UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2017
Commission File Number: 001-35681
AMIRA NATURE FOODS LTD
(Exact name of the Registrant as specified in
its charter)
29E, A.U. Tower
Jumeirah Lake Towers
Dubai, United Arab Emirates
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.
Form 20-F
x
Form 40-F
¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
¨
The information contained in this Form 6-K is incorporated by reference
into the Company’s Form F-3 Registration Statement File No. 333-219645 and Form S-8 Registration Statements File
Nos. 333-184408 and 333-219646, and related Prospectuses, as such Registration Statements and Prospectuses may be
amended from time to time.
CONVENTIONS USED IN THIS REPORT
In this report (this “Report”),
unless otherwise stated or unless the context otherwise requires, references to (i) “ANFI” are to Amira Nature Foods
Ltd, a British Virgin Islands business company; (ii) references to “Amira Mauritius” are solely to Amira Nature Foods
Ltd, a Mauritius company and ANFI’s wholly owned subsidiary; and (iii) “APFPL” or “Amira India” are
to Amira Pure Foods Private Limited, and its subsidiaries, including Amira I Grand Foods Inc., Amira Food Pte. Ltd., Amira Foods
(Malaysia) SDN. Bhd., Amira C Foods International DMCC, Amira Basmati Rice GmbH EUR, Basmati Rice North America LLC, Amira G Foods
Limited, Amira Ten Nigeria Limited. References to “us”, “we”, “our” or the “Company”
or the “Group” includes ANFI and its subsidiaries.
In this Report, references to “India”
are to the Republic of India, references to “BVI” are to the British Virgin Islands, and references to “Mauritius”
are to the Republic of Mauritius. References to “$”, “USD” , “dollars” or “U.S. dollars”
are to the legal currency of the United States and references to “Rs.”, “Rupees”, “INR” or
“Indian Rupees” are to the legal currency of India.
The condensed interim consolidated financial
statements for the six months ended September 30, 2017 and 2016 and notes thereto included elsewhere in this Report have been prepared
in compliance with International Accounting Standard (IAS) 34, “
Interim financial reporting
” as issued
by International Accounting Standards Board (IASB). These condensed interim consolidated financial statements should be read in
conjunction with the Group’s annual consolidated financial statements and related notes included in the Company’s annual
report on Form 20-F for the fiscal year ended March 31, 2017 (the “Annual Report”). References to a particular
“fiscal year” are to our fiscal year ended March 31 of that year. Our fiscal quarters end on June 30, September 30,
and December 31. References to a year other than a “fiscal” are to the calendar year ended December 31.
In this Report, references to our “international
sales” are to those sales which are made to international markets outside of India. In this Report, references to increase/
decrease in percent for the financial statement items have been computed based on absolute figures reported. We also refer in various
places within this report to earnings before interest, tax, depreciation and amortization (EBITDA), adjusted EBITDA, adjusted profit
after tax, adjusted earnings per share, adjusted net working capital and net debt, which are non-IFRS measures and are more fully
explained in the section titled “Non-IFRS Financial Measures”. The presentation of this non-IFRS information is not
meant to be considered in isolation or as a substitute for our consolidated financial results prepared in accordance with IFRS
as issued by the IASB.
FORWARD-LOOKING STATEMENTS
This report contains statements of a forward-looking
nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform
Act of 1995. You can identify these forward-looking statements by words or phrases such as “may,” “will,”
“except,” “anticipate,” “aim,” “estimate,” “intend,” “plan,”
“believe,” “is/are likely to,” “future” or other similar expressions. We have based these forward-looking
statements largely on our current expectations and projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial needs. There is no assurance that our current expectations
and projections are accurate. These forward-looking statements include, but are not limited to:
|
·
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our goals and strategies;
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·
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our operations and expansion plans;
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·
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our future business development, results of operations, financial condition and financial statements;
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·
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our ability to protect our intellectual property rights;
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·
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projected revenue, EBITDA, adjusted EBITDA, profits, adjusted profits, earnings, adjusted earnings and other estimated financial
information;
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·
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our ability to maintain strong relationships with our customers and suppliers;
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·
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governmental policies regarding our industry; and
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·
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the impact of legal proceedings.
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You should not place undue reliance on forward-looking
statements and you should read these statements in conjunction with the risk factors disclosed in “Risk Factors” appearing
in our Annual Reports found on the SEC’s website located at www.sec.gov. Those risks are not exhaustive of all risks impacting
our business and operations. We operate in a rapidly evolving environment. New risk factors emerge from time to time, and it is
impossible for us to predict all risks impacting our business and operations. Additionally, we cannot assess the impact of all
risks on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ
from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking
statements except as required under applicable law.
Results of Operations and Financial Position
Following this page are our condensed
interim consolidated financial position as of September 30, 2017 and our financial results for the six months ended September 30,
2017 and 2016, respectively.
INDEX TO CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
Amira Nature Foods Ltd
Condensed Consolidated Statements of Financial
Position
|
|
(Amounts in USD)
|
|
|
|
As at
September 30, 2017
(Unaudited)
|
|
|
As at
March 31, 2017
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
$
|
17,868,289
|
|
|
$
|
18,674,113
|
|
Goodwill
|
|
|
1,512,058
|
|
|
|
1,386,322
|
|
Other intangible assets
|
|
|
1,468,158
|
|
|
|
1,419,363
|
|
Other long-term financial assets
|
|
|
218,369
|
|
|
|
152,814
|
|
Total non-current assets
|
|
$
|
21,066,874
|
|
|
$
|
21,632,612
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Inventories (Note 8)
|
|
$
|
306,841,721
|
|
|
$
|
273,063,839
|
|
Trade receivables
|
|
|
191,552,088
|
|
|
|
209,673,239
|
|
Derivative financial assets
|
|
|
-
|
|
|
|
-
|
|
Other financial assets
|
|
|
4,115,443
|
|
|
|
5,467,164
|
|
Prepayments (Note 9)
|
|
|
60,620,604
|
|
|
|
47,272,153
|
|
Other current assets
|
|
|
693,463
|
|
|
|
664,553
|
|
Cash and cash equivalents
|
|
|
5,151,300
|
|
|
|
16,831,655
|
|
Total current assets
|
|
$
|
568,974,619
|
|
|
$
|
552,972,603
|
|
Total assets
|
|
$
|
590,041,493
|
|
|
$
|
574,605,215
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Share capital
|
|
$
|
13,609
|
|
|
$
|
11,952
|
|
Share premium
|
|
|
111,585,500
|
|
|
|
102,788,560
|
|
Other reserves
|
|
|
(9,122,790
|
)
|
|
|
(7,741,969
|
)
|
Retained earnings
|
|
|
179,244,727
|
|
|
|
167,424,244
|
|
Equity attributable to shareholders of the Company
|
|
$
|
281,721,046
|
|
|
$
|
262,482,787
|
|
Equity attributable to non-controlling interest
|
|
|
40,159,641
|
|
|
|
40,741,634
|
|
Total equity
|
|
$
|
321,880,687
|
|
|
$
|
303,224,421
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Defined benefit obligations
|
|
$
|
337,556
|
|
|
$
|
283,944
|
|
Debt
|
|
|
12,351
|
|
|
|
48,743
|
|
Deferred tax liabilities (Net)
|
|
|
4,787,887
|
|
|
|
4,491,272
|
|
Total non-current liabilities
|
|
$
|
5,137,794
|
|
|
$
|
4,823,959
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade payables
|
|
$
|
7,894,454
|
|
|
$
|
13,004,865
|
|
Debt (Note 10)
|
|
|
230,654,710
|
|
|
|
224,391,280
|
|
Current tax liabilities (net)
|
|
|
16,929,802
|
|
|
|
15,799,116
|
|
Derivative financial liabilities
|
|
|
-
|
|
|
|
-
|
|
Other financial liabilities
|
|
|
5,940,112
|
|
|
|
12,259,830
|
|
Other current liabilities
|
|
|
1,603,934
|
|
|
|
1,101,744
|
|
Total current liabilities
|
|
$
|
263,023,012
|
|
|
$
|
266,556,835
|
|
Total liabilities
|
|
$
|
268,160,806
|
|
|
$
|
271,380,794
|
|
Total equity and liabilities
|
|
$
|
590,041,493
|
|
|
$
|
574,605,215
|
|
(The accompanying notes are an integral part of these condensed
interim consolidated financial statements)
Amira Nature Foods Ltd
Condensed Consolidated Statements of Profit
or Loss
|
|
(Amounts in USD)
|
|
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Revenue
|
|
$
|
228,929,636
|
|
|
$
|
210,924,684
|
|
Other income
|
|
|
19,110
|
|
|
|
19,682
|
|
Cost of material
|
|
|
(225,261,357
|
)
|
|
|
(182,978,800
|
)
|
Change in inventory of finished goods
|
|
|
36,960,197
|
|
|
|
12,774,137
|
|
Employee benefit expenses
|
|
|
(3,303,120
|
)
|
|
|
(4,561,672
|
)
|
Depreciation and amortization
|
|
|
(830,838
|
)
|
|
|
(936,271
|
)
|
Freight, forwarding and handling expenses
|
|
|
(907,591
|
)
|
|
|
(1,396,839
|
)
|
Other expenses
|
|
|
(6,232,506
|
)
|
|
|
(8,395,427
|
)
|
|
|
$
|
29,373,531
|
|
|
$
|
25,449,494
|
|
Finance costs
|
|
|
(16,994,815
|
)
|
|
|
(13,997,437
|
)
|
Finance income
|
|
|
28,695
|
|
|
|
147,607
|
|
Other gains and (losses)
|
|
|
673,677
|
|
|
|
(1,130,954
|
)
|
Profit before tax for the period
|
|
$
|
13,081,088
|
|
|
$
|
10,468,710
|
|
Income tax expense
|
|
|
(1,558,311
|
)
|
|
|
(434,324
|
)
|
|
|
|
|
|
|
|
|
|
Profit after tax for the period
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Profit after tax attributable to:
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
$
|
9,250,902
|
|
|
$
|
7,787,664
|
|
Non-controlling interest
|
|
$
|
2,271,875
|
|
|
$
|
2,246,722
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic earnings per share
(Note 7)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Diluted earnings per share
(Note 7)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
(The accompanying notes are an integral part of these condensed
interim consolidated financial statements)
Amira Nature Foods Ltd
Condensed Consolidated Statements of Comprehensive
Income
|
|
(Amounts in USD)
|
|
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Profit after tax for the period
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
Available for sale financial assets:
|
|
|
|
|
|
|
|
|
Current period gain/(loss)
|
|
|
37,269
|
|
|
|
31,991
|
|
Reclassification to profit or loss
|
|
|
-
|
|
|
|
-
|
|
Income tax
|
|
|
(12,898
|
)
|
|
|
(11,071
|
)
|
|
|
$
|
24,371
|
|
|
$
|
20,920
|
|
Cash flow hedging reserve:
|
|
|
|
|
|
|
|
|
Current period gain/(loss)
|
|
|
-
|
|
|
|
-
|
|
Reclassification to profit or loss
|
|
|
-
|
|
|
|
-
|
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Currency translation reserve
|
|
|
(1,623,571
|
)
|
|
|
(666,761
|
)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income/(loss) for the period, net of tax
|
|
$
|
(1,599,200
|
)
|
|
$
|
(645,841
|
)
|
Total comprehensive income for the period
|
|
$
|
9,923,577
|
|
|
$
|
9,388,545
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the period attributable to:
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
$
|
8,048,895
|
|
|
$
|
7,266,728
|
|
Non-controlling interest
|
|
$
|
1,874,682
|
|
|
$
|
2,121,817
|
|
(The accompanying notes are an integral part of these condensed
interim consolidated financial statements)
Amira Nature Foods Ltd
Condensed Consolidated Statements of Changes
in Equity
|
|
(Amounts in USD)
|
|
|
|
|
|
|
|
|
|
Other reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Share
premium
|
|
|
Share-based
compensation
reserve
|
|
|
Reserve for
available for
sale
financial
assets
|
|
|
Currency
translation
Reserve
|
|
|
Cash flow
hedging
Reserve
|
|
|
Restructuring
Reserve
|
|
|
Retained
Earnings
|
|
|
Equity
attributable to
shareholders
of the
Company
|
|
|
Equity
attributable to
non -
controlling
interest
|
|
|
Total equity
|
|
Balance as at April 1, 2016 (Audited)
|
|
$
|
9,301
|
|
|
|
85,114,755
|
|
|
|
5,887,470
|
|
|
|
(9,728
|
)
|
|
|
(26,489,384
|
)
|
|
|
-
|
|
|
|
