|  |
|--|
|  |

 

**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

 

**FORM 20-F**

 

(Mark one)

 

| ☐ | **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|----------------------------------------------------------------------------------------------------|

 

OR

 

| ☒ | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|------------------------------------------------------------------------------------------|

 

For the fiscal year ended **March 31, 2019**

 

OR

 

| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|----------------------------------------------------------------------------------------------|

 

OR

 

| ☐ | **SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|-------------------------------------------------------------------------------------------------|

 

For the transition period from __________ to ___________

 

Commission file number 001-35681

 

| **Amira Nature Foods Ltd**                                 |
|------------------------------------------------------------|
| (Exact name of the Registrant as specified in its charter) |

 

****British Virgin Islands****

(Jurisdiction of incorporation or organization)

 

****29E, A.U. Tower****

****Jumeirah Lake Towers****

****Dubai,****

****United Arab Emirates****

(Address of principal executive offices)

 

****Mr. Karan A. Chanana,****Chairman****29E, A.U. Tower****

****Jumeirah Lake Towers****

****Dubai, United Arab EmiratesTelephone: +97144357303Facsimile: +97142387767****

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

  

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

| Title of each class                   |   | Trading Symbol(s) |   | Name of each Exchange on which registered |
|---------------------------------------|--------|-------------------|--------|-------------------------------------------|
| **ORDINARY SHARES, PAR VALUE $0.001** |   | **RYCE**          |   | **New York Stock Exchange**               |

 

Securities registered or to be registered pursuant to Section 12(g) of the Act:

**None.**

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

**None.**

     

On March 31, 2019, the issuer had 55,477,521 ordinary shares outstanding, including 7,005,434 ordinary shares issuable pursuant to an exchange agreement described in detail in this report under the heading “Item 5. Operating and Financial Review and Prospects” 4,465,183 share options and rights granted and vested through March 31, 2019. 

    

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

|   | Yes ☐ | No ☒ |
|--------|-------------|------------|

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

  

|   | Yes ☐ | No ☒ |
|--------|-------------|------------|

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

  

|   | Yes ☒ | No ☐ |
|--------|-------------|------------|

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

|   | Yes ☒ | No ☐ |
|--------|-------------|------------|

 

|   |
|--------|
|        |
|        |
|   |

  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

  

| ☐  | Large Accelerated filer | ☐  | Accelerated filer | ☒  | Non-accelerated filer   |
|---------------|-------------------------|---------------|-------------------|---------------|-------------------------|
|          |                    |          |              | ☐       | Emerging growth company |

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

 

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

  

| ☐   US GAAP | ☒   International Financial Reporting Standards as issued by the International Accounting Standards Board | ☐   Other |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------|

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

 

|   | ☐   Item 17 | ☐   Item 18 |
|--------|-----------------------------|-----------------------------|

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‐2 of the Exchange Act).

  

|   | Yes   ☐ | No   ☒ |
|--------|-------------------------|------------------------|

   

|  |
|--|
|  |

|   |
|--------|
|        |
|        |
|   |

   

| **TABLE OF CONTENTS** |
|-----------------------|

 

|              |   |                                                                         | **Page** |   |
|-------------------|--------|------------------------------------------------------------------------------|----------|--------|
| PART I.           |   |                                                                         |     |   |
| ITEM 1.           |   | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        | 4        |   |
| ITEM 2.           |   | OFFER STATISTICS AND EXPECTED TIMETABLE                                      | 4        |   |
| ITEM 3.           |   | KEY INFORMATION                                                              | 4        |   |
| A.                |   | Selected Financial Data                                                      | 4        |   |
| B.                |   | Capitalization and Indebtedness                                              | 7        |   |
| C.                |   | Reasons for the Offer and Use of Proceeds                                    | 7        |   |
| D.                |   | Risk Factors                                                                 | 7        |   |
| ITEM 4.           |   | INFORMATION ON THE COMPANY                                                   | 32       |   |
| ITEM 4A.          |   | UNRESOLVED STAFF COMMENTS                                                    | 47       |   |
| ITEM 5.           |   | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 | 47       |   |
| ITEM 6.           |   | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   | 63       |   |
| A.                |   | Directors and senior management                                              | 63       |   |
| B.                |   | Compensation                                                                 | 64       |   |
| C.                |   | Board Practices                                                              | 71       |   |
| D.                |   | Employees                                                                    | 74       |   |
| E.                |   | Share Ownership                                                              | 74       |   |
| ITEM 7.           |   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 74       |   |
| A.                |   | Major shareholders                                                           | 74       |   |
| B.                |   | Related Party Transactions                                                   | 82       |   |
| C.                |   | Interests of Experts and Counsel                                             | 77       |   |
| ITEM 8.           |   | FINANCIAL INFORMATION                                                        | 77       |   |
| A.                |   | Consolidated Statements and Other Financial Information                      | 77       |   |
| B.                |   | Significant Changes                                                          | 77       |   |
| ITEM 9.           |   | THE OFFER AND LISTING                                                        | 77       |   |
| A.                |   | Offer and Listing Details                                                    | 77       |   |
| B.                |   | Plan of Distribution                                                         | 77       |   |
| C.                |   | Markets                                                                      | 77       |   |
| D.                |   | Dilution                                                                     | 77       |   |
| E.                |   | Expenses of the Issue                                                        | 77       |   |
| ITEM 10.          |   | ADDITIONAL INFORMATION                                                       | 78       |   |
| A.                |   | Share Capital                                                                | 78       |   |
| B.                |   | Memorandum and Articles of Association                                       | 78       |   |
| C.                |   | Material Contracts                                                           | 80       |   |
| D.                |   | Exchange controls                                                            | 80       |   |
| E.                |   | Taxation                                                                     | 80       |   |
| F.                |   | Dividends and paying agents                                                  | 85       |   |
| G.                |   | Statement by experts                                                         | 85       |   |
| H.                |   | Documents on display                                                         | 85       |   |
| I.                |   | Subsidiary Information                                                       | 85       |   |
| ITEM 11.          |   | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                    | 85       |   |
| ITEM 12.          |   | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 85       |   |
|              |   |                                                                         |     |   |
| ****PART II.****  |   |                                                                         |     |   |
| ITEM 13.          |   | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 86       |   |
| ITEM 14.          |   | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 86       |   |
| ITEM 15.          |   | CONTROLS AND PROCEDURES                                                      | 86       |   |
| ITEM 16A.         |   | AUDIT COMMITTEE FINANCIAL EXPERT                                             | 87       |   |
| ITEM 16B.         |   | CODE OF ETHICS.                                                              | 87       |   |
| ITEM 16C.         |   | PRINCIPAL ACCOUNTANT FEES AND SERVICES.                                      | 87       |   |
| ITEM 16D.         |   | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.                  | 88       |   |
| ITEM 16E.         |   | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.      | 88       |   |
| ITEM 16F.         |   | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT.                         | 88       |   |
| ITEM 16G.         |   | CORPORATE GOVERNANCE                                                         | 88       |   |
| ITEM 16H.         |   | MINE SAFETY DISCLOSURE                                                       | 88       |   |
|              |   |                                                                         |     |   |
| ****PART III.**** |   |                                                                         |     |   |
| ITEM 17.          |   | FINANCIAL STATEMENTS                                                         | 89       |   |
| ITEM 18.          |   | FINANCIAL STATEMENTS                                                         | 89       |   |
| ITEM 19.          |   | EXHIBITS                                                                     | 89       |   |

     

|   |
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| 2      |
|        |
|   |

 

**CONVENTIONS USED IN THIS REPORT**

 

In this annual report on Form 20-F (the “Annual Report”), unless otherwise stated or unless the context otherwise requires, references to (i) ‘‘we’’, ‘‘us’’, ‘‘our’’, ‘‘the Company’’, “the Group”, ‘‘our Company’’ or “RYCE” are to Amira Nature Foods Ltd, a British Virgin Islands business company, including its subsidiaries; (ii) references to “Amira Mauritius” are solely to Amira Nature Foods Ltd, a Mauritius company and RYCE’s wholly owned subsidiary, and its wholly-owned subsidiaries including Amira Basmati Rice GmbH EUR (formerly known as Basmati Rice GmbH Europe), Basmati Rice North America LLC, Amira I Grand Foods Inc. (BVI), and Red Reinel; and (iii) references to “Amira I Grand Foods Inc. (BVI)” are to Amira I Grand Foods Inc., a British Virgin Island business company, and its subsidiaries, including Amira Grand I Foods Inc. (US), Amira K.A Foods International DMCC, and Amira G Foods Limited.

   

In this report, references to Amira India are to Amira Pure Foods Private Limited.

    

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 audited consolidated financial statements for the fiscal years ended March 31, 2019, 2018 and 2017 and notes thereto included elsewhere in this report have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (the “IASB”). References to a particular “fiscal year” are to our fiscal year ended March 31 of that year. Our interim period ends on September 30. 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 in “Item 18. Financial Statements”. 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” in “Item 5. Operating and Financial Review and Prospects”. 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 Annual 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,” “expect ,” “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 operation, business strategy, financial results and financial needs. These forward-looking statements include, but are not limited to:

   

|   | · | our goals and strategies;                                                                                                                     |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                          |
|   | · | our expansion plans;                                                                                                                          |
|   |   |                                                                                                                                          |
|   | · | our future business development and results of operation and financial condition;                                                             |
|   |   |                                                                                                                                          |
|   | · | our ability to protect our intellectual property rights;                                                                                      |
|   |   |                                                                                                                                          |
|   | · | projected revenue, profits, adjusted profits, EBITDA, adjusted EBITDA, earnings, adjusted earnings and other estimated financial information; |
|   |   |                                                                                                                                          |
|   | · | our ability to maintain strong relationships with our customers and suppliers;                                                                |
|   |   |                                                                                                                                          |
|   | · | governmental policies regarding our industry;                                                                                                 |
|   |   |                                                                                                                                          |
|   | · | the impact of legal proceedings; and                                                                                                          |
|   |   |                                                                                                                                          |
|   | · | the impact of COVID-19 on our operations.                                                                                                     |

  

|                |
|---------------------|
| 3                   |
|                     |
| *Table of Contents* |

  

We would like to caution you not to place undue reliance on forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Risk Factors” appearing elsewhere in this Annual Report. Those risks are not exhaustive. We operate in a rapidly evolving environment. New risk factors emerge from time to time, and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of 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.

     

**ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS **

  

Not applicable.

    

**ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE **

  

Not applicable.

   

**ITEM 3. KEY INFORMATION**

  

**A. Selected Financial Data **

  

The following selected consolidated statements of profit or loss data for each of the years ended March 31, 2019, 2018 and 2017 and selected consolidated statement of financial position data as of March 31, 2019 and 2018 are derived from our audited consolidated financial statements included in this Annual Report beginning on page F-1. The selected consolidated statements of profit or loss data for the fiscal year ended March 31, 2016 and 2015 and selected consolidated statement of financial position data as of March 31, 2016 and 2015 have been derived from our audited consolidated financial statements of those respective years, which are not included in this Annual Report. 

 

Since October 15, 2012, when we completed our initial public offering, (and up to the period ended November 14, 2018) we owned 80.4% of Amira India pursuant to the terms of a share subscription agreement between Amira Mauritius and Amira India. We accounted for this combination (between October 15, 2012 and up to the period ended November 14, 2018) using the “pooling of interest method,” and accordingly, our consolidated financial statements included in earlier Annual Reports on Form 20-F included our and Amira India’s assets, liabilities, revenues and expenses, which had been recorded at their carrying values. Also, the remaining 19.6% of Amira India during the above-mentioned period that was then not owned by RYCE was reflected in earlier consolidated financial statements as a non-controlling interest, and accordingly, the profit after tax attributable to equity shareholders of RYCE was reduced by a corresponding percentage. 

   

Amira India announced converted of its debt to equity in the second half of fiscal year 2019 (effective November 15, 2018). This conversion resulted in Amira Mauritius’ holding of Amira India being reduced from 80.4% to 49.8%. Accordingly, Amira India has not been consolidated (Line item level) for purposes of preparing consolidated financial statements of Amira Nature Foods Limited (RYCE) as of March 31, 2019. Instead, investments in associates have been accounted for under IAS 28 (Investments in Associates and Joint Ventures). Please refer to Exhibit 8.1 of this Annual Report for a list of subsidiaries comprised in these consolidated financial statements. Also refer to “Item 4. Information on the Company – Corporate Structure” for further details. Amira India was deconsolidated on 14 November 2018 As a result, our financial statements are not comparable with those of prior years.

   

|                |
|---------------------|
| 4                   |
|                     |
| *Table of Contents* |

   

Accordingly, the following information presented for periods other than for fiscal 2019, is not comparable to the information presented for fiscal 2019. The following selected consolidated financial statements data should be read in conjunction with “Item 5. Operating and Financial Review and Prospects” and our audited consolidated financial statements and the related notes included elsewhere in this Annual Report. Our historical results for any period are not necessarily indicative of results to be expected in any future period as a result of the deconsolidation.

   

|   | · | **Statements of Profit or Loss Data** |
|--------|--------|---------------------------------------|

   

|                                                      |   | **March 31, 2019** |             |   | **March 31, 2018** |   |             | **March 31, 2017** |   |
|-----------------------------------------------------------|--------|--------------------|------------------|--------|--------------------|--------|------------------|--------------------|--------|
| Revenue                                                   |   | $                  | 64,436,816       |   |               | $      | 413,901,480      |               |   | $ | 551,830,966 |   |
| Other income                                              |   |               | 160,805          |   |               |   | 5,031,827        |               |   |   | 48,833 |   |
| Cost of materials                                         |   |               | (49,503,316      | )      |               |   | (373,451,132     | )                  |   |   | (492,189,652 | ) |
| Change in inventory of finished goods                     |   |               | (150,295,581     | )      |               |   | (106,193,580     | )                  |   |   | 35,517,661 |   |
| Employee benefit expenses                                 |   |               | (6,516,026       | )      |               |   | (6,797,731       | )                  |   |   | (8,753,175 | ) |
| Depreciation and amortization                             |   |               | (767,640         | )      |               |   | (1,617,118       | )                  |   |   | (1,778,968 | ) |
| Freight, forwarding and handling expenses                 |   |               | (316,189         | )      |               |   | (2,535,261       | )                  |   |   | (3,139,061 | ) |
| Other expenses                                            |   |               | (196,294,883     | )      |               |   | (12,705,159      | )                  |   |   | (14,905,710 | ) |
|                                                      |   | **$**              | **(339,096,014** | **)**  |               | **$**  | **(84,366,674**  | **)**              |   | **$** | **66,630,894** |   |
| Finance costs                                             |   |               | (18,238,935      | )      |               |   | (34,108,621      | )                  |   |   | (29,272,826 | ) |
| Finance income                                            |   |               | -                |   |               |   | 29,669           |               |   |   | 263,231 |   |
| Other gains and (losses)                                  |   |               | (553,737         | )      |               |   | 4,908,564        |               |   |   | (1,512,928 | ) |
| **Profit/(loss) before tax**                              |   | **$**              | **(357,888,686** | **)**  |               | **$**  | **(113,537,062** | **)**              |   | **$** | **36,108,371** |   |
| Income tax (expense)/credit                               |   |               | 11,706           |   |               |   | 19,941,298       |               |   |   | (4,596,968 | ) |
|                                                      |   |               |             |   |               |   |             |               |   |   |   |   |
| **Profit/(loss) after tax for the year**                  |   | **$**              | **(357,876,980** | **)**  |               | **$**  | **(93,595,764**  | **)**              |   | **$** | **31,511,403** |   |
| **Profit/(loss) after tax for the year attributable to:** |   |               |             |   |               |   |             |               |   |   |   |   |
| Shareholders of the company                               |   | **$**              | **(304,911,721** | **)**  |               | **$**  | **(78,222,174**  | **)**              |   | **$** | **25,087,388** |   |
| Non-controlling interest                                  |   | **$**              | **(52,965,259**  | **)**  |               | **$**  | **(15,373,590**  | **)**              |   | **$** | **6,424,015** |   |
|                                                      |   |               |             |   |               |   |             |               |   |   |   |   |
| **Earnings per share**                                    |   |               |             |   |               |   |             |               |   |   |   |   |
| Basic earnings per share *(1)*                            |   | **$**              | **(7.55**        | **)**  |               | **$**  | **(2.30**        | **)**              |   | **$** | **0.84** |   |
| Diluted earnings per share *(1)*                          |   | **$**              | **(7.55**        | **)**  |               | **$**  | **(2.30**        | **)**              |   | **$** | **0.84** |   |

______________

*(1)****Basic earnings per share (for Fiscal 2015 to 2018) was 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 was not owned by us, by the number of our weighted average outstanding ordinary shares, during the applicable period. Basic earnings per share was calculated by dividing our profit by the weighted average shares outstanding. Diluted earnings per share (for Fiscal 2015 to 2018) was 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 was not owned by us, by the number of our weighted average outstanding ordinary shares adjusted by the dilutive impact of the equivalent stock options granted during the applicable period. The dilutive impact of total share options in the amount of 1,842,082 granted to Mr. Karan A. Chanana, our Chairman in the years ended March 31, 2017, 2016, 2015, 2014, and 2013, (see heading “Item 18. Financial Statements”; under Note 29 “Earnings per share”) is anti-dilutive (in Fiscal 2019) and not material in previous years and hence there is no change in the presented basic and diluted earnings per share in the table above. Basic earnings per share (for Fiscal 2019) was calculated by dividing our profit after tax as reduced by the amount of a non-controlling interest reflecting the remaining 50.2% of Amira India that was not owned by us, by the number of our weighted average outstanding ordinary shares, during the applicable period*

     

|                |
|---------------------|
| 5                   |
|                     |
| *Table of Contents* |

  

|   | · | **Adjusted EBITDA, Adjusted profit after tax and adjusted earnings per share** |
|--------|--------|--------------------------------------------------------------------------------|

   

For the fiscal year ended March 31, 2019, we had adjusted EBITDA of $(338.7) million, adjusted loss after tax of $357.8 million and adjusted earnings per share of $(7.55). 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: 

    

|                                                                                |   | **Fiscal year ended March 31,** |             |
|-------------------------------------------------------------------------------------|--------|---------------------------------|------------------|
|                                                                                |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                |   | **(Amount in $)**               |             |
| **Profit/(loss) after tax (PAT)**                                                   |   |                            | (357,876,980     | ) |   |   | (93,595,764 | ) |   |   | 31,511,403 |   |
| Add: Income tax expense/(credit)                                                    |   |                            | (11,706          | ) |   |   | (19,941,298 | ) |   |   | 4,596,968 |   |
| Add: Finance costs (net of finance income)                                          |   |                            | 18,238,935       |   |   |   | 34,078,952 |   |   |   | 29,009,595 |   |
| Add: Depreciation and amortization                                                  |   |                            | 767,640          |   |   |   | 1,617,118 |   |   |   | 1,778,968 |   |
| **EBITDA**                                                                          |   |                            | **(338,882,111** | **)** |   |   | **(77,840,992** | **)** |   |   | **66,896,934** |   |
| Add: Non-cash expenses for share-based compensation                                 |   |                            | -                |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering |   |                            | -                |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory                                 |   |                            | -                |   |   |   | 133,984,426 |   |   |   | - |   |
| Add: One-time legal & professional charges                                      |   |                            | -                |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted EBITDA**                                                                 |   |                            | **(338,882,111** | **)** |   |   | **59,044,566** |   |   |   | **70,505,179** |   |

       

2. Reconciliation of profit after tax to adjusted profit after tax (excluding IPO-related expenses):

    

|                                                                                |   | **Fiscal year ended March 31,** |             |
|-------------------------------------------------------------------------------------|--------|---------------------------------|------------------|
|                                                                                |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                |   | **(Amount in $)**               |             |
| **Profit****/(loss)****after tax (PAT)**                                            |   |                            | (357,876,980     | ) |   |   | (93,595,764 | ) |   |   | 31,511,403 |   |
| Add: Non-cash expenses for share-based compensation                                 |   |                            | -                |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering |   |                            | -                |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory (net of taxes)                  |   |                            | -                |   |   |   | 87,164,908 |   |   |   | - |   |
| Add: One-time legal & professional charges                                      |   |                            | -                |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted profit****/(loss)****after tax**                                         |   |                            | **(357,876,980** | **)** |   |   | **(3,529,724** | **)** |   |   | **35,119,648** |   |

   

3. Reconciliation of earnings per share and adjusted earnings per share: 

   

|                                                                                         |   |              |   |   | **Fiscal year ended March 31,** |             |
|----------------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------------------------|------------------|
|                                                                                         |   |              |   |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                         |   |              |   |   | **(Amount in $)**               |             |
|                                                                                         |   |         |   |   |                            |             |   |   |   |   |   |   |
| **Profit****/(loss)****after tax (PAT)**                                                     |   |         |   |   |                            | **(357,876,980** | **)** |   |   | **(93,595,764** | **)** |   |   | **31,511,403** |   |
| Profit attributable to Shareholders of the company                                           |   | (A)          |   |   |                            | (304,911,721     | ) |   |   | (78,222,174 | ) |   |   | 25,087,388 |   |
| Weighted average number of shares (for Basic earnings per share)                             |   | (B)          |   |   |                            | 40,388,149       |   |   |   | 34,064,348 |   |   |   | 29,822,470 |   |
| Weighted average number of shares (for diluted earnings per share)                           |   | (C)          |   |   |                            | 40,388,149       |   |   |   | 34,064,348 |   |   |   | 29,822,470 |   |
| **Basic earnings per share as per IFRS**                                                     |   | (A)÷(B) |   |   |                            | **(7.55**        | **)** |   |   | **(2.30** | **)** |   |   | **0.84** |   |
| **Diluted earnings per share as per IFRS**                                                   |   | (A)÷(C) |   |   |                            | **(7.55**        | **)** |   |   | **(2.30** | **)** |   |   | **0.84** |   |
|                                                                                         |   |         |   |   |                            |             |   |   |   |   |   |   |   |   |   |
| Share Issuable under share exchange agreement for non-controlling interest                   |   |         | (D)    |        |                            |             | 7,005,434 |   |   |   | 7,005,434 |   |   |   | 7,005,434 |   |
| **Number of shares outstanding including shares for non-controlling interest-fully diluted** |   | (E)=(C)+(D)  |   |   |                            | **47,393,583**   |   |   |   | **41,069,782** |   |   |   | **36,827,904** |   |
|                                                                                         |   |         |   |   |                            |             |   |   |   |   |   |   |   |   |   |   |
| **Profit****/(loss)****after tax (PAT)**                                                     |   |         |   |   |                            |             | **(357,876,980** | **)** |   |   | **(93,595,764** | **)** |   |   | **31,511,403** |   |
| Add: Non-cash expenses for share-based compensation                                          |   |         |   |   |                            |             | - |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering          |   |         |   |   |                            |             | - |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory (net of taxes)                           |   |         |   |   |                            |             | - |   |   |   | 87,164,908 |   |   |   | - |   |
| Add: One-time legal & professional charges                                               |   |         |   |   |                            |             | - |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted profit****/(loss)****after tax**                                                  |   | (F)          |   |   |                            | **(357,876,980** | **)** |   |   | **(3,529,724** | **)** |   |   | **35,119,648** |   |
|                                                                                         |   |         |   |   |                            |             |   |   |   |   |   |   |   |   |   |   |
| **Adjusted earnings per share**                                                              |   | (F)÷(E) |   |   |                            | **(7.55**        | **)** |   |   | **(0.09** | **)** |   |   | **0.95** |   |

 

**The group has used adjusted cost of goods sold (after accounting for the impact of impairment of inventories) as explained in the MDA section*

 

|                |
|---------------------|
| 6                   |
|                     |
| *Table of Contents* |

  

|   | · | **Statements of Financial Position Data** |
|--------|--------|-------------------------------------------|

  

|                              |   | **As at March 31,** |        |
|-----------------------------------|--------|---------------------|-------------|
|                              |   | **2019**            |        |   | **2018** |   |   | **2017** |   |
| Cash and cash equivalents         |   | $                   | 21,232,011  |   |   |   | 1,216,642 |   |   | $ | 16,831,655 |   |
| Total current assets              |   |                | 23,478,028  |   |   |   | 492,312,312 |   |   |   | 552,972,603 |   |
| Total assets                      |   |                | 26,156,565  |   |   |   | 512,826,507 |   |   |   | 574,605,215 |   |
| Total equity                      |   |                | (15,072,006 | ) |   |   | 241,608,876 |   |   |   | 303,224,421 |   |
| Debt (Long term & Short term) |   |                | 35,080,935  |   |   |   | 250,231,474 |   |   |   | 224,440,023 |   |
| Total liabilities                 |   |                | 41,228,671  |   |   |   | 271,217,631 |   |   |   | 271,380,794 |   |
| Total equity and liabilities      |   |                | 26,156,565  |   |   |   | 512,826,507 |   |   |   | 574,605,215 |   |

 

|   | · | **Capital stock (excluding long-term debt and redeemable preferred stock) and number of shares as adjusted to reflect changes in capital** |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

  

Described in detail in this Annual Report under the heading “Item 18. Financial Statements” under Note 18 “Equity”.

  

**B. Capitalization and Indebtedness**

   

Not applicable.

  

**C. Reasons for the Offer and Use of Proceeds**

   

Not applicable.

  

**D. Risk Factors**

   

*We are subject to certain risks and uncertainties described below. The risks and uncertainties described below are not the only risks we face. Additional risks and uncertainties that are not presently known or are currently deemed immaterial may also impair our business and financial results.*

 

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|---------------------|
| 7                   |
|                     |
| *Table of Contents* |

  

**Risks Related to****the COVID-19 Pandemic**

    

***Our business and operations have been and will continue to be negatively impacted by the COVID-19 global pandemic in each jurisdiction where we operate.*** 

    

The recent COVID-19 pandemic, which is causing potentially deadly respiratory tract infections originating in China and subsequently spreading around the world, has negatively affected economic conditions, the supply chain, the labor market, the demand for products and consumer spending globally and may otherwise impact our operations and the operations of our customers and suppliers. As of March 2020, the outbreak of COVID-19 has been declared a pandemic by the World Health Organization (“WHO”). Governments in affected countries are imposing travel bans, quarantines and other emergency public health measures. As of March 15, 2020, the United States had temporarily restricted travel by foreign nationals into the country from a number of areas, including China and Europe. In addition, on March 18, 2020, the U.S. and Canada agreed to restrict all nonessential travel across the border. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses. These restrictions, and future prevention and mitigation measures, are likely to have an adverse impact on global economic conditions, which could materially and adversely affect our future operations. The extent of COVID-19’s impact on our financial and operational results, which could be material, will depend on the length of time that the pandemic continues and whether subsequent waves of the infection happen. Uncertainties regarding the economic impact of the COVID-19 pandemic are likely to result in sustained market turmoil, which could also negatively impact our business, financial condition and cash flows. 

 

Our Basmati rice, other specialty rice and other food products are sold to customers across four continents with significant portions of our international sales to Asia Pacific, EMEA and North America. Additionally, we have management and employees in two continents. The ability of our management and employees to travel between the countries in which we operate is necessary to effectively manage our business and operations. The supply chain of our products involves crossing and delivery into various foreign jurisdictions. As a foreign issuer and global provider of food products, we are particularly susceptible to the impact of the COVID-19 global pandemic. Our business and operations have been and will continue to be negatively impacted by the COVID-19 global pandemic in each jurisdiction where we operate. At this stage, it is difficult to determine the full impact of COVID-19 on our business. Effects of the current pandemic may include, among others:

  

|   | · | We may be unable to effectively and efficiently manage our business and respond to the impact and uncertainties caused by the COVID-19 pandemic.                                                                                                                                                                                         |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                     |
|   | · | Our supply chains and distribution channels are subject to material interruptions and delays for extended and unknown periods of time, due to government-imposed quarantines, closures, lockdowns and other orders that restrict the movement and activity of persons and goods in the countries where we operate and sell our products. |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
|   | · | Deliveries of our products could be subject to delay or disruption due to governmental orders and laws restricting or preventing the shipment and delivery of our products from or into certain countries.                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
|   | · | We have experienced and may continue to experience reduced cash flow and potential liquidity constraints due to delays caused by COVID-19.                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
|   | · | The COVID-19 pandemic could impair our ability to perform agreements with our customers, vendors, suppliers, distributors and other third parties.                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                     |
|   | · | Third parties such as suppliers, shippers, distributors and retailers may be unwilling or unable to supply, deliver or distribute our products.                                                                                                                                                                                          |

 

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| 8                   |
|                     |
| *Table of Contents* |

  

|   | · | The COVID-19 pandemic could inhibit our ability to recognize revenue from its contracts as planned.                                                                                                                                                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Our employees including our officers and directors could become ill from COVID-19, quarantined, and/or subject to lockdowns that could prevent them from managing our operations and business or cause labor shortages.                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Some or all of our facilities could be disinfected and/or subject to closure due to the COVID-19 outbreak.                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Our suppliers, shippers, distributors and customers could encounter labor shortages and be subject to quarantines and lockdowns in areas affected by the COVID-19 outbreak, and be subject to closures of shipping, manufacturing and other facilities, warehouses, and logistics supply chains.     |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Our results of operations could be adversely affected due to the negative impact of COVID-19 on the economies in each jurisdictions where we operate and sell our products.                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | We could be subject to increased costs to comply with regulatory requirements in areas affected by the COVID-19 outbreak.                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Economic conditions could continue to deteriorate which would reduce the demand for our products,                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | Our distributors and customers could have operational disruptions due to worker health risks and the effects of new regulations, directives or practices implemented in response to the pandemic (such as travel restrictions for individuals and vessels and quarantining and physical distancing). |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | We may experience potential reduced access to capital as a result of any credit tightening generally or due to continued declines in global financial markets.                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                 |
|   | · | We may encounter potential non-performance by counterparties relying on force majeure clauses and potential deterioration in the financial condition and prospects of our customers, joint venture partners or other business partners.                                                              |

 

**Risks Related to Our indebtedness**

 

***If we are unable to amend our agreements with our existing lenders or refinance the existing debt,******it could******have a material adverse effect on our business******,******results******of operations and financial condition******.***

    

***Without obtaining adequate capital funding or improving our financial performance, we may not be able to continue as a going concern.***

   

During the financial year 2019 one of the financial lenders of Amira India (whom to our consternation, was followed by others) applied to NCLT (National Country Law Tribunal), under section 9 of the Insolvency and Bankruptcy Code, 2016 and is seeking an order requiring us to repay the loan an amount of $14.1 million (as per their application) extended to us. The report of our independent registered public accounting firm for the year ended March 31, 2019 included herein contains an explanatory paragraph indicating that there is substantial doubt as to our ability to continue as a going concern is dependent on a plan to address the pending NCLT application by the lenders of Amira India.  See Item 18 Note 37.3. 

      

Our outstanding secured revolving credit facilities and term loans were secured by, among other things, certain current and fixed assets of Amira India, including property, plant and equipment, and supported by personal guarantees previously issued by Mr. Karan A. Chanana (our Chairman) and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”). Mr. Karan A. Chanana and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”) had 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. Karan A. Chanana and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”) had guaranteed the repayment of the secured revolving credit facilities, up to a sum of 1.4 million, along with any applicable interest and other charges due to the consortium. Because we are obligated to indemnify the past guarantors of Amira India’s debt, we could be obligated to pay amounts owed by Amira India to its creditors in connection with the NCLT proceeding. Our financial statements do not include these amounts. Our financial statements have been prepared in accordance with International Financial Reporting Standards, which contemplate that we will continue to operate as a going concern. Our financial statements do not contain any adjustments that might result if we are unable to continue as a going concern. Our ability to continue as a going concern will be determined by the outcome of the NCLT application and our ability to fund our operational plans and realize our business objectives. In addition, we have incurred a net loss and expect to incur losses in future periods. The financial lender’s NLCT application has not been admitted as at the filing of the annual report in this Form 20F. The Company believes the position of the financial creditor is without merit and unwarranted and driven by the general tightening credit environment in India. However, if the application is admitted, it could have a material adverse effect on our financial condition.

     

If we are: (i) required to indemnify the past guarantors of Amira India’s debt for material amounts, (ii) if we are unable to obtain adequate funding in the future, or (iii) if we are unable to grow our revenue substantially to achieve and sustain profitability, we may not be able to continue as a going concern.

  

***Because of the deconsolidation of Amira India, investors will have limited information about our operations, assets and liabilities.***

   

From October 15, 2012 through November 15, 2018, we owned 80.4% of Amira India and its financial results were included in our audited financial statements. Effective November 15, 2018, Amira India converted its debt to equity which reduced our ownership from 80.4% to 49.8%. Because Amira India’s results are not be included in our financial results in future periods, investors may not have all information necessary to make an informed decision about an investment in our ordinary shares.  

     

***We have a substantial amount of indebtedness and obligated to provide indemnification related to Amira India’s debt, which could have a material adverse effect on our financial health and our ability to obtain financing in the future.***

     

The deconsolidation of Amira India reduced our debt from $250.23 million and $224.4 million as of March 31, 2018 and 2017, to $35.09 million as of March 31, 2019. The aggregate amount outstanding under our various financing arrangements as of March 31, 2019 was $35.08 million, of which $27.58 million consisted of our non-current (long-term) debt and $7.5 million consisted of our current (short-term) debt, comprised primarily of our secured revolving credit facilities. Additionally, because we have an obligation to indemnify the past guarantors of Amira India’s debt, we could be required to pay any deficiency in the amount that creditors receive as a result of the pending NCLT proceeding. The amount we would be obligated to pay as a result of this indemnification is uncertain; however, a finding that we are obligated to indemnify material amounts could have a material negative impact on our financial condition and results of operations.

        

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| *Table of Contents* |

  

Our significant amount of debt could limit our ability to operate our business and impair our competitive position. For example, it could: 

 

|   | · | limit our ability to refinance our indebtedness on terms acceptable to us or at all;                                                                                                                           |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                           |
|   | · | require us to dedicate a significant portion of our cash flow from operations for paying the principal of and interest on our indebtedness, thereby reducing funds available for other corporate purposes; and |
|   |   |                                                                                                                                                                                                           |
|   | · | make us more vulnerable to economic downturns and limit our ability to withstand competitive pressures.                                                                                                        |

 

As of March 31, 2019, our outstanding current (short-term) debt, amounting to $7.5 million and comprising substantially all of our debt, bears interest at floating rates. Any upward movements in these interest rates would increase the interest costs of such loans and could harm our business results.

 

The Reserve Bank of India in 2018 promulgated the revised framework and guidelines for ‘loan asset’ identification, classification and provisioning for commercial banks in India. Businesses including ours (and individuals) across India, have faced cash management issues especially in the rapidly evolving regulatory regime in India since early part of fiscal of 2017. This has resulted in tightening of regulatory and credit environment in India. This tightening of credit has adversely impacted and disrupted our cash- to-cash cycle. 

 

Further, the agreements and instruments governing our debt place specified limitations on incurrence of additional debt. Despite current indebtedness levels, we and our subsidiaries may be able to incur substantial additional indebtedness in the future. However, if new debt is added to our and our subsidiaries’ current debt levels, the related risks would increase. 

   

***We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy obligations under our indebtedness, which may not be successful.***

    

Our ability to make scheduled payments on or to refinance our debt obligations depends on our business results which are highly sensitive to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient enough to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Any future refinancing of our indebtedness may not be on favorable terms and could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations.

 

***The terms of our existing debt agreements may restrict our ability to operate and grow our business.***

 

Our agreements with certain banks and financial institutions for short-term and long-term debt contain restrictive covenants, including, but not limited to, requirements that we obtain consent from the lenders prior to altering our capital structure or the organizational documents effecting any merger or consolidation with another company, restructuring or changing our management, declaring or paying dividends under certain circumstances, undertaking major projects or expansions, incurring further debt, undertaking guarantee obligations which permit certain Indian lenders to claim funds invested in us by our management or principal shareholders, entering into long-term or otherwise material contractual obligations, investing in affiliates, creating any charge or lien on our assets or sale of any hypothecated assets or undertaking any trading activities other than the sale of products arising out of our manufacturing operations. 

 

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| *Table of Contents* |

 

We are required to maintain a current ratio (the ratio of the book value of our current assets to our current liabilities outstanding, including current debt as per statutory requirements) of at least 1.33 during the term of our secured revolving credit facilities for Amira India. 

 

RYCE raised unsecured debt in the amount of EUR25 million on March 11, 2019. The debt bears an interest rate of 8.5% per annum, payable in arrears on December 17 of each year, and is due December 17, 2023. RYCE may redeem all of the debt prior to the maturity date in an amount equal to 104% of the outstanding principal amount of the debt. Additionally, in the event of a “Change of Control” of Amira International Finance B.V. outside of the group (the wholly-owned subsidiary of RYCE), such subsidiary will be required to redeem all outstanding debt in an amount equal to 101% of the outstanding principal amount of the debt. We have guaranteed payment obligations under the debt.

 

Certain of our other credit facilities also include various financial covenants, but such facilities are not material. We may not be able to comply with such financial or other terms or be able to obtain the consents from our lenders necessary to take the actions that we believe are required to operate and grow our business.

 

***We require substantial working capital and as a result, may seek additional financing in the form of debt or equity to meet our working capital requirements.***

 

Our business requires substantial working capital, primarily because Basmati rice must be aged for approximately 12 months or more (at times up to 24 months) before it reaches premium quality. Accordingly, we must maintain a sufficient stock of Basmati rice at all times to meet processing requirements, which leads to higher inventory holding costs and increased working capital needs. In addition, we may need additional capital to develop our new processing facility and additional company-managed distribution centers in India and across the world.

 

We meet our working capital requirements largely by debt incurred under our revolving credit facilities. Sources of financing have historically included commercial banks under such credit facilities and equity investments. If we decide to incur more debt, our interest payment obligations will increase, and our lenders may impose additional restrictions on our business which could result in reduced cash flows. If we decide to issue equity, the new equity will dilute the ownership interest of our existing shareholders.

 

We may not be able to raise adequate financing on acceptable terms, in time, or at all. Since the short seller attack in 2014 and now with the global uncertainty due to Covid-19, obtaining financing has been even more difficult. Our failure to obtain sufficient financing or maintain our existing credit facilities could harm our business results and result in a reduction in our operations and the delay or abandonment of our development plans.

   

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| 11                  |
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| *Table of Contents* |

    

**Risks Related to Our Business**

     

***We face risks associated with our **existing and planned international**business.***

    

In fiscal 2019, we generated revenue of 15.9%. In 2018 and 2017, we generated 65.3% and 50.1% of revenue, respectively. The revenue of fiscal 2019 is not comparable to the revenues of fiscal 2018, 2017 or prior periods due to the deconsolidation of Amira India. However, we expect to increase our presence over time. We currently have offices in, the United Arab Emirates (“UAE”), the United Kingdom and Germany, and we sell our products throughout Asia Pacific, Europe, the Middle East, and Africa (“EMEA”), and North America. Our existing and planned international business operations are subject to a variety of risks, including:

    

|   | · | difficulties in staffing and managing geographically dispersed operations;                                                                                                                                                                                              |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | compliance with various foreign laws, including local labor laws and regulations, where we operate throughout the world (as applicable);                                                                                                                                |
|   | · | government expropriation of assets;                                                                                                                                                                                                                                     |
|   | · | changes in or uncertainties relating to geographically dispersed rules and regulations that may harm our ability to sell our products;                                                                                                                                  |
|   | · | tariffs, export or import restrictions, restrictions on remittances abroad, imposition of duties or taxes that limit our ability to move our products out of these countries or interfere with the import of essential materials into these countries;                  |
|   | · | increase in withholding and other taxes, or limitations on remittances and other payments by foreign subsidiaries or strategic partners;                                                                                                                                |
|   | · | varying and possibly overlapping tax regimes, including the risk that the countries in which we operate will impose taxes on inter-company relationships;                                                                                                               |
|   | · | currency devaluations or fluctuations in currency values, including in developing markets such as [Turkey, Egypt, Mexico, Nigeria, Ukraine, and South Africa] as well as in developed markets such as the United Kingdom and other countries within the European Union; |
|   | · | increased sovereign risk, such as default by or deterioration in the economies and credit ratings of governments, particularly in the EMEA region;                                                                                                                      |
|   | · | economic, political or social instability in foreign countries;                                                                                                                                                                                                         |
|   | · | the enforceability of legal agreements and judgments in foreign countries;                                                                                                                                                                                              |
|   | · | an inability, or reduced ability, to protect our intellectual property;                                                                                                                                                                                                 |
|   | · | the unprecedented ongoing Covid-19 pandemic; and                                                                                                                                                                                                                        |
|   | · | government subsidies or other incentives that favor local competitors.                                                                                                                                                                                                  |

  

We currently expect to expand in our existing and additional target international markets, but our expansion plans may not be successful. Failure of, or delay in, our expansion plans could significantly harm our business results.

 

*****We face significant competition from both Indian and international producers of Basmati and other rice and food products.*****

 

We compete for customers principally on the basis of product selection, product quality, reliability of supply, processing capacity, brand recognition, distribution capability, and pricing. With respect to our Basmati rice, we compete with numerous types of competitors in the fragmented and unorganized Basmati rice market, from other large Indian processors to smaller businesses in India and around the world. Basmati rice has historically only been grown successfully in certain states in North India and in a part of the Punjab region located in Pakistan, which regions have climates conducive to growing Basmati rice. In addition, our Basmati rice competes with a type of rice grown in California and Texas, among other places, which is marketed as Basmati rice to compete with our products. 

 

Many of our competitors in the markets for our rice and other food products have a broader product selection, greater processing capacity, brand recognition advantages in certain Indian and international markets, and significantly greater financial and operational resources than we have. Also, since outside of supply chain management and distribution there are no substantial barriers to entry to the markets for our rice and other food products, increased consolidation and, particularly, a more organized Basmati market could decrease our market share or result in lower selling prices of our products or result in higher costs of our raw materials, thereby reducing our earnings.

 

Our growth significantly depends on our ability to penetrate and increase the acceptance of our Basmati rice and other products in new Indian and international markets.

 

***Our historic compound aggregate growth results and trends are not indicative of our future results and may not be sustainable for the future.***

 

We have industry pricing dynamics and an improvement in mix. As a result, the historic CAGR data and trends set out elsewhere in this Form 20F are not indicative of our future results and may not be sustainable for the future.  In particular, our future growth CAGRs may increase at a lower rate or may not increase at all, which in turn would have a negative impact on our business, results of operation and financial results. In fact, the Company had a particularly challenging year during its fiscal year ended March 31, 2019 where it had declines to its financial results due in part to challenging industry conditions, including the impact of currency exchange fluctuations on its business in India and lower industry pricing, as well as certain business disruptions that management believes were short term in nature.

 

***Our inability to meet the quality requirements of our customers or to anticipate and adapt to changes in the market demand for our products could reduce demand for our products and harm our sales.***

 

Our results of operations and growth strategy depend upon the demand for Basmati rice and our other food products in global markets. Demand for our products depends primarily on consumer-related factors such as demographics, local preferences and food consumption trends and macroeconomic factors such as general economic condition and the level of consumer confidence. Our success depends on our ability to predict, identify, and interpret the tastes, packaging, sales channel, and other preferences of consumers around the world and to offer products that appeal to these preferences in the places and ways that consumers shop. Consumer preferences often change over time, and, if we are not able to anticipate, identify or develop and market products that respond to changes in consumer preferences, demand for our products may decline. We must continually monitor and adapt to changing market demand. If we do not offer products that appeal to consumers or if we misjudge consumer demand for our products, we may not meet our growth targets, our sales and market share may decrease, and our profitability may suffer.

   

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| *Table of Contents* |

   

We are also subject to regulation by the countries or regions where our customers are located, such as the European Union (“EU”) and the United States (“US” or the “U.S.”), relating to the quantity, quality, characteristics and variety of the Basmati rice and other food products sold there. Authorities may upgrade or change these regulations from time to time. Our international customers often require that the rice we sell matches their quality standards and conduct sample checks on our products. The results from their sample checks may not reflect the quality of the rice we deliver to them and the rice we sell to them may not comply with their quality specifications or requirements. If our customers’ sample checks identify any deficiencies in our rice, they will generally have the right to return the entire batch we sold to them. We must, on a regular basis, keep pace with the quality requirements of our global customers, invest continuously in new technology and processes to provide the desired quality product and continually monitor our product.

 

Any failure to meet the quality requirements of our customers or to anticipate and adapt to changes in market demand could harm our business results.

 

***Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on our business, financial condition and results of operations.***

   

The Chinese economy differs from the economies of western countries in such respects as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, bank regulation, currency and monetary policy, rate of inflation and balance of payments position. Prior to 1978, the Chinese economy was a “planned economy”. Since 1978, increasing emphasis has been placed on the utilization of market forces in the development of the Chinese economy. Annual and five-year State Plans are adopted by the Chinese government in connection with the development of the economy. Although state-owned enterprises still account for a substantial portion of the Chinese industrial output, in general, the Chinese government is reducing the level of direct control that it exercises over the economy through State Plans and other measures. There is an increasing level of freedom and autonomy in areas such as allocation of resources, production, pricing and management and a gradual shift in emphasis to a “market economy” and enterprise reform. Limited price reforms were undertaken with the result that prices for certain commodities are principally determined by market forces. In addition, economic reforms may include reforms to the banking and credit sector and may produce a shift away from the export-driven growth model that has characterized the Chinese economy over the past few decades. Many of the reforms are unprecedented or experimental and may be subject to revision, change or abolition based upon the outcome of such experiments. The level of imports to and exports from China could be adversely affected by the failure to continue market reforms or changes to existing pro-export economic policies. The level of imports to and exports from China may also be adversely affected by changes in political, economic and social conditions (including a slowing of economic growth) or other relevant policies of the Chinese government, such as changes in laws, regulations or export and import restrictions, internal political instability, changes in currency policies, changes in trade policies and territorial or trade disputes. A decrease in the level of imports to and exports from China could adversely affect our business, operating results and financial condition.

    

***We may not be successful in identifying and acquiring suitable acquisition targets, managing strategic transactions, or making strategic investments, which could adversely affect our growth.***

 

We have in the past expanded, and intend to expand in the future, our operations and markets through acquisitions or strategic investments. The identification and completion of such acquisitions or investments are dependent upon various factors, including satisfactory completion of due diligence, negotiation of definitive agreements and our ability to compete with other entities to acquire attractive targets. There is no assurance that in the future we will be able to identify and acquire appropriate acquisition targets on commercially acceptable terms, if at all, or will have sufficient capital to fund such acquisitions or investments, or will successfully integrate acquired businesses and realize any benefits, cost savings, or synergies presented by strategic transactions. In addition, the execution and oversight of strategic transactions or strategic investments may result in the diversion of management attention from our existing business and may present financial, managerial, and operational risks. Failure to identify and acquire suitable acquisition targets, or to manage the integration of targets that we have acquired, or to make strategic investments in the future could adversely affect our growth.

 

*****Adverse conditions in the global economy and disruption of financial markets may prevent the successful commercialization of our products, as well as significantly harm our results of operations and ability to generate revenue and become profitable.*****

 

We face risks attendant to changes in global economic environments, changes in interest rates, instability in the banking and securities markets, and trade regulations around the world, among other factors. Major market disruptions and adverse changes in market conditions and regulatory climate in China, the United States and worldwide may adversely affect our business or impair our ability to borrow amounts under any future financial arrangements.

 

For example, the economic slowdown in the Asia-Pacific region, especially in China, could negatively affect global economic markets. Before the global economic financial crisis that began in 2008, China had one of the world’s fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on the demand for our products. The growth rate of China’s GDP for the year ended December 31, 2019, was 6.1%, down from a growth rate of 6.6% for the year ended December 31, 2018, but remaining well below pre-2008 levels. On April 14, 2020, the International Monetary Fund (“IMF”) projected that the growth rate of China’s GDP for the year ended December 31, 2020 will drop to 1.2% as a result of the COVID-19 pandemic. China and other countries in the Asia Pacific region may continue to experience slowed or even negative economic growth in the future. Our financial condition and results of operations, as well as our future prospects, would likely be hindered by a continuing or worsening economic downturn in any of these countries or geographic regions. Furthermore, there is a rising threat of a Chinese financial crisis resulting from massive personal and corporate indebtedness and “trade wars”. The IMF has warned that continuing trade tensions, including significant tariff increases, between the United States and China are expected to result in a 0.8% cumulative reduction of global GDP in 2020. We cannot assure you that the Chinese economy will not experience a significant contraction in the future.

    

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Over the past several years, the credit markets in the United States and Europe have remained contracted, deleveraged and less liquid, and the U.S. federal and state governments and European authorities have implemented governmental action and/or new regulation of the financial markets and may implement additional regulations in the future. Global financial markets have been, and continue to be, disrupted and volatile. Beginning in February 2020, due mainly to the COVID-19 pandemic, global financial markets, including in the U.S. experienced volatility and a steep and abrupt downturn. The ultimate impact on the global financial markets and the disruption to the global economy are dependent on, among other things, the length and severity of the COVID-19 pandemic. Potential adverse developments in the outlook for the United States or European countries, or market perceptions concerning these and related issues, could reduce the overall demand for our products, which could negatively affect our financial position, results of operations and cash flow. Economic conditions and the economic slow-down resulting from COVID-19 and the international governmental responses to the virus may also adversely affect the market price of our ordinary shares.

 

Trade actions initiated by the U.S. imposing tariffs on imports have been met with retaliatory tariffs by other countries, adding a level of tension and uncertainty to the global economic environment. In November 2018, the U.S., Mexico and Canada executed the U.S.-Mexico-Canada Agreement, or the USMCA, the successor agreement to the North American Free Trade Agreement, or NAFTA. The agreement includes the imposition of tariffs on vehicles that do not meet regional raw material (steel and aluminum), part and labor content requirements. The agreement was ratified by the U.S. in January 2020. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport our products. and (c) the risks associated with exporting and importing our products. Such increases may significantly affect the quantity of good purchased, shipping time schedules, costs and other associated costs, which could have an adverse impact on our business, operating results and financial condition. An extended period of deterioration in the outlook for the world economy could reduce the overall demand for our products and could also adversely affect our ability to obtain financing on acceptable terms or at all.

 

*****Natural or man–made calamities and health epidemics could have a negative impact on the global economy and cause our business to suffer.*****

 

Our operations, employees and customers are located globally, therefore, natural or man-made calamities such as earthquakes, tsunamis, floods, climate change and drought pose a substantial risk to our business. The extent and severity of these natural or man-made disasters determines their impact on the global economy. Natural or man-made disasters may occur in the future and may have an adverse effect on our business. In addition, the COVID-19 pandemic has engendered unprecedented times and continues to affect the global economic and market conditions which may have an adverse effect on our business. 

 

In recent years, certain regions of the world, including countries in which we operate, have experienced outbreaks of swine flu caused by the H1N1 virus. Any future outbreak of swine flu or other health epidemics may restrict the level of business activity in affected areas which could adversely affect our business. 

 

***We derive a significant portion of our income from sales of Basmati rice, specialty rice and other food products, which may be dependent upon the economies and government policies of the key countries to which we sell our products; any unfavorable change in such economies or government policies may harm our business.***

   

We sell Basmati rice, other specialty rice and other food products to customers across four continents with significant portions of our international sales to Asia Pacific, EMEA and North America. We currently plan to expand our international operations into additional countries in the near future. For fiscal 2019, our revenue was $64,436,816. If an economic slowdown or other factors adversely affect the economic health of the countries to which we sell, our international customers may reduce or postpone their orders, which may in turn lower the demand for our products and harm our revenue and profitability. 

   

In addition, uncertainty surrounding the potential exit of the United Kingdom from the European Union (“Brexit”) may have a significant impact on the global economy and foreign exchange rates which could have a negative impact on our business. We continue to monitor Brexit and its potential impacts on our business results. Volatility in foreign currencies is expected to continue as the United Kingdom executes its exit from the European Union. If the United Kingdom’s membership in the European Union terminates without an agreement, there could be increased costs from re-imposition of tariffs on trade between the United Kingdom and European Union, shipping delays because of the need for customs inspections and procedures and shortages of certain goods. The United Kingdom will also need to negotiate its own tax and trade treaties with countries all over the world, which could take years to complete. In fiscal 2019, we generated 0.04% of our net revenues in the United Kingdom. Our exposure to the imposition of tariffs and currency devaluation in the U.K. could result in a material impact to our consolidated revenue, earnings and cash flow. 

 

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Our rice may not comply with the applicable policies of the countries where we sell it and be returned to us. In addition, any change in government policies and regulations, including any ban imposed on a particular variety of rice by a government, or any duties, pre-conditions or ban imposed by a country to which we sell our products, might harm our international sales. The loss of any significant international rice market because of such events or conditions could harm our business results. Our international sales are also exposed to certain political and economic and other related risks inherent to exporting products, including exposure to potentially unfavorable changes in tax or other laws, a reduction in import subsidies, partial or total expropriation and the risks of war, terrorism and other civil disturbances in our international markets. Our insurance coverage may not be sufficient to protect us against all such risks.

 

We may also be subject to certain sanctions imposed on, or reductions in import subsidies by, the countries or regions where our international customers are located. Further, we provide credit to our customers in connection with most of our international sales of Basmati rice, so, if any sanctions are imposed on the countries to which we sell, our collection of international receivables may be significantly delayed. Import subsidies may be removed by, and international sanctions may be imposed on, any Basmati importing countries in the future, and we may have reduced sales or not be able to collect revenue from all sales made there on a credit basis, which could harm our business results.

 

***We are exposed to volatility in the London Interbank Offered Rate or LIBOR, and we may enter into derivative contracts, which can result in higher than market interest rates and charges against our income. If volatility in LIBOR occurs, it could affect our profitability, earnings and cash flow.***

 

LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to be eliminated or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness and obligations. The amount outstanding under our senior secured credit facility has been, and amounts under additional credit facilities that we have entered after March 31, 2019 or may enter in the future will generally be, advanced at a floating rate based on LIBOR, which has been volatile in prior years, which can affect the amount of interest payable on our debt, and which, in turn, could have an adverse effect on our earnings and cash flow. In addition, in recent years, LIBOR has been at relatively low levels, and may rise in the future as the current low interest rate environment comes to an end. Our financial condition could be materially adversely affected at any time that we have not entered into interest rate hedging arrangements to hedge our exposure to the interest rates applicable to our credit facilities and any other financing arrangements we may enter into in the future. Moreover, we currently do not have any derivative instruments but even if we enter into interest rate swaps or other derivative instruments for purposes of managing our interest rate exposure, our hedging strategies may not be effective and we may incur substantial losses.

 

LIBOR has historically been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times. These conditions are the result of the disruptions in the international credit markets. Because the interest rates borne by our variable interest bearing outstanding indebtedness fluctuate with changes in LIBOR, if this volatility were to occur, it would affect the amount of interest payable on our variable interest debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.

 

Furthermore, the calculation of interest in most financing agreements in our industry has been based on published LIBOR rates. Due in part to uncertainty relating to the LIBOR calculation process in recent years, it is likely that LIBOR will be phased out in the future. As a result, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. If we are required to agree to such a provision in our existing or future financing agreements, our lending costs could increase significantly, which would have an adverse effect on our earnings and cash flow

 

In addition, the banks currently reporting information used to set LIBOR will likely stop such reporting after 2021, when their commitment to reporting information ends. The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate, or “SOFR.” The impact of such a transition from LIBOR to SOFR could be significant for us. In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position. Interest rate derivatives may also be impacted by the transition from LIBOR to SOFR or other alternative rates. Entering into swaps and derivatives transactions is inherently risky and presents various possibilities for incurring significant expenses. Such risk may have an adverse effect on our financial condition and results of operations.

 

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***We are exposed to foreign currency exchange rate fluctuations and exchange control risks, which may harm our results **of**operations and cause our financial results to fluctuate between periods.***

 

Our operating expenses are geographically dispersed however our revenue is denominated primarily in US dollars. However, 4.2 % of our total revenue for fiscal 2019 was denominated in other currencies, typically in U.S. dollars and occasionally in Euros, GBP and UAE Dirham, due to our international sales. We have expenses in various currencies. As a result, our revenue recognition, which is in US dollars, for reporting purposes, may vary and is at risk in light of exchange rate fluctuations. In addition, some of our capital expenditures, and particularly those for equipment imported from international suppliers, are denominated in foreign currencies and we expect our future capital expenditure in connection with our proposed expansion plans to include significant expenditure in foreign currencies for imported equipment and machinery. A significant fluctuation in the Indian Rupee and U.S. dollar and other foreign currency exchange rates could therefore have a significant impact on our results of operations. The exchange rate between the Indian Rupee and these currencies, primarily the U.S. dollar, has fluctuated in the past and any appreciation or depreciation of the Indian Rupee against these currencies can impact our profitability and results of operations. Such fluctuations have affected our results of operations in the past and may do so again in the future. For example, the Indian Rupee has depreciated against the U.S. dollar over the past three years, which may affect our results of operations in future periods. Any amounts we spend to hedge the risks to our business due to fluctuations in currencies may not adequately protect us against any losses we incur due to such fluctuations. Additionally, hedging exchange rate fluctuations could subject us to counter-party credit risk.

