr. Azam Monem

ANNUAL REPORT 2021-22

CONTENTS

STATUTORY REPORT
Particulars	Page No.
Report of Directors ----------------------------------------------------------------------------------------------------------------------------	3
Management Discussion and Analysis --------------------------------------------------------------------------------------------------	13
Corporate Governance Report -------------------------------------------------------------------------------------------------------------	16
Other Annexures-------------------------------------------------------------------------------------------------------------------------------	32 - 49
FINANCIAL STATEMENTS
Standalone Financials ------------------------------------------------------------------------------------------------------------------------	50 - 139
Consolidated Financials ---------------------------------------------------------------------------------------------------------------------	140 - 230
Details of Subsidaries ------------------------------------------------------------------------------------------------------------------------	231 - 232

ANNUAL REPORT 2021-22

REPORT OF THE DIRECTORS

For the year ended 31st March 2022

Your Directors have pleasure in presenting the Twenty-Fourth Annual Report with the Audited Financial Statements of your Company, for the financial year ended 31st March 2022.

REVIEW OF PERFORMANCE
The financial results of the Company for the year ended 31st March 2022 are summarized below:		(` in Lakhs)
	2021-22	2020-21
Revenue from Operations	110853	111187
Other Income	554	848
Total Revenue	111407	112035
Profit before Finance Costs, Depreciation, Exceptional Items and Taxation	9424	17375
Less : Finance Costs	15208	18720
Less : Depreciation and Amortization Expenses	5628	7075
Profit/(Loss) before Exceptional Items and Tax	(11412)	(8420)
Add : Exceptional Items	-	-
Profit before Tax	(11412)	(8420)
Tax Expense	2205	(3137)
Profit/(Loss) for the year	(13617)	(5283)

FINANCIAL PERFORMANCE

The past year was a challenging year for the Company with disruptions in production and sales owing to the pandemic until. The operational turnover of the Company was a bit marginally lower at Rs. 110853 lakhs against Rs. 111187 lakhs in the previous year. The Company made a post-tax loss of Rs.13617 lakhs in the year under review as against a loss of Rs. 5283 lakhs in the previous year due to steep rise in costs of various inputs without a proportionate rise in sale price.

During the year the Company was not able to meet terms of facilities/loans availed from various Lenders. The Company is in discussion with the Lenders for restructuring/change in terms of the loans. Accordingly the Lenders had appointed independent professionals for carrying out Techno Economic Viability Study (TEV), which was again re-vetted and confirmed during the period under review. Valuation of Tea Estate and other assets are in process and will be confirmed in due course of time. Forensic audit, was concluded successfully in the earlier year and the Inter creditor agreement for implementing the resolution plan has been signed by all the lenders (Banks). The committee formed by the lenders have appointed the Credit Rating Agencies for assessing the possible credit rating of the company on implementation of the proposed resolution plan and this is under process. Further the investment banker appointed by the Lenders has been in extensive discussion for finalizing the Debt Resolution Plan, now pending before the Lenders for their consideration and decision.

TRANSFER TO GENERAL RESERVE

The Board has decided not to transfer any amount to the General Reserve for the year ended 31st March 2022.

DIVIDEND

In view of inadequate profit earned by the Company during the year under review, the Board decided to not recommend any dividend for the year ended 31st March 2022.

REVIEW OF OPERATIONS

During the Financial year under review, fluctuating and inconsistent weather conditions resulted in a loss of harvest during peak cropping months. The saleable production of your Company was 489.04 Lakh Kgs tea, as compared to 439.22 Lakh Kgs in the previous year.

Emphasis in plucking standards remained a priority and quality of leaf harvested improved considerably, resulting in a better quality of teas produced. The Uprooting and Replanting Policy of your Company continued to remain in focus and has further improved the percentage of tea under fifty years which is now over 75% of the area. "Integrated Pest Management" practice continued as per past practice and was very effective resulting in improved pest control and reduced cost. Timely supply and application of fertilizer also controlled further crop loss. A high standard of Clonal Tea nurseries with requisite, approved Clonal Blend was established on all estates. The Shade Nurseries being of a good standard contributed as one of the key factors in developing a healthy plantation. The Afforestation program continues to be enhanced along with creation of new water-bodies, to improve the "micro-climate", in select areas which has become essential to counter the effects of climate change. Plantation of 'Agarwood' continued, for revenue enhancement, on some estates.