9,398,927
|
|
|
|
142,297,177
|
|
|
$
|
216,208,518
|
|
|
|
33,513,248
|
|
|
$
|
249,721,766
|
|
Issue of shares (Note 5)
|
|
|
503
|
|
|
|
3,688,780
|
|
|
|
(3,689,283
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation (Note 6)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,647,994
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,647,994
|
|
|
|
-
|
|
|
$
|
3,647,994
|
|
Transactions with Owner - Loan repayment (Note 4.1)
|
|
|
417
|
|
|
|
2,999,583
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000,000
|
|
|
|
-
|
|
|
|
3,000,000
|
|
Profit after tax for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,787,664
|
|
|
$
|
7,787,664
|
|
|
|
2,246,722
|
|
|
$
|
10,034,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income /(loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,873
|
|
|
|
(537,809
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
(520,936
|
)
|
|
|
(124,905
|
)
|
|
$
|
(645,841
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income/(loss) for the period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
16,873
|
|
|
$
|
(537,809
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,787,664
|
|
|
$
|
7,266,728
|
|
|
$
|
2,121,817
|
|
|
$
|
9,388,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at September 30, 2016 (Unaudited)
|
|
$
|
10,221
|
|
|
$
|
91,803,118
|
|
|
$
|
5,846,181
|
|
|
$
|
7,145
|
|
|
$
|
(27,027,193
|
)
|
|
$
|
-
|
|
|
$
|
9,398,927
|
|
|
$
|
150,084,840
|
|
|
$
|
230,123,240
|
|
|
$
|
35,635,065
|
|
|
$
|
265,758,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at April 1, 2017 (Audited)
|
|
$
|
11,952
|
|
|
|
102,788,560
|
|
|
|
5,973,642
|
|
|
|
14,129
|
|
|
|
(23,128,667
|
)
|
|
|
-
|
|
|
|
9,398,927
|
|
|
|
167,424,244
|
|
|
|
262,482,787
|
|
|
|
40,741,634
|
|
|
|
303,224,421
|
|
Issue of shares (Note 5)
|
|
|
1,657
|
|
|
|
8,796,940
|
|
|
|
(8,798,597
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based compensation (Note 6)
|
|
|
|
|
|
|
|
|
|
|
8,732,689
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
8,732,689
|
|
|
|
-
|
|
|
$
|
8,732,689
|
|
Transactions with Owner - Loan repayment (Note 4.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification of Non-controlling interest (refer MD&A- “Corporate Structure”)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,569,581
|
|
|
|
2,569,581
|
|
|
|
(2,569,581
|
)
|
|
|
-
|
|
Profit after tax for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,250,902
|
|
|
$
|
9,250,902
|
|
|
|
2,271,875
|
|
|
$
|
11,522,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income /(loss) for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,039
|
|
|
|
(1,334,952
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
(1,314,913
|
)
|
|
|
(284,287
|
)
|
|
$
|
(1,599,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income/(loss) for the period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,039
|
|
|
$
|
(1,334,952
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
11,820,483
|
|
|
$
|
10,505,570
|
|
|
$
|
(581,993
|
)
|
|
$
|
9,923,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at September 30, 2017 (Unaudited)
|
|
$
|
13,609
|
|
|
$
|
111,585,500
|
|
|
$
|
5,907,734
|
|
|
$
|
34,168
|
|
|
$
|
(24,463,619
|
)
|
|
$
|
-
|
|
|
$
|
9,398,927
|
|
|
$
|
179,244,727
|
|
|
$
|
281,721,046
|
|
|
$
|
40,159,641
|
|
|
$
|
321,880,687
|
|
(The accompanying notes are an integral part of these condensed
interim consolidated financial statements)
Amira Nature Foods Ltd
Condensed Consolidated Statements of Cash
Flows
|
|
(Amounts in USD)
|
|
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
(A) CASH FLOW FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Profit before tax for the period
|
|
$
|
13,081,088
|
|
|
$
|
10,468,710
|
|
Adjustments for non-cash items
|
|
|
10,146,516
|
|
|
|
7,310,918
|
|
Adjustments for non-operating incomes and expenses
|
|
|
16,962,599
|
|
|
|
13,850,920
|
|
Changes in operating assets and liabilities
|
|
|
(43,074,971
|
)
|
|
|
(19,721,565
|
)
|
|
|
$
|
(2,884,768
|
)
|
|
$
|
11,908,983
|
|
Income taxes paid
|
|
|
(2,273
|
)
|
|
|
(3,748,261
|
)
|
Net cash used in operating activities
|
|
$
|
(2,887,041
|
)
|
|
$
|
8,160,722
|
|
|
|
|
|
|
|
|
|
|
(B) CASH FLOW FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
$
|
(430,436
|
)
|
|
$
|
(196,721
|
)
|
Purchase of intangible assets
|
|
|
-
|
|
|
|
-
|
|
Advance for property, plant and equipment
|
|
|
-
|
|
|
|
-
|
|
Proceeds from sale of property, plant and equipment
|
|
|
19,279
|
|
|
|
2,218
|
|
Net cash outflow on acquisition of subsidiaries
|
|
|
-
|
|
|
|
-
|
|
Proceeds from term deposits
|
|
|
-
|
|
|
|
(15,702,045
|
)
|
Investments in term deposits
|
|
|
1,241,394
|
|
|
|
16,572,440
|
|
Purchase of short term investments
|
|
|
-
|
|
|
|
-
|
|
Interest income
|
|
|
75,776
|
|
|
|
225,352
|
|
Net cash generated from investing activities
|
|
$
|
906,013
|
|
|
$
|
901,244
|
|
|
|
|
|
|
|
|
|
|
(C) CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net (repayment of)/ proceeds from short term debt
|
|
|
5,800,846
|
|
|
|
(2,940,756
|
)
|
Proceeds from long term debt
|
|
|
-
|
|
|
|
-
|
|
Repayment of long term debt
|
|
|
(37,865
|
)
|
|
|
(405,490
|
)
|
Interest paid
|
|
|
(14,920,436
|
)
|
|
|
(14,095,694
|
)
|
Net cash used in financing activities
|
|
$
|
(9,157,455
|
)
|
|
$
|
(17,441,940
|
)
|
|
|
|
|
|
|
|
|
|
(D)
Effect of change in
exchange rate on cash and cash equivalents
|
|
|
(541,872
|
)
|
|
|
3,741,018
|
|
Net decrease in cash and cash equivalents (A+B+C+D)
|
|
$
|
(11,680,355
|
)
|
|
$
|
(4,638,956
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
|
16,831,655
|
|
|
|
17,412,501
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
5,151,300
|
|
|
$
|
12,773,545
|
|
(The accompanying notes are an integral part of these condensed
interim consolidated financial statements)
Amira Nature Foods Ltd
Notes to condensed interim consolidated financial statements
|
1.
|
Background and nature of operations
|
Amira Nature Foods Ltd (‘‘ANFI” or ‘‘the
Company’’) and its subsidiaries (hereinafter together referred to as ‘‘Amira’’ or “the
Group’’) are engaged primarily in the business of processing and selling packaged specialty rice, primarily basmati
rice and other food products. The Company sells its products to a diverse mix of retail customers and distributors in India and
internationally (including Asia Pacific, Europe, Middle East, North Africa and North America). The Group has currently one rice
processing plant which is located in Gurgaon, India and another in Krefeld, Germany.
ANFI was incorporated on February 20, 2012 and is domiciled
in the British Virgin Islands. The Company’s principal office is located at 29E, A.U. Tower Jumeirah Lake Towers Dubai, United
Arab Emirates. ANFI completed its initial public offering (“IPO”) in October 2012 and is currently listed on the New
York Stock Exchange (“NYSE”).
These condensed interim consolidated financial statements are prepared
in compliance with International Accounting Standard (IAS) 34, “
Interim financial reporting
” as issued
by International Accounting Standards Board (IASB). These condensed interim consolidated financial statements should be read in
conjunction with the Group’s annual consolidated financial statements and related notes included in the Company’s annual
report on Form 20-F for the fiscal year ended March 31, 2017.
The accounting policies applied are consistent with the policies
that were applied for the preparation of the consolidated financial statements for the year ended March 31, 2017.
The following is the hierarchy for determining and disclosing the
fair value of financial instruments by valuation technique:
•
Level 1
- Quoted prices (unadjusted) in
active markets for identical assets or liabilities.
•
Level 2
- Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
•
Level 3
- Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
No financial assets/liabilities have been valued using level 3
fair value measurements.
The following table presents fair value hierarchy of assets and
liabilities measured at fair value on a recurring basis:
|
|
Fair value measurements
at reporting date using
|
|
|
Valuation techniques and key
inputs
|
September 30, 2017 (Unaudited)
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Derivative instruments classified in Level 2, are valued based on inputs that are directly or indirectly observable in the market place.
|
Available for sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
|
250,579
|
|
|
|
250,579
|
|
|
|
-
|
|
|
Available for sale financial assets classified in Level 1 above are valued on the basis of quoted rates available from securities markets in India.
|
Listed securities
|
|
|
135,290
|
|
|
|
135,290
|
|
|
|
-
|
|
|
Available for sale financial assets classified in Level 1 above are valued on the basis of quoted rates available from securities market in India.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Derivative instruments classified in Level 2, are valued based on inputs that are directly or indirectly observable in the market place.
|
|
|
Fair value measurements
at reporting date using
|
|
|
|
March 31, 2017 (Audited)
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Derivative instruments classified in Level 2, are valued based on inputs that are directly or indirectly observable in the market place.
|
Available for sale financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
|
243,751
|
|
|
|
243,751
|
|
|
|
-
|
|
|
Available for sale financial assets classified in Level 1 are valued on the basis of quoted rates available from securities markets in India.
|
Listed securities
|
|
|
108,036
|
|
|
|
108,036
|
|
|
|
-
|
|
|
Available for sale financial assets classified in Level 1 are valued on the basis of quoted rates available from securities market in India.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Derivative instruments classified in Level 2, are valued based on inputs that are directly or indirectly observable in the market place.
|
|
4.
|
Related party transactions
|
Mr. Karan A. Chanana is the principal shareholder of ANFI. As of
September 30, 2017, Mr. Karan A. Chanana and his affiliates held majority effective interest (including 7,005,434 ordinary shares
issuable pursuant to the Exchange Agreement and 1,465,183 share options granted and vested (Note 6.1), pursuant to ANFI’s
2012 Omnibus Securities and Incentive Plan).
The Group's related parties include transactions with key management
personnel ("KMP") and enterprises over which KMP are able to exercise control/significant influence. ANFI’s Director’s
(both executive and others) and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”) are
considered as KMP for related party transactions disclosures. Ms. Anita Daing was a director of Amira India until May 23, 2016.
4.1.
|
Transactions with KMP
|
|
|
Six months ended
|
|
Transactions during the period
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Short term employee benefits (including salary and bonus)
|
|
$
|
939,102
|
|
|
$
|
953,549
|
|
Share-based compensation:
|
|
|
|
|
|
|
|
|
- expense recognized on share options granted (Mr. Karan A. Chanana)
|
|
|
-
|
|
|
|
853,776
|
|
- expense recognized on share options granted (others)
|
|
|
25,567
|
|
|
|
33,561
|
|
- expense recognized on share awards granted (others)
|
|
|
188,521
|
|
|
|
297,448
|
|
Rent expense
|
|
|
1,957
|
|
|
|
1,882
|
|
Issuance of shares against debt received from Mr. Karan A. Chanana
|
|
|
-
|
|
|
|
3,000,000
|
|
Debt received from Related Parties
|
|
|
2,618,663
|
|
|
|
557,073
|
|
Debt repaid to Related Parties
|
|
|
2,501
|
|
|
|
(558,504
|
)
|
Interest expense on loan from Related Parties
|
|
|
1,183,681
|
|
|
|
645,670
|
|
Outstanding Balances
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
Salary and bonus payable - to Mr. Karan A. Chanana
|
|
$
|
882,500
|
|
|
$
|
647,000
|
|
Salary and bonus payable – to others
|
|
|
354,979
|
|
|
|
323,019
|
|
Advance receivables
|
|
|
-
|
|
|
|
11,641
|
|
Advance payable
|
|
|
83,804
|
|
|
|
651,785
|
|
Loan and interest payable
|
|
|
22,877,881
|
|
|
|
17,903,077
|
|
Rent payable to Mr. Karan A. Chanana
|
|
|
24,627
|
|
|
|
24,500
|
|
All of the above payables are short term and carry no collateral.
|
4.2.
|
Guarantee given by KMP
|
Mr. Karan A. Chanana, ANFI’s Chairman and Chief Executive
Officer and Ms. Anita Daing a former Director of APFPL have issued personal guarantees in favor of consortium of banks that granted
APFPL its outstanding secured revolving credit facilities. Under these personal guarantees Mr. Karan A. Chanana and Ms. Anita Daing
have guaranteed the repayment of secured revolving credit facilities up to a limit of $234,403,819 and $237,981,538 as at September
30, 2017 and March 31, 2017, respectively. ANFI has indemnified Mr. Karan A. Chanana and Ms. Anita Daing as permitted by its
amended and restated memorandum and articles of association and pursuant to indemnification agreements entered into with them.
