Mar 31, 2018
The Directors have pleasure in presenting the Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2018.
From a slow GDP growth of 6.7% in the financial year 2016-17 due to the impact of demonetization, the growth story started falling in place with a GDP growth of 7.4% in the year 2017-18. The growth would have been higher, but for the introduction of GST and its teething problems. The growth is still better than Chinaâs which is not a mean achievement. Things are looking up and in the current financial year, the growth rate is expected to be around 7.8%. Implementation of GST provisions has more or less stabilized and as a result the monthly GST collection has started to clock in over a lakh crore of rupees per month. Stable inflation, the measures being taken for ensuring ease of doing business at various levels and the push being given to infrastructure projects should further impact the economy positively. The upward surge in oil prices may off set gains in the economy to some extent.
Regulatory shortcomings in the Banking sector particularly PSBs over the last 5 years reportedly resulted in frauds of over one lakh crore rupees. This coupled with NPAs of over Rs.8 lakh crore, declared so far, are a matter of concern for the economy. These may erode the confidence of the general public in the banking system. The measures taken by the Govt. including the Insolvency and Bankruptcy Code, put in place within record time and improved upon from time to time based on experience of administering the Code, should go a long way in addressing the problem.
Your Companyâs performance during the year under review was satisfactory despite the adverse conditions faced by the sugar industry from the 3rd quarter onwards due to bumper production and falling sugar prices. The situation continues to be grave with mounting cane arrears. It is hoped that Central and State Governments will take measures to support the industry to tide over the situation, and put in long term stable policies.
Financial Summary
The Company achieved a turnover of Rs.1742 cr. against Rs.1574 cr. in the previous year. The gross profit at Rs.87.96 cr. against Rs.170.31 cr. in the previous year is lower by 48% due to the losses in the sugar business in the last 2 quarters of the year. The net profit at Rs.57.56 cr. as compared to Rs.120.36 cr. in the previous year, was also lower for the same reason. The figures for the previous year were converged to be in line with Ind AS, as the Company adopted Ind AS in preparing the financial statements for the year 2017-18.
Appropriation and Dividend
The Board of Directors is happy to recommend a dividend of Rs. 4 (40%) per equity share of Rs.10 for the year ended 31.3.2018. The payout of dividend for the year under review, inclusive of corporate tax on dividend distribution, is Rs.8.38 cr.
An amount of Rs.207.70 cr, which includes Rs.164.86 cr. brought forward from the previous year, is being carried forward as surplus in the statement of Profit & Loss.
Auditorsâ Report
There are no qualifications, reservation, or adverse remarks or disclaimer in the Auditorsâ Report to the members on the Annual Financial Statements for the year ended 31.3.2018.
Secretarial Audit Report
M/s. Chandrasekaran Associates, Company Secretaries, carried out the Secretarial Audit for the year 201718 pursuant to Section 204 of the Companies Act, 2013. A copy of their Report in Form MR-3 as per Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - 1. There is no qualification in the Report.
THE STATE OF COMPANYâS AFFAIRS
Sugar
During the year Daurala Sugar Works (DSW) produced 2.29 Lakh MT of sugar, highest in any year, by crushing 21.05 Lakh MT of cane as against 1.85 Lakh MT of sugar by crushing 17.29 Lakh MT in the previous year. Sugar recovery in the year at 10.90% was better than 10.72% last year. The improvement in sugar recovery was a reflection of continued efforts made by the factory to identify and popularize the cultivation of high sucrose varieties in cooperation with the farmers.
Supply of power to grid was as planned. Realisation from sale of Renewable Energy Certificates (RECs) was better than expected. As on 31st March, 2018, REC inventory stood largely liquidated due to good demand.
At the start of financial year 2017-18, sugar prices were healthy at around Rs. 3600 per qtl. because of lower sugar stocks. The prices started dropping sharply from December, 2017 in line with the increasing trends of production, estimated at over 31 Million MT for Sugar Season 2017-18, an increase of 53% over the last year. The situation presently is grim with sugar prices ruling around Rs.2700 per qtl. and Industry expecting further losses for the next two years. This has led to storage & liquidity problems resulting in accumulation of cane dues in excess of Rs. 20,000 cr., with Uttar Pradesh alone accounting for about Rs. 12,500 cr.
International sugar prices, which at the start of the year were ranging around US$ 480 per MT, fell to US$ 345 MT by March, 2018 due to anticipated higher production in most sugar producing countries like Brazil, India etc., resulting in a Global surplus of 10 to 11 Million MT.
The Industry and the cane farmers have been representing to the Central and State Governments to arrest the fall in sugar prices. The Government has taken the following steps to address the situation:
- Import duty increased to 100% from 40%
- Custom duty on sugar exports removed.
- Compulsory export of 2 Million MT under Minimum Indicative Export Quantity (MIEQ) notified; and
- Support for farmers at Rs. 55 per MT of sugarcane purchased by Sugar Mills.
The above steps however have not provided any significant relief in the face of continuing rise in sugar production.
There is a substantial gap between the Fair & Remunerative sugarcane Price (FRP) declared by the Central Government and the State Government Advised Sugarcane Price (SAP), resulting in higher losses for Sugar Mills in Northern India. To bridge the gap, the Industry is requesting the respective State Governments to absorb the differential price. Further, for future the Industry is requesting the State Government to refrain from announcing any SAP, and limit cane price to FRP, in terms of the Rangarajan formula as has been done by Maharashtra & Karnataka and as proposed by Tamil Nadu Government from next year.
Alcohol operations continue to be normal. Most of the production was tied-up with Oil Marketing Companies for admixing with petrol. In our continued efforts to adopt the latest technologies, we are replacing our conventional distillation plant with a modern Multi Pressure Distillation Plant. This would reduce the quantum of effluent generated and would also improve product quality. The same is proposed to be commissioned by September, 2018.
Alcohol prices remained by and large stable. The molasses prices in U.P. have fallen sharply due to higher cane crush and closure of some Distilleries. Our Unit is operating at optimum levels. Since, we largely operate on molasses from our own Sugar Factory, we are not impacted by deviations in molasses prices.
The bottling operations continue to show steady growth and Company is in the process of further augmenting its capacity.
On the operational front, the Unit continued to post good results reflecting in improved efficiency and reduced cost. In the next Season, the Company is taking steps to improve farm productivity and to improve efficiency of the boilers, apart from normal debottlenecking. The Company continues to lay emphasis on improved productivity and operational optimization in all areas of activity.
Chemicals
There was an up-swing in the prospects of Chemicals Business as a result of curtailment/ stoppage of production in China due to clamp down by its Environmental Authorities. It is expected that this situation will continue as Chinese producers will either have to invest significantly in better environmental management (thereby also increasing their operating cost) or shut down.