 

***We may be unable to adequately protect or continue to use our intellectual property; failure to protect such intellectual property may harm our business.***

 

The success of our business, in part, depends on our continued ability to use the “Amira” name and other intellectual property to increase awareness of the “Amira” name. We attempt to protect our intellectual property rights through available copyright and trademark laws. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries, and the actions taken by us may be inadequate to prevent imitation by others of the “Amira” name and other intellectual property. Protecting our intellectual property rights may be impeded in light of Amira India’s proceedings under the National Country Law Tribunal. In addition, if the applicable laws in these countries are drafted or interpreted in ways that limit the extent or duration of our rights, or if existing laws are changed, our ability to generate revenue from our intellectual property may decrease, or the cost of obtaining and maintaining rights may increase. We also distribute our Amira branded products in some countries in which there is no trademark protection. As a result, it may be possible for unauthorized third parties to copy and distribute our Amira branded products or certain portions or applications of our Amira branded products, which could have a material adverse effect on our business prospects and results. If we fail to register the appropriate trademarks or our other efforts to protect relevant intellectual property prove to be inadequate, the value of the Amira name could decrease, which could harm our business and results of operations.

 

We have also initiated legal proceedings against certain parties for infringement of our intellectual property rights. For instance, Amira has filed multiple legal proceedings before various courts and forums against a number of third parties for infringement of the trademarks “Amira” and “Guru.” 

 

In the future, additional litigation may be necessary to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Regardless of the validity or the success of the assertion of any claims, we could incur significant costs and diversion of resources in enforcing our intellectual property rights or in defending against such claims, which could harm our business and results of operations.

 

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***Political instability, terrorist attacks, international hostilities and global public health threats could adversely affect our business.***

 

We conduct operations in 4 continents, and our business, results of operations, cash flows, financial condition and ability to pay dividends, if any, in the future may be adversely affected by changing economic, political and government conditions in the countries and regions where our operations are conducted. Moreover, we operate in sectors of the economy that is could be adversely impacted by the effects of political conflicts, including the current political instability in the Middle East and the South China Sea region and other geographic countries and areas, geopolitical events such as Brexit, terrorist or other attacks, and war (or threatened war) or international hostilities, such as those between the United States and North Korea or Iran, or between the Houthi and Arab counties in Yemen, or internally in Libya, and stabilizing growth in China, as well as rapidly growing public health concerns stemming from the COVID-19 pandemic. Terrorist attacks such as those in Paris on November 13, 2015, Manchester on May 22, 2017, as well as the frequent incidents of terrorism in the Middle East, and the continuing response of the United States and others to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East, including increased tensions between the U.S. and Iran, as well as the presence of U.S. or other armed forces in Iraq, Syria, Afghanistan and various other regions, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. As a result of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs. Additionally, Brexit, or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business and operations.

 

Further, governments may turn and have turned to trade barriers to protect their domestic industries against foreign imports, thereby depressing demand for imports. In particular, leaders in the United States and China have implemented certain increasingly protective trade measures. The results of the 2016 presidential election and the potential results of the upcoming 2020 presidential election in the United States have created significant uncertainty about the future relationship between the United States, China and other countries, including with respect to trade policies, treaties, government regulations and tariffs. For example, in March 2018, President Trump announced tariffs on imported steel and aluminum into the United States that could have a negative impact on international trade generally and, in January 2019, the United States announced expanded sanctions against Venezuela, which may have an effect on its oil output and, in turn, affect global oil supply. There have also been continuing trade tensions, including significant tariff increases, between the United States and China. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (i) the cost of goods exported from and into regions globally, (ii) the length of time required to transport goods and (iii) the risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on our charterers’ business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of operations, financial condition and our ability to pay any cash distributions to our stockholders.

 

In Europe, large sovereign debts and fiscal deficits, low growth prospects and high unemployment rates in a number of countries have contributed to the rise of Eurosceptic parties, which would like their countries to leave the Euro. The exit of the U.K. from the European Union and potential new trade policies in the United States further increase the risk of additional trade protectionism.

 

In January 2020, in response to certain perceived terrorist activity, the United States launched an airstrike in Baghdad that killed a high-ranking Iranian general, increasing hostilities between the U.S. and Iran. This attack or further escalations between the U.S. and Iran that may follow, could result in retaliation from Iran that could potentially affect the shipping industry, through increased attacks on vessels in the Strait of Hormuz (which already experienced an increased number of attacks on and seizures of vessels in 2019), or by potentially closing off or limiting access to the Strait of Hormuz, where a significant portion of the world’s oil supply passes through. Any restriction on access to the Strait of Hormuz, or increased attacks on vessels in the area, could negatively impact our earnings, cash flow and results of operations.

 

In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia.

 

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In addition, public health threats, such as those posed by COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, the timing of completion of scheduled dry-dockings and ballast water treatment system installation projects, as well as the operations of our customers.

 

Any of these occurrences could have a material adverse impact on our future performance, results of operations, cash flows and financial position.

 

***We are a holding company and are dependent on dividends and other distributions from our subsidiaries which no longer includes Amira India.***

 

We are a holding company and currently have no direct operations. As a result, we are dependent on dividends and other distributions from our subsidiaries for our cash requirements, which would include funds to pay dividends and other cash distributions to our shareholders. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and we do not anticipate paying any cash dividends for the foreseeable future. 

 

***Insiders have substantial control over us; ownership by insiders of our ordinary shares and ownership by our Chairman give rise to conflicts of interest with our public shareholders.***

   

Our Chairman, Chief Executive Officer and controlling shareholder, Mr. Karan A. Chanana and his affiliates, including various companies controlled by him and direct members of his family and certain of our other directors, directly or indirectly held a majority of our outstanding ordinary shares as of March 31, 2019. Accordingly, these shareholders are able to control all matters requiring approval by holders of a majority of our outstanding ordinary shares, including the election of all the members of our Board of Directors (which allow them day-to-day control of our management and affairs), amendments to our memorandum and articles of association, our winding up and dissolution, and other significant corporate transactions. Specifically, they are able to elect our board of directors, approve any sale of more than 50% in value of our assets, and certain mergers or consolidations involving us, a continuation of the company into a jurisdiction outside the British Virgin Islands where we are currently domiciled, or our voluntary liquidation. As a result, Mr. Chanana and his affiliates can cause, delay or prevent a change of our control, and generally preclude any unsolicited acquisition of us, even if such events would provide our public shareholders with the opportunity to receive a premium for their ordinary shares, or are otherwise in the best interests of our public shareholders.

    

In addition, Mr. Karan A. Chanana and certain of his affiliates, including various companies controlled by him and certain members of his family, hold a significant minority equity interest in Amira India, an entity through which we conducted a significant portion of our operations as of March 31, 2019. These shareholders may have conflicting interests with our public shareholders. For example, if Amira India indirectly makes distributions to us, Mr. Karan A. Chanana and his affiliates will also be entitled to receive distributions pro rata in accordance with their percent of ownership in Amira India, and their preferences as to the timing and amount of any such distributions may differ from those of our public shareholders. In addition, the structuring of future transactions may take into consideration tax or other ramifications to Mr. Karan A. Chanana and these affiliates even where there would be no similar implication to us or our public shareholders.

 

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 Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”). Mr. Karan A. Chanana and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”) 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. Karan A. Chanana and Ms. Anita Daing (a former Director of Amira Pure Foods Private Limited “APFPL”) have guaranteed the repayment of the secured revolving credit facilities, up to a sum of 1.4 million, along with any applicable interest and other charges due to the consortium. 

 

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As a result of these guarantees, Mr. Chanana and Ms. Daing have a conflicting interest with our shareholders and/or other creditors of the Company which may not be resolved in our best interest. We have agreed to indemnify ours present and former directors and officers, including Mr. Chanana and Ms. Daing, in accordance with our Amended and Restated Memorandum and Articles of Association and indemnification agreements entered into with such directors and officers. Such indemnification includes indemnification for Mr. Chanana’s and Ms. Daing’s personal guarantees.

 

There are conflicts of interest involving Mr. Chanana’s interests and those of his affiliates which may not be resolved favorably to our minority shareholders. We do not have any formally documented procedures to identify, analyze or monitor conflicts of interest. 

 

***If the transfer pricing arrangements we have among our subsidiaries are determined to be inappropriate, our tax liability may increase.***

 

We have transfer pricing arrangements among our, Dubai, UK and Germany subsidiaries. Transfer pricing applicable in countries in which we operate, require that any international transaction involving associated enterprises be on arm’s length terms. We consider the transactions among our subsidiaries to be on arm’s length terms. If, however, a tax authority in any jurisdiction reviews any of our tax returns and determines that the transfer prices and terms we have applied are not appropriate, or that other income of our affiliates should be taxed in that jurisdiction, we may incur increased tax liability, including accrued interest and penalties, which would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows.

 

***We could be subject to tax risks attributable to previous tax assessment periods.***

 

We could accrue unanticipated tax expenses in relation to previous tax assessment periods which have not yet been subject to a tax audit or are currently subject to a tax audit. In such tax audits, the tax laws or relevant facts could be interpreted by the tax authorities in a manner deviating from the relevant company’s view. As a result, the tax authorities could revise original tax assessments, which would cause our tax expense to increase, possibly materially, thereby reducing our profitability and cash flows.

 

***Our use of information technology exposes us to cybersecurity breaches and other business disruptions.***

 

We use information technology and third-party service providers to support our global business processes and activities, including supporting critical business operations such as manufacturing and distribution; communicating with our suppliers, customers and employees; maintaining effective accounting processes and financial and disclosure controls; executing mergers and acquisitions and other corporate transactions; conducting research and development activities; meeting regulatory, legal and tax requirements; and executing various digital marketing and consumer promotion activities.

 

Cybersecurity breaches of our systems or of third party systems, whether from circumvention of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing, computer viruses, ransomware or malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions may cause confidential information belonging to us or our employees, customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached. When risks such as these materialize, the need for us to coordinate with various third-party service providers and for third party service providers to coordinate amongst themselves might increase challenges and costs to resolve related issues. If our controls and business continuity plans or those of our third-party providers do not effectively respond to or resolve the issues related to any such disruptions in a timely manner, our product sales and business results may be materially and adversely affected, and we might experience delays in reporting our financial results, loss of intellectual property and damage to our reputation or brand.

 

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***The U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.***

 

In June 2016, a majority of voters in the U.K. elected to withdraw from the EU in a national referendum (informally known as “Brexit”), a process that the government of the U.K. formally initiated in March 2017. Since then, the U.K. and the EU have been negotiating the terms of a withdrawal agreement, which was approved in October 2019 and ratified in January 2020. The U.K. formally exited the EU on January 31, 2020, although a transition period remains in place until December 2020, during which the U.K. will be subject to the rules and regulations of the EU while continuing to negotiate the parties’ relationship going forward, including trade deals. There is currently no agreement in place regarding the aftermath of the withdrawal, creating significant uncertainty about the future relationship between the U.K. and the EU, including with respect to the laws and regulations that will apply as the U.K. determines which EU-derived laws to replace or replicate following the withdrawal. Brexit has also given rise to calls for the governments of other EU member states to consider withdrawal. These developments and uncertainties, or the perception that any of them may occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could have a material adverse effect on our business and on our consolidated financial position, results of operations and our ability to pay distributions. Additionally, Brexit or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business and operations.

 

Brexit contributes to considerable uncertainty concerning the current and future economic environment. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets.

*** ***

***Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.***

 

The sale of products internationally is subject to various security and customs inspection and related procedures in countries of origin and destination and trans-shipment points. Inspection procedures may result in the seizure of our products, delays in the loading, offloading, trans-shipment or delivery and the levying of customs duties, fines or other penalties against our shippers. Changes to inspection procedures could also impose additional costs and obligations on us which could harm our financial condition.

  

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***Our historic compound aggregate growth results and trends are not indicative of our future results and may not be sustainable for the future******.***

 

We have industry pricing dynamics and an improvement in mix. As a result, the historic CAGR data and trends set out elsewhere in this Form 20F are not indicative of our future results and may not be sustainable for the future. In particular, our future growth CAGRs may increase at a lower rate or may not increase at all, which in turn would have a negative impact on our business, results of operation and financial results. In fact, the Company had a particularly challenging year during its fiscal year ended March 31, 2019 where it had declines to its financial results due in part to challenging industry conditions, including the impact of currency exchange fluctuations on its business in India and lower industry pricing, as well as certain business disruptions that management believes were short term in nature.

 

***Any decline in the market price of Basmati rice while held by us could harm our results.***

 

The Basmati rice industry is cyclical and dependent on the results of the Basmati harvest, which occurs for only 5 months of the year (September to January). Our origination process includes the risk of basmati prices from farmers. Farmers sell through government regulated agricultural produce markets or through licensed agents and then process it throughout the year. A unique feature of Basmati rice is that its quality is perceived to improve with age. Our Basmati rice is aged as much as 12 months or more (at times up to 24 months) after harvesting and generally commands a price premium. If there is any fall in the price of Basmati rice during the time, we hold it for sales, we may not be able to recover, or generate the same margins from, our investment in Basmati which may harm our results.

 

***The price we charge for our Basmati rice depends largely on the prevailing wholesale market price; lower market prices may harm our business results.***

 

Numerous factors affect the wholesale price of Basmati rice, including weather, government policies such as the reintroduction of minimum support prices and minimum export prices, changes in prices of other staples, seasonal cycles, pest and disease problems and balance of demand and supply. Furthermore, the highly fragmented nature of the Basmati rice industry in India limits the pricing power of individual companies. Any prolonged decrease in Basmati rice prices could harm our business results. Currently, we are not able to hedge against such price risks since Basmati rice futures do not actively trade on any commodities exchange.

 

***Due to the seasonality of our business, our results may vary over interim periods.***

 

Our revenue is typically higher from October through March than from April through September. We procure most of our Basmati paddy between September and March. Our business requires a significant amount of working capital primarily due to the fact that a significant amount of time passes between when we purchase Basmati paddy and sell finished Basmati rice. Accordingly, we maintain substantial levels of working capital indebtedness that is secured by our inventory. Therefore, our revenues and cash flows are affected by seasonal cyclicality.

 

***We rely on agents, brokers, and third-party processing facilities for our origination of sufficient Basmati of the proper quality for our requirements.***

 

Despite the recent trend of consolidation in the Indian market for Basmati rice, the Basmati market remains relatively fragmented and includes organized and unorganized suppliers such as small family owned farms. We expect this fragmentation to continue for the foreseeable future. These smaller companies may not be able to maintain a required flow of Basmati to us should our volume requirements rapidly increase. If we are unable to buy sufficient Basmati from these agents which meets our quality requirements, we may not be able to originate and sell as much finished rice as we planned or promised to our customers, which could harm our reputation with these customers, as well as our business and results.

 

We also heavily depend upon a limited number of third-party processing facilities for origination of products responsible for substantial portions of our revenue, some of which facilities are owned by our competitors. These facilities are subject to their own unique operational and financial risks, which are out of our control. We have no production agreements with these third-party processing facilities and can provide no assurance that we will be able to use their processing capacity to produce our products. If any of these processors choose not to provide us processing services, we may need to find and enter into arrangements with one or more replacement processors. Finding alternate processing facilities could involve significant delays and other costs and these sources may not be available to us on reasonable terms or at all. Any disruption of processing or packaging could delay delivery of our products, which could harm our business results.

 

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***We enter into long-term or exclusive Basmati rice supply contracts with our customers or with our distributors. Failure to receive timely repeat orders from our customers or our distributors may harm our business.***

 

We generally do not enter into long-term supply contracts with most of our customers. Our customers instead submit purchase orders from time to time, which are short-term commitments for specific quantities of Basmati rice and other products at an agreed price, forcing us to rely primarily on historical trends, other market indicators and management estimates to predict demand, which is particularly difficult as we expand into new markets. We expand our origination based on a trend of historical growth and delivery, but we may not receive purchase orders commensurate with our expanded operations on substantially the same terms, or at all, and we may not get expected repeat orders from our customers. As a result, we are vulnerable to volatility in market demand, which could harm our business and results of operations.

 

If we are not able to supply our distributors the quantities of our products that we have historically supplied them, they may place orders with and even move some or all of their business permanently to our competitors. In addition, our distributors could change their business practices or seek to modify the terms under which we usually do business with them, including the amount and timing of their payments to us. Further, we rely upon our distributors to assess the demand for our products in their market based on their interactions with retailers and consumers. If our distributors do not accurately predict the demand for our products, delay in placing orders with us, fail to market our products successfully or choose to market the products of our competitors instead, such actions could harm our business growth and prospects and business results. Further, our inability to maintain our existing distributors or to expand our distribution network in line with our growth strategy could harm our business results.

 

***We derived 90.2% of our total revenue from our top five customers and distributors in fiscal 2019; the loss of the revenue from any such customer would harm our business results.***

 

Our top five**customers and distributors accounted for 90.2, 37.0% and 24.0% of our total revenue for fiscal 2019, 2018 and 2017, respectively. We anticipate that this concentration of sales among customers may continue in the future. Although we believe we have strong relationships with certain of our key customers, we do not have any long-term supply contracts with these customers obligating them to buy product from us. Our inability to maintain or further develop our relationships with our key customers and distributors would harm our business results. Moreover, changes in the strategies of our largest customers, including a reduction in the number of brands they carry or a shift to competitors’ products, could harm our sales.

 

***Production of Basmati is subject to risks related to potential climate change such as global warming.***

 

Agriculture is extremely vulnerable to climate change, including large-scale changes such as global warming. Global warming is projected to have a significant impact on conditions affecting agriculture, including temperature, carbon dioxide concentration, precipitation and the interaction of these elements. Higher temperatures may eventually reduce yields of desirable crops while encouraging weed and pest proliferation. Increased atmospheric carbon dioxide concentration may lead to a decrease in global crop production. Changes in precipitation patterns increase the likelihood of short-run crop failures and long-run production declines. While crop production in the temperate zones may reap some benefit from climate change, crop production in the tropical and subtropical zones appears more vulnerable to the potential effects of global warming. Even a high degree of farm-level adaptation by the suppliers of our Basmati may not entirely mitigate such negative effects. All of our Basmati is grown in tropical and subtropical areas. As a result, all of our suppliers’ production is particularly susceptible to climate change in these areas. Rapid and severe climate change may decrease our suppliers’ crop production, which may significantly harm our business results.

  

***We rely upon independent third-party transportation providers for substantially all shipments through our supply chain and are subject to increased shipping costs as well as the potential inability of our third-party transportation providers to deliver on a timely basis.***

 

We currently rely upon a network of independent third-party transportation providers for substantially all of our shipments of Basmati and rice to storage, processing, packaging and distribution facilities, as well as from distribution facilities to market. These transportations are primarily made by trucks within the same country and by ship between countries. Our use of these delivery services for our shipments subjects us to many risks, including increases in fuel prices, which would increase our shipping costs, and employee strikes and inclement weather, which may impact our shippers’ ability to provide delivery services that adequately meet our shipping needs. If we change the shipping companies we use, we could face logistical difficulties that could delay deliveries, and we would incur costs and expend resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those received from our current independent third-party transportation providers, which in turn would increase our costs.

 

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***Employee shortages and rising employee costs may harm our business and increase our operation costs.***

 

As of March 31, 2019, we employed 27 employees in geographically dispersed locations that perform a variety of functions in our daily operations. We have observed an overall tightening of the employee market and an emerging trend of shortage of labor supply. Failure to obtain stable and dedicated employee support may cause disruption to our business that harms our operations. Employee costs have increased in recent years and may continue to increase in the near future. To remain competitive, we may need to increase the salaries of our employees to attract and retain them. Any increase in employee costs may harm our business results.

 

***Loss of key personnel or our inability to attract and retain additional key personnel could impair our ability to execute our growth strategy, harm our product development effort and delay our launch of new products.***

    

Our business involves operations spanning a variety of disciplines and demanding a management team and employee workforce that is knowledgeable in many areas necessary for our operations. We have employees in disbursed locations who perform a variety of functions. While we have been successful in attracting experienced, skilled professionals, the loss of any key member of our management team, or operational or product development employees, or the failure to attract and retain additional such employees, could slow the execution of our business strategy, including expansion into new target markets, and our development and commercialization of new products. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, the resulting staffing constraints will harm our ability to expand, satisfy customer demands for our products and develop new products. Competition for such personnel from numerous companies may limit our ability to attract and retain them on acceptable terms, or at all, and we have no “key person” insurance to protect us from any losses of personnel. 

     

***We are obligated to Indemnify our guarantors and out officers and directors against certain liabilities***

          

We are contractually obligated to indemnify our officers and directors pursuant to written agreements. If there were claims against our officers and directors in connection with the services they provide to us, we could be forced to pay their defense costs and any judgement against them. Additionally, we have provided written indemnities given to Mr Karan A Chanana as the past guarantor of Amira India’s debt. These obligations to indemnify remain in force. Should we be obligated to provide indemnification, it would have a negative impact on our financial condition.

          

***Our operations are highly regulated in the areas of food safety and protection of human health and we may be subject to the risk of incurring compliance costs as well as the risk of potential claims and regulatory actions. Any risk found due to the developing Covid-19 pandemic will severely impact our business.***

 

Our operations are subject to a broad range of global health and safety laws and regulations, including laws and regulations governing the use and disposal of pesticides and other chemicals. These regulations directly affect our day-to-day operations, and violations of these laws and regulations can result in substantial fines or penalties, which may significantly harm our business results, results of operations and financial condition. For example, there has been a recent focus in the U.S. on the potential levels of arsenic in rice and the Food and Drug Administration (“FDA”) has indicated that it will evaluate strategies designed to limit arsenic exposure from rice and rice products. In December 2013, FDA issued an import alert enabling it to detain shipments of Indian Basmati rice for compulsory testing for residue of certain pesticides. While Amira is currently exempted from the import alert, FDA’s interest in Basmati rice could impact our business. While the U.S. Environmental Protection Agency (“EPA”), which establishes the Maximum Residue Limit (“MRL”) for pesticide residue allowed in food imported into the U.S., has yet to set an MRL for most of the pesticides used by Indian farmers to protect Basmati rice from pests, it has recently set an import tolerance for tricyclazole in Indian Rice at 3.0 parts per million (“PPM”). For other pesticides without an MRL, however, if even 0.01 PPM are detected in any rice shipments into the U.S. they will be rejected by FDA. FDA’s enforcement activities have not, to date, materially affected our business or the results of our operations because our sales of Basmati rice in the United States have been limited, representing less than 13.0% in fiscal 2018. However, FDA’s regulatory activities may limit our growth in the U.S. Until FDA’s regulation of Basmati rice is resolved, there can be no assurance as to what additional measures, if any, may be taken by FDA or any other regulatory body and the impact of any such measures. 

  

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To stay compliant with all of the laws and regulations that apply to our operations and products, we may be required in the future to modify our operations or make capital improvements. Our products may be subject to extensive examinations by governmental authorities before they are allowed to enter certain regulated markets, which may delay the processing or sale of our products or require us to take other actions, including product recalls, if we or the regulators believe any such product presents a potential risk. If we are granted access to any such regulated market, maintaining regulatory compliance there may be expensive and time consuming, and if approvals are later withdrawn for any reason, we may be required to abruptly stop marketing certain of our products there, which could harm our business , results of operations and financial condition.

 

In addition, the sale of products for human use and consumption involves the risk of injury or illness to consumers. Such injuries may result from inadvertent mislabeling, tampering by unauthorized third parties or product contamination or spoilage. Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products or cease operations, which may lead to a material adverse effect on our business. In addition, customers may cancel orders for such products as a result of such events. Even if a situation does not necessitate a recall or market withdrawal, we may in the future become subject to lawsuits alleging that our operations and products cause damage to human health. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or physical harm, could adversely affect our reputation with existing and potential customers and consumers and our corporate and brand image. Although we maintain product liability and product recall insurance in an amount that we believe to be adequate, we may incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a product recall could have a material adverse effect on our business financial condition, results of operations or liquidity.

 

***We rely on certifications by industry standards-setting bodies; loss of a certification could reduce our sales.***

 

Certifications are not compulsory in the rice industry. However, some of our customers require us to have one or more internationally recognized certification. We have received an ISO 9001:2008 quality system certification and an ISO 22000:2005 food safety management certification for our rice processing facility, and an SQF Certificate. In addition, we have received certifications from BRC Global Standards and the U.S. Food and Drug Administration, as well as being Kosher certified, and have received a certificate of approval for the export of Basmati rice by the Export Inspection Council of India. We incur significant costs and expenses, including any necessary upgrades to our facilities, associated with maintaining these certifications. If we fail to maintain any of our certifications, our business may be harmed because our customers that require them may stop purchasing some or all of our products.

 

We also have organic certifications for our rice products from Ecocert IMO GmbH, an international certification body that certifies our compliance with the requirements of the EU, Regulations and as per the USDA National Organic Program’s Organic Standards.

 

***Our historical and future sales to certain non-U.S. customers, including independent resellers, expose us to special risks associated with operating in particular countries. If we are not in compliance with applicable legal requirements, we may be subject to civil or criminal penalties and other remedial measures.***

 

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) administers certain laws and regulations, or U.S. Economic Sanctions Laws, that restrict U.S. persons and, in some instances, non-U.S. persons like us, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to U.S. economic sanctions, or sanctions targets. We did not used any proceeds, directly or indirectly, from our IPO to fund any activities or business with any sanctions target. In compliance with the relevant laws, our non-U.S. subsidiaries have sold rice to independent non-U.S. customers in international markets that resell products to their own customers, which customers may have included private customers in Iran, Syria and other countries in the region. Iran and Syria are currently sanctioning targets. In fiscal year 2019, 2018 and 2017, there were no sales to Iran, Syria and Sudan. Currently, direct and indirect sales of rice into Iran are allowed under an OFAC general license issued in October 2011. Sales of rice into Syria are not restricted by OFAC or by the U.S. Department of Commerce, Bureau of Industry and Security, which primarily administers U.S. restrictions on exports or re-exports to Syria. Therefore, we believe we are in compliance with U.S. Economic Sanctions Laws. We believe that we conducted our historical activities in compliance with applicable U.S. Economic Sanctions Laws in all material respects; however, it is possible that U.S. authorities could view certain of our past transactions to have violated U.S. Economic Sanctions Laws. If our activities are found to violate applicable sanctions or other trade controls, we may be subject to potential fines or other sanctions. For example, a violation of OFAC’s Iran regulations could currently result in a civil monetary penalty of up to the greater of $250,000 or twice the value of the transaction involved. We intend to conduct our business activities in compliance with all applicable laws and regulations. We will continue to monitor developments in countries that are the subject or target of any of these laws or regulations so that our sales to Sanction Targets will be conducted in compliance with all applicable law.

 

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We are also subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits U.S. companies and their intermediaries from bribing foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and other laws concerning our international operations. Legislation in other jurisdictions contains similar prohibitions, although varying in both scope and jurisdiction. Although our U.S. subsidiary only transacts business in the U.S., we operate in many parts of the world that have experienced governmental corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices, which may negatively impact our results of operations.

 

We have adopted and are in the process of continuous improvement and strengthening of the formal controls and procedures to ensure that we are in compliance with OFAC, FCPA and similar laws, regulations and sanctions. The implementation of such controls and procedures could result in the discovery of issues or violations with respect to the foregoing by us or our employees, independent contractors, subcontractors or agents of which we were previously unaware. Any violations of these laws, regulations and procedures by our employees, independent contractors, subcontractors and agents could expose us to administrative, civil or criminal penalties, fines or restrictions on export activities (including other U.S. and Indian laws and regulations as well as foreign laws). A violation of these laws and regulations, or even an alleged violation, could harm our reputation and cause some of our U.S. investors to sell their interests in our company to be consistent with their internal investment policies or to avoid reputational damage, and some U.S. institutional investors might forego the purchase of our ordinary shares, all of which may negatively impact the trading prices of our ordinary shares.

 

*****Improper storage, processing and handling of our products could damage our inventories and, as a result, harm our business results.*****

 

Typically, paddy is stored in covered warehouses or in bags placed on open-air, raised plinths (or platforms) and processed rice in covered warehouses. In the event our paddy is not appropriately stored, handled and processed, spoilage may reduce the quality of the paddy and the resulting processed rice. Even if paddy is appropriately stored on open-air plinths, above-average rains may still harm the quality and value of paddy stored in this manner. In addition, the occurrence of any mistakes or leakage in the rice storage process may harm the yield, quality and value of our rice, leading to lower revenue.

 

*****We may incur significant costs to comply with environmental, health and safety laws and regulations; failure to comply could expose us to significant liabilities.*****

 

We are subject to a variety of environmental, health and safety laws and regulations in the jurisdictions in which we operate. Although we have implemented procedures to comply with these laws and regulations, we cannot be sure that our measures are compliant or capable of eliminating the risk of injury or contamination from the use, generation, manufacture, or disposal of our products. In the event of contamination or injury, we could be held liable for any resulting damages, and any liability could exceed our insurance coverage. Violations of environmental, health and safety laws may occur as a result of human error, accident, equipment failure or other causes. 

   

Compliance with applicable environmental health and safety laws and regulations may be expensive, and the failure to comply could result in the imposition of fines, regulatory oversight costs, third party property damage, product liability and personal injury claims, investigation and remediation costs, the suspension of production, or a cessation of operations, and our liability may exceed our total assets. We expect to encounter similar laws and regulations in most if not all of the countries in which we may seek to establish production capabilities or operate and the scope and nature of these laws and regulations will likely be different from country to country. Environmental, health and safety laws could become more stringent over time, requiring us to change our operations or incur greater compliance or capital costs, or could provide for increased penalties for violations, all of which could impair our research, development or production efforts and harm our business. The costs of complying with environmental, health and safety laws and regulations and any claims concerning noncompliance, or liability arising thereunder, could significantly harm our business results.

 

***We may become subject to lawsuits or indemnity claims, including those related to class action suits, product contamination and product liability, which could harm our business and results **of**operations.***

 

From time to time, we may be named as a defendant in lawsuits, claims and other legal proceedings. These actions may seek, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination, breach of contract, infringement of the intellectual property rights of others, or civil penalties and other losses of injunctive or declaratory relief. In the event that such actions or indemnities are ultimately resolved unfavorably for amounts exceeding our accrued liability, or are otherwise significant, the outcome could harm our reputation, business and results of operations. In addition, payments of significant amounts, even if reserved, could harm our liquidity.

 

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In addition, the distribution and sale of our products involve an inherent risk of product liability claims and product recalls if our products become adulterated or misbranded, as well as any associated adverse publicity. Our products may contain undetected impurities or toxins that are not discovered until after the products have been consumed by customers. For instance, our products are subject to tampering and to contamination risks, such as mold, bacteria, insects and other pests. This could result in claims from our customers or others, or in a significant product recall, which could damage our business and reputation and involve significant costs to correct. In addition, these kinds of events could result in cancellation of contracts by our customers or the recall of products. We may also be sued for defects resulting from errors of our commercial partners or unrelated third parties, and any product liability claim brought against us, regardless of its merit, or product recall could result in material expense, divert management’s attention, and harm our business, reputation and consumer confidence in our products.

 

*****Our insurance policies may not protect us against all potential losses including those which arise from the ongoing Covid-19 pandemic and other outbreaks, which could harm our business and results of operations.*****

 

Operating our business involves many risks, which, if not adequately insured, could harm our business and results of operations.

 

We believe that the extent of our insurance coverage is consistent with industry practice. Our insurance policies include coverage for risks relating to personal accident, burglary, medical payments, product liability and marine cargo, including transit cover covering certain employees, office premises and consignments of rice. In addition, the inventory stored at our processing facility and warehouses is insured against fire and other perils such as earthquake, burglary and floods, and we have fire and allied perils insurance coverage for business interruptions at our milling facility. However, any claim under our insurance policies maintained by us may be subject to certain exceptions, may not be honored fully, in part, in a timely manner or at all, and we may not have purchased sufficient insurance to cover all losses that we may incur. For instance, a majority of our inventory consists of Basmati and rice. In the event our inventory is not appropriately stored or is affected by fires or natural disasters such as floods, storms or earthquakes, our inventory may be damaged or destroyed, which would harm our results of operations. In addition, if we were to incur substantial liabilities or if our business operations were interrupted for a substantial period of time, we could incur costs and suffer losses. Our insurance policies may not cover such inventory and business interruption losses. Additionally, in the future, insurance coverage may not be available to us at commercially acceptable premiums, or at all.

 

***We are engaged in legal proceedings in Dubai with IDBI Bank***

 

We are engaged in legal proceedings with IDBI Bank [see Item 4. Legal Proceedings], which may affect our ability to raise working capital.

 

***We have been recently subject to short sale attacks which could harm our reputation and negatively affect our operations.***

 

In February 2015 and July 2015, we were subject to short sale attacks by a short seller firm. As a result of the short sale attack, we have been subject to two shareholder class action lawsuits before the United States District Court for the Central District of California. See “Business‒Legal Proceedings.” The short sale attack and the ensuing shareholder litigation, resulted in a significant decrease in the value of our shares, exposed us to significant litigation costs, diverted our management’s attention from day-to-day operations and negatively affected our credibility and reputation, which in turn disrupted our operations and relationships and negatively impacted our ability to effectively market, distribute and sell our products in various jurisdictions and negative effect on our business results. We may be exposed to additional short sale attacks in the future which could result in operational and reputational harm, which in turn could negatively affect our business results and credit ratings. See also “Management’s Discussion and Analysis of Our Financial Condition and Results of Operations‒Factors Affecting Our Results of Operations.”

 

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****Risks Related to our Business and Operations in India****

 

*****A substantial portion of our business and operations are located in India; we are subject to regulatory, economic, social and political uncertainties in India.*****

 

India remains an origination point for the products we sell and we are subject to regulatory, economic, social and political uncertainties in India. Even after the deconsolidation of Amira India, we continue to concentrate on originating our products from the Indian subcontinent and selling across the world. 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, outbreaks, pandemics and diseases and other political, social and economic developments in or affecting the diverse geographical locations in which we operate and sell our products.

 

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 results. The Indian government levied GST on sales of branded food products in second half of 2017 resulting in supply chain disruption and also extended operating cash cycle.  

 

Business environment (including legal and regulatory) in India is continuously evolving and there are new laws, regulations and /or ordinances being enacted like demonetization, GST, bankruptcy laws, new and updated banking regulations in India etc. which has a significant impact on the Company’s business. These and continuing changes by the Indian administration have impacts which are not essentially positive for the business environment, as initially anticipated.

 

All these changes have the potential 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.

 

*****We own less than 50% of Amira India, and as a result will not have the ability to control or impact decisions impacting Amira India.*****

 

Amira India announced conversion of its debt to equity in second half of fiscal year 2019 (effective November 15, 2018). This conversion resulted in Amira Mauritius’ holding of Amira India reducing from 80.4% to 49.8%. Mr. Karan A. Chanana, our Chairman, and his affiliates together own 59.5% of Amira India. Third parties own an aggregate of 40.5% of Amira India. Mr. Chanana has economic or business interests or goals that conflict with our economic or business interests and/or goals. Because of our reduced ownership of Amira India we no longer have the ability to exert control over its policies and decisions. We have not adopted a policy for resolving conflicts of interest. There is assurance that conflicts of interest will be resolved in our favor. Additionally, our ownership of Amira India involves risks that are different from the risks involved in our wholly-owned subsidiaries.

 

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*****The Government of India has previously banned the export of certain of our products, and future changes in the regulation of our sales may harm our business results.*****

 

In fiscal 2019, we generated a revenue of 15.9%. In 2018 and 2017, we generated 65.3% and 50.1% respectively. The revenue of 2019 is not comparable to the revenues of fiscal 2018, 2017 or previously. However, we expect to increase our presence over time. The majority of revenue is subject to the Government of India’s export control laws. Unfavorable changes in, or interpretations of, existing Indian laws, rules and regulations, or the adoption of new Indian laws, rules and regulations applicable to us and our business, may harm business results. Such unfavorable changes could decrease our ability to supply our products, increase our costs or subject us to additional liabilities. For example, from October 2007 to September 2011, the Government of India prohibited the export of non-Basmati rice from India. In addition, the Government of India has in the past and may in the future impose export duties or other export restrictions on our products that could harm our business results. The Government of India also determines the Minimum Export Price (“MEP”), which is the minimum price below which rice (except Basmati rice) cannot be exported from India, and so could at any time increase the prices at which we may sell our non-Basmati rice products outside India. While the Government of India terminated the MEP for Basmati rice in July 2012, the Government of India may in the future reinstitute the MEP for Basmati rice. Any increase or reinstitution of the MEP above our then current prices could decrease our international sales and harm business results. In addition, any other duties or tariffs, adverse changes in export policy or other export restrictions enacted by the Government of India and related to our international business could harm our business results.

 

*****Restrictions on foreign investment in India may prevent us and other persons from making future acquisitions or investments in India, which may harm our business results.*****

 

India regulates ownership of Indian companies by foreigners and, although some restrictions on foreign investment and borrowing from foreign persons have been relaxed in recent years, these regulations and restrictions may still apply to acquisitions by us or our affiliates, including Amira Mauritius and other affiliates which are not resident in India, of shares in Indian companies, or the provision of funding by us or any other entity which is not resident in India. Under current Indian regulations, transfers of shares between non-residents and residents are permitted (subject to certain exceptions) if they comply with, among other things, the pricing guidelines and reporting requirements specified by the Reserve Bank of India. If the transfer of shares is not in compliance with such pricing guidelines or reporting requirements or falls under any of the exceptions referred to above, then the prior approval of the Reserve Bank of India is required. We may not be able to obtain any required approval from the Reserve Bank of India or any other Indian regulatory authority on favorable terms or at all.

 

Further, under its consolidated foreign direct investment policy, the Government of India has set out additional requirements for foreign investments in India, including requirements with respect to downstream investments by Indian companies owned and controlled by non-resident entities. While we believe that these regulations will not have any material impact on our origination in India, these requirements, which currently include minimum valuations for Indian company shares and restrictions on sources of funding for such investments, may restrict our ability to make further equity investments in India.

 

*****Adverse weather, disease, pests and over farming in India could reduce the general availability of Basmati, which may affect our operations and growth plans.*****

 

Although Basmati rice is not entirely dependent upon a successful monsoon, the consistent failure of monsoons in India, extreme flooding, adverse weather or other natural calamities may harm the production of Basmati and another paddy. In addition, farmers could shift their production to other crops, resulting in a drop-in production. Such adverse weather and supply conditions may occur at any time and create volatility for our business and results of operations. Crop diseases and pest infestations may also affect production; such events may vary in severity, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. Major diseases and pests such as leaf blight, sheath blight, smut, blast, rice tango virus and stern borer affect our suppliers’ production. The costs to control these diseases and other infestations vary depending on the severity of the damage and the extent of the plantings affected. The available technologies to control such diseases and infestations may not continue to be effective. Furthermore, the continued use of intensive irrigated rice-based cropping systems in producing Basmati may cause deterioration of soil health and productivity. Any of these risks can affect the availability and current and future cost of Basmati. The future growth of our business depends upon our ability to originate product on a timely basis. We may not be able to originate all of our product requirements, and our failure to do so would harm our business results.

 

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*****Water or power shortage or other interruptions in utility supply issues in India could disrupt our processing and harm our business results.*****

 

Our rice is processed and originates in India and is sold across the world. As a result, the Indian authorities may ration the supply of utilities and this may affect our sales and have an impact on the business***.*** Interruptions of water or electricity supply could result in temporary shutdowns of our storage, processing, packaging and distribution facilities. Any major suspension or termination of water or electricity or other unexpected service interruptions could significantly harm our business results.

  

*****Terrorist acts and other acts of violence involving India or other countries could significantly harm our operations directly or may result in a more general loss of customer confidence and reduced investment in these countries that reduces the demand for our products.*****

 

Past terrorist attacks, as well as the threat of future terrorist attacks in India around the world, continue to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial condition. Continuing conflicts, instability and other recent developments in the Middle East and India and elsewhere, and the presence of U.S. or other armed forces in Afghanistan and Syria, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. The occurrence of any of these events may result in a loss of business confidence, which could potentially lead to economic recession and generally cause significant harm to our business results. In addition, any deterioration in international relations in some countries where we have operations such as India may result in investor concern regarding regional stability, which could decrease the price of our ordinary shares.

 

South Asia has also experienced instances of civil unrest and hostilities among neighboring countries from time to time. There have also been incidents in and near India such as terrorist attacks in Mumbai, Delhi and on the Indian Parliament, troop mobilizations along the India and Pakistan border and an aggravated geopolitical situation in the region. Such military activity or terrorist attacks in the future could significantly harm the economies where we operate by disrupting communications, travel and making the purchase, sale and delivery of goods more difficult. Resulting political tensions could create a greater perception that investments in companies with operations in these countries including but not limited to India involve a high degree of risk. Furthermore, if any country where we conduct operations were to become engaged in armed hostilities, particularly hostilities that were protracted or that involved the threat or use of nuclear or biological weapons, we might not be able to continue our operations. Our insurance policies may not be sufficient to protect us from terrorist attacks or business interruptions caused by terrorist attacks, violence, acts of war, civil unrest, hostilities or other reasons.

 

Any of these occurrences could have a material adverse impact on our business, financial condition and results of operations.

 

***Stringent labor laws in India can harm our ability to have flexible human resource hiring policies and origination of rice, thus impacting overall profitability.***

 

India has stringent labor legislation that protects the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and imposes financial obligations on employers upon employee layoffs. These laws may restrict our ability to have human resource policies that would allow us to react swiftly to the needs of our business, discharge employees or downsize our operations. We may also experience labor unrest in the future, which may delay or disrupt our operations. If such delays or disruptions occur or continue for a prolonged period of time, our origination capacity and overall profitability could be negatively affected. 

 

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***Changing and adverse application of tax laws, rules and regulations and legal uncertainties in India may adversely affect our business and financial performance.***

 

|   | · | The General Anti Avoidance Rules came into effect on April 1, 2017. The intent of this legislation is to prevent business arrangements set up with the intent to avoid tax incidence under the IT Act. In the absence of any precedents on the subject, the application of these provisions is uncertain.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|   | · | The Government of India has issued revised Income Computation and Disclosure Standards (“ICDS”) that will be applied in computing taxable income and payment of income taxes thereon, applicable with effect from the assessment period for the Fiscal Year 2017. ICDS shall apply to all taxpayers following an accrual system of accounting for the purpose of computation of income under the heads of “profits and gains of business or profession” and “income from other sources”. Such specific standards for computation of income taxes in India are relatively new, and the impact of the ICDS on our business results is uncertain.                                                                                                                                                                                                                                                  |
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|   | · | The Indian Parliament has recently approved the adoption of a comprehensive national goods and services tax (“GST”), regime that will combine taxes and levies by the central and state governments into a unified rate structure. It is not clear, however, how the GST will be applied and implemented, and there can be no assurance that the GST will not result in significant additional taxes being payable, which in turn, may harm our business results.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|   | · | The Government of India has also amended its rules which determine the ‘tax residency’ of a company in India with effect from April 1, 2017. Previously, a foreign company could be a tax resident of India only if its control and management was situated wholly in India. Under the amended rules, a company will be treated as tax resident of India if (i) it is an Indian company; or (ii) its place of effective management (“POEM”) is in India. POEM is defined in the Income Tax Act, 1961, to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. The Government of India has also issued the final guidelines for determining the POEM of a company on January 24, 2017. The applicability of the amended rules and the treatment of our subsidiaries under such rules is uncertain. |

 

The impact of any or all of the above changes to Indian legislation on our business cannot be fully determined at this time. Uncertainty in the applicability, interpretation or implementation of any amendment to governing law, regulation or policy may impact the viability of our current business or restrict our ability to grow our business in the future. Further, if we are affected, directly or indirectly, by the application or interpretation of any provision of such laws and regulations or any related proceedings, or are required to bear any costs in order to comply with such provisions or to defend such proceedings, our business results may be adversely affected.

 

****Risks Related to Our Public Company Status****

 

***We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to the Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer.***

 

Because we qualify and report as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time, and (iii) the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. We intend to furnish reports to the Securities and Exchange Commission on Form 6-K which contain our six month results for the period ending September 30 of each year, for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Exchange Act, although the information we furnish is not as frequent or the same as the information that is required in quarterly reports on Form 10-Q for U.S. domestic issuers. In addition, while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required to file their annual reports on Form 10-K within 90 days after the end of each fiscal year, for the fiscal years ending on or after December 15, 2011, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. Although we intend to make interim reports available to our shareholders in a timely manner, investors in our securities may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

 

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*****As a foreign private issuer and a controlled company, we are permitted to take advantage of certain exemptions to the corporate governance requirements; this may afford less protection to holders of our ordinary shares.*****

    

As a foreign private issuer, we may elect to follow certain home country (BVI) corporate governance practices in lieu of certain New York Stock Exchange (“NYSE”) requirements or if we do not remain listed on the NYSE, we will not be subject to the requirements that: (1) a majority of the Board of Directors consist of independent directors, (2) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (3) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, and (4) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. A foreign private issuer must disclose in its annual reports filed with the Securities and Exchange Commission each significant New York Stock Exchange requirement with which it does not comply followed by a description of its applicable home country practice.

    

In addition, we are a controlled company, or a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company. As a controlled company, we are exempt from complying with certain corporate governance requirements of the NYSE. A foreign private issuer is required to disclose in its annual report that it is a controlled company and the basis for that determination.

  

BVI law does not require our company to maintain a compensation committee of the Board of Directors. On May 4, 2018, the Company elected to follow home country (BVI) practices and eliminated its compensation committee. Compensation decisions are instead determined by the full board. BVI law also doesn’t require us to obtain shareholder approval if we issue more than 20% of our outstanding ordinary shares. Such practices may afford less protection to the holders of our ordinary shares.

 

***If we are unable to maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price of our ordinary shares.***

 

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. We are aware that deficiencies in our internal controls may adversely affect our management’s ability to record, process, summarize, and report financial data on a timely basis. 

 

As a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over financial reporting. In addition, we are required by Section 404 of the Sarbanes-Oxley Act of 2002 to include an auditor’s attestation report on our internal control over financial reporting in our annual reports on Form 20-F.

 

On management testing done by us, we determined that we do not have adequate internal controls over financial processes and reporting. 

 

We cannot assure you that we will, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price of our ordinary shares.

 

***We have incurred and will continue to incur increased costs as a result of being a public company.***

 

As a public company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company, particularly after we no longer qualify as an “emerging growth company.” In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the Securities and Exchange Commission, has required changes in corporate governance practices of public companies. These rules and regulations have increased our legal, accounting and financial compliance costs and make certain corporate activities more time-consuming and costly. In addition, we have incurred or may incur in future additional costs associated with our public company reporting requirements. We continue to evaluate and monitor developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

***We have been notified that we are not incompliance with the requirements of the NYSE******which will result in the delisting of our ordinary shares from******the New York Stock Exchange, which could limit investors’ ability to sell and purchase our securities and subject us to additional trading restrictions******and shareholder actions***.

 

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As of August 18, 2020, our ordinary shares were suspended from trading on the New York Stock Exchange. On or about August 16, 2019, we received a notice from the NYSE Regulation, Inc., that we were not in compliance with Section 802.01E of the New York Stock Exchange (“NYSE”) Listed Company Manual because the Company did not timely file its Form 20-F for the fiscal year ended March 31, 2019. The letter further notified the Company that its failure to hold an annual meeting for the year ended March 31, 2019 violated Section 302 of the NYSE Listed Company Manual. The Company was notified by the NYSE that it must file its required Form 20-F for the year ended March 31, 2019 and 2020, and its interim report for the period ended September 30, 2019, on or before August 16, 2020 or it would be delisted. The Company is unable to file these reports by the August 16, 2020 deadline imposed by the NYSE and as a result will be delisted from the NYSE. The Company intends to file the late periodic reports though not in the time required by the NYSE. The Company’s ability to timely file these reports was the result of the deconsolidation of Amira India and impact of the COVID-19 global pandemic. We will face significant material adverse consequences as of the result of the delisting of our ordinary shares by the NYSE including:

    

|   | · | a limited availability of market quotations for our ordinary shares;                                                                                                                                                                                                            |
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|   | · | reduced liquidity of our ordinary shares;                                                                                                                                                                                                                                       |
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|   | · | reduced trading price of our ordinary shares,                                                                                                                                                                                                                                   |
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|   | · | reputational harm,                                                                                                                                                                                                                                                              |
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|   | · | a determination that our ordinary shares are a “penny stock” which will require brokers trading in our shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares; |
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|   | · | a limited amount of news and analyst coverage for our company; and                                                                                                                                                                                                              |
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|   | · | a decreased ability to issue or obtain additional financing in the future.                                                                                                                                                                                                      |

   

**ITEM 4.****INFORMATION ON THE COMPANY**

  

**Overview**

  

We are a leading global player of branded packaged specialty rice and other related food products, with sales across four continents around the world. We generate the majority of our revenue through the sale of Basmati rice, a premium long-grain variety of rice grown only in the geographically indicated region of the Indian sub-continent, as well as other specialty rice. We sell our products under our flagship Amira brand, as well as under other Company owned brands and third-party brands. We have expanded our product offerings in recent years to include other value-added categories such as edible oils and organics. We also sell other products such as wheat, barley, legumes and other produce to large institutional customers. 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 in the high growth Basmati rice sector. Under our current leadership, we significantly expanded our footprint in India and internationally. 

 

We primarily operate in the global packaged rice market and we have focused our efforts on premium, packaged, specialty rice, with a concentration in Basmati rice, a long-grain aromatic rice with favorable health attributes that can be grown only in the geographically indicated region of the Indian sub-continent. The global rice market is a large, staple market with stable growth, while specialty rice and specifically Basmati rice benefits from premium pricing and increasing consumption patterns. The global rice market represented approximately $275 billion in value based on benchmark rice export prices for the international rice trade, according to statistics from Horizon Research in 2012. The Indian rice industry was valued at approximately $50 billion in wholesale prices in 2013 according to the CRISIL equity 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 30% was sold in India and approximately 70% was sold internationally. In recent years, the Basmati rice segment has benefited from increased consumption trends both in India and internationally. According to information provided by APEDA Agri-exchange, WASDE and Jefferies LLC research estimates from September 2016, domestic consumption of Indian Basmati rice has increased at a 4.2% CAGR over the past 10 years, while international sales volumes of Indian Basmati rice have increased at a 3.7% CAGR over the same time period. 

 

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We sell our products globally in both emerging and developed markets through a broad distribution network, of Amira branded and third-party products. Such products are sold to retailers including Sysco, Metro Germany, Metro Austria, Real, Frische-Paradies, Omega Sorg, Bartels Langness, Citti, Rewe, Hamberger Großmarkt, MPreis Warenvertriebs GmbH, Transgourmet (food service), Chefs Culinar (food service), and Kaufland, 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 (the “general trade” or “traditional retail”). We maintain a strong distribution platform into the restaurant channel and have long standing network of distributors, third party branded partners and institutional customers who sell our products throughout the world. Our third party branded business is often conducted under contracts with our customers, which enable us to have a high degree of visibility on our sales, volumes, margins and profitability.

 

We get the benefit of origination from the Indian subcontinent. We believe our model of flexible origination now gives us significant advantage in ensuring stability of supply maintaining quality control and broad-basing our points of origination within the Indian subcontinent. We have had longstanding relationships with a large network of agents and third-party processors. Some of these relationships have been strained over the last few years as the economic and other challenges including covid-19 have impacted the business.

 

We have relationships with several independent rice milers in India who supplement our origination however, work within our processes and parameters, thereby ensuring consistent supply, quality control and product harmony in Amira, Atry and third-party brands.

 

We have successfully expanded our distribution platform to reach customers across four continents around the world and we continue to invest resources to further establish Amira, Atry and third-party brands as premium, high quality, and packaged specialty rice brands. We also go to market under additional Company owned brands and sub-brands, which allow us to sell at multiple channels and various price points across the value chain to maximize our customer exposure. We have tailored our strategy to local market requirements and continuously focus on developing new value-added products to sell to our customers.

 

See “Non-IFRS Financial Measures” for additional information regarding EBITDA, adjusted EBITDA, adjusted profit after tax and other Non-IFRS Measures. For a reconciliation of Non-IFRS Measures to the most directly comparable IFRS measure, see “Summary Financial and Other Data.” 