Such indemnification will include indemnification for the personal guarantees provided by Mr. Karan A. Chanana and Ms. Anita Daing
as described above. Ms. Anita Daing was a director of Amira India until May 23, 2016.
|
4.3.
|
Share-based compensation to KMP
|
ANFI granted share options to Mr. Karan A. Chanana, its Chairman
and Chief Executive Officer and Mr. Bruce C. Wacha, its former Chief Financial Officer and Director pursuant to ANFI’s Omnibus
Securities and Incentive Plan (‘The plan). Further, ANFI granted share awards to its Directors pursuant to the Plan (Note
6 and 11).
|
4.4.
|
Share exchange agreement with KMP (representing NCI)
|
19.6% in APFPL represents Non-controlling interest (“NCI”)
held by Mr. Karan A. Chanana, and his affiliates. The NCI have entered into a share exchange agreement with ANFI (Note 5 and 7).
|
4.5.
|
Transactions with enterprises over which KMP are able to exercise control/significant influence
|
|
|
Six months ended
|
|
Transactions during the period
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Advance made
|
|
$
|
-
|
|
|
$
|
-
|
|
Outstanding balances
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
Trade payable
|
|
$
|
47
|
|
|
$
|
47
|
|
Advances receivable
|
|
|
-
|
|
|
|
-
|
|
ANFI was incorporated in the British Virgins Islands on February 20,
2012 with unlimited authorized share capital and an issued share capital of $100 by issuing 100 shares for $1 per share. Thereafter,
on May 24, 2012, a 1,000 for 1 share split was made increasing the number of shares to 100,000 with nominal value of $0.001
per share. The Company further made a 196.6 for 1 share split on October 15, 2012 thereby increasing the total number of shares
to 19,660,000.
Shares issued and authorized are summarized as follows:
Shares issued and fully paid: as at September 30, 2017
|
|
No. of Shares
|
|
Balance as at April 1, 2012
|
|
|
19,660,000
|
|
Shares issued during the year ended March 31, 2013 (Public offering)
|
|
|
9,000,000
|
|
Shares issued under share-based compensation plan during the year ended March 31, 2013, 2014, 2015 and 2016 (net of shares 3,819 re-purchased and cancelled from a former Director of ANFI during year ended March 31, 2015)
|
|
|
299,498
|
|
Total Shares issued and fully paid as at March 31, 2016
|
|
|
28,959,498
|
|
Shares issued during the year ended March 31, 2017 (Note 19.2)
|
|
|
2,233,264
|
|
Shares issued to Mr. Karan A. Chanana as consideration towards repayment of loan
|
|
|
416,667
|
|
Total shares issued and fully paid as at March 31, 2017
|
|
|
31,609,429
|
|
Shares issued during the six months ended September 30, 2017 (Note 19.2)
|
|
|
1,657,195
|
|
Total shares issued and fully paid as at September 30, 2017 (A)
|
|
|
33,266,624
|
|
Shares issuable pursuant to exchange agreement
*
(B)
|
|
|
7,005,434
|
|
Total (C) = (A) + (B)
|
|
|
40,272,058
|
|
*Represents ordinary shares issuable to NCI shareholders in APFPL
pursuant to an exchange agreement.
ANFI has adopted and approved the 2012 Omnibus Securities and Incentive
Plan, or 2012 Plan and also 2017 Omnibus Securities and Incentive Plan or 2017 Plan, (collectively “The Plan”). The
Plan is a comprehensive incentive compensation plan under which the management can grant equity-based and other incentive awards
to officers, employees, directors and consultants and advisers to ANFI and its subsidiaries.
The Plan provides for the granting of Distribution Equivalent
Rights, Incentive Share Options, Non-Qualified Share Options, Performance Share Awards, Performance Unit Awards, Restricted Share
Awards, Restricted Share Unit Awards, Share Appreciation Rights, Tandem Share Appreciation Rights, Unrestricted Share Awards or
any combination of the foregoing, to key management employees and non-employee Directors of, and non-employee consultants of,
ANFI or any of its subsidiaries. However, incentive share options awards are solely for employees of ANFI. ANFI reserved a total
of 3,962,826 ordinary shares for issuance as or under awards to be made under the 2012 Plan. ANFI reserved a total of 4,500,000
ordinary shares for issuance as or under awards to be made under the 2017 Plan.
Details of Share authorized for share based compensation as per 2012 Omnibus
Securities and Incentive Plan
|
|
No. of Shares
|
|
Shares authorized for share-based compensation
|
|
|
8,462,826
|
|
Less: Share awards granted during the year ended March 31, 2013
|
|
|
(11,000
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on March 31, 2013
|
|
|
8,451,826
|
|
Less: Share awards granted during the year ended March 31, 2014
|
|
|
(3,997
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on March 31, 2014
|
|
|
8,447,829
|
|
Less: Share awards granted during the year ended March 31, 2015
|
|
|
(105,167
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on March 31, 2015
|
|
|
8,342,662
|
|
Less: Share awards granted during the year ended March 31, 2016
|
|
|
(179,334
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on March 31, 2016
|
|
|
8,163,328
|
|
Less: Share awards granted during the year ended March 31, 2017
|
|
|
(2,233,264
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on March 31, 2017
|
|
|
5,930,064
|
|
Less:
Share awards granted during the six
months ended September 30, 2017
|
|
|
(1,657,195
|
)
|
Shares authorized for share-based compensation (Net of shares already granted to directors) as on September 30, 2017
|
|
|
4,272,869
|
|
|
6.1.
|
Share-based compensation
|
|
a)
|
Mr. Karan A. Chanana (ANFI’s Chairman and Chief Executive Officer)
|
ANFI granted share options to Mr. Karan A. Chanana (ANFI’s
Chairman and Chief Executive Officer) under the 2012 Plan, as approved by the Compensation Committee, as follows:
For the period ended
|
|
March 31, 2017
|
|
|
March 31, 2016
|
|
|
March 31, 2014
|
|
No. of share options granted
|
|
|
375,899
|
|
|
|
367,749
|
|
|
|
361,278
|
*
|
Exercise price
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
10
|
|
Grant date
|
|
|
July 15, 2016
|
|
|
|
July 7, 2015
|
|
|
|
October 15, 2013
|
|
Exercise period
|
|
|
10 years
|
|
|
|
10 years
|
|
|
|
10 years
|
|
Valuation model used
|
|
|
Binomial
|
|
|
|
Binomial
|
|
|
|
Binomial
|
|
Share based compensation recognized in profit or loss
|
|
$
|
853,776
|
#
|
|
$
|
1,890,910
|
|
|
$
|
2,679,848
|
*
|
#
These share options (fair value of $853,776 as on
the grant date) have been granted as on July 15, 2016, after the end of fiscal 2016; hence it was a non-adjusting event for the
year ended March 31, 2016. Since these share options vested immediately as on the grant date of July 15, 2016, accordingly, a corresponding
expense of $853,776 has been charged to Profit or loss for the year ended on March 31, 2017.
*
These share options were originally granted for
vesting on a monthly basis over a period of four years from the grant date. The total amount to be expensed over the vesting period
is determined by reference to the fair value of the options granted. This vesting period has been amended by the Compensation Committee
and approved by the Board on December 9, 2013 which makes the options immediately exercisable. Consequent to this amendment, the
unamortized amount of $1,916,226 (included in $2,679,848) has been charged to profit or loss for the year ended March 31, 2014
relating to the share option issued during the years ended March 31, 2014 and 2013
The fair values of options granted during the years ended March
31,2017, 2016 and 2014 as mentioned above, were determined using appropriate pricing model that takes into account following factors
and assumptions specific to the share incentive plans along with other external inputs:
|
·
|
Expected volatility was determined based on historical volatility of entities in similar industry following a comparable period
in their lives.
|
|
·
|
Similarly, expected exercise period of the option has been taken as a period over which share price will be twice of the exercise
price which is based on industry average considering the Company does not have any historical pattern for the exercise of share
options.
|
|
·
|
Dividend yield is taken as zero as the Company does not intend to pay dividends in the foreseeable future.
|
|
·
|
The risk-free rate is the rate associated with a risk-free security.
|
Grant date
|
|
July 15, 2016
|
|
|
July 7, 2015
|
|
|
October 15, 2013
|
|
Fair value of the option using appropriate model
|
|
$
|
2.27
|
|
|
$
|
5.14
|
|
|
$
|
6.39
|
|
Fair value of shares at grant date
|
|
$
|
7.48
|
|
|
$
|
11.47
|
|
|
$
|
13.76
|
|
Exercise price
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
|
$
|
10.00
|
|
Exercise multiple
|
|
|
2.5
|
|
|
|
2.5
|
|
|
|
2
|
|
Expected time to exercise (years)
|
|
|
-
|
|
|
|
3.4
|
|
|
|
6.32
|
|
Expected volatility
|
|
|
28.89
|
%
|
|
|
27.00
|
%
|
|
|
31.38
|
%
|
Total life of Options
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
Risk-free interest rate
|
|
|
1.56
|
%
|
|
|
2.26
|
%
|
|
|
1.78
|
%
|
|
b)
|
Mr. Bruce C. Wacha (Former Chief Financial Officer of ANFI)
|
On July 15, 2016, Mr. Bruce C. Wacha (Former Chief
Financial Officer of ANFI) was granted share options as follows:
|
|
Mr. Bruce C. Wacha
|
|
No. of share options granted
|
|
|
56,061
|
*
|
Exercise price
|
|
$
|
7.48
|
|
Grant date
|
|
|
July 15, 2016
|
|
Exercise period
|
|
|
10 years
|
|
Valuation model used
|
|
|
Binomial
|
|
Share based compensation recognized in profit or loss
|
|
|
See
note below
|
*
|
*
These share options (fair value of $162,500 as on
the grant date) were granted on July 15, 2016, which was after the end of fiscal 2016 and thus was a non-adjusting event for the
year ended March 31, 2016. These share options will vest over the course of three years in equal annual installments following
the grant date of July15, 2017.The annual vesting dates and number of shares vesting are as follows.
Mr. Wacha’s employment
agreement provides that unvested options are contingent upon his continued employment with the Company. As reflected in the chart
below, 37,374 options terminated on August 21, 2017, the date which Mr. Wacha ceased to be employed by the Company.
Grant date
|
|
Vesting date (equal annual instalment
following grant date)
|
|
Number of Share options vested as on
Vesting date (subject to continued
employment)
|
|
July 15, 2016
|
|
-
|
|
|
-
|
|
July 15, 2016
|
|
July 15, 2017
|
|
|
18,687
|
|
July 15, 2016
|
|
July 15, 2018
|
|
|
0
|
|
July 15, 2016
|
|
July 15, 2019
|
|
|
0
|
|
July 15, 2016
|
|
Total
|
|
|
18,687
|
|
The Company has recorded a corresponding pro-rated expense of total
$14,467 for the period starting from April 1, 2017 to July 15, 2017 and charged to profit or loss $14,467 for the six months ended
September 30, 2017, on account of share options to be vested on July 15, 2017.
The fair values of options granted during the years ended March
31,2017, 2016 and 2014 as mentioned above, were determined using appropriate pricing model that takes into account following factors
and assumptions specific to the share incentive plans along with other external inputs:
|
·
|
Expected volatility was determined based on historical volatility of entities in similar industry following a comparable period
in their lives.
|
|
·
|
Similarly, expected exercise period of the option has been taken as a period over which share price will be twice of the exercise
price which is based on industry average considering the Company does not have any historical pattern for the exercise of share
options.
|
|
·
|
Dividend yield is taken as zero as the Company does not intend to pay dividends in the foreseeable future.
|
|
·
|
The risk-free rate is the rate associated with a risk-free security.
|
|
|
Granted to Mr. Bruce C. Wacha (Former Chief Financial Officer)
|
|
Grant date
|
|
July 15, 2016
|
|
|
July 15, 2015
|
|
Fair value of the option using appropriate model
|
|
$
|
2.90
|
|
|
$
|
4.47
|
|
Fair value of shares at grant date
|
|
$
|
7.48
|
|
|
$
|
11.47
|
|
Exercise price
|
|
$
|
7.48
|
|
|
$
|
11.47
|
|
Exercise multiple
|
|
|
2.5
|
|
|
|
2.5
|
|
Expected time to exercise (years)
|
|
|
-
|
|
|
|
5.83
|
|
Expected volatility
|
|
|
28.89
|
%
|
|
|
27.00
|
%
|
Total life of Options
|
|
|
10
|
|
|
|
10
|
|
Dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Risk-free interest rate
|
|
|
1.56
|
%
|
|
|
2.26
|
%
|
|
c)
|
The total outstanding and exercisable share options and weighted average exercise price and remaining contractual life (in
years) during the reporting period is as follows:
|
For the period ended
|
|
September 30, 2017
|
|
Share options
|
|
Number of
Options
#
|
|
|
Exercise
price ($)
|
|
|
Remaining
weighted average
contractual life
(in years)
|
|
Balance as on April 1, 2017
|
|
|
1,474,512
|
|
|
|
Various
|
|
|
|
7.5
|
|
Granted during the period
|
|
|
28,016
|
|
|
|
Various
|
|
|
|
-
|
|
Forfeited during the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised during the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance at end of the period
|
|
|
1,502,528
|
|
|
|
Various
|
|
|
|
7.0
|
|
Vested and exercisable at end of the period
|
|
|
1,502,528
|
|
|
|
Various
|
|
|
|
7.0
|
|
|
6.1.2.
|
Share awards granted
|
On July 15, 2016, Mr. Bruce C. Wacha (Former Chief Financial Officer
of ANFI) was granted 10,027 ordinary equity shares (fair value $75,000 as on the grant date) which will vest over the course of
three years in equal annual installments following the grant date July 15, 2016. Mr. Wacha’s employment agreement provides
that unvested awards are contingent upon his continued employment with the Company. As reflected in the chart below, 6,684 options
terminated on August 21, 2017, the date which Mr. Wacha ceased to be employed by the Company. The annual vesting dates and number
of shares which vested prior to termination are as follows:
Grant date
|
|
Vesting date (equal annual instalment
following grant date)
|
|
Number of Share awards vested as on
Vesting date (subject to continued
employment)
|
|
July 15, 2016
|
|
-
|
|
|
-
|
|
July 15, 2016
|
|
July 15, 2017
|
|
|
3,342
|
|
July 15, 2016
|
|
July 15, 2018
|
|
|
0
|
|
July 15, 2016
|
|
July 15, 2019
|
|
|
0
|
|
July 15, 2016
|
|
Total
|
|
|
3,342
|
|
Accordingly, the Company has recorded a corresponding pro-rated
expense of total $6,677 for the period starting from April 1, 2017 to July 15, 2017 and charged to profit or loss $6,677 for the
six months ended Sep 30, 2017, on account of share awards to be vested on July 15, 2017.
