AFT INDUSTRIES LIMITED - Apeejay Surrendra Group · 2007. 12. 5. · (Formerly ASSAM FRONTIER TEA...

AFT INDUSTRIES LIMITEDANNUAL REPORT

2002-2003

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AFT INDUSTRIES LIMITED(Formerly Assam Frontier Tea Limited)

(ESTABLISHED IN 1889)

BOARD OF DIRECTORS

SHIRIN PAUL ChairpersonJIT PAULKARAN PAULGOLAM MOMENDEBA JYOTI MUKHERJEEOM KAULDEBANJAN MANDALASHOK KUMAR BHARGAVA Executive DirectorARUP BARBORA General Manager

COMPANY SECRETARY

BHASKARJYOTI DUTTA

AUDITORS

PRICE WATERHOUSE

BANKERS

PUNJAB NATIONAL BANKSTATE BANK OF INDIAHDFC BANK

REGISTRARS

AXC COMPUTERS PRIVATE LIMITEDNational Council of Education, BengalJadavpur University CampusJadavpur, Kolkata-700 032

REGISTERED OFFICE

TALAP 786 156District : TinsukiaAssam

HEAD OFFICE

APEEJAY HOUSE15, Park StreetKolkata – 700 016

REGIONAL OFFICES

PRAGATI BHAWANJai Singh RoadNew Delhi-110 001

APEEJAY HOUSE3, Dinsha Vachha RoadMumbai-400 020

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AFT INDUSTRIES LIMITED(Formerly ASSAM FRONTIER TEA LIMITED)

Notice to the MembersNotice is hereby given that the Twentysixth Annual General Meeting of the Members of AFT IndustriesLimited will be held on Thursday, August 21, 2003, at 10.00 A.M. at the Registered Office of the Company atTalap 786 156, Assam, to transact the following as :

ORDINARY BUSINESS

1. To receive, consider and adopt the Profit & Loss Account for the year ended March 31, 2003, the BalanceSheet as at that date and the Reports of the Directors and Auditors thereon.

2. To declare a Dividend for the year ended March 31, 2003.

3. To appoint a Director in place of Mrs. Shirin Paul, who retires by rotation and being eligible, offers herselffor re-appointment.

4. To appoint a Director in place of Mr. Golam Momen, who retires by rotation and being eligible, offers himselffor re-appointment.

5. To appoint Auditors and to fix their remuneration.

SPECIAL BUSINESS

6. To consider and if thought fit, to pass, with or without modification(s) the following resolutions as ordinaryresolutions:

I. “RESOLVED THAT Mr. Debanjan Mandal, appointed as an Additional Director of the Company by theBoard of Directors with effect from November 7, 2002, and whose term expires at this Annual GeneralMeeting and for the appointment of whom the Company has received notice under Section 257 of theAct from a member proposing his candidature for the office of Director, be and is hereby appointedas a Director of the Company whose period of office will be liable to determination by retirement byrotation.”

II. “RESOLVED THAT Mr. Om Kaul, appointed as an Additional Director of the Company by the Boardof Directors with effect from April 1, 2003, and whose term expires at this Annual General Meeting andfor the appointment of whom the Company has received notice under Section 257 of the Act from amember proposing his candidature for the office of Director, be and is hereby appointed as a Directorof the Company whose period of office will be liable to determination by retirement by rotation.”

III. “RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310 and Schedule XIII of theCompanies Act, 1956, Mr. Ashok Kumar Bhargava be and is hereby appointed as a Wholetime Directordesignated as “Executive Director” with effect from December 1, 2002 till March 31, 2004 on the principalterms and conditions as set out in the Explanatory Statement attached to the Notice convening thismeeting.”

“RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorisedto alter or vary any of the terms and conditions of the appointment of Mr. Ashok Kumar Bhargava,including remuneration, as may be mutually agreed by the Board and Mr. Bhargava, within the provisionsof Schedule XIII of the Companies Act, 1956.”

IV. “RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310 and Schedule XIII of theCompanies Act, 1956, Mr. Arup Barbora, General Manager of the Company be and is hereby re-appointedas a Wholetime Director for a period of one year with effect from April 1, 2003 on the principal termsand conditions as set out in the Explanatory Statement attached to the Notice convening this meeting.”

“RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorisedto alter or vary any of the terms and conditions of the re-appointment of Mr. Arup Barbora, includingremuneration, as may be mutually agreed by the Board and Mr. Barbora, within the provisions ofSchedule XIII of the Companies Act, 1956”.

“RESOLVED FURTHER THAT pursuant to the provisions of Sections 198, 269, 309, 310 and Schedule

XIII of the Companies Act, 1956, approval be and is hereby accorded to the payment of remunerationto Mr. Arup Barbora by way of Plantation Allowance amounting to Rs. 0.84 lakhs paid during the year2002-2003, being within the limits specified by Schedule XIII of the Companies Act, 1956.”

7. To consider and if thought fit, to pass, with or without modification(s) the following resolution as specialresolution:

“RESOLVED THAT pursuant to Section 31 of the Companies Act, 1956, the Articles of Association of theCompany be altered by substituting the following Article for Article 93:

Article 93: Director’s fees, remuneration and expenses

Unless otherwise determined by the Company in general meeting, each director shall be entitled to receiveout of the funds of the Company for his/her services in attending the meetings of the Board or a Committeeof the Board, unless it is specified otherwise in the terms of reference of the Committee, a fee of not exceedingRs.2,500/- (Rupees two thousand five hundred only) per meeting of the Board or a Committee of the Boardattended by him/her. All other remuneration, if any, payable by the Company to each Director, whether inrespect of his/her services as a Managing Director or a Director in the whole or part time employment ofthe Company shall be determined in accordance with and subject to the provisions of these Articles andof the Act. The Directors shall be entitled to be paid all fees for filing documents which they may be requiredto file under the Act and shall also be entitled to be paid reasonable travelling, hotel and other expensesincurred in consequence of their attending Board and Committee Meetings and General Meetings of theCompany or otherwise incurred in execution of their duties as Directors.”

Registered Office :Talap 786 156 By Order of the BoardAssamPlace : Kolkata BHASKARJYOTI DUTTADate : June 12, 2003 Secretary

Notes :

1. A Member entitled to attend and vote at the Meeting may appoint a proxy to attend and vote on apoll in his stead. A proxy need not be a Member of the Company.

Proxies, in order to be effective, must be received at Company’s Registered Office not less than 48 hoursbefore the Meeting.

2. The Register of Members and Share Transfer Books of the Company shall remain closed from August 13to August 21, 2003, both days inclusive. Dividend, if declared, will be paid to those members whose nameswill appear on the Register of Members of the Company on August 21, 2003 or to their mandates. Membersare requested to bring their copies of the Report and Accounts to the Meeting.

3. Members desirous of making a nomination in respect of their shareholding in the Company, as permittedunder Section 109A of the Companies Act, 1956, are requested to fill in and submit the Nomination Form(Form 2B) sent with Annual Report.

4. An Explanatory Statement as required under Section 173(2) of the Companies Act, 1956, in respect of theitems of business specified in the notice and the relevant details in respect of Items 3 & 4 pursuant toClause 49 of the Listing Agreements with Stock Exchanges are annexed hereto.

5. During the current financial year viz. 2003-2004, the Company will be required to transfer to the InvestorEducation & Protection Fund, the unclaimed amount of the Final Dividend for the year ended March 31,1996. Those shareholders who have not encashed their warrants are requested to immediately return theoutdated warrants to the Company to enable the Company to issue demand drafts in lieu thereof.

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EXPLANATORY STATEMENT(Pursuant to Section 173(2) of the Companies Act, 1956)

Item No.6(I)Mr. Debanjan Mandal was inducted as Additional Director on the Board of Directors of the Company at their meetingheld on November 7, 2002. He holds office as Director of the Company only upto the date of ensuing AnnualGeneral Meeting pursuant to Section 260 of the Companies Act, 1956 read with Article 91 of the Articles ofAssociation of the Company and is eligible for election.

Mr. Debanjan Mandal of Fox & Mandal, Solicitors, is the fourth generation lawyer in a family, which has beenassociated with the legal profession for the last 107 years. The Firm has been in close proximity to the tea industrysince long and has also been Advisors to the Tea Board since its inception. A corporate lawyer by interest, heregularly represents various Public Sectors as well as Private Banks, Financial Institutions and other Companiesin corporate as well as litigation matters. An avid speaker in a number of multinational fora of lawyers, he alsointeracts with eminent lawyers and jurists from the world over. Mr. Debanjan Mandal, born on August 26, 1973 isa graduate in law and a Bachelor of Arts (English Hons.).

The Company has received notice pursuant to Section 257 of the Companies Act, 1956 from a member signifyinghis intention to individually propose the name of Mr. Debanjan Mandal as Director. The Board considers that itwould be in the interest of the Company to continue to avail his services as Director and accordingly, recommendadoption of resolution no. 6(I) of this Notice.

Mr. Debanjan Mandal may be deemed to be concerned or interested in the said resolution. Save as aforesaid,none of the other Directors are, in any way, concerned or interested in the said resolution.

Item No.6(II)Mr. Om Kaul was inducted as Additional Director with effect from April 1, 2003 on the Board of Directors of theCompany at their meeting held on February 3, 2003. He holds office as Director of the Company only upto thedate of ensuing Annual General Meeting pursuant to Section 260 of the Companies Act, 1956 read with Article91 of the Articles of Association of the Company and is eligible for election.

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DETAILS OF DIRECTORS RETIRING BY ROTATION AND SEEKING RE-APPOINTMENT(In pursuance of Clause 49 of the Listing Agreement)

Particulars Date of Date of Qualifica- Expertise Directorships of other Members ofBirth Appoint- tions in specific Companies Committees of

ment functional the Boards ofareas other Companies

Mrs. Shirin 04.12.44 11.12.90 BA, TTC & Industrialist Empire & Singlo Tea Ltd. NonePaul French-BA Apeejay Surrendra

Hotels Pvt. Ltd.

Mr. Golam 06.06.33 11.12.90 BA Tea- Baghmari Tea Co Ltd.Momen Marketing Bengal Tea & Fabrics Ltd. Audit, Share

Transfer/Share-holders Grievance

Birla VXL Ltd. AuditAssam Brook Ltd. AuditABL International Ltd.Empire & Singlo Tea Ltd. RemunerationJutlibari Tea Co. Ltd.Kanco Enterprises Ltd. AuditNorben Tea & Exports Ltd. RemunerationRydak Syndicate Ltd.Scottish Assam (India) Ltd. AuditWhite Cliff Holdings Pvt. Ltd.White Cliff Tea Pvt. Ltd.White Cliff Properties Pvt. Ltd.Dover Tea Pvt. Ltd.

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The Company has received notice pursuant to Section 257 of the Companies Act, 1956 from a member signifyinghis intention to individually propose the name of Mr. Om Kaul as Director. The Board considers that it would bein the interest of the Company to continue to avail his services as Director and accordingly, recommend adoptionof resolution no. 6(II) of this Notice.