Consequently, international prices of our main products have improved to more viable level, and profits correspondingly increased.
There was some moderation, however, as our user industry was also adversely affected by lower availability of some of their major inputs they source from China.
Overall the prospects for the Chemicals business look better.
The Company continued its focus on optimizing processes and cost of production through an active R & D programme.
Rayon
Shriram Rayons achieved highest ever export sales for the second consecutive year. The turnover for the year was also highest ever.
With debottlenecking in yarn production capacity and commensurate increase in conversion capacity in textile section, the Unit achieved its highest production level in the year.
The operating margins were under pressure due to strengthening of the Rupee affecting export realization and a steep increase in the price of Caustic Soda, a key raw material.
Nylon Chafer sale increased during the year. The Unit was exploring export markets for the product and achieved a breakthrough during the year. The Unit received regular order during the year.
The capability to use agro-fuel helped the Unit to keep energy cost under control in spite of shortage in coal supply under fuel supply agreement from Coal India. A one MW Solar power plant was installed and operationalized during the year.
The Unit continued receiving appreciation and awards from various agencies for the efforts in improving production, reduction in energy cost, and quality systems.
The Unit kept up efforts for improving effluent and emission controls by upgrading the facilities. Engineering Projects
As a measure of exploring new avenues, the Company has decided to venture into defence equipment manufacturing. The Company has successfully designed, developed and tested a Light Bullet Proof Vehicle - ZEBU- for use by the Indian Defence and Paramilitary Forces. The vehicle was displayed at DEFEXPO 2018 at Chennai. It is hoped that with the Government of Indiaâs âMake in Indiaâ initiative and opening up of defence production to private sector, there will be opportunities in the sector. The effort is exploratory.
Material changes and commitments
No material changes or commitments have occurred between the end of the financial year to which the financial statements relate and the date of this Report, affecting the financial position of the Company.
Subsidiary/ Associate Companies
The Company has a non-material wholly owned subsidiary, Daurala Foods & Beverages Pvt. Ltd.(DFBL), which is not carrying on any operations presently. DCM Hyundai Limited (DHL) is an associate company. The required information with regard to the performance and financial position of the subsidiary and associate companies are annexed in Form AOC - I as annexure to the Annual Financial Statements for the year ended 31.3.2018. There has been no change in relationship of subsidiary/ associate companies during the year.
BOARD MEETINGS AND DIRECTORS
Meetings of the Board
During the year 2017-18 five Board meetings were held. The dates of the meetings, attendance, etc., are given in the Corporate Governance Report annexed hereto.
Declaration u/s 149(6) of the Act
All the Independent Directors (IDs) have given declarations u/s 149(6) of the Act confirming that they meet the criteria of independence as laid down under the said Section.
The Directors of the Company have also confirmed that they were not disqualified to be appointed as Directors as per Section 164(2) of the Companies Act, 2013.
Familiarization Programme for Independent Directors
The Independent Directors of the Company have been on the Board for over 4 years and are fully familiar with its operations. As such no separate familiarization programme was organized during the year.
The Directors are also kept updated with information on the Company, the industry and developments in different segments in which the Company operates, at the Board meetings while reviewing the operations, quarterly/annual financial results and considering the budgets.
A familiarization programme for IDs laid down by the Board has been posted on the Companyâs website -https://www.dcmsr.com.
Policy on Board Diversity
The Board of Directors in its meeting held on 30.5.2016 has approved a Policy on Board Diversity, devised by the Nomination & Remuneration Committee (NRC) as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A copy of the same has been posted on the Companyâs website - https://www.dcmsr.com.
Directors Appointment and Remuneration
Appointment of directors on the Board of the Company is based on the recommendations of the Nomination and Remuneration Committee (NRC). NRC identifies and recommends to the Board, persons for appointment on the Board, after considering the necessary and desirable competencies. NRC takes into account positive attributes like integrity, maturity, judgement, leadership position, time and willingness, financial acumen, management experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, etc.
In case of Independent Directors (IDs) they should fulfill the criteria of independence as per the Act and Regulation 25 of the SEBI (LODR) Regulations, 2015 in addition to the general criteria stated above. It is ensured that a person to be appointed as director has not suffered any disqualification under the Act or any other law to hold such an office. There has been no change in the composition of the Board for the last 3 years.
The directors of the Company are paid remuneration as per the Remuneration Policy of the Company, the gist of which is given under the heading âRemuneration Policyâ herein below. The details of remuneration paid to the directors during the year 2017-18 are given in Form MGT-9 annexed hereto and also in the Corporate Governance Report forming part of this Report.
Changes in Directors or KMP
There has been no change in the composition of the Board of Directors or Key Managerial Personnel during the year 2017-18.
The Board of Directors, on the recommendation of the NRC, has reappointed Shri Alok B. Shriram, Vice Chairman & Dy. Managing Director, whose current term of office expires on 30.9.2018, w.e.f. 1.10.2018 for a further period of 5 years on revised terms and conditions, subject to the approval of the shareholders u/s 196 and other applicable provisions of the Companies Act, 2013 at the ensuing AGM and subject to the provisions of any other Regulations, as may be applicable from time to time.
The Board also on the recommendation of NRC, reappointed Shri Tilak Dhar, Chairman & Managing Director and Shri Madhav B. Shriram, Dy. Managing Director, whose current terms of office expire on 31.3.2019 w.e.f. 1.10.2018 for a further period of 5 years, on revised terms and conditions, subject to the approval of the shareholders u/s 196 and other applicable provisions of the Companies Act, 2013 at the ensuing AGM and subject to the provisions of any other Regulations, as may be applicable from time to time.
The reappointment of Shri Tilak Dhar and Shri Madhav B. Shriram have been advanced by six months as permitted u/s 196 of the Act, with a view to synchronize the dates of reappointment of these three Managerial Personnel.
Annual Evaluation of Board and Directors
As required under the Act and the SEBI (LODR) Regulations, 2015 evaluation of the performance of the IDs, Board as a whole, Executive Directors, the Chairman and the Committees during the year 2017-18 was carried out by the Board of Directors based on the criteria laid down by the NRC. A copy of the âcriteriaâ is annexed as Annexure 2 hereto.