Earnings per share have been calculated using ANFI’s outstanding
ordinary shares which are reflected in the table below:
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Profit attributable to Shareholders of the Company (A)
|
|
$
|
9,250,902
|
|
|
$
|
7,787,664
|
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
|
- For calculation of basic earnings per share (B)
|
|
|
32,402,272
|
#
|
|
|
29,217,092
|
*
|
- Dilutive impact of stock options as converted in equivalent number of shares (C)
|
|
|
-
|
|
|
|
-
|
|
For diluted earnings per share (D) = (B) + (C)
|
|
|
32,402,272
|
|
|
|
29,217,092
|
|
Basic earnings per share (A) ÷ (B)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Diluted earnings per share (A) ÷ (D)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
The Company has granted an option to NCI shareholders in APFPL to
exchange shares in ANFI at a pre- determined share exchange ratio. The exchange ratio is reflective of fair values of the shares
and therefore, the option is not considered as dilutive.
#
The effect of total share options of 1,465,183 granted
to Mr. Karan A. Chanana through the six months ended September 2017 was anti-dilutive and has not been considered in the computation
of the diluted earnings per share for the six months ended September 30, 2017.
*
The effect of total share options of 1,465,183 granted
to Mr. Karan A. Chanana through the six months ended September 2016 was anti-dilutive and has not been considered in the computation
of the diluted earnings per share for the six months ended September 30, 2016.
The cost of inventories expensed during the six months ended September
30, 2017 was $188,301,160 (September 30, 2016: $170,204,664)
During the six months ended September 30, 2017, the Group recognized
$21,471 (March 31, 2017: $23,776) for inventory write downs.
Prepayments comprise the following:
|
|
September 30, 2017
|
|
|
March 31, 2017
|
|
Prepaid expenses
|
|
$
|
235,876
|
|
|
$
|
612,832
|
|
Advances to suppliers
|
|
|
60,384,728
|
|
|
|
46,659,321
|
|
Total
|
|
$
|
60,620,604
|
|
|
$
|
47,272,153
|
|
|
10.
|
Current liabilities – Debt
|
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
Working capital debt
|
|
$
|
205,672,986
|
|
|
$
|
205,272,318
|
|
Debt from Mr. Karan A. Chanana and other related party
|
|
|
22,877,881
|
|
|
|
17,903,077
|
|
Debt from other body corporates
|
|
|
772,489
|
|
|
|
-
|
|
|
|
$
|
229,323,356
|
|
|
$
|
223,175,395
|
|
Add: Current portion of long term debt
|
|
|
1,331,354
|
|
|
|
1,215,885
|
|
Total
|
|
$
|
230,654,710
|
|
|
$
|
224,391,280
|
|
Working capital debt represents credit limits from banks with renewal
period not exceeding one year. As of September 30, 2017, the Group's property, plant and equipment, trade receivables and inventories
with a carrying value of $14,982,771 (March 31, 2017: $15,808,040), $42,214,602 (March 31, 2017: $48,002,350), and $296,643,640
(March 31, 2017: $270,399,288), respectively have been pledged as collateral to secure repayment of these debts. This working capital
debt carries floating rates of interest.
Debt from Mr. Karan A. Chanana, ANFI’s Chairman and Chief
Executive Officer consists of a loan payable on demand which carries a fixed rate of interest of 11% per annum, compounded daily.
The annualized weighted average interest rates (including corresponding
bank processing charges and fees) for each of the reporting periods for working capital debt and debt from related party are as
follows:
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
Working capital loans
|
|
|
14.5
|
%
|
|
|
13.69
|
%
|
Debt from Mr. Karan A. Chanana
|
|
|
11.60
|
%
|
|
|
11.60
|
%
|
Debt from other related party
|
|
|
9.29
|
%
|
|
|
9.29
|
%
|
|
11.
|
Events after the reporting period
|
11.1. Mr. Neal Cravens,
our director and Mr. Shiv Surinder Kumar, our former director are entitled to receive ordinary shares having a value of $55,000
each, on an annual basis for each year of their service as a Director of ANFI payable on October 15 of each year. Accordingly,
ANFI’s Compensation Committee has granted Mr. Neal Cravens and Mr. Shiv Surinder Kumar ordinary shares having a value of
$55,000 (based on the fair market value of such ordinary shares on the grant date as of October 15, 2017) for the period October
16, 2016 to October 15, 2017. The same has been accounted for as follows:
|
·
|
The Company has incurred a charge, on a pro-rata basis through March 31, 2017 amounting to $50,329.
|
|
·
|
Further, charge on pro-rata basis from April 1, 2017 to September 30, 2017 amounting to $55,151 has been accounted for, for
the six months ended September 30, 2017
|
|
·
|
The remaining charge of $4,521 will be accounted for subsequently, in the fiscal year ending March 31, 2018.
|
11.2. On June 14, 2012,
the Company entered into an employment agreement with its Chairman and Chief Executive Officer Karan A. Chanana. The Agreement
had an initial term of 5 years after which the Agreement renews each year. The agreement may be terminated by either party by providing
written notice to the other party at least thirty days before the end of the term. The Company is presently in negotiations with
Mr. Chanana concerning the terms of his employment.
11.3. On October 3, 2017,
the Board of Directors of the Company approved the issuance of 373,606 of the Company’s restricted ordinary shares in exchange
for $1,980,113 due to vendors of the Company
. These securities were offered and sold without
registration under Section 5 of the Securities Act of 1933 (“Securities Act”) pursuant to Regulation S under the
Securities Act. The vendors are
non-U.S.
persons. These securities may not be offered
or sold within the United States absent registration or an applicable exemption from the registration requirements of the Securities
Act of 1933, as amended.
11.4. On
October 6, 2017, the Company granted 1,893 of its ordinary shares to its Bruce Wacha, its former Chief Financial Officer and director.
The shares were valued at the per share price of $5.81 or an aggregate of $11,000.
11.5. On October 17,
2017, the Company issued 1,200,149 of its restricted ordinary shares upon the conversion of $6,936,861.96 of loans provided
to the Company by its Chairman of the Board of Directors and Chief Executive Officer, Karan A. Chanana. These loans were
provided to the Company from April 1, 2015 through October 10, 2017. The loans were converted into the ordinary shares at the
price of $5.78 per share representing the average closing market price of the ordinary shares in the ninety (90) days prior
to the conversion date, as reported by the New York Stock Exchange (“NYSE”).
11.6. On October 26, 2017, the Company issued 11,905 of its ordinary shares to Surinder Kumar for his services
as our director which were valued at $5.88 per share or an aggregate of $70,000.
11.7. On November 10, 2017,
the Company issued 205,663 of its restricted ordinary shares upon the conversion of $1,188,734 of loans provided to the Company
by Radhika Chanana, the spouse of Karan A. Chanana. These loans were provided to the Company from January 1, 2016 through October
10, 2017. These loans were converted into the ordinary shares at the price of $5.78 per share representing the average closing
market price of the ordinary shares in the ninety (90) days prior to the conversion date, as reported by the NYSE.
11.8. On November 16, 2017,
the Company issued 99,293 shares of its restricted ordinary shares in exchange for $562,000 of accrued sums owed to Mr. Chanana
for his services to the Company for the years ended March 31, 2013 to March 31, 2017. These sums were converted into ordinary shares
at the price of $5.78 per share representing the average closing market price of the ordinary shares in the ninety (90) days prior
to the conversion date, as reported by the NYSE.
11.9. Other than the items
mentioned above, there have been no material events other than already disclosed in the financial statement after reporting date
which would require disclosure or adjustments to the financial statements as of and for the six months ended September 30, 2017.
|
12.
|
Authorization of financial statements
|
These condensed interim consolidated financial statements for the
six months ended September 30, 2017 and 2016 were approved and authorized for issue by the Board of Directors on November 29, 2017.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
You should read the following discussion
in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Report. We
urge you to carefully review and consider the various disclosures made by us in this Report and in our other SEC filings, including
our Annual Report on Form 20-F for the year ended March 31, 2017. Some of the statements in the following discussion are forward-looking
statements. See “Forward-Looking Statements.”
Overview
We are a leading global provider of branded
packaged specialty rice and other food products, with sales across five continents. We generate the majority of our revenue through
the sale of Basmati rice, a premium long-grain variety of rice grown only in certain regions of the Indian sub-continent and other
specialty rice, under our flagship Amira brand, as well as under other third party brands. We have developed a complete line of
Amira branded products to complement our packaged rice offerings, including, edible oil, snacks, ready-to-heat meals and a growing
line of organic product offerings. We also sell other products such as wheat, barley, legumes and other produce. Our fourth generation
leadership has built on a rich, century-old legacy and transformed Amira from a local family-run business to a publicly-listed
globally focused packaged food company with a leadership position in the attractive Basmati rice sector.
We sell our products globally in both developed
and emerging markets through a broad distribution network. Our Amira branded products are currently sold by global retailers such
as Bharti’s Easyday, Big Bazaar, Carrefour, Costco, EDEKA, HEB, Jetro Restaurant Depot, Kaufland, Metro Cash & Carry,
Morrison’s, Publix, REWE, Safeway Albertsons, Spencer’s, Tesco, Walmart and Waitrose. In emerging markets, our products
are sold by global retailers and regional supermarkets (“the modern trade”), as well as a network of small, privately-owned
independent stores, which are also known as general trade or traditional retail. We maintain a strong distribution platform into
the restaurant channel and have a longstanding network of third party branded partners who sell our products throughout the world.
We have successfully expanded the Amira brand
across five continents and are investing resources to further establish our brand as a premium, high quality packaged Basmati products.
We have tailored our strategy to local market requirements and continuously focus on strengthening our brand and developing new
value-added products. Since 2010, Amira has been recognized multiple times by the World Economic Forum as a Global Growth Company,
an invitation-only community consisting of approximately 300 of the world’s fastest-growing corporations, including companies
such as illycaffe SpA and Intralinks. In 2011 and 2013, Planman Marcom recognized the Amira brand as one of only six food Power
Brands in our Indian market, based on a survey of Indian consumers, along with such other brands as United Breweries, Britannia,
Dabur, Godrej and Tata. In 2013, Amira was voted as one of “Asia’s Most Promising Brand” by the WCRC group. Additionally,
Inc. India, a leading Indian business magazine, has recognized Amira as one of India’s fastest growing mid-sized companies
in every year since 2010. The Amira brand remains the foundation of our expansion strategy and it continues to gain traction with
customers as a trusted standard of premium quality. In 2013, Bharti Wal-Mart named Amira its Indian Best Partner in the “Staples”
category. The Amira brand has also been recognized as “The Admired Brand of India” for the year 2014-15 by VWP World
Brands.
We are vertically integrated and participate
across the entire rice supply chain beginning with the procurement of paddy to its storage, aging, processing into rice, packaging,
distribution and marketing. We have multigenerational relationships with more than 200,000 local Indian paddy farmers and a large
network of procurement agents which allow us to consistently source high-quality paddy. Over the past several years, we have implemented
an organic sourcing initiative and currently have direct and indirect relationships with approximately 7,000 farmers practicing
organic farming in India. We operate a state-of-the-art, fully-automated and integrated processing and milling facility that is
located on nearly 20 acres of land in Gurgaon, Haryana, India. The facility spans a covered area of approximately 310,000 square
feet, with a processing capacity of approximately 24 metric tons of paddy per hour. We also own 48.2 acres of land in nearby Karnal,
Haryana, India in the vicinity of key Basmati rice paddy producing regions in northern India. We have plans for a new processing
plant in Karnal, which we expect to increase our production capacity to more than 60 metric tons per hour. Additionally, we have
relationships with several independent rice millers throughout India which supplement our production capacity to fully meet our
growing product needs. Meanwhile, our international operations also source product from outside of India from time to time. We
believe our flexible, vertically integrated model provides us with significant advantages in ensuring stability of supply and maintaining
quality control throughout the processing cycle.
The global rice market represented approximately
$275 billion in value, according to statistics from Horizon Research in fiscal 2012, based on benchmark rice export prices for
the international rice trade. The Indian rice industry was valued at approximately $50 billion in wholesale prices in fiscal 2013
according to the CRISIL Research Report on the Indian Rice Industry. CRISIL has also estimated the Indian Basmati rice market to
be approximately $6.9 billion in fiscal 2014, of which approximately 70% is sold internationally and 30% is sold in India.