Mr. Om Kaul, born on December 5, 1941, graduate from the University of Rajasthan, joined Caritt Moran & Co.Pvt. Ltd., the second largest tea broking firm in the world as a Tea Taster. In 1977 he was inducted to the Boardof Directors, and in 1992 he became the Chairman and Managing Director of the Company and had a tenure of30 years with them. He is widely travelled in most tea producing areas and has in-depth knowledge of all facetsof the tea industry. At present Mr. Kaul is not holding directorship in any other Company.

Mr. Om Kaul may be deemed to be concerned or interested in the said resolution. Save as aforesaid, none ofthe other Directors are, in any way, concerned or interested in the said resolution.

Item No.6(III)Mr. Ashok Kumar Bhargava, and existing member of the Board, has been appointed by the Board of Directors intheir meeting held on November 7, 2002 as a Whole-time Director of the Company for the period from December1, 2002 to March 31, 2004 and has been designated as “Executive Director” of the Company by the Board ofDirectors in their meeting held on February 3, 2003, at a remuneration given below, subject to approval of shareholdersin the ensuing Annual General Meeting.

Mr. Bhargava, born on September 9, 1956, is a postgraduate from the University of Rajasthan. Mr. Bhargava startedhis career in tea in 1977 as a Trainee Assistant Manager in Empire Plantations Ltd. and thereafter through hisperseverance and leadership skills has attained a meteoric rise by being appointed as the General Manager. Hehas been instrumental in transforming the Company into a producer of superior quality teas. He has over 27 yearsof valuable experience in this sector and is immensely knowledgeable about all the facets of the industry. Mr.Bhargava is an alumnus of the London Business School where he completed the Senior Executive Programmewith distinction. He is a Director on the Board of Empire & Singlo Tea Limited and is not a member of any Committee.

An agreement to that effect has been entered into between Mr. Bhargava and the Company. The principal termsand conditions of service of Mr. Bhargava are as follows:

1. Remuneration

a) SalaryRs. 26,000/- per month

b) Performance BonusMr. Bhargava will be entitled to performance bonus if approved by the Board of Directors of the Company.

c) PerquisitesIn addition to the aforesaid Salary and Performance Bonus, Mr. Bhargava is entitled to perquisites, the monetaryvalue of such perquisites being limited to Rs.6,33,000/- per annum, for the purposes of which limit, perquisitesshall be evaluated as per Income Tax Rules, wherever applicable, and in absence of any such Rule, perquisitesshall be evaluated at actual cost. However the following shall not be included in the aforesaid perquisite limit:-

i) Contribution to Provident FundAs per the Rules of the Company, subject to a ceiling of 12% of the Salary.

ii) Contribution to Superannuation FundAs per the Rules of the Company, subject to a ceiling of 15% of the Salary.

iii) GratuityPayable in accordance with the Rules of an approved Gratuity Fund.

2. Minimum Remuneration

In the event of absence or inadequacy of profits in any financial year during the currency of tenure ofMr. Bhargava, he will be entitled to above salary, performance bonus and perquisites as minimum remuneration

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as is permissible under Section II of Part II of Schedule XIII of the Companies Act, 1956.

3. Mr. Bhargava will also be entitled to reimbursement of all expenses actually and properly incurred by him inconnection with the Company’s business.

4. So long as Mr. Bhargava acts as the Whole-time Director of the Company, he shall not be paid any fee forattending any meeting of the Board or a Committee thereof.

Provided, however, that the overall remuneration payable to all Wholetime Directors of the Company taken togethershall not exceed 10% of the net profits of the Company in any financial year computed in the manner laid downin Section 309(5) of the Companies Act, 1956.

The agreement entered into between the Company and Mr. Bhargava will be kept open for inspection by anymember at the Registered Office of the Company during business hours on any working day.

The Directors recommended adoption of the proposed resolution.

None of the other Directors of the Company are concerned or interested in the aforesaid appointment.

Item No. 6(IV)Mr. Arup Barbora, General Manager of the Company, has been re-appointed by the Board as a Whole-time Directorfor the period from April 1, 2003 to March 31, 2004, as decided by the Board of Directors in their meeting heldon June 12, 2003, at a remuneration given below, subject to approval of the shareholders in the ensuing AnnualGeneral Meeting.

Mr. Barbora, born on February 9, 1951 is a Bachelor of Science (Agriculture) and has in-depth knowledge of allfacets of the tea industry. He has vast experience and has been associated with the tea industry for over 30 years.At present Mr. Barbora is not holding directorship in any other Company.

An agreement to that effect has been entered into between Mr. Barbora and the Company. The principal termsand conditions of service of Mr. Barbora are as follows:

1. Remuneration

a) SalaryRs. 25,500/- per month

b) Performance BonusMr. Barbora will be entitled to performance bonus if approved by the Board of Directors of the Company.

c) PerquisitesIn addition to the aforesaid Salary and Performance Bonus, Mr. Barbora is entitled to perquisites, the monetaryvalue of such perquisites being limited to Rs. 3,58,200/- per annum, for the purposes of which limit, perquisitesshall be evaluated as per Income Tax Rules, wherever applicable, and in absence of any such Rule, perquisitesshall be evaluated at actual cost. However the following shall not be included in the aforesaid perquisite limit:-

i) Contribution to Provident Fund

As per the Rules of the Company, subject to a ceiling of 12% of the Salary.

ii) Contribution to Superannuation Fund

As per the Rules of the Company, subject to a ceiling of 15% of the Salary.

iii) Gratuity

Payable in accordance with the Rules of an approved Gratuity Fund.

2. Minimum RemunerationIn the event of absence or inadequacy of profits in any financial year during the currency of tenure ofMr. Barbora, he will be entitled to above salary, performance bonus and perquisites as minimum remuneration.

3. Mr. Barbora will also be entitled to reimbursement of all expenses actually and properly incurred by him inconnection with the Company’s business.

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4. So long as Mr. Barbora acts as the Whole-time Director of the Company, he shall not be paid any fee forattending any meeting of the Board or a Committee thereof.

Provided, however, that the overall remuneration payable to all Whole-time Directors of the Company taken togethershall not exceed 10% of the net profits of the Company in any financial year computed in the manner laid downin Section 309(5) of the Companies Act, 1956.

The agreement entered into between the Company and Mr. Bhargava will be kept open for inspection by anymember at the Registered Office of the Company during business hours on any working day.

During the year 2002-2003 the Company paid Mr. Arup Barbora, General Manager of the Company, PlantationAllowance amounting to Rs. 0.84 lakhs. This payment although in line with perquisites generally paid to seniormanagers of the Company was not included in the terms and conditions of the agreement governing Mr. Barbora’sappointment as a Whole-time Director.

None of the other Directors of the Company are concerned or interested in the aforesaid resolutions.


Item No. 7The Articles of Association of the Company need alteration towards increasing the sitting fees payable to theDirectors. In order to enable the Company to pay increased sitting fees to its Directors, the resolution no.7 is beingproposed.

None of the Directors of the Company are concerned or interested in the proposed resolution except to the extentof increase in their sitting fees.

Copy of the Memorandum & Articles of Association of the Company together with the proposed alteration shallbe open for inspection of the shareholders at the Company’s registered office on any working day up to and inclusiveof the date of the Annual General Meeting between 3 and 4 p.m.


Directors' ReportYour Directors have pleasure in presenting their Twentysixth Annual Report together with the Audited Accounts forthe year ended March 31, 2003.

FINANCIAL RESULTS2002-2003 2001-2002

Rs. in Lacs Rs. in LacsProfit before Taxation 4,02.57 7,16.65Less : Provision for Taxation

Current Tax 1,57.00 1,70.00Deferred Tax (net) (35.04) 10.05

Profit after Taxation 2,80.61 5,36.60Add : Development Allowance Reserve — 4.00

Balance Brought Forward 3,43.24 3,52.64Profit available for Appropriation 6,23.85 8,93.24Appropriated as under :General Reserve 28.06 2,50.00Proposed Dividend 1,20.00 3,00.00Tax on Proposed Dividend 15.38 —Balance Carried Forward 4,60.41 3,43.24

6,23.85 8,93.24

DIVIDEND

Your Directors are pleased to recommend dividend of 20% i.e. Rs. 2/- per equity share for the year ended March31, 2003. Such dividend on declaration will be paid to those members whose names will appear on the Registerof Members of the Company as at the close of business on the date of Annual General Meeting, subject to theprovision of Section 206A of the Companies Act, 1956.

PERFORMANCE

Your Company has performed better than most of the others due to its inherent strengths and the timing ofvarious prudent decisions. The Export turnover of your Company has shown a steady growth trend. It increasedto Rs.1463 lacs as compared to Rs.1121 lacs in the previous year. During the year the sales revenue of yourCompany was Rs.9316 lacs as against Rs. 9293 lacs of previous year thereby registering an increase ofRs. 23 lacs. This was possible because of higher average price realisation of Rs. 69.75 per kg. as comparedto Rs. 68.59 per kg. in the previous year. However, there was a decrease in crop to 130.33 lac kgs. in thisfinancial year as against 137.64 lac kgs. of previous year resulting in reduction of the net profit of your Companyto Rs.281 lacs as compared to Rs.537 lacs of previous year.

The year under review was a difficult one for the tea industry. Drop in exports, lower production, absence ofany significant growth in domestic demand and presence of bought leaf factories resulted in lower profitability.

Your Company remained consistent in maintaining ISO 9002 standardisation in all its tea estates, RegisteredOffice and Kolkata Office and has made itself compliant with ISO 9001 – 2000 standards.

PROSPECTS

The prospect for the year 2003-04 will be challenging. Crop is expected to increase because of favourableweather condition. The prices being an uncertain factor, increased emphasis is being given on improving qualityof tea. Some new field practices are being introduced to improve the productivity.

The Company expects to increase its export turnover through larger quantity of exports to the European countries,especially to the United Kingdom, Canada and Germany. It is heartening to note that tea is being increasinglyrecognised as a Health Drink. This is a welcome change and attempts to popularise tea among the youngergenerations is beginning to show positive results.

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Your Company is continuously investing in modernization of factories and improvement of agricultural practicesin order to produce best quality of tea in the most cost effective manner.

Your Company continues with its online tea boutique, www.teastall.com wherein Company’s single garden teasare being promoted in packaged form for the first time.

SOCIAL OBLIGATION

Your Company is fully aware of responsibility towards its own employees, their dependents and the local communitywithin which the tea estates are situated and to the people of Assam in general. Tea is labour intensive industryand our driving objective has been to improve living and working condition of our large workforce and theirdependents.

There has been a constant endeavor to interact with the workers on a day to day basis and resolve pendingissues that surface.

Your Company regularly and on a continuing basis undertakes various social welfare projects for improving thequality of life of the people residing around the tea estates through sustainable social and economic developmentprojects.

AUDITORS’ OBSERVATION

As regards the Auditors’ observation for ratification of the managerial remuneration, the approval of the shareholderswill be sought in the ensuing Annual General Meeting.

DIRECTORS

Mr. D. J. Mukherjee retired as Director (Finance) & Secretary at the close of business on November 30, 2002.However he continues to be a member of the Board as an independent Director. The Board would wish to placeon record its appreciation for the services rendered by Mr. Mukherjee as Director (Finance) & Secretary.