It has always been Your Company's endeavor to produce Quality teas, which continued to command a premium, both in the domestic and international markets. Factory infrastructure and machinery was enhanced accordingly to meet the requirements to further improve processes and Capital expenditure were accordingly sanctioned. To improve field operations and overcome the acute shortage of workers by way of

3

ANNUAL REPORT 2021-22

absenteeism, additional investments in plucking Shears and Pruning machines were made available. Additions to the transport fleet included Tractors to aid field operations, and Ambulances to further improve the medical facilities.

There was a spurt of Covid cases during May/June 2021 and January 2022 in Assam. However the situation on the tea estates was well managed and controlled and estates functioned normally following all SOP's circulated by the State Government very strictly.

The Company has thirty-one ISO 22000:2005 certified Factories which are in the process of upgradation to ISO 22000:2018. Your Company has twenty seven estates certified under "Rainforest Alliance." All our factories are certified under the "Trustea" certification and we are also in the process of assisting our suppliers of leaf from Small Tea Growers to become compliant under this certification.

Your Company also participates in the Ethical Tea Partnership forum for international buyers and producers to promote sustainable practices jointly. Due to such initiatives we have set up 'Community Development Forums' on some of our estates, to enable welfare schemes mandated by the Government to reach our communities as well as bring about better awareness and improve the livelihood of our workers and their families.

We have also over the last few years, engaged with various organisations including UN Women, IDH, Dharmalife, GAIN, BSR, Mercy Corps, ZvdZ Foundation, ETP and ITA to build awareness and provide responsible services among all levels of our employees, particularly women. Programmes such as 'Preventing Violence Against Women and Girls', 'Women's Safety Accelerator Fund', 'Work and Opportunities for Women', 'Global Alliance for Improved Nutrition', 'Project Sanitation' etc. now cover twenty-nine of our Estates in Assam and have proven to be most successful at building social awareness amongst women and children.

The Company performed well in the domestic and overseas markets and achieved a sales turnover of Rs 107858 lakhs. Favorable feedback was received from all buyers both in terms of quality and deliveries. Your Company continues to be the leading producer-exporter of tea with shipments to over seventeen countries worldwide at a value of Rs 21721 lakhs.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In terms of requirements of Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), a Management Discussion and Analysis Report is attached as Annexure - I forming part of this Report.

REPORT ON CORPORATE GOVERNANCE

In terms of requirements of Regulation 34(3) of the Listing Regulations, a Report on Corporate Governance together with the Auditors' Certificate regarding Compliance of Conditions of Corporate Governance are attached as Annexure II and Annexure III respectively, forming part of this Report.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

The Company has one wholly owned subsidiary namely, Borelli Tea Holdings Limited, U.K. (Borelli) and four step down Subsidiaries. Borelli is inter alia engaged in the business of investing funds in various companies engaged in tea production, blending and marketing activities. As at the end of the year on 31st March 2022 Borelli had the following Subsidiaries in different countries:-

1. Phu Ben Tea Company Limited, Vietnam - controlling stake of Borelli being 100%
2. McLeod Russel Uganda Limited - controlling stake of Borelli being 100%
3. McLeod Russel Middle East DMCC, UAE - controlling stake of Borelli being 100%
4. McLeod Russel Africa Limited, Kenya - controlling Stake of Borelli being 100%

The performances of the Subsidiaries are summarised below for your information. As required under Section 129(3) of the Companies Act, 2013 and Regulation 33 and 34(2)(b) of the Listing Regulations, Consolidated Profit & Loss Statement of the Company and its five subsidiaries and the Consolidated Balance Sheet of the Company and its five subsidiaries prepared in accordance with the Indian Accounting Standards prescribed under Section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standard) Rules 2015 as amended ("Ind AS") are appended in the Annual Report. Investments made in D1 Williamson Magor Bio Fuel Limited, an Associate Company, have been fully provided for in the Accounts of the earlier years and as such the Financial Statements of the said Company have not been considered for consolidation.

A statement containing the salient features of the financial statements of the Company's Five Subsidiaries and the Associate Company pursuant to the first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 prepared in Form AOC-1 is attached to the financial statements of the Company for your information.

In terms of Regulation 34(2)(a) of the Listing Regulations, Statements on impact of Audit Qualifications as stipulated in Regulation 33(3)(d) of the Listing Regulations are appended in the Annual Report.

The Company has formulated a Policy for determining "Material Subsidiary" and the same is disclosed on the website of the Company and can be accessed at: http://www.mcleodrussel.com/ investors/policies.aspx

4