 

**Our Strengths**

 

We believe that the following competitive strengths have contributed to our expansion and strong track record and will continue to benefit us over time:

 

|   | · | **A Global Player in the Attractive Packaged Specialty Rice Industry, and Primarily Basmati Rice.**We are a leading global participant in packaged specialty rice, and primarily Basmati rice, a premium specialty rice that is well known for its long-grain and appealing aroma, and which can only be grown in the geographically indicated region of the Indian sub-continent. We believe our leadership in the Basmati rice segment represents a distinct competitive advantage since Basmati is a premium rice variety with a long shelf life that generally commands higher prices and is more profitable than other types of rice. The size of the Indian Basmati rice market is approximately $6.9 billion (CRISIL Equity Research Report, 2014), while the overall global rice market is equal to approximately $275 billion (Horizon Research, 2012). Demand for Basmati rice has remained strong over the past 10 years with sales volumes of Basmati rice increasing at more than a 3% CAGR during this time period. |
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|   | · | **A Market Participant with a Differentiated Business Model.**We believe that we have a unique opportunity within the global premium, packaged specialty rice industry. As one of the few globally focused participants in the packaged rice category, we believe that we have the flexibility to reach customers with differentiated offerings across continents and within the various countries in which we operate. By utilizing our globally dispersed professional management teams, we believe that we are better able to provide solutions to our customers’ product needs while also maximizing our capital allocation and marketing efforts.                                                                                                                                                                                                                                                                                                                                                                      |
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|   | · | **Successful Track Record of Brand-Building and Product Innovation.**We launched our flagship Amira brand in 2008 and have since rapidly expanded the presence of our Amira branded products across four continents around the world Planman Marcom recognized the Amira brand as one of only six food Power Brands in our Indian market. In 2013, Amira was voted as one of “Asia’s Most Promising Brands” by WCRC group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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|   | · | **Global Presence Across Four Continents.** We currently sell our products across four continents around the world. We sell our products in India through a network of small privately-owned independent stores (the “general trade” or “traditional retail”), as well as global retailers and regional supermarkets (the “modern trade”). Additionally, we have been selling our products globally for almost forty years and we have built a strong distribution platform throughout the emerging markets, utilizing a combination of direct sales and distributors to sell our products in the general trade and modern trade channels of these localized markets. We have also added substantially to our distribution efforts in the developed world and our products are now sold in many leading retailers in the United States, the United Kingdom and in Continental Europe.                                                                                                         |

  

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|   | · | **Deep Relationships with Broad Customer Base.**We have been operating continuously in India for more than one hundred years and we have been selling our products internationally for nearly forty years. Our experiences have allowed us to develop a deep and extensive customer base with strong relationships among our large international and regional customers who market our products under our brand names, as well as their own. These relationships have provided us a deep understanding of consumer preferences in numerous markets worldwide. Our ability to consistently deliver large quantities of high-quality products globally in a timely manner has been essential to our success in our Amira branded, third-party branded and institutional businesses. As a result of our global operations and diverse customer base, we have limited customer concentration. For the fiscal year ended March 31, 2019, our top five customers accounted for approximately 90.2% of our total revenue.****               |
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|   | · | **Broad Product Portfolio that Can Be Tailored to Specific Customer and Regional Requirements.**We sell our products through many SKUs, which includes our premium and everyday Basmati rice offerings, as well as other specialty rice, a growing line of other value-add food products including edible oils and organic product offerings and an opportunistic agricultural business which includes sales of wheat, barley, legumes and other produce to our institutional customers. We have the ability to tailor our products to our customers’ needs which allows us to sell at various price points across the value chain and maximize our customer exposure.                                                                                                                                                                                                                                                                                                                                                         |
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|   | · | **Flexible Supply Chain.**We participate across the entire rice supply chain beginning with the origination of unprocessed rice to its storage, aging, processing into rice, packaging, marketing and distribution. We believe that our flexible, integrated model provides us with significant advantages in ensuring stability of supply and maintaining quality control throughout the processing cycle. Over the past several years, we have also developed organic sourcing initiatives which allow us to source and sell organic certified products in Europe and the United States. Additionally, we have relationships with several independent rice millers throughout India from whom we supplement our capacity to fully meet our product needs. Meanwhile, our operations also source products from outside India as needed. We believe that our flexible, integrated model provides us with significant advantages in ensuring stability of supply and maintaining quality control throughout the processing cycle.**** |

 

**Our Strategy**

 

|   |   | Our goal is to be the leading global rice brand. Key elements of our strategy to achieve this goal include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|   | · | **Pursue our Bi-Focal Business Model Focused on Premium Specialty Rice Segments, with an Emphasis on Basmati.**We sell our products under our flagship Amira brand, as well as other Company owned brands and third-party brands. We believe that consumers recognize our brand and associate it with high quality, premium and authentic specialty rice. We successfully expanded the Amira brand across four continents within only nine years of its launch, and we are investing resources to further establish our brand with the consumer as the standard for high-quality Basmati rice. Our Amira branded sales accounted for approximately 9.8% of our total revenue or $6.3 million for the fiscal year ended March 31, 2019, a substantial decrease from $173.2 million for the fiscal year ended March 31, 2012. As a part of our bi-focal strategy, we also supply our products to third party branded partners. We have been selling products to many of our third party branded partners for generations. These relationships provide stability to our business and grant us visibility over our sales and profits in any given year. In addition, we also continue to add new third-party customers over time. The strategic deployment of third party branded products helps us secure footholds into new markets and provides us with proprietary, deep understanding of end markets, consumer preferences and price points, which helps us to obtain insights into the local trends and consumer preferences. This unique knowledge helps us refine our strategy for our branded product offerings to cater to specific needs of each customer segment in those markets, hence allowing for greater chances of success. We have successfully used this strategy to increase our Amira branded presence in both emerging and developed markets. Our third party branded sales accounted for approximately 90.2% of our total revenue or $58.1 million for the fiscal year ended March 31, 2019, compared to $189.5 million for the fiscal year ended March 31, 2012. Basmati remains our core category, accounting for approximately 66.1% of our total revenue for the fiscal year ended March 31, 2019, which stems from our strong presence in our home market and heritage around the category. |
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|   | · | **Expand our Presence in both Developed and Emerging Economies.**Despite its importance as a staple, the packaged rice market remains highly fragmented in both emerging and developed economies which typically see concentrated market positions across most consumer categories. Additionally, we believe that most of these markets have yet to fully realize the full potential of the premium/gourmet, specialty segments within the broader rice category. As a result, we believe that emerging markets across the Middle East, Africa and Asia, and developed markets such as the United States, the United Kingdom and Europe represent compelling growth opportunities for us in the near term. We believe that our unyielding focus on high quality, branded specialty rice will allow us to strengthen our market position over time. Our products are currently sold by major retailers in markets such as Sysco, Metro Germany, Metro Austria, Real, Frische-Paradies, Omega Sorg, Bartels Langness, Citti, Rewe, Hamberger Großmarkt, MPreis Warenvertriebs GmbH, Transgourmet (food service), Chefs Culinar (food service), and Kaufland. We plan to expand our footprint, building on our existing presence as well as increasing our penetration into new countries. In India, we believe that the increase in purchasing power resulting from population growth and an expanding middle class in India will create additional demand for our Basmati rice and value-added product offerings across all distribution channels. Our extensive distribution strength, stemming from more than 200 Indian distributors and 15 company managed distribution centers in India, will allow us to further capitalize on the extensive growth opportunities across both traditional and Western-style modern retail locations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

  

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|   | · | **Continue Building on our Local Organization and Infrastructure in Each Market as we Expand Globally.**We believe that the presence of local management teams and sales teams in each of our core markets is one of our key strengths and differentiating aspects vis-à-vis other rice players. We employ dedicated sales teams focused on promoting our products on a country and regional basis. This provides us with a superior interface with the customers, allowing us to better promote our products, respond better to consumer trends and preferences, align our value chain, consistently deliver superior products in a timely manner and further strengthen customer relationships. We have local teams in the United Kingdom, Europe and the Middle East. We will continue to invest in our local organization by further additions as we expand into new markets.                                                                                                                                                                                                                                               |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | · | **Drive Margin Expansion through further Vertical Integration and Operating Efficiencies.** We have a highly flexible, integrated supply chain and production model. We continuously strive to incorporate incremental elements of the value chain into our operations, thereby capturing additional profitability upside and increased margins, while also retaining flexibility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | · | **Develop new Higher Margin, Branded Products in line with Consumer Trends and Preferences.**Consistent with our bi-focal business model, we plan to continue to build on the success of our third party branded products in international markets to further develop our Amira branded product sales. In addition to penetrating new markets and increasing our presence in existing markets with our Amira branded and third party branded rice offerings, we are also focused on developing on new branded product offerings such as edible oils, organic categories to increase our relevance to consumers and drive further growth. We have leveraged our brand strength and diverse product offerings to allow us to sell our products at various price points across the value chain and maximize our customer exposure. We plan to further penetrate the higher margin, premium segments of the customer proposition through the development of new Amira branded offerings leveraging on our consumer insights, strong global distribution network and established customer relationships.                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | · | **Opportunistic Inorganic Expansion through Small Bolt-on Acquisitions to Expand our Presence.**The highly fragmented nature of the industry presents a wide range of opportunities for consolidation and entering new markets and consumer segments. We have a very selective approach towards inorganic growth which is based on an extensive assessment of the target company and the opportunity it presents in terms of growth and synergy extraction potential. For example, in December 2013, we entered the German market through our acquisition of Amira Basmati Rice GmbH Eur, which sells its products under the Amira, Atry, Sadry, Sativa, Scheherazade and Sultan brand names into leading retailers such as Edeka, Metro and Rewe in Germany and in neighboring European countries. We further built upon that acquisition in March 2017, when our German entity acquired a portfolio of packaged specialty rice brands from Euro Basmati GmbH. The brands, which include Al Amir, Al Hakim, Bano, Dalia, Hanna and Shah Pari are sold primarily in the ethnic channel in the key markets of Hamburg and Berlin.**** |

 

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**History**

 

Our business was originally founded in 1915 by the Chanana family as an agricultural commodities and salt trading business. Prior to 1947, we were one of the largest suppliers of grain to the British Indian Army. Following the partition of India and Pakistan, we re-located our business in New Delhi, India and expanded to include the trade and supply of lentils and other legumes to Indian government agencies. Throughout the 1960s and 1970s, we focused on the processing and distribution of legumes. In 1978, we first established an international business division which imported legumes. In 1985, we began to process and distribute Basmati rice in India and internationally. In 1995, we constructed what we believe was the first automated rice plant in India which we have continuously upgraded to increase capacity. In 2006, our Chairman, Mr. Karan A. Chanana, assumed responsibility for our operations. Under his leadership, we have transitioned from a family owned and managed business to an international, professionally managed business. We launched the Amira branded strategy in 2008 to enhance our growth in both the India retail channel and globally. In 2012, we completed our IPO and were listed on the New York Stock Exchange (the “NYSE”).

   

**Corporate Structure**

 

We were incorporated on February 20, 2012 as a BVI business company and currently have no direct operations of our own. The principal office of the Company is located at 29E, A.U. Tower Jumeirah Lake Towers Dubai, United Arab Emirates, and its telephone number is +97144357303. 

 

In connection with the IPO, our wholly-owned subsidiary Amira Mauritius purchased through a new issue of 53,102,500 equity shares of Amira India, representing 80.4% of Amira India’s outstanding equity shares. This purchase by Amira Mauritius was funded with substantially all of the net proceeds of the IPO and occurred just after the completion of the IPO. The actual number of equity shares that Amira Mauritius purchased equaled such net proceeds divided by the per share value of such shares, or $1.45, as determined using the discounted free cash flow method in accordance with the Reserve Bank of India’s then-current pricing guidelines for issuance of shares to persons resident outside India (the “RBI Price”). The conversion of outstanding debt of Amira India in the second half of fiscal year 2019 (effective November 15, 2018) resulted in Amira Mauritius’ holding of Amira India reducing from 80.4% to 49.8%. Other than equity shares, Amira India has no other class of equity outstanding, with or without voting rights. As a result, Amira Mauritius no longer controls Amira India and no longer holds a controlling interest. 

 

As of March 31, 2019, Mr. Karan A. Chanana’s beneficial ownership of our ordinary shares is 65.0% (See **Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS of this Report on page 74)**

 

**Governance of Amira Mauritius**

 

Under the Companies Act 2001 of the Republic of Mauritius and Amira Mauritius’ organizational documents, the shareholders of Amira Mauritius elect the Board of Directors of Amira Mauritius at its general meeting. We are the sole shareholder of Amira Mauritius, and the Board of Directors of Amira Mauritius consists of Mr. Karan A. Chanana, Mr. Druvnath Damry and Mr. Qaiyoom Dustagheer. 

  

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**Corporate Structure as of March 31, 2019**

 

The diagram below illustrates our corporate structure since November 15, 2018

  

  

 

  

Amira India announced conversion of its debt to equity in second half of fiscal year 2019 (effective November 15, 2018). This conversion resulted in Amira Mauritius holding of Amira India reducing from 80.4% to 49.8%. Accordingly, Amira India has not been consolidated (Line item level) for purposes of preparing our Consolidated financial statements of Amira nature foods limited (RYCE) as of March 31, 2019 and instead have been accounted for under IAS 28 (Investments in Associates and Joint Ventures).

 

Please refer Exhibit 8.1 for a list of subsidiaries and Associates comprised in these consolidated financial statements

 

The following table sets forth our significant subsidiaries as of March 31, 2019: 

 

| **Name of company**                                    |   | **Country of incorporation or establishment** |   | **Attributable equity interest held**  |
|--------------------------------------------------------|--------|-----------------------------------------------|--------|----------------------------------------|
|                                                   |   |                                          |   |                                   |
| Amira Nature Foods Ltd (“Amira Mauritius”) |   | Mauritius                                     |   | 100% by RYCE                           |
|                                                   |   |                                          |   |                                   |
| Amira International Finance B.V.                       |   | Netherlands                                   |   | 100% by RYCE                           |
|                                                   |   |                                          |   |                                   |
| Red Reinel Limited                                     |   | Mauritius                                     |   | 100% by Amira Mauritius                |
|                                                   |   |                                          |   |                                   |
| Amira I Grand Foods Inc.                               |   | British Virgin Islands                        |   | 100% by Amira Mauritius                |
|                                                   |   |                                          |   |                                   |
| Amira Basmati Rice GmbH EUR                            |   | Germany                                       |   | 100% by Amira Mauritius                |
|                                                   |   |                                          |   |                                   |
| Basmati Rice North America LLC                         |   | United States                                 |   | 100% by Amira I Grand Foods Inc. (BVI) |
|                                                   |   |                                          |   |                                   |
| Amira K.A. Foods International DMCC                    |   | UAE                                           |   | 100% by Amira I Grand Foods Inc. (BVI) |
|                                                   |   |                                          |   |                                   |
| Amira G Foods Limited                                  |   | United Kingdom                                |   | 100% by Amira I Grand Foods Inc. (BVI) |

 

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**Our Products**

 

We are primarily engaged in the business of processing, distributing and marketing packaged Indian specialty rice, primarily Basmati rice, which accounted for 66.1% of our revenues for the fiscal year ended March 31, 2019. We also sell non-Basmati specialty rice. We are also engaged in the institutional sale of bulk commodities to large international and regional trading firms. 

 

We offer all of our products in an array of packages to meet different market needs. We continuously evaluate our existing products for quality, taste, nutritional value and cost and make improvements where possible. Additionally, we develop new products where we see market opportunity. We offer several types of rice, including AMIRA Brown Basmati, which is low-fat, cholesterol-free, high in fiber, and rich in vitamin B and manganese, and our Parboiled Basmati Products, which have 80% of the nutrients found in brown rice. In addition, we have begun to market Amira Smoked Basmati and Amira Organic Basmati in certain geographies.

 

***Amira Branded Products***

 

Our Amira branded products, consist of several rice varieties, as well as a growing line of complementary products. A representative list of our products is set forth below. 

 

|  

**Brand/**

**Product**

**Lines** |                     |                                       |                                              |    |                                                                                                    |                                                                                                            |    |
|--------------------------------------------|--------------------------|---------------------------------------|---------------------------------------------------|---------|---------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|---------|
|                                       | **Premium Basmati Rice** |                                  | **Value Basmati Rice**                            |    | **Other Specialty Rice**                                                                                | **Other Product Adjacencies**                                                                                   |
|                                       |                     |                                  |                                              |    |                                                                                                    |                                                                                                            |    |   |   |   |   |
|                                       | •                  | Pure Basmati Rice                     |                                              | • | Daily Fresh Basmati Rice                                                                                |                                                                                                            | • | Thai Jasmine Rice |   | • | Edible Oils |
|                                       | •                  | Extra Long Grain Basmati Rice         |                                              | • | Goodlength Day to Day Basmati Rice                                                                      |                                                                                                            | • | Sharbati Aromatic Long Grain Rice |   | • | Organic Products |
|                                       | •                  | Indian Basmati Rice                   |                                              | • | Everyday Basmati Rice                                                                                   |                                                                                                            | • | Kheer Rice |   |   |   |
|                                       | •                  | Brown Basmati Rice                    |                                              | • | Goodlength Broken Basmati Products                                                                      |                                                                                                            | • | Khichdi Rice |   |   |   |
|                                       | •                  | Traditional Basmati Rice              |                                              | • | Parboiled Basmati Products                                                                              |                                                                                                            | • | Sona Masoori Rice |   |   |   |
|                                       | •                  | Smoked Basmati Rice                   |                                              | • | Banquet Rice                                                                                            |                                                                                                            |    |   |   |   |   |
|                                       |                     |                                  |                                              |    |                                                                                                    |                                                                                                            |    |   |   |   |   |
| **Product**

**Features**                  |                     | •                               | Consists of the finest grains of aromatic Basmati |    | •                                                                                                 | Consist of different types of high-quality rice such as a mix of Basmati rice varieties or a mix of broken rice |    | • | **Thai Jasmine**: sourced from Thailand and has a fragrant aroma and chewy texture |   | • | Oils used in food preparation |
|                                       | •                  | Aged for as much as 12+ months        |                                              | • |  Value alternative commonly used as an "everyday" Basmati and by restaurants or catering companies |                                                                                                            | • | **Sharbati Aromatic Long Grain**: an everyday rice for daily consumption; often purchased by foodservice customers |   |   |   |
|                                       | •                  | More than doubles in size when cooked |                                              |    |                                                                                                    |                                                                                                            | • | **Kheer:** formulated for rice pudding |   |   |   |
|                                       | •                  | Rich taste and fragrant aroma         |                                              |    |                                                                                                    |                                                                                                            | • | **Khichdi**: formulated for Indian and South Asian comfort food; also used as infant and toddler food |   |   |   |
|                                       |                     |                                  |                                              |    |                                                                                                    |                                                                                                            | • | **Sona Masoori:** aromatic and light grain white rice |   |   |   |

  

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***Third Party Branded Products***

 

We sell a number of varieties of Basmati packaged rice to global customers, such as the Seychelles State Trading Corporation Limited who market them under their own brand through their own distribution networks. Our third party branded business is primarily focused on emerging markets where the retail channel is highly fragmented. The following table shows examples of our third party branded rice products.

  

|                             |   |                                                  | **Third Party Basmati Rice**                                              |    |         |
|-----------------------------|--------|-------------------------------------------------------|---------------------------------------------------------------------------|---------|---------|
| **Brand/ Product****Lines** |   | Mahe Regular White Basmati Rice (Economy), Seychelles |                                                                      | • |
|                        |   | •                                               | Mahe Premium White Basmati Rice (Premium), Seychelles                     |    |    |
|                        |   |                                                  |                                                                      |    |    |
| **Product**

**Features**   |   | •                                               | Consists of the finest grains of pure traditional aromatic Indian Basmati |    | • |
|                        |   | •                                               | Available in brown, white and parboiled rice                              |    |    |
|                        |   | •                                               | Rich taste and fragrant aroma                                             |    |    |

 

***Institutional Products***

 

Our institutional business primarily consists of the opportunistic sale of bulk commodities, including wheat, barley, legumes, maize, sugar, soybean meal, onion, potato and millet. We sell these products to large international and regional trading firms.

 

**Customers and Sales Channels**

   

We sell our products through a broad distribution network across four continents throughout the world. Our Amira branded products are sold by global retailers such as, Sysco, Metro Germany, Metro Austria, Real, Frische-Paradies, Omega Sorg, Bartels Langness, Citti, Rewe, Hamberger Großmarkt, MPreis Warenvertriebs GmbH, Transgourmet (food service), Chefs Culinar (food service), and Kaufland. We also sell our products globally through the food service channel. Our third party branded products are sold globally, such as Seychelles State Trading Corporation Limited who market them under their own brands through their own distribution networks. Third party sales provide a level of sales visibility as they are made during January-March for delivery during the year. Our institutional products are sold to large international and regional trading firms. Sales to our top five customers and distributors collectively accounted for 90.2% and 37.0% of our revenue for the fiscal years ended March 31, 2019 and 2018, respectively. Our two largest customers or distributors accounted for approximately 82.0% and 28.7% of our revenue during the fiscal years ended March 31, 2019 and 2018, respectively.

   

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**Production**

 

Our Basmati rice origination include inspection, cleaning, drying, parboiling, storage and aging, processing, sorting, packaging, branding and distribution. We purchase our non-Basmati rice from other rice processors, and contract with third parties to produce and package our edible oils.

 

***Basmati and Semi-Processed Rice Origination***

 

*Basmati Origination*

 

The primary raw material that we use in producing Basmati rice is Basmati. Rice seed is typically planted in flooded fields in the early spring and, after it matures, water is drained from the fields and the crop is harvested. In India, Basmati is typically harvested between September and March. Basmati available during this period is generally of superior quality compared to Basmati available during the off-season, although we also purchase small quantities of Basmati in the off-season to supplement our annual origination and to benefit from lower Basmati prices. Our Basmati origination team purchases Basmati to be stored for aging and processing throughout the year from the major Basmati production centers, including the Indian states of Haryana, Punjab, Rajasthan, Uttarakhand, and Western Uttar Pradesh, either directly at the organized and government regulated agricultural produce markets in India known as “mandis,” and/or through licensed agents. Licensed agents, or “pucca artiyas,” evaluate, test and purchase Basmati on our behalf at mandis. We have non-contractual long-standing relationships with agents for sourcing Basmati and are knowledgeable about and experienced with local areas and farmers. 

 

Our ability to originate adequate quantities and good quality Basmati is affected by crop conditions. For example, yields of Basmati could decrease and the price of Basmati could increase due to inadequate or delayed monsoons or heavy rains and high winds. We believe Basmati is generally available at reasonable, stable prices prevalent in the current market. We have not encountered any processing interruptions due to Basmati shortages since we commenced our Basmati origination in 1985.

 

*Semi-Processed Rice Origination*

 

Semi-processed rice origination is done through approved vendors. These vendors are sourced through approved brokers with whom we have a historic relationship. Vendors or suppliers are millers who have bought and aged non-Basmati rice. We purchase the semi-processed rice, transport the product into our rice mill and then finish, pack and sell the product to our customers and distributors. 

 

*Processed Rice Origination*

 

We also purchase processed rice based on our specifications from third parties in India and internationally to supplement our product needs. We purchase the rice and then sell the product to our customers and distributors on our terms and conditions.

 

***Basmati******Drying, Parboiling, Storage and Aging***

 

After the Basmati is tested and then unloaded at our processing facility, it is pre-cleaned and dried to prevent deterioration. After it has been dried, some of our Basmati is parboiled. Parboiling involves soaking the Basmati in water, steaming it before removing the husk, and further hydrating, heating and drying it. Parboiling improves the nutritional profile of Basmati rice, causing it to retain more nutrients than regular milled Basmati rice, and changes its texture so that it has a fluffier consistency. After it has been dried, and where appropriate, parboiled, we store and age the Basmati for as much as seven months or more in our warehouses or open plinths. Aging dehydrates the Basmati, which results in its rice grains elongating more when cooked.

 

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***Processing and Additional Storage and Aging***

 

Prior to further processing, the Basmati is cleaned again to remove any residual dust or impurities and foreign materials. The Basmati is then milled using a rice huller to remove the Basmati’s outer and inner husk. Once the husk has been removed, the resulting rice is polished, and the broken rice is removed and retained. We sell broken Basmati rice as Amira branded “Every Day” Basmati rice at an economical price compared to full grain Basmati rice. Byproducts produced as a result of processing the Basmati are husk, bran and broken rice, which we further process and sort to produce other Amira branded rice products such as Kheer and Kichdi rice and Amira Goodlength Day to Day rice. Once the Basmati products and the broken rice have been removed, the remaining rice is sorted by color and graded. Basmati rice is hygienically aged in our warehouses for as much as six months or more. Finally, our rice and rice products are packaged in our processing facility and prepared for shipment.

 

***Inspection***

 

Basmati is checked for quality at the time of purchase and prior to loading it on the trucks that transport Basmati to our storage facility. Further, the Basmati bags are sample checked on arrival at storage locations to ensure that the Basmati meets the quality specifications based on our purchase. In addition, we inspect the rice to ensure that it meets our and our customers’ quality standards. We have implemented strong measures to ensure product quality and food safety. Our standardized monitoring and testing systems help to ensure consistent adherence to our quality control and food safety policies. 

 

**Certifications**

 

While certifications are not compulsory in the rice industry, we maintain a number of internationally recognized certifications. 

 

We have organic certifications for our rice products from Ecocert, an international certification body that certifies our compliance with the requirements of the EU and the NOP, which tracks the US FDA organic regulations.

 

**Sales, Marketing and Distribution**

 

Our products also reach our global customers both directly and through our network of distributors who coordinate regional marketing, sales and distribution.

 

**Competition**

 

The global packaged rice market is highly fragmented with no dominant players on a global basis. According to Euromonitor, for example, in 2015 the top 10 brands only accounted for approximately 11% of market share by value around the world. Competition in the rice markets is principally on the basis of product selection, product quality, reliability of supply, brand recognition, distribution capability and pricing. With respect to our Basmati rice, we compete with various types of competitors in the fragmented and unorganized Basmati rice market, globally, as well as, to smaller businesses around the world. Internationally, our major competitors are leading Indian overseas Basmati rice companies, as well as non-India based companies that sell basmati and non-basmati rice. Basmati rice has historically only been grown successfully in the Indian states of Haryana, Uttar Pradesh, Uttaranchal and Punjab, Rajasthan, Jammu and Kashmir, and in a part of the Punjab region located in Pakistan which enjoy the climatic conditions required to successfully grow Basmati rice. A type of rice similar to Basmati is grown and sold as Basmati rice from California and Texas, among other places. 

 

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**Intellectual Property**

 

We protect our intellectual property through copyright and trademark laws. Our intellectual property includes the registered trademarks “Amira,” “Goodlength,” “Indigo,” “Sativa,” among others under Laws of the European Union and other foreign trademark and copyright legislations. The registration of a trademark is generally valid for ten years but can be renewed. In addition, we have applied for the registration of “Amira” across certain other product categories. Further, we have obtained copyright protection for certain of our intellectual property. While registration is not a prerequisite for acquiring or enforcing copyrights, registration creates a presumption favoring the ownership of the registered owner. 

 

In December 2013, we entered the German market through our acquisition of Amira Basmati Rice Gmbh EUR, which sells its products under the Amira, Atry, Sadry, Sativa, Scheherazade and Sultan brand names into leading retailers such as Edeka, Metro and Rewe in Germany and in neighboring European countries. We further built upon that acquisition in March 2017, when our German entity acquired a portfolio of packaged specialty rice brands from Euro Basmati GmbH. The brands, which include Al Amir, Al Hakim, Bano, Dalia, Hanna and Shah Pari are sold primarily in the ethnic channel in the key markets of Hamburg and Berlin. 

 

We have also registered, or are in the process of registering, trade names and trademarks internationally in various countries where our products are sold, including in the U.S.

 

**Employees**

 

As of March 31, 2019, and 2018, we had 27 and 209 full-time employees, respectively. We have entered into employment agreements with all of our fulltime employees that provide for termination of their employment upon delivery of two months’ severance or notice, and that prohibit them from soliciting any of our other employees during or after their employment. There is a registered trade union comprising a small number of workers at the processing facility. We consider our relations with our employees to be amicable.

 

**Insurance**

 

We currently maintain commercial general liability insurance and property insurance. We also have liability insurance for our directors and officers.

 

**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 our rice 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. On May 15, 2012, the Collector of Customs (“COC”) in the Port of Subic Bay issued a warrant of seizure and detention of the shipment. During the quarter ended June 30, 2012, as reported in our Form 20-F for the year ended March 31, 2013, the rice subject of the warrant was sold to an related party for $11.4 million and the related party succeeded to the benefits of the action. Or was released from further obligation, other than our obligation to make best efforts to assist the related party with any regulatory, port and customs clearance required to transship the goods. On October 17, 2012, the COC conducted a public auction and sold the rice shipment for Php487 Million ($11.7 million at the rate of Php41.18 to one U.S. dollar). Trial then ensued in the CTA and the Republic of the Philippines presenting their testimonial and documentary evidence to prove their case. In its Decision dated July 18, 2019, the CTA ruled in favor of the Company. In the Decision, the CTA ordered the Republic of the Philippines to release and deliver to the Company the amount of Php487.2. We filed a Motion seeking interest. The Republic filed a Manifestation stating that the interest should accrue to the owner of the principal amount. In the Resolution dated October 11, 2019, the CTA deemed both the Republic’s Motion for Reconsideration and our Motion seeking interest be submitted for resolution. Because the Company received money and transferred its obligations and benefits of this case to a related party in 2012, we do not consider this matter material and do not expect the DIFC’s ruling to have a material adverse effect on the Company.

   

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Unlike in the United States, in India, private citizens are permitted to initiate criminal complaints against companies and individuals. For instance, Amira India and its executives have been named in certain civil and criminal complaints filed by its suppliers and vendors from time to time. 

  

On April 30, 2018, we initiated an action in Dubai International Financial Centre Court against IDBI Bank Limited for its breach of an irrevocable letter (“the Irrevocable Letter”) whereby IDBI failed to deliver payment to us in the amount $4,134,000 upon its receipt of funds from our customer as required by the Irrevocable Letter. On April 30, 2018, the Company initiated an action in Dubai International Financial Centre Court (“DIFC”) against IDBI Bank Limited for its breach of an irrevocable letter (“the Irrevocable Letter”) whereby IDBI failed to deliver payment to the Company in the amount $4,134,000 upon its receipt of funds from its customer as required by the Irrevocable Letter. The Company sought damages, costs and injunctive relief against IDBI. The Company was provided interim relief by the court and the amount of $4,134,000 was paid by IDBI to the Company’s distributor AK Global. The Company further pursued claims against IDBI Bank Limited for damages and costs. On July 30, 2019, a final hearing was held in the DIFC Court to determine the damages suffered by the Company and the Counterclaim by the Bank. On October 7, 2019, the Court entered a judgment (the “Judgement”) whereby the Bank was ordered to pay the Company damages and litigation costs. IDBI was ordered to pay amount of USD$12,603,791 plus interest. The Court also dismissed the Bank’s claims against the Company. The Bank appealed the ruling. The DIFC dismissed IDBI’s counter-claims against the Company and reduced the aggregate amount payable to the Company from $12,603,791 to $500,000. Because this matter has been resolved in the Company’s favor, we do not expect the DIFC’s ruling to have a material adverse effect on the Company. Post the IDBI default, all our Middle East and Asia business has moved to Amira K A Foods International DMCC.

   

On November 16, 2017, an order was entered against the Company in the amount of $1,449,630.85 in favor of a former law firm in which the Company had a dispute. The award includes interest at the rate of 310.31 per day accruing from June 2018.

 

On July 2020, the Company entered into a settlement agreement with a law firm which resulted in the law firm’s payment of $1,000,000 to the Company. Because a settlement agreement was reached between the parties, we do not expect it to have a material adverse effect on the Company.

  

On June 30, 2019, we commenced an arbitration proceeding against Dana Foods Limited (“Dana”) in the London Court of International Arbitration to reclaim the sum of $3,400,000 for products delivered to Dana. This matter is ongoing. Since we are the Claimant in the action against Dana, we do not expect it to have a material adverse effect on the Company.

   

**Seasonality of our Business**

 

Our revenue is typically higher from October through March than from April through September. Due to inherent seasonality in our business, our results may vary over reporting periods. Our business requires a significant amount of working capital primarily due to the fact that a significant amount of time passes between when we purchase Basmati. Our average period of Basmati rice is as much as 12 months or more (at times up to 24 months). Accordingly, we maintain substantial levels of working capital indebtedness. Our results of operations may also be impacted by fluctuations in foreign currency. See “Item 5. Operating and Financial Review and Prospects—Factors Affecting our Results of Operations—Foreign exchange fluctuations.”

 

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**Government Regulations Applicable to Our Former Subsidiary in India**

 

The following description is a summary of the material regulations and policies, which are applicable to the business in India.

 

***Regulations Related to Agricultural Produce and Exports***

 

The Government of India, under the Foreign Trade (Development & Regulation) Act, 1992, or the Foreign Trade Act, together with the Foreign Trade Policy, provides for development and regulation of foreign trade by facilitating imports into, and augmenting exports from India, as a part of which it sets the MEP, including Basmati and non-Basmati rice, from time to time. While the MEP for Basmati rice was terminated in July 2012, the Government of India may in the future reinstitute an MEP for Basmati rice. The Foreign Trade Act empowers the Director General of Foreign Trade to advise the Government of India in formulation of export and import policy and to implement such policy. The Foreign Trade Act prohibits any person from importing or exporting any goods without an importer-exporter code number, granted by the Director General of Foreign Trade or an officer authorized by the Director General of Foreign Trade.

 

The Indian Ministry of Agriculture has established the Commission for Agricultural Costs and Prices, or CACP, to advise it on the price policy of major agricultural commodities. The CACP provides recommendations in relation to the minimum fixed price of major agricultural produce every year. These prices are announced by the Government of India with a view to ensure compensatory prices to farmers for their produce.

 

Further, agriculture produce market committee laws have been enacted by various Indian state governments for benefit of Indian farmers, providing for better regulation of the purchase, sale, storage and processing of agricultural produce, including rice, and the establishment of established market areas for such produce known as “mandis”, each governed by a market committee, within the respective state. Under the legislation, only persons with valid licenses are permitted to purchase, sell, store or process agricultural produce on behalf of buyers and sellers.

 

In addition to the above policies of the Government of India, the following are some of the material regulations that apply to our business in India:

 

*Agricultural Produce (Grading and Marking) Act, 1937*

 

The Agricultural Produce (Grading and Marking) Act, 1937, or the APGM Act, was enacted to provide for the grading and marking of agricultural and other produce. The APGM Act gives powers to the Government of India to make rules for fixing the quality of agricultural produce. It provides powers of entry, inspection and search and seizure to the inspecting authorities and penalties for violating the provisions of the AGPM Act.

 

*The Export (Quality Control and Inspection) Act, 1963*

 

The Export (Quality Control and Inspection) Act, 1963, or the Export Quality Act, was enacted for the further development of an export trade from India through quality control and inspection. The Export Quality Act provides for establishment of export inspection council to advise the Government of India regarding measures for quality control and inspection for commodities intended for export. The Export Quality Act authorizes the Government of India to notify commodities which shall be subject to quality control and inspection and specify the type of quality control or inspection applicable, and the agencies authorized to conduct quality control or inspection. The Government of India also has power to obtain information from exporters, inspect their premises and seize commodities. The Export Quality Act also provides for fines and penalties in case of non-compliance.

 

*The Agricultural and Processed Food Products Export Development Authority Act, 1985*

 

The Agricultural and Processed Food Products Export Development Authority Act provides for the establishment of the Agricultural and Processed Food Products Export Development Authority for the purpose of promotion and development of industries engaged in the export of certain scheduled products, including cereal and cereal products, and registration of and filing of returns by persons exporting the scheduled products. Under this act, the Government of India also has the authority to prohibit, restrict or otherwise regulate the import and export of the scheduled products.

 

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*The Export of Basmati Rice (Quality Control and Inspection) Rules, 2003*

 

In exercise of powers conferred under Export (Quality Control and Inspection) Act, 1963 the Government of India has adopted the Export of Basmati Rice (Quality Control and Inspection) Rules, 2003, or the Basmati Rice Rules. The Basmati Rice Rules provide for inspection of Basmati rice by the Export Inspection Council to ascertain conformity with quality specifications prescribed by the Government of India. An exporter intending to export a consignment of Basmati rice is required to register the contract with the Agricultural and Processed Food Products Export Development Authority along with a declaration that adequate quality control has been exercised. On satisfying itself that adequate quality controls have been exercised, the agency issues a certificate declaring the consignment as export worthy.

 

In 2007, the Government of India banned the export of non-Basmati rice. However, pursuant to a notification (No. 71 (RE-2010)/2009-2014) dated September 9, 2011, issued by the Ministry of Commerce and Industry of the Government of India, non-Basmati rice can again be exported from India, subject to certain conditions specified in the notification.

 

***Regulations Related to Food Quality***

 

*The Food Safety and Standards Act, 2006*

 

The Food Safety and Standards Act, 2006, or the FSS Act, provides for the establishment of the Food Safety and Standards Authority of India, or the Food Authority, which lays down scientific standards for food and regulates the manufacture, storage, distribution, sale and import of food. The Food Authority is also required to provide scientific advice and technical support to the Government of India and Indian state governments in framing the Policy Rules and Regulations under the Act relating to food safety and nutrition. The FSS Act also sets forth regulations relating to the license and registration of food businesses, general principles for food safety, responsibilities of food business operators and liability of manufacturers and sellers, and provides for punishment, prosecution and adjudication for offences under the Act. 

 

***Environmental Regulations***

 

We are subject to various environmental, health and safety laws and regulations. Our origination requires various environmental and other permits covering, among other things, water use and discharges, waste disposal and air and other emissions

 

Material environmental laws applicable to our origination are set forth below.

 

*The Environment (Protection) Act, 1986*

 

The Environment (Protection) Act, 1986, or the EPA, is an umbrella legislation which encompasses various environment protection laws in India. The EPA grants the Government of India the power to take any measures it deems necessary or expedient for protecting and improving the quality of the environment and preventing and controlling pollution. Penalties for violation of the EPA include imprisonment, payment of a fine, or both.

 

Under the EPA and the Environment (Protection) Rules, 1986, as amended, the Government of India has issued a notification (S.O. 1533(E)) dated September 14, 2006, or the EIA Notification, which requires that prior approval of the Ministry of Environment and Forests, or the MoEF, or the State Environment Impact Assessment Authority, or the SEIAA, as the case may be, be obtained for the establishment of any new project and for expansion or modernization of existing projects specified in the EIA Notification. The EIA Notification states that obtaining of prior environment clearance includes four stages: screening, scoping, public consultation and appraisal.

 

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An application for environment clearance is made after the prospective project or activity site has been identified, but prior to commencing construction activity or other land preparation. Certain projects which require approval from the SEIAA may not require an EIA report. For projects that require preparation of an EIA report, public consultation involving public hearing and written responses is conducted by the State Pollution Control Board, prior to submission of a final EIA report. The environmental clearance (for commencement of the project) is valid for up to five years for all projects (other than mining projects). This period may be extended by the concerned regulator for up to five years.

 

*The Water (Prevention and Control of Pollution) Act, 1974*

 

The Water (Prevention and Control of Pollution) Act, 1974, or the Water Act, aims to prevent and control water pollution and to maintain or restore water purity. The Water Act provides for one central pollution control board, as well as various state pollution control boards, to be formed to implement its provisions. The Water Act debars any person from establishing any industry, operation or process or any treatment and disposal system likely to discharge sewage or other pollution into a water body, without prior consent of the State Pollution Control Board.

 

*The Air (Prevention and Control of Pollution) Act, 1981*

 

The Air (Prevention and Control of Pollution) Act, 1981, or the Air Act, aims to prevent, control and abate air pollution, and stipulates that no person shall, without prior consent of the State Pollution Control Board, establish or operate any industrial plant which emits air pollutants in an air pollution control area. The Central Pollution Control Board and State Pollution Control Board constituted under the Water Act perform similar functions under the Air Act as well. Not all provisions of the Air Act apply automatically to all parts of India, and the State Pollution Control Board must notify an area as an “air pollution control area” before the restrictions under the Air Act apply.

 

*The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008*

 

The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, or the Hazardous Wastes Rules, regulate the collection, reception, treatment, storage and disposal of hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous waste to dispose of such waste without harming the environment. Every occupier and operator of a facility generating hazardous waste must obtain approval from the applicable State Pollution Control Board.

 

The occupier is liable for damages caused to the environment resulting from the improper handling and disposal of hazardous waste and must pay any fine that may be levied by the respective State Pollution Control Board.

 

*The Plastic (Waste Management and Handling) Rules 2011*

 

The Plastic (Waste Management and Handling) Rules 2011 take into account the significant growth in waste generation, predominantly in the form of carry bags and multi-layered plastic packaging and lays out procedures and guidelines for plastic waste collection, segregation and disposal. The Plastic Rules include the stipulation of benchmarked standards for recycling facilities, mandatory pricing of consumer carry bags given by retailers, a labeling scheme, and extended responsibility to both manufacturers and users of plastic packaging.

 

***Foreign Investment Regulations***

 

Pursuant to the current Consolidated Foreign Direct Investment policy (effective from May 12, 2015) issued by the Department of Industrial Policy and Promotion of the Government of India, 100% foreign direct investment is allowed in services related to agricultural and related sectors.

 

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**ITEM 3B. UNRESOLVED STAFF COMMENTS**

  

None.

 

**ITEM 4. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

  

The following discussion of our business results should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Forward-Looking Statements” and “Item 3D. Risk Factors” and elsewhere in this Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.

 

****Overview****

 

We are a global processor, marketer and distributor of branded packaged specialty rice and other related food products, with sales across four continents around the world. We generate the majority of our revenue through the sale of Basmati rice, a premium long-grain variety of rice grown only in the geographically indicated region of the Indian sub-continent, as well as other specialty rice. We sell our products under our flagship Amira brand, as well as under other Company owned brands and third-party brands. We have expanded our product offerings in recent years to include other value-add categories such as edible oils and organics. We also sell other products such as wheat, barley, legumes, edible oil, sugar and other fresh produce to large institutional customers. 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 global leadership position in the high growth Basmati rice sector. Under our current leadership, we significantly expanded our footprint in India and internationally. We completed an initial public offering (“IPO”) in October 2012 and our shares are listed on the New York Stock Exchange with the stock symbol RYCE.

 

We primarily operate in the global packaged rice market and we have focused our efforts on premium, packaged, specialty rice, with a concentration in Basmati rice, a long-grain aromatic rice with favorable health attributes that can be grown only in the geographically indicated region of the Indian sub-continent. The global rice market is a large, staple market with stable growth, while specialty rice and specifically Basmati rice benefits from premium pricing and increasing consumption patterns. The global rice market represented approximately $275 billion in value based on benchmark rice export prices for the international rice trade, according to statistics from Horizon Research in 2012. The Indian rice industry was valued at approximately $50 billion in wholesale prices in 2013 according to the CRISIL equity 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 30% was sold in India and approximately 70% was sold internationally. In recent years, the Basmati rice segment has benefited from increased consumption trends both in India and internationally. According to information provided by APEDA Agri-exchange, WASDE and Jefferies LLC research estimates from September 2016, domestic consumption of Indian Basmati rice has increased at a 10% CAGR over the past 10 years, while international sales volumes of Indian Basmati rice have increased at a 13% CAGR over the same time period. 

 

We sell our products globally in both emerging and developed markets through a broad distribution network. Our Amira branded products are currently sold by retailers such as, Sysco, Metro Germany, Metro Austria, Real, Frische-Paradies, Omega Sorg, Bartels Langness, Citti, Rewe, Hamberger Großmarkt, MPreis Warenvertriebs GmbH, Transgourmet (food service), Chefs Culinar (food service), and Kaufland. In emerging markets, our products are sold by global retailers and regional supermarkets as well as a network of small, privately-owned independent stores. We maintain a strong distribution platform into the restaurant channel and have long standing network of distributors, third party branded partners and institutional customers who sell our products throughout the world. Our third party branded business is often conducted under contracts with our customers, which enable us to have a high degree of visibility on our sales, volumes, margins and profitability. The current Covid-19 crisis has affected our business with restaurants and the full impact is still unknown. 

 

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**Factors Affecting our Results of Origination**

 

Our business results are affected by a number of factors, including the following:

 

***Demand for Basmati rice***

 

In fiscal 2019 we generated a revenue of $64.4 million. This revenue is not comparable to the revenues of fiscal 2018, 2017 or previously. However, we expect to increase our presence over time. In 2018 and 2017, we derived 66.1%, 67.6% and 75.2% of our revenue, respectively, from sales of Basmati rice. Its unique taste, aroma, shape and texture have historically elicited premium pricing and strong demand. According to CRISIL, total sales of Indian Basmati rice were approximately $6.9 billion in 2014, of which approximately 70% was sold internationally and 30% was sold in India. While we expect overall market growth to remain strong over time, we cannot guarantee that such growth will materialize every year. Furthermore, any negative change in customer preferences for Basmati rice may result in reduced demand for our products. Because Basmati rice makes up a significant portion of our revenue, reduced demand for Basmati rice in general, or for our Basmati rice products in particular, could harm our business and results of operations.

 

***Demand for our products in our international markets***

 

In fiscal 2019, 2018 and 2017, our revenue from international sales was $64.4 million, $270.4 million, and $276.6 million, respectively, and accounted for 100.0%, 65.3%, and 50.1% respectively, of our revenue in these periods. We sold our products to customers across four continents and significant portions of our international sales were to Asia Pacific, EMEA and North America.

 

|                           |   | **FY 2019**               |     |   | **FY 2018** |   |      | **FY 2017** |   |
|--------------------------------|--------|---------------------------|----------|--------|-------------|--------|-----------|-------------|--------|
|                           |   | **(Amount in $ million)** |     |
| EMEA                           |   |                      | 63.1     |   |        |   | 218.8     |        |   |   | 242.8 |   |
| Asia Pacific (excluding India) |   |                      | 0.1      |   |        |   | 1.5       |        |   |   | 6.1 |   |
| North America                  |   |                      | 1.2      |   |        |   | 50.1      |        |   |   | 27.7 |   |
| **Total**                      |   |                      | **64.4** |   |        |   | **270.4** |        |   |   | **276.6** |   |

 

We sell our products across four continents. We plan to expand our international operations into additional countries in the near future. Our international sales are dependent on general economic conditions in our various international markets and regulatory policies and governmental initiatives of these jurisdictions relating to the import of Basmati rice and our other products from India. 

 

Consistent with our historical branded growth strategy, we plan to leverage our success in existing markets to further penetrate them and enter other international markets with our Amira branded product offerings. From our existing international operations, we have gained a deep understanding of end markets and consumer preferences which helps us to shape our strategy for branded products. We plan to continue to expand our international operations in the future.

 

***Origination******and cost of Basmati and aged rice***

 

Our results of origination are significantly dependent on the cost of raw materials used in our production process and our ability to procure sufficient good quality Basmati and ungraded rice, which is semi-processed rice where the husk has been removed but the rice has not been fully processed. Cost of material, which includes the costs of finished goods sold that have been consumed during the period by adjusting for any increase or decrease in our finished goods inventory, constitutes the largest component of our expenditures and, as a percentage of revenue in fiscal 2019, 2018 and 2017 were 310.1%, 115.9% and 82.8% respectively. Since Basmati crop is grown once a year, we are required to complete most of our annual origination during the period between September and March. Basmati available during this period is generally of superior quality compared to Basmati available during the off-season. We purchase small quantities of Basmati in the off-season to supplement our annual origination and to benefit from lower Basmati prices.

 

Our ability for origination depends on crop conditions. For example, crop yields of Basmati, could decrease due to inadequate or delayed monsoons or heavy rains and high winds. The price of Basmati procured by us depends on the variety of Basmati we purchase, which is primarily determined by the demand for specific Basmati rice varieties. The price of Basmati also depends on the quality of that season’s crop, which depends on weather conditions and the amount of monsoon or seasonal rainfall, and prevailing global demand, particularly during the harvesting season. In determining the quantity and price of Basmati that we purchase, we rely on the historic demand and supply of particular Basmati varieties, estimates and forecasts of demand based on market information through continuing interaction with significant customers, and expectation of the supply. The quality of origination is also dependent on the weather and pest activity because we are living through climate change.

 

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***Foreign exchange fluctuation***

 

Our sales account for a majority of our revenue in U.S. dollars and to a lesser extent Euros, GBP and UAE Dirham. In fiscal 2019, 2018 and 2017, our revenue from international sales was 100.0%, 65.3%, and 50.1%, respectively, of our revenue. As of March 31, 2019, foreign currency receivables were $ 0.3 million.

 

Our results have been impacted in the past and may be impacted by such fluctuations in the future. 

 

**Financial Operations Overview**

 

***Revenue***

 

We derive our revenue primarily from the sale of Amira branded and third party branded products and institutional sales to our customers across four continents. Revenue is measured at the fair value of consideration received, excluding discounts, rebates, and sales tax or duty. 

 

***Other income***

 

Our other income consists of income not related to the sale of Amira branded and third party branded products and institutional sales to our customers.

 

***Cost of material including change in inventory of finished goods***

 

Cost of material consists of cost of raw materials (semi-processed rice and other products), other expenses used in processing our products, certain direct expenses to bring inventory to its present location, and related taxes net of tax credit available, if any. Cost of material also includes cost of finished goods consumed during the period by adjusting for any increase or decrease in our finished goods inventory.

 

The price of Basmati originated by us depends on the variety of Basmati we purchase, which is primarily determined by the demand for specific Basmati rice varieties. The price of Basmati also depends on the quality of that season’s crop, which depends on weather conditions and the amount of monsoon or seasonal rainfall, and prevailing global demand, particularly during the harvesting season. We also procure aged rice typically after the origination season is over based on our requirements from time to time, which we then further process, polish, sort and grade before selling it to our customers.

 

***Employee benefit expenses***

 

Employee benefit expenses primarily consist of:

 

|   | · | wages and salaries of our employees,                                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                              |
|   | · | defined benefit plans (gratuity), defined contribution plan, accrued annual leave and sick leave, severance payments and bonuses, |
|   |   |                                                                                                                              |
|   | · | employee stock options, and restricted share awards, and                                                                          |
|   |   |                                                                                                                              |
|   | · | employee welfare expenses.                                                                                                        |

 

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***Depreciation and amortization***

 

Depreciation consists primarily of depreciation expense recorded on property, plant and equipment, such as buildings, plant and machineries, furniture and fixtures, office equipment and vehicles. Amortization expense consists primarily of amortization recorded on intangible assets, such as trademarks registration fees, software, customer relationships and favorable lease.

 

Depreciation on property, plant and equipment is charged to income on a systematic basis over the useful life of assets as estimated by management. Depreciation is computed using the straight-line method of depreciation.

 

***Freight, forwarding and handling expenses***

 

Freight, forwarding and handling expenses primarily consists of ocean freight, inland freight, customs clearing and freight forwarding, material handling and demurrage.

 

***Other expenses***

 

Other expenses are comprised primarily of expenses of our sales and marketing operations and field location administrative costs which include:

  

|   | · | product insurance,                                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                            |
|   | · | traveling,                                                                                                                      |
|   |   |                                                                                                                            |
|   | · | rent,                                                                                                                           |
|   |   |                                                                                                                            |
|   | · | power and fuel expenses,                                                                                                        |
|   |   |                                                                                                                            |
|   | · | corporate headquarters expenses related to our executive, general management, finance, accounting and administrative functions, |
|   |   |                                                                                                                            |
|   | · | commission, claims and compensation,                                                                                            |
|   |   |                                                                                                                            |
|   | · | advertising and business promotion expenses,                                                                                    |
|   |   |                                                                                                                            |
|   | · | legal fees, and                                                                                                                 |
|   |   |                                                                                                                            |
|   | · | other functions.                                                                                                                |

  

These costs are based on our volume of business and expenses incurred to support corporate activities and initiatives such as training. We plan to expand our sales and marketing efforts, improve our information processes and systems and implement the financial reporting, compliance and other infrastructure required for a public company.

 

***Finance costs***

 

Finance costs consist primarily of interest expense (borrowing costs) accrued on short term and long term loans taken from our lenders to fund working capital, bank charges and other interest paid.

 

***Finance income***

 

Finance income primarily consists of interest received on deposits including collateral deposits made by us to obtain letters of credit and other non-cash instruments and short-term interest bearing fixed deposits with banks.

 

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***Other gains and (losses)***

 

Other gains and (losses) primarily consist of our gain or loss due to foreign exchange. We expect that income from these items will continue to contribute an insignificant percentage (on a net basis) of our revenue in the near future.

 

We have designated certain derivative instruments as hedging instruments in a cash flow hedge relationship. All derivative financial instruments used for hedge accounting are recognized and measured at fair value. Changes in the fair value of the derivative hedging instruments designated as a cash flow hedge are recognized in other comprehensive income and held in cash flow hedging reserve, a component of equity to the extent that the hedges are effective. To the extent that the hedge is ineffective, changes in fair values are recognized in the consolidated statements of profit or loss and reported in “Other gains and (losses)”. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the consolidated statements of profit or loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, such cumulative balance is immediately recognized in the consolidated statements of profit or loss. Previously, before March 31, 2012 such derivative financial instruments were not designated as effective hedges, and all changes in instruments’ fair value that were reported in the consolidated statements of profit or loss were included in “Other gains and (losses)”.

 

**Results of Operations**

 

On October 15, 2012 we completed the IPO of our ordinary shares. On October 16, 2012, we subscribed through our wholly owned subsidiary, Amira Nature Foods Ltd, Mauritius (“Amira Mauritius”) for 53,102,500 equity shares of Amira Pure Foods Private Limited (“Amira India”), representing 80.4% of the outstanding shares of Amira India pursuant to a subscription agreement dated September 27, 2012, as subsequently amended on October 10, 2012. We accounted for this combination using the “pooling of interest method,” and accordingly, our financial statements for fiscal years 2018 and 2017 included in this Annual Report include our and Amira India’s assets, liabilities, revenues and expenses, which have been recorded at their carrying values and retrospectively adjusted for all periods presented in these financial statements. On November 15, 2019, Amira India announced conversion of its debt to equity. This conversion resulted in Amira Mauritius’ holding of Amira India reducing from 80.4% to 49.8%. Accordingly, Amira India and its subsidiaries have not been consolidated (line item level) for purposes of preparing consolidated financial as of March 31, 2019. Instead, investments in associates have been accounted for under IAS 28 (Investments in Associates and Joint Ventures).

 

| · | Our results of operations for the fiscal years ended March 31, 2019, 2018 and 2017, respectively, were as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------|

  

*(Amounts in USD)*

|                                                        |   | **Fiscal years ended** |             |
|-------------------------------------------------------------|--------|------------------------|------------------|
|                                                        |   | **March31, 2019**      |             |   | **March 31, 2018** |   |   | **March 31, 2017** |   |
| Revenue                                                     |   | $                      | 64,436,816       |   |   | $ | 413,901,480 |   |   | $ | 551,830,966 |   |
| Other income                                                |   |                   | 160,805          |   |   |   | 5,031,827 |   |   |   | 48,833 |   |
| Cost of materials                                           |   |                   | (49,503,316      | ) |   |   | (373,451,132 | ) |   |   | (492,189,652 | ) |
| Change in inventory of finished goods                       |   |                   | (150,295,581     | ) |   |   | (106,193,580 | ) |   |   | 35,517,661 |   |
| Employee benefit expenses                                   |   |                   | (6,516,026       | ) |   |   | (6,797,731 | ) |   |   | (8,753,175 | ) |
| Depreciation and amortization                               |   |                   | (767,640         | ) |   |   | (1,617,118 | ) |   |   | (1,778,968 | ) |
| Freight, forwarding and handling expenses                   |   |                   | (316,189         | ) |   |   | (2,535,261 | ) |   |   | (3,139,061 | ) |
| Other expenses                                              |   |                   | (196,294,883     | ) |   |   | (12,705,159 | ) |   |   | (14,905,710 | ) |
|                                                        |   | **$**                  | **(339,096,014** | **)** |   | **$** | **(84,366,674** | **)** |   | **$** | **66,630,894** |   |
| Finance costs                                               |   |                   | (18,238,935      | ) |   |   | (34,108,621 | ) |   |   | (29,272,826 | ) |
| Finance income                                              |   |                   | -                |   |   |   | 29,669 |   |   |   | 263,231 |   |
| Other gains and (losses)                                    |   |                   | (553,737         | ) |   |   | 4,908,564 |   |   |   | (1,512,928 | ) |
| **Profit****/(loss) before tax**                            |   | **$**                  | **(357,888,686** | **)** |   | **$** | **(113,537,062** | **)** |   | **$** | **36,108,371** |   |
| Income tax expense                                          |   |                   | 11,706           |   |   |   | 19,941,298 |   |   |   | (4,596,968 | ) |
|                                                        |   |                   |             |   |   |   |   |   |   |   |   |   |
| **Profit****/(loss) after tax for the year**                |   | **$**                  | **(357,876,980** | **)** |   | **$** | **(93,595,764** | **)** |   | **$** | **31,511,403** |   |
| ***Profit/(loss) after tax for the year attributable to:*** |   |                   |             |   |   |   |   |   |   |   |   |   |
| Shareholders of the Company                                 |   |                   | **(304,991,721** | **)** |   |   | **(78,222,174** | **)** |   |   | **25,087,388** |   |
| Non-controlling interest                                    |   |                   | **(52,965,259**  | **)** |   |   | **(15,373,590** | **)** |   |   | **6,424,015** |   |
|                                                        |   |                   |             |   |   |   |   |   |   |   |   |   |
| **Earnings per share**                                      |   |                   |             |   |   |   |   |   |   |   |   |   |
| Basic earnings per share                                    |   | **$**                  | **(7.55**        | **)** |   | **$** | **(2.30** | **)** |   | **$** | **0.84** |   |
| Diluted earnings per share                                  |   | **$**                  | **(7.55**        | **)** |   | **$** | **(2.30** | **)** |   | **$** | **0.84** |   |

______________

*(1)****Basic earnings per share( for Fiscal 2015 to 2018) 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 was not owned by us, by the number of our weighted average outstanding ordinary shares, during the applicable period. Basic earnings per share (for fiscal 2019) is calculated (4.63). Diluted earnings per share( for Fiscal 2015 to 2018) 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 during the applicable period. The dilutive impact of total share options 1,842,082 granted to Mr. Karan A. Chanana in the years ended March 31,  2017, 2016, 2015, 2014 and 2013, (see heading “Item 18. Financial Statements”; under Note 29 “Earnings per share”) is anti-dilutive (in FY2019) and not material in previous years and hence there is no change in the presented basic and diluted earnings per share in the table above.*

   

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|   | · | **Adjusted EBITDA and adjusted earnings per share** |
|--------|--------|-----------------------------------------------------|

  

Described in detail in this report under the heading “Item 5. Operating and Financial Review and Prospects”; under section “Non-IFRS Financial Measures”.

 

***Comparison of the Fiscal Years ended March 31, 2019 and 2018***

   

Due to the deconsolidation of Amira India the results of operations between fiscal years 2019 and 2018 are not comparable. Our results of operations for fiscal 2019 and 2018, respectively, were as follows:

   

*Revenue*

      

Revenue for fiscal 2019 was $64.4 million. Revenue decline was primarily driven by the deconsolidation of the Company’s former Indian subsidiary. Revenue cannot be compared to previous years as a result of the deconsolidation.

   

Revenue for our Amira branded and third party branded products was $64.4 million in fiscal 2019.

   

Revenue in India was $0 million in fiscal 2019.

   

A breakdown of our revenue by geographic region is as follows:

     

| **Region**                     |   | **FY 2019**             |           |   | **FY 2018** |   |
|--------------------------------|--------|-------------------------|----------------|--------|-------------|--------|
|                           |   | **Amount in $ million** |           |   | **%**       |   |   | **Amount in $ million** |   |   | **%** |   |
| India                          |   |                    | -              |   |        | -%     |   |   |   | 143,515,397 |   |   |   | 34.7 | % |
| EMEA                           |   |                    | 63,112,475     |   |        |   | 97.9 | % |   |   | 218,805,726 |   |   |   | 52.9 | % |
| Asia Pacific (excluding India) |   |                    | 75,600         |   |        |   | 0.1 | % |   |   | 1,465,763 |   |   |   | 0.4 | % |
| North America                  |   |                    | 1,248,741      |   |        |   | 2.0 | % |   |   | 50,114,594 |   |   |   | 12.0 | % |
| **Total**                      |   |                    | **64,436,816** |   |        |   | **100** | **%** |   |   | **413,901,480** |   |   |   | **100.0** | **%** |

   

*Other income*

      

The Company had other income of $0.2 million during the fiscal year 2019. Other Income cannot be compared to previous years as a result of the deconsolidation. 

         

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*Cost of materials, including change in inventory of finished goods*

  

Cost of materials including change in inventory of finished goods was $199.8. Notably, the group recognized provision for impairment of inventory (being one-time expense) for the amount of $0 million in fiscal 2019. Accordingly, in fiscal 2019, adjusted cost of materials* (including change in inventory of finished goods) is 0% of the revenue. Cost of materials cannot be compared to previous years as a result of the deconsolidation.

  

**(Adjusted cost of materials is arrived at as summation of cost of materials and change in inventories of finished goods, after taking the impact of impairment of inventory values)*

  

*Employee benefit expenses*

  

Employee benefits expenses were $6.5 million in fiscal 2019. As a percentage of revenue, employee benefit expenses were 10.1%. Employee benefit expenses cannot be compared to previous years as a result of the deconsolidation.

  

*Depreciation and amortization*

  

Depreciation and amortization expense was $0.8 million in fiscal 2019 As a percentage of revenue, depreciation and amortization costs increased at 1.2% in fiscal 2019. Depreciation and amortization cannot be compared to previous years as a result of the deconsolidation.