In order to broadbase and enrich the Board with professionalism, the Board appointed Mr. Debanjan Mandal,an eminent lawyer and Mr. Om Kaul, a reputed tea consultant, as additional directors at its meetings held onNovember 7, 2002 and February 3, 2003 respectively.

Mr. Ashok Kumar Bhargava has been appointed by the Board of Directors in their meeting held on November 7,2002 as a Whole-time Director of the Company for the period from December 1, 2002 to March 31, 2004 andhas been designated as “Executive Director” of the Company by the Board of Directors in their meeting held onFebruary 3, 2003, at a remuneration given below, subject to approval of shareholders in the ensuing GeneralMeeting.

Further the Board at its meeting held on June 12, 2003 re-appointed Mr. Arup Barbora, General Manager of theCompany, as a Whole-time Director designated as “General Manager” of the Company, for a period of one yearwith effect from April 1, 2003.

Approval of the shareholders is sought for the appointment of Mr. Debanjan Mandal, Mr. Om Kaul, Mr. A. K.Bhargava and re-appointment of Mr. Arup Barbora and the remuneration payable to the whole-time directors.

In terms of the provision contained in the Articles of Association, Mrs. Shirin Paul and Mr. Golam Momen retireby rotation and being eligible offer themselves for re-appointment.

CORPORATE GOVERNANCE

Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governanceas prescribed under the listing agreements. A detailed report on Corporate Governance along with the Auditors’certificate as stipulated under clause 49 of the listing agreement is annexed along with the Management Discussionand Analysis Report.

PERSONNEL

Your Directors record their appreciation for cooperation extended by the employees at all levels. Industrial relationshave remained cordial during the year under review.

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None of Employees are coming under the purview of the requirements of Section 217(2A) of the CompaniesAct, 1956.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 217 (2AA) of the Companies Act, 1956 your Directors hereby confirmthat:

● In the preparation of the annual accounts for the year ended March 31, 2003, the applicable accountingstandards have been followed and there are no material departures;

● The Directors have selected such accounting policies and applied them consistently and made judgementsand estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairsof the Company at the end of the financial year ended March 31, 2003 and the Profit of the Company forthat period;

● The Directors have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;

● The Directors have prepared the annual accounts on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

The particulars of Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo interms of Section 217(1)(e) is provided in an annexure to the Report.

AUDITORS

M/s. Price Waterhouse, Chartered Accountants, Auditors retire at the forthcoming Annual General Meeting andbeing eligible offer themselves for re-appointment.

ACKNOWLEDGEMENT

Your Directors would like to take this opportunity to convey their sincere appreciation to the Management,employees, bankers, Government of India and the Government of Assam for their continued support and cooperation.Your Directors are also deeply grateful for the confidence and faith shown in them by the members of theCompany.

For and on behalf of the Board

Kolkata SHIRIN PAULJune 12, 2003 Chairperson

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Annexure I to the Directors' Report

Information pursuant to Section 217 (1) (e) of the Companies Act, 1956 and forming part of the Directors'Report for the year ended March 31, 2003

I. Conservation of Energy

1. Energy conservation measures undertaken.

2. Additional investments and proposals, if any,being implemented for reduction of consumptionof energy.

3. Impact of measures at (1) and (2) above forreduction of energy consumption and consequentimpact on the cost of production of goods.

Continuous endeavour to reduce energy cost is on.

Optimisation of power utilisation through installation ofnew machineries and streamlining production proceduresare being done on a continuous basis.

Energy conservation measures adopted by the Companyare likely to save energy cost.

Form - AYear Year

A. Power and Fuel Consumption : ended ended31.03.2003 31.03.2002

i) Electricitya) Purchased Units 71,62,038 69,38,750

Total Amount (Rs.) 4,00,00,271 3,20,55,033Rate/Unit (Rs.) 5.59 4.62

b) Own GenerationThrough Diesel GeneratorUnits 44,03,055 41,23,145Unit/Ltr. of Diesel Oil 2.64 2.46Cost/Unit (Rs.) 6.58 6.71

ii) Coal (Specify quality and where used) H.P. and R.O.M. used in Budlapara FactoryQuantity (Tonnes) 715 1,066Total Amount (Rs.) 14,04,850 19,43,347Average Rate (Rs.) 1,965 1,824

iii) Furnace OilQuantity (K. Ltrs.) 3,18,965 1,76,403Total Amount (Rs.) 54,01,155 24,30,338Average Rate (Rs.) 16,933 13,777

iv) GasQuantity (Cu. m.) 1,20,87,810 1,27,92,152Total Amount (Rs.) 1,85,78,139 1,77,79,702Average Rate (Rs.) 1.54 1.39

B. Consumption per unit of Production :Product—Tea (Kgs.) 1,33,40,361 1,41,39,260Electricity (Unit) 0.87 0.78Furnace Oil (Ltrs.) 0.02 0.01Coal (Kgs.) 0.05 0.08Gas (Cu. m.) 0.91 0.90

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II. Form for disclosures of particulars with respect to absorption :

Form - B

Research and Development (R & D) :

1. Specific area in which R & D carriedout by the Company :

2. Benefits as a result of above R & D :

3. Future plan of action :

4. Expenditure on Research and Development :

Technology Absorption, Adaptation and Innovation :

1. Efforts, in brief, made towards technology absorption, adaptation and innovation :

We are continuing to replace the existing machinery with modern machines for better output and better controlover production procedures.

2. Benefits derived as a result of above efforts, e.g. product improvement, cost reduction, product development,import substitution etc.

There has been an overall improvement in the productivity and quality of the product.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the FinancialYear), following information may be furnished :

(a) Technology imported : Colour Sorting Machines were imported from Japan.

(b) Year of Import : 2001-2002

(c) Has Technology been fully absorbed ? Yes, the machines were put to use during the year of import.

(d) If not fully absorbed, areas where this has not taken place, reasons therefor, and future plans of actions. - Notapplicable as the machines are in use.

III. Foreign Exchange Earnings and Outgo :

Earnings and Outgo of Foreign Exchange as detailed in Notes 21.6 and 21.8 in Schedule 17 to the Accounts wereas under :

2002-2003 2001-2002Rs. in lacs Rs. in lacs

Foreign Exchange Earnings : 14,62.63 11,21.41

Foreign Exchange Outgo : 27.28 29.52

Net Earnings/(Outgo) : 14,35.35 10,91.89

For and on behalf of the Board

Kolkata SHIRIN PAULJune 12, 2003 Chairperson

The Company is a member of Tea ResearchAssociation, and contributed Rs. 16.05 lacs assubscription during the year. The thrust of theCompany remains on improvement of productivityand quality by efficient operation and automationof process.

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Annexure II to the Directors' Report

REPORT ON CORPORATE GOVERNANCE

1. Company’s Philosophy on Corporate Governance

The Company is committed to high ethical values and to sustain and enhance leadership through excellencein tea manufacturing by operating in a socially responsible manner. The Company believes that good corporategovernance is to ensure transparency in the functioning of Board, in all its dealings with the people workingwith it at all levels and with all its stakeholders. Your Company also believes in encouraging active involvementof all employees in improvement and innovation in all spheres of management.

2. Board of Directors – Composition

The Board of Directors is headed by the Non-Executive Chairperson, Mrs. Shirin Paul and comprises ofpersons with entrepreneurial and professional experience. Out of total strength of 8,

3 of the Directors are Non-Executive Independent Directors.

3 of the Directors are Non-Executive Directors.

2 of the Directors are Whole-time Directors.

Particulars as at March 31, 2003 are given below :

Name Category Directorships CommitteeAttendance at in other Positions in other

Companies Companies as

Board Meetings Last AGM Chairman Member

Mrs. Shirin Paul C(NED) 2 No 1 — —

Mr. Jit Paul NED 3 No 2 — —

Mr. Karan Paul NED 3 No 2 — 1

Mr. G. Momen NEID 3 No 11 2 8

Mr. D. J. Mukherjee NEID 4 Yes 2 2 2

Mr. D. Mandal NEID 1 No — — —

Mr. A. K. Bhargava ED 3 No 1 — —

Mr. A. Barbora WTD — Yes — — —

Notes:

I. Mr. D. J. Mukherjee retired from the office of Director (Finance) & Secretary with effect from December 1,2002 on due completion of his term and continued as a Non-Executive Independent director.

II. Mr. Debanjan Mandal was appointed on the Board of Directors of the Company as an additional director witheffect from November 7, 2002.

III. Mr. A. K. Bhargava, a Non-Executive director of the Company, was appointed as Whole-time Director to bedesignated as ‘Executive Director’ with effect from December 1, 2002.

IV. Directorships exclude Private Limited Companies, Foreign Companies and Companies under Section 25 ofthe Companies Act, 1956.

V. Committee positions in other companies relate to Chairmanships/Memberships of Audit, Remuneration andShareholders’ Grievance Committees.

14


VI. C: Chairperson, NED: Non-Executive Director, NEID: Non-Executive Independent Director, ED: ExecutiveDirector, WTD: Whole-time Director

During the year under review, four Board Meetings were held, the dates being May 21, 2002, July 31, 2002,November 7, 2002 and February 3, 2003.

3. Audit Committee

a) The Audit Committee consisting of four Non-Executive Directors, of whom three are independent, was firstconstituted vide Resolution passed by the Board of Directors in their meeting held on November 7, 2002.The members of Audit Committee are all persons of high standing in the Industry and whilst most of themhave considerable financial experience and expertise, the Chairman of the Committee also has professionalaccounting qualification.

b) The terms of reference of this Committee are wide enough covering the matters specified for Audit Committeeunder the Clause 49 of the Listing Agreement with the Stock Exchanges and the provision of Section 292Aof the Companies Act, 1956.

c) The Audit Committee met on February 3, 2003 during the year and the composition and attendance of themembers at the Audit Committee Meeting are as follows:

d) The Company Secretary acts as the Secretary to the Committee. Statutory Auditors are permanent inviteesalongwith the Executive Director and Head of Finance who are also invited to join the meeting. The representativeof Internal Auditors also attends the meeting.

4. Remuneration Committee:

The Company has not appointed any committee of directors under the name and style of “RemunerationCommittee”. The Company has whole-time directors including one Executive Director and the remunerationhas been fixed by the Board and approved, subject to the approval by the members in a general meeting.

1. Remuneration Policy:

Remuneration payable to Executive and Non-Executive Directors is decided by the Board within thestatutory framework and approved by the Shareholders.

2. Remuneration paid to Directors during the financial year 2002-2003:(Figures in Rs.)

Names of the Whole- Salary & Contribution Incentive/ Perquisites Totaltime Directors Allowances to funds Commission

Mr. A. K. Bhargava* 1,82,600 32,413 52,000 33,468 3,00,481

Mr. D. J. Mukherjee** 4,55,362 66,073 1,06,000 64,691 6,92,126

Mr. A. Barbora*** 5,48,773 89,760 1,44,000 87,162 8,69,695

*Mr. A. K. Bhargava has been appointed for the period December 1, 2002 to March 31, 2004, subject to Shareholders’Approval.**Mr. D. J. Mukherjee’s remuneration is till the date of expiry of his term as Whole-time Director on November 30, 2002.***Mr. A. Barbora has been re-appointed for a period of one year with effect from April 1, 2003, subject to Shareholders’Approval.