Based on the criteria, the Board reviewed the performance of the Board as a whole with particular reference to structure, quality of deliberations in the meetings, functions, performance of the management and feed back etc. It was concluded that the Board adheres to the highest standards in all above areas, and the performance was constructive and met the test of objectivity in achieving the goals of the Company. The Board noted that the Committees carried out their functions keeping in view the requirements mandated under the Companies Act/ SEBI (LODR) Regulations pursuant to which they were constituted, effectively. The Board then reviewed the performance of Directors individually and concluded that all of them had given very valuable inputs / contributions in achieving the goals of the Company. It was noted that the Executive Directors performed with utmost responsibility in achieving the operating targets. The Independent Directors contributed greatly by providing valuable inputs and guidance. It was noted with appreciation that the IDs adhered to the Code of Independence as per Schedule IV of the Act and to the restriction with regard to pecuniary relationship with the Company during the period under evaluation. The Board also noted that Shri Tilak Dhar, CMD, continued to lead from the front and appreciated his ability to steer the Company.
The IDs in a separate meeting reviewed and evaluated the performance of non-Independent Directors, the Board as a whole, the Board Committees and the performance of the Chairman of the Company taking into account the views of Executive Directors, based on the criteria laid down by the NRC.
The IDs also reviewed the quality, quantity and timeliness of flow of information between the Company management and the Board which are necessary for the Board to effectively and reasonably perform its duties.
Directorsâ Responsibility Statement
As required under Section 134(3)(c) of the Act, your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Internal Financial Controls
A comprehensive and effective internal financial control system is followed by the Company at all its establishments. This is further strengthened by an internal audit process under the overall supervision of the Audit Committee of the Board. The services for the internal audit are outsourced. Qualified and experienced professionals are engaged to ensure effective and independent evaluation of, inter alia, the internal financial controls.
The Audit Committee lays down the schedule for internal audit. Internal audit reports are placed before the Committee with management comments. Suggestions are implemented and reported to the Audit Committee.
Apart from the above, an effective budgeting and monitoring system is also in place. Budgets are reviewed by Audit Committee and approved by the Board. The operating results are compared and monitored with the approved budgets periodically. An Executive Committee comprising of senior management team meets every month, reviews all aspects of operations and chalks out remedial measures and strategies, wherever necessary.
An effective communication/ reporting system operates between the Units, Divisions and Corporate Office to keep various establishments abreast of regulatory changes and ensure compliances.
Loans, Guarantees and Investments
The particulars of loans given by the Company are given in Note no.15 of the Stand alone Financial Statements for the year ended 31.3.2018.
The Company has not made any investment or provided any guarantee covered u/s 186 of the Companies Act, 2013, during the year except surplus funds placed in liquid funds of Mutual funds on short term basis, which have all been redeemed during the year.
Related Party Transactions
There has been no materially significant related party transactions between the Company and the Directors, Key Management Personnel, the subsidiary or the relatives except for those disclosed in the financial statements - Note No.45 of Notes to Accounts.
Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contracts or arrangements in form AOC -2 does not form part of the Report.
The Board had framed a policy on related party transactions and placed the same on the Companyâs website https://www.dcmsr.com.
CSR Activities
Pursuant to Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, a report in the prescribed proforma is annexed - Annexure 3. The Company has spent Rs.134.24 lakh on CSR activities during the year as required under the above Section of the Act.
Risk Management
The Board of Directors in its meeting held on 30.01.2006 undertook a comprehensive review of the risk assessment and minimization procedures/ policies followed by the Company at its various operations. While taking note of the same, the Board laid down that a half yearly status report of the risk assessment and steps taken to minimize the risks be placed before the Board. Such a report in respect of all the operations of the company is regularly placed before the Board and suggestions, if any, are implemented.
In view of the diversified business, there are no significant element of risk, which in the opinion of the Board may threaten the existence of the Company.
The Board of Directors while reviewing the existing risk assessment procedures, laid down a Risk Management Policy as required under Regulation 17 of SEBI (LODR) Regulations, 2015.
Public Deposits
Details relating to deposits covered under Chapter V of the Act.
I) Accepted during the year : |
163.00 |
ii) Remained unpaid or unclaimed as at the : end of the year |
Nil |
iii) Whether there has been any default in } repayment of deposits or payment of interest } thereon during the year and if so, number of } such cases and the total amount involved : } |
No |
a) at the beginning of the year } b) maximum during the year } c) at the end of the year } |
|
iv) The details of deposits which are not in } compliance with the requirement of } Chapter V of the Act. } |
Nil |
Significant Material Orders Passed by Regulators or Courts or Tribunals
No significant orders have been passed by any Regulators, Courts or Tribunals during the year impacting the going concern status and Companyâs operations in future.
Extract of the Annual Return
Extract of the Annual Return for the year 2017-18 in Form MGT-9 is annexed - Annexure 4.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The required information as per Rule 8 (3) A, B & C of Companies (Accounts) Rules, 2014 is annexed -Annexure 5.
REMUNERATION POLICY
The Board of Directors in its meeting held on 14.8.2014 had laid down a Remuneration Policy as recommended by the NRC relating to remuneration of the Directors, Key Managerial Personnel (KMP), Sr. Management Personnel (SMP) and other employees of the Company. The Remuneration Policy is in accordance with Section 178 of the Act and the Rules made there under. The Remuneration Policy is posted on the Companyâs website https://www.dcmsr.com The salient features of the Policy are given below:
i. Guiding principle
The guiding principle of the Policy is that the remuneration and other terms of employment should effectively help in attracting and retaining committed and competent personnel. The remuneration packages are designed keeping in view industry practices and cost of living.
ii. Directors
Non-executive directors are paid remuneration in the form of sitting fees for attending Board/ Committee meetings as fixed by the Board from time to time subject to statutory provisions. Presently sitting fee is Rs.50,000 per Board meeting and Rs.25,000 per Committee meeting. In addition, Non-executive Directors are to be paid commission on profits of up to 1% of the net profit of the Company, computed in the manner laid down u/s 198 of the Companies Act, 2013, in such amount and proportion as may be decided by the Board of Directors.
Remuneration of Executive Directors (Whole-time Directors) including Managing Director is fixed by the Board of Directors on the recommendation of the NRC, subject to the approval of the shareholders. The NRC, while recommending the remuneration, takes into account pay and employment conditions in the industry, merit and seniority of the person and paying capacity of the Company. The remuneration, which comprises of salary, perquisites, performance based reward/ profit based commission and retirement benefits as per Company Rules, is subject to the limits laid down under the Companies Act, 2013.
iii. Key Managerial Personnel and Sr. Management Personnel
Appointment and cessation of service of Key Managerial Personnel are subject to the approval of the NRC and Board of Directors. Remuneration of Key and Sr. Management Personnel is approved by CMD on the recommendation of the concerned Executive Director, keeping in view the Remuneration Policy.
iv. Other employees
The remuneration of other employees is fixed from time to time by the Management as per the guiding principle laid down in the Remuneration Policy and considering industry standards and cost of living. In addition to salary, they are also provided perquisites and retirement benefits as per schemes of the Company and statutory requirements, where applicable.