  

*Freight, forwarding and handling expenses*

  

Freight, forwarding and handling expenses were $0.3 million or 0.5% of sales in fiscal 2019. Freight, forwarding and handling expenses cannot be compared to previous years as a result of the deconsolidation.

  

*Other expenses*

  

Other expenses increased were $196.3 million in fiscal 2019. As a percent of revenue, other expenses was 304.6% in fiscal 2019. Other expenses primarily increased as a result of the Amira India deconsolidation. Other expenses cannot be compared to previous years as a result of the deconsolidation.

  

*Finance costs*

  

Finance costs were $18.2 million in fiscal 2019. Debt is $46.0 million in fiscal 2019. Finance costs cannot be compared to previous years as a result of the deconsolidation.

  

*Finance income*

  

There was no finance income in fiscal 2019. Finance income cannot be compared to previous years as a result of the deconsolidation.

  

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*Other gains and (losses)*

 

Other gains and losses was a loss of $0.6 million in fiscal 2019 compared to a gain of $4.9 million in fiscal 2018 primarily due to the impact of a stronger dollar relative to rupee. 

 

*Profit before tax*

   

There was a loss of 357.88 million in fiscal 2019. This decrease was primarily due to the deconsolidation.

   

*Income tax expense*

 

Corporate tax expense was $(0.01) million in fiscal 2019, due to the deconsolidation.

 

***Comparison of the Fiscal Years ended March 31, 2018 and 2017******which are not comparable to Fiscal 2019.***

 

Our results of operations for fiscal 2018 and 2017, respectively, were as follows:

 

*Revenue*

 

Revenue for fiscal 2018 was $413.9 million, a decrease of $137.9 million or 25.0% compared to $551.8 million in fiscal 2017. The revenue decline was primarily driven by decrease sale volume in the Company’s India markets and to an extent in International markets business. The decline has been partly set off by increase in price realisations for basmati and non-basmati. Notably, two of our key markets, India and UAE implemented country-wide indirect taxes (GST in India and VAT in UAE). 

 

Revenue for our Amira branded and third party branded products was $362.7 million in fiscal 2018, compared to $505.8 million for the same period in fiscal 2017. Our Amira branded sales were $173.2 million and accounted for 41.9% of total sales, compared to $245.6 million accounting for 44.5% of total sales in 2017. Decline in Amira branded products was driven largely by levy of GST (Goods and Service Tax) in India on branded food products in the second half of 2017. Third party branded sales were $189.5 million in fiscal 2018 compared to $260.2 million in fiscal 2017. Sales to the Company’s institutional customers were $51.2 million during fiscal 2018 compared to $46.0 million in fiscal 2017.

 

Revenue in India was $143.5 million in fiscal 2018, a decrease of $131.7 million or 47.8% compared to $275.2 million in fiscal 2017. Revenue decline in India was positively impacted by the appreciation of the Indian rupee against the U.S. dollar in fiscal 2018. Our sales in India, decreased by approximately 49.9%, when measured in Indian rupees in fiscal 2018. Our sales in India were also impacted by lower volumes of Basmati rice offset to an extent by better prices for Basmati rice.

 

Revenue from international sales decreased by $6.3 million, or 2.3%, to $270.4 million in fiscal 2018 from $276.6 million in fiscal 2017, primarily due to lower sales volumes, as well as lower pricing for institutional products sold internationally to our institutional customers which were offset in part by higher pricing of Basmati rice.

 

In Fiscal 2018, tightening of regulatory and credit environment in financial sector in India, resulted in non-availability of sufficient working capital, adversely impacting our cash-to-cash cycle and achievement of revenue targets for the fiscal. The Indian entity entered into certain business transactions with its buyers and suppliers involving sales and purchase of basmati rice worth $93.2 million. Although the sales were originated and generated by the business of Indian company, in accordance with IAS 18 and after careful evaluation of underlying documents, the group concluded and determined, that it acted primarily as an agent in those transactions. In accordance with IAS 18 Revenue recognition, the group has decided to recognize the net commission income from such transactions, instead of recognizing the revenue on gross basis. The net income has been recognized as ‘other income’.

 

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A breakdown of our revenue by geographic region is as follows:

   

| **Region**                     |   | **FY 2018**     |            |   |        |   |      | **FY 2017**     |   |   |                 |   |
|--------------------------------|--------|-----------------|-----------------|--------|--------|--------|-----------|-----------------|--------|--------|-----------------|--------|
|                           |   | **Amount in $** |            |   | **%**  |   |      | **Amount in $** |   |   | **%**           |   |
| India                          |   |            | 143,515,397     |   |   |   | 34.7      | %               |   |   | 275,183,618     |   |   |   | 50.1 | % |
| EMEA                           |   |            | 218,805,726     |   |   |   | 52.9      | %               |   |   | 242,773,808     |   |   |   | 44.0 | % |
| Asia Pacific (excluding India) |   |            | 1,465,763       |   |   |   | 0.4       | %               |   |   | 6,137,993       |   |   |   | 1.1 | % |
| North America                  |   |            | 50,114,594      |   |   |   | 12.1      | %               |   |   | 27,735,547      |   |   |   | 5.0 | % |
| **Total**                      |   |            | **413,901,480** |   |   |   | **100.0** | **%**           |   |   | **551,830,966** |   |   |   | **100.0** | **%** |

       

*Other income*

  

Other income increased to $5.0 million in the year ended March 31, 2018 compared to $48,833 in the year ended March 31, 2017. The commission income (as explained above) has been recognized as ‘other income’.

 

*Cost of materials, including change in inventory of finished goods*

 

Cost of materials including change in inventory of finished goods was $479.6 million or 115.9% of revenue in fiscal 2018, compared to $456.7 million or 82.8% of revenue in fiscal 2017, primarily reflecting the higher input costs. Notably, the group recognized provision for impairment of inventory (being one-time expense) for the amount of $134.0 million in fiscal 2018. Accordingly, in fiscal 2018, adjusted cost of materials* (including change in inventory of finished goods) is 83.5% of the revenue, compared to 82.8% of revenue in fiscal 2017.

 

We carry inventories for a regular period of time and at times upon careful consideration, inventories are written off on their natural qualitative deterioration. However, this year we identified certain deterioration in quality of inventories primarily due to large number of warehousing facilities spread across India, the mismatch in cash-to-cash cycle and sporadic unfavourable weather conditions. The management believes these are one-time events driven largely by macro-economic conditions as also, by uncontrollable external factors. This deterioration in quality of inventory results into a higher percentage of broken rice content upon processing. The management has decided, consciously and conservatively, to recognise a provision for impairment of inventories for $134.0 million, considering the adjustment in its realisable value.

   

**(Adjusted cost of materials is arrived at as summation of cost of materials and change in inventories of finished goods, after taking the impact of impairment of inventory values)*

 

*Employee benefit expenses*

 

Employee benefits expenses decreased by $2.0 million to $6.8 million in fiscal 2018 from $8.8 million in fiscal 2017, primarily due to a reduction in the number of employees versus the prior year. As a percentage of revenue, employee benefit expenses were 1.6% and 1.6% in fiscal 2018 and 2017, respectively.

 

*Depreciation and amortization*

 

Depreciation and amortization expense marginally decreased by $0.2 million to $1.6 million in fiscal 2018 as compared to $1.8 million in fiscal 2017. As a percentage of revenue, depreciation and amortization costs remained same at 0.3% in fiscal 2018 and 2017, respectively.

 

*Freight, forwarding and handling expenses*

 

Freight, forwarding and handling expenses were $ 2.5 million or 0.5% of sales in fiscal 2018 compared to $3.1 million or 0.6% of sales in fiscal 2017. 

 

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*Other expenses*

 

Other expenses decreased by $2.2 million, or 14.8%, to $12.7 million in fiscal 2018 from $14.9 million in fiscal 2017. As a percent of revenue, other expenses decreased to 3.1% in fiscal 2018 from 2.7% in fiscal 2017. 

 

*Finance costs*

 

Finance costs were $34.1 million in fiscal 2018 compared to $29.3 million in fiscal 2017. The increase of $4.8 million is in line with increase in our debt from $224.4 million in fiscal 2017 to $234.0 million in fiscal 2018. 

 

*Finance income*

 

Finance income was $0.03 million in fiscal 2018 compared to $0.26 million in fiscal 2017 driven by a lower balance of cash and other marketable securities. 

 

*Other gains and (losses)*

 

Other gains and losses was a gain of $4.9 million in fiscal 2018 compared to a loss of $1.5 million in fiscal 2017 primarily due to the impact of a stronger dollar relative to rupee. 

 

*Profit before tax*

 

Profit before tax decreased by $149.6 million, or (414.4%) to a loss of $113.5 million in fiscal 2018 from a gain of $36.1 million in fiscal 2017. This decrease was primarily due to a decrease in revenue and increase in cost of material margins and one-time provision created on impairment of inventory. Profit before tax as a percentage of revenue was (27.4%) and 6.5% in fiscal 2018 and fiscal 2017.

 

*Income tax expense*

 

Corporate tax expense was $(19.9) million in fiscal 2018 as compared to expense of $4.6 million in fiscal 2017. We recognized our income tax liability of $(0.7) million and deferred tax liability of $0.8 million as of March 31, 2018. Deferred income taxes are calculated using a balance sheet liability method on temporary differences between the carrying amount of assets and liabilities and their tax bases using the tax laws that have been enacted or substantively enacted as on the reporting date.

 

*Profit after tax*

 

Profit after tax decreased by $125.1 million, or (397.0%), to a loss of $93.6 million in fiscal 2018 from a gain of $31.5 million in fiscal 2017 as explained above. Profit after tax as a percentage of revenue was to (22.6%) in fiscal 2018 compared to 5.7% in fiscal 2017.

  

**Liquidity and Capital Resources**

 

As of March 31, 2019, we had debt and liabilities in the following amounts:

    

|   | · | secured credit facilities, aggregating $35 million; |
|--------|--------|-----------------------------------------------------|
|   |   |                                                |
|   | · | related party debt, aggregating $10.862 million;*   |
|   |   |                                                |
|   | · | other facilities, aggregating $5.7 million;         |
|   |   |                                                |
|   | · | trade payables, aggregating $0.3 million.           |

  

*Out of this loan of which is a total of $10.862m (as of 31st March 2019) there is the option to convert $3m of this loan into ordinary shares of the company each valued at USD 1 per share.

 

As of March 31, 2019, the Group had Nil undrawn financing facilities which remained available for drawdown under existing financing arrangements.

 

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The weighted average interest rates (including corresponding bank processing charges and fees for bank-related facilities) for each of the reporting periods were as follows:

  

|                                            |   |   | **Terms of Interest**      |   | **Fiscal year ended March 31,** |   |
|-------------------------------------------------|--------|--------|----------------------------|--------|---------------------------------|--------|
|                                            |   |   |                            |   | **2019**                        |   |   | **2018** |   |   | **2017** |   |
| Secured facilities                              |   |   | Floating Rates of Interest |   |                                 | NA     |   |   |   | 14.7 | % |   |  | 14.5 | %  |
| Other facilities                                |   |   | Floating Rates of Interest |   |                                 | NA     |   |   |   | 12.45 | % |   |  |  9.7 | %  |
| Related party debt – Mr. Karan A. Chanana |   |   | Fixed Rate of Interest     |   |                            | 11.6   | % |   |   | 11.6 | % |   |  |  11.6 | %  |
| Related party debt – Others               |   |   | Fixed Rate of Interest     |   |                            | 9.3    | % |   |   | 9.4 | % |   |  |  9.4 | % |
| Term loans                                      |   |   | Floating Rate of Interest  |   |                                 | NA     |   |   |   | 18.30 | % |   |  |  13 | %  |
| Trade payables                                  |   |   | Fixed Rate of Interest     |   |                            |   |   |   |   |   |   |   |   | - |   |

     

In fiscal 2019, 2018 and 2017, we spent $0.2, $0.4 million and $0.1 million, respectively, on capital expenditures.

   

Historically, our cash requirements have mainly been for working capital as well as capital expenditures. As of March 31, 2019, our primary sources of liquidity, aside from our secured revolving credit facilities, were $21.2 million of cash and cash equivalents. 

 

Our trade receivables primarily comprise receivables from our retail and institutional customers to whom we typically extend credit periods. Our trade receivables were $0.2 million as of March 31, 2019, as compared to $258.3 million and $209.1 million as of March 31, 2018 and 2017, respectively.

 

Our prepayments and current assets primarily consist of advances to our suppliers to secure better prices and availability of inventory in future periods, insurance claim receivables, short-term investments and input tax credit receivables. Our prepayments were $0.2 million as of March 31, 2019, as compared to $66.0 million and $47.3 million as of March 31, 2018 and 2017, respectively.

 

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. We may, however, 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 the expenses of RYCE. However, in the event that RYCE requires additional cash resources, we may conduct certain international operations or transactions through RYCE using transfer pricing principles

 

However, as mentioned in our risk factors, due to tightening of regulatory and credit environment and Covid-19 we may not be able to raise more capital to finance our activities and growth. 

 

The following table sets forth the summary of our cash flows for the periods indicated:

 

|                                                      |   | **Fiscal year ended March 31,** |     |
|-----------------------------------------------------------|--------|---------------------------------|----------|
|                                                      |   | **2019**                        |     |   | **2018** |   |   | **2017** |   |
|                                                      |   | **(Amount in $ million)**       |     |
| Net cash generated from/(used in) operating activities    |   |                            | (169.4   | ) |   |   | (28.4 | ) |   |   | 5.8 |   |
| Net cash generated from/(used in) investing activities    |   |                            | (2.9     | )  |   |   | 1.4 |   |   |   | 3.3 |   |
| Net cash generated from/(used in) financing activities    |   |                            | 33.5     |   |   |   | 7.6 |   |   |   | (18.6 | ) |
| Effect of change in exchange rate on cash and equivalents |   |                            | 158.8    |   |   |   | 3.7 |   |   |   | 8.9 |   |
| **Net increase/(decrease) in cash and cash equivalents**  |   |                            | **20.0** |   |   |   | **(15.6** | **)** |   |   | **(0.6** | **)** |
| Cash and cash equivalents at the beginning of the year    |   |                            | 1.2      |   |   |   | 16.8 |   |   |   | 17.4 |   |
| Cash and cash equivalents at the end of the year          |   |                            | 21.2     |   |   |   | 1.2 |   |   |   | 16.8 |   |

 

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***Net cash generated from/ (used in) operating activities***

 

In fiscal 2019, net cash generated from/(used in) operating activities was $(169.4) million in comparison to net cash used of $(28.4) million in fiscal 2018 and net cash generated of $5.8 million in fiscal 2017.

 

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 used in investing activities***

 

In fiscal 2019, cash generated from investing activities was $2.9 million compared to cash generated of $1.4 million in fiscal 2018 and $3.3 million in fiscal 2017, each of which were primarily due to interest income slightly offset by capital expenditure.

 

***Net cash generated from financing activities***

 

In fiscal 2019, cash flow from financing activities was $33.5 million which was primarily due to the net proceeds of $43.7 million from the incurrence of short-term debt. We repaid interest of $10.1 million during the fiscal 2019.

 

In fiscal 2018, cash flow from financing activities was $7.6 million which was primarily due to the net proceeds of $33.5 million from the incurrence of short-term debt. We repaid long-term debt of $0.02 million and interest of $25.9 million during the fiscal 2018.

 

In fiscal 2017, cash flow from financing activities was $18.6 million which was primarily due to the net proceeds of $9.4 million from the incurrence of short-term debt. We repaid interest of $27.5 million during the fiscal 2017.

 

***Contractual Obligations***

 

The following is a summary of our contractual obligations and other commitments as of March 31, 2019:

 

|                                          |   | **Payments due by period** |           |
|-----------------------------------------------|--------|----------------------------|----------------|
|                                          |   | **Total**                  |           |   | **Less than 1**

**year** |   |   | **1-2 years** |   |   | **2-5 years** |   |   | **More than5 years** |   |
|                                          |   | **(Amount in $ million)**  |           |
| Long-Term Debt Obligations:                   |   |                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| *Current portion of Long Term Debt*           |   |                       | 30,306         |   |   |   | 5,276 |   |   |   | 25,030 |   |   |   | - |   |   |   | - |   |
| *Non-Current portion of Long Term Debt*       |   |                       | -              |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| *Interest liability*                          |   |                       | 1,776          |   |   |   | 1,018 |   |   |   | 759 |   |   |   | - |   |   |   | - |   |
| **Total Long-Term Debt Obligations (A)**      |   |                       | **32,083**     |   |   |   | **6,294** |   |   |   | **25,789** |   |   |   | **-** |   |   |   | **-** |   |
| **Operating Lease Obligations (B)**           |   |                       |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-Term Debt Obligations:                  |   |                       |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Current Debt*                                |   |                       | 7,494,684      |   |   |   | 7,494,684 |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
| *Less: Current portion of Long-Term Debt*     |   |                       | -              |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| *Trade Payables*                              |   |                       | 166,495        |   |   |   | 166,495 |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
| *Other Financial Liabilities*                 |   |                       | 5,207,352      |   |   |   | 5,207,352 |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
| *Lease Obligation*                            |   |                       | 62,138         |   |   |   | 62,138 |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
| **Total Short-Term Debt Obligations (C)**     |   |                       | **12,930,670** |   |   |   | **12,930,670** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
|                                          |   |                       |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total Contractual Obligations (A)+(B)+(C)** |   |                       | **12,962,753** |   |   |   | **12,936,964** |   |   |   | **25,789** |   |   |   | **-** |   |   |   | **-** |   |

 

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**Capital commitments**

 

Capital commitments net of advances amounted to $13.0 million, $8.5 million, and $8.5 million as of March 31, 2019, 2018 and 2017 respectively.

 

**Inflation**

 

Our business results 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 March 31, 2019, we had no off-balance sheet arrangements, other than items disclosed under the heading “Item 18. Financial Statements”.

 

**Critical Accounting Policies and Estimates**

 

Information relating to “Critical Accounting Policies and Estimates” are described in detail under the heading “Item 18. Financial Statements – Note 6”.

 

**New standards/amendments relevant for the Group adopted from April 1, 2016 and****new standards/amendments issued but not yet effective relevant for the Group**

 

Information relating to “New standards/amendments relevant for the Group adopted from April 1, 2016” and “New standards/amendments issued but not yet effective relevant for the Group” are described in detail under the heading “Item 18. Financial Statements – Note 4 and 5”.

 

**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 fiscal 2019, fiscal 2018 and fiscal 2017, respectively, other one-time legal & professional charges for fiscal 2019, 2018 and fiscal 2017 and one-time provision for impairment of inventory in fiscal 2018; 

(3) adjusted profit after tax, as profit after tax plus non-cash expense for share-based compensation for fiscal 2019, fiscal 2018 and fiscal 2017, respectively, other one-time legal and professional charges for fiscal 2017, 2018 and 2019; and one-time provision for impairment of inventory in fiscal 2018;

(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.

(7) Adjusted Cost of goods sold as Cost of goods sold after accounting for the impact of impairment of inventories.

 

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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 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), 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; |
|   |   |                                                                                                                                                                                                                                                 |
|   | · | 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 EBITDA only as a supplemental measure. 

 

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.

 

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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:

 

|                                                                                |   | **Fiscal year ended March 31,** |             |
|-------------------------------------------------------------------------------------|--------|---------------------------------|------------------|
|                                                                                |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                |   | **(Amount in $)**               |             |
| **Profit/(loss) after tax (PAT)**                                                   |   |                            | (357,876,980     | ) |   |   | (93,595,764 | ) |   |   | 31,511,403 |   |
| Add: Income tax expense/(credit)                                                    |   |                            | (11,706          | ) |   |   | (19,941,298 | ) |   |   | 4,596,968 |   |
| Add: Finance costs (net of finance income)                                          |   |                            | 18,238,935       |   |   |   | 34,078,952 |   |   |   | 29,009,595 |   |
| Add: Depreciation and amortization                                                  |   |                            | 767,640          |   |   |   | 1,617,118 |   |   |   | 1,778,968 |   |
| **EBITDA**                                                                          |   |                            | **(338,882,111** | **)** |   |   | **(77,840,992** | **)** |   |   | **66,896,934** |   |
| Add: Non-cash expenses for share-based compensation                                 |   |                            | -                |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering |   |                            | -                |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory                                 |   |                            | -                |   |   |   | 133,984,426 |   |   |   | - |   |
| Add: One-time legal & professional charges                                      |   |                            | -                |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted EBITDA**                                                                 |   |                            | **(338,882,111** | **)** |   |   | **59,044,566** |   |   |   | **70,505,179** |   |

 

2. Reconciliation of profit after tax to adjusted profit after tax (excluding IPO-related expenses):

  

|                                                                                |   | **Fiscal year ended March 31,** |             |
|-------------------------------------------------------------------------------------|--------|---------------------------------|------------------|
|                                                                                |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                |   | **(Amount in $)**               |             |
| **Profit****/(loss)****after tax (PAT)**                                            |   |                            | (357,876,980     | ) |   |   | (93,595,764 | ) |   |   | 31,511,403 |   |
| Add: Non-cash expenses for share-based compensation                                 |   |                            | -                |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering |   |                            | -                |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory (net of taxes)                  |   |                            | -                |   |   |   | 87,164,908 |   |   |   | - |   |
| Add: One-time legal & professional charges                                      |   |                            | -                |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted profit****/(loss)****after tax**                                         |   |                            | **(357,876,980** | **)** |   |   | **(3,529,724** | **)** |   |   | **35,119,648** |   |

 

3. Reconciliation of earnings per share and adjusted earnings per share: 

   

|                                                                                         |   |                  |   |   | **Fiscal year ended March 31,** |             |
|----------------------------------------------------------------------------------------------|--------|------------------|--------|--------|---------------------------------|------------------|
|                                                                                         |   |                  |   |   | **2019**                        |             |   | **2018** |   |   | **2017** |   |
|                                                                                         |   |                  |   |   | **(Amount in $)**               |             |
|                                                                                         |   |             |   |   |                            |             |   |   |   |   |   |   |
| **Profit****/(loss)****after tax (PAT)**                                                     |   |             |   |   |                            | **(357,876,980** | **)** |   |   | **(93,595,764** | **)** |   |   | **31,511,403** |   |
| Profit attributable to Shareholders of the company                                           |   | (A)              |   |   |                            | (304,911,721     | ) |   |   | (78,222,174 | ) |   |   | 25,087,388 |   |
| Weighted average number of shares (for Basic earnings per share)                             |   | (B)              |   |   |                            | 40,388,149       |   |   |   | 34,064,348 |   |   |   | 29,822,470 |   |
| Weighted average number of shares (for diluted earnings per share)                           |   | (C)              |        |   |                            | 40,388,149       |   |   |   | 34,064,348 |   |   |   | 29,822,470 |   |
| **Basic earnings per share as per IFRS**                                                     |   | **(A)÷(B)** |   |   |                            | **(7.55**        | **)** |   |   | **(2.30** | **)** |   |   | **0.84** |   |
| **Diluted earnings per share as per IFRS**                                                   |   | **(A)÷(C)** |   |   |                            | **(7.55**        | **)** |   |   | **(2.30** | **)** |   |   | **0.84** |   |
|                                                                                         |   |             |   |   |                            |             |   |   |   |   |   |   |   |   |   |   |
| Share Issuable under share exchange agreement for non-controlling interest                   |   | (D)              |   |   |                            | 7,005,434        |   |   |   | 7,005,434 |   |   |   | 7,005,434 |   |
| **Number of shares outstanding including shares for non-controlling interest-fully diluted** |   | **(E)=(C)+(D)**  |        |   |                            | **47,393,583**   |   |   |   | **41,069,782** |   |   |   | **36,827,904** |   |
|                                                                                         |   |             |   |   |                            |             |   |   |   |   |   |   |   |   |   |   |
| **Profit****/(loss)****after tax (PAT)**                                                     |   |             |   |   |                            |             | **(357,876,980** | **)** |   |   | **(93,595,764** | **)** |   |   | **31,511,403** |   |
| Add: Non-cash expenses for share-based compensation                                          |   |             |   |   |                            |             | - |   |   |   | 1,205,809 |   |   |   | 1,312,250 |   |
| Add: Onetime expenses related to proposed Senior Secured Second Lien Notes offering          |   |             |   |   |                            |             | - |   |   |   | - |   |   |   | - |   |
| Add: One-time provision for impairment of inventory (net of taxes)                           |   |             |   |   |                            |             | - |   |   |   | 87,164,908 |   |   |   | - |   |
| Add: One-time legal & professional charges                                               |   |             |   |   |                            |             | - |   |   |   | 1,695,323 |   |   |   | 2,295,995 |   |
| **Adjusted profit****/(loss)****after tax**                                                  |   | (F)              |   |   |                            | **(357,876,980** | **)** |   |   | **(3,529,724** | **)** |   |   | **35,119,648** |   |
|                                                                                         |   |             |   |   |                            |             |   |   |   |   |   |   |   |   |   |   |
| **Adjusted earnings per share**                                                              |   | **(F)÷(E)** |   |   |                            | **(6.43**        | **)** |   |   | **(0.09** | **)** |   |   | **0.95** |   |

 

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4. Reconciliation of working capital (total current assets minus total current liabilities) and adjusted net working capital: 

 

|                                                                       |   |                   |           |   | **Fiscal year ended March 31,** |   |
|----------------------------------------------------------------------------|--------|-------------------|----------------|--------|---------------------------------|--------|
|                                                                       |   | **2019**          |           |   | **2018**                        |   |   | **2017** |   |
|                                                                       |   | **(Amount in $)** |           |
| **Current assets:**                                                        |   |              |           |   |                            |   |   |   |   |
| Inventories                                                                |   |              | 1,172,369      |   |                            |   | 161,278,863 |   |   |   | 273,063,839 |   |
| Trade receivables                                                          |   |              | 362570         |   |                            |   | 258,331,963 |   |   |   | 209,673,239 |   |
| Derivative financial assets                                                |   |              | -              |   |                            |   | - |   |   |   | - |   |
| Other financial assets                                                     |   |              | 1,200          |   |                            |   | 3,612,232 |   |   |   | 5,467,164 |   |
| Prepayments                                                                |   |              | 196,578        |   |                            |   | 65,977,255 |   |   |   | 47,272,153 |   |
| Other current assets                                                       |   |              | 513,300        |   |                            |   | 1,170,200 |   |   |   | 664,553 |   |
| Cash and cash equivalents                                                  |   |              | 21,232,011     |   |                            |   | 1,216,642 |   |   |   | 16,831,655 |   |
| **Total current assets**                                                   |   |              | **23,478,028** |   |                            |   | **491,587,155** |   |   |   | **552,972,603** |   |
|                                                                       |   |              |           |   |                            |   |   |   |   |   |   |   |
| **Current liabilities:**                                                   |   |              |           |   |                            |   |   |   |   |   |   |   |
| Trade payables                                                             |   |              | 172,862        |   |                            |   | 11,741,143 |   |   |   | 13,004,865 |   |
| Debt                                                                       |   |              | 7,499,960      |   |                            |   | 250,204,044 |   |   |   | 224,391,280 |   |
| Current tax liabilities (net)                                              |   |              | -              |   |                            |   | - |   |   |   | 15,799,116 |   |
| Derivative financial liabilities                                           |   |              |           |   |                            |   | - |   |   |   | - |   |
| Other financial liabilities                                                |   |              | 5,675,033      |   |                            |   | 7,285,473 |   |   |   | 12,259,830 |   |
| Other current liabilities                                                  |   |              | 8,341          |   |                            |   | 871,160 |   |   |   | 1,101,744 |   |
| **Total current liabilities**                                              |   |              | **13,356,166** |   |                            |   | **270,101,820** |   |   |   | **266,556,835** |   |
|                                                                       |   |              |           |   |                            |   |   |   |   |   |   |   |
| **Working Capital (Total current assets minus Total current liabilities)** |   |              | **10,121,862** |   |                            |   | **221,485,335** |   |   |   | **286,415,768** |   |
| Less: Cash and cash equivalents                                            |   |              | 21,232,011     |   |                            |   | 1,216,642 |   |   |   | 16,831,655 |   |
| Add: Current debt                                                          |   |              | 7,499,960      |   |                            |   | 250,204,044 |   |   |   | 224,391,280 |   |
| **Adjusted net working capital**                                           |   |              | **(3,610,189** | **)**  |                            |   | **470,472,737** |   |   |   | **493,975,393** |   |

 

5. Reconciliation of total current and non-current debt to net debt:

  

|                                               |   |                   |           |   | **Fiscal year ended March 31,** |   |
|----------------------------------------------------|--------|-------------------|----------------|--------|---------------------------------|--------|
|                                               |   | **2019**          |           |   | **2018**                        |   |   | **2017** |   |
|                                               |   | **(Amount in $)** |           |
| Current debt                                       |   |              | 7,499,690      |   |                            |   | 250,204,044 |   |   |   | 224,391,280 |   |
| Non-current debt                                   |   |              | 27,580,975     |   |                            |   | 27,430 |   |   |   | 48,743 |   |
| **Total current and non-current debt as per IFRS** |   |              | **35,080,935** |   |                            |   | **250,231,474** |   |   |   | **224,440,023** |   |
| Less: Cash and cash equivalents                    |   |              | 21,232,011     |   |                            |   | 1,216,642 |   |   |   | 16,831,655 |   |
| **Net debt**                                       |   |              | **13,848,924** |   |                            |   | **249,014,832** |   |   |   | **207,608,368** |   |

  

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**ITEM 5. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

 

**A. Directors and senior management**

 

The following table sets forth information about our directors and executive officers: 

  

| **Name**                   |   | **Age** |   | **Position**                       |
|----------------------------|--------|---------|--------|------------------------------------|
| Karan A. Chanana           |   | 47      |   | Chairman of the Board of Directors |
| Brian Speck*               |   | 45      |   | Chief Financial Officer            |
| Harash Pal Sethi*(1)(2**)* |   | 69      |   | Independent Director               |
| Herve Larren**             |   | 41      |   | Independent Director               |
| Mohit Malik (1)            |   | 59      |   | Independent Director               |

* *

*** New director Herve Larren joined the board as independent director in May 2018. Neal Cravens retired on October 16, 2018 and was replaced by Mohit Malik on the Board and also the Audit Committee. Nathalie Dauriac resigned on May 17, 2018.*

  

**Effective June 30, 2019, Mr. Speck replaced Mr. Varun Sethi as our Chief Financial Officer.*

 

|   | *(1)* | *Member of Audit Committee*                               |
|--------|-------|-----------------------------------------------------------|
|   | *(2)* | *Member of Corporate Governance and Nominating Committee* |

 

***Mr. Karan A. Chanana*******has been our Chairman of the Board of Directors since our Initial Public Offering in 2012. His employment agreement as CEO of RYCE expired in July 2017 and has since not been renewed, and is still under negotiation. Mr. Chanana is therefore an employee at will. 

 

***Mr. Brian Speck***has been our Chief Financial Officer since June 30, 2019. From March 2018 until June 30, 2019, Mr. Spec served as the Chief Financial Officer of Surge Holdings, Inc., a provider of a suite of financial and telecommunications services which are primarily marketed through small retail establishments which are utilized by members of its target market. Since October 2013, Mr. Speck has also been Director of Financial Reporting for Brio Financial Group, which has assisted the Company in its ongoing financial reporting. In his capacity at Brio Financial Group, Mr. Speck consults various private and public companies in financial reporting, internal control development and evaluation, budgeting and forecasting. Prior to joining Brio Financial Group, from 2011 to 2013, he was an audit supervisor at Wiss & Company. In that capacity, he was involved in the firm’s accounting and tax practice with industry focuses in manufacturing, wholesalers, construction contractors and professional service firms. Mr. Speck received a Master of Science in Accounting from Kean University. 

 

***Mr. Harash Pal Sethi***has been a member of our Board of Directors since November 2013. He brings with him over 40 years of experience in the areas of finance, accounting, corporate finance, cross-border investments, investment advisory and structuring of joint ventures in the UK, Europe, the Middle East and India. Mr. Sethi has been a part of Cornelius Barton & Co, a London-based firm providing audit, accounting, tax and consulting services to family-owned businesses and high net worth individuals since 1972 as a chartered accountant, partner and the sole proprietor since 1990. He has been a partner at Blenheim Equity LLP since 2005 and Blenheim Windfarms LLP since 2007 focusing on equity and financing transactions for European wind and solar projects. He is the chairman of the JKS Restaurant Group, which owns and manages restaurants in the UK and Europe, and advises on international opportunities for diversification and development. Mr. Sethi has also been a director of Euro Afro Financial Holdings Limited, an investment holding company between 2002 and 2013. As a member of the Board of Directors of Eoxis India Private Limited from February 2011 through February 2013, Mr. Sethi advised on India-based investments, business development and acquisitions of India-based projects. Mr. Sethi received a Bachelor of Commerce degree from Delhi University, India in 1971. He also qualified as a Chartered Accountant in 1976 from the Institute of Chartered Accountants in England & Wales and is presently a Fellow Member. 

 

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***Hervé Larren***, is the co-founder of Global Crypto Ventures, a leading company involved in cryptocurrency and blockchain technology investments. Mr. Larren is also a partner at Geneva based blockchain advisory firm Dybaw Advisory where he helps businesses leverage the blockchain technology. Mr. Larren is also a speaker on the subject of Bitcoin and Blockchain. Prior to receiving his MBA, Mr. Larren worked as a brand manager at LVMH Moet Hennessy – Louis Vuitton SE (EPA: MC) where he gained experience building luxury brands in the US. Prior to LVMH, Mr. Larren held analyst experience at Pernod Ricard (EPA: RI) in France and internationally. Mr. Larren attended the Harvard Business School’s Presidents’ Seminar, received his MBA from Columbia Business School and his BBA in International Business and Finance from Concordia University. Mr. Larren graduated from the Lycée Pasteur in France with honors. 

 

**Mr. Mohit Malik** has been an independent director of the Company since October 16, 2018. Mr. Malik graduated in Law (LLB) from prestigious Delhi University and has practiced law since 1984. He has served as the past President of Gurgaon Chamber of Industry & Commerce and is presently serving as the Executive Member of the Chamber. He is an accomplished professional and has over 34 years’ experience in the field of Corporate Debt Restructuring, Corporate Financial Restructuring, advise on Amalgamations and Mergers, etc.

 

None of our officers and directors is related to each other.

 

**B. Compensation**

    

****Compensation of Directors and Executive Officers****

 

***Director Compensation***

 

| · | We incurred an aggregate amount of $602,338 as compensation (in cash and shares awards) for services of independent directors to the Board of Directors and its committees for the fiscal year 2019. We do not pay any compensation to our executive directors for their services to the Board. We reimburse our directors for expenses accrued in connection with their services to the Board. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

The following table summarizes the accrued compensation of our non-executive directors for fiscal 2019:

 

| **Name**          | ** ** | **Fees Earned or Paid in Cash ($)** | ** ** | ** ** | **Share Awards ($)** | ** ** | ** ** | **Total ($)** |   |
|-------------------|------------|-------------------------------------|------------|------------|----------------------|------------|------------|---------------|--------|
| Neal Cravens*     |       |                                | 63,150     |       |                 |       |       |          |   | 63,150 |   |
| Nathalie Dauriac* |       |                                | 13,750     |       |                 |       |       |          |   | 13,750 |   |
| Robert Wagman     |       |                                | 80,000     |       |                 |       |       |          |   | 80,000 |   |
| Harash Pal Sethi  |       |                                | 80,000     |       |                 |       | 225,000    |          |   |   | 305,000 |   |
| Herve Larren*     |       |                                |       |       |                 |       | 95,233     |          |   |   | 95,233 |   |
| Mohit Malik*      |       |                                |       |       |                 |       | 45,205     |          |   |   | 45,205 |   |

 

** New director Herve Larren joined the board as independent director in May 2018. Nathalie Dauriac resigned on May 17, 2018. Neal Cravens retired on October 16, 2018 and was replaced by Mohit Malik.*

  

| · | In fiscal 2019, Mr. Harash Pal Sethi, received ordinary shares having a value of $199,503.00 relating to fiscal 2018 for his increased responsibilities as the Chairman of the Audit Committee. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

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***Executive Officer Compensation***

 

During fiscal 2019, none of our senior executives received more than $305,000 in cash compensation pertaining to fiscal year 2019.

 

| **Compensation for our CEO* and****CFO**                                                                                                                     |   | **Karan A.* Chanana** |   |   | **Varun Sethi** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------|---------|
|                                                                                                                                                         |   | **(Amount in $)**     |   |
| Annual Salary                                                                                                                                                |   |                  | -      |   |            |    | 425,000 |   |
| Cash Bonus                                                                                                                                                   |   |                  | -      |   |            |    | - |   |
| Equity-Based Compensation (non-cash expense – see “Item 18. Financial Statements”; under Note 19.1 “Share-based compensation”) |   |                  |   |   |            |    |   |   |
| Other Compensation                                                                                                                                           |   |                  | -      |   |            |    | - |   |
| **Total**                                                                                                                                                    |   | **NIL**               |   |   |            | 425,000 |   |

__________   

**On June 14, 2012, the Company entered into an employment agreement to act as the CEO with its Chairman, 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. However, pending a documented agreement, he has not been remunerated/ paid remuneration as the Chief Executive Officer during the fiscal 2018-19. Mr. Chanana is the Chairman of the Company despite the expiration of the Employment Agreement until his successor has been duly elected and appointed by the Board of Directors.*

     

Mr. Varun Sethi’s employment with us was terminated effective June 30, 2019. In connection with his termination, Mr. Sethi was paid his base salary through June 30, 2019 and was issued an aggregate of 528,243 ordinary shares. Mr. Sethi has agreed that he will not sell, transfer or assign the shares for a period of six (6) months from March 8, 2019 (or, until September 8, 2019) without the prior consent of the Company. The Company and Mr. Sethi have agreed that if the value of the Shares on September 8, 2019 is more or less than $559,937, shares will be returned by Mr. Sethi, or the Company will issue additional cash or shares to Mr. Sethi, in each case in an amount equal to the difference between the value of the shares on such date and $559,937**.**

 

**Employment Agreements**

 

***Employment Agreement with Mr. Karan A. Chanana***

  

On June 14, 2012, Mr. Karan A. Chanana entered into an employment agreement with RYCE governing his role as Chairman of the Company. The employment agreement, as amended from time to time, provided that Mr. Chanana is entitled to receive or participate in all employee benefit programs and perquisites applicable to senior executives. Mr. Chanana is entitled to reimbursement of business expenses and certain personal expenses incurred in India. Under his employment agreement, Mr. Chanana is entitled to receive payments and other benefits upon the termination of his employment. These payments and other benefits are described below under “—Potential payments upon termination of employment or a change of control”. 

 

Mr. Chanana’s employment agreement expired on June 13, 2017, and was not renewed. The Company is presently in negotiations with Mr. Chanana concerning the terms of his employment. Based upon our Amended and Restated Memorandum and Articles of Association, Mr. Chanana is the Chief Executive Officer of the Company despite the expiration of the Employment Agreement until his successor has been duly elected and appointed by the Board of Directors. However, he has not been remunerated for his services as our Chief Executive Officer for fiscal years 2018 or 2019.

 

*Potential payments upon termination of employment or a change of control*

 

Under Mr. Chanana’s employment agreement, he was entitled to receive certain benefits in connection with a termination of employment or a change in control of the Company. The employment agreement requires specific payments and benefits to be provided to Mr. Chanana in the event of termination of employment under the circumstances described below. The following is a description of the payments and benefits that the employment agreement provides we will owe to Mr. Chanana upon termination of his employment. Since we are currently negotiating an agreement with Mr. Chanana, it is not certain whether any of these terms will apply under the new agreement or at all.

 

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*Termination without Cause or for Good Reason not in Connection with a Change in Control.* If we terminate Mr. Chanana’s employment without cause or Mr. Chanana terminates his employment for good reason, then Mr. Chanana is entitled to receive the following payments and benefits: 

 

|   | · | an amount equal to his unpaid base salary earned through the date of termination and any unpaid bonus earned for the preceding year;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | an amount equal to any business expenses that were previously incurred but not reimbursed and are otherwise eligible for reimbursement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | any accrued but unused vacation pay and any payments or benefits payable to him or his spouse or other dependents under any other company employee plan or program;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | an amount equal to the bonus amount that would have been earned by him for the year in which the termination occurs if his employment had not terminated, prorated for the number of days elapsed since the beginning of that year, payable when the bonus for such year would otherwise have been paid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | an amount equal to a multiple (the “severance multiplier”) of (a) his highest annual rate of base salary during the preceding 24 months, plus (b) his target bonus award for the calendar year in which the termination occurs (or, if greater, the actual short-term incentive award earned by him for the preceding calendar year). The severance multiplier is the greater of (i) 365 days or (ii) the number of days from and including the day after the termination date through the last day of the then-current term of the employment agreement, in each case, divided by 365, for payments and benefits payable in the event of a termination without cause or for good reason. However, the severance multiplier is 1.0 plus the above-mentioned multiple, if we terminate Mr. Chanana’s employment without cause at the request of an acquirer or otherwise in contemplation of a change in control in the period beginning six months prior to the date of a change in control, or he terminates his employment for good reason within two years after a change in control; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | immediate vesting of his option award to purchase 1,842,082 ordinary shares granted under the terms of his employment agreement and any outstanding long-term incentive awards;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | continued participation by him and his spouse or other dependents in our group health plan, at the same benefit and contribution levels in effect immediately before the termination for 24 months or, if sooner, until similar coverage is obtained under a new employer’s plan. If continued coverage is not permitted by our plan or applicable law, we will pay the cost of continuation coverage to the extent any of these persons elects and is entitled to receive continuation coverage; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | · | continued receipt for 24 months of those employee benefit programs or perquisites made available to him during the 12 months preceding the termination. If continued receipt of such employee benefit programs or perquisites is not permitted by the applicable benefit plan or applicable law, we will pay the cost of continuation coverage to the extent any of these persons elects and is entitled to receive continuation coverage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

  

Under the employment agreement, Mr. Chanana is deemed to have been terminated without cause if he is terminated for any reason other than: (1) a commission of any felony or misdemeanor (other than minor traffic violations or offenses of a comparable magnitude not involving dishonesty, fraud or breach of trust); or (2) a breach of any of his material obligations under the employment agreement, subject to a 30-day cure period if such breach is curable by Mr. Chanana.

 

Mr. Chanana is deemed to have terminated his employment for good reason if the termination follows: (1) a breach by RYCE of any of its material obligations under the employment agreement; or (2) a relocation of his principal place of employment of more than 50 miles.

  

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For example, in the event we terminate Mr. Chanana without cause or Mr. Chanana terminates his employment for good reason, the cash payments that would be payable to Mr. Chanana (assuming the termination date is 548 days, or approximately 18 months, following his initial employment date, and based on compensation received in fiscal 2013) would be the sum of:

 

|   | · | $0 (assuming all base salary earned through the date of termination and any unpaid bonus earned for the preceding year has been paid in full);                                                                                                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | $0 (assuming any business expenses that were previously incurred have been reimbursed);                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | $0 (assuming no accrued but unused vacation pay is owed);                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | approximately $216,000 (the bonus amount that would have been earned by Mr. Chanana for the year in which the termination occurs if his employment had not terminated, prorated for the number of days elapsed since the beginning of that year); and                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | $783,000 (Mr. Chanana’s highest annual rate of base salary during the preceding 24 months ($432,000), plus his target bonus award for the calendar year in which the termination occurs ($351,000), multiplied by 1.0 (365 days divided by 365)), or                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                     |
|   | · | $1,566,000 (the amount above multiplied by 2.0) if we terminate Mr. Chanana’s employment without cause at the request of an acquirer or otherwise in contemplation of a change in control in the period beginning six months prior to the date of a change in control, or he terminates his employment for good reason within two years after a change in control. |

  

Accordingly, under the above scenarios, the total cash payment that would be payable to Mr. Chanana is approximately $999,000 or, if the termination is in connection with a change in control as described above, and the total cash payment that would be payable to Mr. Chanana is approximately $1,782,000. However, these amounts would be different in any given year.

 

*Termination in Connection with a Change in Control* If we terminate Mr. Chanana’s employment in contemplation of a change in control in the period beginning six months prior to the date of a change in control, or he terminates his employment for good reason within two years after a change in control, then he is entitled to receive the payments and benefits described above, except that the severance multiple is 1.0 plus the above-mentioned multiple. Accordingly, under the above scenario, the total cash payment that would be payable to Mr. Chanana is approximately $1,782,000. Under the employment agreement, a change in control is defined as: (1) the acquisition of 40% or more of our ordinary shares, except in connection with a consolidation, merger or reorganization where (a) the shareholders of RYCE immediately prior to the transaction own at least a majority of the voting securities of the surviving entity, (b) a majority of the directors of the surviving entity were directors of RYCE prior to the transaction, and (c) no person, subject to certain exceptions, beneficially owns more than 50% of the voting securities of the surviving entity; (2) the completion of a consolidation, merger or reorganization, unless (a) the shareholders of RYCE immediately prior to the transaction own at least a majority of the voting securities of the surviving entity, (b) a majority of the directors of the surviving entity were directors of RYCE prior to the transaction, or (c) no person, entity, or group, subject to certain exceptions, beneficially owns more than a majority of the voting securities of the surviving entity; (3) a change in a majority of the members of our board, without the approval of the then incumbent members of the board; or (4) the shareholders approve the complete liquidation or dissolution of RYCE, or a sale or other disposition of all or substantially all of the assets of RYCE. 

  

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*Termination Due to Death or Disability*If Mr. Chanana’s employment terminates due to death or is terminated by us due to disability; he (or his beneficiary) is entitled to receive: 

 

|   | · | a lump-sum payment in an amount equal to (a) his base salary for six months, plus (b) an amount equal to the bonus amount that would have been earned by him for the year in which the termination occurs if his employment had not terminated, prorated for the number of days elapsed since the beginning of that year, payable when the bonus for such year would otherwise have been paid; and                                                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | · | continued participation by him and his spouse or other dependents in our group health plan, at the same benefit and contribution levels in effect immediately before the termination for 24 months or, if sooner, until similar coverage is obtained under a new employer’s plan. If continued coverage is not permitted by our plan or applicable law, we will pay the cost of continuation coverage to the extent any of these persons elects and is entitled to receive continuation coverage. |

 

*Obligations of Mr. Chanana*Payment and benefits under the employment agreement are subject to compliance by Mr. Chanana with the restrictive covenants in the agreement, including non-disclosure, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants expire on the second anniversary of the termination of Mr. Chanana’s employment. The non-disclosure covenant does not expire. If Mr. Chanana violates any of these or other covenants or obligations contained in the agreement, we will be entitled to recover all costs and fees incurred to enforce RYCE’s rights under the agreement and are not restricted from pursuing other available remedies for such breach. 

 

***Employment Agreements with Other Senior Executive Officers***

 

We have entered into employment agreements with our senior executive officers. We may terminate a senior executive officer’s employment for cause at any time without remuneration for certain acts of the officer, such as the commission of any felony, or any material breach of any Company policy or code after being afforded a reasonable opportunity to cure such failure. We may also terminate a senior executive officer’s employment without cause at any time, and we shall provide severance payments to the officer in accordance with the terms of the respective employment agreement. A senior executive officer may terminate his or her employment at any time, subject to the specifics of his or her employment agreement.

 

In connection with their respective employment agreements, each senior executive officer has agreed to not disclose any confidential or proprietary information of the Company or its business, including, without limitation, all of the Company’s customer lists, financial data, sales figures, costs and pricing figures, marketing and other business plans, product development, marketing concepts, computer software or data of any sort developed or compiled by the Company, formulae or any other information relating to the Company’s services, products, sales, technology, research data, software and all other know-how, trade secrets or proprietary information. Each officer also agrees that the Company will own all the intellectual property created, made or conceived by such executive officer during his or her employment.

 

***Retirement Benefits***

 

During fiscal 2019, we accrued $2,998 for post-employment benefits through defined contribution and defined benefit plans for our employees (including executive officers).

 

**Equity Benefit Plan**

 

Our Board of Directors and existing shareholders have adopted and approved the 2012 Plan and a further 2017 plan (collectively, the “Plan”). The Plan, effective as applicable, is a comprehensive incentive compensation plan under which we can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, RYCE and our subsidiaries. The purpose of the Plan is to help us attract, motivate and retain such persons and thereby enhance shareholder value.

 

*Administration*the Plan is administered by the Board of Directors. Among other things, the Board has complete discretion, subject to the terms of the Plan, to determine the employees, non-employee directors and non-employee consultants to be granted an award under the Plan, the type of award to be granted, the number of ordinary shares subject to each award, the exercise price under each option and base price for each SAR (as defined in a subsequent paragraph), the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the ordinary shares underlying the award, and the required withholdings, if any. The Board is also authorized to construe the award agreements and may prescribe rules relating to the Plan. 

 

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*Grant of Awards; Ordinary Shares Available for Awards*The Plan provides for the grant of awards which are distribution equivalent rights, incentive share options, non-qualified share options, performance shares, performance units, restricted ordinary shares, restricted share units, share appreciation rights, or SARs, tandem share appreciation rights, unrestricted ordinary shares or any combination of the foregoing, to key management employees and non-employee directors of, and non-employee consultants of, RYCE or any of its subsidiaries (each a “participant”) (however, solely our employees or employees of our subsidiaries are eligible for awards which are incentive share options). We have reserved a total of 3,962,826 ordinary shares for issuance as or under awards to be made under the 2012 Plan. Further, we have reserved a total of 4,500,000 ordinary shares for issuance as or under awards to be made under the 2017 Plan. To the extent that an award lapses, expires, is canceled, is terminated unexercised or ceases to be exercisable for any reason, or the rights of its holder terminate, any ordinary shares subject to such award shall again be available for the grant of a new award; provided, however, that ordinary shares surrendered or withheld as payment of the exercise price under an award or for tax withholding purposes in connection with an award shall not be available for the grant of a new award. The Plan shall continue in effect, unless sooner terminated, until the tenth (10th) anniversary of the date on which it is adopted by the Board of Directors (except as to awards outstanding on that date). The Board of Directors in its discretion may terminate the Plan at any time with respect to any ordinary shares for which awards have not theretofore been granted; provided, however, that the Plan’s termination shall not materially and adversely impair the rights of a holder with respect to any award theretofore granted without the consent of the holder. The number of ordinary shares for which awards which are options or SARs may be granted to a participant under the Plan during any calendar year is limited to 1,000,000. 

 

Future new hires, non-employee directors and additional non-employee consultants would be eligible to participate in the Plan as well. The number of awards to be granted to officers, non-employee directors, employees and non-employee consultants cannot be determined at this time as the grant of awards is dependent upon various factors such as hiring requirements and job performance.

 

*Options*The term of each share option shall be as specified in the option agreement; provided, however, that except for share options which are incentive share options, or ISOs, granted to an employee who owns or is deemed to own (by reason of the attribution rules applicable under Code Section 424(d)) more than 10% of the combined voting power of all classes of our ordinary shares or the capital stock of our subsidiaries (a “ten percent shareholder”), no option shall be exercisable after the expiration of ten (10) years from the date of its grant (five (5) years for ISOs granted to an employee who is a ten percent shareholder). 

 

The price at which an ordinary share may be purchased upon exercise of a share option shall be determined by the Board; provided, however, that such option price (i) shall not be less than the fair market value of an ordinary share on the date such share option is granted, and (ii) shall be subject to adjustment as provided in the Plan. The Board of Directors shall determine the time or times at which or the circumstances under which a share option may be exercised in whole or in part, the time or times at which options shall cease to be or become exercisable following termination of the share option holder’s employment or upon other conditions, the methods by which such exercise price may be paid or deemed to be paid, the form of such payment, and the methods by or forms in which ordinary shares will be delivered or deemed to be delivered to participants who exercise share options.

 

Options which are ISOs shall comply in all respects with Section 422 of the Code. In the case of ISOs granted to a ten percent shareholder, the per share exercise price under such ISO (to the extent required by the Code at the time of grant) shall be no less than 110% of the fair market value of a share on the date such ISO is granted. ISOs may solely be granted to employees. In addition, the aggregate fair market value of the shares subject to an ISO (determined at the time of grant) which are exercisable for the first time by an employee during any calendar year may not exceed $100,000.

 

*Restricted Share Awards*A restricted share award is a grant or sale of ordinary shares to the participant, subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Board of Directors may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise, as the Board of Directors may determine at the date of grant or purchase or thereafter. Except to the extent restricted under the terms of the Plan and any agreement relating to the restricted share award, a participant who is granted or has purchased restricted shares shall have all of the rights of a shareholder, including the right to vote the restricted shares and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Board of Directors). During the restricted period applicable to the restricted shares, subject to certain exceptions, the restricted shares may not be sold, transferred, pledged, hypothecated, or otherwise disposed of by the participant. 

  

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*Unrestricted Share Awards*An unrestricted share award is the award of ordinary shares which are not subject to transfer restrictions. Pursuant to the terms of the applicable unrestricted share award agreement, a holder may be awarded (or sold) ordinary shares which are not subject to transfer restrictions, in consideration for past services rendered thereby to us or an affiliate or for other valid consideration. 

 

*Restricted Share Unit Awards*A restricted share unit award provides for a payment of cash or shares to be made to the holder upon the satisfaction of predetermined individual service-related vesting requirements, based on the number of units awarded to the holder. The Board shall set forth in the applicable restricted share unit award agreement the individual service-based or performance-based vesting requirement which the holder would be required to satisfy before the holder would become entitled to payment and the number of units awarded to the Holder. Such payment shall be subject to a “substantial risk of forfeiture” under Section 409A of the Code. At the time of such award, the Board may, in its sole discretion, prescribe additional terms and conditions or restrictions. The holder of a restricted share unit shall be entitled to receive a cash payment equal to the fair market value of an ordinary share, or one (1) ordinary share, as determined in the sole discretion of the Board and as set forth in the restricted share unit award agreement, for each restricted share unit subject to such restricted share unit award, if and to the extent the applicable vesting requirement is satisfied. Such payment shall be made no later than the fifteenth (15th) day of the third (3rd) calendar month next following the end of the calendar year in which the restricted share unit first becomes vested. 

 

*Performance Unit Awards*A performance unit award provides for a cash payment to be made to the holder upon the satisfaction of predetermined individual and/or RYCE performance goals or objectives, based on the number of units awarded to the holder. The Board shall set forth in the applicable performance unit award agreement the performance goals and objectives (and the period of time to which such goals and objectives shall apply) which the holder and/or RYCE would be required to satisfy before the holder would become entitled to payment, the number of units awarded to the holder and the dollar value assigned to each such unit. Such payment shall be subject to a “substantial risk of forfeiture” under Section 409A of the Code. At the time of such award, the Board may, in its sole discretion, prescribe additional terms and conditions or restrictions. The holder of a performance unit shall be entitled to receive a cash payment equal to the dollar value assigned to such unit under the applicable performance unit award agreement if the holder and/or RYCE satisfy (or partially satisfy, if applicable under the applicable performance unit award agreement) the performance goals and objectives set forth in such performance unit award agreement. If achieved, such payment shall be made no later than by the fifteenth (15th) day of the third (3rd) calendar month next following the end of RYCE’s fiscal year to which such performance goals and objectives relate. 

 

*Performance Share Awards*A performance share award provides for distribution of ordinary shares to the holder upon the satisfaction of predetermined individual and/or RYCE goals or objectives. The Board shall set forth in the applicable performance share award agreement the performance goals and objectives (and the period of time to which such goals and objectives shall apply) which the holder and/or RYCE would be required to satisfy before the holder would become entitled to the receipt of ordinary shares pursuant to such holder’s performance share award and the number of ordinary shares subject to such performance share award. Such payment shall be subject to a “substantial risk of forfeiture” under Section 409A of the Code and, if such goals and objectives are achieved, the distribution of such ordinary shares shall be made no later than by the fifteenth (15th) day of the third (3rd) calendar month next following the end of our fiscal year to which such goals and objectives relate. At the time of such award, the Board may, in its sole discretion, prescribe additional terms and conditions or restrictions. The holder of a performance share award shall have no rights as an RYCE shareholder until such time, if any, as the holder actually receives ordinary shares pursuant to the performance share award. 

 

*Distribution Equivalent Rights*A distribution equivalent right entitles the holder to receive bookkeeping credits, cash payments and/or ordinary share distributions equal in amount to the distributions that would be made to the holder had the holder held a specified number of ordinary shares during the period the holder held the distribution equivalent right. The Board shall set forth in the applicable distribution equivalent rights award agreement the terms and conditions, if any, including whether the holder is to receive credits currently in cash, is to have such credits reinvested (at fair market value determined as of the date of reinvestment) in additional ordinary shares or is to be entitled to choose among such alternatives. Such receipt shall be subject to a “substantial risk of forfeiture” under Section 409A of the Code and, if such award becomes vested, the distribution of such cash or ordinary shares shall be made no later than by the fifteenth (15th) day of the third (3rd) calendar month next following the end of the Company’s fiscal year in which the holder’s interest in the award vests. Distribution equivalent rights awards may be settled in cash or in ordinary shares, as set forth in the applicable distribution equivalent rights award agreement. A distribution equivalent rights award may, but need not be, awarded in tandem with another award (subject to compliance with Code Section 409A), whereby, if so awarded, such distribution equivalent rights award shall expire, terminate or be forfeited by the holder, as applicable, under the same conditions as under such other award. The distribution equivalent rights award agreement for a distribution equivalent rights award may provide for the crediting of interest on a distribution rights award to be settled in cash at a future date (but in no event later than by the fifteenth (15th) day of the third (3rd) calendar month next following the end of the Company’s fiscal year in which such interest was credited), at a rate set forth in the applicable distribution equivalent rights award agreement, on the amount of cash payable thereunder. 