Name Position Held No. of Audit Committee Meetings

Held Attended

Mr. D. J. Mukherjee Chairman 1 1

Mr. Karan Paul Member 1 1

Mr. G. Momen Member 1 1

Mr. D. Mandal Member 1 1

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The sitting fees for attending the Board meetings paid to the Directors were enhanced vide Board Resolutiondated November 7, 2002 subject to the alteration of the Articles of Association.

Non-Executive Directors Board Fees (Rs.) Committee Fees (Rs.) Total (Rs.)

Mrs. Shirin Paul 2750 — 2750

Mr. Jit Paul 3000 — 3000

Mr. Karan Paul 3000 — 3000

Mr. G. Momen 3000 — 3000

Mr. D. J. Mukherjee 2500 — 2500

Mr. D. Mandal 2500 — 2500

Mr. A. K. Bhargava 500 — 500

There are no stock option plans of the Company.

5. Investor Grievance Committee

a) The Committee was constituted with 2 Non-Executive Directors and 1 Whole-time Director vide a resolutionpassed by the Board of Directors at their meeting held on November 7, 2002 and functions under theChairmanship of Mr. Jit Paul with the other members being Mr. Karan Paul and Mr. A. K. Bhargava. TheCommittee deals with any complaints or grievances as may be received from the shareholders and met onFebruary 3, 2003.

Mr. Bhaskarjyoti Dutta, Company Secretary, is the Compliance Officer.

b) The status of investors complaints after Committee formation are as follows :

No. of other complaints received during the year : 20

No. of complaints pending as on 31.03.03 : 2

(Note : The two complaints were pending for more than one month as at March 31, 2003 and were subsequentlyattended to in April 2003)

No. of pending share transfers as on 31.03.03 : 2

6. General Body Meetings

Location and time of last three AGMs are as under:

Year Date Location Time No. of SpecialResolutions approved

at the AGM

1999-2000 15.09.00 Registered Office at : 10.00 AM 2Talap - 786156,Tinsukia, Assam

2000-2001 03.08.01 Do 10.00 AM 1

2001-2002 02.08.02 Do 10.00 AM 2

No special resolution requiring Postal Ballot was placed at these meetings nor any is proposed at the ensuingAnnual General Meeting and no other General Meetings were held in course of the last three years.

Particulars of the Directors re-appointed are given in the Notice convening the ensuing Annual GeneralMeeting.

16


7. Disclosures

A. Related party transactions:

There have been no materially significant related party transactions that is of material nature with the promoters,directors, management, their subsidiaries, or relatives that may have potential conflict with the interest of theCompany at large. However the list of related party transactions as required to be disclosed, is done underAS-18.

B. No penalties/strictures have been imposed on the Company by any regulatory authority for non-complianceof any laws on any matter related to capital markets, during the last three years.

C. The Company had intimated the Stock Exchange, Mumbai vide letter dated 22.10.02 regarding delay inimplementation of conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreementand intimations were also given to the Stock Exchanges explaining the reasons for dealy in submission ofquarterly results for the quarters ended September 30, 2002 and December 31, 2002 beyond stipulated timeof one month.

8. Means of Communication

a) No Quarterly/Half-yearly results are sent to each shareholder as the same is published in the newspapersi.e. one national daily namely “Business Standard” and one regional daily namely “Dainik Asom” (Assamese).

b) The Company has no website at present.

c) No presentations were made to institutional investors, however same are made to credit rating agenciesfor Commercial Paper programmes of the Company.

d) Management Discussion and Analysis Report is a part of the Directors’ Report.

9. Shareholder Information

i) Annual General Meeting:

Date: 21.08.03 Time: 10.00 A.M Venue: Regd. Office at Talap, Assam.

ii) Financial calendar (Tentative):

Publication of Results would be as follows:

Period Approval by the Board of Directors

Unaudited results for 1st quarter ending June, 2003 Within end of July, 2003

Limited Review Report for 1st quarter ending June, 2003 Within end of August, 2003

Unaudited results for 2nd quarter and half year ending Within end of October, 2003September, 2003

Limited Review Report for 2nd quarter and half year Within end of November, 2003ending September, 2003

Unaudited results for 3rd quarter Within end of January, 2004ending December, 2003

Limited Review Report for 3rd quarter ending Within end of February, 2004December, 2003

Final audited annual results Within end of June, 2004

iii) Book closure period:

August 13, 2003 to August 21, 2003, both days inclusive.

iv) Dividend payment date:

On declaration to be paid on and from August 28, 2003.

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v) Listing on Stock Exchanges:

Stock Exchanges Stock Code

1 The Guwahati Stock Exchange Limited,Saraf Building Annexe, A.T. Road, Guwahati – 781 001 GSE/L/607

2 The Stock Exchange, MumbaiPhiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai – 400 001 508134

3 Delhi Stock Exchange Association LimitedDSE House, 3/1 Asaf Ali Road, New Delhi – 110 002 01169

4 The Calcutta Stock Exchange Association Limited7, Lyons Range, Kolkata – 700 001 11043

Listing fees as prescribed, have been paid to all the aforesaid Stock Exchanges upto March 31, 2004. ISINAllotted both by National Securities Depository Ltd.& Central Depository Services (India) Ltd. is INE 417A01018.

vi) Stock Price Data for Year 2002-03:

Month Stock Exchange, Mumbai (BSE)

High Low

April, 2002 51.85 46.00May, 2002 52.70 47.50June, 2002 82.15 48.10July, 2002 77.80 55.10August, 2002 59.40 49.25September, 2002 53.90 49.65October, 2002 52.50 46.75November, 2002 48.60 38.80December, 2002 50.00 46.20January, 2003 55.00 43.40February, 2003 55.00 46.15March, 2003 57.50 48.85

vii) Stock Performance:

Nov., 2002Oct., 2002May, 2002 June, 2002 July, 2002 Aug., 2002 Sept., 2002 Dec., 2002 Jan., 2003 Feb., 2003 Mar., 20030

10

20

30

40

50

60

70

80

90

April, 2002

Months

Share price movement

BSE High Rs. BSE Low Rs.

18


Share price performance compared with BSE Sensex:

BSE

Company’s Share price on April 1, 2002 49.85on March 31, 2003 52.00

Change +4.31%

BSE SENSEX as on April 1, 2002 3500.18on March 31, 2003 3048.72

Change -12.90%

viii) Registrar and Share Transfer Agent: AXC Computers Pvt. Ltd.(For both physical & dematerialised Unit: AFT Industries Ltd.

securities) National Council of Education Bengal,Jadavpur University Campus, Kolkata - 700 032Phone: 033 - 2414 6363, 2414 6292, 2414 6561Fax: 033 - 2413 7900E-mail: [email protected]

ix) Share Transfer System:

Shares in physical form, for transfer, should be lodged at the office of the Company’s Registrar and ShareTransfer Agent, AXC Computers Pvt. Ltd., Kolkata or at the Registered Office or Kolkata Corporate Officeof the Company. The transfers are processed, if technically found to be in order and complete in allrespects and are approved by the Share Transfer Committee. As per directives issued by SEBI, it iscompulsory to trade in the Company’s equity shares in dematerialised form. The Company offers thefacility of transfer-cum-dematerialisation to its shareholders. Those shareholders who avail of this facilityreceive electronic credit of the shares in their respective accounts with the depository.

x) A) Distribution of Shareholding as on March 31, 2003:

Group of Shares No. of % No. of Equity % ofShareholders Shares Shareholding

1 – 500 7324 95.06 829164 13.82

501 – 1000 210 2.73 169158 2.82

1001 – 2000 91 1.18 141150 2.35

2001 – 3000 30 0.39 77307 1.29

3001 – 4000 18 0.23 66102 1.10

4001 – 5000 10 0.13 45569 0.76

5001 – 10000 15 0.19 95646 1.59

10001 & higher 7 0.09 4575904 76.27

Total 7705 100.00 6000000 100.00

B) Shareholding Pattern as on March 31, 2003:

Category No. of shares held Percentage ofshareholding

A Promoters Holding

1. Promoters

— Indian Promoters 16450 0.27

— Foreign Promoters 4440000 74.00

2. Persons acting in concert — —

Sub – total 4456450 74.27

B Non-promoters Holding

3. Institutional Investors

a) Mutual Funds and UTI 1300 0.02

b) Banks, Financial Institutions, Insurance Companies (Central/State

Govt. Institutions/Non-government Institutions) 68535 1.14

c) FIIs — —

Sub – total 69835 1.16

4. Others

a) Private Corporate Bodies 109519 1.83

b) Indian Public 1360196 22.68

c) NRIs / OCBs 3800 0.06

d) Any other:

Directors other than Promoters 200 0.00

Sub – total 1473715 24.57

GRAND TOTAL 6000000 100.00

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xi) Dematerialisation of Shares & Liquidity:

AXC Computers Pvt. Ltd, Kolkata acts as the interface registrars for electronic part of the processingrelating to dematerialisation of shares. On receipt of the demat request both physically and electronicallyand after verification, the shares are dematerialised and an electronic credit of shares is given in theaccount of the shareholders. As on March 31, 2003, 18.71% of total number of shares stood dematerialised.

xii) Outstanding GDR/ADR/Warrants or any convertible instruments:

Not Applicable.

xiii) Plant locations:

The Company owns 9 Tea Gardens and 8 of them are having processing factory, particulars of whichare given at the end of the Annual Report.

xiv) Address for correspondence:Registrar & Share Transfer Agents – Given against 10 (i)Corporate Office: APEEJAY HOUSE15, Park Street, Kolkata – 700 016Phone: 2229 5455 to 58 Fax: 2217 2050E-mail: [email protected]

Management Discussion and Analysis Report

Industry Structure and Developments

Tea in India, is a 150 year old legendary industry and one of the finest agro-assets which produces its own rawmaterials by processing such green leaves into tea. The major tea growing areas are North-Eastern parts of thecountry and South India, both of which account for 97% of the country’s produce of tea. It is a highly labourintensive industry being agricultural in nature and provides direct employment to more than 1 million people allover the country, approximately half of whom are women.

The tea gardens are located in remote and far flung areas, but with passage of time, inaccessibility has beensubstantially eliminated by better means of communications and transportation facilities. But unfortunately therequirements of Plantation Labour Act, 1951(PLA) have not been still relaxed as a result of which the teacompanies are undergoing a lot of stress to adhere to the regulatory provisions of PLA.

Reeling under severe pressure from consistently declining margins, the year 2002 held out little solace for theIndian tea industry. Uncertainty regarding the Indian crop and consumption has to a large extent also dampenedmarket sentiments.

However on a positive side, the Tea Board has recently repositioned its promotional campaign to highlight thehealth benefits of tea. “Piyo More Chai” is now synonymous with tea and well-being. As one of the country’soldest and most organized industries, Indian tea is well positioned to take up challenges of the future and bea front runner in the global tea scene.