Managerial Remuneration
The information required as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to remuneration of Directors, KMP and comparisons are annexed -Annexure 6. It is affirmed that the remuneration is as per the Remuneration Policy of the Company.
Particulars of employees who have drawn remuneration of Rs.102 lakh or more per annum during the year 2017-18 are annexed - Annexure 7 .
Audit Committee
The Audit Committee presently comprises of three IDs and one Executive Director. Shri P.R. Khanna is the Chairman and Shri S.B. Mathur, Shri S.C. Kumar, all IDs and Shri K.N. Rao, Director & CEO (Rayons) are Members. There was no instance of the Board not accepting the recommendation of the Audit Committee.
Vigil Mechanism
Pursuant to Section 177 of the Act and Regulation 22 of SEBI (LODR) Regulations, 2015, the Board of Directors, on the recommendation of the Audit Committee, adopted a Vigil Mechanism (Whistle Blower Policy). The Policy has been circulated among the employees and also put on the website of the Company.
The Policy provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or policies. The mechanism provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.
Share Capital
During the year, the Company has not issued any share capital with differential voting rights, sweat equity or ESOP nor provided any money to the employees or trusts for purchase of its own shares.
The Company has not made any public offer of shares during the year.
Unclaimed Shares Suspense Account
The position with regard to the unclaimed equity shares, transferred to the Demat Suspense Account as required under SEBI (LODR) Regulations, is as under:
No. of Folios |
No. of Shares |
|
Outstanding shares in the suspense account as on 1st April, 2017 |
6056 |
83563 |
No. of shareholders approached for transfer of shares from the Account and no. of shares released during the year 2017-18 |
7 |
445 |
Shares transferred to IEPF as per IEPF Rules 2016 |
5534 |
74842 |
Balance as on 31.3.2018 |
51 5 |
8276 |
The voting rights on the above shares remain frozen till the shares are released to the rightful owners.
Statutory Auditors
Pursuant to Section 139 of the Companies Act, 2013, the shareholders in their meeting held on 22.8.2017 had appointed M/s. B S R & Co., LLP, Chartered Accountants (Firm Registration No.101248W/W100022), Gurugram as statutory auditors for holding office from the conclusion of the said AGM till the conclusion of the AGM to be held in the year 2022 on the recommendation of the Audit Sub-Committee and the Board of Directors.
Cost Auditors
M/s Ramanath Iyer & Co., Cost Accountants, (Regn No.13848), 808, Pearls Business Park, Netaji Subhash Place, Pitampura, Delhi - 110034, who were appointed as Cost Auditors of the Company for the year 2016-17, submitted the Cost Audit report, due for filing on or before 27.9.2017, to the Central Government on 12.9.2017. They have been reappointed as Cost Auditors for the year 2018-19. A resolution for ratification of their remuneration for the year 2018-19, as required under the Companies Act, 2013, forms part of the Notice convening the AGM.
Corporate Governance
Reports on Corporate Governance and Management Discussion & Analysis are annexed - Annexure 8. Anti-Sexual Harassment Policy Pursuant to the âSexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013â, the Company constituted Internal Complaints Committees at all its workplaces. There has not been any instance of complaint reported in this regard to any of the Committees.
Acknowledgment
The Directors acknowledge the continued co-operation and support received from the banks and various government agencies, and all our business associates.
The Directors also place on record their appreciation of the contribution made by employees at all levels.
For and on behalf of the Board
New Delhi,
May 29, 2018 CHAIRMAN
Mar 31, 2017
The Directors have pleasure in presenting the Annual Report and the Audited Financial Statements of your Company for the year ended 31st March, 2017.
From an appreciable 7.6% GDP growth in the preceding year, the first quarter of the financial year witnessed a fall in GDP growth to 7.1%, but picked up marginally in the second quarter to 7.3%. The momentum was interrupted with the demonetization of 86% of the currency in circulation from 8.11.2016, causing disturbance especially in micro-economic activities. Demonetization has had short term costs in the form of slow-growth but holds the potential for long term benefits, in the form of better tax compliance and tax revenues, greater digitalization of the economy, increased flow of financial savings, all of which could eventually lead to higher GDP growth. In spite of this, the year closed with a GDP growth of 7.1%, which is one of the best amongst the growing economies in the world.
The proposed introduction of GST from July, 2017 is expected to create a common Indian market, improved tax compliance and governance, boosting investment and growth. The measure is expected to further contribute to the overall economic growth, once the normal teething troubles are resolved. Another encouraging factor is the agricultural growth of 4.1% in the year 2016-17, which is expected to improve further during the current financial year in case of a normal monsoon as predicted. The one area of concern is low job generation. With a determined regime at the Centre and better cohesion between the Centre and State Governments in matters of economic development, an anticipated economic growth of 8% and above is not impossible.
Your Companyâs performance scaled new heights in the year under review. All segments performed well, particularly the sugar business. After several years, sugar prices appreciated and remained remunerative all through the year. The decline in sugar production particularly in Maharashtra and Southern States resulted in normalization of the excessive stocks and stabilized the market at a reasonable level. With a view to control prices, the Government has already initiated measures, such as, restrictions on stock, import of raw-sugar, etc. These measures should hold the price line.
Financial Summary
With a turnaround in the sugar operations, the Company earned its highest ever profit in the year 2016 17. The Company achieved its highest turnover of Rs.1505 cr. against Rs.1226 cr. in the previous year. The gross profit at Rs.169.2 cr. against Rs.57.4 cr. in the previous year, was higher by 195%. The net profit at Rs.120.5 cr. as compared to Rs.33.2 cr. in the previous year, was also highest ever.
Appropriation and Dividend
In view of the record profit position achieved by your Company, the Board of Directors is happy to recommend a final dividend of Rs.6.50 per equity share of Rs.10 (65%) for the year ended 31.3.2017. Taking into account the interim dividend of Rs.3.50 per equity share (35%) already paid, the total dividend for the year works out to Rs.10.00 per equity share (100%). The total payout of dividend for the year under review, inclusive of corporate tax on dividend distribution, is Rs.20.94 cr.
An amount of Rs.152.21 cr., which includes Rs.39.02 cr. brought forward from the previous year is being carried forward as surplus in the statement of Profit and Loss.
Auditors'' Report
There are no qualifications, reservation, or adverse remarks or disclaimer in the Auditors'' Report to the members on the Annual Financial Statements for the year ended 31.3.2017. Regarding the ''Emphasis of Matterâ in the Auditors'' Report on the consolidated financial statements with regard to the financial assets and income there from of the subsidiary companyâs financial statements for the year ended 31.3.2017, as clarified in Note No.47 of the consolidated financial statements, the subsidiary company has no intention of undertaking NBFC business. During the financial year under review the management of the subsidiary company has taken necessary steps to keep the financial assets below the specified limit.