 

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*Share Appreciation Rights*A Share Appreciation Right (“SAR”) provides the participant to whom it is granted the right to receive, upon its exercise, the excess of (A) the fair market value of the number of ordinary shares subject to the SAR on the date of exercise, over (B) the product of the number of ordinary shares subject to the SAR multiplied by the base value under the SAR, as determined by the Board of Directors. The base value of a SAR shall not be less than the fair market value of an ordinary share on the date of grant. If the Board grants a share appreciation right which is intended to be a tandem SAR, additional restrictions apply. 

 

*Recapitalization or Reorganization* Subject to certain restrictions, the Plan provides for the adjustment of ordinary shares underlying awards previously granted if, and whenever, prior to the expiration or distribution to the holder of ordinary shares underlying an award theretofore granted, we shall effect a subdivision or consolidation of our ordinary shares or the payment of a share dividend on ordinary shares without receipt of consideration by us. If we recapitalize or otherwise change our capital structure, thereafter upon any exercise or satisfaction, as applicable, of a previously granted award, the holder shall be entitled to receive (or entitled to purchase, if applicable) under such award, in lieu of the number of ordinary shares then covered by such award, the number and class of shares and securities to which the holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to such recapitalization, the holder had been the holder of record of the number of ordinary shares then covered by such award. The Plan also provide for the adjustment of shares underlying awards previously granted by the Board of Directors in the event of changes to the outstanding ordinary shares by reason of extraordinary cash dividend, reorganization, mergers, consolidations, combinations, split ups, spin offs, exchanges or other relevant changes in capitalization occurring after the date of the grant of any award, subject to certain restrictions. 

 

*Amendment and Termination*

 

The Plan shall continue in effect, unless sooner terminated pursuant to its terms, until the tenth (10th) anniversary of the date on which it is adopted by the Board of Directors (except as to awards outstanding on that date). The Board of Directors may terminate the Plan at any time with respect to any shares for which awards have not theretofore been granted; provided, however, that the Plan’s termination shall not materially and adversely impair the rights of a holder with respect to any award theretofore granted without the consent of the holder. The Board of Directors shall have the right to alter or amend the Plan or any part thereof from time to time; provided, however, that without the approval by a majority of the votes cast at a meeting of our shareholders at which a quorum representing a majority of our ordinary shares entitled to vote generally in the election of directors is present in person or by proxy, no amendment or modification of 2012 Plan may (i) materially increase the benefits accruing to holders, (ii) except as otherwise expressly provided in the Plan, materially increase the number of ordinary shares subject to the Plan or the individual award agreements, (iii) materially modify the requirements for participation, or (iv) amend, modify or suspend certain repricing prohibitions or amendment and termination provisions as specified therein. In addition, no change in any award theretofore granted may be made which would materially and adversely impair the rights of a holder with respect to such award without the consent of the holder (unless such change is required in order to exempt the Planor any Award from Section 409A of the Code).

 

Refer “Item 18. Financial Statements – Note 18”, for issuances and grants as of March 31, 2018, under the 2012 Omnibus Securities and Incentive Plan.

 

**C. Board Practices**

  

***Corporate Governance Standards***

 

Under New York Stock Exchange (NYSE) Listing Rules, foreign private issuers are permitted to follow home country (BVI) practice in respect of certain corporate governance in lieu of the NYSE Listing Rules. However, we are still required to comply with certain audit committee and additional notification requirements. We believe that we have complied with all NYSE Listing Rules applicable to us.

 

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As a foreign private issuer with shares listed on the NYSE, the Company is required by Section 303A.11 of the Listed Company Manual of the NYSE to disclose any significant ways in which its corporate governance practices differ from those followed by U.S. domestic companies under NYSE listing standards. Management believes that RYCE follows corporate governance standards which are substantially similar to those followed by U.S. domestic companies under NYSE listing standards. We believe the significant differences between our Corporate Governance and NYSE Rules are as follows:

 

|   | · | The NYSE Listing Rules require that, subject to limited exceptions, shareholders be given the opportunity to vote on equity compensation plans and material revisions to those plans. In the BVI there are no laws, securities regulations or rules that require shareholder approval of equity-based incentive plans or individual grants under those plans.                                                                                                                                                                                                                                                                                                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | · | The NYSE Listing Rules provide that NYSE-listed companies that are not otherwise exempt will need to include specified provisions in their charters regarding retaining advisers; appointing, compensating, and overseeing such advisers; considering independence factors before selecting and receiving advice from advisers; and receiving funding from the listed company to compensate such advisers. Our compensation committee charter from our IPO until the elimination of our compensation committee on May 4, 2018, followed home country practices which do not provide for any of the above-mentioned compensation committee charter requirements. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | · | The Company eliminated its compensation committee effective May 4, 2018. As a Foreign Private Issuer as defined by Securities Exchange Act Rule 3b-4(c), under the rules of the New York Stock Exchange, we are not required to have a compensation committee and as such, we have elected to follow home country governance practices.                                                                                                                                                                                                                                                                                                                         |

 

***Board of Directors***

 

Our company is managed and controlled by our Board of Directors. Our Board of Directors currently has five directors. There are no family relationships between any of our directors and executive officers. A director is not required to hold any shares in our company by way of qualification. There are no severance benefits payable to our non-executive directors upon termination of their directorships. 

  

Committees of the Board of Directors 

 

We have established two committees under our Board of Directors: an Audit Committee and a Corporate Governance and Nominating Committee. Each committee’s members and functions are described below. The Company eliminated its compensation committee effective May 4, 2018. As a Foreign Private Issuer as defined by Securities Exchange Act Rule 3b-4(c), under the rules of the New York Stock Exchange we are not required to have a compensation committee and as such, we have elected to follow home country governance practices.

  

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***Audit Committee*********

 

Our Audit Committee consists of Mr. Harash Pal Sethi, Mr. Mohit Malik, and Mr Herve Larren. Mr. Sethi is the Chairman of the Audit Committee. Each of these individuals satisfies the “independence” requirements of the New York Stock Exchange. The Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements. The Audit Committee is responsible for, among other things:

 

|   | · | selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                               |
|   | · | reviewing and approving all proposed related-party transactions;                                                                                   |
|   |   |                                                                                                                                               |
|   | · | discussing the annual audited financial statements with management and the independent auditors;                                                   |
|   |   |                                                                                                                                               |
|   | · | annually reviewing and reassessing the adequacy of our Audit Committee charter;                                                                    |
|   |   |                                                                                                                                               |
|   | · | meeting separately and periodically with management and the independent auditors;                                                                  |
|   |   |                                                                                                                                               |
|   | · | reviewing such other matters that are specifically delegated to our Audit Committee by our Board of Directors from time to time; and               |
|   |   |                                                                                                                                               |
|   | · | reporting regularly to the full Board of Directors.                                                                                                |

 

***Corporate Governance and Nominating Committee***

 

Our Corporate Governance and Nominating Committee consists of Mr. Harash Pal Sethi and Mr Herve Larren. Each of these individuals satisfies the “independence” requirements of the New York Stock Exchange. Mr. Sethi is the Chairman of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee assists the board in identifying individuals qualified to become our directors and in determining the composition of the board and its committees. The Corporate Governance and Nominating Committee is responsible for, among other things:

 

|   | · | identifying and recommending to the board nominees for election or re-election to the board;                                                                                                                                                                                                                          |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | · | making appointments to fill any vacancy on our board;                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | · | reviewing annually with the board the current composition of the board in light of the characteristics of independence, age, skills, experience and availability of service to us;                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | · | identifying and recommending to the board any director to serve as a member of the board’s committees;                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | · | advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any corrective action to be taken; and |
|   |   |                                                                                                                                                                                                                                                                                                                  |
|   | · | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.                                                                                                                                                 |

 

**Code of Ethics**

 

We have adopted a Code of Conduct for all employees and a Code of Ethics that applies to our principal executive officer, our principal financial and accounting officer and our other senior officers. The Code of Conduct and Code of Ethics are intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters. The Code of Conduct and Code of Ethics are available on our corporate website at www.amira.net and a printed copy of the Code of Conduct and Code of Ethics is obtainable free of charge by writing to 29E, A.U. Tower; Jumeirah Lake Towers; Dubai, UAE.

 

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**Directors’ Duties**

 

Under BVI law, our Directors owe fiduciary duties at both common law and under statute, including a statutory duty to act honestly, in good faith and in what the Director believes are the best interests of our company. When exercising powers or performing duties as a Director, the Director is required to exercise the care, diligence and skill that a responsible Director would exercise in the same circumstances, taking into account, without limitation, the nature of the company, the nature of the decision and the position of the Director and the nature of the responsibilities undertaken by him. In exercising the powers of a Director, the Directors are required to exercise their powers for a proper purpose and must not act or agree to the company acting in a manner that contravenes our memorandum and articles of association or the BVI Act.

 

**Directors’ Interests in Transactions**

 

Pursuant to the BVI Act and the company’s memorandum and articles of association, a Director of a company who has an interest in a transaction and who has declared such interest to the other Directors, may (a) vote on a matter relating to the transaction, (b) attend a meeting of Directors at which a matter relating to the transaction arises and be included among the Directors present at the meeting for the purposes of a quorum, and (c) sign a document on behalf of the company, or do any other thing in his capacity as a Director, that relates to the transaction.

 

**Qualification**

 

A Director is not required to hold shares as a qualification to office.

  

**D. Employees**

 

As of March 31, 2019, we had and 27 full-time employees. We have entered into employment agreements with all of our fulltime employees that provide for termination of their employment upon delivery of two months’ severance or notice, and that prohibit them from soliciting any of our other employees during or after their employment. There is a registered trade union comprising a small number of workers at the processing facility. We consider our relations with our employees to be amicable.

    

**E. Share Ownership**

 

See Item 7, below.

 

**ITEM 6. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

 

**A. Major shareholders**

  

The following table sets forth, as of August 14, 2019, certain information as to the stock ownership of:

 

|   | · | each person known to us to own beneficially more than 5% of our ordinary shares; |
|--------|--------|----------------------------------------------------------------------------------|
|   |   |                                                                             |
|   | · | each of our directors and officers who beneficially own our ordinary shares; and |
|   |   |                                                                             |
|   | · | all of our directors and officers as a group.                                    |

    

Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have or share the voting and investment power with respect to all shares shown as beneficially owned by them as on March 31, 2019. The number of our ordinary shares used in calculating the percentage for each listed person includes any options exercisable by such person within 60 days after March 31, 2019. Percentage of beneficial ownership is based on 55,477,521 shares outstanding as of March 31, 2019, including, solely for purposes of calculating Mr. Karan A. Chanana’s beneficial ownership and the beneficial ownership of all directors and officers as a group, : (i) 7,005,434 Ordinary Shares issuable pursuant to an exchange agreement under which Mr. Karan A. Chanana has the right, subject to the terms of the exchange agreement, to exchange all or a portion of his equity shares in Amira India for our Ordinary Shares and assumes the completion of Mr. Chanana’s purchase of 1,500,000 equity shares of Amira India, (ii )an aggregate of 1,841,082 vested stock options to purchase Ordinary Shares granted to Mr. Chanana pursuant to our 2012 Plan, (iii) 100,000 shares granted on October 17, 2014 pursuant to the OSI, (iv) 100,000 shares granted on March 31, 2016 pursuant to the OSI, (v) 100,000 shares granted on October 21, 2017 pursuant to the OSI (vi) 416,666 Ordinary Shares granted to Mr. Chanana on September 12, 2016 in satisfaction of $3,000,000 of interest free loans,(vii) 3,705,663 shares held by Xeaton 5 Trust (viii) 3,000,000 shares issuable upon conversion of obligations granted on March 25, 2019. Mr. Karan A. Chanana’s business address is 29E, A.U. Tower, Jumeirah Lake Towers Dubai, UAE.

      

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| **Name and Title of Beneficial Owner**                           |   | **Beneficial Ownership of Ordinary Shares** |       |   | **Percentage of Class** |   |
|------------------------------------------------------------------|--------|---------------------------------------------|------------|--------|-------------------------|--------|
|                                                             |   |                                        |       |   |                    |   |
| Karan A. Chanana, Chairman *(2)*                                 |   |                                        | 33,853,426 | *(1)*  |                    |   | 61 | % |
| Brian Speck, Chief Financial Officer beginning June 30, 2019     |   |                                        | -          |   |                    |   | - |   |
| Varun Sethi, Chief Financial Officer through June 30, 2019       |   |                                        |       |   |                    |   |   |   |
| Robert Wagman, Former Director (not re-elected February 25,2019) |   |                                        | -          |   |                    |   | *-* |   |
| Neal Cravens, Former Director (retired October 16, 2018) *(3)*   |   |                                        | 21,384     |   |                    |        | *** |   |
| Harash Pal Sethi, Director *(4)*                                 |   |                                        | 190,625    |   |                    |        | *** |   |
| Nathalie Dauraic, Former Director (resigned May 17, 2018)        |   |                                        | -          |   |                    |   | *-* |   |
| Herve Larren, Director                                           |   |                                        |       |   |                    |   |   |   |
| Mohit Malik, Director                                            |   |                                        |       |   |                    |   |   |   |
| **All directors and officers as a group**                        |   |                                        | 34,065,435 |   |                    |   |   |   |

 

**Denotes less than 1%.*

*(1)**The amount reflected includes: (i) 7,005,434 Ordinary Shares issuable pursuant to an exchange agreement under which Mr. Karan A. Chanana has the right, subject to the terms of the exchange agreement, to exchange all or a portion of his equity shares in Amira India for our Ordinary Shares and assumes the completion of Mr. Chanana’s purchase of 1,500,000 equity shares of Amira India, (ii)an aggregate of 1,841,082 vested stock options to purchase Ordinary Shares granted to Mr. Chanana pursuant to our 2012 Plan, (iii) 100,000 shares granted on October 17, 2014 pursuant to the OSI, (iv) 100,000 shares granted on March 31, 2016 pursuant to the OSI, (v) 100,000 shares granted on October 21, 2017 pursuant to the OSI (vi) 416,666 Ordinary Shares granted to Mr. Chanana on September 12, 2016 in satisfaction of $3,000,000 of interest free loans,* (*vii) 3,705,663 shares held by Xeaton 5 Trust (viii) 3,000,000 shares issuable upon conversion of obligations granted on March 25, 2019. Mr. Karan A. Chanana’s business address is 29E, A.U. Tower, Jumeirah Lake Towers Dubai, UAE*

*   *

*(2)**Mr. Harash Pal Sethi’s business address is Alliance House, 29-30 High Holborn, London WC1V 6AZ*

  

**B. Related Party Transactions**

   

**Related Parties**

      

Mr. Karan A. Chanana and his affiliates are our principal shareholders and as of the date hereof, Mr. Chanana held majority effective interest including (i) 7,005,434 Ordinary Shares issuable pursuant to an exchange agreement under which Mr. Karan A. Chanana has the right, subject to the terms of the exchange agreement, to exchange all or a portion of his equity shares in Amira India for our Ordinary Shares and assumes the completion of Mr. Chanana’s purchase of 1,500,000 equity shares of Amira India, (ii )an aggregate of 1,841,082 vested stock options to purchase Ordinary Shares granted to Mr. Chanana pursuant to our 2012 Plan, (iii) 100,000 shares granted on October 17, 2014 pursuant to the OSI, (iv) 100,000 shares granted on March 31, 2016 pursuant to the OSI, (v) 100,000 shares granted on October 21, 2017 pursuant to the OSI (vi) 416,666 Ordinary Shares granted to Mr. Chanana on September 12, 2016 in satisfaction of $3,000,000 of interest free loans,(vii) 3,705,663 shares held by Xeaton 5 Trust (viii) 3,000,000 shares issuable upon conversion of obligations granted on March 25, 2019. 

       

The Amira Group’s related parties include transactions with key management personnel (“KMP”) and enterprises over which KMP are able to exercise control/significant influence. All of our directors (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.

   

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4.1 Transactions with KMP

 

|                                                      |   | Fiscal year ended |    |
|-----------------------------------------------------------|--------|-------------------|---------|
| Transactions during the fiscal year                       |   | March 31, 2019    |    |
| Short term employee benefits (including salary and bonus) |   | $                 | NIL     |   |
| Share-based compensation:                                 |   |              |    |   |
| - expense recognized on share options granted (others)    |   |              |    |   |
| - expense recognized on share awards granted (others)     |   |              | 59,671  |   |
| Rent expense                                              |   |              |    |   |
| Debt received from Related Parties                        |   |              |    |   |
| Debt repaid to Related Parties                            |   |              |    |   |
| Interest expense on loan from Related Parties             |   |              | 318,731 |   |

  

| Outstanding Balances                               |   |   |    |
|----------------------------------------------------|--------|--------|---------|
| Salary and bonus payable - to Mr. Karan A. Chanana |   | $      | -       |   |
| Salary and bonus payable – to others         |   |   | 747,518 |   |
| Advance payable                                    |   |   |    |   |
| Loan and interest payable                          |   |   |    |   |
| Rent payable to Mr. Karan A. Chanana               |   | NIL    |    |

 

All of the above payables are short term and carry no collateral.

 

4.2 Guarantee given by KMP

 

Mr. Karan A. Chanana, RYCE’s Chairman 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 $212,945,517 and $ 214,143,128 as at September 30 2018 March 31, 2019 respectively, respectively. RYCE 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.

 

3. Shares granted to Varun Sethi

 

Mr. Varun Sethi’s employment with us was terminated effective June 30, 2019. In connection with his termination, Mr. Sethi was paid his base salary through June 30, 2019 and was issued an aggregate of 528,243 ordinary shares. Mr. Sethi has agreed that he will not sell, transfer or assign the shares for a period of six (6) months from March 8, 2019 (or, until September 8, 2019) without the prior consent of the Company. The Company and Mr. Sethi have agreed that if the value of the Shares on September 8, 2019 is more or less than $559,937, shares will be returned by Mr. Sethi, or the Company will issue additional cash or shares to Mr. Sethi, in each case in an amount equal to the difference between the value of the shares on such date and $559,937.

  

**Our Related-Party Transaction Policies**

 

Our code of ethics requires us to avoid, wherever possible, all related-party transactions that could result in actual or potential conflicts of interest, except under guidelines approved by our board of directors (or our Audit Committee). SEC rules generally define related-party transactions as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our common stock, or (c) immediate family member of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

 

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Our Audit Committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. Our Audit Committee considers all relevant factors when determining whether to approve a related-party transaction, including whether the related-party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related-party’s interest in the transaction. No director may participate in the approval of any transaction in which he or she is a related-party, but that director is required to provide our Audit Committee with all material information concerning the transaction. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire annually that elicits information about related-party transactions. These procedures are intended to determine whether any such related-party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee, or officer.

 

We have conducted all our related-party transactions on normal commercial terms that are fair and reasonable and in the interests of our shareholders as a whole. We believe that the terms of our related-party transactions are comparable to the terms we could obtain from independent third parties. 

** **

**C. Interests of Experts and Counsel **

 

Not applicable. 

 

**ITEM 7. FINANCIAL INFORMATION**

 

**A. Consolidated Statements and Other Financial Information **

 

See Item 3.D (risk factor on dividend distribution), Item 4, Item 10. F and Item 18,

 

**B. Significant Changes**

  

None.

  

**ITEM 8. THE OFFER AND LISTING**

 

**A. Offer and Listing Details **

 

Amira’s ordinary shares are listed on the NYSE under the symbol “RYCE”.

 

**B. Plan of Distribution**

  

Not Applicable.

 

**C. Markets**

  

See Item 9.A.

 

**D. Selling shareholders**

   

Not Applicable.

  

**E. Dilution Expenses of the Issue **

 

Not Applicable.

  

**F. Expenses of the Issue**

  

Not Applicable

 

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**ITEM 9. ADDITIONAL INFORMATION**

 

**A. Share Capital**

  

Not Applicable.

 

**B. Memorandum and Articles of Association**

  

***Registered Office-***Our registered office is 171 Main Street, PO Box 92, Road Town, Tortola VG 1110, British Virgin Islands.

 

***Objects and Purposes, Register, and Shareholders-***Our objects and purposes are unlimited. Our register of shareholders is maintained by our transfer agent, Continental Stock & Trust Company. Under the BVI Business Companies Act, 2004 (as amended), or the BVI Act, a BVI company may treat the registered holder of a share as the only person entitled to (a) exercise any voting rights attaching to the share, (b) receive notices, (c) receive a distribution in respect of the share and (d) exercise other rights and powers attaching to the share. Consequently, as a matter of BVI law, where a shareholder’s shares are registered in the name of a nominee such as Cede & Co, the nominee is entitled to receive notices, receive distributions and exercise rights in respect of any such ordinary shares registered in its name. The beneficial owners of the ordinary shares registered in a nominee’s name are therefore reliant on their contractual arrangements with the nominee in order to receive notices and dividends and ensure the nominee exercises voting rights in respect of the ordinary shares in accordance with their directions.

 

***Directors’ Powers-***under the BVI Act, subject to any limitations in a company’s memorandum and articles of association, a company’s business and affairs are managed by, or under the supervision of, its directors, and directors generally have all powers necessary to manage a company. A director must disclose any interest he has on any proposal, arrangement or contract not entered into in the ordinary course of business and on usual terms and conditions. An interested director may vote on a transaction in which he has an interest. The directors may cause us to borrow money or mortgage or charge our property or uncalled capital, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of us or any third party.

 

***Rights, Preferences and Restrictions of Ordinary Shares-***Subject to certain restrictions, our directors may authorize dividends at such time and in such amount as they determine. Each ordinary share is entitled to one vote. There are no cumulative voting rights. In the event of a liquidation or winding up of the company, our shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the ordinary shares. There are no sinking fund provisions applicable to our ordinary shares. Holders of our ordinary shares have no pre-emptive rights. Subject to the provisions of the BVI Act, we may repurchase our ordinary shares in certain circumstances.

 

***Rights Preferences and Restrictions of Preferred Shares-***Our memorandum and articles of association authorizes our Board of Directors to create and to issue up to five classes of preferred shares without shareholder approval with such designation, rights and preferences as may be determined by our Board of Directors. We have five classes of preferred shares to give us flexibility as to the terms on which each class is issued since, under BVI law, all shares of a single class must be issued with the same rights and obligations. Our Board of Directors is empowered, without shareholder approval, to issue such preferred shares with dividend, liquidation, redemption, voting or other rights which could harm the voting power or other rights of the holders of ordinary shares or another class of preferred shares. Although we do not currently intend to issue any preferred shares, we may do so in the future.

 

***Variation of the Rights of Shareholders-***As permitted by the BVI Act and our memorandum of association, we may vary the rights attached to any class of shares only with the consent of not less than a majority of the votes of shareholders of that class who being so entitled attend and vote at the meeting of that class, except where a greater majority is required under our memorandum and articles of association or the BVI Act. A greater majority is required in relation to a scheme of arrangement and may be required in relation to a plan of arrangement. For these purposes, the creation, designation or issuance of preferred shares with rights and privileges ranking equal to or in priority to an existing class of ordinary or preferred shares is deemed not to be a variation of the rights of such existing class and may be effected by resolution of directors without shareholder approval.

 

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***Shareholder Meetings-***Our directors may call a meeting of shareholders whenever they see fit. Our shareholders may requisition our directors to hold a meeting upon the written request of shareholders entitled to exercise at least 30% of the voting rights. Under BVI law, the memorandum and articles of association may be amended to decrease but not increase the required percentage to call a meeting above 30%. At least ten days’ and not more than 120 days’ notice of such meeting is required. A meeting of shareholders held in contravention of this notice requirement is valid if shareholders holding not less than a 90% majority of the total number of ordinary shares entitled to vote on all matters to be considered at the meeting have waived notice of the meeting and for this purpose presence at the meeting is deemed to constitute a waiver. A majority of the shares entitled to vote at the meeting, present in person or by proxy, forms a quorum.

 

Our memorandum and articles of association establish advance notice procedures with respect to shareholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the Board of Directors or a committee of the Board of Directors. However, our memorandum and articles of association may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. Any proposed business other than the nomination of persons for election to our Board of Directors must constitute a proper matter for stockholder action pursuant to the notice of meeting delivered to us. For notice to be timely, it must be received by our secretary not later than 90 nor earlier than 120 calendar days prior to the first anniversary of the previous year’s annual meeting (or if the date of the annual meeting is advanced more than 30 calendar days or delayed by more than 60 calendar days from such anniversary date, not later than 90 nor earlier than 120 calendar days prior to such meeting or the 10th calendar day after public disclosure of the date of such meeting is first made). These provisions may also discourage or deter a potential acquirer from conducting a solicitation of votes from other shareholders to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

 

Our Amended and Restated Memorandum and Articles of Association provide that we will hold an annual shareholders’ meeting during each fiscal year, as required by the rules of the New York Stock Exchange.

 

***Dividends-***Subject to the BVI Act and our memorandum and articles of association, our directors may declare dividends at a time and amount they think fit if they are satisfied, on reasonable grounds, that, immediately after distribution of the dividend, the value of our assets will exceed our liabilities and we will be able to pay our debts as they fall due. There is no further BVI restriction on the amount of funds which may be distributed by us by dividend, including all amounts paid by way of the subscription price for shares regardless of whether such amounts may be wholly or partially treated as share capital or share premium under certain accounting principles. Shareholder approval is not required to pay dividends under BVI law. No dividend shall carry interest against us.

 

***Rights of Non-Resident or Foreign Shareholders and Disclosure of Substantial Shareholdings-***There are no limitations imposed by our memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

 

***Untraceable Shareholders-***Under our memorandum and articles of association, we are entitled to sell any shares of a shareholder who is untraceable, as long as: (a) all checks, not being less than three in total number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (b) we have not during that time or before the expiry of the three-month period referred to in (c) below received any indication of the existence of the shareholder or person entitled to such shares by death, bankruptcy or operation of law; and (c) upon expiration of the 12-year period, we have caused an advertisement to be published in newspapers, giving notice of our intention to sell these shares, and a period of three months or such shorter period has elapsed since the date of such advertisement. The net proceeds of any such sale shall belong to us, and when we receive these net proceeds we shall become indebted to the former shareholder for an amount equal to such net proceeds.

 

***Transfer of Shares-***Subject to any applicable restrictions set forth in our memorandum and articles of association, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form or in any other form which our directors may approve. Our memorandum and articles of association also state that shares may be transferred by means of a system utilized for the purposes of holding and transferring ordinary shares, or a “Relevant System,” and that the operator of the Relevant System (and any other person necessary to ensure the Relevant System is effective to transfer Shares) shall act as agent of the Shareholders for the purposes of the transfer of any Shares transferred by means of the Relevant System.

 

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***Anti-takeover Provisions-***Some provisions of our memorandum and articles of association may discourage, delay or prevent a change in control of our company or management that shareholders may consider favorable, including but not limited to provisions that:

 

|   | · | authorize our Board of Directors without shareholder approval to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares by amending the memorandum and articles of association; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                        |
|   | · | require advance notice requirements from shareholders nominating directors for election at a shareholder meeting;                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                        |
|   | · | prohibit shareholders from acting by written consent;                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                        |
|   | · | prohibit shareholders from cumulating votes in the election of directors; and                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                        |
|   | · | enable directors to be removed by shareholders only for cause.                                                                                                                                                                                                              |

 

Additional information required by Item 10.B of Form 20-F is included in the section titled “Description of Share Capital— Summary of Certain Significant Provisions of BVI Law” and “Description of Share Capital —Material Differences in BVI Law and our Amended and Restated Memorandum and Articles of Association and Delaware Law” in our Registration Statement on Form F-1 initially filed with the SEC on August 29, 2012 (File No.: 333-183612), as amended, which section is incorporated herein by reference.

 

**C. Material Contracts**

  

All material contracts governing the business of the Company and entered into in the last two years, other than contracts entered into in the ordinary course of business, are described elsewhere in this Annual Report or in the information incorporated by reference herein.

 

**D. Exchange controls **

 

Under BVI law, there are currently no withholding taxes or exchange control regulations in the BVI applicable to the company or its security holders.

 

**E. Taxation **

 

*****General*****

 

The following summary of the material BVI, Indian and U.S. federal income tax consequences of the acquisition, ownership and disposition of our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this Annual Report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws. As used in this summary, references to “the company,” “we,” “us” and “us” refer to RYCE.

 

**BVI Taxation**

 

The BVI government does not, under existing legislation, impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax upon the company or its shareholders (who are not tax residents in the BVI).

 

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Shareholders who are not tax residents in the BVI will not be subject to any income, withholding or capital gains taxes in the BVI, with respect to dividends paid on, or transfers of shares in the Company, nor will they be subject to any estate or inheritance taxes in the BVI.

 

No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable in the BVI by persons who are not a tax resident in the BVI with respect to any shares, debt obligations or other securities of the Company.

 

Subject to the payment of stamp duty on any acquisition of real property in the BVI by us (and in respect of certain transactions in respect of the shares, debt obligations or other securities of incorporated companies owning real property in the BVI), all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from the payment of stamp duty in the BVI.

 

There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company or its security holders.

 

There is no income tax treaty or convention currently in effect between the United States and the BVI, although a Tax Information Exchange Agreement is in force.

 

On 30 June 2014, the government of the BVI signed a Model 1B Intergovernmental Agreement (“**IGA**”) with the United States to implement the US Foreign Account Tax Compliance Act (“**FATCA**”), providing for automatic provision of information in relation to tax matters. Under the Model IB IGA regime, financial institutions located in the BVI are required to report information regarding certain U.S. reportable accounts to the BVI Government, which in turn will report that information to the United States Internal Revenue Services

 

**Indian Taxation**

 

The following are the material Indian tax consequences relating to the acquisition, ownership and disposition of our ordinary shares.

 

The discussion contained herein is based on the applicable tax laws of India as in effect on the date hereof and is subject to possible changes in Indian law that may come into effect after such date. The information set forth below is intended to be a general discussion only. Prospective investors should consult their own tax advisers as to the consequences of purchasing our ordinary shares, including, without limitation, the consequences of the receipt of dividends paid on our ordinary shares and the sale, transfer or other disposition of our ordinary shares.

 

Because RYCE is considered for Indian income tax purposes as a company domiciled abroad, any dividend income in respect of its ordinary shares will not be subject to any withholding or deduction in respect of Indian income tax laws. However, Amira India would be required to pay dividend distribution tax in India at an effective rate of 20.36% (including applicable cess and surcharge) on the total amount distributed as dividend, grossed up by the amount of such dividend distribution tax.

 

Pursuant to recent amendments to the Indian Income Tax Act, 1961, as amended, income arising directly or indirectly through the sale of a capital asset, including any share or interest in a company or entity registered or incorporated outside India, will be liable to tax in India, if such share or interest derives, directly or indirectly, its value substantially from assets (whether tangible or intangible) located in India and whether or not the seller of such share or interest has a residence, place of business, business connection, or any other presence in India. The share or interest of a company or entity registered or incorporated outside of India is deemed to derive its value substantially from the assets located in India if the value of such Indian assets exceeds INR 100 million and represents at least 50% of the value of all the assets owned by the company or entity registered or incorporated outside of India.

 

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However, if the transferor of shares or interests in a company or entity registered or incorporated outside of India (along with its associated enterprises), does not hold the right of management or control of such company or entity and does not hold more than 5% of the total voting power or total share capital or interest in such company or entity, at any time during the twelve months preceding the date of transfer, such transferor is exempt from the indirect transfer provisions mentioned above. The amendments do not address the interplay between the amendments to the Indian Income Tax Act, 1961, as amended, and the existing Double Taxation Avoidance Agreements, or DTAAs, that India has entered into with countries such as the United States, United Kingdom and Canada, in case of an indirect transfer. Accordingly, the implications of the recent amendments are presently unclear. If it is determined that these amendments apply to a holder of RYCE ordinary shares with respect to income arising from the sale of the ordinary shares, such holder could be liable to pay tax in India on such income.

 

**U.S. Federal Income Taxation**

 

**General**

  

The following summary sets forth the material U.S. federal income tax consequences of the ownership and disposition of our ordinary shares by U.S. Holders as described below. 

 

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations promulgated thereunder, published rulings and court decisions, all as currently in effect. These authorities are subject to differing interpretations and may change, possibly on a retroactive basis.

 

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular U.S. Holder based on such U.S. Holder’s individual circumstances. In particular, this discussion considers only U.S. Holders that own and hold our ordinary shares as “capital assets” (generally, property held for investment) within the meaning of Section 1221 of the Code, and does not discuss the alternative minimum tax or the Medicare contribution tax on net investment income. In addition, this discussion does not address U.S. federal income tax consequences to U.S. Holders that are subject to special rules, including:

 

|   | · | financial institutions or financial services entities;                                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                             |
|   | · | broker-dealers;                                                                                                                                                  |
|   |   |                                                                                                                                                             |
|   | · | persons that are subject to the mark-to-market accounting rules under Section 475 of the Code;                                                                   |
|   |   |                                                                                                                                                             |
|   | · | tax-exempt entities (including private foundations);                                                                                                             |
|   |   |                                                                                                                                                             |
|   | · | governments or agencies or instrumentalities thereof;                                                                                                            |
|   |   |                                                                                                                                                             |
|   | · | insurance companies;                                                                                                                                             |
|   |   |                                                                                                                                                             |
|   | · | individual retirement accounts or other tax-deferred accounts;                                                                                                   |
|   |   |                                                                                                                                                             |
|   | · | regulated investment companies;                                                                                                                                  |
|   |   |                                                                                                                                                             |
|   | · | real estate investment trusts;                                                                                                                                   |
|   |   |                                                                                                                                                             |
|   | · | certain expatriates or former long-term residents of the United States;                                                                                          |
|   |   |                                                                                                                                                             |
|   | · | persons that directly, indirectly or constructively own 10% or more of our voting shares;                                                                        |
|   |   |                                                                                                                                                             |
|   | · | persons that acquired our ordinary shares pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation; |
|   |   |                                                                                                                                                             |
|   | · | persons that hold our ordinary shares as part of a straddle, constructive sale, hedging, conversion or other integrated transaction; or                          |
|   |   |                                                                                                                                                             |
|   | · | persons whose functional currency is not the U.S. dollar;                                                                                                        |

   

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This discussion does not address any aspect of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws, or, except as discussed herein, any tax reporting obligations applicable to a U.S. Holder of our ordinary shares. Additionally, this discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our ordinary shares through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our ordinary shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships that hold our ordinary shares and their partners should consult their tax advisors. 

 

For purpose of this discussion a “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of our ordinary shares and is:

 

|   | · | an individual who is a citizen or resident of the United States;                                                                                                                                                                                                                                                       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                   |
|   | · | a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                   |
|   | · | an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                   |
|   | · | a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |

  

We have not sought, and will not seek, a ruling from the Internal Revenue Service (the “IRS”) as to any U.S. federal income tax consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court. Moreover, future legislation, regulations, administrative rulings or court decisions may affect the accuracy of the statements in this discussion.

 

**THIS DISCUSSION IS ONLY A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES. IT IS NOT TAX ADVICE. EACH INVESTOR IN OUR ORDINARY SHARES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.**

 

This discussion assumes that we are not, and will not become, a passive foreign investment company (“PFIC”) as described below. 

 

**U.S. Holders**

 

***Taxation of Cash Distributions Paid on Ordinary Shares***

*** ***

A U.S. Holder generally will be required to include in gross income as ordinary income the amount of any cash dividend paid on our ordinary shares to the extent the distribution is paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividend will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations. The portion of such cash distribution, if any, in excess of such earnings and profits will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in its ordinary shares. Any remaining excess will be treated as gain from the sale or other taxable disposition of such ordinary shares. Because we do not maintain calculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any dividend paid in foreign currency will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. U.S. Holders may be required to recognize foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt.

 

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With respect to non-corporate U.S. Holders, such dividends may be subject to U.S. federal income tax at the lower rates applicable to long-term capital gains (see “—Taxation on the Sale or Other Taxable Disposition of Ordinary Shares” below) provided that (1) our ordinary shares are readily tradable on an established securities market in the United States, (2) we are not a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (3) certain holding period and other requirements are met. Under published IRS authority, shares are considered for purposes of clause (1) above to be readily tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently include the New York Stock Exchange. Although our ordinary shares are currently listed and traded on the New York Stock Exchange, we cannot guarantee that such shares will continue to be listed and traded on the New York Stock Exchange. U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any cash dividends paid with respect to our ordinary shares. 

 

***Taxation on the Sale or Other Taxable Disposition of Ordinary Shares***

 

Upon a sale or other taxable disposition of our ordinary shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized upon the sale or other taxable disposition and the U.S. Holder’s adjusted tax basis in the ordinary shares, in each case as determined in U.S. dollars

 

Long- Term capital gains recognized by non-corporate U.S. Holders generally are subject to U.S. federal income tax at preferential rates. Capital gain or loss will constitute long- term capital gain or loss if the U.S. Holder’s holding period for the ordinary shares exceeds one year. The deductibility of capital losses is subject to various limitations.

 

Any gain or loss will generally be U.S. source for purposes of computing a U.S. Holder’s foreign tax credit limitation. As described in “—Indian Taxation” above, U.S. Holders may be subject to Indian tax on the disposition of our ordinary shares. U.S. Holders entitled to the benefits of the Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “U.S.-India Tax Treaty”), may be able to elect to treat disposition gain that is subject to Indian taxation, if any, as foreign-source gain for foreign tax credit purposes. U.S. Holders should consult their tax advisers as to whether they would be able to credit any such Indian tax against their U.S. federal income tax liabilities in their particular circumstances.

 

***Passive Foreign Investment Company Rules***

 

In general, a foreign corporation is a PFIC for any taxable year if: (i) 75% or more of its gross income consists of passive income (such as dividends, interest, rents and royalties) or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income.

 

We believe that we were not a PFIC for U.S. federal income tax purposes for our tax year ending March 31, 2016. However, because PFIC status depends on the composition of a company’s income and assets and the market value of its assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year.

 

In general, if we were a PFIC for any taxable year during which a U.S. Holder held our ordinary shares, gain recognized by a U.S. Holder on a sale or other disposition (including certain pledges) of the ordinary shares would be allocated ratably over the U.S. Holder’s holding period for the ordinary shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the tax on such amount. Further, to the extent that any distribution received by a U.S. Holder on its ordinary shares exceeds 125% of the average of the annual distributions on the ordinary shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain, described immediately above. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ordinary shares. U.S. Holders should consult their tax advisers to determine whether any of these elections would be available and, if so, what the consequences of the alternative treatments would be in their particular circumstances.

 

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**Backup Withholding and Information Reporting**

 

In general, information reporting requirements apply to cash distributions to and the proceeds from sales and other dispositions of our ordinary shares by, a U.S. Holder (other than an exempt recipient) that are paid within the United States or through a U.S. office of a broker. Payments made (and sales and other dispositions effected at an office) outside the United States may be subject to information reporting in limited circumstances. In addition, certain information concerning a U.S. Holder’s adjusted tax basis in its ordinary shares and adjustments to that tax basis and whether any gain or loss with respect to such ordinary shares is long-term or short-term also may be required to be reported to the IRS, and certain Holders may be required to file an IRS Form 8938 (Statement of Specified Foreign Financial Assets) to report their interest in our ordinary shares or non-U.S. accounts through which they may be held.

 

Moreover, backup withholding of U.S. federal income tax at a rate of 28%, may apply to dividends paid on our ordinary shares to a U.S. Holder (other than an exempt recipient) and the proceeds from sales and other dispositions of our ordinary shares by a U.S. Holder (other than an exempt recipient), in each case who (a) fails to provide an accurate taxpayer identification number; (b) is notified by the IRS that backup withholding is required; or (c) in certain circumstances, fails to comply with applicable certification requirements.

 

Backup withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided that certain required information is timely furnished to the IRS. U.S. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedures for obtaining an exemption from backup withholding in their particular circumstances.

 

**F. Dividends and paying agents **

  

Not applicable.

  

**G. Statement by experts**

  

Not applicable.

 

**H. Documents on display **

 

Documents concerning us that are referred to in this document may be inspected at 29E, A.U. Tower Jumeirah Lake Towers Dubai, United Arab Emirates, or the UAE.

 

In addition, we file annual reports and other information with the Securities and Exchange Commission. We file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders are exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. In addition, the Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be accessed at http://www.sec.gov.

  

**I. Subsidiary Information **

 

For more information on our subsidiaries, please see “Item 4. Information on the Company – Our Organizational Structure.”

   

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK **

 

Information relating to “Quantitative and qualitative disclosure about market risk” has been described in detail under the heading “Item 18. Financial Statements – Note 38”.

  

**ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES **

 

Not applicable.

 

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**PART II.**

 

**ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES **

 

Please refer section on “Risk Factors”.

  

**ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS **

 

**A. – D. Material Modifications to the Rights of Security Holders.**

 

Not applicable.

 

**E. Use of Proceeds.**

 

Not applicable.

  

**ITEM 15. CONTROLS AND PROCEDURES **

 

*Evaluation of Disclosure Controls and Procedures*

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report, as required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our management has concluded that, as of March 31, 2019, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

*Management’s Annual Report on Internal Control over Financial Reporting*

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board and applicable to the Company for the reporting period, and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with IFRS, and that receipts and expenditures of our Company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our Company’s assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

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Our management conducted an evaluation of the effectiveness of our Company’s internal control over financial reporting as of March 31, 2019. Based on criteria established by the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2019.

 

This Annual Report includes an attestation report of our Company’s Registered Public Accounting firm, as the Company is no more an emerging growth company under JOBS Act and is required to include an attestation report.

 

*Changes in Internal Control over Financial Reporting*

 

During the period covered by this Annual Report, there were no changes in our internal control over financial reporting, which were identified in connection with management’s evaluation required by Rule 13(a)-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

  

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

  

Our Board of Directors determined that Mr. Neal Cravens and Mr. Mohit Malik are “audit committee financial experts” as defined in Item 16A(b) of Form 20-F by the Securities and Exchange Commission’s rules and “independent” as that term is defined in the New York Stock Exchange listing standards. Mr. Cravens retired from our Board on October 16, 2018 and was replaced by Mr. Mohit Malik on the Board and on the Audit Committee. 

  

**ITEM 16B. CODE OF ETHICS **

 

On August 22, 2012, we adopted a Code of Conduct for all employees and a Code of Ethics that applies to our principal executive officer, our principal financial and accounting officer and our other senior officers. Copies of our Code of Business Conduct and Ethics are available on the “Investor Relations” page of our corporate website www.amira.net.

**   ****  **

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

  

***Audit Fees***

 

The following table presents the aggregate fees for professional services and other services rendered by our principal accountant, ASA & Associates LLP, to us in fiscal 2019 and 2018.

 

|               |   | **Years ended March 31,** |        |
|--------------------|--------|---------------------------|-------------|
|               |   | **2019**                  |        |   | **2018** |   |
|               |   | **(Amount in $)**         |        |
| Audit fees:        |   |                      | 225,000     |   |   |   | 375,000 |   |
| Audit-Related Fees |   |                      |        |   |   |   |   |   |
| Tax Fees           |   |                      |        |   |   |   |   |   |
| All Other Fees     |   |                      |        |   |   |   | - |   |
| **Total**          |   |                      | **225,000** |   |   |   | **375,000** |   |

 

We are required to obtain pre-approval by our Audit Committee for all audit and permitted non-audit services performed by our independent auditors. In accordance with this requirement, during fiscal years 2019, 2018 and 2017, all audit, audit-related, tax and other services performed by-principal auditor were approved in advance by the Audit Committee. Any pre-approved decisions are presented to the full Audit Committee at the next scheduled meeting. 

 

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***Audit of Financial Statements.***

 

In fiscal year 2019, ASA & Associates LLP was our principal auditor and audited fiscal year 2019 and 2018, and no audit work was performed by persons outside of this firm.

 

**ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. **

  

None.

 

**ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. **

  

None.

 

**ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT. **

  

None.

  

**ITEM 16G. CORPORATE GOVERNANCE **

  

We are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act) and our ordinary shares are listed on the New York Stock Exchange. Under Section 303A of the New York Stock Exchange Listed Company Manual, New York Stock Exchange listed companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate governance provisions specified by the New York Stock Exchange, with limited exceptions. As required by the New York Stock Exchange Listed Company Manual, we note the following significant differences between our corporate governance practices and the corporate governance practices required to be followed by U.S. domestic companies under the New York Stock Exchange rules:

 

|   | · | The New York Stock Exchange Listed Company Manual requires that, subject to limited exceptions, shareholders be given the opportunity to approve equity compensation plans and material revisions to those plans. There are no BVI laws, securities regulations or rules that require shareholder approval of equity-based incentive plans or individual grants under those plans.                                                                                                                                                                                                                                                                                                                      |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | · | The New York Stock Exchange Listed Company Manual provides that NYSE-listed companies that are not otherwise exempt will need to include specified provisions in their charters regarding retaining advisers; appointing, compensating, and overseeing such advisers; considering independence factors before selecting and receiving advice from advisers; and receiving funding from the listed company to compensate such advisers. Our compensation committee charter from the date of our IPO until the elimination of our compensation committee on May 4, 2018, followed home country practices which do not provide for any of the above-mentioned compensation committee charter requirements. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | · | The Company eliminated its compensation committee effective May 4, 2018. As a Foreign Private Issuer as defined by Securities Exchange Act Rule 3b-4(c), under the rules of the New York Stock Exchange, we are not required to have a compensation committee and as such, we have elected to follow home country governance practices.                                                                                                                                                                                                                                                                                                                                                                 |

   

**ITEM 16H. MINE SAFETY DISCLOSURE**

  

Not applicable.

 

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**PART III.**

   

**ITEM 17. FINANCIAL STATEMENTS**

  

We have elected to provide financial statements pursuant to Item 18.

    

**ITEM 18. FINANCIAL STATEMENTS**

   

The financial statements are filed as part of this Annual Report beginning on page F-1. 

 

**ITEM 19. EXHIBITS**

   

| **Exhibit No.** |   | **Description**                                                                                                                                                              |
|-----------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1             |   | Memorandum and Articles of Association of Amira Nature Foods Ltd*(1)*                                                                                                        |
| 1.2             |   | Certificate of Name Change*(1)*                                                                                                                                              |
| 1.3             |   | Amended and Restated Memorandum and Articles of Association of Amira Nature Foods Ltd*(1)*                                                                                   |
| 4.1             |   | Underwriting Agreement*(1)*                                                                                                                                                  |
| 4.2             |   | Share Exchange Agreement*(1)*                                                                                                                                                |
| 4.3             |   | Employment Agreement, dated May 13, 2011, between Amira Foods (India) Limited and Mr. Protik Guha, as amended on October 18, 2011*(1)*                                       |
| 4.5             |   | Employment Agreement, dated May 2, 2012, between Amira and Mr. Karan A. Chanana*(1)*                                                                                    |
| 4.6             |   | Service Agreement, dated June 14, 2012, between Amira Nature Foods Ltd and Mr. Karan A. Chanana*(1)*                                                                         |
| 4.8             |   | Offer Letter, dated March 28, 2012, between Amira Nature Foods Ltd and Mr. Neal Cravens*(1)*                                                                                 |
| 4.9             |   | Offer Letter, dated March 29, 2012, between Amira Nature Foods Ltd and Mr. Bimal Kishore Raizada*(1)*                                                                        |
| 4.10            |   | Lease Deed, dated November 24, 2011, between Amira Pure Foods Private Limited and Mr. Karan Chanana*(1)*                                                                     |
| 4.11            |   | Lease Deed, dated November 24, 2011, between Amira Pure Foods Private Limited and Mr. Anil Chanana*(1)*                                                                      |
| 4.12            |   | Working Capital Consortium Agreement, dated August 16, 2010, by and among Amira Pure Foods Private Limited and certain lenders*(1)*                                          |
| 4.13            |   | First Supplement to the Working Capital Consortium Agreement, dated June 15, 2012, by and among Amira Pure Foods Private Limited and certain lenders*(1)*                    |
| 4.14            |   | Personal Guarantee, dated June 15, 2012, issued by Mr. Karan A. Chanana in favor of Canara Bank*(1)*                                                                         |
| 4.15            |   | Personal Guarantee, dated June 15, 2012, issued by Ms. Anita Daing in favor of Canara Bank*(1)*                                                                              |
| 4.16            |   | Subscription Agreement*(1)*                                                                                                                                                  |
| 4.17            |   | Form of Indemnification Agreement*(1)*                                                                                                                                       |
| 4.18            |   | Personal Guarantee issued by Mr. Karan A. Chanana in favor of ICICI Bank Limited*(1)*                                                                                        |
| 4.19            |   | Personal Guarantee issued by Ms. Anita Daing in favor of ICICI Bank Limited*(1)*                                                                                             |
| 4.20            |   | Personal Guarantee, dated July 7, 2010, issued by Mr. Karan A. Chanana and Ms. Anita Daing in favor of Bank of Baroda*(1)*                                                   |
| 4.21            |   | Loan Agreement, dated April 1, 2010, between Mr. Karan A. Chanana and Amira Pure Foods Private Limited*(1)*                                                                  |
| 4.22            |   | Loan Agreement, dated April 1, 2011, between Mr. Karan A. Chanana and Amira Pure Foods Private Limited*(1)*                                                                  |
| 4.23            |   | Loan Agreement, dated April 24, 2012, between Mr. Karan A. Chanana and Amira Pure Foods Private Limited*(1)*                                                                 |
| 4.24            |   | 2012 Omnibus Securities and Incentive Plan*(1)*                                                                                                                              |
| 4.25            |   | Joint Deed of Hypothecation, dated August 16, 2010, by and among Amira Pure Foods Private Limited and certain lenders*(1)*                                                   |
| 4.26            |   | Employment Agreement, dated May 12, 2014, between Mr. Bruce C. Wacha and Amira Nature Foods Ltd.**                                                                           |
| 8.1             |   | Subsidiaries of the Registrant###                                                                                                                                            |
| 11.1            |   | Code of Conduct*(1)*                                                                                                                                                         |
| 11.2            |   | Code of Ethics for Executive Officers, Senior Officers and Managers*(1)*                                                                                                     |
| 12.1            |   | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended###                                                        |
| 12.2            |   | Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended###                          |
| 13.1            |   | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002### |
| 15.1            |   | Consent of ASA & Associates LLP for inclusion of their Audit Report for fiscal year 2018 in the Annual Report on Form 20-F###                                            |
| 15.4            |   | Addendum to the Service Agreement, dated November 10, 2013, between Amira Nature Foods Ltd and Mr. Karan A. Chanana *                                                        |
| 15.5            |   | Loan Agreement dated April 13, 2013, between Mr. Karan A Chanana and Amira Pure Foods Private Limited **                                                                     |
| 15.6            |   | Amendment to the 2012 Omnibus Securities and Incentive Plan dated November 10, 2013 *                                                                                        |
| 15.7            |   | Amended and Restated Code of Conduct**                                                                                                                                       |
| 15.8            |   | Director Restricted Share Award Agreement dated November 10, 2013 between Neal Cravens and Amira Nature Foods Ltd**                                                          |
| 15.9            |   | Share Option Agreement dated November 10, 2013 between Karan A Chanana and Amira Nature Foods Ltd*                                                                           |
| 15.10           |   | Addendum to the Service Agreement, dated July 18, 2014, between Amira Nature Foods Ltd and Mr. Karan A. Chanana**                                                            |
| 15.11           |   | Share Option Agreement dated July 7, 2015 between Karan A Chanana and Amira Nature Foods Ltd ***                                                                             |
| 15.12           |   | Amended and restated Insider Trading policy ****                                                                                                                             |
| 15.13           |   | Loan Agreement dated April 12, 2014, between Mr. Karan A Chanana and Amira Pure Foods Private Limited ****                                                                   |
| 15.14           |   | Director Share Award Agreement dated November 24, 2014 between Neal Cravens and Amira Nature Foods Ltd****                                                                   |
| 15.15           |   | Director Share Award Agreement dated November 24, 2014 between Shiv Surinder Kumar and Amira Nature Foods Ltd****                                                            |
| 15.16           |   | Director Share Award Agreement dated October 16, 2015 between Neal Cravens and Amira Nature Foods Ltd****                                                                    |
| 15.17           |   | Director Share Award Agreement dated October 16, 2015 between Shiv Surinder Kumar and Amira Nature Foods Ltd****                                                             |
| 15.18           |   | Director Share Award Agreement dated October 16, 2015 between Harash Pal Sethi and Amira Nature Foods Ltd****                                                                |
| 15.19           |   | Director Share Award Agreement dated May 15, 2016 between Harash Pal Sethi and Amira Nature Foods Ltd#                                                                       |
| 15.20           |   | Share Option Agreement dated July 15, 2016 between Karan A Chanana and Amira Nature Foods Ltd#                                                                               |
| 15.21           |   | Share Award Agreement dated October 17, 2014, between Karan A Chanana and Amira Nature Foods Ltd#                                                                            |
| 15.22           |   | Share Award Agreement dated March 31, 2016, between Karan A Chanana and Amira Nature Foods Ltd#                                                                              |

**

 

(1)*Incorporated by reference to the Registration Statement on Form F-1, as amended, initially filed with the SEC on August 29, 2012 (File No.: 333-183612).*

  

**Incorporated by reference to the Form 6-K filed with the SEC on November 13, 2013*

 

***Incorporated by Reference to the Form 20-F filed with the SEC on 28 July, 2014*

 

**** Incorporated by Reference to the Form 6-K filed with the SEC on July 13, 2015*

 

***** Incorporated by Reference to the Form 20-F filed with the SEC on January 24, 2016*

 

#*Incorporated by Reference to the Form 20-F filed with the SEC on July 28, 2016*

 

##*Incorporated by Reference to the Form 20-F filed with the SEC on July 31, 2017*

   

###*Filed herewith*

 

|                |
|---------------------|
| 89                  |
|                     |
| *Table of Contents* |

 

****SIGNATURES****

 

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

 

|            | **AMIRA NATURE FOODS LTD** |                                                         |
|-----------------|----------------------------|--------------------------------------------------------------|
|            |                       |                                                         |
| August 18, 2020 | By:                        | */s/ Karan A. Chanana*                                       |   |
|            |                       | Name: Karan A. Chanana                                       |   |
|            |                       | Title: Chairman (Principal Executive Officer)                |   |
|            |                       |                                                         |   |
| August 18, 2020 | By:                        | */s/ Brian Speck*                                            |   |
|            |                       | Name: Brian Speck                                            |   |
|            |                       | Title: Chief Financial Officer (Principal Financial Officer) |   |

   

|                |
|---------------------|
| 90                  |
|                     |
| *Table of Contents* |

 

**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

  

| Reports of Independent Registered Public Accounting Firm                                          |   | F-2    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                              |   |   |   |
| Consolidated Statements of Financial Position as at March 31, 2019 and 2018                       |   | F-3    |   |
|                                                                                              |   |   |   |
| Consolidated Statements of Profit or Loss for the years ended March 31, 2019, 2018 and 2017       |   | F-4    |   |
|                                                                                              |   |   |   |
| Consolidated Statements of Comprehensive Income for the years ended March 31, 2019, 2018 and 2017 |   | F-5    |   |
|                                                                                              |   |   |   |
| Consolidated Statements of Changes in Equity for the years ended March 31, 2019, 2018 and 2017    |   | F-6    |   |
|                                                                                              |   |   |   |
| Consolidated Statements of Cash Flows for the years ended March 31, 2019, 2018 and 2017           |   | F-7    |   |
|                                                                                              |   |   |   |
| Notes to the Consolidated Financial Statements                                                    |   | F-8    |   |

    

|                |
|---------------------|
| F-1                 |
|                     |
| *Table of Contents* |

   

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

     

To the Shareholders and the Board of Directors of Amira Nature Foods Ltd.

 

**Opinion on the Financial Statements**

 

We have audited the accompanying consolidated statements of financial position of Amira Nature Foods Ltd and its subsidiaries (‘the Company’) as of March 31, 2019 and 2018, and the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2019 and the related notes (collectively referred to as the ‘financial statements’). 

  

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Amira Nature Foods Ltd and its subsidiaries as of March 31, 2019 and 2018, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2019, in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board.