Opportunities, Threats, Risks and Concerns

It is noted that there is greater scope to gain market share through Orthodox route and therefore support is beingextended to augment dual processing capabilities in the organised sector to produce both CTC and Orthodoxteas. However cost reduction is vital to combat the current crisis, preserve viability and enhance exportcompetitiveness. Therefore, all cost components are being revisited to bring down the cost through better labourdeployment and increasing productivity of tea bush as well as labour. The Company is also targeting value-addition and niche segment opportunities in specific markets.

The Exporter rating system has been evolved to which good response has been received. The Indian Tea Logohas been redefined and promotional programme launched in Russia. “World’s Gold Standard” will be the newtagline appended to symbolize quality. A comprehensive IT plan has been designed for the tea industry. A jointGeneric Domestic Tea Promotion Campaign has been launched to highlight the health aspects of drinking tea,thereby promoting consumption of tea within India.

Resurgence of Tea as “Health Drink” with a thrust towards giving it a youth drink image is a welcome change.

The entry into the new millennium has thrown open several new challenges; opening up of the Indian economyfor Tea and freer imports has necessitated a change in our mind-set. We can no longer take the domestic marketfor granted without serious effort. Similarly, without diversifying the export base we cannot expect to be a leaderin the world market. This radically altered environment calls for a strong process of adjustment, restructuring andaggression in the market place.

The main risk perceived is further fall in the selling price of tea, if any. Further the production of tea being highlydependent on the weather conditions, due to overall imbalances in the eco-system there is always a risk offluctuation and uncertainty in production.

The tea gardens being spread over large geographical areas are highly labour intensive, hence are subject toadministrative problems whenever and wherever active support from the governmental authorities are lacking.Further there is always a chance of increase in labour cost irrespective of any improvement in production andreduction in other costs.

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21


Segmentwise Performance

Your Company is presently operating in two geographic segments viz. Domestic market and Export market whereinapproximately 86% of the Company’s turnover is contributed to, by the Domestic market segment and the balanceby the Export market segment. However the Company plans to improve the export volumes in coming years.

Outlook

The Tea industry is currently passing through its most turbulent years and views the forthcoming year with somemeasure of optimism. The Tea Board in a bid to increase exports, commissioned the services of a leadingconsultancy agency who in turn made a number of suggestions, a few of which are in the process of beingimplemented. The Government of India is expected to continue to support the industry. Further the numeroushealth benefits of this beverage have now been confirmed by medical science and on this basis industry isactively promoting tea as the beverage of the millennium.

Internal Control Systems and their Adequacy

The Company has appointed as Internal Auditors, Messrs. Lodha & Co., Chartered Accountants, who conductregular internal audit and keep regular checks on the various internal control measures implemented. They alsovisit the various gardens and factories several times during the year and submit regular reports to that effect.

Financial and Operating Performance

The profit margins of the Company have been under severe stress due to continuous depressed prices andvarious measures for stringent cost control, monitoring of the working capital cycle, etc. have been adopted bythe Company. Notwithstanding the above your Company continued its zeal of producing highest quality teasduring the year under review.

The Company’s profit before depreciation, interest and tax declined to Rs. 10,81 lacs against Rs. 13,41 lacs inthe previous year. The Company’s basic financials in terms of debt equity ratio, cash flow, interest coveragecontinues to be strong.

Industrial Relations and Human Resource Development

The fact that it is a labour intensive industry, lays great responsibilities on the Company’s shoulders. Howeverthe present workforce of over 15000 employees have shown great resilience, adaptability and a high degree ofcommitment. Your Company has a full-fledged Human Resource Department, which monitors the developmentof all employees, organises various orientation, training and management development programmes throughoutthe year.

In its continuous employee welfare endeavor your Company has also designed various policies on Ethics,Personnel, Employee recognition and long service awards etc, which will be implemented from April 1, 2003.

Cautionary Statement

Any statement made in the Management Discussion and Analysis Report relating to Company’s objectives,projections, outlook, expectations, estimates etc. may constitute “forward looking statements” within the meaningof applicable laws and regulations. Actual results may differ from such expectations, projections etc. whetherexpressed or implied. Several factors could make a significant difference to the Company’s operations whichinclude climatic conditions, economic conditions affecting demand / supply, Government regulations, tax laws,other statutes and such other incidental factors.

22


AUDITORS’ CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATEGOVERNANCE AS STIPULATED IN CLAUSE 49 OF THE LISTING AGREEMENT

To the Members of AFT Industries Limited

We have reviewed the compliance of conditions of Corporate Governance by AFT Industries Limited for the yearended 31st March 2003, as stipulated in Clause 49 of the Listing Agreement of the said Company with StockExchanges, with the relevant records and documents maintained by the Company and furnished to us.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examinationwas limited to procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.

We further state that such compliance is neither an assurance as to the future viability of the Company nor theefficiency or effectiveness with which the management has conducted the affairs of the Company.

As at 31st March, 2003 no investor grievance is pending for a period exceeding one month against the Companyas per the records maintained by the Company, other than 2 cases (subsequently resolved) referred to in theNote in Section 5(b) of the Report on Corporate Governance issued by the Company on even date.

On the basis of our review and according to the information and explanations given to us, except for the numberof Audit Committee Meetings held during the year below the required minimum and delay in implementation ofthe conditions of Corporate Governance beyond the stipulated date and in submission of quarterly results asreferred to in Sections 3(c) and 7C respectively, of the Report on Corporate Governance issued by the Companyon even date, the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement withthe Stock Exchanges have been complied with in all material respect by the Company.

S. K. DEBPartner

For and on behalf of

Kolkata PRICE WATERHOUSE12th June, 2003 Chartered Accountants

Auditors' Report to the Members

1. We have audited the attached Balance Sheet of AFT Industries Limited, as at 31st March 2003, and also theProfit and Loss Account for the year ended on that date annexed thereto and the cash flow statement for theyear ended on that date. These financial statements are the responsibility of the Company's management. Ourresponsibility is to express our opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatements. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Manufacturing and Other Companies (Auditor’s Report) Order, 1988 issued by the CentralGovernment of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, of India (‘TheAct’) we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to the above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the company so far as appearsfrom our examination of those books;

(iii) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books ofaccount;

(iv) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the applicableaccounting standards referred to in sub-section (3C) of section 211 of the Act;

(v) On the basis of written representations received from the directors, as on 31st March, 2003, and taken onrecord by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2003from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accountsgive in the prescribed manner the information required by the Companies Act, 1956, and also give subject toNote 8 on Schedule 17 regarding managerial remuneration to the extent indicated therein awaiting Shareholders’approval, a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2003;

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(c) in the case of cash flow statement, of the cash flows for the year ended on that date.

S. K. DEBPartner



23


24


Annexure referred to in paragraph (3) of the Auditors’ Report to the Shareholders of AFTIndustries Limited on the accounts for the year ended 31st March, 2003.

1. The Company has maintained proper records, showing full particulars including quantitative details and situationof its Fixed Assets. The Fixed Assets of the Company (other than those at the Head Office) have been physicallyverified by them during the year and that no material discrepancies between the book records and the physicalinventory have been noticed.

2. The Fixed Assets of the Company have not been revalued during the year.

3. The Stock of stores, raw materials (Green Leaf) and finished goods lying at all locations, other than the finishedgoods with the agents, have been physically verified by the management during the year. In our opinion, theprocedures of physical verification of stocks followed by the management are reasonable and adequate inrelation to the size of the Company and the nature of its business. The discrepancies between the physicalstocks and the book stocks, which have been properly dealt with in the books of account, were not significantin relation to the size of the Company’s operation. In our opinion, the valuation of stocks of finished tea andstores has been fair and proper in accordance with the normally accepted accounting principles followed inIndia and is on the same basis as in the preceding year.

4. In our opinion, the rates of interests and the terms and conditions of loans secured or unsecured taken by theCompany during the year, from companies, firms and other parties listed in the Register maintained underSection 301 of the Act, are not prima facie prejudicial to the interest of the Company.

In terms of sub section (6) of Section 370 of the Act, provisions of this section are not applicable to a Companyon or after 31st October 1988.

5. In our opinion, the rates of interest and other terms and conditions of loans, secured or unsecured, grantedby the Company, during the year, to companies, firms and other parties listed in the Register maintained underSection 301 of ‘The Act’ are not prima facie prejudicial to the interest of the Company.

In terms of sub section (6) of Section 370 of the Act, provisions of this section are not applicable to a Companyon or after 31st October, 1988.

6. Parties (including employees) to whom loans and advances in the nature of loans have been given by theCompany during the year are repaying those principal amounts as stipulated and are also regular in paymentof interest, where applicable; in a few exceptional cases reasonable steps have been or are being taken bythe Company for recovery.

7. In our opinion, internal control procedures of the Company relating to purchase of stores, plant and machinery,equipment and other similar assets and for sale of goods are commensurate with the size and nature of businessof the Company.

8. In our opinion, purchase of goods and materials and sale of goods and materials, made in pursuance ofarrangements entered in the Register maintained under Section 301 of ‘The Act’ and aggregating during theyear Rs. 50,000/- or more in value in respect of each party have been made at prices which are reasonablehaving regard to the prevailing market prices for such goods and materials or the prices at which the transactionsfor similar goods and materials were made with other parties. The Company has not sold services aggregatingRs. 50,000/- or more in value to any of the parties listed in the Register maintained under Section 301 of theAct.

9. The Company has a system of determining unserviceable or damaged stores or finished goods on the basisof technical evaluation and on such basis, in our opinion, adequate amounts have been written off such stocksin these accounts. As regards raw materials, the question of determination of unserviceable or damaged stockdoes not arise, since raw material is green leaf, which is consumed immediately after plucking.

10. The Company has not accepted any deposits from the public.

11. In our opinion, reasonable records have been maintained by the Company for sale and disposal of tea waste.The Company has no by-products.

25


12. Internal audit has been performed by certain firms of Chartered Accountants and based on their reports asavailable for the period upto December 2002 in our opinion the system of internal audit is commensurate withthe size and nature of the Company's business.

13. The Central Government of India has not prescribed the maintenance of cost records by the Company underSection 209(1)(d) of the Act for its product for the financial year ended 31st March, 2003.

14. The Company has generally been regular in depositing during the year, provident fund dues with the appropriateauthorities. As explained by the management, the Employees’ State Insurance Scheme is not applicable tothe Company.

15. There was no amounts outstanding on 31st March, 2003 in respect of undisputed Income Tax, Wealth Tax,Sales Tax, Customs Duty and Excise Duty, which were due for more than six months from the date they becamepayable.

16. During the course of our examination of the books of account carried out in accordance with generally acceptedauditing practices we have not come across any personal expenses which have been charged to Profit andLoss Account nor have we been informed of such case by the management other than those payable undercontractual obligations or in accordance with generally accepted business practices followed in India.

17. As on 31st March, 2003 the Company is not a sick industrial Company within the meaning of clause (o) ofSection 3 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 of India.