Secretarial Audit Report
M/s. Chandrasekaran Associates, Company Secretaries, carried out the Secretarial Audit for the year 2016-17 pursuant to Section 204 of the Companies Act, 2013. A copy of their Report in Form MR-3 as per Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - 1. There is no qualification in the Report.
THE STATE OF COMPANY''S AFFAIRS
Sugar
During the year Daurala Sugar Works (DSW) produced 1.85 lakhs MT of sugar by crushing 17.29 lakhs MT of cane as against 1.86 lakhs MT of sugar by crushing 17.83 lakhs MT in the previous year. Recovery in the year was better at 10.72% as against 10.44% last year. This was the result of continued efforts made by the factory along with farmers to propagate high sucrose varieties in the area.
Alcohol capacity utilization improved significantly during 2016-17 subsequent to installation of Multi Effect Evaporator to meet the more stringent statutory environmental regulations. This helped the Unit increase its Alcohol production by 33% over the previous year.
The Unit doubled its Absolute Alcohol manufacturing capacity in the year. With this, the Company could contract higher quantity of Anhydrous Alcohol with Oil Marketing Companies, which is expected to further increase during next year. Bottling operations were strengthened by augmenting capacity to meet the increased requirements.
The supply of power to grid was as planned and realization from Renewable Energy Certificates was satisfactory.
The industry reported profits during 2016-17, after incurring losses for last 6-7 years due to improvement in sugar prices. The credit risk profile of sugar companies improved because of better profits and the resultant reduction of debt.
The financial year 2016-17 started on a promising note with improved sugar prices because of anticipated lower domestic sugar production and the international deficit of 6-7 Million MT. Domestic production during 2016-17 was lower than in 2015-16 and sugar prices which were hovering around Rs.3450 per qtl. in April, 2016, improved to a level above Rs. 3700 per qtl. by August. However, with the Government taking actions like imposing stock limits and indicating further actions if prices rose abnormally, sugar prices settled at around Rs. 3600 per qtl.
The international price of white sugar remained firm during the year and touched US$ 600 per MT in September, 2016 due to global deficit. The prices have now fallen to around US$ 480 per MT with start of crushing in Brazil and the realization that Indian Imports may be limited.
With the improving sugar scenario, the Uttar Pradesh Government increased the cane price for Sugar Season 2016-17 and the concessions given in 2015-16 were withdrawn. Overall cane cost increased significantly.
General liquidity in the second half of 2016-17 was affected due to demonetization of high denomination currency by the Central Government, which also affected the Sugar Industry, by reducing the off-take of sugar at the retail level.
The Government has allowed the duty free import of 0.5 Million MT of raw sugar to meet the expected deficit, in specific deficit areas, and indicated that this could be extended to larger quantities, if sugar prices were to rise abnormally.
Overall the sugar sectorâs situation is expected to be stable. Some important Government Policy decisions such as on Import of sugar, Cane pricing, Excise Policy on Alcohol etc., will be key factors in the coming year.
On the operational front, continued efforts were made to improve efficiency and reduce cost. Identification and propagation of new varieties of cane, improved productivity, quality improvement & optimizing operations remain priority areas.
Chemicals
The profitability of the Chemicals Business remained under pressure due to subdued demand and aggressive marketing policies of Chinese competitors, including significant price reduction in respect of some of major products.
To offset the adverse impact of the above to some extent, the Company focused on optimizing cost of production, and continued its active R&D programme to optimize processes. The Company also undertook investments to reduce environment load.
Contract Manufacturing operations remained robust during the year and regular production of one more product was stabilized.
Rayon
In spite of the global headwinds, Shriram Rayons achieved highest ever export sales during the year. The Unit was able to increase its market share with a broader customer base and wider geographical distribution. Consistent with the objective of increasing value added products, Unit exported substantially higher volume of treated fabric.
The Unit succeeded in increasing the production by debottlenecking the plant, improving capacity utilization, higher machine productivity and reduction in wastage.
Nylon Chafer Sales were maintained despite competition from imported tyres. Nylon Chafer exports commenced for the first time.
Consolidation of energy related projects resulted in bringing down energy cost of the Unit as well as the environmental load. The Unitâs efforts in improving productivity and reduction in energy cost received appreciation and the Unit received awards for the same from various agencies.
The Effluent Treatment Plant up-gradation continues in the effort towards staying ahead of mandatory standards.
Material changes and commitments
No material changes or commitments have occurred between the end of the financial year to which the financial statements relate and the date of this Report, affecting the financial position of the Company.
Subsidiary/ Associate Companies
The Company has a non-material wholly owned subsidiary, Daurala Foods & Beverages Pvt. Ltd.(DFBL), which is not carrying on any operations presently. DCM Hyundai Limited (DHL) is an associate company. The required information with regard to the performance and financial position of the subsidiary and associate companies are annexed in Form AOC - I as annexure to the Annual Financial Statements for the year ended 31.3.2017. There has been no change in relationship of subsidiary/ associate companies during the year.
BOARD MEETINGS AND DIRECTORS
Meetings of the Board
During the year 2016-17 seven Board meetings were held. The dates of the meetings, attendance, etc., are given in the Corporate Governance Report annexed hereto.
Declaration u/s 149(6) of the Act
All the Independent Directors (IDs) have given declarations u/s 149(6) of the Act confirming that they meet the criteria of independence as laid down under the said Section.
Familiarization Programme for Independent Directors
The Independent Directors on the Board of the Company are well versed with the Companyâs business model and the nature of industries in which it is operating.
The Directors are also kept updated with information on the Company, the industry and developments in different segments in which the Company operates, at the Board meetings while reviewing the operations, quarterly/annual financial results and considering the budgets.
A familiarization programme for IDs laid down by the Board has been posted on the Companyâs website https://www.dcmsr.com
Policy on Board Diversity
The Board of Directors in its meeting held on 30.5.2016 has approved a Policy on Board Diversity, devised by the Nomination & Remuneration Committee (NRC) as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A copy of the same has been posted on the Companyâs website https://www.dcmsr.com.
Directors Appointment and Remuneration
Appointment of directors on the Board of the Company is based on the recommendations of the NRC. NRC identifies and recommends to the Board, persons for appointment on the Board, after considering the necessary and desirable competencies. NRC takes into account positive attributes like integrity, maturity, judgment, leadership position, time and willingness, financial acumen, management experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, etc.
In case of Independent Directors (IDs) they should fulfill the criteria of independence as per the Act and Regulation 25 of the SEBI (LODR) Regulations, 2015 in addition to the general criteria stated above. It is ensured that a person to be appointed as director has not suffered any disqualification under the Act or any other law to hold such an office.