  

**Emphasis of Matter**

 

|   | 1.     | As elaborated in Note 6.1 to the financial statements, liabilities in respect of bankers of Amira India is subject to adjustments, which will be finalised once the resolution plan is approved by NCLT, official liquidator and Committee of Creditors. Therefore, adjustments in amount due to bankers/ operational creditors (presently not ascertainable) in respect of Amira India can be accounted for only once the insolvency proceeding is over.                                                                                                                                                                                                                                                                                    |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | 2.     | As elaborated in Note 7 to the financial statements, during the year Amira India has converted the loan outstanding amounting to USD 16,394,751 in its books, from a related party, into equity shares.Later on, the aforesaid related party, has gone into litigation, disputing such conversion of loan. Currently, the matter is pending at NCLT, Delhi. The Management as well as the legal counsel of the company has opined that, there is probability of having outcome of such litigation in favour of the company. Considering the opinion of legal counsel, these financial statements has been prepared taking into account such conversion of aforesaid loan, which resulted Amira India being consolidated as associate entity. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | 3.     | As elaborated in Note 42 to the financial statements, the financial statements include management approved financial statements of Amira India (associate entity) which is under liquidation. Pending receipt of official liquidator’s approved financial statements, the management has prepared and approved the Amira India’s financial statements for consolidation purpose, by bringing down the values of assets at realizable value as mentioned in note 6.1. In the opinion of management, there will not be any material impact on financial statements of this associate, once they are approved by official liquidator.                                                                                               |

 

Our opinion is not modified with respect to above mentioned matters.

  

**Basis for opinion**

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 

          

**    **

** **

**ASA & Associates LLP**

   

We have served as the Company’s auditor since year 2015.

 

New Delhi, India

August 18, 2020

   

|                |
|---------------------|
| F-2                 |
|                     |
| *Table of Contents* |

    

| **Amira Nature Foods Ltd**                        |
|---------------------------------------------------|
|                                              |
| **Consolidated Statements of Financial Position** |

   

|                                                   |   |        | **(Amounts in USD)** |   |
|--------------------------------------------------------|--------|--------|----------------------|--------|
|                                                   |   |        | **Notes**            |   |   | **As at** |   |   | **As at** |   |
|                                                        |   |        |                      |   |   | **March 31,**

**2019** |  |  | **March 31,**

**2018** |   |
| **ASSETS**                                             |   |        |                 |   |   |   |   |   |   |   |
| **Non-current**                                        |   |        |                 |   |   |   |   |   |   |   |
| Property, plant and equipment                          |   |   | 8                    |   |   | $ | 83,572 |   |   | $ | 17,251,314 |   |
| Goodwill                                               |   |   | 9                    |   |   |   | 1,445,876 |   |   |   | 1,568,607 |   |
| Other intangible assets                                |   |   | 10                   |   |   |   | 1,040,027 |   |   |   | 1,457,704 |   |
| Other long-term financial assets                       |   |   | 11                   |   |   |   | 109,062 |   |   |   | 236,570 |   |
| **Total non-current assets**                           |   |   |                 |   |   | **$** | **2,678,537** |   |   | **$** | **20,514,195** |   |
|                                                   |   |   |                 |   |   |   |   |   |   |   |   |   |
| **Current**                                            |   |   |                 |   |   |   |   |   |   |   |   |   |
| Inventories                                            |   |   | 12                   |   |   | $ | 1,172,369 |   |   | $ | 161,278,863 |   |
| Trade receivables                                      |   |   | 13                   |   |   |   | 362,570 |   |   |   | 258,331,963 |   |
| Other financial assets                                 |   |   | 14                   |   |   |   | 1,200 |   |   |   | 3,612,232 |   |
| Prepayments                                            |   |   | 15                   |   |   |   | 196,578 |   |   |   | 65,977,255 |   |
| Current tax assets                                     |   |   |                 |   |   |   | - |   |   |   | 725,157 |   |
| Other current assets                                   |   |   | 16                   |   |   |   | 513,300 |   |   |   | 1,170,200 |   |
| Cash and cash equivalents                              |   |   | 17                   |   |   |   | 21,232,011 |   |   |   | 1,216,642 |   |
| **Total current assets**                               |   |   |                 |   |   | **$** | **23,478,028** |   |   | **$** | **492,312,312** |   |
| **Total assets**                                       |   |   |                 |   |   | **$** | **26,156,565** |   |   | **$** | **512,826,507** |   |
|                                                   |   |   |                 |   |   |   |   |   |   |   |   |   |
| **EQUITY AND LIABILITIES**                             |   |   |                 |   |   |   |   |   |   |   |   |   |
| **Equity**                                             |   |   |                 |   |   |   |   |   |   |   |   |   |
| Share capital                                          |   |   |                 |   |   | $ | 20,539 |   |   | $ | 18,256 |   |
| Share premium                                          |   |   |                 |   |   |   | 148,136,007 |   |   |   | 134,383,090 |   |
| Other reserves                                         |   |   |                 |   |   |   | (100,038,537 | ) |   |   | (7,501,501 | ) |
| Retained earnings                                      |   |   |                 |   |   |   | (58,911,829 | ) |   |   | 91,815,016 |   |
| **Equity attributable to shareholders of the Company** |   |   |                 |   |   | $ | (1,394,894 | ) |   | **$** | **218,714,861** |   |
| Equity attributable to non-controlling interest        |   |   |                 |   |   |   | (13,677,112 | ) |   |   | 22,894,015 |   |
| **Total equity**                                       |   |   |                 |   |   | **$** | **(15,072,006** | **)** |   | **$** | **241,608,876** |   |
|                                                   |   |   |                 |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                        |   |   |                 |   |   |   |   |   |   |   |   |   |
| **Non-current liabilities**                            |   |   |                 |   |   |   |   |   |   |   |   |   |
| Defined benefit obligations                            |   |   | 24                   |   |   | $ | - |   |   | $ | 286,439 |   |
| Debt                                                   |   |   | 22                   |   |   |   | 27,580,975 |   |   |   | 27,430 |   |
| Deferred tax liabilities (net)                         |   |   | 23                   |   |   |   | 291,430 |   |   |   | 801,942 |   |
| **Total non-current liabilities**                      |   |   |                 |   |   | **$** | **27,872,405** |   |   | **$** | **1,115,811** |   |
|                                                   |   |   |                 |   |   |   |   |   |   |   |   |   |
| **Current liabilities**                                |   |   |                 |   |   |   |   |   |   |   |   |   |
| Trade payables                                         |   |   | 20                   |   |   | $ | 172,862 |   |   | $ | 11,741,143 |   |
| Debt                                                   |   |   | 22                   |   |   |   | 7,499,960 |   |   |   | 250,204,044 |   |
| Current tax liabilities (net)                          |   |   |                 |   |   |   | - |   |   |   | - |   |
| Other financial liabilities                            |   |   | 21                   |   |   |   | 5,675,003 |   |   |   | 7,285,473 |   |
| Other current liabilities                              |   |   | 20                   |   |   |   | 8,341 |   |   |   | 871,160 |   |
| **Total current liabilities**                          |   |   |                 |   |   | **$** | **13,356,166** |   |   | **$** | **270,101,820** |   |
| **Total liabilities**                                  |   |   |                 |   |   | **$** | **41,228,571** |   |   | **$** | **271,217,631** |   |
| **Total equity and liabilities**                       |   |   |                 |   |   | **$** | **26,156,565** |   |   | **$** | **512,826,507** |   |

   

|                |
|---------------------|
| F-3                 |
|                     |
| *Table of Contents* |

     

| **Amira Nature Foods Ltd**                    |
|-----------------------------------------------|
|                                          |
| **Consolidated Statements of Profit or Loss** |

   

|                                                       |   |        |           |   |   | **(Amounts in USD)**    |             |
|------------------------------------------------------------|--------|--------|-----------|--------|--------|-------------------------|------------------|
|                                                       |   |        |           |   |   | **Fiscal years ended**  |             |
|                                                       |   |        | **Notes** |   |   | **March 31,**

**2019** |             |   | **March 31,**

**2018** |   |   | **March 31,**

**2017** |   |
| Revenue                                                    |   |        |      |   |   | $                       | 64,436,816       |   |   | $ | 413,901,480 |   |   | $ | 551,830,966 |   |
| Other income                                               |   |        |      |   |   |                    | 160,805          |   |   |   | 5,031,827 |   |   |   | 48,833 |   |
| Cost of materials                                          |   |        |      |   |   |                    | (49,503,316      | ) |   |   | (373,451,132 | ) |   |   | (492,189,652 | ) |
| Change in inventory of finished goods                      |   |        |      |   |   |                    | (150,295,581     | ) |   |   | (106,193,580 | ) |   |   | 35,517,661 |   |
| Employee benefit expenses                                  |   |   | 24,31     |   |   |                    | (6,516,026       | ) |   |   | (6,797,731 | ) |   |   | (8,753,175 | ) |
| Depreciation and amortization                              |   |   | 25        |   |   |                    | (767,640         | ) |   |   | (1,617,118 | ) |   |   | (1,778,968 | ) |
| Freight, forwarding and handling expenses                  |   |   |      |   |   |                    | (316,189         | ) |   |   | (2,535,261 | ) |   |   | (3,139,061 | ) |
| Other expenses                                             |   |   | 26        |   |   |                    | (196,294,883     | ) |   |   | (12,705,159 | ) |   |   | (14,905,710 | ) |
|                                                       |   |   |      |   |   | **$**                   | **(339,096,014** | **)** |   | **$** | **(84,366,674** | **)** |   | **$** | **66,630,894** |   |
| Finance costs                                              |   |   | 27        |   |   |                    | (18,238,935      | ) |   |   | (34,108,621 | ) |   |   | (29,272,826 | ) |
| Finance income                                             |   |   | 27        |   |   |                    | -                |   |   |   | 29,669 |   |   |   | 263,231 |   |
| Other gains and (losses)                                   |   |   | 28        |   |   |                    | (553,737         | ) |   |   | 4,908,564 |   |   |   | (1,512,928 | ) |
| **Profit/(loss) before tax**                               |   |   |      |   |   | **$**                   | **(357,888,686** | **)** |   | **$** | **(113,537,062** | **)** |   | **$** | **36,108,371** |   |
| Income tax expense                                         |   |   | 23        |   |   |                    | 11,706           |   |   |   | 19,941,298 |   |   |   | (4,596,968 | ) |
|                                                       |   |   |      |   |   |                    |             |   |   |   |   |   |   |   |   |   |
| **Profit/(loss) after tax for the year**                   |   |   |      |   |   | **$**                   | **(357,876,980** | **)** |   | **$** | **(93,595,764** | **)** |   | **$** | **31,511,403** |   |
| ***Profit/loss) after tax for the year attributable to:*** |   |   |      |   |   |                    |             |   |   |   |   |   |   |   |   |   |
| Shareholders of the Company                                |   |   |      |   |   |                    | **(304,911,721** | **)** |   |   | **(78,222,174** | **)** |   |   | **25,087,388** |   |
| Non-controlling interest                                   |   |   |      |   |   |                    | **(52,965,259**  | **)** |   |   | **(15,373,590** | **)** |   |   | **6,424,015** |   |
|                                                       |   |   |      |   |   |                    |             |   |   |   |   |   |   |   |   |   |
| **Earnings per share**                                     |   |   |      |   |   |                    |             |   |   |   |   |   |   |   |   |   |
| Basic earnings per share                                   |   |   | 29        |   |   | **$**                   | **(7.55**        | **)** |   | **$** | **(2.30** | **)** |   |   | **0.84** |   |
| Diluted earnings per share                                 |   |   | 29        |   |   | **$**                   | **(7.55**        | **)** |   | **$** | **(2.30** | **)** |   |   | **0.84** |   |

   

|                |
|---------------------|
| F-4                 |
|                     |
| *Table of Contents* |

     

**Amira Nature Foods Ltd**

 

**Consolidated Statements of Comprehensive Income**

    

|                                                                      |   | **(Amounts in USD)**    |             |
|---------------------------------------------------------------------------|--------|-------------------------|------------------|
|                                                                      |   | **Fiscal years ended**  |             |
|                                                                      |   | **March 31,**

**2019** |             |   | **March 31,**

**2018** |   |   | **March 31,**

**2017** |   |
| **Profit/(loss) after tax for the year**                                  |   | **$**                   | **(357,876,980** | **)** |   | **$** | **(93,595,764** | **)** |   | **$** | **31,511,403** |   |
| **Other comprehensive income**                                            |   |                    |             |   |   |   |   |   |   |   |   |   |
| ***Items that will not be reclassified subsequently to profit or loss:*** |   |                    |             |   |   |   |   |   |   |   |   |   |
| Re-measurement of defined benefit obligation:                             |   |                    |             |   |   |   |   |   |   |   |   |   |
| *Current year gain*                                                       |   | **$**                   | **-**            |   |   | $ | 79,955 |   |   | $ | 74,931 |   |
| *Income tax*                                                              |   |                    | **-**            |   |   |   | (27,671 | ) |   |   | (25,932 | ) |
|                                                                      |   | **$**                   | **-**            |   |   | **$** | **52,284** |   |   | **$** | **48,999** |   |
| ***Items that may be reclassified subsequently to profit or loss:***      |   |                    |             |   |   |   |   |   |   |   |   |   |
| Available for sale financial assets:                                      |   |                    |             |   |   |   |   |   |   |   |   |   |
| *Current year gain/(loss)*                                                |   | $                       | (43,953          | ) |   | $ | 47,400 |   |   | $ | 45,053 |   |
| *Reclassification to profit or loss*                                      |   |                    | **-**            |   |   |   | - |   |   |   | - |   |
| *Income tax*                                                              |   |                    | **-**            |   |   |   | (16,404 | ) |   |   | (15,592 | ) |
|                                                                      |   | **$**                   | **(43,953**      | **)** |   | **$** | **30,996** |   |   | **$** | **29,461** |   |
| Cash flow hedging reserve:                                                |   |                    |             |   |   |   |   |   |   |   |   |   |
| *Current year gain/(loss)*                                                |   | **$**                   | **-**            |   |   | $ | - |   |   | $ | - |   |
| *Reclassification to profit or loss*                                      |   |                    | **-**            |   |   |   | - |   |   |   | - |   |
| *Income tax*                                                              |   |                    | **-**            |   |   |   | - |   |   |   | - |   |
|                                                                      |   |                    |             |   |   |   |   |   |   |   |   |   |
| Currency translation reserve                                              |   | $                       | 87,405,140       |   |   | $ | (211,056 | ) |   | $ | 4,150,164 |   |
|                                                                      |   |                    |             |   |   |   |   |   |   |   |   |   |
| **Other comprehensive income/(loss) for the year, net of tax**            |   | **$**                   | **87,361,187**   |   |   | **$** | **(127,776** | **)** |   | **$** | **4,228,624** |   |
| **Total comprehensive income/(loss) for the year**                        |   | **$**                   | **(270,515,793** | **)** |   | **$** | **(93,723,540** | **)** |   | **$** | **35,740,027** |   |
|                                                                      |   |                    |             |   |   |   |   |   |   |   |   |   |
| Total comprehensive income/(loss) for the year attributable to:           |   |                    |             |   |   |   |   |   |   |   |   |   |
| **Shareholders of the Company**                                           |   | **$**                   | **(233,944,666** | **)** |   | **$** | **(78,445,500** | **)** |   | **$** | **28,511,641** |   |
| **Non-controlling interest**                                              |   | **$**                   | **(36,571,127**  | **)** |   | **$** | **(15,278,040** | **)** |   | **$** | **7,228,386** |   |

   

|                |
|---------------------|
| F-5                 |
|                     |
| *Table of Contents* |

    

| **Amira Nature Foods Ltd**                       |
|--------------------------------------------------|
|                                             |
| **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** |   |   | **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**                                                                  |   | **$**             | **9,301**  |   |              | **$**  | **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 18)                                                                        |   |              | **2,651**  |   |              |   | **17,673,805**  |                                 |   |   | **(17,676,456** | )  |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |
| Share-based compensation (Note 19)                                                               |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **17,762,628** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **17,762,628** |   |   |   | **-** |   |   |   | **17,762,628** |   |
| Profit after tax for the year                                                                    |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **25,087,388** |   |   |   | **25,087,388** |   |   |   | **6,424,015** |   |   |   | **31,511,403** |   |
| Other comprehensive income /(loss) for the year                                                  |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **23,857** |   |   |   | **3,360,717** |   |   |   | **-** |   |   |   | **-** |   |   |   | **39,679** |   |   |   | **3,424,253** |   |   |   | **804,371** |   |   |   | **4,228,624** |   |
| **Total comprehensive income/(loss) for the year**                                               |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **23,857** |   |   |   | **3,360,717** |   |   |   | **-** |   |   |   | **-** |   |   |   | **25,127,067** |   |   |   | **28,511,641** |   |   |   | **7,228,386** |   |   |   | **35,740,027** |   |
| **Balance as at March 31, 2017**                                                                 |   | **$**             | **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** |   |
|                                                                                             |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance as at April 1, 2017**                                                                  |   | **$**             | **11,952** |   |              | **$**  | **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 18)                                                                        |   |              | **6,304**  |   |              |   | **31,594,530**  |                                 |   |   | **(31,600,834** | ) |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   |   |   |   |   |   |   |
| Share-based compensation (Note 19)                                                               |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **32,107,995** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **32,107,995** |   |   |   | **-** |   |   |   | **32,107,995** |   |
| Reclassification of Non-controlling interest (refer MD&A- “Corporate Structure”) |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **2,569,581** |   |   |   | **2,569,581** |   |   |   | **(2,569,581** | **)** |   |   | **-** |   |
| Profit/(loss) after tax for the year                                                             |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **-** |   |   |   | **(78,222,174** | **)** |   |   | **(78,222,174** | **)** |   |   | **(15,373,590** | **)** |   |   | **(93,595,764** | **)** |
| Other comprehensive income /(loss) for the year                                                  |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   | **25,709** |   |   |   | **(292,401** | **)** |   |   | **-** |   |   |   | **-** |   |   |   | **43,364** |   |   |   | **(223,328** | **)** |   |   | **95,552** |   |   |   | **(127,776** | **)** |
| **Total comprehensive income/(loss) for the year**                                               |   |              | **-**      |   |              |   | **-**           |                                 |   |   | **-** |   |   |   | **25,709** |   |   |   | **(292,401** | **)** |   |   | **-** |   |   |   | **-** |   |   |   | **(75,609,229** | **)** |   |   | **(75,875,921** | **)** |   |   | **(17,847,619** | **)** |   |   | **(93,723,540** | **)** |
| **Balance as at March 31, 2018**                                                                 |   | **$**             | **18,256** |   |              | **$**  | **134,383,090** |                                 |   | **$** | **6,480,803** |   |   | **$** | **39,838** |   |   | **$** | **(23,421,068** | **)** |   | **$** | **-** |   |   | **$** | **9,398,927** |   |   | **$** | **91,815,015** |   |   | **$** | **218,714,861** |   |   | **$** | **22,894,015** |   |   | **$** | **241,608,876** |   |
|                                                                                             |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance as at April 1, 2018**                                                                  |   | **$**             | **18,256** |   |              | **$**  | **134,383,090** |                                 |   | **$** | **6,480,803** |   |   | **$** | **39,838** |   |   | **$** | **(23,421,068** | **)** |   | **$** | **-** |   |   | **$** | **9,398,927** |   |   | **$** | **91,815,015** |   |   | **$** | **218,714,861** |   |   | **$** | **22,894,015** |   |   | **$** | **241,608,876** |   |
| Issue of shares (Note 18)                                                                        |   |              | **2,283**  |   |              |   | **13,752,917**  |                                 |   |   | **(13,952,143** | ) |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **(196,943** | **)** |
| Share-based compensation (Note 19)                                                               |   |              |       |   |              |   |            |                                 |   |   | **14,031,854** |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **13,834,911** |   |   |   |   |   |   |   | **14,031,854** |   |
| Reclassification of Non-controlling interest (refer MD&A- “Corporate Structure”) |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **-** |   |
| Profit/(loss) after tax for the year                                                             |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | **(304,911,721** | **)** |   |   | **(304,911,721** | **)** |   |   | **(52,965,259** | **)** |   |   | **(357,876,980** | **)** |
| Other comprehensive income /(loss) for the year                                                  |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   | **(39,838** | **)** |   |   | **(83,177,983** | **)** |   |   |   |   |   |   |   |   |   |   | 154,184,877 |   |   |   | 70,967,054 |   |   |   | **16,394,132** |   |   |   | 87,361,186 |   |
| **Total comprehensive income/(loss) for the year**                                               |   |              |       |   |              |   |            |                                 |   |   |   |   |   |   | **(39,838** | **)** |   |   | **(83,177,983** | **)** |   |   |   |   |   |   |   |   |   |   | **(150,726,844** | **)** |   |   | **(233,944,666** | **)** |   |   | **(36,571,127** | **)** |   |   | **(270,515,793** | **)** |
| **Balance as at March 31, 2019**                                                                 |   | **$**             | **20,539** |   |              | **$**  | **148,136,007** |                                 |   | **$** | **6,560,514** |   |   | **$** | **-** |   |   | **$** | **(106,599,051** | **)** |   | **$** | **-** |   |   | **$** | **9,398,927** |   |   | **$** | **(58,911,829** | **)** |   | **$** | **(1,394,894** | **)** |   | **$** | **(13,677,112** | **)** |   | **$** | **(15,072,006** | **)** |

   

| *(The accompanying notes are an integral part of these consolidated financial statements)* |
|--------------------------------------------------------------------------------------------|

    

|                |
|---------------------|
| F-6                 |
|                     |
| *Table of Contents* |

   

| **Amira Nature Foods Ltd**                |
|-------------------------------------------|
|                                      |
| **Consolidated Statements of Cash Flows** |

  

|                                                                                       |   |           |      |   | **(Amounts in USD)**    |             |
|--------------------------------------------------------------------------------------------|--------|-----------|-----------|--------|-------------------------|------------------|
|                                                                                       |   |           |      |   | **Fiscal years ended**  |             |
|                                                                                       |   | **Notes** |      |   | **March 31,**

**2019** |             |   | **March 31,**

**2018** |   |   | **March 31,**

**2017** |   |
|                                                                                       |   |           |      |   |                         |             |   |  |   |   |  |   |
| **(A) CASH FLOW FROM OPERATING ACTIVITIES**                                                |   |
| **Profit/(loss) before tax for the year**                                                  |   |      |      |   | **$**                   | **(357,888,686** | **)** |   | **$** | **(113,537,062** | **)** |   | **$** | **36,108,371** |   |
| Adjustments for non-cash items                                                             |   |      | 32        |   |                    |             | 173,942,880 |   |   |   | 18,960,826 |   |   |   | 14,960,995 |   |
| Adjustments for non-operating incomes and expenses                                         |   |      | 32        |   |                    |             | 18,238,935 |   |   |   | 34,050,541 |   |   |   | 29,011,112 |   |
| Changes in operating assets and liabilities                                                |   |      | 32        |   |                    |             | (3,718,771 | ) |   |   | 32,615,146 |   |   |   | (68,644,523 | ) |
|                                                                                       |   |      |      |   |                    | **$**            | **(169,425,641** | **)** |   | **$** | **(27,910,549** | **)** |   | **$** | **11,435,955** |   |
| Income taxes paid                                                                          |   |      |      |   |                    |             | 10 |   |   |   | (468,492 | ) |   |   | (5,648,895 | ) |
| **Net cash generated from/(used in) operating activities**                                 |   |      |      |   |                    | **$**            | **(169,425,631** | **)** |   | **$** | **(28,379,041** | **)** |   | **$** | **5,787,060** |   |
|                                                                                       |   |      |      |   |                    |             |   |   |   |   |   |   |   |   |   |   |
| **(B) CASH FLOW FROM INVESTING ACTIVITIES**                                                |
| Purchase of property, plant and equipment                                                  |   |      |      |   |                    | $                | 1,180,429 |   |   | $ | (442,568 | ) |   | $ | (71,885 | ) |
| Purchase of intangible assets                                                              |   |      |      |   |                    |             | 67,812 |   |   |   | - |   |   |   | - |   |
| Advance for property, plant and equipment                                                  |   |      |      |   |                    |             | - |   |   |   | - |   |   |   | - |   |
| Proceeds from sale of property, plant and equipment                                        |   |      |      |   |                    |             | 38,770 |   |   |   | 52,208 |   |   |   | 2,262 |   |
| Net cash outflow on acquisition of subsidiaries                                            |   |      |      |   |                    |             | (4,441,917 | ) |   |   | - |   |   |   | - |   |
| Proceeds from term deposits                                                                |   |      |      |   |                    |             | 254,399 |   |   |   | 12,459,795 |   |   |   | 17,230,029 |   |
| Investments in term deposits                                                               |   |      |      |   |                    |             | - |   |   |   | (10,705,256 | ) |   |   | (14,189,981 | ) |
| Purchase of short term investments                                                         |   |      |      |   |                    |             | - |   |   |   | - |   |   |   | - |   |
| Proceeds from the sale of short term investments                                           |   |      |      |   |                    |             | - |   |   |   | - |   |   |   | - |   |
| Interest received                                                                          |   |      |      |   |                    |             | 9,290 |   |   |   | 83,563 |   |   |   | 381,144 |   |
| **Net cash used in investing activities**                                                  |   |      |      |   |                    | **$**            | **(2,891,218** | **)** |   | **$** | **1,447,742** |   |   | **$** | **3,351,569** |   |
|                                                                                       |   |      |      |   |                    |             |   |   |   |   |   |   |   |   |   |   |
| **(C) CASH FLOWS FROM FINANCING ACTIVITIES**                                               |
| Net proceeds from issue of shares                                                          |   |      |      |   |                    | **$**            | **-** |   |   | **$** | **-** |   |   | **$** | **-** |   |
| Net proceeds from short term debt                                                          |   |      |      |   |                    |             | 17,433,767 |   |   |   | 33,494,022 |   |   |   | 9,384,793 |   |
| Proceeds from long term debt                                                               |   |      |      |   |                    |             | 5,857,222 |   |   |   | - |   |   |   | - |   |
| Repayment of long term debt                                                                |   |      |      |   |                    |             | 28,442,971 |   |   |   | (24,029 | ) |   |   | (463,035 | ) |
| Interest paid                                                                              |   |      |      |   |                    |             | (18,191,897 | ) |   |   | (25,872,309 | ) |   |   | (27,520,656 | ) |
| **Net cash generated from financing activities**                                           |   |      |      |   |                    | **$**            | **33,542,062** |   |   | **$** | **7,597,684** |   |   | **$** | **(18,598,898** | **)** |
| **(D) Effect of change in exchange rate on cash and cash equivalents**                     |   |      |      |   |                    |             | **158,790,155** |   |   |   | **3,718,602** |   |   |   | **8,879,423** |   |
| **Net increase/(decrease) in cash and cash equivalents**                                   |   |           | (A+B+C+D) |   |                    | **$**            | **20,015,369** |   |   | **$** | **(15,615,013** | **)** |   | **$** | **(580,846** | **)** |
| Cash and cash equivalents at the beginning of the year                                     |   |      |      |   |                    |             | 1,216,642 |   |   |   | 16,831,655 |   |   |   | 17,412,501 |   |
| **Cash and cash equivalents at the end of the year**                                       |   |      |      |   |                    | **$**            | **21,232,011** |   |   | **$** | **1,216,642** |   |   | **$** | **16,831,655** |   |
|                                                                                       |   |      |      |   |                    |             |   |   |   |   |   |   |   |   |   |   |
| *(The accompanying notes are an integral part of these consolidated financial statements)* |

   

|                |
|---------------------|
| F-7                 |
|                     |
| *Table of Contents* |

   

**Amira Nature Foods Ltd**

 

**Notes to the Consolidated Financial Statements**

 

**1.****Background and nature of operations**

     

Amira Nature Foods Ltd (‘‘RYCE” or ‘‘the Company’’) and its subsidiaries (hereinafter together referred to as ‘‘Amira’’ or ‘‘the Group’’) are engaged primarily in the business of processing, sourcing and selling packaged Indian specialty rice, primarily basmati rice and other food products. The Group sells these products to international buyers, distributors and retail chains across four continents. On November 14, 2018, the Company’s Indian subsidiary, Amira Pure Foods Private Limited (“Amira India”), converted Amira India debt into ordinary shares of Amira India. As a result of the debt conversion, the Company’s ownership in Amira India decreased from 80.4% to 49.8%. As such, Amira India is included in the Company’s consolidated financial statements till November 14, 2018 as subsidiary and thereafter as an associate. after this conversion. Wherever the Amira India is referred, the same should be read in conjunction with note number 7 and 42.       

         

RYCE was incorporated on February 20, 2012 and is domiciled in the British Virgin Islands. The principal office of the Company is located at 29E, A.U. Tower Jumeirah Lake Towers Dubai, United Arab Emirates.

 

**2.****Formation of the Company and initial public offering (IPO)**

 

RYCE was formed to act as holding company of the Group and to make an initial public offering of its shares in the United States of America (“USA”). On October 15, 2012 RYCE completed its IPO in the USA of 9,000,000 ordinary shares of face value of $0.001 at a premium of $9.999 per share. The Company incurred a total cost of $9.1 million towards share issue and listing of shares. Share issue expenses attributable to raising of new equity amounting to $7.3 million had been reduced from equity and other expenses amounting to $1.8 million were recorded in the consolidated statement of profit or loss during the year ended March 31, 2013.

 

Immediately thereafter, the Company through its wholly owned subsidiary, Amira Nature Foods Ltd, Mauritius (“Amira Mauritius”), subscribed for 53,102,500 equity shares of Amira Pure Foods Private Limited (“APFPL”), incorporated in India representing approximately 80.4% of its outstanding shares on October 16, 2012, pursuant to a subscription agreement dated September 27, 2012, as amended subsequently through an amendment agreement dated October 10, 2012 for $77,000,100. The balance of 19.6% in APFPL represents Non-controlling interest (“NCI”) held by Mr. Karan A. Chanana, Chairman RYCE, and his affiliates.

 

On November 14, 2018, the Company’s Indian subsidiary, Amira India, converted Amira India debt into ordinary shares of Amira India. As a result of the debt conversion, the Company’s ownership in Amira India decreased from 80.4% to 49.8%. 

    

**3. Statement of compliance**

  

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

        

**4.****New standards/amendments relevant for the Group adopted from April 1, 2018**

 

On April 1, 2018 the Group adopted new accounting policies where necessary to comply with amendments to IFRS.

 

The following are those accounting pronouncements which are relevant to the Group and which have been adopted during 2018 in the preparation of these consolidated financial statements:

  

|                |
|---------------------|
| F-8                 |
|                     |
| *Table of Contents* |

 

| • | **Amendments to IAS 1 - Presentation of Financial Statements** |
|---------|----------------------------------------------------------------|

   

In December 2014, IASB issued an amendment to IAS 1 to address perceived impediments to preparers exercising their judgment in presenting their financial reports by making the following changes:

   

|  | • | Clarification that information should not be obscured by aggregating or by providing immaterial information, and that materiality considerations apply to the all parts of the financial statements, and even when a standard requires a specific disclosure, materiality considerations do apply; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

|  | • | Clarification that the list of line items to be presented in these statements can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarification that an entity’s share of other comprehensive income of equity-accounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss; and |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

|  | • | Additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes and to demonstrate that the notes need not be presented in the order so far listed in paragraph 114 of IAS 1. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

This amendment is effective for annual periods beginning on or after January 1, 2016.

 

The Group does not believe that the adoption of this amendment will have a material effect on its consolidated financial statements.

 

| • | **Amendment to IAS 16 – Property, Plant and Equipment and IAS 38 – Intangible Asset***s* |
|---------|------------------------------------------------------------------------------------------------------|

  

In May 2014, the IASB issued “Amendments to IAS 16 and IAS 38”, clarifying that the use of methods based on revenue to calculate depreciation is not appropriate because revenue generated by an activity that includes the use of an asset typically reflects factors that are not directly linked to the consumption of the economic benefits embodied in the asset. Revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances. This Amendment is effective for annual period, beginning on or after January 1, 2016.

  

The Group does not believe that the adoption of this amendment will have a material effect on its consolidated financial statements.

  

| • | **Annual improvements to IFRSs 2012-2014 Cycle** |
|---------|--------------------------------------------------|

  

In September 2014, the IASB issued “Annual Improvements to IFRSs: 2012-2014 Cycle” and “Annual Improvements to IFRSs: 2012-2014 Cycle”, as part of its annual process of revising and improving existing standards. These are effective for annual periods beginning on or after January 1, 2016.

  

|        | • | IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held-for-sale to held-for-distribution or vice versa and cases in which held-for-distribution accounting is discontinued |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and clarification on offsetting disclosures in condensed interim financial statements               |
|   | • | IAS 19 — Clarifies that the high-quality corporate bonds used in estimating the discount rate for post-employment benefits should be denominated in the same currency as the benefits to be paid                           |
|   | • | IAS 34 — Clarifies the meaning of “elsewhere in the interim report” and requires a cross-reference                                                                                                             |

    

The Group does not believe that the adoption of these amendments will have a material effect on its consolidated financial statements.

       

|                |
|---------------------|
| F-9                 |
|                     |
| *Table of Contents* |

  

| • | **IFRS 9 Financial Instruments:** |
|---------|-----------------------------------|

 

IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted and is applied retrospectively, except for the hedge accounting requirements which are applied prospectively.

 

It replaces IAS 39’s measurement categories for financial assets as: fair value through profit or loss (“FVTPL”), fair value through other comprehensive income (“FVTOCI”) and amortized cost.

 

It introduces new impairment model, under which the “expected” credit loss are required to be recognized as compared to the existing “incurred” credit loss model of IAS 39.

 

The standard did not materially impact the measurement of our financial liabilities. However, certain assets which are carried at fair value through other comprehensive income under IAS 39 will now be fair valued through profit and loss under IFRS 9 depending upon the class of asset.

 

Further, under IFRS 9, the impairment of financial assets is measured under the ‘Expected Credit Loss’ (ECL) model, which uses a dual measurement approach, under which the loss allowance is measured as either twelve month expected credit losses or lifetime expected credit losses. The management did not find a material impact of change in the impairment model on trade receivables.

 

Further, there are fundamental changes in hedge accounting by introduction of new general hedge accounting model which:

 

|  | • | Increases the eligibility of hedged item and hedging instruments; |
|--|---------|-------------------------------------------------------------------|

 

|  | • | Introduces a more principles–based approach to assess hedge effectiveness. |
|--|---------|----------------------------------------------------------------------------------|

 

| • | **IFRS 15 Revenue from Contracts with Customers:** |
|---------|----------------------------------------------------|

 

In May 2014, the IASB issued IFRS 15 “Revenue from Contracts with Customers” (IFRS 15). This standard provides a single, principle-based five-step model to be applied to all contracts with customers. Guidance is provided on topics such as the point at which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various other related matters. IFRS 15 also introduced new disclosure requirements with respect to revenue.

 

The five steps in the model under IFRS 15 are: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contracts; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

 

IFRS 15 replaces the following standards and interpretations:

  

|  | • | IAS 11 “Construction Contracts” |
|--|---------|--------------------------------------------------|

 

|  | • | IAS 18 “Revenue” |
|--|---------|-----------------------------------|

 

|  | • | IFRIC 13 “Customer Loyalty Programmes” |
|--|---------|---------------------------------------------------------|

 

|  | • | IFRIC 15 “Agreements for the Construction of Real Estate” |
|--|---------|----------------------------------------------------------------------------|

 

|  | • | IFRIC 18 “Transfers of Assets from Customers” |
|--|---------|----------------------------------------------------------------|

 

|  | • | SIC-31 “Revenue - Barter Transactions Involving Advertising Services” |
|--|---------|----------------------------------------------------------------------------------------|

   

|                |
|---------------------|
| F-10                |
|                     |
| *Table of Contents* |

 

When first applying IFRS 15, it should be applied in full for the current period, including retrospective application to all contracts that were not yet complete at the beginning of that period. In respect of prior periods, the transition guidance allows an option to either:

  

|  | *•* | apply IFRS 15 in full to prior periods (with certain limited practical expedients being available); or |
|--|-----------|--------------------------------------------------------------------------------------------------------|

  

|  | *•* | retain prior period figures as reported under the previous standards, recognizing the cumulative effect of applying IFRS 15 as an adjustment to the opening balance of equity as at the date of initial application (beginning of current reporting period). |
|--|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

In April 2016, the IASB issued amendments to IFRS 15, clarifying some requirements and providing additional transitional relief for companies. The amendments do not change the underlying principles of IFRS 15 but clarify how those principles should be applied. The amendments clarify how to:

 

|  | *•* | identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; |
|--|-----------|--------------------------------------------------------------------------------------------------------------|

  

|        | *•* | determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided); and |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                               |
|        | *•* | determine whether the revenue from granting a license should be recognized at a point in time or over time.                                                        |

  

In addition to the clarifications, the amendments include two additional reliefs to reduce cost and complexity for a company when it first applies IFRS 15. The amendments have the same effective date as IFRS 15.

  

IFRS 15 is effective for fiscal years beginning on or after January 1, 2018. We will apply this standard retrospectively with the cumulative effect of initially applying this standard recognized at April 1, 2018 (i.e. the date of initial application in accordance with this standard) which will be based on specific terms of active contracts as at April 1, 2018. The Group did not find that the adoption of this standard had a material effect on its consolidated financial statements.

 

We expect revenue recognition to remain largely unchanged, however there will be an impact on the timing of recognition of certain contract costs, which will now be amortized over the contract period rather than expensed as incurred. Based on the analysis completed to date, we did not find that the adoption had a material impact on consolidated revenue in our consolidated financial statements.

 

The effective date for adoption of IFRS 15 is annual periods beginning on or after January 1, 2018, though early adoption is permitted.

 

The Group does not believe that the adoption of this amendment had a material effect on its consolidated financial statements.

     

|                |
|---------------------|
| F-11                |
|                     |
| *Table of Contents* |

 

| • | **IFRS 2 – “Share-based Payment”** |
|---------|------------------------------------------------------|

 

In June 2016, the IASB issued amendments in IFRS 2 – “Share-based Payment” to clarify the following:

 

|  | • | the accounting for cash-settled share-based payment transactions that include a performance condition should follow the same approach as for equity-settled share-based payment; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

|  | • | the classification of share-based payment transactions with net settlement features for withholding tax obligations should be classified as equity-settled in its entirety, provided the share-based payment would have been classified as equity-settled had it not included the net settlement feature; and |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

|  | • | modifications of a share-based payment that changes the transaction from cash-settled to equity-settled to be accounted for as follows: |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------|

  

|  | i. | the original liability is derecognized; |
|--|----|-----------------------------------------|

  

|  | ii. | the equity-settled share-based payment is recognized at the modification date fair value of the equity instrument granted to the extent that services have been rendered up to the modification date; and |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

|  | iii. | any difference between the carrying amount of the liability at the modification date and the amount recognized in equity should be recognized in the statement of income immediately. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The above amendments are effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted. The amendments are to be applied prospectively. However, if an entity applies the amendments retrospectively, it must do so for all of the amendments described above.

 

We adopted these amendments prospectively and had no material impact on our consolidated financial statements.

 

| • | **IFRIC 22 – “Foreign Currency Transactions and Advance Consideration”** |
|---------|--------------------------------------------------------------------------------------------|

  

In December 2016, the IFRS Interpretations Committee (“IFRIC”) issued amendments to IFRIC 22 – “Foreign Currency Transactions and Advance Consideration” to clarify the exchange rate to use for translation when payments are made or received in advance of the related asset, expense or income (or part of it) in foreign currency.

  

The exchange rate in this case will be the rate prevalent on the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration.

 

IFRIC 22 is effective for annual reporting periods beginning on or after January 1, 2018. Earlier application is permitted.

 

On initial application, entities have the choice to apply the Interpretation either retrospectively or, alternatively, prospectively to all assets, expenses and income in the scope of the Interpretation initially recognized on or after:

 

|  | • | the beginning of the reporting period in which the entity first applies the Interpretation; or |
|--|---------|------------------------------------------------------------------------------------------------|

 

|  | • | the beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Interpretation. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

We adopted these amendments prospectively and had no material impact on our consolidated financial statements.

  

|                |
|---------------------|
| F-12                |
|                     |
| *Table of Contents* |

    

**5. New standards/amendments issued but not yet effective relevant for the Group**

 

The following accounting pronouncements were not effective as of March 31, 2019 and therefore have not been applied in preparing these consolidated financial statements.

 

| *•* | **IFRS 16 Leases:**                                                                                                        |
|-----------|----------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                       |
|      | In January 2016, the IASB has issued IFRS 16 “Leases” (“IFRS 16”). Key changes in IFRS 16 include: |

   

|  | • | eliminates the requirement to classify a lease as either operating or finance lease in the books of lessee. |
|--|---------|-------------------------------------------------------------------------------------------------------------|

 

|  | • | introduces a single lessee accounting model, which requires lessee to recognize assets and liabilities for all leases, initially measured at the present value of unavoidable future lease payment. Entity may elect not to apply this accounting requirement to short term leases and leases for which underlying asset is of low value. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|  | • | replaces the straight-line operating lease expense model with a depreciation charge for the lease asset (included within operating costs) and an interest expense on the lease liability (included within finance costs). |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|  | • | requires lessee to classify cash payments for principal and interest portion of lease arrangement within financing activities and financing/operating activities respectively in the cash flow statements. |
|--|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|  | • | requires entities to determine whether a contract conveys the right to control the use of an identified asset for a period of time to assess whether that contract is, or contains, a lease. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | IFRS 16 replaces IAS 17, Leases and related interpretations viz. IFRIC 4, “Determining whether an Arrangement contains a Lease;” SIC-15, “Operating Leases—Incentives;” and SIC-27, “Evaluating the Substance of Transactions Involving the Legal Form of a Lease.”                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                             |   |
|   | IFRS 16 substantially carries forward lessor accounting requirements in IAS 17, “Leases.” Disclosures, however, have been enhanced.                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                             |   |
|   | 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. |
|   |                                                                                                                                                                                                                                                                                                                                                             |   |
|   | The Group does not believe that the adoption of this amendment will have a material effect on its consolidated financial statements.                                                                                                                                                                                                                             |

   

|                |
|---------------------|
| F-13                |
|                     |
| *Table of Contents* |

   

| • | **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. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    | 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.                                           |

          

| *•* | **IFRIC 23 – “Uncertainty over Income Tax Treatments”**                                                                                                                                   |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                        |
|      | In June 2017, the IFRIC issued IFRIC 23 – “Uncertainty over Income Tax Treatments” to clarify the accounting for uncertainties in income taxes, by specifically addressing the following: |

    

| • | the determination of whether to consider each uncertain tax treatment separately or together with one or more uncertain tax treatments; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------|

 

| • | the assumptions an entity makes about the examination of tax treatments by taxations authorities; |
|---------|---------------------------------------------------------------------------------------------------|

 

| • | the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates where there is an uncertainty regarding the treatment of an item; and |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| • | the reassessment of judgements and estimates if facts and circumstances change.                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    | IFRIC 23 is effective for annual reporting periods beginning on or after 1 January 2019. Earlier application is permitted.                                                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    | On initial application, the requirements are to be applied by recognizing the cumulative effect of initially applying them in retained earnings, or in other appropriate components of equity, at the start of the reporting period in which an entity first applies them, without adjusting comparative information. Full retrospective application is permitted, if an entity can do so without using hindsight. We are currently evaluating the impact of this pronouncement on our consolidated financial statements. |

   

|                |
|---------------------|
| F-14                |
|                     |
| *Table of Contents* |

           

| *•* | **IAS 19 – “Employee Benefits”**                                                                                                                                     |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                   |
|      | In February 2018, the IASB issued amendments to IAS 19 – “Employee Benefits” regarding plan amendments, curtailments and settlements. The amendments are as follows: |

     

| • | If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement; |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

| • | In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding asset ceiling. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                         |
|    | The above amendments are effective for annual periods beginning on or after January 1, 2019. Earlier application is permitted but must be disclosed.         |
|    |                                                                                                                                                         |
|    | We are currently evaluating the impact of these amendments on our consolidated financial statements.                                                         |

   

**6.****Summary of significant accounting policies**

 

***6.1******Overall considerations***

 

The consolidated financial statements have been prepared on a going concern basis, except in respect of Amira India as referred in below. The significant accounting policies that have been used in the preparation of these consolidated financial statements are summarized below.

      

On November 14, 2018, the Company’s Indian subsidiary, Amira Pure Foods Private Limited (“Amira India”), converted Amira India debt into ordinary shares of Amira India.  As a result of the debt conversion, the Company’s ownership in Amira India decreased from 80.4% to 49.8%. As such, Amira India is included in the Company’s consolidated financial statements till November 14, 2018 as subsidiary and thereafter as an associate. . Wherever the Amira India is referred, the same should be read in conjunction with note number 7 and 42.  

   

The Going Concern assumption of Amira India was lost because of insolvency proceedings initiated by bankers and certain vendors at Honorable National Company Law Tribunal (NCLT) as the Amira India was not able to serve its debts and pay the liabilities. Accordingly, the adjustments have been made in the carrying amount of its assets, wherever required to bring down them at realizable value. 

 

The liabilities in respect of bankers of Amira India is subject to various adjustments, which will be finalized once the resolution plan is approved by NCLT, official liquidator and Committee of Creditors. There can be material adjustments in liabilities in respect of bankers of Amira India, as the entity is under liquidation process. Therefore, adjustments in amount due to bankers/ operational creditors (presently not ascertainable) in respect of Amira India can be carried out only once the insolvency proceeding is over.

  

All assets and liabilities have been classified as current or non-current as per the Group’s normal operating cycle. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities. 

    

|                |
|---------------------|
| F-15                |
|                     |
| *Table of Contents* |

    

Due to the deconsolidation of Amira India in the finical year 2019, the Company has made adjustment to the carrying values of the assets and liabilities from the deconsolidation of Amira India and will not consider Amira India as part of the Company’s future going concern.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had a net loss for the year ended March 31, 2019 and a working capital deficit at March 31, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. However, the management is confident about the future prospects of the Company.

   

| ***6.2*** | ***Basis of consolidation*** |
|-----------|------------------------------|

 

The Group’s subsidiaries are those entities which it directly or indirectly controls. Control over an entity is evidenced by the Group’s ability to exercise its power in order to affect any variable returns that the Group is exposed to through its involvement with the entity.

  

When assessing whether to consolidate an entity, the Group evaluates a range of control factors, namely:

 

|   | · | the purpose and design of the entity                                                     |
|--------|--------|------------------------------------------------------------------------------------------|
|   |   |                                                                                     |
|   | · | the relevant activities and how these are determined                                     |
|   |   |                                                                                     |
|   | · | whether the Group’s rights result in the ability to direct the relevant activities |
|   |   |                                                                                     |
|   | · | whether the Group has exposure or rights to variable returns                             |
|   |   |                                                                                     |
|   | · | whether the Group has the ability to use its power to affect the amount of its returns   |

 

Subsidiaries are consolidated from the date on which control is transferred to the Group and are deconsolidated from the date that control ceases.

   

The Group reassesses the consolidation status when any changes in the structure lead to a change in one or more of the control factors. On November 14, 2018, the Company’s ownership in Amira India decreased from 80.4% to 49.8% during the year ended March 31, 2019. As such, Amira India is included in the Company’s consolidated financial statements till November 14, 2018 as subsidiary and thereafter as an associate. Wherever the Amira India is referred, the same should be read in conjunction with note number 7 and 42. 

   

All intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated on consolidation.

 

Consistent accounting policies are applied throughout the Group for the purposes of consolidation. Issuances of a subsidiary’s stock to third parties are treated as non-controlling interests. Profit or loss attributable to non-controlling interests are reported separately in the consolidated statements of profit or loss and consolidated statements of comprehensive income.

 

| ***6.3*** | ***Business combinations*** |
|-----------|-----------------------------|

 

The Group uses the acquisition method to account for business combinations. At the date, the Group obtains control of the subsidiary, the cost of an acquisition is measured at the fair value of the consideration given, including any cash or non-cash consideration (equity instruments) transferred any contingent consideration, any previously held equity interest in the acquiree and liabilities incurred or assumed. The excess of the aggregate of the cost of an acquisition and any non-controlling interests in the acquiree over the Group’s share of the fair value of the identifiable net assets acquired is recorded as goodwill. If the aggregate of the acquisition cost and any non-controlling interests is below the fair value of the identifiable net assets (negative goodwill), a gain is reported in other income. Acquisition-related costs are recognized as expenses in the period in which they are incurred.

 

Non-controlling interests are shown in the consolidated balance sheet as a separate component of equity, which is distinct from the Group’s shareholders’ equity. The net income attributable to of non-controlling interests is separately disclosed on the face of the consolidated statement of income. Changes in the ownership interest in subsidiaries which do not result in a change of control are treated as transactions between equity holders and are reported in equity.

 

|                |
|---------------------|
| F-16                |
|                     |
| *Table of Contents* |

  

| ***6.4*** | ***Foreign currency*** |
|-----------|------------------------|

  

Our consolidated financial statements are presented in U.S. dollars which is the functional currency of RYCE. 

   

A currency other than the functional currency of the entities is a foreign currency. Foreign currency transactions are translated into the functional currency of each respective entity, using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange on the date of the statement of financial position. Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognized in the consolidated statements of profit or loss. Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction.

 

For purposes of our consolidated financial statements, all assets, liabilities and transactions of our subsidiaries with a functional currency other than the U.S. dollar (our presentation currency) are translated into U.S. dollars upon consolidation.

 

On consolidation, assets and liabilities have been translated into the U.S. dollar at the closing rate at the statement of financial position date. Income and expenses have been translated into the presentation currency at the average rate over the reporting period. Exchange differences are recognized in equity as “Currency translation reserve”.

 

| ***6.5*** | ***Revenue*** |
|-----------|---------------|

 

The Company recognizes revenue based on IFRS 15. See note 5 - IFRS 15 Revenue from Contracts with Customers.

  

The RYCE adopted IFRS 15 for the first-time effective April 1, 2018. IFRS 15 had a major impact on revenue recognition in respect of Amira India which primarily deal with customers in unorganized sector.  Amira India also went into liquidation process as it was enabled to serve the debts from bankers as well as some vendors. This casted significant doubt on realizability of goods shipped to customers. As a result, revenue amounting to USD 96,467,574 has been reversed in Amira India as on November 14, 2018. However, this does not jeopardize the recovery proceeding which might take place under the supervision of court appointed official liquidator in respect of Amira India. This adjustment has been done purely to meet with the requirements of IFRS 15.  

   

*Sale of basmati rice and other food products*

 

The Group recognizes revenue when the amount of revenue can be reliably measured; it is probable that future economic benefits will flow to the Group. Revenues are measured at the fair value of the consideration received or receivable, net of discounts, rebates, outgoing sales taxes, and other indirect taxes. Revenues are recognized when all significant risks and rewards of ownership of the goods are transferred to the customer and delivery has occurred as per the contractual terms.

  

In evaluating whether the amount is realizable in term of IFRS 15, the Group consider whether collectability of an amount of consideration is probable, on the basis of the customer’s ability and intention to pay that amount of consideration when it is due.

  

*Interest and dividend income*

 

Interest income is reported on an accrual basis using the effective interest method. Dividend income is recognized at the time the right to receive payment is established.

 

| ***6.6*** | ***Cost of materials*** |
|-----------|-------------------------|

 

Cost of materials includes purchase of raw materials and change in raw materials.

 

| ***6.7*** | ***Inventories*** |
|-----------|-------------------|

 

Inventory is valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost of completion and selling expenses.

 

Basmati (classified under raw materials) and rice (classified under finished goods) are stored for a substantial period of time (approximately 10 months to 12 months) for natural ageing necessary to bring these inventories to their intended quality.

 

*Raw materials, stores and spares, packaging materials and purchased finished goods*

 

Raw materials costs are comprised of purchase price and expenses incurred to bring inventory to its present location and related taxes net of tax credits available, if any. Cost of such closing inventory is determined on a first in first out basis (and includes storage costs and borrowing costs as Basmati is required to be stored for a substantial period of time for Basmati’s natural ageing process).

 

|                |
|---------------------|
| F-17                |
|                     |
| *Table of Contents* |

  

*Finished goods*

 

Finished goods include cost of direct materials and manufacturing expenses incurred to bring inventories to their present location and condition. Cost of finished goods is determined using the weighted average method. Cost of closing inventory includes interest expense (borrowing costs) as Basmati rice is required to be stored for a substantial period of time for the natural ageing process to occur.

 

| ***6.8*** | ***Goodwill*** |
|-----------|----------------|

 

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

 

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units that is expected to benefit from the synergies of the combination.

 

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

 

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

 

| ***6.9*** | ***Other intangible assets*** |
|-----------|-------------------------------|

 

Other intangible assets including those acquired in a business combination are stated at cost of acquisition, less accumulated amortization and impairments, if any. Indefinite life intangible assets are stated at cost less accumulated impairment, if any.

 

Intangible assets are amortized on straight-line basis over their estimated useful lives.

 

Management’s estimate of the useful life of trademarks registration fees, software licenses, favorable lease and customer relationships is 10, 3, 5 and 12 years, respectively. Acquired brand has indefinite useful life and tested for impairment annually or more frequently when there is indication that such asset may be impaired.

 

| ***6.10*** | ***Property, plant and equipment*** |
|------------|-------------------------------------|

 

Property, plant and equipment are stated at cost of acquisition less accumulated depreciation and accumulated impairment, if any.

 

An item of property, plant and equipment is no longer recognized upon disposal or when no future economic benefits are expected from its use. Any resulting gain or loss (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statements of profit or loss within “Other income” in the year the asset is derecognized.

 

The assets residual values, useful lives and methods are reviewed by management, and adjusted if appropriate, at each reporting date.

 

Property, plant and equipment are depreciated using the straight-line method over the useful life of asset as estimated by management. The estimated useful lives are as follows:

 

| Buildings                                                                                                                                  | 5-25 years |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Plant and machinery – include storage equipment, pollution and fire control equipment                                                | 3-20 years |
| Plant and machinery – include laboratory equipment, weighing equipment, electrical fittings & packing and generator & boiler | 3-10 years |
| Office equipment                                                                                                                           | 3-6 years  |
| Furniture and fixtures                                                                                                                     | 3-5 years  |
| Vehicles                                                                                                                                   | 5 years    |

 

|                |
|---------------------|
| F-18                |
|                     |
| *Table of Contents* |

  

Freehold land is not a depreciable asset.

 

Depreciation is not recorded on capital work in progress until construction and installation are complete and the asset is ready for its intended use. Capital advances are included in capital work in progress.

 

| ***6.11*** | ***(A) Impairment testing of property, plant and equipment and intangible assets other than goodwill and indefinite life intangible assets*** |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

 

At the end of each reporting period the Group reviews the carrying amounts of tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. The Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

  

An impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

  

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

 

| ***6.12*** | ***Leases*** |
|------------|--------------|

 

Operating leases are considered to be leases where substantial risks and rewards related to ownership of the leased asset are retained with the lessor. Payments on operating lease agreements are recognized as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

 

| ***6.13*** | ***Debt costs*** |
|------------|------------------|

 

Debt costs primarily comprise interest on our debt. Debt costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

 

| ***6.14*** | ***Advertising and business promotion expenses*** |
|------------|---------------------------------------------------|

 

Advertising and business promotion expenses classified under “Other expenses”, which primarily includes hoarding cost, exhibition cost, publicity cost and cost of other promotional activities. Advertising and business promotion expenses are recognized in profit or loss as and when incurred.

 

| ***6.15*** | ***Financial assets and financial liabilities*** |
|------------|--------------------------------------------------|

 

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument.

 

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.

 

A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

 

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

 

Financial assets and financial liabilities are measured subsequently as described below.

 

|                |
|---------------------|
| F-19                |
|                     |
| *Table of Contents* |

  

**Financial assets**

 

On initial recognition, the Group’s financial assets are classified into the loans and receivables and available for sales.

 

*Loans and receivables*

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortized cost using the effective interest method, less provision for impairment. The Group’s cash and cash equivalents, trade receivables, term and other deposits and other receivables fall into this category of financial instruments.

 

*Cash and cash equivalents*

 

Cash and cash equivalents consist of cash in hand and balance held with banks including deposits. Cash and cash equivalents are unrestricted as to withdrawal or usage.

 

*Available for sale financial assets (referred to as AFS)*

 

Available for sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group’s available for sale financial assets include investments in listed securities and mutual funds in India.

 

Available for sale financial assets are measured at fair value. Gains and losses are recognized in the consolidated statement of other comprehensive income and reported within the available for sale reserve within equity. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss recognized in the consolidated statement of other comprehensive income is reclassified from the equity reserve to the consolidated statement of profit or loss account.

 

**Financial liabilities**

 

The Group’s financial liabilities include debt, trade payables and other financial liabilities. Financial liabilities are measured subsequently at amortized cost using the effective interest method except for derivative financial liabilities.

 

**Equity instruments**

 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized at the proceeds received net of direct issue costs.

 

**Impairment of financial assets**

 

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.

 

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

 

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and other receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

      

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

 

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

 

|                |
|---------------------|
| F-20                |
|                     |
| *Table of Contents* |

  

In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income and accumulated under the heading of “Reserve for available for sale financial assets”.