S. K. DEBPartner



26


Balance Sheet as at March 31, 2003(Rs. in thousands)

Schedule March 31 March 31No. 2003 2002

SOURCES OF FUNDSShareholders' Funds

Capital 1 60,000 60,000

Reserves & Surplus 2 21,11,382 21,55,194

21,71,382 22,15,194

Loan FundsSecured Loans 3 1,88,043 84,776

Unsecured Loans 4 3,65,173 1,14,336

5,53,216 1,99,112

Deferred Taxation Liability - net (Note 11 on schedule 17) 22,795 26,299

TOTAL 27,47,393 24,40,605

APPLICATION OF FUNDSFixed Assets 5

Gross Block 25,22,205 24,77,006

Less : Depreciation 8,42,541 7,49,272

Net Block 16,79,664 17,27,734

Capital Work-in-Progress 3,763 7,966

16,83,427 17,35,700

Investments 6 43,702 26,934

Current Assets, Loans and AdvancesInventories 7 87,414 86,347

Sundry Debtors 8 34,817 22,746

Cash and Bank Balances 9 2,26,612 5,821

Loans and Advances 10 9,23,373 8,24,354

12,72,216 9,39,268

Less : Current Liabilities and ProvisionsLiabilities 11 1,81,721 1,75,022

Provisions 12 70,231 86,275

2,51,952 2,61,297

Net Current Assets 10,20,264 6,77,971

TOTAL 27,47,393 24,40,605

Notes on Accounts 17

This is the Balance Sheet referred Schedules referred to aboveto in our report of even date form part of the Balance Sheet

S. K. DEBPartner JIT PAUL

For and on behalf of KARAN PAULKolkata PRICE WATERHOUSE B. DUTTA A. K. BHARGAVAJune 12, 2003 Chartered Accountants Secretary Directors

27


Profit and Loss Account for the year ended March 31, 2003(Rs. in thousands)

Schedule Year ended Year endedNo. 31.03.2003 31.03.2002

INCOMESales (Including Claims) 9,31,571 9,29,308

Other Income 13 62,486 53,866

Increase/(Decrease) in Stock 14 7,821 22,772

10,01,878 10,05,946

EXPENDITUREExpenses 15 8,93,731 8,71,851

Interest 16 32,281 25,526

Depreciation 93,944 95,401

Less : Depreciation on amount added on Revaluation 58,335 35,609 58,497 36,904(Note 6 on Schedule 17)

9,61,621 9,34,281

Profit before Taxation 40,257 71,665

Provision for Taxation

– Current (Note 10 on Schedule 17) 15,700 17,000

– Deferred (Notes 10 and 11 on Schedule 17) (3,504) 1,005

Profit after Taxation 28,061 53,660

Transfers from :

Development Allowance Reserve — 400

Balance Brought Forward 34,324 35,264

Profit available for Appropriation 62,385 89,324

APPROPRIATIONSTransfers to :

General Reserve 2,806 25,000

Proposed Dividend 12,000 30,000

Provision for Tax on Proposed Dividend 1,538 —

Balance Carried Forward 46,041 34,324

62,385 89,324

Earnings per share Basic and Diluted (Rs.) 4.68 8.94(Note 16 on Schedule 17)

Notes on Accounts 17

This is the Profit and Loss Account Schedules referred to abovereferred to in our report of even date form part of the Profit and Loss Account



28


Schedules to the Balance Sheet and Profit & Loss Account(Rs. in thousands)

SCHEDULE 1 March 31 March 31SHARE CAPITAL 2003 2002

Authorised1,50,00,000 Equity Shares of Rs. 10 each 1,50,000 1,50,000

Issued and Subscribed60,00,000 Equity Shares of Rs. 10 each fully paid 60,000 60,000

Of the above :a) 22,20,000 fully paid Equity Shares are held by the Holding

Company, Assam Frontier Tea Holdings Limited, U.K.which were issued for consideration other than cash

b) 30,00,000 fully paid Bonus Shares were issued bycapitalisation of General Reserve

SCHEDULE 2 March 31 March 312002 Additions Deductions 2003

RESERVES AND SURPLUSCapital Reserve (Note 7) 4,990 — — 4,990Pre Merger Reserve 1,273 — — 1,273Revaluation Reserve (Note 6) 13,90,863 58,335 13,32,528

13,97,126 — 58,335 13,38,791Revenue Reserves

Development Allowance Reserve —Export Profit Reserve 9,000 — — 9,000General Reserve 7,14,744 2,806 — 7,17,550

7,23,744 2,806 — 7,26,550Balance in Profit and Loss Account 34,324 46,041 34,324 46,041

21,55,194 48,847 92,659 21,11,382

March 31 March 31SCHEDULE 3 2003 2002

SECURED LOANSCash Credit from Banks 1,58,043 84,776(Secured by hypothecation of crop, Book debts and movable/immovable properties and also the title deeds to the Company'stea estates are held by the Bank by way of equitable mortgageand rank paripassu at the point of security)Short term loan from BNP PARIBAS 30,000 —(Secured by hypothecation of all movable assets on second charge basis)

1,88,043 84,776

SCHEDULE 4UNSECURED LOANS

Packing Credit Loan from Bank — 3,708Term Loan from Banks (Repayable within one year - Rs. 50,000) 3,64,625 1,10,000Temporary Overdraft 548 628

3,65,173 1,14,336

29

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30


SCHEDULE 6(Rs. in thousand)

March 31 March 312003 2002

INVESTMENTS (LONG TERM) — AT COST

Other than Trade – Quoted

14,144 Equity Shares of Rs. 10 each fullypaid up in DCM Shriram Consolidated Limited 711 711

8,486 Equity Shares of Rs. 10 each fully paid up inDCM Shriram Consolidated Limited 678 678

7,072 13% Secured Redeemable Non-ConvertibleDebentures of Rs. 33 each (2002 – Rs. 66 each)fully paid up in DCM Shriram Consolidated Limited(redeemed in 2003-04)* 234 466

75,432 16% Partly Non-Convertible Debenturesof Rs. 135 each, fully paid up in DCM Limited(Note 14 on Schedule 17)* 10,203 10,203

75,432 Equity Shares of Rs. 10 eachfully paid up in DCM Limited 3,402 3,402

100 Equity Shares of Rs. 10 each fully paid up inThe Industrial Finance Corporation of India Limited 4 4

150 Equity Shares of Rs. 10 each fullypaid up in State Bank of India 15 15

Other than Trade – Unquoted

14,000 Equity Shares of Rs. 10 each fullypaid in ABC Tea Workers Welfare Services 140 140

13,37,856.89 units of Rs. 10 each(under 1964 scheme) of Unit Trust of India 18,815 18,815

44,000 (2002 - Nil) Equity Shares of Rs. 10 eachfully paid up in Empire & Singlo Tea Limited 22,000 —

56,202 34,434

Provision for Diminution in value of Investments (12,500) (7,500)

43,702 26,934

31


Note : Aggregate Book Value (Gross)

Quoted Investments 15,246 15,479

Unquoted Investments 40,955 18,955

Market Value of Quoted Investments(other than items marked with*above for which currentquotations are not readily available) 1,755 1,499

Published Net Asset Value of Units in MutualFunds (other than units of Unit Trust of India) — —

Repurchase Price of Units of Unit Trust of India 13,379 8,214

(Rs. in thousands)March 31 March 31

2003 2002

SCHEDULE 7

INVENTORIES

Stock of tea at lower of costand net realisable value 59,757 51,936

Stores and Spares at or under cost 27,657 34,411

87,414 86,347

SCHEDULE 8

SUNDRY DEBTORS

Unsecured

Debts outstanding for a period exceeding six months

Considered good 81 404

Considered doubtful 199 199

Less : Provision for doubtful debts 199 199

— —

Other Debts

Considered good 34,736 22,342

34,817 22,746

SCHEDULE 9

CASH AND BANK BALANCES

Cash in hand 2,00,162 223(including Cheques in hand Rs. 1,99,460; 2002 - Nil)

Remittance-in-transit 387 380

With Scheduled Banks

On Current Accounts 21,403 617

On Unpaid Dividend Accounts 4,660 4,601

2,26,612 5,821

32



2003 2002

SCHEDULE 10

LOANS AND ADVANCES

Unsecured

Inter Corporate Loans

Considered good 4,80,580 2,90,780

Considered doubtful 15,000 15,000

Provision for doubtful Loans (15,000) (15,000)

— —

Interest accrued :

Considered good

on Loans and Deposits 41,329 34,189

on Others — 1,660

Advances recoverable in cash orin kind or for value to be received

Considered good 2,54,137 3,44,377

Considered doubtful 1,332 332

Provision for doubtful advances (1,332) (332)

— —

Deposits [including Rs. 496 (2002 – Rs. 496)under Investment Deposit Scheme (Tea), 1986 andRs. 41,689 (2002 – Rs. 43,893) under TeaDevelopment Account Scheme, 1990] – considered good 1,47,327 1,53,348

9,23,373 8,24,354

Note : Includes balance with Excise Authorities Rs. 309 (2002 – Rs. 380)

SCHEDULE 11

CURRENT LIABILITIES

Sundry Creditors (Note 22 on Schedule 17) 1,73,853 1,70,303

Investor Education and Protection Fund shall becredited by the following amounts namely @

Unpaid Dividend 4,660 4,601

Interest Accrued but not due 3,208 118

@ No amount due for actual credit at theBalance Sheet date. 1,81,721 1,75,022

SCHEDULE 12

PROVISIONS

For Taxation less payments 45,713 45,295

Proposed Dividend 12,000 30,000

Tax on Proposed Dividend (Note 15 on Schedule 17) 12,518 10,980

70,231 86,275

33



2003 2002

SCHEDULE 13

OTHER INCOME

Profit on sale of Investments (Net) — 261

Sale of DEPB Licence 4,207 —

Dividend on Units — 1,216[Tax deducted at source Rs. Nil (2002 – Rs. Nil)]

Dividend on Shares/Mutual Funds 1 97[Tax deducted at source Rs. Nil (2002 – Rs. Nil)]

InterestOn Investments (Other than Units) 150 935[Tax deducted/deductible at sourceRs. 21 (2002 – Rs. 15)]

On Loans 40,976 32,377[Tax deducted/deductible at sourceRs. 8,605 (2002 – Rs. 6,476)]

On Deposits 4,274 4,649[Tax deducted/deductible at sourceRs. 897 (2002 – Rs. 949)]

Sundry Receipts 12,878 12,831[Includes Rs. 2,933 (2002 – Rs. 1,984)being foreign currency exchange gain (net)]

Provision for Loans and Advances no longer required written back — 1,500

62,486 53,866

SCHEDULE 14

INCREASE/(DECREASE) IN STOCK

Closing Stock of Tea 59,757 51,936Less : Opening Stock of Tea 51,936 29,164

7,821 22,772

SCHEDULE 15

EXPENSES

Salaries, Wages and Bonus 4,08,808 3,53,230

Contribution to Provident and other Funds 49,933 44,286

Workmen and Staff Welfare 61,018 70,828

Purchase of Green Leaf 1,652 1,417

Purchase of Black Tea for blending 26,088 23,137

Cess on Green Leaf 19,824 21,216

Stores and Spares 61,859 61,248

Power and Fuel 1,07,709 1,04,859

Excise Duty 1,638 19,593

Rent 8,025 3,312

Rates and Taxes 4,901 6,515

Insurance 5,103 7,320

Repairs to Buildings 9,292 14,187

Repairs to Machinery 14,490 18,517

Other Repairs and Maintenance 7,816 11,497

Shipment Charges 7,982 6,156

Transportation 17,595 16,999

Sale Charges 21,186 27,846

Brokerage 10,901 8,460

Advertisement and Sales Promotion 1,175 1,416

Directors' Fees 17 3

Advances written off 1,660 —

Provision for doubtful advances 1,000 —

Provision towards diminution in value of investment 5,000 2,000

Loss on sale of Assets 12 8

Miscellaneous 39,047 47,801

8,93,731 8,71,851

SCHEDULE 16

INTEREST AND DISCOUNTING CHARGES

Interest

Banks – Other than Fixed Loans 8,604 6,902

– Fixed Loans 17,273 15,274

Others 2,048 —

Discounting charges on Commercial Paper 4,356 3,350

32,281 25,526

34



2003 2002

35


SCHEDULE 17

NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2003

1. Significant Accounting Policies (Rupees in thousands)

1.1 Fixed Assets

Fixed Assets are stated at cost of acquisition together with resultant write up due to revaluation as theremay be. The cost of extension planting on cultivable land including cost of development is capitalised.The cost of replanting tea bushes and fuel trees is charged to revenue.