The directors of the Company are paid remuneration as per the Remuneration Policy of the Company, the gist of which is given under the heading ''Remuneration Policyâ herein below. The details of remuneration paid to the directors during the year 2016-17 are given in Form MGT-9 annexed hereto and also in the Corporate Governance Report forming part of this Report.
Changes in Directors or KMP
There has been no change in the composition of the Board of Directors or Key Managerial Personnel during the year 2016-17.
Shri K.N. Rao, Director & CEO (Rayons), whose term expired on 31.1.2017 has been reappointed by the Board in its meeting held on 14.11.2016 in the same capacity to hold office till 31.10.2019, subject to the approval of the shareholders in the ensuing AGM.
Shri Madhav B. Shriram, retires by rotation at the ensuing AGM and being eligible offers himself for reappointment as a Director liable to retire by rotation as per Section 152 of the Companies Act, 2013. Shri Madhav B. Shriram is presently Dy. Managing Director. A proposal for his re-appointment as a director liable to retire by rotation is being placed before the shareholders for approval at the ensuing AGM.
Annual Evaluation of Board and Directors
As required under the Act and the SEBI (LODR) Regulations, 2015 evaluation of the performance of the IDs, Board as a whole, Executive Directors, the Chairman and the Committees during the year 2016-17 was carried out by the Board of Directors based on the criteria laid down by the NRC. A copy of the ''criteriaâ is annexed as Annexure 2 hereto.
On an overall assessment, the performance of the IDs individually and collectively, was found noteworthy. It was noted that the IDs adhered to the code of independence as per Schedule IV of the Act and to the restrictions with regard to pecuniary relationship with the Company. The Board of Directors evaluated the performance of the Board as a whole, including the Committees, the Chairman and Executive Directors. It was noted that the performances, individually and collectively, were constructive and met the test of objectivity in achieving the goals of the Company.
The IDs in a separate meeting reviewed and evaluated the performance of non-Independent Directors, the Board as a whole, the Board Committees and the performance of the Chairman of the Company taking into account the views of Executive Directors, based on the criteria laid down by the NRC.
The IDs also reviewed the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
Directorsâ Responsibility Statement
As required under Section 134(3)(c) of the Act, your Directors state that:
a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Internal Financial Controls
A comprehensive and effective internal financial control system is followed by the Company at all its establishments. This is further strengthened by an internal audit process under the overall supervision of the Audit Committee of the Board. The services for the internal audit are outsourced. Qualified and experienced professionals are engaged to ensure effective and independent evaluation of, inter alia, the internal financial controls.
The Audit Committee lays down the schedule for internal audit. Internal audit reports are placed before the Committee with management comments. Suggestions are implemented and reported to the Audit Committee.
Apart from the above, an effective budgeting and monitoring system is also in place. Budgets are reviewed by Audit Committee and approved by the Board. The operating results are compared and monitored with the approved budgets periodically. An Executive Committee comprising of senior management team meets every month, reviews all aspects of operations and chalks out remedial measures and strategies, wherever necessary.
An effective communication/ reporting system operates between the Units, Divisions and Corporate Office to keep various establishments abreast of regulatory changes and ensure compliances.
Loans, Guarantees and Investments
The Company has not given any loan covered u/s 186 of the Act during the year.
During the year the Company executed a guarantee in favour of IDBI Bank Ltd. with regard to crop loans from the Bank to the farmers, who supply cane to the Companyâs Unit Daurala Sugar Works on recommendation of the Company, for an overall limit of Rs.100 cr. The guarantee was valid for one year. Against this guarantee the Bank had disbursed loans amounting to around Rs.18 cr. These loans stand fully repaid and as such the guarantee stand discharged.
Related Party Transactions
The transactions entered with a related party during the year under review were on Armâs Length basis and in the ordinary course of business. All related party transactions were approved by the Audit Committee and the Board. The relevant information regarding related party transactions has been set out in Note No.38 of the Standalone Financial Statements for the y.e. 31.3.2017. In view of this, disclosure in Form AOC-2 is not required.
The Board has framed a policy on related party transactions and placed the same on the Companyâs website https://www.dcmsr.com.
CSR Activities
Pursuant to Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, a report in the prescribed proforma is annexed - Annexure 3. The Company has spent Rs.64.66 lakhs against the mandated amount of Rs.63.14 lakhs on CSR activities during the year.
Risk Management
The Board of Directors in its meeting held on 30.01.2006 undertook a comprehensive review of the risk assessment and minimization procedures/ policies followed by the Company at its various operations. While taking note of the same, the Board laid down that a half yearly status report of the risk assessment and steps taken to minimize the risks be placed before the Board. Such a report in respect of all the operations of the Company is regularly placed before the Board and suggestions, if any, are implemented.
In view of the diversified business, there are no significant element of risk, which in the opinion of the Board may threaten the existence of the Company.
The Board of Directors while reviewing the existing risk assessment procedures, laid down a Risk Management Policy as required under Regulation 17 of SEBI (LODR) Regulations, 2015.
Public Deposits
Details relating to deposits covered under Chapter V of the Act.
(Rs./lakhs)
i) Accepted during the year : 252.15
ii) Remained unpaid or unclaimed as at the : Nil end of the year
iii) Whether there has been any default in } repayment of deposits or payment of interest } thereon during the year and if so, number of } such cases and the total amount involved : } No
a) at the beginning of the year }
iv) The details of deposits which are not in } compliance with the requirement of } Nil Chapter V of the Act. }
Significant Material Orders Passed by Regulators or Courts or Tribunals
No significant orders have been passed by any Regulators, Courts or Tribunals during the year impacting the going concern status and Companyâs operations in future.
Extract of the Annual Return
Extract of the Annual Return for the year 2016-17 in Form MGT-9 is annexed - Annexure 4.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The required information as per Rule 8 (3) A, B & C of Companies (Accounts) Rules, 2014 is annexed
- Annexure 5.
REMUNERATION POLICY
The Board of Directors in its meeting held on 14.8.2014 had laid down a Remuneration Policy as recommended by the NRC relating to remuneration of the Directors, Key Managerial Personnel (KMP), Sr. Management Personnel (SMP) and other employees of the Company. The Remuneration Policy is in accordance with Section 178 of the Act and the Rules made there under. The Remuneration Policy is posted on the Companyâs website https://www.dcmsr.com. The salient features of the Policy are given below:
i. Guiding principle
The guiding principle of the Policy is that the remuneration and other terms of employment should effectively help in attracting and retaining committed and competent personnel. The remuneration packages are designed keeping in view industry practices and cost of living.
ii. Directors
Non-executive directors are paid remuneration in the form of sitting fees for attending Board/ Committee meetings as fixed by the Board from time to time subject to statutory provisions. Presently sitting fee is Rs.50,000 per Board meeting and Rs.25,000 per Committee meeting. In addition, Non-executive Directors are to be paid commission on profits of up to 1% of the net profit of the Company, computed in the manner laid down u/s 198 of the Companies Act, 2013, in such amount and proportion as may be decided by the Board of Directors.