As of September 30, 2017 and 2016, we had 224
and 269 full time employees, respectively. As of September 30, 2017, we had 47 employees working in our finance, accounting
and legal department, 64 working in sales, marketing and distribution, 53 working in HR, IT and administration, and 60 working
in operations and processing facility. We support our sales force using a marketing strategy including extensive media advertising
in both Indian and international markets. We use television, radio and print advertisements to reach our end users in order to
promote the Amira brand name.
Corporate Structure
During the six months ended September 30, 2017, certain transactions
being business combinations of entities under common control were consummated. The revised corporate structure is presented below.
(1) Assumes the completion of the purchase by Mr. Karan A. Chanana
of 1,500,000 equity shares of Amira India.
(2) Includes Share options granted and vested through September
30, 2017.
(3) International subsidiaries include:
• Amira I Grand Foods Inc.
• Amira Food Pte. Ltd.
• Amira C Foods International DMCC
• Amira Foods (Malaysia) SDN. BHD.
• Amira Ten Nigeria Limited
(4) Subsidiaries include
• Amira Basmati Rice GmbH EUR (formerly known as Basmati
Rice GmbH Europe)
• Basmati Rice North America LLC
(5) Subsidiaries include
• Amira G Foods Limited
• Amira K.A. Foods International DMCC
• Amira Grand I Foods Inc.
We own 80.4% of Amira India and have consolidated its financial
results in the financial statements included in this Annual Report. As a result, the remaining 19.6% of Amira India that is not
owned by ANFI has been reflected in our consolidated financial statements as a non-controlling interest and accordingly, the profit
after tax attributable to equity shareholders of ANFI has been reduced by a corresponding percentage. Refer exhibit 99.2, which
sets forth our significant subsidiaries as of September 30, 2017.
Results of Operations
Our results of operations for the six months
ended September 30, 2017 and 2016, respectively, were as follows:
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Revenue
|
|
$
|
228,929,636
|
|
|
$
|
210,924,684
|
|
Other income
|
|
|
19,110
|
|
|
|
19,682
|
|
Cost of material
|
|
|
(225,261,357
|
)
|
|
|
(182,978,800
|
)
|
Change in inventory of finished goods
|
|
|
36,960,197
|
|
|
|
12,774,137
|
|
Employee benefit expenses
|
|
|
(3,303,120
|
)
|
|
|
(4,561,672
|
)
|
Depreciation and amortization
|
|
|
(830,838
|
)
|
|
|
(936,271
|
)
|
Freight, forwarding and handling expenses
|
|
|
(907,591
|
)
|
|
|
(1,396,839
|
)
|
Other expenses
|
|
|
(6,232,506
|
)
|
|
|
(8,395,427
|
)
|
|
|
$
|
29,373,531
|
|
|
$
|
25,449,494
|
|
Finance costs
|
|
|
(16,994,815
|
)
|
|
|
(13,997,437
|
)
|
Finance income
|
|
|
28,695
|
|
|
|
147,607
|
|
Other gains and (losses)
|
|
|
673,677
|
|
|
|
(1,130,954
|
)
|
Profit before tax for the period
|
|
$
|
13,081,088
|
|
|
$
|
10,468,710
|
|
Income tax expense
|
|
|
(1,558,311
|
)
|
|
|
(434,324
|
)
|
|
|
|
|
|
|
|
|
|
Profit after tax for the period
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Profit after tax attributable to:
|
|
|
|
|
|
|
|
|
Shareholders of the Company
|
|
$
|
9,250,902
|
|
|
$
|
7,787,664
|
|
Non-controlling interest
|
|
$
|
2,271,875
|
|
|
$
|
2,246,722
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Diluted earnings per share
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
(1)
|
Basic earnings per share is calculated
by dividing our profit after tax as reduced by the amount of a non-controlling interest
reflecting the remaining 19.6% of Amira India that is not owned by us, by the number
of our weighted average outstanding ordinary shares, during the applicable period. Diluted
earnings per share is calculated by dividing our profit after tax as reduced by the amount
of a non-controlling interest reflecting the remaining 19.6% of Amira India that is not
owned by us, by the number of our weighted average outstanding ordinary shares adjusted
by the dilutive impact of equivalent stock options granted. For six months ended September
30, 2017, the effect of total share options of 1,465,183 granted to Mr. Karan A. Chanana
through September 30, 2017 was anti-dilutive and
as
per IAS 33 “Earnings per share”, therefore has not been considered in the
computation of the diluted earnings per share. For six months ended September 30, 2016,
the dilutive impact of total share options of 1,465,183 granted to Mr. Karan A. Chanana
through September 30, 2016, was anti-dilutive and hence these were not considered in
the computation of basic and diluted earnings per share in the table above.
|
Comparison of the six months ended September 30, 2017 and
2016
For the six months ended September 30, 2017,
we had revenues of $228.9 million, adjusted EBITDA of $31.3 million, and adjusted profit after tax of $11.9 million. Our revenue
for the six months ended September 30, 2017, increased by $18.0 million or 8.5% to $228.9 million from $210.9 million for the same
period in 2016. Our adjusted EBITDA for the six months ended September 30, 2017, increased by $3.9 million to $31.3 million from
$27.4 million for the same period in 2016. Our adjusted profit after tax for the six months ended September 30, 2017, decreased
by $0.3 million to $11.9 million from $12.2 million for the same period in 2016.
For the reconciliation of above mentioned non-IFRS measures with
IFRS measures, please refer to the section “Non-IFRS Financial Measures”
Revenue
Revenue increased by $18.0 million, or 8.5%,
to $228.9 million in the six months ended September 30, 2017 from $210.9 million in the six months ended September 30, 2016. The
revenue increase was primarily due to improved sales realization both in India and internationally.
During the six months ended September 30, 2017,
our revenue from Indian sales increased by $6.2 million or 6.9% to $95.2 million from $89.0 million in the same period of 2016.
Our sales in India increased by approximately 2.9% during the six months ended September 30, 2017 as compared to the same period
in 2016, when measured in Indian rupees. Translation of our revenues from India, to USD also positively impacted the reported revenues.
The Company’s International sales increased by $11.8 million or 9.7% to $133.7 million from $121.9 million for the same period
in 2016. During the six months ended September 30, 2017, our revenue from international sales contributed 58.4% of total sales,
while revenue from Indian sales contributed 41.6% of total sales. During the six month period ended September 30, 2016, our revenue
from international sales contributed 57.8% of total sales, while revenue from Indian sales contributed 42.2% of total sales.
During the six months ended September 30, 2017,
sales of our Amira branded and third party branded products declined by $9.0 million or 4.6% to $189.6 million from $198.6 million
during the same period in 2016. Our Amira branded and third party branded sales contributed to 82.8% of our total sales for the
period, compared to 94.2% of total sales in 2016 for the same period. During the six months ended September 30, 2017, our institutional
sales were $39.3 million or 17.2% of our total sales for the period compared to $12.3 million or 5.8% of our total sales for the
prior year period.
Other Income
Other income decreased to $19,110 in the six months ended September
30, 2017 compared to $19,682 in the six months ended September 30, 2016.
Cost of Material, Including Change in
Inventory of Finished Goods
Cost of material including change in inventory
of finished goods increased by $18.1 million, or 10.6%, to $188.3 million in the six months ended September 30, 2017 from $170.2
million in the six months ended September 30, 2016, primarily due to increase in input costs and change in sales mix. As a percentage
of revenue, cost of material including change in inventory of finished goods increased to 82.3% in the six months ended September
30, 2017 as compared to 80.7% in the six months ended September 30, 2016.
Employee Benefit Expenses
Employee benefit expenses decreased by $1.3
million, or 27.6%, to $3.3 million in the six months ended September 30, 2017 from $4.6 million in the six months ended September
30, 2016. Accordingly, as a percentage of revenue, employee benefit expenses were 1.4% and 2.2% in each of the six months ended
September 30, 2017 and 2016, respectively.
Depreciation and Amortization
Depreciation and amortization expense for six
months ended September 30, 2017 marginally decreased to $0.8 million as compared to $0.9 million in the six months ended September
30, 2016. As a percentage of revenue, depreciation and amortization costs were 0.4% and 0.4% in the six months ended September
30, 2017 and 2016, respectively.
Freight, Forwarding and Handling Expenses
Freight, forwarding and handling expenses for
the six months ended September 30, 2017 decreased by $0.5 million to $0.9 million from $1.4 million in the six months ended September
30, 2016, primarily reflecting the greater percentage of sales which were conducted on FOB basis. As a percentage of revenue, freight,
forwarding and handling expenses were 0.4% and 0.7% in the six months ended September 30, 2017 and 2016, respectively.
Other Expenses
Other expenses decreased by $2.2 million, to
$6.2 million in the six months ended September 30, 2017 from $8.4 million in the six months ended September 30, 2016. As a percentage
of revenue, other expenses were 2.7% in the six months ended September 30, 2017 as compared to 4.0% in the six months ended September
30, 2016. The decrease was primarily due to relative decrease in traveling expense, Insurance expense, Rates and taxes and Commission,
Claims & Compensation.
Finance Costs
Finance costs increased to $17.0 million in
the six months ended September 30, 2017, as compared to $14.0 million in the six months ended September 30, 2016, primarily due
to exchange rate fluctuation and higher levels of debt limits utilized during the period.
Finance Income
Finance income declined to $0.03 million in
the six months ended September 30, 2017 compared to $0.15 million in the six months ended September 30, 2016.
Other Gains and (Losses)
Other gains and (losses) increased by $1.8
million, to a gain of $0.7 million in the six months ended September 30, 2017 compared to a loss of $1.1 million in the six months
ended September 30, 2016, primarily due to increase in exchange fluctuations as compared to last year same period.
Profit before Tax
Profit before tax increased by $2.6 million,
or 25.0% to $13.1 million in the six months ended September 30, 2017 from $10.5 million in the six months ended September 30, 2016.
This increase was primarily due to increase in revenue and positive impact of exchange fluctuation primarily between INR and USD.
Profit before tax as a percentage of revenue was 5.7% and 5.0% in the six months ended September 30, 2017 and six months ended
September 30, 2016, respectively.
Income Tax Expense
Corporate tax expense was $1.6 million and
our effective tax rate was 11.9% in the six months ended September 30, 2017, as compared to corporate tax expense of $0.4 million
and effective tax rate of 4.1% in the six months ended September 30, 2016.
Profit after Tax
Profit after tax increased by $1.5 million,
or 14.8%, to $11.5 million in the six months ended September 30, 2017 from $10.0 million in the six months ended September 30,
2016. Profit after tax as a percentage of revenue was 5.0% and 4.8% in the six months ended September 30, 2017 and six months ended
September 30, 2016, respectively.
Liquidity and Capital Resources
As of September 30, 2017, we had debt and liabilities
in the following amounts:
|
·
|
secured revolving credit facilities, aggregating $177.1 million;
|
|
·
|
other facilities, aggregating $29.4 million;
|
|
·
|
related party debt, aggregating $22.9 million;
|
|
·
|
term loan facilities (including current portion of long term debt amounting to $1.3 million), aggregating $1.3 million;
|
|
·
|
vehicle loans (including current portion of vehicle loan amounting to $0.03 million), aggregating $0.04 million; and
|
|
·
|
trade payables, aggregating $7.9 million.
|
Debt incurred under our secured revolving credit
facilities bears interest at variable rates of interest, determined by reference to the relevant benchmark rate. Most of our debt
is denominated in Rupees.
As of September 30, 2017, we had the following
undrawn financing facilities which remained available for drawdown under existing financing arrangements:
|
|
September 30, 2017
(Unaudited)
|
|
Working capital - fund based
|
|
$
|
717,036
|
|
Total
|
|
$
|
717,036
|
|
The annualized weighted average interest
rates (including corresponding bank processing charges and fees for bank-related facilities) for each of the reporting periods
were as follows:
|
|
Interest
|
|
Six months ended
September 30, 2017
(Unaudited)
|
|
|
Year ended
March 31, 2017
(Audited)
|
|
Working capital debt:
|
|
|
|
|
|
|
|
|
|
|
Secured revolving credit facilities
|
|
Floating Rates of Interest
|
|
|
14.7
|
%
|
|
|
14.5
|
%
|
Other facilities
|
|
Floating Rates of Interest
|
|
|
12.5
|
%
|
|
|
9.7
|
%
|
Others:
|
|
|
|
|
|
|
|
|
|
|
Related party debt – Mr. Karan A. Chanana
|
|
Fixed Rate of Interest
|
|
|
11.6
|
%
|
|
|
11.6
|
%
|
Related party debt – Others
|
|
Fixed Rate of Interest
|
|
|
9.4
|
%
|
|
|
9.4
|
%
|
Term loans
|
|
Floating Rate of Interest
|
|
|
18.1
|
%
|
|
|
13.0
|
%
|
Vehicle loan
|
|
Fixed Rate of Interest
|
|
|
4.4
|
%
|
|
|
7.0
|
%
|
Our secured revolving credit facilities have
been provided to us by a consortium of 11
*
banks (Canara Bank, ICICI Bank, Oriental Bank of Commerce, Indian Overseas
Bank, Yes Bank, Bank of India, State Bank of India, State Bank of Hyderabad, Bank of Baroda, Vijaya Bank, Punjab National Bank
and IDBI Bank), while the term loan facilities have been provided by ICICI Bank and Bank of Baroda.