 

| ***6.16*** | ***Derivatives*** |
|------------|-------------------|

 

Derivatives are initially recognized at fair value and subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument in which event the timing of the subsequent recognition in profit or loss depends on the nature of the hedge relationship.

 

| ***6.17*** | ***Cash flow hedges*** |
|------------|------------------------|

 

The Group designates forward currency derivative contracts in respect of foreign currency risk, as cash flow hedges. Hedges of foreign exchange risk on highly probable forecasted sales are accounted for as cash flow hedges.

 

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in cash flows of the hedged item attributable to the hedged risk.

 

Gain/ loss arising due to change in fair value of forward currency derivative contracts not designated as cash flow hedges are recognized in the consolidated statements of profit or loss under “Other gains and (losses)”.

 

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statements of profit or loss and is included under “Other gains and (losses)”.

 

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to the consolidated statements of profit or loss in the periods when the hedged item is recognized in consolidated statements of profit or loss and is included under “Other gains and (losses)”.

 

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in consolidated statements of profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in the consolidated statements of profit or loss and is included under “Other gains and (losses)”.

  

| ***6.18*** | ***Share-based compensation*** |
|------------|--------------------------------|

  

The fair value of share-based payment awards granted to employees/directors as of grant date is recognized as employee benefit expenses, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date. The increase in equity recognized in connection with a share-based compensation transaction is presented in “Share-based compensation reserve”. At the time of issue of respective shares, the corresponding share-based compensation reserve is reclassified to share capital and share premium.

 

The share options granted by the Group to its employees/directors are valued with respect to the fair values of the equity instruments granted, using appropriate option pricing models.

 

|                |
|---------------------|
| F-21                |
|                     |
| *Table of Contents* |

  

| ***6.19*** | ***Income taxes*** |
|------------|--------------------|

 

Income tax comprises current tax and deferred tax. Income tax is recognized in the consolidated statements of profit or loss except where it relates to items that are recognized in the consolidated statements of other comprehensive income or directly in equity in which case the related income tax is recognized in the consolidated statements of other comprehensive income or equity, respectively. The basis for computation of current tax and deferred tax is described below.

 

*Current tax*

 

Calculation of current tax is based on tax rates applicable for the respective years in respective tax jurisdictions and is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Current income tax assets and/or liabilities comprises those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid/un-recovered at the reporting date. Current tax is payable on taxable profit, which differs from the consolidated statements of profit or loss.

 

*Deferred tax*

 

Deferred income tax is calculated using the balance sheet method on temporary differences between the carrying amounts of assets and liabilities and their tax bases using the tax laws that have been enacted or substantively enacted by the reporting date. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. In respect of taxable temporary difference associated with investment in subsidiaries, where the timing of reversal is controllable and are not probable to reverse in foreseeable future, a deferred tax liability is not recognized. Tax losses available to be carried forward and other income tax credits available to the Group are assessed for recognition as deferred tax assets.

 

Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for business combination.

 

Deferred tax liabilities are recognized for in full. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income.

 

Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority.

 

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

 

| ***6.20*** | ***Other reserves*** |
|------------|----------------------|

 

Other reserves consist of the following:

 

**Share-based compensation reserve**

 

Share-based compensation reserve relates to share options granted by the Group to its directors under its share option plan. Further information about share-based payments to directors is set out in Note 19.

 

**Reserve available for sale financial assets**

 

The reserve available for sale financial assets created by the Group represents the unrealized changes in the fair value of securities classified as available for sale financial assets.

 

**Currency translation reserve**

 

Translation differences arising on translation of foreign operations are recognized in other comprehensive income and included in a separate heading of “Currency translation reserve” within equity.

 

**Cash flow hedging reserve**

 

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognized and accumulated under the heading of “Cash flow hedging reserve” are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

 

|                |
|---------------------|
| F-22                |
|                     |
| *Table of Contents* |

  

**Restructuring reserve**

 

Restructuring reserve relates to reserve created during IPO (Note 2). This is a free reserve.

 

| ***6.21*** | ***Post-employment benefits, short term and long term employee benefits and employee costs*** |
|------------|-----------------------------------------------------------------------------------------------|

 

The Group provides post-employment benefits through defined contribution plans as well as defined benefit plans.

 

*Defined contribution plan*

 

A defined contribution plan is a plan under which APFPL pays fixed contributions into an independent fund administered by the Government of India (GOI). APFPL has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. The contributions recognized in respect of defined contribution plans are expensed in the period that relevant employee services are received. There are no other obligations other than the contribution payable to the fund. There are no other defined contribution plans in other entities of the Group.

 

*Defined benefit plan*

 

The defined benefit plan which includes gratuity benefit is sponsored by APFPL and it defines the amount of the benefit that an employee will receive on completion of services by reference to length of service and last drawn salary.

 

The liability recognized in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (“DBO”) at the reporting date, together with adjustments for unrecognized actuarial gains or losses and past service costs.

 

Management estimates the present value of the DBO annually through valuations by an external actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows based on management’s assumptions.

 

The estimate of its benefit obligations is based on standard rates of inflation and mortality. Discount rate is based upon the market yield available on government bonds at the reporting date with a term that matches that of the liabilities and the salary increase taking into account inflation, seniority, promotion and other relevant factors. Actuarial gains and losses are included in other comprehensive income.

 

There are no other defined benefit plans in other entities of the Group.

 

*Short term employee benefits*

 

Short term benefits comprise employee costs such as salaries, bonuses, and paid annual leave and sick leave that are accrued in the year in which the associated services are rendered by employees of the Group.

 

The liability in respect of compensated absences expected to be availed within one year from the reporting date are considered as short-term benefits and are recognized at the undiscounted amount of estimated value of benefit expected to be availed by the Group’s employees.

 

| ***6.22*** | ***Provisions and contingent liabilities*** |
|------------|---------------------------------------------|

 

*Provisions*

 

Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Provisions are not recognized for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best management’s estimate.

 

|                |
|---------------------|
| F-23                |
|                     |
| *Table of Contents* |

  

*Contingent Liabilities*

 

Where the possible outflow of economic resources as a result of present obligations is considered improbable or where the amount of the obligation cannot be determined reliably, no liability is recognized, and such cases are disclosed as contingent liabilities.

 

| ***6.23*** | ***Significant judgment and estimation uncertainty*** |
|------------|-------------------------------------------------------|

 

When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgments, estimates and assumptions made by management, and may be materially different from the estimated results. Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.

 

*Significant management judgments regarding the following consolidated financial statement elements*

 

*Inventories*

 

Interest expense amounting to NIL (March 31, 2018: $22,846,505) has been capitalized in inventory cost as of March 31, 2019 because rice is stored for a substantial period of time for natural ageing necessary to bring these inventories to their intended quality. However, the same has no impact on inventory valuation in Fiscal 2019, since the inventory has been valued at Net realizable value, which is lower than the cost.

 

*Estimates*

 

|  | *i.* | *Useful lives of depreciable assets* |
|--|------|--------------------------------------|

 

Management reviews the useful lives of depreciable assets at each reporting date based on the expected utility of the assets to the Group. Actual results, however, may vary due to technical obsolescence, particularly relating to plant and machinery equipment.

 

|  | *ii.* | *Impairment of goodwill* |
|--|-------|--------------------------|

 

Determination of whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and an appropriate discount rate in order to calculate the present value. Where actual future cash flows are less than expected, impairment loss may arise. The carrying amount of goodwill at March 31, 2019 was $1,445,876 (March 31, 2018: $1,568,607) and there is no impairment to be recognized during the year ended March 31, 2019.

 

|  | *iii.* | *Impairment of indefinite life intangible* |
|--|--------|--------------------------------------------|

 

Determination of whether the indefinite life intangible consisting of a brand is impaired requires an estimation of the recoverable amount of the brand. The recoverable amount has been measured using the relief from royalty method. The carrying amount of the indefinite life intangible assets at March 31, 2019 was $1,040,027 (March 31, 2018: $941,531) and there is no impairment to be recognized during the year ended March 31, 2019.

 

|                |
|---------------------|
| F-24                |
|                     |
| *Table of Contents* |

  

| **7.** | **100% Owned****Subsidiaries**  |
|--------|--------------------------------------|

 

Details of the Group’s subsidiaries*** as at the end of the reporting period are as follows:

 

| **Name ofsubsidiary**                |   | **Principal activity**                                                                 |   | **Place ofincorporation andoperation** |   | **Proportion of ownership interest andvoting power held by the Group** |   |
|--------------------------------------|--------|----------------------------------------------------------------------------------------|--------|----------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                 |   |                                                                                   |   |                                   |   | **31/03/2019**                                                         |   |   | **31/03/2018** |   |
| Amira Nature Foods Ltd               |   | Non-operating                                                                          |   | Mauritius                              |   |                                                                   | 100    | % |   |   | 100 | % |
| Amira I Grand Foods Inc.             |   | Non-operating                                                                          |   | BVI                                    |   |                                                                   | 100    | % |   |   | 100 | % |
| Amira K.A. Foods International DMCC* |   | Selling packaged Indian specialty rice, primarily basmati rice and other food products |   | UAE                                    |   |                                                                   | 100    | % |   |   | 100 | % |
| Amira G Foods Limited                |   | Selling packaged Indian specialty rice, primarily basmati rice                         |   | UK                                     |   |                                                                   | 100    | %# |   |   | 100 | %## |
| Amira Basmati Rice GmbH EUR**        |   | Processing and selling packaged specialty rice                                         |   | Germany                                |   |                                                                   | 100    | %# |   |   | 100 | %## |
| Basmati Rice North America LLC       |   | Non-operating                                                                          |   | USA                                    |   |                                                                   | 100    | %# |   |   | 100 | %## |

   

| *      | *Formed during the year ended March 31, 2015*                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                        |
| **     | *Formerly known as Basmati Rice GmbH Europe*                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| #      | From August 1, 2017                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                        |
| ***    | A new company named Amira International Finance B.V. has been incorporated in Netherlands on July 30, 2018. Amira International Finance B.V. is a 100% owned subsidiary of Amira Nature Foods Limited. Further, a new company named Red Reinel Limited, was incorporated on 6 February 2019. The transactions in these subsidiaries are not material.  |

 

Non wholly owned subsidiaries which were consolidated in the financial statements of FY 2017-18 has ceased to be subsidiary from November 14, 2018 (Amira Pure Foods Private Limited, Amira I Grand Foods Inc, Amira C Foods International DMCC, Amira Foods Pte. Ltd., Amira Ten Nigeria Limited and Amira Foods (Malaysia) SDN. BHD.). These entities have been accounted for as Associate from November 14, 2018.  

  

On November 14, 2018, the Company’s Indian subsidiary, Amira Pure Foods Private Limited (“Amira India”), converted Amira India debt into ordinary shares of Amira India. As a result of the debt conversion, the Company’s ownership in Amira India decreased from 80.4% to 49.8%. This event is a continuation of the Company’s focus on strengthening its international business.**As a result, Amira India is included in the Company’s consolidated financial statements till November 14, 2018 as subsidiary and thereafter as an associate. 

       

The Group in order to strengthen its international business and reduce its exposure to debts, converted the loan outstanding in the books of Amira India from a related party, into equity shares amounting to USD 16,394,751.  The documents related to this conversion were duly filed with the regulatory authorities in accordance with the legal requirements in the respective countries. Subsequent to these filings, the aforesaid related party, has gone into litigation, disputing such conversion. Currently, the matter is pending at Honorable National Company Law Tribunal, New Delhi (‘NCLT’). The Management as well as the legal counsel of the RYCE has opined that, as number of hearings have already taken place at NCLT and due process for such conversion was followed by RYCE. The chances of having outcome in favour of RYCE is probable as per opinion provided by legal counsel. In  case, such order is not in favour of RYCE, i-e the conversion of loan is set aside by NCLT, it will have following impacts on the financial statements of RYCE:.

   

a. Amira India will be considered as subsidiary subsequent to November 14, 2018. (depending on the outcome of legal proceedings as mentioned above). However, there are no significant transactions in Amira India post November 14, 2018 till March 31, 2019. 

 

b. Certain disclosures in the statement of related party disclosures in respect of above transactions will be required to be restated.

 

However, Management of RYCE does not feel such situation will arise, based on the legal opinion.

  

| ***7.1*** | ***Information about the composition of the Group at the end of the reporting period is as follows:*** |
|-----------|--------------------------------------------------------------------------------------------------------|

 

**Wholly owned subsidiaries**

 

| **Principal activity**                                         |   |   | **Name of subsidiary**              |   | **Place ofincorporation andoperation** |   | **Number of wholly ownedsubsidiaries** |   |
|----------------------------------------------------------------|--------|--------|-------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
|                                                           |   |   |                                     |   |                                        |   | **March 31, 2019**                     |   |   | **March 31, 2018** |   |
| Non-operating                                                  |   |   | Amira Nature Foods Ltd              |   | Mauritius                              |   |                                   | 1      |   |   |   | 1 |   |
| Non-operating                                                  |   |   | Amira I Grand Foods Inc.            |   | BVI                                    |   |                                   | 1      |   |   |   | 1 |   |
| Selling packaged Indian specialty rice, primarily basmati rice |   |   | Amira K.A. Foods International DMCC |   | UAE                                    |   |                                   | 1      |   |   |   | 1 |   |
| Selling packaged Indian specialty rice, primarily basmati rice |   |   | Amira G Foods Limited               |   | United Kingdom                         |   |                                   | 1      |   |   |   | 1 |   |
| Processing, sourcing and selling packaged specialty rice       |   |   | Amira Basmati Rice GmbH EUR*        |   | Germany                                |   |                                   | 1      |   |   |   | 1 |   |
| Non-operating                                                  |   |   | Basmati Rice North America LLC      |   | USA                                    |   |                                   | 1      |   |   |   | 1 |   |
|                                                           |   |   |                                |   |                                   |   |                                   | **6**  |   |   |   | **6** |   |

  

** Formerly known as Basmati Rice GmbH Europe*

  

|                |
|---------------------|
| F-25                |
|                     |
| *Table of Contents* |

     

| ***7.2*** | ***Details of non-wholly owned subsidiaries that have material non-controlling interest*** |
|-----------|--------------------------------------------------------------------------------------------|

  

| **Name of subsidiary**                                                       |   | **Place ofincorporationandprincipalplace ofbusiness** |   |   | **Proportion of ownershipinterest and voting rights heldby non-controlling interest(in USD)** |   |   | **Profit/(loss) allocated to non-controlling interest(in USD)** |   |   | **Accumulated**

**non-controllinginterest(in USD)** |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
|                                                                         |   |                                                       |   |   | **March 31, 2019**                                                                            |   |   | **March 31, 2018**                                              |   |   | **March 31, 2019**                                   |   |   | **March 31, 2018** |   |   | **March 31, 2019** |   |   | **March 31, 2018** |   |
| Amira UK, Basmati Rice LLC Amira Germany**                                   |   |                                                  |        |   |                                                                                          |   |        |                                                            |   |   |                                                      |   |   |   | (99,976 | ) |   |   | - |   |   |   | (2,569,581 | ) |   |   | (2,569,581 | ) |
| Others (individually immaterial subsidiaries with non-controlling interests) |   |                                                  |   |   |                                                                                          |   |   |                                                            |   |   |                                                 |   |   |   | (52,865,283 | ) |   |   | 532,428 |   |   |   | (4,173,025 | ) |   |   | (4,079,296 | ) |
| **Total**                                                                    |   |                                                  |   |   |                                                                                          |   |   |                                                            |   |   |                                                 |   |   |   | **(52,965,259** | **)** |   |   | **(15,373,590** | **)** |   |   | **(13,677,112** | **)** |   |   | **22,894,015** |   |

 

** The Non-controlling interest (NCI) is computed using 7,005,434 shares (assuming exchange under the’ exchange agreement’).*

**Amira Basmati Rice LLC (US), Amira G Foods (UK) and Amira Basmati Rice GmBH (Germany) have been transferred under a common control transaction in fiscal 2018 and accordingly, there is no NCI in those entities.

 

| **8.** | **Property, plant and equipment** |
|--------|-----------------------------------|

    

|                             |   | **Buildings** |          |   | **Freehold**

**Land** |   |           | **Plant and**

**machinery** |   |   | **Furniture**

**and fixtures** |   |   | **Office**

**Equipment** |         |   | **Vehicles** |   |          | **Total** |   |
|----------------------------------|--------|---------------|---------------|--------|------------------------|--------|----------------|------------------------------|--------|--------|---------------------------------|--------|--------|---------------------------|--------------|--------|--------------|--------|---------------|-----------|--------|
| **Cost**                         |   |          |          |   |                   |   |           |                         |   |   |                            |   |   |                      |         |   |         |   |          |      |   |
| **Balance as at March 31, 2017** |   | **$**         | **4,697,879** |   |                   | **$**  | **3,066,950**  |                         |   | **$**  | **23,396,077**                  |   |   | **$**                     | **921,319**  |   |         | **$**  | **1,000,839** |      |   | **$** | **1,285,577** |   |   | **$** | **34,368,641** |   |
| - Additions                      |   |          | **5,476**     |   |                   |   | **-**          |                         |   |   | **22,599**                      |   |   |                      | **-**        |   |         |   | **2,159**     |      |   |   | **69,806** |   |   |   | **100,040** |   |
| - Disposals                      |   |          | **-**         |   |                   |   | **-**          |                         |   |   | **-**                           |   |   |                      | **-**        |   |         |   | **-**         |      |   |   | **(227,223** | **)** |   |   | **(227,223** | **)** |
| - Translation adjustment         |   |          | **(10,078**   | **)**  |                   |   | **(6,956**     | **)**                        |   |   | **(19,935**                     | **)**  |   |                      | **(1,998**   | **)**  |         |   | **2,191**     |      |   |   | **15,130** |   |   |   | **(21,647** | **)** |
| **Balance as at March 31, 2018** |   |          | **4,693,277** |   |                   |   | **3,059,994**  |                         |   |   | **23,398,741**                  |   |   |                      | **919,321**  |   |         |   | **1,005,189** |      |   |   | **1,143,290** |   |   |   | **34,219,811** |   |
| - Additions                      |   |          |          |   |                   |   |           |                         |   |   |                            |   |   |                      |         |   |         |   |          |      |   |   |   |   |   |   |   |   |
| - Disposals                      |   |          | **(4693,277** | **)**  |                   |   | **(3,059,994** | **)**                        |   |   | **(23,137,626**                 | **)**  |   |                      | **(907,121** | **)**  |         |   | **(971,776**  | **)**     |   |   | **(996,983** | **)** |   |   | **(33,766,776** | **)** |
| - Translation adjustment         |   |          |          |   |                   |   |           |                         |   |   | **(22,275**                     | **)**  |   |                      |         |   |         |   | **(2,885**    | **)**     |   |   | **(12,064** | **)** |   |   | **(37,224** | **)** |
| **Balance as at March 31, 2019** |   |          | **-**         |   |                   |   | **-**          |                         |   |   | **238,840**                     |   |   |                      | **12,200**   |   |         |   | **30,528**    |      |   |   | **134,243** |   |   |   | **415,811** |   |
| **Depreciation and impairment**  |   |          |          |   |                   |   |           |                         |   |   |                            |   |   |                      |         |   |         |   |          |      |   |   |   |   |   |   |   |   |
| **Balance as at March 31, 2017** |   | **$**         | **1,681,725** |   |                   | **$**  | **-**          |                         |   | **$**  | **11,281,405**                  |   |   | **$**                     | **625,605**  |   |         | **$**  | **975,447**   |      |   | **$** | **1,130,346** |   |   | **$** | **15,694,528** |   |
| - Depreciation charge            |   |          | 165,763       |   |                   |   | -              |                         |   |   | 1,108,576                       |   |   |                      | 126,663      |   |         |   | 26,261        |      |   |   | 67,321 |   |   |   | 1,494,584 |   |
| - Disposals                      |   |          | -             |   |                   |   | -              |                         |   |   | -                               |   |   |                      | -            |   |         |   | -             |      |   |   | (209,282 | ) |   |   | (209,282 | ) |
| - Translation adjustment         |   |          | (4,825        | )      |                   |   | -              |                         |   |   | (11,777                         | )      |   |                      | (2,094       | )      |         |   | 1,030         |      |   |   | 6,333 |   |   |   | (11,333 | ) |
| **Balance as at March 31, 2018** |   | **$**         | **1,842,663** |   |                   | **$**  | **-**          |                         |   | **$**  | **12,378,204**                  |   |   | **$**                     | **750,174**  |   |         | **$**  | **1,002,738** |      |   | **$** | **994,718** |   |   | **$** | **16,968,497** |   |
| - Depreciation charge            |   |          |          |   |                   |   |           |                         |   |   | 22,960                          |   |   |                      |         |   |         |   | 3,931         |      |   |   | 21,437 |   |   |   | 48,328 |   |
| - Disposals                      |   |          | (1,696,848    | )      |                   |   | -              |                         |   |   | (11,935,765                     | )      |   |                      | (740,523     | )      |         |   | (1,000,139    | )         |   |   | (972,163 | ) |   |   | (16,345,438 | ) |
| - Impairment                     |   |          | (145,815      | )      |                   |   |           |                         |   |   | (404,615                        | )      |   |                      | (7,151       | )      |         |   | (2,667        | )         |   |   | (667 | ) |   |   | (560,915 | ) |
| - Translation adjustment         |   |          |          |   |                   |   |           |                         |   |   | (16,593                         | )      |   |                      |         |   |         |   | (2,526        | )         |   |   | (7,781 | ) |   |   | (26,900 | ) |
| **Balance as at March 31, 2019** |   | **$**         | **-**         |   |                   |   | **-**          |                         |   |   | **44,191**                      |   |   |                      | **2,500**    |   |         |   | **1,337**     |      |   |   | **35,544** |   |   |   | **83,572** |   |
| **Carrying value**               |   |          |          |   |                   |   |           |                         |   |   |                            |   |   |                      |         |   |         |   |          |      |   |   |   |   |   |   |   |   |
| At March 31, 2018                |   | $             | 2,850,614     |   |                   |   | 3,059,994      |                         |   |   | 11,020,537                      |   |   |                      | 169,147      |   |         |   | 2,451         |      |   |   | 148,578 |   |   |   | 17,251,314 |   |
| At March 31, 2019                |   | $             | -             |   |                   |   | -              |                         |   |   | 44,191                          |   |   |                      | 2,500        |   |         |   | 1,337         |      |   |   | 35,544 |   |   |   | 83,572 |   |

      

|                |
|---------------------|
| F-26                |
|                     |
| *Table of Contents* |

    

Property, plant and equipment with carrying values of $ NIL* as of March 31, 2019 (March 31, 2018: $14,382,951) has been pledged as collateral against the Group’s debt (Note 22).

    

* In respect of the securities of assets of the Associate company i-e Amira India, refer note 6.1. Due to losses, carrying value of Associate is Nil as on March 31, 2019.

       

Due to non-existence of Going Concern assumption in Amira India, the carrying amount of Property, Plant and Equipment of Amira India has been brought to its estimated realizable value. The impairment loss of USD $560,915 has been accounted for. The residual value (in accordance with IAS 16) of assets is considered as estimated realizable value for these assets.  

    

Plant and machinery, building and furniture and fixtures include capital work in progress and capital advance as follows:

 

|                                                      |   | **March 31, 2019** |          |   | **March 31, 2018** |   |
|-----------------------------------------------------------|--------|--------------------|---------------|--------|--------------------|--------|
| **Work in progress**                                      |   |               |          |   |               |   |
| Plant and machinery                                       |   | $                  | 1,549,102     |   |               | $      | 1,549,102 |   |
| Building                                                  |   |               | 961,718       |   |               |   | 961,718 |   |
| Furniture and fixtures (including leasehold improvements) |   |               | -             |   |               |   | - |   |
|                                                      |   | **$**              | **2,510,820** |   |               | **$**  | **2,510,820** |   |
|                                                      |   |               |          |   |               |   |   |   |
| **Capital advance**                                       |   |               |          |   |               |   |   |   |
| Plant and machinery                                       |   | $                  | (10,201       | )      |               | $      | (10,201 | ) |
| Furniture and fixtures                                    |   |               | -             |   |               |   | - |   |
|                                                      |   |               |          |   |               |   |   |   |
| **Total**                                                 |   | **$**              | **2,500,619** |   |               | **$**  | **2,500,619** |   |

 

Capital commitments for each of the three years have been summarized in Note 33.

 

| **9.** | **Goodwill** |
|--------|--------------|

 

| **Cost**                         |   |   |          |
|----------------------------------|--------|--------|---------------|
| **Balance as at March 31, 2017** |   | **$**  | **1,386,322** |   |
| - Additions                      |   |   | -             |   |
| - Translation adjustment         |   |   | 182,285       |  |
| **Balance as at March 31, 2018** |   | **$**  | **1,568,607** |   |
| - Additions                      |   |   | -             |   |
| - Translation adjustment         |   |   | (122,731      | ) |
| **Balance as at March 31, 2019** |   | **$**  | **1,445,876** |   |
| **Carrying value**               |   |   |          |   |
| At March 31, 2018                |   | $      | 1,568,607     |   |
| At March 31, 2019                |   |   | 1,445,876     |   |

 

Goodwill has been allocated to the rice and related products, an operating segment.

 

The recoverable amount of at least $2 million for the cash-generating unit (Amira Basmati Rice GmbH EUR (formerly known as Basmati Rice GmbH Europe) and Basmati Rice North America LLC, collectively “Basmati GmbH/LLC”) has been determined based on a value in use calculation which uses estimated cash flows for a period of 5 years which were developed using forecasts, and a pre-tax discount rate of 15%. The cash flows beyond 5 years have been extrapolated assuming a steady growth rate of 1.5%. The management believes that any reasonably possible change in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the cash-generating unit. There is no impairment loss to be recognized during the year ended March 31, 2019.

  

|                |
|---------------------|
| F-27                |
|                     |
| *Table of Contents* |

   

| **10.** | **Other intangible assets** |
|---------|-----------------------------|

 

|                             |   | **Trademarks**

**registration fees** |        |   | **Software** |   |        | **Indefinite life****Brands** |   |   | **Customer****relationships** |   |   | **Favorable****lease** |        |   | **Total** |   |
|----------------------------------|--------|---------------------------------------|-------------|--------|--------------|--------|-------------|-------------------------------|--------|--------|-------------------------------|--------|--------|------------------------|-------------|--------|-----------|--------|
| **Cost**                         |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |
| **Balance as at March 31, 2017** |   | **$**                                 | **825,657** |   |         | **$**  | **130,237** |                          |   | **$**  | **816,127**                   |   |   | **$**                  | **309,787** |   |      | **$**  | **58,755** |   |   | **$** | **2,140,563** |   |
| - Additions                      |   |                                  | -           |   |         |   | -           |                          |   |   | -                             |   |   |                   | -           |   |      |   | - |   |   |   | - |   |
| - Translation adjustment         |   |                                  | (1,828      | )      |         |   | (295        | )                             |   |   | 125,403                       |   |   |                   | 47,601      |   |      |   | 9,027 |   |   |   | 179,908 |   |
| **Balance as at March 31, 2018** |   | **$**                                 | **823,829** |   |         | **$**  | **129,942** |                          |   | **$**  | **941,530**                   |   |   | **$**                  | **357,388** |   |      | **$**  | **67,782** |   |   | **$** | **2,320,471** |   |
| - Additions                      |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| - Disposals                      |   |                                  | (275,313    | )      |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| - Translation adjustment         |   |                                  |        |   |         |   |        |                          |   |   | (84,443                       | )      |   |                   | (32,038     | )      |      |   | (6,079 | ) |   |   | (122,560 | ) |
| **Balance as at March 31, 2019** |   | **$**                                 | **548,516** |   |         |   | **129,942** |                          |   |   | **857,087**                   |   |   |                   | **325,350** |   |      |   | **61,703** |   |   |   | **1,922,598** |   |
|                             |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| **Amortization and impairment**  |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| **Balance as at March 31, 2017** |   | **$**                                 | **468,768** |   |         | **$**  | **130,237** |                          |   | **$**  | **-**                         |   |   | **$**                  | **83,972**  |   |      | **$**  | **38,223** |   |   | **$** | **721,200** |   |
| - Amortization charge            |   |                                  | 81,376      |   |         |   | -           |                          |   |   | -                             |   |   |                   | 28,283      |   |      |   | 12,874 |   |   |   | 122,533 |   |
| - Translation adjustment         |   |                                  | (1,628      | )      |         |   | (295        | )                             |   |   | -                             |   |   |                   | 14,402      |   |      |   | 6,555 |   |   |   | 19,034 |   |
| **Balance as at March 31, 2018** |   | **$**                                 | **548,516** |   |         | **$**  | **129,942** |                          |   | **$**  | **-**                         |   |   | **$**                  | **126,657** |   |      | **$**  | **57,652** |   |   | **$** | **862,767** |   |
| - Amortization charge            |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   | 27,984      |   |      |   | 9,518 |   |   |   | 37,503 |   |
| - Translation adjustment         |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   | (12,231     | )      |      |   | (5,467 | ) |   |   | (17,697 | ) |
| **Balance as at March 31, 2019** |   | $                                     | -           |   |         |   |        |                          |   |   | **-**                         |   |   |                   | **142,410** |   |      |   | **61,703** |   |   |   | **882,573** |   |
|                             |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| **Carrying value**               |   |                                  |        |   |         |   |        |                          |   |   |                          |   |   |                   |        |   |      |   |   |   |   |   |   |   |
| At March 31, 2018                |   |                                  | 275,313     |   |         |   | -           |                          |   |   | 941,530                       |   |   |                   | 230,731     |   |      |   | 10,130 |   |   |   | 1,457,704 |   |
| At March 31, 2019                |   |                                  | -           |   |         |   | -           |                          |   |   | 857,087                       |   |   |                   | 182,940     |   |      |   | - |   |   |   | 1,040,027 |   |

 

The useful life of brands (consisting mainly of the Atry and Scheherazade brand names) in respect of the acquisition have been determined to be indefinite as the Group expects to generate future economic benefits indefinitely from these assets.

 

The indefinite life intangible assets relate to the Amira Basmati Rice GmbH EUR (formerly known as Basmati Rice GmbH Europe) and Basmati Rice North America LLC business (Note 9).

   

Amira has portfolio of packaged specialty rice brands which include Al Amir, Al Hakim, Bano, Dalia, Hanna and Shah Pari brands from Euro Basmati GmbH in Germany.

   

| **11.** | **Other long-term financial assets** |
|---------|--------------------------------------|

 

Other long-term financial assets comprise the following:

 

|                          |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|-------------------------------|--------|--------------------|-------------|--------|--------------------|--------|
| Security deposits, restricted |   | $                  | 109,062     |   |               | $      | 235,300 |   |
| Term deposits                 |   |               | -           |   |               |   | 1,270 |   |
| **Total**                     |   | **$**              | **109,062** |   |               | **$**  | **236,570** |   |

 

*Security deposits*

 

Security deposits primarily include refundable interest free deposits placed with electricity board and paid for office premises and warehouses.

 

*Term deposits*

 

Term deposits represent deposits with banks along with corresponding interest accrued that has been pledged with banks for guarantees and letter of credit issued to meet contractual obligations related to sale and purchase arrangements.

 

|                |
|---------------------|
| F-28                |
|                     |
| *Table of Contents* |

  

| **12.** | **Inventories** |
|---------|-----------------|

 

Inventories comprise the following:

 

|                      |   | **March 31, 2019** |          |   | **March 31, 2018** |   |
|---------------------------|--------|--------------------|---------------|--------|--------------------|--------|
| Raw materials             |   | $                  | 593,536       |   |               | $      | 209,162 |   |
| Finished goods            |   |               | 409,566       |   |               |   | 160,558,326 |   |
| Stores, spares and others |   |               | 169,267       |   |               |   | 511,375 |   |
| **Total**                 |   | **$**              | **1,172,369** |   |               | **$**  | **161,278,863** |   |

    

Inventories with carrying values of $ NIL* as of March 31, 2019 (March 31, 2018: $149,025,563) have been pledged against the Group’s debt (Note 22). The above amount of inventory is net of write down in the values of inventory of Amira India amounting to USD 2,848,825 for the reasons stated in note below**. (the physical custody of inventory of Amira India is with official liquidator appointed by NCLT. Any amount realized will be accounted for by official liquidator)

     

The cost of inventories as expense during the year was $197,070,428 (March 31, 2018: $479,644,712).

 

As of March 31, 2018, the group conservatively recognized provision for impairment of inventory for the amount of $134.0 million on account of impairment in (realizable values of) inventory. The adverse impact on realizable values is attributed primarily to quality deterioration of a part of inventory and partly to levy of GST on branded food products, (unlike the case in erstwhile VAT (Value added tax) regime).

  

An amount of $2,848,825 (March 31, 2018: $99,519) for inventory write downs are recognized for the year ended March 31, 2019. Inventory also includes borrowing costs (Note 27).

     

* In respect of the securities of assets of the Associate company i-e Amira India, refer note 6.1. Due to losses, carrying value of Associate is Nil as on March 31, 2019.

   

** The inventory write down accounted for the year ended March 31, 2019 has been considered based on the fact that management feels that proper fumigation and upkeep of inventory was not up to the standard and hence the quality of rice, being a perishable commodity, may not fetch the carrying amount of inventory.

     

| **13.** | **Trade receivables** |
|---------|-----------------------|

 

Trade receivables comprise the following:

 

|                                       |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|--------------------------------------------|--------|--------------------|-------------|--------|--------------------|--------|
| Gross value                                |   | $                  | 646,677     |   |               | $      | 260,290,455 |   |
| Less: Provision for bad and doubtful debts |   |               | (284,107    | )      |               |   | (1,958,492 | ) |
| **Net trade receivables**                  |   | **$**              | **362,570** |   |               | **$**  | **258,331,963** |   |

  

Trade receivables of $ NIL * as of March 31, 2019 (March 31, 2018: $119,577,956) have been pledged as collateral against the Group’s debt (Note 22).

   

* In respect of the securities of assets of the Associate company i-e Amira India, refer note 6.1. Due to losses, carrying value of Associate is Nil as on March 31, 2019.

   

All of the Group’s trade receivables have been reviewed for indicators of impairment. An analysis of net unimpaired trade receivables that are past due is given in Note 37.2.

   

Movement in provision for bad and doubtful debts is shown below: 

    

|                                 |   | **March 31, 2019** |       |   | **March 31, 2018** |   |
|--------------------------------------|--------|--------------------|------------|--------|--------------------|--------|
| At the beginning of the year         |   | $                  | 1,958,492  |   |               | $      | 3,639,942 |   |
| Add: During the year                 |   |               | (1,674,385 | )      |               |   | (1,675,460 | ) |
| Add/ (less): Translation adjustments |   |               | -          |   |               |   | (5,990 | ) |
| **At the end of the year**           |   | $                  | 284,107    |   |               | **$**  | **1,958,492** |   |

 

As of March 31, 2019, the group conservatively recognized provision for impairment of trade receivables for the amount of $0.3 million on account of impairment in (realizable values of) trade receivable. The adverse impact on realizable values is attributed primarily due to impact of levy of GST/ VAT on branded food products, (unlike the case in erstwhile VAT (Value added tax) regime) / on all products and demonetization.

 

| **14.** | **Other financial assets** |
|---------|----------------------------|

 

Other financial assets comprise the following:

 

|                                             |   | **March 31, 2019** |      |   | **March 31, 2018** |   |
|--------------------------------------------------|--------|--------------------|-----------|--------|--------------------|--------|
| Security deposits, restricted                    |   | $                  | -         |   |               | $      | 122,158 |   |
| Term deposits, restricted                        |   |               | -         |   |               |   | 2,352,525 |   |
| Interest receivable                              |   |               | -         |   |               |   | 673,869 |   |
| Investment in listed securities and mutual funds |   |               | -         |   |               |   | 398,034 |   |
| Other receivables                                |   |               | 1,200     |   |               |   | 65,646 |   |
| **Total**                                        |   | **$**              | **1,200** |   |               | **$**  | **3,612,232** |   |

 

As at March 31, 2018, security deposits primarily comprise of deposits being placed with corporate credit cards agency.

 

|                |
|---------------------|
| F-29                |
|                     |
| *Table of Contents* |

  

As at March 31, 2018, security deposits primarily comprise of deposits being placed with global public sector organization customers. Such deposits were given as part of contracts between the Group and such organizations.

 

Term deposits represent deposits with banks, along with corresponding accrued interest, that have been pledged with banks for guarantees and letter of credit issued to meet contractual obligations related to sale and purchase arrangements.

 

| **15.** | **Prepayments** |
|---------|-----------------|

 

Prepayments comprise the following:

 

|                  |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|-----------------------|--------|--------------------|-------------|--------|--------------------|--------|
| Prepaid expenses      |   | $                  | 45,848      |   |               | $      | 347,052 |   |
| Advances to suppliers |   |               | 107,951     |   |               |   | 65,630,203 |   |
| Other prepayments     |   |               | 42,779      |   |               |   | - |   |
| **Total**             |   | **$**              | **196,578** |   |               | **$**  | **65,977,255** |   |

 

| **16.** | **Other current assets** |
|---------|--------------------------|

 

Other current assets comprise the following:

 

|                                        |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|---------------------------------------------|--------|--------------------|-------------|--------|--------------------|--------|
| Advances to employees                       |   | $                  | 41,748      |   |               | $      | 313,167 |   |
| Service tax and other tax credit receivable |   |               | 6,546       |   |               |   | 694,595 |   |
| Other receivables                           |   |               | 465,006     |   |               |   | 162,438 |   |
| **Total**                                   |   | **$**              | **513,300** |   |               | **$**  | **1,170,200** |   |

 

| **17.** | **Cash and cash equivalents** |
|---------|-------------------------------|

 

Cash and cash equivalents comprise the following:

 

|                     |   | **March 31, 2019** |           |   | **March 31, 2018** |   |
|--------------------------|--------|--------------------|----------------|--------|--------------------|--------|
| Cash on hand             |   | $                  | 1,397          |   |               | $      | 41,352 |   |
| Cash in current accounts |   |               | 21,230,614     |   |               |   | 1,175,290 |   |
| Bank deposits            |   |               | -              |   |               |   | - |   |
| **Total**                |   | **$**              | **21,232,011** |   |               | **$**  | **1,216,642** |   |

 

| **18.** | **Equity** |
|---------|------------|

 

| ***18.1*** | ***Share capital*** |
|------------|---------------------|

 

RYCE was incorporated 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 authorized and issued are summarized as follows:

 

| **Shares issued and fully paid:**                                                                                                                                                                                            |   | **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 under the share-based compensation plan during the year ended March 31, 2017                                                                                                                                   |   |              | 2,233,264      |   |
| Shares issued to 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 under the share-based compensation plan during the nine months ended March 31, 2018                                                                                                                            |   |              | 3,744,198      |   |
| Shares issued under S-8 during the nine months ended March 31, 2018                                                                                                                                                          |   |              | 2,659,847      |   |
| **Total shares issued and fully paid as at March 31, 2018**                                                                                                                                                                  |   |              | **38,013,474** |   |
| Shares issued under the share-based compensation plan during the six months ended March 31, 2019                                                                                                                             |   |              | 1,984,458      |   |
| Shares issued under S-8 during the six months ended March 31, 2019                                                                                                                                                           |   |              | 1,498,740      |   |
| **Total shares issued and fully paid as at March 31, 2019 (A)**                                                                                                                                                              |   |              | **41,496,672** |   |
|                                                                                                                                                                                                                         |   |              |           |   |
| Shares issuable pursuant to exchange agreement*** (B)                                                                                                                                                                        |   |              | 7,005,434      |   |
| **(C) = (A) + (B)**                                                                                                                                                                                                          |   |              | **48,502,106** |   |

 

**Represents ordinary shares issuable to NCI shareholders in APFPL pursuant to share exchange agreement.*

***Represents shares issued under share-based compensation plan (2012 & 2017 Omnibus Plan) and also otherwise.*

 

|                |
|---------------------|
| F-30                |
|                     |
| *Table of Contents* |

  

| **19.** | **Share-based compensation** |
|---------|------------------------------|

 

RYCE 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 RYCE and its subsidiaries.

 

The 2012 Plan is administered by the compensation committee of the Board of Directors.

 

The 2012 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, RYCE or any of its subsidiaries. However, incentive share options awards are solely for employees of the Group. The Group had reserved a total of 3,962,826 ordinary shares for issuance as or under awards to be made under the Plan. RYCE 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 & 2017 Omnibus**

**Securities and Incentive Plan** |   | **No. of Shares** |          |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------------|
| Shares authorized for share-based compensation                                                                                 |   |              | 3,962,826     |   |
| Granted / Issued in FY13                                                                                                       |   |              | (11,000       | ) |
| **Remaining as at March 31, 2013**                                                                                             |   |              | **3,951,826** |   |
| Granted / Issued in FY14                                                                                                       |   |              | (3,997        | ) |
| **Remaining as at March 31, 2014**                                                                                             |   |              | **3,947,829** |   |
| Granted / Issued in FY15                                                                                                       |   |              | (105,167      | ) |
| **Remaining as at March 31, 2015**                                                                                             |   |              | **3,842,662** |   |
| Granted / Issued in FY16                                                                                                       |   |              | (179,334      | ) |
| **Remaining as at March 31, 2016**                                                                                             |   |              | **3,663,328** |   |
| Granted / Issued in FY17                                                                                                       |   |              | (2,233,264    | ) |
| **Remaining as at March 31, 2017**                                                                                             |   |              | **1,430,064** |   |
| Shares authorized for share-based compensation                                                                                 |   |              | **4,500,000** |   |
| Granted / Issued in FY18                                                                                                       |   |              | (3,744,198    | ) |
| **Remaining as at March 31, 2018**                                                                                             |   |              | **2,185,866** |   |
| Granted / Issued in FY19                                                                                                       |   |              | (1,984,458    | ) |
| **Shares authorized for share-based compensation (Net of shares already granted to directors) as on Mar 31, 2019**             |   |              | **201,408**   |   |

 

On June 14, 2012, the Company entered into an employment agreement with its Chairman, 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. Post the Board meeting of October 21, 2017, Karan A. Chanana continues to serve the business in the capacity of the Chairman and CEO. However, pending a documented agreement, he has not been remunerated/ paid remuneration as the Chief Executive Officer during the fiscal 2017-18.

 

|                |
|---------------------|
| F-31                |
|                     |
| *Table of Contents* |

  

**19.1 Share awards**

 

On June 14, 2012, the Company entered into an employment agreement with its Chairman, 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. Post the Board meeting of October 21, 2017, Karan A. Chanana continues to serve the business in the capacity of the Chairman and CEO. However, pending a documented agreement, he has not been remunerated/ paid remuneration as the Chief Executive Officer during the fiscal 2017-18.

 

We have created a provision for share compensation reserve of $536,000 in respect of 100,000 share awards granted to RYCE Chairman in Fiscal 2018 as approved by the Board in the meeting concluded in October 2017.

 

**19.2 Share options**

 

| **a)** | **Mr. Karan A. Chanana (RYCE’s Chairman)** |
|--------|--------------------------------------------------|

 

RYCE has not granted* any share options to Mr. Karan A. Chanana (RYCE’s Chairman) during fiscal 2018-19. Details of share options granted historically to Mr. Karan A. Chanana are as below:

 

| **For the period ended**                              |   | **March 31, 2019** |   |   | **March 31, 2018** |   |   | **March 31, 2017** |   |
|-------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| No. of share options granted                          |   |               | -      |   |               |   | -      |               |   |   | 375,899 |   |
| Exercise price                                        |   | $                  | -      |   |               | $      | -      |               |   | $ | 10 |   |
| Grant date                                            |   |               | -      |   |               |   | -      |               |   | July 15, 2016 |   |
| Exercise period                                       |   |               | -      |   |               |   | -      |               |   | 10 years |   |
| Valuation model used                                  |   |               | -      |   |               |   | -      |               |   | Binomial |   |
| Share based compensation recognized in profit or loss |   |               | -      |   |               |   | -      | #                  |   | $ | 853,776 | # |

 

*#**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.*

 

|                |
|---------------------|
| F-32                |
|                     |
| *Table of Contents* |

  

The fair values of options granted during the years ended March 31, 2017, 2016, 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 Group do not have any historical pattern for exercise of share option. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| • | Dividend yield is taken as zero as the Group 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** |   |
|--------------------------------------------------|--------|-------------------|--------|--------|------------------|--------|
| Fair value of the option using appropriate model |   | $                 | 2.27   |   |             | $      | 5.14 |   |
| Fair value of shares at grant date               |   | $                 | 7.48   |   |             | $      | 11.47 |   |
| Exercise price                                   |   | $                 | 10.00  |   |             | $      | 10.00 |   |
| Exercise multiple                                |   |              | 2.5    |   |             |   | 2.5 |   |
| Expected time to exercise (years)                |   |              | -      |   |             |   | 3.4 |   |
| Expected volatility                              |   |              | 28.89  | %      |             |   | 27.00 | % |
| Total life of Options                            |   |              | 10     |   |             |   | 10 |   |
| Dividend yield                                   |   |              | 0      | %      |             |   | 0 | % |
| Risk-free interest rate                          |   |              | 1.56   | %      |             |   | 2.26 | % |

  

| **20.** | **Trade payables and other current liabilities** |
|---------|--------------------------------------------------|

 

Trade payables and other current liabilities comprise the following:

 

|                                    |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|-----------------------------------------|--------|--------------------|-------------|--------|--------------------|--------|
|                                    |   |               |        |   |               |   |
| **Trade payables (A)**                  |   | **$**              | **172,862** |   |               | **$**  | **11,741,143** |   |
|                                    |   |               |        |   |               |   |   |   |
| **Other current liabilities**           |   |               |        |   |               |   |   |   |
| Statutory dues                          |   |               | 8,341       |   |               |   | 431,446 |   |
| Advance received from customers         |   |               | -           |   |               |   | 424,991 |   |
| Other liabilities                       |   |               | -           |   |               |   | 14,722 |   |
| **Total other current liabilities (B)** |   | **$**              | **8,341**   |   |               | **$**  | **871,159** |   |
|                                    |   |               |        |   |               |   |   |   |
| **Total (A) + (B)**                     |   | **$**              | **181,203** |   |               | **$**  | **12,612,302** |   |

 

| **21.** | **Other financial liabilities** |
|---------|---------------------------------|

 

Other financial liabilities comprise the following:

  

|                                  |   | **March 31, 2019** |          |   | **March 31, 2018** |   |
|---------------------------------------|--------|--------------------|---------------|--------|--------------------|--------|
| Expenses payable                      |   | $                  | 4,753,565     |   |               | $      | 3,125,704 |   |
| Salary payable                        |   |               | -             |   |               |   | 1,567,348 |   |
| Security deposits                     |   |               | -             |   |               |   | 10,815 |   |
| Liability for compensated absences    |   |               | -             |   |               |   | 183,411 |   |
| Other liabilities                     |   |               | 921,438       |   |               |   | 2,398,195 |   |
| **Total other financial liabilities** |   | **$**              | **5,675,003** |   |               | **$**  | **7,285,473** |   |

   

|                |
|---------------------|
| F-33                |
|                     |
| *Table of Contents* |

  

| **22.** | **Debt** |
|---------|----------|

 

Debt comprises working capital loans, vehicle loans and term loans. These can be classified in the categories mentioned below: 

 

| ***22.1*** | ***Non-current debt*** |
|------------|------------------------|

 

|                                      |   | **March 31, 2019** |           |   | **March 31, 2018** |   |
|-------------------------------------------|--------|--------------------|----------------|--------|--------------------|--------|
| Term loans                                |   | $                  | 27,555,588     |   |               | $      | 1,421,911 |   |
| Vehicle loans                             |   |               | 25,387         |   |               |   | 33,292 |   |
| **Total debt**                            |   | **$**              | **27,580,975** |   |               | **$**  | **1,455,203** |   |
| Less: Amount reclassified to current debt |   |               | -              |   |               |   | (1,427,773 | ) |
| **Total non-current debt**                |   | **$**              | **27,580,975** |   |               | **$**  | **27,430** |   |

 

Term loans relate to plant and machinery and carry a floating rate of interest and all vehicle loans carry a fixed rate of interest.

 

The weighted average interest rates for each of the reporting periods are as follows:

 

|          |   | **March 31, 2019** |   |   | **March 31, 2018** |   |
|---------------|--------|--------------------|--------|--------|--------------------|--------|
| Term loans    |   |               | 8.5    | %      |               |   | 18.3 | % |
| Vehicle loans |   |               | 6.52   | %      |               |   | 4.6 | % |

 

| ***22.2*** | ***Current debt*** |
|------------|--------------------|

 

|                                          |   | **March 31, 2019** |          |   | **March 31, 2018** |   |
|-----------------------------------------------|--------|--------------------|---------------|--------|--------------------|--------|
| Working capital loans                         |   | $                  | 7,499,960     |   |               | $      | 231,782,800 |   |
| Debt from Mr. Karan A. Chanana and affiliates |   |               | -             |   |               |   | 16,394,751 |   |
| Debt from Other Body Corporates               |   |               | -             |   |               |   | 598,720 |   |
|                                          |   | **$**              | **7,499,960** |   |               | **$**  | **248,776,271** |   |
| Add: Current portion of long term debt        |   |               | -             |   |               |   | 1,427,773 |   |
| **Total current debt**                        |   | **$**              | **7,499,960** |   |               | **$**  | **250,204,044** |   |

  

Working capital loans represent credit limits from banks with renewal period not exceeding one year. The Group’s property, plant and equipment (Note 8), trade receivables (Note 13) and inventories (Note 12) have been pledged as collateral to secure repayment of these debts. These secured revolving credit facilities carry floating rates of interest. The figures reported as at March 31, 2019 excludes the bank loans outstanding in the books of Amira India, which is now an Associate entity. Amira India has not been able to serve these loans and bankers have filed a bankruptcy case as per Insolvency law in India. 

     

Debt from Mr. Karan A. Chanana and affiliates comprises debt taken from a director of the Company that is payable on demand and carries a fixed rate of interest of 11% per annum, compounded daily. This debt has been converted on November 14, 2018.  

     

The 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 is as follows:

   

|                           |   | **March 31, 2019** |   |   | **March 31, 2018** |   |
|--------------------------------|--------|--------------------|--------|--------|--------------------|--------|
| Working capital loans          |   |               | 10     | %      |               |   | 12.68 | % |
| Debt from Mr. Karan A. Chanana |   |               | 11.60  | %      |               |   | 11.60 | % |
| Debt from other related party  |   |               | 9.29   | %      |               |   | 9.29 | % |

  

| **23.** | **Income taxes** |
|---------|------------------|

  

| ***23.1*** | ***Deferred tax liabilities (net)*** |
|------------|--------------------------------------|

 

Deferred tax assets and (liabilities) arising from temporary differences are summarized as follows:

 

|                |
|---------------------|
| F-34                |
|                     |
| *Table of Contents* |

   

|                                              |   | **March 31,********2017** |           |   | **Change in********opening********balance due********to change in********tax rates** |   |        | **Recognized in********consolidated********statements of********other********comprehensive********income** |   |   | **Recognized in********consolidated********statement of********profit or loss** |   |   | **Translation********adjustment** |          |   | **March 31,********2018** |   |
|---------------------------------------------------|--------|---------------------------|----------------|--------|--------------------------------------------------------------------------------------|--------|-------------|------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|-----------------------------------|---------------|--------|---------------------------|--------|
| Intangible assets                                 |   | $                         | (318,772       | )      |                                                                                 | $      | 1           |                                                                                                       |   | $      | -                                                                               |   |   | $                                 | 4,119         |   |                      | $      | (48,548 | ) |   | $ | (363,200 | ) |
| Property, plant and equipment                     |   |                      | 591,541        |   |                                                                                 |   | 5,581       |                                                                                                       |   |   | -                                                                               |   |   |                              | (1,567,605    | )      |                      |   | 13,656 |   |   |   | (956,827 | ) |
| Employee benefits                                 |   |                      | 173,299        |   |                                                                                 |   | 1,691       |                                                                                                       |   |   | (27,671                                                                         | )      |   |                              | 39,049        |   |                      |   | (491 | ) |   |   | 185,878 |   |
| **Derivative assets/liabilities:**                |   |                      |           |   |                                                                                 |   |        |                                                                                                       |   |   | -                                                                               |   |   |                              | -             |   |                      |   | - |   |   |   | - |   |
| - Forward contracts not used for cash flow hedges |   |                      | -              |   |                                                                                 |   | -           |                                                                                                       |   |   | -                                                                               |   |   |                              | -             |   |                      |   | - |   |   |   | - |   |
| - Forward contracts used for cash flow hedges     |   |                      | -              |   |                                                                                 |   | -           |                                                                                                       |   |   | -                                                                               |   |   |                              | -             |   |                      |   | - |   |   |   | - |   |
| Available for sale reserve                        |   |                      | (8,572         | )      |                                                                                 |   | (84         | )                                                                                                          |   |   | (16,404                                                                         | )      |   |                              | (159          | )      |                      |   | 144 |   |   |   | (25,075 | ) |
| Interest on Inventory                             |   |                      | (5,087,699     | )      |                                                                                 |   | (48,982     | )                                                                                                          |   |   | -                                                                               |   |   |                              | 5,125,344     |   |                      |   | (26,343 | ) |   |   | (37,681 | ) |
| Debt                                              |   |                      | (1,648         | )      |                                                                                 |   | -           |                                                                                                       |   |   | -                                                                               |   |   |                              | 1,530         |   |                      |   | (8 | ) |   |   | (125 | ) |
| Others                                            |   |                      | 160,579        |   |                                                                                 |   | 1,551       |                                                                                                       |   |   | -                                                                               |   |   |                              | 235,092       |   |                      |   | (2,134 | ) |   |   | 395,088 |   |
| **Total**                                         |   | **$**                     | **(4,491,272** | **)**  |                                                                                 | **$**  | **(40,242** | **)**                                                                                                      |   | **$**  | **(44,075**                                                                     | **)**  |   | **$**                             | **3,837,370** |   |                      | **$**  | **(63,724** | **)** |   | **$** | **(801,942** | **)** |

  

|                                              |   | **March 31,********2018** |   |   | **Change in********opening********balance due********to change in********tax rates** |   |   | **Recognized in********consolidated********statements of********other********comprehensive********income** |   |   | **Recognized in********consolidated********statement of********profit or loss** |   |   | **Translation********adjustment** |   |   | **March 31,********2019** |   |
|---------------------------------------------------|--------|---------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|-----------------------------------|--------|--------|---------------------------|--------|
| Intangible assets                                 |   | $                         | -      |   |                                                                                 | $      | -      |                                                                                                       |   | $      | -                                                                               |   |   | $                                 | -      |   |                      | $      | - |   |   | $ | - |   |
| Property, plant and equipment                     |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| Employee benefits                                 |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| **Derivative assets/liabilities:**                |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| - Forward contracts not used for cash flow hedges |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| - Forward contracts used for cash flow hedges     |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| Available for sale reserve                        |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| Interest on Inventory                             |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| Debt                                              |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| Others                                            |   |                      | -      |   |                                                                                 |   | -      |                                                                                                       |   |   | -                                                                               |   |   |                              | -      |   |                      |   | - |   |   |   | - |   |
| **Total**                                         |   | **$**                     | **-**  |   |                                                                                 | **$**  | **-**  |                                                                                                       |   | **$**  | **-**                                                                           |   |   | **$**                             | **-**  |   |                      | **$**  | **-** |   |   | **$** | **-** |   |

 

| ***23.2*** | ***Deferred tax assets not recognized*** |
|------------|------------------------------------------|

  

The Group has not created deferred tax assets of $4,671,396 and $4,671,396 as of March 31, 2019 and 2018 respectively relating to carry forward tax losses in Group entities located in Singapore, USA, United Kingdom, Mauritius Malaysia and Germany in the absence of reasonable certainty of availability of sufficient taxable profit in these entities in the future. The following table provides the information relating to expiry period of the carry forward of the tax losses and related deferred tax assets:

  

|                                                         |   | **March 31, 2019** |   |
|--------------------------------------------------------------|--------|--------------------|--------|
|                                                         |   | **Tax losses**     |   |   | **Related deferredtax assets** |   |
| Losses that can be carried forwarded indefinitely            |   | $                  | -      |   |   | $ | - |   |
| Losses that will expire by the year ending March 31, 2023    |   |               | -      |   |   |   | - |   |
| Losses that will expire after the year ending March 31, 2030 |   |               | -      |   |   |   | - |   |
| **Total**                                                    |   | **$**              | **-**  |   |   | **$** | **-** |   |

 

| ***23.3*** | ***Unrecognized temporary differences on account of undistributed earnings of subsidiaries*** |
|------------|-----------------------------------------------------------------------------------------------|

 

The Group has not recognized deferred tax liability on undistributed profits of certain subsidiaries amounting to $NIL (March 31, 2018: $25,283,576) because it is able to control the timing of the reversal of temporary differences associated with such undistributed profits and management believes it is probable that such differences will not reverse in the foreseeable future.