Remuneration of Executive Directors (Whole-time Directors) including Managing Director is fixed by the Board of Directors on the recommendation of the NRC, subject to the approval of the shareholders. The NRC, while recommending the remuneration, takes into account pay and employment conditions in the industry, merit and seniority of the person and paying capacity of the Company. The remuneration which comprises of salary, perquisites, performance based reward/ profit based commission and retirement benefits as per Company Rules is subject to the limits laid down under the Companies Act, 2013.
iii. KMP and SMP
Appointment and cessation of service of Key Managerial Personnel are subject to the approval of the NRC and Board of Directors. Remuneration of KMP and Sr. Management Personnel is approved by CMD on the recommendation of the concerned Executive Director, keeping in view the Remuneration Policy.
iv. Other employees
The remuneration of other employees is fixed from time to time by the Management as per the guiding principle laid down in the Remuneration Policy and considering industry standards and cost of living. In addition to salary, they are also provided perquisites and retirement benefits as per schemes of the Company and statutory requirements, where applicable.
Managerial Remuneration
The information required as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 pertaining to remuneration of Directors, KMP and comparisons are annexed
- Annexure 6. It is affirmed that the remuneration is as per the Remuneration Policy of the Company.
Particulars of employees who have drawn remuneration of Rs.102 lakhs or more per annum during the year 2016-17 are annexed - Annexure 7.
Audit Committee
The Audit Committee presently comprises of three IDs and one Executive Director. Shri P.R. Khanna is the Chairman and Shri S.B. Mathur, Shri S.C. Kumar, all IDs and Shri K.N. Rao, Director & CEO (Rayons) are Members. There was no instance of the Board not accepting the recommendation of the Audit Committee.
Vigil Mechanism
Pursuant to Section 177 of the Act and Regulation 22 of SEBI (LODR) Regulations, 2015, the Board of Directors, on the recommendation of the Audit Committee, adopted a Vigil Mechanism (Whistle Blower Policy). The Policy has been circulated among the employees and also put on the website of the Company.
The Policy provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the code of conduct or policies. The mechanism provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.
Share Capital
During the year, the Company has not issued any share capital with differential voting rights, sweat equity or ESOP nor provided any money to the employees or trusts for purchase of its own shares.
The Company has not made any public offer of shares during the year.
Unclaimed Shares Suspense Account
The position with regard to the unclaimed equity shares, transferred to the Demat Suspense Account as required under SEBI (LODR) Regulations, is as under:
No. of Folios No. of Shares
Outstanding shares in the suspense 6069 83879 account as on 1st April, 2016
No. of shareholders approached for 13 316 transfer of shares from the Account and no. of shares released during the year 2016-17
Balance as on 31.3.2017 6056 83563
The voting rights on the above shares remain frozen till the shares are released to the rightful owners.
Statutory Auditors
The Statutory Auditors of the Company are M/s A. F. Ferguson & Co. (Registration No.112066W), Chartered Accountants, 9, Scindia House, K.G. Marg, New Delhi - 110001, who hold office till the conclusion of the ensuing AGM. There was no change in the statutory auditors during the year.
Pursuant to Section 139 of the Companies Act, 2013, the Board of Directors have recommended appointment of M/s. B S R & Co., LLP, Chartered Accountants (Firm Registration No.101248W/W100022), Gurugram as statutory auditors for holding office from the conclusion of the ensuing AGM till the conclusion of the AGM to be held in the year 2022, subject to the approval of the shareholders in the ensuing AGM, in place of M/s. A.F. Ferguson & Co. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s. B S R & Co. that their appointment, if made, would be in conformity with the limits specified in the said Section.
Cost Auditors
M/s Ramanath Iyer & Co., Cost Accountants, (Regn No.13848), 808, Pearls Business Park, Netaji Subhash Place, Pitampura, Delhi - 110034, who were appointed as Cost Auditors of the Company for the year 2015-16, submitted the Cost Audit report, due for filing on or before 27.9.2016, to the Central Government on 3.9.2016. They have been reappointed as Cost Auditors for the year 2017-18. A resolution for ratification of their remuneration for the year 2017-18, as required under the Companies Act, 2013, forms part of the Notice convening the AGM.
Corporate Governance
Reports on Corporate Governance and Management Discussion & Analysis are annexed - Annexure 8. Anti-Sexual Harassment Policy
Pursuant to the âSexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013â, the Company constituted Internal Complaints Committees at all its workplaces. There has not been any instance of complaint reported in this regard to any of the Committees.
Acknowledgement
The Directors acknowledge the continued co-operation and support received from the banks and various government agencies, and all our business associates.
The Directors also place on record their appreciation of the contribution made by employees at all levels.
For and on behalf of the Board
New Delhi,
May 23, 2017 CHAIRMAN
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Annual Report and the
Audited Financial Statements of your Company for the year ended 31st
March, 2015.
From the start of 2014-15 the economy, which was languishing in the
previous years, moved to a growth path on the back of falling inflation
and an upward trend in the manufacturing and service sectors. The
economy received further fillip with the positive signals with regard
to progressive reforms in areas of infrastructure development,
unblocking of coal mines, allocation of telecom spectrum, deregulation
of diesel prices and promises of an ambitious 'make in India' campaign.
The external economic scenario turned more benign with falling crude
oil prices which resulted in reduced import bills and reduced pressure
on the current account of the Country. With control on inflation, which
was moving up by leaps and bounds earlier, there was hope of a lower
interest rate regime, to aid faster growth. This aspect is yet to
crystallize up to the expectations. With anticipation of GDP growth of
over 7% during the current financial year, which projection has been
echoed by domestic and international agencies, one hopes that the stage
is set for a turnaround in the overall economic scenario.
As for your Company's operations, segments other than sugar performed
well. As far as the sugar business is concerned, during the year under
review, the problems faced by the industry in the year
2013- 14 turned more acute, making further long term reforms and the
need for short term relief measures even more urgent.
Financial Summary
In spite of the continued adversity in the sugar business, which is the
core business of the Company, the Company achieved a turnover of
Rs.1305 cr. against Rs.1329 cr. in the previous year. There was a gross
profit of Rs. 29.9 cr. as compared to Rs. 67.9 cr. in the previous year
and net profit of Rs. 4.4 cr. as compared to Rs. 29 cr. in the
previous year.