(*State Bank of India and
State Bank of Hyderabad (two of the banks comprising of the consortium) merged during the year)
Our outstanding secured revolving credit facilities
and term loans have been secured by, among other things, certain current and fixed assets of Amira India, including property, plant
and equipment, and supported by personal guarantees issued by Mr. Karan A. Chanana (our Chairman and Chief Executive Officer)
and Ms. Anita Daing (a former Director of Amira India). Mr. Chanana and Ms. Daing have issued personal guarantees in favor
of Canara Bank, the lead bank of a consortium of 11 banks that granted Amira India its outstanding secured revolving credit facilities.
Under these personal guarantees, Mr. Chanana and Ms. Daing have guaranteed the repayment of the secured revolving credit facilities,
up to a sum of $233.1 million, along with any applicable interest and other charges due to the consortium. In the event that
Amira India defaults in its payment obligations, Canara Bank has the right to demand such payment from Mr. Chanana and/or
Ms. Daing, who are obligated under the terms of the personal guarantees to make such payment. Ms. Anita Daing was a director of
Amira India until May 23, 2016.
Additionally, personal guarantees containing
similar terms have been issued by Mr. Chanana and Ms. Daing in favor of ICICI Bank for amounts not exceeding $1.3 million,
respectively, guarantying repayment of the term loan facilities availed by Amira India from these banks.
ANFI has indemnified its Directors and Officers,
including Mr. Karan A. Chanana, in accordance with its amended and restated memorandum and articles of association and indemnification
agreements entered into with Directors and Officers. Such indemnification includes indemnification for Mr. Chanana’s
and Ms. Daing’s personal guarantees described above.
Under the terms of some of Amira India’s
current secured revolving credit facilities (representing less than 10% of our total debt outstanding as of September 30, 2017),
we need the consent of lenders under our current secured revolving credit facilities to declare dividends for any year except (i)
out of profits relating to that year after meeting all the financial commitments to the bank(s) and making all other due and necessary
provisions and (ii) that no default had occurred in any repayment obligations during the year. Additionally, such financing arrangements
contain limitations on Amira India’s ability to:
|
·
|
incur additional indebtedness,
|
|
·
|
effect a change in Amira India’s capital structure,
|
|
·
|
formulate any merger or other similar reorganization such as a scheme of amalgamation,
|
|
·
|
implement a scheme of expansion, diversification, modernization,
|
|
·
|
make investments by way of shares/debentures or lend or advance funds to or place deposits with any other company, except in
the normal course of business,
|
|
·
|
create any charge, lien or encumbrance over its assets or any part thereof in favor of any financial institution, bank, company
or persons, and
|
|
·
|
make certain changes in management or ownership.
|
In the six months ended September 30, 2017
and 2016, we spent $0.4 million and $0.2 million, respectively, on capital expenditures.
Historically, our cash requirements have mainly
been for working capital as well as capital expenditures. As of September 30, 2017, our primary sources of liquidity, aside from
our secured revolving credit facilities, were $5.1 million of cash and cash equivalents and $2.9 million of short term investments,
deposits which are available on demand.
We believe that our current cash and cash
equivalents, cash flow from operations, debt incurred under our secured revolving credit facilities and other short and long-term
loans will be sufficient to meet our anticipated regular working capital requirements and our needs for capital expenditures for
at least the next 12 months. Further, our operating cash cycle as assessed by the working capital providers is more than
18 months and additionally we have paid down the current liabilities. As a result, we have mismatch in our working capital facility
and the assessed business cash to cash cycle and actual needs. We may, also, require additional cash resources to fund the development
of our new processing facility or to respond to changing business conditions or other future developments, including any new investments
or acquisitions we may decide to pursue.
Since we are currently a holding company, we
do not generate cash from operations in order to fund our expenses. Restrictions on the ability of our subsidiaries to pay us cash
dividends may make it impracticable for us to use such dividends as a means of funding our expenses. However, in the event that
we require additional cash resources, we may conduct certain international operations or transactions through ANFI using transfer
pricing principles that involve Amira India or its trading affiliates, or seek third-party sources of debt or equity financing.
The following table sets forth the summary
of our cash flows for the periods indicated:
|
|
(Amounts in $ million)
|
|
|
|
Six months ended
|
|
|
|
September 30, 2017
(Unaudited)
|
|
|
September 30, 2016
(Unaudited)
|
|
Net cash generated from / (used in) operating activities
|
|
$
|
(2.9
|
)
|
|
$
|
8.2
|
|
Net cash generated from investing activities
|
|
|
0.9
|
|
|
|
0.9
|
|
Net cash used in financing activities
|
|
|
(9.2
|
)
|
|
|
(17.4
|
)
|
Effect of change in exchange rate on cash and cash equivalents
|
|
|
(0.5
|
)
|
|
|
3.7
|
|
Net increase/ (decrease) in cash and cash equivalents
|
|
$
|
(11.7
|
)
|
|
$
|
(4.6
|
)
|
Cash and cash equivalents at the beginning of the period
|
|
|
16.8
|
|
|
|
17.4
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
5.1
|
|
|
$
|
12.8
|
|
Net cash used in operating activities
In six months ended September 30, 2017, net
cash used in operating activities was $2.9 million compared to cash generated of $8.2 million in the six months ended September
30, 2016, primarily due to an increase in Inventories and payments to trade payables.
Generally, factors that affect our earnings
include, among others, sales price and volume, costs and productivity, which similarly also affect our cash flows from or (used
in) operations. While management of working capital, including timing of collections and payments, affects operating results only
indirectly, its impact on working capital and cash flows provided by operating activities can be significant.
Net cash generated from investing activities
In six months ended September 30, 2017, we
generated $0.9 million net cash from investing activities compared to cash generated of $0.9 million for the six months ended September
30, 2016.
Net cash used in financing activities
In the six months ended September 30, 2017,
we received net $5.8 million from short term debt and repaid $0.04 million of long term debt along with interest of $14.9 million
on total debt which resulted in net outflow of $9.2 million.
Inflation
Our results of operations and financial condition
have historically not been significantly affected by inflation because we were able to pass most, if not all, increases in raw
materials prices on to our customers through price increases on our products.
Off-Balance Sheet Arrangements
As of September 30, 2017, we had no off-balance
sheet arrangements, other than items disclosed under Note 4.2 “Guarantees given by KMP” to the unaudited condensed
interim consolidated financial statements.
Critical Accounting Policies and Estimates
For information regarding Critical Accounting
Policies and Estimates, see Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS – “Critical Accounting Policies and
Estimates” contained in the Company’s annual report on Form 20-F for the year ended March 31, 2017. There have been
no material changes since March 31, 2017 to the critical accounting policies and estimates.
New standards/amendments relevant for the Group adopted from
April 1, 2017 and new standards/amendments issued but not yet effective relevant for the Group
There is no material impact due to adoption
of new standards/amendments relevant for the Group from April 1, 2017. The accounting pronouncements which were not effective as
of September 30, 2017 and have not been applied in preparing these condensed interim consolidated financial statements.
IFRS 9 Financial Instruments:
In July 2014, the International Accounting Standards Board issued
the final version of IFRS 9, Financial Instruments. The standard reduces the complexity of the current rules on financial instruments
as mandated in IAS 39. IFRS 9 has fewer classification and measurement categories as compared to IAS 39 and has eliminated the
categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement
of segregating embedded derivatives and tainting rules pertaining to held to maturity investments. For an investment in an equity
instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recognition, on an individual share-by-share
basis, to present all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive
income would ever be reclassified to profit or loss. It requires the entity, which chooses to measure a liability at fair value,
to present the portion of the fair value change attributable to the entity’s own credit risk in other comprehensive income.
IFRS 9 replaces the ‘incurred loss model’ in IAS 39
with an ‘expected credit loss’ model. The measurement uses a dual measurement approach, under which the loss allowance
is measured as either 12 month expected credit losses or lifetime expected credit losses. The standard also introduces new presentation
and disclosure requirements.
The effective date for adoption of IFRS 9 is annual periods beginning
on or after January 1, 2018, though early adoption is permitted. We are in the process of determining the method of adoption
and assessing the impact of IFRS 9 on our consolidated results of operations, cash flows, financial position and disclosures.
IFRS 15 Revenue from Contracts with Customers:
In May 2014, the International Accounting Standards Board and Financial
Accounting Standards Board jointly issued IFRS 15, Revenue from Contracts with Customers. The core principle of the new standard
is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new
standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from
the entity’s contracts with customers.
The standard permits the use of either the retrospective or cumulative
effect transition method. The effective date for adoption of IFRS 15 is annual periods beginning on or after January 1, 2017,
though early adoption is permitted.
In September 2015, the IASB issued an amendment to IFRS 15, deferring
the adoption of the standard to periods beginning on or after January 1, 2018 instead of January 1, 2017.
In April 2016, the IASB has amended IFRS 15. The amendments provide
clarifications to apply the principles of IFRS 15 and some additional transitional relief to companies.
The effective date for adoption of IFRS 15 is annual periods beginning
on or after January 1, 2018, though early adoption is permitted. We are in the process of determining the method of adoption
and assessing the impact of IFRS 15, the impact on consolidated financial statements is not expected to be material.
IFRS 16 Leases:
On January 13, 2016, the International Accounting Standards
Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases standard, IAS 17, Leases, and related
Interpretations.
The Standard sets out the principles for the recognition, measurement,
presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. IFRS 16 introduces a single
lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit or loss
and other comprehensive income (loss). The Standard also contains enhanced disclosure requirements for lessees. The effective date
for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019, though early adoption is permitted for companies
applying IFRS 15 Revenue from Contracts with Customers. We are in the process of assessing the impact of IFRS 16 on our consolidated
results of operations, cash flows, financial position and disclosures.
IAS 7 Statement of cash flows:
In January 2016, the International Accounting Standards Board issued
the amendments to IAS 7, requiring the entities to provide disclosures that enable users of financial statements to evaluate changes
in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting
inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing
activities, to meet the disclosure requirement. The effective date for adoption of the amendments to IAS 7 is annual reporting
periods beginning on or after January 1, 2017, though early adoption is permitted. The Group has evaluated the disclosure
requirements of the amendment and the effect on the consolidated financial statements is not expected to be material
IFRIC 23, Uncertainty over Income Tax Treatments:
In June 2017, the International Accounting Standards Board issued
IFRIC 23, Uncertainty over Income Tax Treatments. IFRIC 23 is to be applied while performing the determination of taxable profit
(or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments
under IAS 12. According to IFRIC 23, companies need to determine the probability of the relevant tax authority accepting each tax
treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered
to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits and tax rates.
IFRIC 23, Uncertainty over Income Tax Treatments – (Continued)
The standard permits two possible methods of transition:
|
·
|
Full retrospective approach – Under this approach, IFRIC 23 will be applied retrospectively to each prior reporting period
presented in accordance with IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors
|
|
·
|
Retrospectively with cumulative effect of initially applying IFRIC 23 recognized by adjusting equity on initial application,
without adjusting comparatives
|
The effective date for adoption of IFRC 23 is annual periods beginning
on or after January 1, 2019, though early adoption is permitted. The Group is yet to evaluate the effect of IFRIC 23 on the
consolidated financial statements.
Non-IFRS Financial Measures
In evaluating our business, we consider and
use the non-IFRS measures EBITDA, adjusted EBITDA, adjusted profit after tax, adjusted earnings per share, adjusted net working
capital and net debt as supplemental measures to review and assess our operating performance. The presentation of these non-IFRS
financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and
presented in accordance with IFRS. We define:
(1) EBITDA as profit after tax plus finance costs (net of finance
income), income tax expense and depreciation and amortization;
(2) adjusted EBITDA, as EBITDA plus non-cash expense for share-based
compensation for the six months ended September 30, 2017 and 2016, respectively, other one-time legal & professional charges
for the six months ended September 30, 2017 and 2016;
(3) adjusted profit after tax, as profit after tax plus non-cash
expense for share-based compensation for the six months ended September 30, 2017 and 2016, respectively, and other one-time legal
and professional charges for the six months ended September 30, 2017 and 2016;
(4) adjusted earnings per share as the quotient of: (a) adjusted
profit after tax and (b) the sum of our weighted average number of shares (including dilutive impact of share options granted)
for the applicable period and the ordinary shares subject to the exchange agreement between us and the non-controlling shareholders
of Amira India; during the applicable period;
(5) adjusted net working capital as total current assets minus:
(a) total current liabilities (b) cash and cash equivalents and plus current debt; and
(6) net debt as total current and non-current debt minus cash and
cash equivalents.
We use both EBITDA and adjusted EBITDA as measures
of operating performance to assist in comparing performance from period to period on a consistent basis, as a measure for planning
and forecasting overall expectations, for evaluating actual results against such expectations and as a performance evaluation metric,
including as part of assessing and administering our executive and employee incentive compensation programs. We believe that the
use of both EBITDA and adjusted EBITDA as non-IFRS measures facilitates investors’ assessment of our operating performance
from period to period and from company to company by backing out potential differences caused by variations in items such as capital
structure (affecting relative finance or interest expenses), non-recurring IPO-related expenses, one time legal and professional
charges for defending class action suits, the book amortization of intangibles (affecting relative amortization expenses), the
age and book value of property and equipment (affecting relative depreciation expenses) and other non-cash expenses. We also present
these non-IFRS measures because we believe they are frequently used by securities analysts, investors and other interested parties
as measures of the financial performance of companies in our industry.