 

|                |
|---------------------|
| F-35                |
|                     |
| *Table of Contents* |

  

| ***23.4*** | ***Deferred tax liabilities (net)*** |
|------------|--------------------------------------|

  

|                               |   | **March 31, 2019** |        |   | **March 31, 2018** |   |
|------------------------------------|--------|--------------------|-------------|--------|--------------------|--------|
| Deferred tax assets                |   | $                  | -           |   |               | $      | 543,285 |   |
| Less: Deferred tax liabilities     |   |               | 291,430     |   |               |   | 1,345,227 |   |
| **Deferred tax liabilities (net)** |   | **$**              | **291,430** |   |               | **$**  | **801,942** |   |

  

| ***23.5*** | ***Income tax expense*** |
|------------|--------------------------|

 

Income tax is based on tax rate applicable on profit and loss in various jurisdictions in which the Group operates.

 

Income tax expense reported in the consolidated statements of profit or loss for the years ended March 31, 2019, 2018 and 2017 is as follows:

 

|                           |   | **March 31, 2019** |   |   | **March 31, 2018** |   |        | **March 31, 2017** |   |
|--------------------------------|--------|--------------------|--------|--------|--------------------|--------|-------------|--------------------|--------|
| Current tax expense            |   | $                  | 11,706 |   |               | $      | (16,144,171 | )                  |   | $ | 5,405,733 |   |
| Deferred tax expense /(income) |   |               | -      |   |               |   | (3,797,127  | )                  |   |   | (808,765 | ) |
| Tax expense for earlier years  |   |               | -      |   |               |   | -           |               |   |   | - |   |
| **Income tax expense**         |   | $                  | 11,706 |   |               | $      | (19,941,298 | )                  |   | **$** | **4,596,968** |   |

 

The income tax expense for the year can be reconciled to the accounting profit as follows:

 

|                                                                                            |   | **March 31, 2019** |         |   | **March 31, 2018** |   |            | **March 31, 2017** |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------|--------------|--------|--------------------|--------|-----------------|--------------------|--------|
| Profit/(loss) before tax                                                                        |   | $                  | (357,888,686 | )      |               | $      | (113,537,062    | )                  |   | $ | 36,108,371 |   |
|                                                                                            |   |               |         |   |               |   |            |               |   |   |   |   |
| **Tax expense reconciliation:**                                                                 |   |               |         |   |               |   |            |               |   |   |   |   |
| Taxes at domestic rate of British Virgin Island***                                              |   |               | -            |   |               |   | -               |               |   |   | - |   |
| Taxes in India at domestic statutory rate – (2019: 34.61%, 2018: 34.61% and 2017: 34.61%) |   |               | -            |   |               |   | 48,495,989      |               |   |   | 3,522,732 |   |
| Impact of change in tax rate                                                                    |   |               | -            |   |               |   | -               |               |   |   | - |   |
| Non-deductible expenses                                                                         |   |               | -            |   |               |   | (24,707         | )                  |   |   | 14,710 |   |
| Tax for earlier years                                                                           |   |               | -            |   |               |   | -               |               |   |   | - |   |
| Others                                                                                          |   |               | (11706       | )      |               |   | (68,412,580     | )                  |   |   | 1,059,526 |   |
| **Tax expense**                                                                                 |   | **$**              | **(11,706**  | **)**  |               | **$**  | **(19,941,298** | **)**              |   | **$** | **4,596,968** |   |

  

****Profits and income are not statutorily taxable in British Virgin Islands.*

 

| **24.** | **Employee benefit expenses** |
|---------|-------------------------------|

 

Expense recognized for employee benefits comprises the following:

 

|                                    |   | **March 31, 2019** |          |   | **March 31, 2018** |   |          | **March 31, 2017** |   |
|-----------------------------------------|--------|--------------------|---------------|--------|--------------------|--------|---------------|--------------------|--------|
| Salaries and wages                      |   | $                  | 4,526,741     |   |               | $      | 5,655,032     |               |   | $ | 6,555,976 |   |
| Bonus to Mr. Karan A. Chanana (Note 31) |   |               | -             |   |               |   | -             |               |   |   | 351,000 |   |
| Compensated absence cost                |   |               | -             |   |               |   | 19,982        |               |   |   | (88,830 | ) |
| Gratuity cost                           |   |               | -             |   |               |   | 63,186        |               |   |   | 75,329 |   |
| Contribution to provident fund          |   |               | 2,998         |   |               |   | 19,793        |               |   |   | 19,965 |   |
| Share-based compensation (Note 31)      |   |               | 1,969,689     |   |               |   | 907,158       |               |   |   | 1,312,246 |   |
| Staff welfare expenses                  |   |               | 16,598        |   |               |   | 132,580       |               |   |   | 527,489 |   |
| **Total**                               |   | **$**              | **6,516,026** |   |               | **$**  | **6,797,731** |               |   | **$** | **8,753,175** |   |

 

|                |
|---------------------|
| F-36                |
|                     |
| *Table of Contents* |

  

Category-wise employee benefits expense:

 

|                         |   | **March 31, 2019** |          |   | **March 31, 2018** |   |          | **March 31, 2017** |   |
|------------------------------|--------|--------------------|---------------|--------|--------------------|--------|---------------|--------------------|--------|
| **Post-employment benefit:** |   |               |          |   |               |   |          |               |   |
| Defined benefit plans        |   | $                  | -             |   |               | $      | 63,186        |               |   | $ | 75,329 |   |
| Defined contribution plans   |   |               | 2,998         |   |               |   | 19,793        |               |   |   | 19,965 |   |
|                         |   |               |          |   |               |   |          |               |   |   |   |   |
| Share-based compensation     |   |               | 1,969,689     |   |               |   | 907,158       |               |   |   | 1,312,246 |   |
| Short term benefit           |   |               | 4,543,339     |   |               |   | 5,807,595     |               |   |   | 7,345,635 |   |
| **Total**                    |   | **$**              | **6,516,026** |   |               | **$**  | **6,797,732** |               |   | **$** | **8,753,175** |   |

 

***Post-employment benefits***

 

Post-employment benefits comprise gratuity (defined benefit plan) and provident fund (defined contribution plan), details of which are given below.

 

| ***24.1*** | ***Gratuity*** |
|------------|----------------|

 

The Group provides gratuity benefits to its employees working in APFPL. The gratuity benefit is a defined benefit plan that, at retirement or termination of employment, provides eligible employees with a lump sum payment, which is a function of the last drawn salary and completed years of service. This is an unfunded plan. The defined benefit obligation is calculated annually by an external actuary using the projected unit credit method.

 

Amount recognized in the consolidated statements of profit or loss in respect of gratuity cost (defined benefit plan) is as follows:

 

|                                                                    |   | **March 31, 2019** |   |   | **March 31, 2018** |   |       | **March 31, 2017** |   |
|-------------------------------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|------------|--------------------|--------|
| Current service cost                                                    |   | $                  | -      |   |               | $      | 41,664     |               |   | $ | 48,884 |   |
| Interest cost                                                           |   |               | -      |   |               |   | 21,522     |               |   |   | 26,445 |   |
| **Expense recognized in the consolidated statements of profit or loss** |   | **$**              | **-**  |   |               | **$**  | **63,186** |               |   | **$** | **75,329** |   |

 

Amount recognized in other comprehensive income consist of:

 

|           |   | **March 31, 2019** |   |   | **March 31, 2018** |   |       | **March 31, 2017** |   |
|----------------|--------|--------------------|--------|--------|--------------------|--------|------------|--------------------|--------|
| Actuarial gain |   | $                  | -      |   |               | $      | 79,955     |               |   | $ | 74,931 |   |
|           |   | **$**              | **-**  |   |               | **$**  | **79,955** |               |   | **$** | **74,931** |   |

 

Cumulative amount of actuarial gains and losses recognized in the other comprehensive income consist of:

 

|           | **March 31, 2019** |   | **March 31, 2018** |   |        | **March 31, 2017** |   |
|----------------|--------------------|--------|--------------------|--------|-------------|--------------------|--------|
| Actuarial gain | $                  | NIL    |               | $      | 191,549     |               |   | $ | 139,974 |   |
|           | $                  | NIL    |               | **$**  | **191,549** |               |   | **$** | **139,974** |   |

 

The principal assumptions used for the purpose of actuarial valuation are as follows:

 

|                                             |   | **March 31, 2019** |   |   | **March 31, 2018** |   |   | **March 31, 2017** |   |
|--------------------------------------------------|--------|--------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| Discount rate                                    |   |               | 0      | %      |               |   | 7.71   | %                  |   |   | 7.54 | % |
| Expected rate of increase in compensation levels |   |               | 0      | %      |               |   | 8.00   | %                  |   |   | 8.00 | % |

 

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|---------------------|
| F-37                |
|                     |
| *Table of Contents* |

    

Change in present value of defined benefit obligation is summarized below:

    

|                                                    |   | **March 31, 2019** |     |   | **March 31, 2018** |   |        | **March 31, 2017** |   |
|---------------------------------------------------------|--------|--------------------|----------|--------|--------------------|--------|-------------|--------------------|--------|
| **Change in defined benefit obligation**                |   |               |     |   |               |   |        |               |   |
| Defined benefit obligation at the beginning of the year |   | $                  | 258,806  |   |               | $      | 283,944     |               |   | $ | 334,928 |   |
| Interest cost                                           |   |               | -        |   |               |   | 21,522      |               |   |   | 26,445 |   |
| Current service cost                                    |   |               | -        |   |               |   | 41,664      |               |   |   | 48,884 |   |
| Benefits paid                                           |   |               | -        |   |               |   | (7,910      | )                  |   |   | (56,547 | ) |
| Actuarial (gain) / loss                                 |   |               | -        |   |               |   | (79,955     | )                  |   |   | (74,931 | ) |
| Translation adjustment                                  |   |               | -        |   |               |   | (459        | )                  |   |   | (5,165 | ) |
| Associate Adjustment                                    |   |               | (258,806 | )      |               |   | -           |               |   |   | - |   |
| **Defined benefit obligation at the end of the year**   |   | **$**              | **0**    |   |               | **$**  | **258,806** |               |   | **$** | **283,944** |   |

    

**Experience adjustments on actuarial gain / (loss):**

 

|                          |   | **March 31, 2019** |   |   | **March 31, 2018** |   |       | **March 31, 2017** |   |
|-------------------------------|--------|--------------------|--------|--------|--------------------|--------|------------|--------------------|--------|
|                          |   |               |   |   |               |   |       |               |   |
| On defined benefit obligation |   | $                  | -      |   |               | $      | 79,955     |               |   | $ | 74,931 |   |
| **Total**                     |   | **$**              | **-**  |   |               | **$**  | **79,955** |               |   | **$** | **74,931** |   |

 

A quantitative sensitivity analysis for significant assumptions as at March 31, 2019 is as shown below:

 

| **Assumptions**                      |   | **Discount rate** |    |   | **Future Salary increases** |   |
|--------------------------------------|--------|-------------------|---------|--------|-----------------------------|--------|
|                                 |   | **1% increase**   |    |   | **1% decrease**             |   |   | **1% increase** |   |   | **1% decrease** |   |
| Impact on defined benefit obligation |   |              | (26,979 | )      |                        |   | 29,229 |   |   |   | 29,007 |   |   |   | (27,030 | ) |

 

The sensitivity analysis above has been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

 

The following payments are expected contributions to the defined benefit plan obligation in future years:

 

|                                              |   | **March 31, 2019** |   |
|---------------------------------------------------|--------|--------------------|--------|
| Within the next 12 months (next reporting period) |   | $                  | -      |   |
| Between 2 and 5 years                             |   |               | -      |   |
| Beyond 5 years                                    |   |               | -      |   |
| **Total expected payments**                       |   | **$**              | **-**  |   |

  

| **25.** | **Depreciation and amortization** |
|---------|-----------------------------------|

 

Depreciation and amortization comprise the following:

 

|         |   | **March 31, 2019** |        |   | **March 31, 2018** |   |          | **March 31, 2017** |   |
|--------------|--------|--------------------|-------------|--------|--------------------|--------|---------------|--------------------|--------|
| Depreciation |   | $                  | 668,805     |   |               | $      | 1,494,585     |               |   | $ | 1,662,059 |   |
| Amortization |   |               | 98,835      |   |               |   | 122,533       |               |   |   | 116,909 |   |
| **Total**    |   | **$**              | **767,640** |   |               | **$**  | **1,617,118** |               |   | **$** | **1,778,968** |   |

 

| **26.** | **Other expenses** |
|---------|--------------------|

 

Other expenses comprise the following:

 

|                                        |   | **March 31, 2019** |            |   | **March 31, 2018** |   |           | **March 31, 2017** |   |
|---------------------------------------------|--------|--------------------|-----------------|--------|--------------------|--------|----------------|--------------------|--------|
| Insurance                                   |   | $                  | 376,681         |   |               | $      | 790,195        |               |   | $ | 1,459,792 |   |
| Communication expenses                      |   |               | 54,402          |   |               |   | 153,562        |               |   |   | 193,400 |   |
| Repairs and maintenance                     |   |               | 17,864          |   |               |   | 198,325        |               |   |   | 345,375 |   |
| Travel and conveyance                       |   |               | 407,335         |   |               |   | 1,113,198      |               |   |   | 832,006 |   |
| Legal and professional                      |   |               | 15,028,881      |   |               |   | 4,373,607      |               |   |   | 4,670,277 |   |
| Rent                                        |   |               | 358,131         |   |               |   | 1,700,257      |               |   |   | 1,954,959 |   |
| Power and fuel                              |   |               | 22,848          |   |               |   | 352,568        |               |   |   | 424,533 |   |
| Security expenses                           |   |               | 8,169           |   |               |   | 162,002        |               |   |   | 292,745 |   |
| Advertising and business promotion expenses |   |               | 348,860         |   |               |   | 677,207        |               |   |   | 1,160,661 |   |
| Commission, claims and compensation         |   |               | 2,722           |   |               |   | 90,644         |               |   |   | 179,979 |   |
| Others*                                     |   |               | 179,668,900     |   |               |   | 3,093,595      |               |   |   | 3,391,983 |   |
| **Total**                                   |   | **$**              | **196,294,883** |   |               | **$**  | **12,705,160** |               |   | **$** | **14,905,710** |   |

_______    

* includes dilution loss of USD 13,677,112 on disposal of equity of Amira India.  The loss on dilution has resulted the carrying amount of the Associate at Nil value as at November 14, 2018 as well as March 31, 2019. Loss from November 14, 2018 to March 31, 2019 in the Associate also could not be recognised as the carrying amount cannot go beyond Nil value as per IAS 28. The negative value in the Associate is mainly due to bank borrowings for which refer note 6.1.

     

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|---------------------|
| F-38                |
|                     |
| *Table of Contents* |

  

| **27.** | **Finance costs and finance income** |
|---------|--------------------------------------|

 

Finance costs comprise the following:

 

|                                   |   | **March 31, 2019** |       |   | **March 31, 2018** |   |           | **March 31, 2017** |   |
|----------------------------------------|--------|--------------------|------------|--------|--------------------|--------|----------------|--------------------|--------|
| Interest on debt                       |   | $                  | 16,057,887 |   |               | $      | 31,538,688     |               |   | $ | 26,472,908 |   |
| Interest to suppliers                  |   |               | -          |   |               |   | 2,826          |               |   |   | - |   |
| Interest on loan from related party    |   |               | -          |   |               |   | 1,959,017      |               |   |   | 1,107,351 |   |
| **Total interest expense**             |   |               | 16,057,887 |   |               |   | **33,500,531** |               |   |   | **27,580,259** |   |
| Add: Debt processing and other charges |   |               | 2,181,048  |   |               |   | 608,090        |               |   |   | 1,692,567 |   |
| **Total**                              |   | **$**              | 18,238,935 |   |               | **$**  | **34,108,621** |               |   | **$** | **29,272,826** |   |

   

Inventory carrying value includes capitalized interest cost of $ NIL, $22,846,505and $14,015,122 as of March 31, 2019, 2018 and 2017.

 

Borrowing costs have been included in the cost of inventory using weighted average interest rate (including corresponding bank processing charges and fees) of NIL, 14.72% and 13.69% for the years ended March 31, 2019, 2018 and 2017 respectively.

    

Debt processing and other charges primarily comprise letter of credit opening charges, processing fees and other miscellaneous bank charges.

 

Finance income comprises the following:

 

|                            |   | **March 31, 2019** |   |   | **March 31, 2018** |   |       | **March 31, 2017** |   |
|---------------------------------|--------|--------------------|--------|--------|--------------------|--------|------------|--------------------|--------|
| Interest on deposits with banks |   | $                  | -      |   |               | $      | 29,669     |               |   | $ | 263,095 |   |
| Other interest received         |   |               | -      |   |               |   | -          |               |   |   | 136 |   |
| **Total**                       |   | **$**              | **-**  |   |               | **$**  | **29,669** |               |   | **$** | **263,231** |   |

 

| **28.** | **Other gains and (losses)** |
|---------|------------------------------|

 

Other gains and (losses) comprise the following:

 

|                                                                                               |   | **March 31, 2019** |         |   | **March 31, 2018** |   |          | **March 31, 2017** |   |
|----------------------------------------------------------------------------------------------------|--------|--------------------|--------------|--------|--------------------|--------|---------------|--------------------|--------|
| Net gain/(loss) on change in exchange rate on non-derivative foreign currency transactions/balance |   | $                  | 368,737      |   |               | $      | 4,880,153     |               |   | $ | (1,424,689 | ) |
| Gain/ (loss) on sale of property, plant and equipment                                              |   |               |         |   |               |   | 28,411        |               |   |   | (1,517 | ) |
| Cumulative gain/(loss) reclassified from equity on sale of available for sale financial assets     |   |               | -            |   |               |   | -             |               |   |   | - |   |
| Hedge ineffectiveness on cash flow hedges                                                          |   |               |         |   |               |   | -             |               |   |   | - |   |
| Net gain/(loss) on revaluation/settlement of forward contracts not used for cash flow hedges       |   |               |         |   |               |   | -             |               |   |   | (86,722 | ) |
| Net gain/(loss) on settlement of forward contracts used for cash flow hedges                       |   |               |         |   |               |   | -             |               |   |   | - |   |
| **Total**                                                                                          |   | **$**              | **(368,737** | **)**  |               | **$**  | **4,908,564** |               |   | **$** | **(1,512,928** | **)** |

 

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|---------------------|
| F-39                |
|                     |
| *Table of Contents* |

  

| **29.** | **Earnings per share** |
|---------|------------------------|

 

As explained in Note 2, the Group has accounted for the restructuring in fiscal 2012-13 using the pooling of interests method and accordingly, financial information of RYCE includes assets, liabilities, revenues and expenses of APFPL at their respective carrying values as if combination was completed at the beginning of the first period presented. This combination gives rise to a 19.6% non-controlling interest (NCI) in APFPL. Earnings per share have been calculated using outstanding shares of RYCE which are reflected in the table below:

 

|                                                   |   | **March 31, 2019** |         |    | **March 31, 2018** |   |        | **March 31, 2017** |   |
|--------------------------------------------------------|--------|--------------------|--------------|---------|--------------------|--------|-------------|--------------------|--------|
| Profit attributable to Shareholders of the Company (A) |   | $                  | (304,911,721 | )       |               | $      | (78,222,174 | )                  |   | $ | 25,087,388 |   |
| Weighted average number of shares:                     |   |               |         |    |               |   |        |               |   |   |   |   |
| - For calculation of basic earnings per share (B)      |   |               | 40,388,149   |    |               |   | 34,064,348  |               |   |   | 29,822,470 |   |
| - Dilutive impact of equivalent stock options (C)      |   |               |         | *  |               |   | -           | #                  |   |  | - | * |
| - For diluted earnings per share (D) = (B) + (C)       |   |               | 40,388,149   |    |               |   | 34,064,348  |               |   |   | 29,822,470 |   |
| **Basic earnings per share (A) ÷ (B)**            |   | **$**              | **(7.55**    | **)**   |               | **$**  | **(2.30**   | **)**              |   | **$** | **0.84** |   |
| **Diluted earnings per share (A) ÷ (D)**          |   | **$**              | **(7.55**    | **)**   |               | **$**  | **(2.30**   | **)**              |   | **$** | **0.84** |   |

 

The Company has granted an option to NCI shareholders in APFPL to exchange shares in RYCE at a pre-determined share exchange ratio. The exchange ratio is reflective of fair values of the shares to be exchanged and therefore, the option is not considered as dilutive (Note 18).

 

*#**The dilutive impact of total share options of 375899, 360,257, 361,278 and 367,749 granted to Mr. Karan A. Chanana in the years ended March 31, 2013, 2014, 2016 and 2017, respectively is anti-dilutive and hence there is no change in the presented basic and diluted earnings per share in the table above.* 

 

****The dilutive impact of total share options of 375899, 360,257, 361,278 and 367,749 granted to Mr. Karan A. Chanana in the years ended March 31, 2013, 2014, 2016 and 2017, respectively is anti-dilutive and hence there is no change in the presented basic and diluted earnings per share in the table above.*

 

| **30.** | **Operating leases as lessee** |
|---------|--------------------------------|

 

The Group has operating lease agreements for office facility and warehouses. The average lease period is 11-36 months and can be cancelled with a notice period of 1-3 months (non-cancellable period). These leases are renewable on a periodic basis at the option of both the lessors and the lessees. Lease expense for the years ended March 31, 2019, 2018 and 2017 is $358,131, $1,700,257and $1,954,959 respectively. The total future lease obligation for the non-cancellable period amounts to$63,594, $307,899and $321,447 as at March 31, 2019, 2018 and 2017, respectively.

 

| **31.** | **Related party transactions** |
|---------|--------------------------------|

    

Mr. Karan A. Chanana is the principal shareholder of RYCE and as of March 31, 2019, he held majority effective interest including : (i) 7,005,434 Ordinary Shares issuable pursuant to an exchange agreement under which Mr. Karan A. Chanana has the right, subject to the terms of the exchange agreement, to exchange all or a portion of his equity shares in Amira India for our Ordinary Shares and assumes the completion of Mr. Chanana’s purchase of 1,500,000 equity shares of Amira India, (ii )an aggregate of 1,841,082 vested stock options to purchase Ordinary Shares granted to Mr. Chanana pursuant to our 2012 Plan (See Note 19), (iii) 100,000 shares granted on October 17, 2014 pursuant to the OSI, (iv) 100,000 shares granted on March 31, 2016 pursuant to the OSI, (v) 100,000 shares granted on October 21, 2017 pursuant to the OSI (vi) 416,666 Ordinary Shares granted to Mr. Chanana on September 12, 2016 in satisfaction of $3,000,000 of interest free loans,(vii) 3,705,663 shares held by Xeaton 5 Trust (viii) 3,000,000 shares issuable upon conversion of obligations granted on March 25, 2019. 

     

The Group’s related parties include transactions with key management personnel (“KMPs”) and enterprises over which KMPs are able to exercise control/significant influence. All the directors (both executive and others) of RYCE and Ms. Anita Daing (a former director of Amira Pure Foods Private Limited “APFPL”) are considered as KMPs for related party transactions disclosures.

 

|                |
|---------------------|
| F-40                |
|                     |
| *Table of Contents* |

  

| ***31.1*** | ***Transactions with KMPs (including independent directors)*** |
|------------|----------------------------------------------------------------|

 

| **Transactions during the year**                                     |   | **March 31,**

 **2019** |       |   | **March 31,**

**2018** |   |      | **March 31,**

**2017** |   |
|----------------------------------------------------------------------|--------|-------------------------------|------------|--------|-------------------------|--------|-----------|-------------------------|--------|
| Short term employee benefits                                         |   | $                             | 870,891    |   |                    |   | 1,668,354 |                    |   | $ | 2,450,169 |   |
| **Share-based compensation:**                                        |   |                          |       |   |                    |   |      |                    |   |   |   |   |
| - expense recognized on share options granted (Mr. Karan A. Chanana) |   |                          | -          |   |                    |   | -         |                    |   |   | 853,776 |   |
| - expense recognized on share awards granted (Mr. Karan A. Chanana)  |   |                          | -          |   |                    |   | 536,000   |                    |   |   | - |   |
| - expense recognized on share awards granted (others)                |   |                          | -          |   |                    |   | 345,591   |                    |   |   | 377,165 |   |
| -\ expense recognized on share options granted (others)              |   |                          | 59,671     |   |                    |   | 25,567    |                    |   |   | 81,308 |   |
| Defined benefit plan – Gratuity                                |   |                          | -          |   |                    |   | -         |                    |   |   | - |   |
| Rent expense                                                         |   |                          | -          |   |                    |   | 3,925     |                    |   |   | 3,758 |   |
| Loan received                                                        |   |                          | 7,915,019  |   |                    |   | 6,613,610 |                    |   |   | 727,652 |   |
| Loan repaid                                                          |   |                          | 1,040,580  |   |                    |   | 6,015,377 |                    |   |   | 637,923 |   |
| Loan conversion                                                      |   |                          | 16,394,751 |   |                    |   | -         |                    |   |   | - |   |
| Interest expense                                                     |   |                          | 318,731    |   |                    |   | 1,968,907 |                    |   |   | 1,107,351 |   |
| Advance paid back                                                    |   |                          | 138,679    |   |                    |   | 4,004,804 |                    |   |   | 2,800,000 |   |
| Advance received                                                     |   |                          | 268,416    |   |                    |   | 1,696,113 |                    |   |   | 2,840,833 |   |

     

| **Outstanding balances**                           |   | **March 31,**

**2019** |       |   | **March 31,**

**2018** |   |       | **March 31,**

**2017** |   |
|----------------------------------------------------|--------|-------------------------|------------|--------|-------------------------|--------|------------|-------------------------|--------|
| Salary and bonus payable - to Mr. Karan A. Chanana |   | $                       | -          |   |                    | $      | -          |                    |   | $ | 647,000 |   |
| Salary and bonus payable – to others         |   |                    | 747,518    |   |                    |   | 468,538    |                    |   |   | 323,019 |   |
| Advance receivables                                |   |                    | -          |   |                    |   | -          |                    |   |   | 11,641 |   |
| Advance payable to Mr. Karan A. Chanana            |   |                    | 701,226    |   |                    |   | 578,247    |                    |   |   | 651,785 |   |
| Loan and interest payable                          |   |                    | 23,333,097 |   |                    |   | 17,828,042 |                    |   |   | 17,903,077 |   |
| Rent payable to Mr. Karan A. Chanana               |   |                    | -          |   |                    |   | 27,728     |                    |   |   | 24,500 |   |

 

All of the above payables are payables on demand and carry no collateral.

 

| ***31.2*** | ***Guarantee given by KMP*** |
|------------|------------------------------|

   

Mr. Karan A. Chanana, RYCE’s Chairman and Ms. Anita Daing a former Director of APFPL have issued personal guarantees in favor of consortium of banks that granted APFPL its outstanding term loans and secured revolving credit facilities. Under these personal guarantees Mr. Karan A. Chanana and Ms. Anita Daing have guaranteed the repayment of term loans and secured revolving credit facilities up to a limit of $214,143,128, $235,685,871and $237,981,538 as at March 31, 2019, 2018 and 2017, respectively. RYCE has previously issued personal guarantees. None were executed post 2015. We do not believe these are valid anymore. However, RYCE has indemnified Karan A Chanana, its directors and officers. In the event any of the lenders retrospectively attempt to dispute this, RYCE will be liable under the indemnity already given to Karan A Chanana.

    

| ***31.3*** | ***Share-based payments to KMP*** |
|------------|-----------------------------------|

 

The Group has granted share awards to its directors and the CFO pursuant to the 2012 and 2017 Omnibus Securities and Incentive Plans (Note 19).

 

| ***31.4*** | ***Share Exchange agreement with KMP (representing NCI)*** |
|------------|------------------------------------------------------------|

 

The NCI have entered into a share exchange agreement with RYCE (Note 18.1).

 

| ***31.5*** | ***Transactions with enterprises over which KMP is able to exercise control/significant influence*** |
|------------|------------------------------------------------------------------------------------------------------|

 

| **Transactions during the year** |   | **March 31,**

**2019** |   |   | **March 31,**

**2018** |   |   | **March 31,**

**2017** |   |
|----------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| Sales*(1)*                       |   | $                       | -      |   |                    | $      | -      |                    |   | $ | - |   |
| Advances received back           |   |                    | -      |   |                    |   | -      |                    |   |   | - |   |
| Purchase of asset                |   |                    | -      |   |                    |   | -      |                    |   |   | - |   |

 

| **Outstanding balances** |   | **March 31,**

**2019** |   |   | **March 31,**

**2018** |   |   | **March 31,**

**2017** |   |
|--------------------------|--------|-------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| Trade payables           |   | $                       | -      |   |                    | $      | 47     |                    |   | $ | 47 |   |
| Advances receivables     |   |                    | -      |   |                    |   | -      |                    |   |   | - |   |

 

|                |
|---------------------|
| F-41                |
|                     |
| *Table of Contents* |

  

| **32.** | **Cash flow adjustments and changes in operating assets and liabilities** |
|---------|---------------------------------------------------------------------------|

 

Adjustments to arrive at the operating cash flow before taxes are summarized below:

 

| ***32.1*** | ***Adjustment for non-cash items*** |
|------------|-------------------------------------|

 

|                                                                                              |   | **March 31, 2019** |            |   | **March 31, 2018** |   |           | **March 31, 2017** |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------|-----------------|--------|--------------------|--------|----------------|--------------------|--------|
| Depreciation and amortization                                                                     |   | $                  | 764,640         |   |               | $      | 1,617,118      |               |   | $ | 1,778,968 |   |
| Impairment loss recognized on trade receivables and other current assets                          |   |               | 178,348,743     |   |               |   | 1,008,534      |               |   |   | 2,926,165 |   |
| Unrealized (gains)/ losses on account of foreign exchange differences                             |   |               | 73,485          |   |               |   | (3,887,013     | )                  |   |   | 373,026 |   |
| Unrealized fair value (gains)/ losses on derivative financial assets recognized in profit or loss |   |               | -               |   |               |   | -              |               |   |   | 433,311 |   |
| Actuarial gain/(loss) for the period                                                              |   |               | -               |   |               |   | -              |               |   |   | - |   |
| Share-based compensation                                                                          |   |               | (5,246,985      | )      |               |   | 20,222,187     |               |   |   | 9,449,525 |   |
| **Total**                                                                                         |   | **$**              | **173,942,882** |   |               | **$**  | **18,960,826** |               |   | **$** | **14,960,995** |   |

    

| ***32.2*** | ***Adjustment for non-operating income and expense*** |
|------------|-------------------------------------------------------|

 

|                                          |   | **March 31, 2019** |           |   | **March 31, 2018** |   |           | **March 31, 2017** |   |
|-----------------------------------------------|--------|--------------------|----------------|--------|--------------------|--------|----------------|--------------------|--------|
| Interest expense                              |   | $                  | 18,238,935     |   |               | $      | 34,108,621     |               |   | $ | 29,272,826 |   |
| Interest and dividend income                  |   |               | -              |   |               |   | (29,669        | )                  |   |   | (263,231 | ) |
| Gain on sale of property, plant and equipment |   |               | -              |   |               |   | (28,411        | )                  |   |   | 1,517 |   |
| Gain on sale of shares                        |   |               | -              |   |               |   | -              |               |   |   | - |   |
| **Total**                                     |   | **$**              | **18,238,935** |   |               | **$**  | **34,050,541** |               |   | **$** | **29,011,112** |   |

 

| ***32.3*** | ***Change in operating assets and liabilities*** |
|------------|--------------------------------------------------|

 

|                                         |   | **March 31, 2019** |           |   | **March 31, 2018** |   |           | **March 31, 2017** |   |
|----------------------------------------------|--------|--------------------|----------------|--------|--------------------|--------|----------------|--------------------|--------|
| Trade payables and other current liabilities |   | $                  | 30,109,161     |   |               | $      | (9,958,378     | )                  |   | $ | 3,825,278 |   |
| Inventories                                  |   |               | (15,820,433    | )      |               |   | 112,237,473    |               |   |   | (28,206,199 | ) |
| Trade receivables                            |   |               | (74,717,006    | )      |               |   | (50,559,691    | )                  |   |   | (21,603,553 | ) |
| Other current assets and prepayments         |   |               | 56,709,507     |   |               |   | (19,104,258    | )                  |   |   | (22,660,049 | ) |
| **Total**                                    |   | **$**              | **(3,718,771** | **)**  |               | **$**  | **32,615,146** |               |   | **$** | **(68,644,523** | **)** |

 

| **33.** | **Commitments and contingent liabilities** |
|---------|--------------------------------------------|

 

*Commitments*

 

Capital commitments, net of advances amounted to $5,966,433, $8,514,215 and $8,533,570 as of March 31, 2019, 2018 and 2017 respectively. The capital commitment is on account of entering into a contract towards purchase of plant and machinery and office equipment in connection with the new rice processing plant.

 

*Contingent liabilities*

 

|                 |   | **March 31, 2019** |   |   | **March 31, 2018** |   |        | **March 31, 2017** |   |
|----------------------|--------|--------------------|--------|--------|--------------------|--------|-------------|--------------------|--------|
| Market fees*(a)*     |   | $                  | -      |   |               | $      | 71,571      |               |   | $ | 71,585 |   |
| Income tax case*(b)* |   |               | -      |   |               |   | 202,495     |               |   |   | 202,535 |   |
| **Total**            |   | **$**              | **-**  |   |               | **$**  | **274,066** |               |   | **$** | **274,120** |   |

 

*(a)**Represents market fees demand raised by Haryana State Agricultural Marketing Board (“HSAMB”) in respect of certain**Basmati**purchases. The Group has paid $35,793 (INR 2,324,195) under protest and the case is pending with local authorities against the demand. The Group expects that the likelihood of any liability is not probable. Accordingly, no provision has been created for this matter.*

 

*(b)**Represents tax litigations with the income tax department of India in respect of various years’ cases pending with the High Court of Delhi and High Court of Punjab and Haryana. The Group has been contesting these demands and has received favorable orders in the majority of cases from the Tribunal, which have been contested by the Income tax department in the High Court of Delhi and High Court of Punjab and Haryana. The Group expects that the likelihood of any liability is not probable. Accordingly, no provision has been created for this matter.*

 

|                |
|---------------------|
| F-42                |
|                     |
| *Table of Contents* |

        

(1) During the year ended March 31, 2013, products temporarily stored in Subic, a free trade zone located in the Republic of Philippines, were subjected to a seizure and forfeiture process decision by the Collector of Customs, Port of Subic, against a “locator” (customs broker) engaged by Amira to unload and warehouse the cargo. Amira, as an intervener, or legal owner of the products, has appealed this decision with the Commissioner of Customs (“COC”) of the Republic of the Philippines, seeking reversal of the decision, which appeal was denied on October 3, 2012. On October 16, 2012, the Amira filed a Petition for review with the Court of Tax Appeals challenging the correctness of the decision of COC as being contrary to the law. The case is currently in the pre-trial stage. On October 17, 2012, a public auction was conducted by the Bureau of Customs (‘‘BOC’’) and an entity named Veramar Rice Mill and Trading Company was declared as the highest bidder with a bid of Php 487 million Pesos (equivalent to $11.7 million). Based on representations of legal counsel for the COC, the full bid amount has been remitted to the COC and that the amount has been deposited in escrow to be released to the party who will prevail in this case. Based on the advice provided by its attorneys, the Amira expects that the likelihood of any liability to the Amira is not probable. Accordingly, no provision has been created for this matter. These products, currently undergoing the above process, were sold on June 27, 2012 for $11,445,000 to a related party and money was received for this. However, as part of this sale Amira is obligated to continue to fight this case, recover the money and pay the buyer since it has sold the goods and received the money. 

     

With respect to these contingent liabilities, the Group does not expect any reimbursement from any third party.

 

| **34.** | **Segment reporting** |
|---------|-----------------------|

 

The Group is primarily engaged in the business of processing and selling packaged Indian specialty rice, primarily basmati rice, and other food products. The chief operating decision maker reviews the operations of the Group as one operating segment. Hence no separate segment information has been furnished herewith.

 

The Group generates its revenue primarily from the sale of rice. An analysis of the Group’s revenue from sales of rice and other food products is as follows:

 

|                           |   | **March 31, 2019** |           |   | **%**  |   |    | **March 31, 2018** |   |   | **%**           |   |   | **March 31, 2017** |    |   |        |   |
|--------------------------------|--------|--------------------|----------------|--------|--------|--------|---------|--------------------|--------|--------|-----------------|--------|--------|--------------------|---------|--------|--------|--------|
| Rice and rice related products |   | $                  | 42,582,086     |   |   |   | 66.1    | %                  |   | $      | 343,579,277     |   |   |               | 83      | %      |   | $      | 485,474,856 |   |   |   | 88 | % |
| Other food products            |   | $                  | 21,854,730     |   |   |   | 33.9    | %                  |   |   | 70,322,203      |   |   |               | 17      | %      |   |   | 66,356,110 |   |   |   | 12 | % |
| **Total**                      |   | **$**              | **64,436,816** |   |   |   | **100** | **%**              |   | **$**  | **413,901,480** |   |   |               | **100** | **%**  |   | **$**  | **551,830,966** |   |   |   | **100** | **%** |

 

The Group categorizes its revenue by geographical region based on product destination to the external customers, as summarized below, which as per management is most appropriate:

 

| **Region**                     |   | **March 31, 2019** |           |   | **%**  |   |    | **March 31, 2018** |   |        | **%**           |   |   | **March 31, 2017** |    |   | **%**  |        |
|--------------------------------|--------|--------------------|----------------|--------|--------|--------|---------|--------------------|--------|-------------|-----------------|--------|--------|--------------------|---------|--------|--------|-------------|
| EMEA                           |   | $                  | 63,112,475     |   |   |   | 97.9    | %                  |   | $           | 218,805,726     |   |   |               | 52.9    | %      |   | $           | 242,773,808 |   |   |   | 44.0 | % |
| India                          |   |               | -              |   |   | -%     |    |               |   | 143,515,397 |            |   |   | 34.7               | %       |   |   | 275,183,618 |   |   |   | 49.9 | % |
| North America                  |   |               | 1,248,741      |   |   |   | 1.9     | %                  |   |        | 50,114,594      |   |   |               | 12.1    | %      |   |        | 27,735,547 |   |   |   | 5.0 | % |
| Asia Pacific (excluding India) |   |               | 75,600         |   |   |   | 0.2     | %                  |   |        | 1,465,763       |   |   |               | 0.4     | %      |   |        | 6,137,993 |   |   |   | 1.1 | % |
| **Total**                      |   | **$**              | **64,436,816** |   |   |   | **100** | **%**              |   | **$**       | **413,901,480** |   |   |               | **100** | **%**  |   | **$**       | **551,830,966** |   |   |   | **100** | **%** |

 

Information relating revenue generated from major customer(s) that represent more than 10% of Group’s total revenue:

 

|                                                              |   | **March 31,**

**2019** |       |   | **March 31,**

**2018** |   |        | **March 31,**

**2017** |   |
|-------------------------------------------------------------------|--------|-------------------------|------------|--------|-------------------------|--------|-------------|-------------------------|--------|
| No. of customer(s)                                                |   |                    | 2          |   |                    |   | 2           |                    |   |   | 0 |   |
| Group’s revenue (A)                                         |   | $                       | 64,436,816 |   |                    | $      | 413,901,480 |                    |   | $ | - |   |
| Revenue generated from major customer(s) (B)                      |   |                    | 58,115,688 |   |                    |   | 118,797,692 |                    |   |   | - |   |
| Concentration of revenue in % in such major customer(s) [(B)/(A)] |   |                    | 82.0       | %      |                    |   | 29          | %                       |   | -% |   |

      

|                |
|---------------------|
| F-43                |
|                     |
| *Table of Contents* |

   

Non-current assets other than financial instruments located in the RYCE’s country of domicile and in all foreign countries in total in which the entity holds assets are provided as follows:

 

|      |   | **March 31,**

**2019** |          |   | **March 31,**

**2018** |   |           | **March 31,**

**2017** |   |
|-----------|--------|-------------------------|---------------|--------|-------------------------|--------|----------------|-------------------------|--------|
| India     |   | $                       | 0             |   |                    | $      | 17,233,815     |                    |   | $ | 18,642,280 |   |
| Germany   |   |                    | 2,360,309     |   |                    |   | 2,705,984      |                    |   |   | 2,359,060 |   |
| Others    |   |                    | 318,228       |   |                    |   | 574,396        |                    |   |   | 478,458 |   |
| **Total** |   | **$**                   | **2,678,537** |   |                    | **$**  | **20,514,195** |                    |   | **$** | **21,479,798** |   |

 

| **35.** | **Fair value hierarchy** |
|---------|--------------------------|

 

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 andkey inputs** |
|---------------------------------------|--------|----------------------------------------------------------|--------|--------|----------------------------------------|
| **March 31, 2019**                    |   | **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                          |   |                                                     | -      |   |                                   |   | - |   |   |   | - |   |   | 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                     |   |                                                     | -      |   |                                   |   | - |   |   |   | - |   |   | 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** |    |   | **Valuation techniques andkey inputs** |
|---------------------------------------|--------|----------------------------------------------------------|---------|--------|----------------------------------------|
| **March 31, 2018**                    |   | **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                          |   |                                                     | 259,352 |   |                                   |   | 259,352 |   |   |   | - |   |   | 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                     |   |                                                     | 138,682 |   |                                   |   | 138,682 |   |   |   | - |   |   | 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. |

       

|                |
|---------------------|
| F-44                |
|                     |
| *Table of Contents* |

 

| **36.** | **Financial assets and liabilities** |
|---------|--------------------------------------|

 

The fair value of trade receivables, other current financial assets, cash and cash equivalents, trade payables, working capital debt and other financial liabilities approximate the carrying amounts because of the short-term nature of these financial instruments.

  

The fair values of non-current financial assets consisting of security and term deposits are not significantly different from the carrying amount. The fair value of term and vehicle loans and loan from related party was $10.8 million as compared to the carrying amount of $17.8 million.

  

Financial assets that are neither past due nor impaired include cash and cash equivalents, security deposits, term deposits, portion of trade receivables, investment and other financial assets.

 

The fair value of cash and cash equivalents, current security deposits, current term deposits, trade receivables, other receivables, trade payables, other current liabilities and debt approximate their carrying amount largely due to the short-term nature of these instruments.

 

Non-current debt largely comprises term loans from banks which carry floating interests. Therefore, the fair value of these term loans approximates their carrying values. The impact of fair value of outstanding other non-current debt is not material and therefore not considered for above disclosure. Similarly, carrying values of non-current security deposits and non-current term deposits are not significant and therefore the impact of fair value is not considered for above disclosure.

 

| **37.** | **Financial risk management** |
|---------|-------------------------------|

 

The Group is exposed to various financial risks. These risks are categorized into market risk, credit risk and liquidity risk. The Group’s risk management is coordinated by the Board of Directors and focuses on securing long term and short-term cash flows. The Group does not engage in trading of financial assets for speculative purposes.

 

| ***37.1*** | ***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. Our operating expenses are geographically dispersed however our revenue is denominated primarily in US dollars. However, 4.2% of our total revenue for fiscal 2019 was denominated in other currencies, typically in U.S. dollars and occasionally in Euros, GBP and UAE Dirham, due to our international sales. We have expenses in various currencies. As a result, our revenue recognition, which is in US dollars, for reporting purposes, may vary and is at risk in light of exchange rate fluctuations.

 

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 K.A. 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 3.67

    

|                |
|---------------------|
| F-45                |
|                     |
| *Table of Contents* |

 

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 March 31, 2019, 2018 and 2017:

 

| **March 31, 2019**           |   | **U.S. Dollars** |            |   | **Other**

**currencies** |   |
|------------------------------|--------|------------------|-----------------|--------|---------------------------|--------|
| Trade receivables            |   | $                | 0               |   |                      | **$**  | **0** |   |
| Intercompany receivables     |   |             | 871,025         |   |                      |   | 4,091,301 |   |
| Trade payables               |   |             | 0               |   |                      |   | 0 |   |
| Intercompany payables        |   |             | (2,155,409      | )      |                      |   | (977,113 | ) |
| Debt                         |   |             |            |   |                      |   |   |   |
| Intercompany debt receivable |   |             | 0               |   |                      |   | 28,298,630 |   |
| Intercompany debt payable    |   |             | (174,570        | )      |                      |   |   |   |
| Cash and cash equivalents    |   |             | 59,532          |   |                      |   | 5,609,280 |   |
| **Total**                    |   |             | **(1,399,423**  | **)**  |                      |   | **37,022,099** |   |
| **March 31, 2018**           |   |             |            |   |                      |   |   |   |
| Trade receivables            |   | $                | 750,370         |   |                      | **$**  | **-** |   |
| Intercompany receivables     |   |             | 15,594,842      |   |                      |   | 7,893,582 |   |
| Trade payables               |   |             | (147,660        | )      |                      |   | (150,734 | ) |
| Intercompany payables        |   |             | (35,100,711     | )      |                      |   | (1,063,795 | ) |
| Debt                         |   |             | -               |   |                      |   | - |   |
| Intercompany debt receivable |   |             | 5,000,000       |   |                      |   | 1,557,038 |   |
| Intercompany debt payable    |   |             | (2,441,767      | )      |                      |   | - |   |
| Cash and cash equivalents    |   |             | 748,853         |   |                      |   | 3,779 |   |
| **Total**                    |   |             | **(15,596,073** | **)**  |                      |   | **8,239,870** |   |
| **March 31, 2017**           |   |             |            |   |                      |   |   |   |
| 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 March 31, 2019, 2018 and 2017 every 1% increase or decrease of the respective foreign currencies compared to our functional currency of the respective group entities would impact our profit before tax by approximately $356,227, $(73,562) and $188,828, respectively.

 

There are no long-term exposures in foreign currency denominated financial asset and liabilities as of 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 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 the year ended March 31, 2019. Forecasted transactions for which hedge accounting has been applied are expected to occur and affect profit or loss in the year ended March 31, 2019.

 

Based on expected volatility, the management does not expect the foreign currency hedges to become ineffective due to changes in the exchange rates and therefore, there is no impact expected on profit on changes in the values of such derivatives consequent to changes in foreign currency exchange rates. This analysis assumes that all other variables remain constant.

     

|                |
|---------------------|
| F-46                |
|                     |
| *Table of Contents* |

 

*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 March 31, 2019, 2018 and 2017, we had $35,086,392, $250,231,474 and $224,440,023 of total indebtedness, respectively, of which 100% had floating rates of interest. The sensitivity analysis below has 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 $328,038, $2,339,526 and $2,203,228 in the years ended March 31, 2019, 2018 and 2017, respectively.

     

| ***37.2*** | ***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 the 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:

    

|                                                         |   | **March 31, 2019** |    |   | **March 31, 2018** |   |
|--------------------------------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
|                                                         |   | **Gross**          |    |   | **Impairment**     |   |   | **Gross** |   |   | **Impairment** |   |
| Not past due                                                 |   | $                  | 249,100 |   |               | $      | - |   |   | $ | 206,340,772 |   |   | $ | - |   |
| Past due less than three months                              |   |               | 22,913  |   |               |   | - |   |   |   | 45,026,945 |   |   |   | - |   |
| Past due more than three months but not more than six months |   |               | (220    | )      |               |   | - |   |   |   | 6,802,541 |   |   |   | - |   |
| Past due more than six months but not more than one year     |   |               | 5,537   |   |               |   | - |   |   |   | 176,382 |   |   |   | (14,677 | ) |
| More than one year                                           |   |               | 357,994 |   |               |   | (272,756 | ) |   |   | 1,943,815 |   |   |   | (1,943,815 | ) |
| **Total**                                                    |   | $                  | 635,324 |   |               | **$**  | **(272,756** | **)** |   | **$** | **260,290,455** |   |   | **$** | **(1,958,492** | **)** |

     

Trade receivables are accounted in accordance with IAS 39 (Financial Instruments: Measurement and recognition). Trade receivables are impaired in full when recoverability is considered doubtful based on the recovery analysis performed by the Group for individual trade receivables.

 

Receivables from our top five customers are as follows:

 

|                                                     |   | **March 31, 2019** |     |   | **March 31, 2018** |   |
|----------------------------------------------------------|--------|--------------------|----------|--------|--------------------|--------|
|                                                     |   |               |     |   |               |   |
| Receivables from top five customers as of reporting date |   | $                  | 322,533  |   |               | $      | 14,451,384 |   |
| **Percentage to total receivables**                      |   |               | **89.0** | **%**  |               |   | **6.1** | **%** |

 

Receivables from our top two customers are as follows:

 

|                                                        |   | **March 31, 2019** |     |   | **March 31, 2018** |   |
|-------------------------------------------------------------|--------|--------------------|----------|--------|--------------------|--------|
| Receivables from our top two customers as of reporting date |   | $                  | 218,423  |   |               | $      | - |   |
| **Percentage to total receivables**                         |   |               | **60.2** | **%**  |               |   | **0.0** | **%** |

 

Management considers the credit quality of these trade receivables to be good. No collateral is held for trade receivables.

     

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*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. 

 

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.

 

| ***37.3*** | ***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.

 

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 may or may not be sufficient to meet our anticipated regular working capital requirements and our needs for capital expenditures for 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 as drawn 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. We are in the process of injecting liquidity through various means like land base monetization etc. Management is confident to address the issue of liquidity.

 

Short term liquidity requirements consist mainly of sundry creditors, expense payable, employee dues, debt and security deposits received arising during the normal course of business as of each reporting date. We attempt to maintain 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 manage 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 DBO.

 

The management is confident that the going concern assumption has not been impacted.

 

As at each reporting date, our liabilities having contractual maturities are summarized as follows:

 

|                        |   | **Current**        |           |   | **Non-Current** |   |
|-----------------------------|--------|--------------------|----------------|--------|-----------------|--------|
| **March 31, 2019**          |   | **Within6 months** |           |   | **6-12 months** |   |   | **1-5 years** |   |   | **More than5 years** |   |
| Long term debt*             |   | $                  | 2,872          |   |            | $      | 3,421 |   |   | $ | 25,789 |   |   | $ | - |   |
| Short term debt             |   |               | 7,494,684      |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Trade payables              |   |               | 166,495        |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Other financial liabilities |   |               | 5,207,352      |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Lease obligation            |   |               | 62,138         |   |            |   | - |   |   |   | - |   |   |   | - |   |
| **Total**                   |   | **$**              | **12,933,542** |   |            | **$**  | **3,421** |   |   | **$** | **25,789** |   |   | **$** | **-** |   |

  

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|                        |   | **Current**        |            |   | **Non-Current** |   |
|-----------------------------|--------|--------------------|-----------------|--------|-----------------|--------|
| **March 31, 2018**          |   | **Within6 months** |            |   | **6-12 months** |   |   | **1-5 years** |   |   | **More than5 years** |   |
| Long term debt*             |   | $                  | 1,626,345       |   |            | $      | 3,759 |   |   | $ | 28,330 |   |   | $ | - |   |
| Short term debt             |   |               | 248,775,942     |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Trade payables              |   |               | 11,741,143      |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Other financial liabilities |   |               | 7,285,473       |   |            |   | - |   |   |   | - |   |   |   | - |   |
| Lease obligation            |   |               | 307,899         |   |            |   | - |   |   |   | - |   |   |   | - |   |
| **Total**                   |   | **$**              | **269,736,802** |   |            | **$**  | **3,759** |   |   | **$** | **28,330** |   |   | **$** | **-** |   |

 

**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 values. As a result, these values will differ as compared to the carrying values of the liabilities at the balance sheet date.

 

| **38.** | **Additional capital disclosures** |
|---------|------------------------------------|

 

The Group’s capital management objectives are (a) to ensure the Group’s ability to continue as a going concern and (b) to provide an adequate return to shareholders. The Group has not distributed any dividend to its shareholders since the date of initial public offering. The Group monitors gearing ratio i.e. total debt in proportion to its overall financing structure, i.e. equity and debt. Total debt comprises of all liabilities of the Group. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

 

|                                                        |   | **March 31, 2019** |           |   | **March 31, 2018** |   |
|-------------------------------------------------------------|--------|--------------------|----------------|--------|--------------------|--------|
| Total equity (A)                                            |   | $                  | (15,072,006    | )      |               | $      | 241,608,876 |   |
| Total debt - comprising of all liabilities of the Group (B) |   |               | 41,228,571     |   |               |   | 271,217,631 |   |
| **Overall financing (C) = (A) + (B)**                       |   | **$**              | **26,156,565** |   |               | **$**  | **512,826,507** |   |
| **Gearing ratio (B) / (C)**                                 |   |               | **1.58**       |   |               |   | **0.53** |   |

 

| **39.** | **Class Action suit and other litigation** |
|---------|--------------------------------------------|

 

**39.1. Class action suit**

 

On February 10, 2015, two shareholder class action lawsuits were filed in the United States District Court for the Central District of California. The complaints, which were subsequently consolidated, named the Company and certain of our current and former officers and directors as defendants. The consolidated lawsuit purported to state claims for violation of Section 11 and Section 15 of the Securities Act and Section 10(b) and Section 20(a) of the Exchange Act, generally alleging that certain statements in the Company’s Registration Statement and certain subsequent Exchange Act filings were false and misleading and seeking damages in an unspecified amount.

 

We filed a Motion to Dismiss the Plaintiff’s amended complaint on October 2, 2015, and on July 18, 2016 the Court granted our Motion to Dismiss the complaint in its entirety. The second amended class action complaint was also dismissed on August 12, 2016. The Plaintiffs did not file a third amended complaint in the time permitted by the judge. On August 26, 2016, the Plaintiffs filed a motion for relief from the Court’s order on the motion to dismiss. The Plaintiff’s motion was denied on December 18, 2017.

 

**39.2. Complaint against IDBI Bank Limited**

 

On April 30, 2018, we initiated an action in Dubai International Financial Centre Court against IDBI Bank Limited for its breach of an irrevocable letter (“the Irrevocable Letter”) whereby IDBI failed to deliver payment to us in the amount $4,134,000 upon its receipt of funds from our customer as required by the Irrevocable Letter. On April 30, 2018, the Company initiated an action in Dubai International Financial Centre Court (“DIFC”) against IDBI Bank Limited for its breach of an irrevocable letter (“the Irrevocable Letter”) whereby IDBI failed to deliver payment to the Company in the amount $4,134,000 upon its receipt of funds from its customer as required by the Irrevocable Letter. The Company sought damages, costs and injunctive relief against IDBI. The Company was provided interim relief by the court and the amount of $4,134,000 was paid by IDBI to the Company’s distributor AK Global. The Company further pursued claims against IDBI Bank Limited for damages and costs. On July 30, 2019, a final hearing was held in the DIFC Court to determine the damages suffered by the Company and the Counterclaim by the Bank. On October 7, 2019, the Court entered a judgment (the “Judgement”) whereby the Bank was ordered to pay the Company damages and litigation costs. IDBI was ordered to pay amount of USD$12,603,791 plus interest. The Court also dismissed the Bank’s claims against the Company. The Bank appealed the ruling. The DIFC dismissed IDBI’s counter-claims against the Company and reduced the aggregate amount payable to the Company from $12,603,791 to $500,000. 

        

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| **40.** | **Events after the reporting period** |
|---------|---------------------------------------|

 

On June 3, 2019, the Company hired Brian M. Speck as Chief Financial Officer, effective as of June 30, 2019, the date of departure of the Company’s current Chief Financial Officer, Varun Sethi.

 

On December 4, 2019, the Board of Directors of the Company a company formed under the laws of the British Virgin Islands (“BVI”), approved a reverse stock split (the “Reverse Split”) of the Company’s authorized, issued and outstanding shares of common stock, par value $0.0 per share, at a ratio of 20-for-1 so that every 20 shares (or part thereof) currently authorized and issued is combined into one (1) share (or fraction thereof). The Company’s ordinary shares will begin trading on a split adjusted basis on December 20, 2019. Both before and after the Reverse Split, the Company is authorized to issue unlimited Ordinary Shares. As a result of the Reverse Split, the Company’s issued and outstanding ordinary shares will be reduced from 44,421,835 to approximately 2,221,091.

 

Other than the item 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 year ended March 31, 2019.

  

41. Management has evaluated and obtained a legal opinion that confirms the shareholding as at March 31, 2019 and concluded that there is no applicability of auditor’s attestation on Internal Financial Control Over Financial Reporting (IFCFR) in the Financial Year Ended March 31, 2019.

    

| **42.** | **Authorization of financial statements** |
|---------|-------------------------------------------|

    

These consolidated financial statements were approved and authorized for issue by the Board of Directors on August 18, 2020. These consolidated accounts also include management approved financial statements of Amira India (associate entity) which is under liquidation. Pending receipt of official liquidator’s approved financial statements, the management has prepared and approved the Amira India financial statements for consolidation purpose.

          

Further, there is no significant operational activity taken place in Indian Entity post appointment of Resolution Professional (RP) and up to the year end of March 31, 2019. The accounting entries passed during this period pertains only to adjustments to the carrying value of assets and liabilities which RYCE’s Audit Committee and board approved for the accounting purposes. This is also in line with bringing down the value because the Going Concern of Indian Entity is lost. Thus, the financial statements of Indian Entity being consolidated with RYCE is prepared on conservative approach as Going Concern assumption is lost and after considering the required accounting adjustments as per applicable accounting framework. 

    

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