Amira Nature Foods Ltd. [ANFIF] Filings

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark one)

OR

For the fiscal year ended March 31, 2019

OR

OR

For the transition period from __________ to ___________

Commission file number 001-35681

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 Emirates
Telephone: +97144357303
Facsimile: +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:

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.

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.

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.

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).

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.

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:

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.

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).

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:

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.

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.

______________

⁽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

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: 

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

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

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

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.

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:

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.

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

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.

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.

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:

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.”

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.

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.

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.

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

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.

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.

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:

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.

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:

Our Strategy

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.

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: 

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.

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.

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.

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.

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.

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.

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.”

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.

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.

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.

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.

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.

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.

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:

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:

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.

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).

(Amounts in USD)

______________

⁽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.

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:

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. 

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.

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’.

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

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.