These non-IFRS financial measures are not defined
under IFRS and are not presented in accordance with IFRS. These non-IFRS financial measures have limitations as analytical tool,
and when assessing our operating performance, investors should not consider it in isolation, or as a substitute for profit/ (loss)
or other consolidated statements of operations data prepared in accordance with IFRS. Some of these limitations include, but are
not limited to:
|
·
|
it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
|
|
·
|
it does not reflect changes in, or cash requirements for, our working capital needs;
|
|
·
|
it does not reflect the finance or interest expenses, or the cash requirements necessary to service interest or principal payments,
on our debt;
|
|
·
|
it does not reflect income taxes or the cash requirements for any tax payments;
|
|
·
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to
be replaced in the future, and adjusted net profit and EBITDA do not reflect any cash requirements for such replacements; and
|
|
·
|
other companies may calculate EBITDA differently than we do, limiting the usefulness of this non-IFRS measure as a comparative
measure.
|
We compensate for these limitations by relying
primarily on our IFRS results and using non-IFRS measures only as supplemental information.
We present adjusted EBITDA, adjusted profit
after tax, adjusted earnings per share, adjusted net working capital and net debt because we believe these measures provide additional
metrics to evaluate our operations and, when considered with both our IFRS results and the reconciliation to profit after tax,
basic and diluted earnings per share, working capital and total current and non-current debt, respectively, provide a more complete
understanding of our business than could be obtained absent this disclosure. We also believe that these non-IFRS financial measures
are useful to investors in assessing the operating performance of our business after reflecting the adjustments described above.
In the following tables we have provided reconciliation
of non-IFRS measures to the most directly comparable IFRS measure:
|
1.
|
Reconciliation of profit after tax to EBITDA and adjusted EBITDA:
|
|
|
Six months ended
|
|
|
|
September 30, 2017
|
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
Profit after tax (PAT)
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Add: Income tax expense
|
|
|
1,558,311
|
|
|
|
434,324
|
|
Add: Finance costs (net of finance income)
|
|
|
16,966,120
|
|
|
|
13,849,830
|
|
Add: Depreciation and amortization
|
|
|
830,838
|
|
|
|
936,271
|
|
EBITDA
|
|
$
|
30,878,046
|
|
|
$
|
25,254,811
|
|
Add: Non-cash expenses for share-based compensation
|
|
|
230,000
|
|
|
|
1,184,784
|
|
Add: One-time legal & professional charges
|
|
|
188,199
|
|
|
|
1,006,713
|
|
Adjusted EBITDA
|
|
$
|
31,296,245
|
|
|
$
|
27,446,308
|
|
|
2.
|
Reconciliation of profit after tax to adjusted profit after tax:
|
|
|
Six months ended
|
|
|
|
September 30, 2017
|
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
Profit after tax (PAT)
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Add: Non-cash expenses for share-based compensation
|
|
|
230,000
|
|
|
|
1,184,784
|
|
Add: One-time legal & professional charges
|
|
|
188,199
|
|
|
|
1,006,713
|
|
Adjusted profit after tax
|
|
$
|
11,940,976
|
|
|
$
|
12,225,883
|
|
|
3.
|
Reconciliation of earnings per share and adjusted earnings per share:
|
|
|
|
|
Six months ended
|
|
|
|
|
|
September 30, 2017
|
|
|
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
Profit after tax (PAT)
|
|
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Profit attributable to Shareholders of the Company
|
|
(A)
|
|
$
|
9,250,902
|
|
|
$
|
7,787,664
|
|
Weighted average number of shares (for basic earnings per share)
|
|
(B)
|
|
|
32,402,272
|
|
|
|
29,217,092
|
|
Dilutive impact of share options as converted in equivalent number of shares
|
|
(C)
|
|
|
-
|
|
|
|
-
|
|
Weighted average number of shares (for diluted earnings per share)
|
|
(D) = (B) + C)
|
|
|
32,402,272
|
|
|
|
29,217,092
|
|
Basic earnings per share as per IFRS
|
|
(A) ÷ (B)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Diluted earnings per share as per IFRS
|
|
(A) ÷ (D)
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issuable under share exchange agreement for non-controlling interest
|
|
(E)
|
|
|
7,005,434
|
|
|
|
7,005,434
|
|
Number of shares outstanding including shares for non-controlling interest
|
|
(F) = (D) + (E)
|
|
|
39,407,706
|
|
|
|
36,222,526
|
|
Profit after tax (PAT)
|
|
|
|
$
|
11,522,777
|
|
|
$
|
10,034,386
|
|
Add: Non-cash expenses for share-based compensation
|
|
|
|
$
|
230,000
|
|
|
$
|
1,184,784
|
|
Add: One-time legal & professional charges
|
|
|
|
|
188,199
|
|
|
|
1,006,713
|
|
Adjusted profit after tax
|
|
(G)
|
|
$
|
11,940,976
|
|
|
$
|
12,225,883
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share
|
|
(G) ÷ (F)
|
|
$
|
0.30
|
|
|
$
|
0.34
|
|
|
4.
|
Reconciliation of working capital (total current assets minus total current liabilities) and adjusted net working capital:
|
|
|
As at September 30, 2017
|
|
|
As at March 31, 2017
|
|
|
|
(Amount in $)
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
306,841,721
|
|
|
|
273,063,839
|
|
Trade receivables
|
|
|
191,552,088
|
|
|
|
209,673,239
|
|
Derivative financial assets
|
|
|
-
|
|
|
|
-
|
|
Other financial assets
|
|
|
4,115,443
|
|
|
|
5,467,164
|
|
Prepayments
|
|
|
60,620,604
|
|
|
|
47,272,153
|
|
Other current assets
|
|
|
693,463
|
|
|
|
664,553
|
|
Cash and cash equivalents
|
|
|
5,151,300
|
|
|
|
16,831,655
|
|
Total current assets
|
|
|
568,974,619
|
|
|
|
552,972,603
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
7,894,454
|
|
|
|
13,004,865
|
|
Debt
|
|
|
230,654,710
|
|
|
|
224,391,280
|
|
Current tax liabilities (net)
|
|
|
16,929,802
|
|
|
|
15,799,116
|
|
Derivative financial liabilities
|
|
|
-
|
|
|
|
-
|
|
Other financial liabilities
|
|
|
5,940,112
|
|
|
|
12,259,830
|
|
Other current liabilities
|
|
|
1,603,934
|
|
|
|
1,101,744
|
|
Total current liabilities
|
|
|
263,023,012
|
|
|
|
266,556,835
|
|
|
|
|
|
|
|
|
|
|
Working Capital (Total current assets minus Total current liabilities)
|
|
|
305,951,607
|
|
|
|
286,415,768
|
|
Less: Cash and cash equivalents
|
|
|
5,151,300
|
|
|
|
16,831,655
|
|
Add: Current debt
|
|
|
230,654,710
|
|
|
|
224,391,280
|
|
Adjusted net working capital
|
|
|
531,455,017
|
|
|
|
493,975,393
|
|
|
5.
|
Reconciliation of total current and non-current debt to net debt:
|
|
|
As at September 30, 2017
|
|
|
As at March 31, 2017
|
|
|
|
(Amount in $)
|
|
Current debt
|
|
|
230,654,710
|
|
|
|
224,391,280
|
|
Non-current debt
|
|
|
12,351
|
|
|
|
48,743
|
|
Total current and non-current debt as per IFRS
|
|
|
230,667,061
|
|
|
|
224,440,023
|
|
Less: Cash and cash equivalents
|
|
|
5,151,300
|
|
|
|
16,831,655
|
|
Net debt
|
|
|
225,515,761
|
|
|
|
207,608,368
|
|
Quantitative and Qualitative Disclosure about Market Risks
We are exposed to various financial risks.
These risks are categorized into market risk, credit risk and liquidity risk. Our risk management is coordinated by our Board of
Directors and focuses on securing long term and short term cash flows. We do not engage in trading of financial assets for speculative
purposes.
Market risk Analysis
Market risk is the risk that changes in market
prices will have an effect on our income or value of the financial assets and liabilities. We are exposed to various types of market
risks which result from its operating and investing activities. The most significant financial risks to which we are exposed are
described below.
Currency risk (foreign exchange risk)
We operate internationally and a significant
portion of the business is transacted in the U.S. dollar and consequently we are exposed to foreign exchange risk through its sales.
The exchange rate risk primarily arises from foreign exchange receivables. A significant portion of revenue is in U.S. dollars
while a significant portion of our costs is in Indian Rupee (INR).
The exchange rate between the INR and the U.S.
dollar has fluctuated significantly in recent years and may continue to fluctuate in the future. Appreciation of the INR against
the U.S. dollar can adversely affect our results of operations. We also have exposure to foreign currency exchange risk from other
currencies, namely the Euro; however, management considers the impact of any fluctuation in these currencies to be insignificant.
Further, Amira C Foods International DMCC, having a functional currency of United Arab Emirates Dirham (AED), has significant foreign
currency transactions denominated in U.S. dollars. There is no risk of change in the same, as the exchange rate between the U.S.
dollar and the AED is fixed at $1 = AED 3.6735.
We evaluate exchange rate exposure arising
from these transactions and enter into foreign currency derivative instruments to mitigate such exposure. We follow established
risk management policies, including the use of derivatives like foreign exchange forward contracts to hedge forecasted cash flows
denominated in foreign currency. The analysis assumes that all other variables remain constant.
The table below presents non-derivative financial
instruments, which are exposed to currency risk as of September 30, 2017 and March 31, 2017:
September 30, 2017 (Unaudited)
|
|
U.S. Dollars
|
|
|
Other Currencies
|
|
|
|
(Amount in $)
|
|
Trade receivables
|
|
|
524,186
|
|
|
|
2,800
|
|
Intercompany receivables
|
|
|
15,760,437
|
|
|
|
6,998,545
|
|
Trade payables
|
|
|
(146,874
|
)
|
|
|
(149,931
|
)
|
Intercompany payables
|
|
|
(14,001,969
|
)
|
|
|
(816,844
|
)
|
Debt
|
|
|
-
|
|
|
|
-
|
|
Intercompany debt receivable
|
|
|
4,962,092
|
|
|
|
1,200,738
|
|
Intercompany debt Payable
|
|
|
(2,448,832
|
)
|
|
|
-
|
|
Cash and cash equivalents
|
|
|
1,783,627
|
|
|
|
3,303
|
|
Total
|
|
|
6,432,667
|
|
|
|
7,238,611
|
|
March 31, 2017 (Audited)
|
|
U.S. Dollars
|
|
|
Other Currencies
|
|
|
|
(Amount in $)
|
|
Trade receivables
|
|
|
524,388
|
|
|
|
2,821
|
|
Intercompany receivables
|
|
|
16,993,042
|
|
|
|
6,229,158
|
|
Trade payables
|
|
|
(147,996
|
)
|
|
|
(151,076
|
)
|
Intercompany payables
|
|
|
(8,973,929
|
)
|
|
|
(833,354
|
)
|
Debt
|
|
|
-
|
|
|
|
-
|
|
Intercompany debt receivable
|
|
|
5,000,000
|
|
|
|
1,024,417
|
|
Intercompany debt payable
|
|
|
(2,249,986
|
)
|
|
|
-
|
|
Cash and cash equivalents
|
|
|
1,462,024
|
|
|
|
3,303
|
|
Total
|
|
|
12,607,543
|
|
|
|
6,275,270
|
|
As of September 30, 2017 and March 31, 2017
every 1% increase or decrease of the respective foreign currencies compared to our functional currency would impact our profit
before tax by approximately $136,713 and $188,828 respectively.
There are no long term exposures in foreign
currency denominated financial asset and liabilities as of the reporting date.
We use forward foreign exchange contracts to mitigate exchange rate
exposure arising from forecasted sales in U.S. dollars in APFPL whose functional currency is the INR. U.S. Dollar forward exchange
contracts covering forecasted revenue have been designated as hedging instruments in cash flow hedges in accordance with IAS 39.
Outstanding U.S. dollar forward contracts relate to revenue forecasted for fiscal 2018. Forecasted transactions for which hedge
accounting has been applied are expected to occur and affect profit or loss in fiscal 2018.
Interest Rate Sensitivity
Our results of operations are subject to fluctuations
in interest rates because we maintain substantial levels of short term indebtedness in the form of secured revolving credit facilities,
which are subject to floating interest rates, to fulfill our capital requirements. As of September 30, 2017 and March 31, 2017,
we had $230.7 million and $224.4 million of total indebtedness, respectively, of which more than 98% had floating rates of interest.
The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative financial instruments
at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding
at the balance sheet date was outstanding for the whole year. The analysis assumes that all other variables remain constant.
In computing the sensitivity analysis, management
has assumed a change of 100 basis points movement in the interest rate per annum. This movement in the interest rate would have
led to an increase or decrease in the profit before tax by $1.1 million, in the six months ended September 30, 2017.
Price Risk Sensitivity
We are exposed to price risk in respect of
APFPL’s investments in listed equity securities and investment in mutual funds in India. These investments are held short
term and are designated as available for sale financial assets and therefore do not impact the profit or loss in the consolidated
statements of profit or loss unless impaired. Further, the amount of investment is not material. Accordingly, sensitivity towards
the change in price is not presented.