Depreciation is charged on written down value method in the manner and at the rates specified in ScheduleXIV of the Companies Act, 1956.

1.2 Investments

Long Term Investments are stated at cost; provision for diminution in value, other than temporary, ismade.

1.3 Inventories

Stock of Tea is valued at lower of cost (calculated on weighted average basis including all charges andexcise duty payable thereon on clearance) and net realisable value and stock of stores and spares isvalued at or under cost (on weighted average basis) (after considering write-off for obsolescence etc.).

1.4 Foreign Currency Transactions

Foreign Currency Transactions are converted and accounted for at the rates prevailing on the date oftransaction. Year-end current assets (monetary items) and liabilities are restated at the year-end exchangerate.

1.5 Retirement Benefits

a) Annual Gratuity liability is actuarially ascertained and funded.

b) Appropriate contributions for pension are made to the approved Fund in respect of the eligible Staffand Executives.

c) Annual Leave Encashment liability is actuarially ascertained and provided for.

1.6 Turnover

Turnover includes tea claims.

1.7 Revenue Recognition

Items of income and expenditure are recognised on accrual and prudent basis. Credits under DutyEntitlement Pass Book Scheme is recognised as revenue in the Annual Accounts on the basis of actualrealisation against related licenses.

1.8 Taxes on Income

Current Tax is determined as the amount of tax payable in respect of taxable income for the period basedon applicable tax rates and laws. Deferred Tax is recognised, subject to the consideration of prudence inrespect of deferred tax assets, on timing differences, being the difference between taxable income andaccounting income that originate in one period and are capable of reversal in one or more subsequentperiods and is measured using tax rates and laws that have been enacted or substantively enacted by theBalance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation.

1.9 Borrowing costs attributable to the acquisition and construction of qualifying assets are added to the costupto the date when such assets are ready for their intended use. Other borrowing costs are recognisedas expenses in the period in which these are incurred.

2. Compensation in respect of 2632 hectares of land acquired by Assam Government in earlier years is beingaccounted for as and when received.

36


3. There are contingent liabilities in respect of : (Rupees in thousands)

a) Sales Tax matter under dispute : Rs. 2,959 (2001-2002 : Rs. 62,936).

b) Income Tax and Agricultural Income Tax matters under dispute (other than matters awaiting quantificationby assessing authorities and/or with favourable appellate decision for other years against which furtherappeals are pending) : Rs. 16,075 (2001-2002 : Rs. 4,887).

c) Claims against the Company not acknowledged as debts (to the extent quantifiable) Rs. 26,072 (2001-2002 : Rs. 24,682).

d) Outstanding Guarantees given to third parties : Rs. 7,300 (2001-2002 : Rs. 7,143).

e) Corporate Guarantees given by the Company to secure the financial assistance/accommodation extendedto other bodies Corporate amounting to Rs. 1,735 (2001-2002 : Rs. 1,735)

4. Miscellaneous Expenses include :

Auditors' Remuneration

2002-03 2001-02

Audit Fee 390 350

Tax Audit Fee 100 90

For other services (Half yearly review, certificates etc.) 205 186

Reimbursement of Expenses 79 52[including service tax : Rs. 32 (2001-2002 : Rs. 30)]

774 678

5. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net ofadvance) Rs. 1,059 (2001-2002 : Rs. 5,195).

6. Based on the Valuation Report submitted by Professional Valuer appointed for the purpose, Plantations,Buildings and certain items of Plant and Machinery of the Company have been revalued as at March 31, 1994on current cost basis and adjusted for depreciation element as applicable. The resultant increase in net bookvalue on such revaluation amounting to Rs. 18,31,759 was transferred to Revaluation Reserve.

Depreciation on Fixed Asset items covered by revaluation referred to in paragraph above is calculated ontheir respective revalued amounts at rates considered applicable by the Valuer on Straight Line Method asagainst the methods/rates/bases which would have otherwise been adopted for the purpose of the AnnualAccounts of the Company and accordingly include additional charges of Rs. 58,335 (2001-2002 :Rs. 58,497) which has been transferred from Revaluation Reserve, such transfer according to an authoritativeprofessional view, being accepted for the purpose of Company's Accounts. In consequence, the effectivedepreciation rates are as per Schedule XIV of the Companies Act, 1956.

7. Capital Reserve includes pre-acquisition profit of Rs. 1,900 (Schedule 2).

8. (a) The total amount paid/payable to the Wholetime Directors and charged in these accounts under variousheads is set out below :

2002-03 2001-02

Salaries & Allowances 1,187 1,028

Commission 302 285

Contribution to Provident & Other Funds 188 178

Cost of benefits (including estimated value of perquisites) 185 192

1,862 1,683

(b) Managerial remuneration amounting to Rs. 385 is yet to be approved by the shareholders.

37


9. Computation of Profit under Section 198 read with Section 309 of the Companies Act, 1956 for the purposeof Commission payable to the Wholetime Directors.

2002-03 2001-02

Profit as per Profit & Loss Account 40,257 71,665

Add : Wholetime Directors’ Remuneration 1,862 1,683


Directors’ fees 17 3

77,745 1,10,255

Less : Depreciation under Section 350 35,609 36,904

Profit/(Loss) on sale of Investment — 261

42,136 73,090

1% Commission 421 731

Restricted to 50% of salary of eligible Directors 302 285

10. a) The provision for Income Tax (including deferred tax) has been made after considering depreciation onfixed assets on the basis of the decision of the Calcutta High Court in CIT vs. Suman Tea & PlywoodsIndustries Private Limited reported in 204 ITR 719.

b) Deferred Tax Assets pertaining to Agricultural Income Tax Losses have not been recognised in the absenceof virtual certainty of availability of taxable income in future years.

11. Composition of year - end deferred tax liability (net) 2002-03 2001-02

Timing difference on account of :

Depreciation as per tax law and books 25,737 28,298

Others (2,942) (1,999)

22,795 26,299

12. Expenses include reimbursements.

13. As in the past on a prudent basis replanting subsidy is being accounted for as and when received.

14. 16% Partly Non Convertible Debentures of Rs. 135/- each, fully paid up in DCM Limited (Schedule 6), whichwere due for redemption at par in three equal annual instalments at the end of 7th, 8th and 9th years fromthe date of Allotment i.e. 7th May 1993, are yet to be redeemed pending finalisation of the Scheme ofRestructuring of DCM Limited under Sections 391 to 394 of the Companies Act, 1956 currently before theHon’ble Delhi High Court.

SCHEDULE 17 (contd.) (Rupees in thousands)

38


SCHEDULE 17 (contd.) (Rupees in thousands)

15. Year end balance of tax on proposed dividend Rs. 12,518 (Schedule 12) represents an amount in respectof the earlier years, which has not been deposited with the income tax authorities pursuant to the interim staygranted by the Hon’ble High Court at Calcutta in connection with a writ petition filed by the Company.

16. Computation of Earning per Equity Share (Basic and Diluted) 2002-03 2001-02

i) Basic

a) (i) Number of Equity Shares at the beginning of the year 60,00,000 60,00,000

(ii) Number of Equity Shares at the end of the year 60,00,000 60,00,000

(iii) Weighted average number of Equity Sharesoutstanding during the year 60,00,000 60,00,000

(iv) Face Value of each Equity Share (Rs.) 10 10

b) Profit after tax available for Equity Shareholders

Profit after Taxation 28,061 53,660

Basic Earning Per Share [(b) / (a)(iii)] (Rs.) 4.68 8.94

ii) Diluted Earning Per Share (Rs.) 4.68 8.94

17. Repairs to Buildings, Repairs to Machinery and Other Repairs in Schedule 15 are exclusive of salariesand wages amounting to Rs. 3,380 (2001-2002 : Rs. 4,341), Rs. 4,216 (2001-2002 : Rs. 4,469) andRs. 6,005 (2001-2002 : Rs. 6,463) respectively which have been included in Salaries, Wages and Bonus inSchedule 15.

18. Information in accordance with Accounting Standard-17 on Segment Reporting issued by the Institute ofChartered Accountants of India, for the year ended March 31, 2003 :

The Company is engaged in the business of cultivation, manufacture and sale of tea having eight estateslocated in the State of Assam. The products and their application are homogeneous in nature. However it hascustomers within and outside India and thus its primary reporting format is based on the geographical locationof the customers.

The accounting policies adopted for segment reporting are in line with the accounting policies adopted in financialstatements. Revenue, expenses, assets and liabilities have been identified to segments on the basis of theirrelationship to the operating activities of the segment. Revenue and expenses, assets and liabilities which relateto the enterprise as a whole and are not allocable to segments on a reasonable basis, have been included under“Unallocable income (net of unallocable expenditure)” and “Unallocable assets/liabilities” respectively.

39


SCHEDULE 17 (contd.)