Credit Risk Analysis
Credit risk refers to the risk of default by
the counterparty to a financial instrument to meet its contractual obligation resulting in a financial loss to us. Our credit risk
primarily arises from trade receivables. Accordingly, credit risk from trade receivables has been separately evaluated from all
other financial assets in the following paragraphs.
Trade Receivables
Trade receivables are unsecured and are derived
from revenue earned from customers. Credit risk in trade receivables is managed through monitoring of creditworthiness of the customers
and by granting credit approvals in the normal course of the business. An analysis of age of trade receivables at each reporting
date is summarized as follows:
|
|
September 30, 2017
(Unaudited)
|
|
|
|
Gross
|
|
|
Impairment
|
|
|
|
(Amount in $)
|
|
Not past due
|
|
|
111,186,662
|
|
|
|
|
|
Past due less than three months
|
|
|
43,101,152
|
|
|
|
|
|
Past due more than three months but not more than six months
|
|
|
35,445,443
|
|
|
|
|
|
Past due more than six months but not more than one year
|
|
|
1,578,946
|
|
|
|
|
|
More than one year
|
|
|
4,518,287
|
|
|
|
(4,278,402
|
)
|
Total
|
|
|
195,830,490
|
|
|
|
(4,278,402
|
)
|
|
|
March 31, 2017
(Audited)
|
|
|
|
Gross
|
|
|
Impairment
|
|
|
|
(Amount in $)
|
|
Not past due
|
|
|
164,373,125
|
|
|
|
-
|
|
Past due less than three months
|
|
|
43,134,363
|
|
|
|
-
|
|
Past due more than three months but not more than six months
|
|
|
310,671
|
|
|
|
-
|
|
Past due more than six months but not more than one year
|
|
|
1,545,177
|
|
|
|
-
|
|
More than one year
|
|
|
3,949,844
|
|
|
|
(3,639,941
|
)
|
Total
|
|
|
213,313,180
|
|
|
|
(3,639,941
|
)
|
Trade receivables are impaired in full when recoverability is considered
doubtful based on the recovery analysis performed by the Group for individual trade receivables. The Group considers that all the
above financial assets that are not impaired and past due for each reporting dates under review are of good credit quality.
Receivables from our top five customers are as follows:
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
|
|
|
|
|
|
|
Receivables from top five customers as of reporting date
|
|
$
|
12,326,167
|
|
|
$
|
32,648,938
|
|
Percentage to total receivables
|
|
|
6.4
|
%
|
|
|
15.6
|
%
|
Receivables from our top two customers are as
follows:
|
|
September 30, 2017
(Unaudited)
|
|
|
March 31, 2017
(Audited)
|
|
|
|
|
|
|
|
|
Receivables from top two customers as of reporting date
|
|
$
|
-
|
|
|
$
|
1,749
|
|
Percentage to total receivables
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Management considers the credit quality of these trade receivables
to be good. No collateral is held for trade receivables.
Other Financial Assets
The maximum exposure to credit risk in other financial assets is
summarized as follows:
Credit risk relating to cash and cash equivalents
and derivative financial instruments is considered negligible because our counterparties are banks. We consider the credit quality
of term deposits with such banks that are majority-owned by the Government of India and subject to the regulatory oversight of
the Reserve Bank of India to be good, and we review these banking relationships on an ongoing basis.
Security deposits are primarily comprised of
deposits made with customers who are public sector organizations. Such deposits were given as part of our contracts with such organizations.
We do not hold any security in respect of the
above financial assets. There are no impairment provisions as at each reporting date against these financial assets. We consider
all the above financial assets as at the reporting dates to be of good credit quality.
Liquidity Risk Analysis
Our liquidity needs are monitored on the basis
of monthly and yearly projections. We manage our liquidity needs by continuously monitoring cash flows from customers and by maintaining
adequate cash and cash equivalents. Net cash requirements are compared to available cash in order to determine any shortfalls.
Short term liquidity requirements consists
primarily of trade payables, expense payable, employee dues, debt and security deposits received during the normal course of business
as of each reporting date. We maintain a sufficient balance in cash and cash equivalents to meet our short term liquidity requirements.
We assess long term liquidity requirements on a periodical basis and managed them through internal accruals and through our ability
to negotiate long term debt facilities. Our non-current liabilities include vehicle loans, term loans and liabilities for defined
benefit obligations.
As of September 30, 2017, we had following
undrawn financing facilities which remained available for drawdown under our existing financing arrangements:
|
|
September 30, 2017
(Unaudited)
|
|
Working capital – fund based
|
|
$
|
717,036
|
|
Total
|
|
$
|
717,036
|
|
Our liabilities as of September 30, 2017 having
contractual maturities are summarized as follows:
|
|
Current
|
|
|
Non-current
|
|
September 30, 2017
(Unaudited)
|
|
Within
6 months
|
|
|
6-12 months
|
|
|
1-5 years
|
|
|
More than
5 years
|
|
|
|
(Amount in $)
|
|
Long term debt
*
|
|
|
1,411,539
|
|
|
|
44,403
|
|
|
|
12,798
|
|
|
|
-
|
|
Short term debt
|
|
|
229,322,593
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Trade payables
|
|
|
7,894,454
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other financial liabilities
|
|
|
5,940,112
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Lease obligation
|
|
|
334,778
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
244,903,476
|
|
|
|
44,403
|
|
|
|
12,798
|
|
|
|
-
|
|
|
|
Current
|
|
|
Non-current
|
|
March 31, 2017 (Audited)
|
|
Within
6 months
|
|
|
6-12 months
|
|
|
1-5 years
|
|
|
More than
5 years
|
|
|
|
(Amount in $)
|
|
Long term debt
*
|
|
|
1,271,624
|
|
|
|
67,907
|
|
|
|
55,989
|
|
|
|
-
|
|
Short term debt
|
|
|
223,175,395
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Trade payables
|
|
|
13,004,865
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other financial liabilities
|
|
|
12,259,830
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Lease obligation
|
|
|
321,447
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
250,033,161
|
|
|
|
67,907
|
|
|
|
55,989
|
|
|
|
-
|
|
*
Includes future interest costs on account of long
term debt as at reporting period to be payable over the period of term loan.
The above contractual maturities reflect the
gross cash outflows, not discounted at the current value as of September 30, 2017. As a result, these values will differ as compared
to the carrying values of the liabilities at the balance sheet date.
LEGAL PROCEEDINGS
We are subject to litigation in the normal
course of our business. Except as set forth below, we are not currently, and have not been in the recent past subject to any material
legal, arbitration or government proceedings (including proceedings pending or known to be contemplated) that we believe could
have a significant effect on our financial position or profitability.
On April 4, 2012, a vessel carrying rice owned
by Amira C Foods International DMCC (“Amira C Foods”) with a market value of approximately $10 million arrived at the
Subic Special Economic Zone (“SSEZ”) in the Port of Subic Bay, a free trade zone located in the Republic of the Philippines
for purposes of temporary warehousing and trans-shipment. Metro Eastern Trading Corp (“Metro Eastern”) a registered
“locator,” duly authorized and regulated by the Subic Bay Metropolitan Authority was engaged to unload, warehouse,
and transship the vessel’s cargo. On May 15, 2012, the Collector of Customs (“COC”) in the Port of Subic Bay
issued a warrant of seizure and detention to Metro Eastern alleging violation of certain sections of the Tariff and Customs Code
of the Philippines. To protect its interests, on June 8, 2012, Amira C Foods intervened in the proceedings and argued that the
COC lacked jurisdiction over the goods because they were never imported into the Philippines, but rather only transshipped into
the SSEZ. The COC upheld seizure of the rice shipment and forfeiture of the goods to the Philippines on grounds that the shipment
was imported into the Philippines without a valid import permit. This decision was upheld by the Commissioner of the Bureau of
Customs (“BOC”), and Amira C Foods filed an appeal with the Court of Tax Appeals (the “CTA”).
On June 27, 2012, the rice subject of the warrant
was sold to a related party for $11.4 million under an arrangement that effectively transferred all risks and rewards to the goods
without any recourse or further obligation, other than Amira C Foods’ obligation to make best efforts to assist the purchaser
in any regulatory, port and customs clearance required to transship the goods, the cost of which will be borne by the purchaser.
On October 17, 2012, the COC conducted a public
auction for the seized rice and an entity named Veramar Rice Mill and Trading Company was declared as the highest bidder with a
bid of Php 487 Million ($11.7 million at the rate of Php 41.18 to one U.S. dollar). Based on representations by BOC’s legal
counsel during the hearing of October 22, 2012 before the CTA, the full bid amount was delivered to the COC and such amount was
deposited in escrow to be released to the final prevailing party. Should the CTA find the forfeiture to be invalid, it will issue
a ruling that the escrowed amount be released to Amira C Foods. The CTA case is currently at the trial stage Amira completing the
presentation of its evidence-in-chief. The Republic will then present its evidence to refute the arguments raised by Amira in its
Petition. Should the CTA rule against Amira C Foods, we intend to appeal the ruling.
The CTA case is currently pending. We do not
believe that the Company will suffer any financial loss as a consequence of this proceeding.
On February 10, 2015, a consolidated class
action named the Company and certain of our current and former officers and directors as defendants alleging violations of Section
11 and Section 15 of the Securities Act and Section 10(b) and Section 20(a) of the Exchange Act. The Court dismissed the action
in its entirety on July 18, 2016. In December 2015, the Company filed a formal complaint in the United States District Court in
the Southern District of New York against a short-selling firm, related entities and individuals as a result of their dissemination
of material false, misleading and defamatory information about the Company. We sought damages and injunctive relief for defamation
and a permanent injunction. On April 6, 2017 we accepted a settlement agreement with the defendants and dismissed the action. The
financial terms of the settlement are subject to confidentiality requirements and as such, have not been disclosed.
RISK FACTORS
We are subject to certain risks and uncertainties.
There have been no material changes since March 31, 2017 to the significant risk factors and uncertainties known to the Company
that, if they were to occur, could materially adversely affect the Company’s business, financial condition, operating results
and/or cash flow. For a discussion of the Company’s risk factors, refer to Item. 3D “Risk Factors”, contained
in the Company’s annual report on Form 20-F for the year ended March 31, 2017. Additional risks and uncertainties that are
not presently known or are currently deemed immaterial may also impair our business and financial results.
A substantial portion of our business and operations are located
in India; we are subject to regulatory, economic, social and political uncertainties in India.
A substantial portion of our business and employees are located
in India and we intend to continue to develop and expand our business in India. Consequently, our financial performance and the
market price of our ordinary shares will be affected by changes in exchange rates and controls, interest rates, changes in government
policies, including taxation policies, social and civil unrest and other political, social and economic developments in or affecting
India.
The Government of India has exercised and continues to exercise
significant influence over many aspects of the Indian economy. Since 1991, successive Indian governments have generally pursued
policies of economic liberalization and financial sector reforms, including by significantly relaxing restrictions on the private
sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators
has remained significant and we cannot assure you that such liberalization policies will continue. The present government, formed
in May 2014, has announced policies and taken initiatives that support the continued economic liberalization policies that previous
governments have pursued. The rate of economic liberalization could change, and specific laws and policies affecting food companies,
foreign investments, currency exchange rates and other matters affecting investments in India could change as well. Further, protests
against privatizations and government corruption scandals, which have occurred in the past, could slow the pace of liberalization
and deregulation. A significant change in India’s policy of economic liberalization and deregulation or any social or political
uncertainties could significantly harm business and economic conditions in India generally and our business and prospects.
The Reserve Bank of India and the Ministry of Finance of the Government
of India withdrew the legal tender status of INR 500 and INR 1,000 currency notes pursuant to notification dated November 8, 2016.
The short-term impact of these developments has been, among other things, a decrease in liquidity of cash in India. There is uncertainty
on the long-term impact of this action. The short- and long-term effects of demonetization on the Indian economy and our business
are uncertain and may have a negative effect on our business, results of operations and financial condition.
Business environment (including legal and regulatory) in India is
continuously evolving and there are new laws and regulations being enacted like demonetization, GST, bankruptcy laws, new and updated
banking regulations etc. The impact of these laws is yet to be determined; also these and continuing changes by the Indian administration
have impacts beyond, and not necessarily in a positive manner, as initially anticipated; many of them are infact, open to misuse
and abuse as well.
All these changes have the ability to create an untested and unfavorable
situation for our business, where the impact to our business is unknown. Some vendors have attempted to use and misuse some of
these laws against us. However, these can happen again and create a negative impact on the business.
OTHER EVENTS
Earnings Press Release
On November 29, 2017, we issued a press release
announcing our interim results for the period ended September 30, 2017. The press release is attached as Exhibit 99.1 and
is incorporated by reference herein. The information contained in Exhibits 99.1 shall not be deemed “filed” for purposes
of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended,
or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
We make reference to non-IFRS financial information
in the press release. A reconciliation of these non-IFRS financial measures to the comparable IFRS financial measures is contained
in the press release attached hereto.
Exhibits
|
|
|
99.1
|
|
Press Release, dated November 29, 2017
|
99.2
|
|
List of Subsidiaries
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Amira Nature Foods Ltd
|
|
|
|
|
By:
|
/s/ Varun Sethi
|
|
Name:
|
Varun Sethi
|
|
Title:
|
Chief Financial Officer
|
Dated: November 29, 2017
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