Information about Geographical segments

Export Domestic Total

UK USA Canada OthersSegment RevenueExternal Revenue 1,21,411 12,656 10,756 9,810 7,76,938 9,31,571

(1,04,686) (2,024) (6,708) (5,368) (8,10,522) (9,29,308)

TOTAL REVENUE 1,21,411 12,656 10,756 9,810 7,76,938 9,31,571(1,04,686) (2,024) (6,708) (5,368) (8,10,522) (9,29,308)

Segment Result (PBIT) 15,799 1,592 1,897 869 42,733 62,890(1,863) (124) (374) (1,895) (69,524) (73,780)

Unallocated Income (net of expenses) 9,648(23,411)

Less : Interest 32,281(25,526)

Profit before taxation 40,257(71,665)

Provision for taxation 15,700(17,000)

Add : Deferred tax adjustments 3,504(-1,005)

Profit after taxation 28,061(53,660)

Other InformationSegment Assets 3,393* 31,424* 34,817

(7,572) (15,175) (22,747)

Unallocated Assets 29,64,528(26,79,155)

Total Assets 29,99,345(27,01,902)

Segment Liabilities 270** 270

Unallocated Liabilities 8,27,693(4,86,708)

Total Liabilities 8,27,963(4,86,708)

Capital Expenditure 41,838(46,507)

Depreciation 35,609(36,904)

Note : Previous year’s figures are shown in parenthesis

* Debtors** Brokerage liability

40



19. Related Party Disclosure in keeping with Accounting Standard-18 issued by the Institute of Chartered Accountantsof India :

Related Parties

a) Where control exists Relationship

Assam Frontier Tea Holdings Ltd. Holding Company

Empire & Singlo Tea Limited Associate

b) Others

Mr. D. J. Mukherjee Key Management Personnel

Mr. A. K. Bhargava Key Management Personnel

Mr. A. Barbora Key Management Personnel

c) Transaction with related parties : 2002-03 2001-02

i) Holding Company— Dividend paid 18,870 22,200

ii) Associate— Stores issued 2,281 853— Purchase of Tea 25,984 22,917— Stores received 643 1,195— Expenditure on Other Services 587 342

Outstanding balances— Recoverable (Net) — 1,372— Investment in Equity Shares 22,000 —— Counter guarantees given 1,735 1,735

iii) Managerial Remuneration to KeyManagement Personnel 1,862 1,683

Transactions set out above do not include —

i) Advances given Rs. 99,804 (maximum at any time during the year Rs. 40,002) to Empire & Singlo Tea Ltd.,from time to time in keeping with normal trade practices for purchase of Black Tea for blending which wereliquidated within the year end, in cases of their inability to timely supply of quality/quantity of tea.

ii) Garden Remittances —

In absence of adequate banking facilities in Assam weekly remittances for tea garden payments on behalfof Empire & Singlo Tea Ltd., were made through the Company’s Banker and the reimbursement againstsuch remittances were received generally on the same week from them. However no charges were madefor the above.

(Rupees in thousands)

20. a) Particulars of loans and advances in the nature of loans to firms/companies in which directors are interested.

Name of the Loanee Amount of loans/ advances Maximum amount ofin the nature of loans at loans/advances in thethe year end. nature of loans outstanding

during the year.

Apeejay Finance Group Ltd. 50,000 1,07,000

Surrendra Overseas Ltd. — 10,000

Apeejay Surrendra Park Hotels Ltd. 3,67,800 3,68,900

Apeejay Surrendra Corporate Services Pvt. Ltd. 57,780 57,780

b) Advances recoverable in cash or in kind for value to be received includes Rs. 2,357 towards interest freeadvances being car loans to various employees which are recovered from their remuneration as per therepayment schedule in terms of the relevant scheme for the employees.

21. The Company produces Black Tea and the relevant information pursuant to the provisions of paragraphs 3 and4 of part II of Schedule VI of the Companies Act, 1956 is given below :

2002-03 2001-02

21.1 Licensed Capacity Does not apply Does not apply

Installed Capacity (Kgs. in thousand) 20,574 16,200

(as certified by the Management)

21.2 Saleable Production (Kgs. in thousand) 13,033 13,764

21.3 Opening Stock (Kgs. in thousand) 969 489

— Value (Rs. in thousand) 51,936 29,164

— Purchase (Kgs. in thousand) 337 263


Turnover (including claims, damages,

samples etc.) (Kgs. in thousand) 13,356 13,547

— Value (Rs. in thousand) 9,31,571 9,29,308

Closing Stock (Kgs. in thousand) 983 969


21.4 (i) Raw Materials ConsumedGreen Leaf (indigenous) (Kgs. in thousand) 61,893 65,562

— Value (Rs. in thousand) It is not required to be disclosed in view of notification no.S.O.954(E) dated 25.09.01 of Dept. of Company Affairs, Ministryof Finance, Government of India.

(ii) Raw Materials PurchasedGreen Leaf (indigenous) (Kgs. in thousand) 217 158— Value (Rs. in thousand) 1,652 1,417

41




JIT PAULKARAN PAUL

Kolkata B. DUTTA A. K. BHARGAVAJune 12, 2003 Secretary Directors

42



21.5 Stores and Spares Consumed(indigenous) (Rs. in thousand) 61,066 87,772

21.6 Expenditure in Foreign Currency (Rs. in thousand)Foreign Travel 1,365 1,425Others — 244Interest on Foreign Currency Loan 1,363 1,283

21.7 Remittance in Foreign Currency (Rs. in thousand)Dividend

— Final 18,870 22,200Number of non-resident shareholders 1 1Number of shares held by the non-residentshareholders on which the Dividends were due 44,40,000 44,40,000

Year to which the Dividend relates— Final Year ended Year ended

March 31, 2002 March 31, 2001

21.8 Earnings in foreign exchange (Rs. in thousand)Export of goods calculated on F.O.B. Basis 1,46,263 1,12,141

22. The names of Small Scale Industrial Undertakings to whom amounts are due for more than 30 days as onMarch 31, 2003 are as follows :

Epoch Marketing Pvt. Ltd. (Rs. in thousand) 18

23. Previous year’s figures have been rearranged / regrouped, wherever necessary.

Signatures to Schedules 1 to 17


2002-03 2001-02

43


(Information pursuant to provisions of Part IV of Schedule VI to the Companies Act, 1956)

I. Registration Details

Registration No. State Code

Balance Sheet Date

II. Capital raised during the Year (Amount in Rupees Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation & Deployment of Funds (Amount in Rupees Thousands)

Total Liabilities Total Assets

Sources of Funds

Paid up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Application of Funds

Net Fixed Assets(Including Capital Work in Progress 3763) Investments

Net Current Assets Miscellaneous Expenditure

Accumulated Losses

IV. Performance of the Company (Amount in Rupees Thousands)

Turnover (Including Other Income & Adjustments) Total Expenditure

+ – Profit/Loss Before Tax + – Profit/Loss After Tax

(Please (✓) Tick Appropriate Box + for Profit, – for Loss)

Earnings per Share in Rs. Dividend Rate %

V. Generic Names of Three Principal Products/Services of Company (As per Monetary Terms)

Item Code No.

(ITC Code)

Product Description : Black Tea (Leaf & Dust in Bulk)

BALANCE SHEET ABSTRACT & COMPANY'S GENERAL BUSINESS PROFILE

1 7 1 4

3 1 0 3 0 3

0 2

N I L

N I L

N I L

N I L

2 9 9 9 3 4 5

2 1 1 1 3 8 2

3 6 5 1 7 3

4 3 7 0 2

N I L

9 6 1 6 2 1

✓ 2 8 0 6 1

2 0

2 9 9 9 3 4 5

6 0 0 0 0

1 8 8 0 4 3

1 0 0 1 8 7 8

✓ 4 0 2 5 7

N I L

4 . 6 8

0 9 0 2 4 0 0 2

0 9 0 2 4 0 0 3

DATE MONTH YEAR

1 6 8 3 4 2 7

1 0 2 0 2 6 4

JIT PAULKARAN PAUL

Kolkata B. DUTTA A. K. BHARGAVAJune 12, 2003 Secretary Directors

44


CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2003Prepared pursuant to clause 32 of the Listing Agreement

(Rupees in thousands)31.03.2003 31.03.2002

A. CASH FLOW FROM OPERATING ACTIVITIES :Net profit before Tax and Extraordinary Items 40,257 71,665

Adjustments for :


Foreign currency translation (gain)/loss at year end 45 (154)

— Income from Investments - Interest (150) (935)

Dividend (1) (1,313)

— (Profit)/Loss on sale of Investments — (261)

Interest paid / payable on Loans 32,281 25,526

Interest received / receivable on Loans etc. (45,250) (37,026)

(Profit)/Loss on sale of Fixed Assets 12 8

Provision for Leave Encashment — 389

Provision for doubtful debts/Loans and Advances/Investments 6,000 2,000

Provision no longer required written back — (1,500)

28,546 23,638

Operating Profit before Working Capital changes 68,803 95,303

Adjustments for :

Trade and Other Receivables 83,145 (32,791)

Inventories (1,067) (27,135)

Trade Payables 3,550 (65,452)

85,628 (1,25,378)

Cash Generated from Operations 1,54,431 (30,075)

Direct Taxes Paid - Income Tax (5,759) (14,499)

- Dividend Tax — —

(5,759) (14,499)

Cash Flow before extraordinary items 1,48,672 (44,574)

Extraordinary Items — —

Net Cash from Operating Activities 1,48,672 (44,574)

B. CASH FLOW FROM INVESTING ACTIVITIES :Purchase of Fixed Assets (41,838) (46,505)

Sale of Fixed Assets 155 15

Intercorporate Loans given (7,83,650) (2,48,500)

Intercorporate Loans realised/adjusted 5,93,850 1,54,500

Purchase of Investments (22,000) (1,216)

Sale/Redemption of Investments 232 21,086

Interest Received 30,397 29,952

Dividend Received 1 1,313

Net Cash used in Investing Activities (2,22,853) (89,355)

Balance Carried Over (74,181) (1,33,929)

45


C. CASH FLOW FROM FINANCING ACTIVITIES :Proceeds from Long Term Borrowings 4,17,900 95,000

Repayment of Long Term Borrowings (1,26,983) (96,889)

Proceeds from/(Repayment) of Short Term Borrowings 63,187 1,78,089

Interest Paid (29,191) (25,408)

Dividends paid (29,941) (29,876)

Net cash used in Financing Activities 2,94,972 1,20,916

Net Increase/(Decrease) in Cash 2,20,791 (13,013)

Cash and Cash Equivalents (Opening Balance) 5,821 18,834(Refer Schedule 9)

Cash and Cash Equivalents (Closing Balance) 2,26,612 2,20,791 5,821 (13,013)(Refer Schedule 9)

Notes :

1. The above Cash Flow Statement has been compiled/prepared based on the audited accounts of the Companyunder the ‘Indirect Method’ as set out in the Accounting Standard-3 on Cash Flow Statements issued by the Instituteof Chartered Accountants of India and the reallocations made as required for the purpose.

2. The schedule referred to above forms an integral part of the Cash Flow Statement.

3. Figures for the previous year have been rearranged and regrouped wherever necessary.

This is the Cash Flow referred to in our report of even date.

Balance Brought Forward (74,181) (1,33,929)


31.03.2003 31.03.2002



46

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0

1000

2000

3000

4000

5000

6000

7000

8000

9000

93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03

NET WORTH(Excluding Revaluation Reserve)

YEAR

RS

. IN

LA

CS

SALES

YEAR

RS

. IN

LA

CS

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2000

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6000

8000

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20

DISTRIBUTION OF REVENUERs. 10,018.78 Lacs

Employees51%

Taxes/Cess/Duties4%

Cultivation/Manufacturing23%

Selling Expenses6%

Interest3%

Depreciation4% Dividend

1%Retained Earning

2%

Material Consumed6%

PAYMENTS TO EXCHEQUERRs. 400.97 Lacs

Cess on Green Leaf49.44%

Excise Duty & Cess4.09%

Rates & Taxes12.22%

Income Tax30.42%

Dividend Tax3.84%

AFT INDUSTRIES LIMITED - Apeejay Surrendra Group · 2007. 12. 5. · (Formerly ASSAM FRONTIER TEA...

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Transcript of AFT INDUSTRIES LIMITED - Apeejay Surrendra Group · 2007. 12. 5. · (Formerly ASSAM FRONTIER TEA...