Appropriation and Dividend
The Board of Directors is pleased to recommend a dividend of Re.1 per
equity share of Rs.10 (10%) for the year ended 31.3.2015. The dividend
payout for the year under review, inclusive of corporate tax on
dividend distribution, is Rs. 2.09 cr.
After provision for proposed dividend, out of Rs.117.63 cr. in the
Profit & Loss Account, including Rs.115.34 cr. brought forward from the
previous year and on adjustment of (-) Rs. 5.56 cr. towards carrying
value of fixed assets (net of deferred tax), Rs.100 cr. was transferred
to General Reserve (Rs. 3 cr. in the previous year) leaving a balance
of Rs.12.06 cr. in the Profit & Loss Account.
Auditors' Report
There are no qualifications, reservation, or adverse remarks or
disclaimer in the Auditors Report to the members on the Annual
Financial Statements for the year ended 31.3.2015.
Secretarial Audit Report
M/s. Chandrasekaran Associates, Company Secretaries, carried out a
Secretarial Audit for the year 2014- 15 pursuant to Section 204 of the
Companies Act, 2013 (the Act). A copy of their Report in Form MR-3 as
per Rule 9 of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is annexed as Annexure - 1.
There are no qualifications in the Report. Regarding their observation
with regard to deposits, the Company is repaying the deposits accepted
prior to 1.4.2014 on the respective due dates, which in terms of the
Explanation appended to Rule 19 of the Companies (Acceptance of
Deposit) Rules, 2014 is deemed to be in compliance of Section 74(1)(b)
of the Companies Act, 2013. Regarding 'related party transactions', as
the Company had obtained prior approval of the Audit Committee and the
Board of Directors to each such transactions, the need for obtaining
the omnibus approval of the Audit Committee to such transactions does
not arise.
THE STATE OF COMPANY'S AFFAIRS Sugar
During the year the Unit produced 1.62 lac MT of sugar, by crushing
16.79 lac MT of cane as against 1.32 lac MT of sugar by crushing 14.12
lac MT of cane in the previous year.
The financial year 2014-15 has been difficult for the Indian Sugar
Industry due to continued fall in sugar prices, which dropped to lowest
level in the past five years. Continued excess production over
consumption in the last five years has resulted in significant increase
in sugar inventory.
At the start of the financial year, the sugar prices were ruling around
Rs. 3000 - 3200 per qtl., in anticipation of improved sentiments with
swearing in of new Government at Centre. However, with domestic sugar
production for Sugar Season 2014-15 estimated to be higher at over 27
Million MT as against consumption of around 23 Million MT, the market
sentiments turned bearish and sugar prices collapsed to a low of around
Rs. 2400 per qtl. before rising to a level of Rs. 2600 per qtl. in
March' 15. Consequently, the Industry is straddled with huge losses
and cane dues. In the current situation, companies are finding it
difficult even to pay cane dues as per Fair & Remunerative Price (FRP),
let alone the State Administered Price (SAP).
Internationally also the sugar prices have declined from US$ 450 per MT
to a level of US$ 380 per MT for White Sugar, with surplus production
in most sugar producing countries. At these prices, no exports are
taking place despite the Government having declared a higher export
incentive on raw sugar. Consequently, the surplus situation is
continuing and the Industry is expected to carry forward a record stock
of around 10 Million MT into the next Season, which is nearly 5 months
consumption of sugar.
During these difficult times, the State Government has given some
relief to Sugar Industry in the following manner : -
- The Uttar Pradesh Government has maintained the sugarcane price, SAP,
at Rs. 280 per qtl. for Sugar Season 2014-15 at the same level as last
year, to be paid in two installments, Rs. 240 per qtl. within 14 days
of supply, and the balance Rs. 40 per qtl. in the following manner :
 Rs.11.40 per qtl. through waiver of taxes / charges and other
payables
 Upto Rs. 28.60 per qtl. cane price subsidy, linked to selling
prices of sugar, molasses, bagasse and press mud from Oct.'14 - May'15.
Keeping in mind actual realisation, it is expected that the whole of
the Rs. 28.60 per qtl. incentive would accrue to the Industry.
Though above steps have helped in mitigating the financial difficulties
/ losses to some extent, but the losses are still huge and cane price
arrears have increased substantially, and stood at around Rs. 19250
crs. as on 31st March, 2015.
For Industry to survive surplus sugar stock position needs to be
further addressed by way of buffer stock creation by the Central
Government, for which representations have already been made to take
some initiatives to safeguard the Industry and its stakeholders. It is
also necessary that a linkage between the price of sugar and sugarcane
is established at the earliest, to ensure that the Industry has the
capacity to meet its obligations towards its stakeholders.
In order to rationalize the Import Export Policy of Sugar, the Central
Government has recently increased the import duty to 40% and enhanced
export subsidy on raw sugar to Rs. 4000 per MT, to stabilize the
domestic market.
On the operational front, Company continues to lay emphasis on
increasing productivity, sugar recovery and reducing cost of
production.
Alcohol
There was a decline in the profitability of the Alcohol Business
relative to the previous year, basically because of a sharp increase in
the price of the input i.e. molasses which could not be matched with
increase in selling prices. In-fact sales and prices of Alcohol were
under pressure due to relatively cheap imports, and limited progress in
the Gasohol Programme due to various statutory and commercial reasons.
Chemicals
The profitability of the Chemicals business was maintained at the
previous year's level, despite intensified competition, and aggressive
pricing by Chinese manufacturers, particularly in the last quarter of
the year when significant export benefits were again introduced by the
Chinese Govt.
Demand for our main products was stable.
Contract Manufacturing activities declined due to sluggish offtake of
the end product manufactured by the Customer.
The Company continued with its active R&D programme for optimization of
processes and developing new products.
Rayon
Shriram Rayons, Unit of the Company, continued to increase its share in
the Rayon market, achieving its highest export volume during the year.
The Unit enhanced its efforts for widening its customer base,
geographic distribution and increasing value added products.
The Nylon Chafer sale was lower due to the depressed domestic
automobile market.
The Rayon debottlenecking project was completed during the year. This,
along with improved machine productivity and reduction in wastages,
helped the Unit in achieving higher production and lower operating
cost.
To control the energy cost and also to protect the environment, the
Unit is consistently replacing coal with agro fuel. During the year,
the Unit met 44% of its fuel requirement from renewable sources. The
Unit also completed implementation of energy related projects including
the Solar Power Pilot Project to further increase usage of renewable
energy and also increase operational economics.
The steep fall in the value of the Euro has adversely affected export
realization in the later part of the year. All the above steps have
helped us to counteract the continuing weakness in Euro, in some
measure.
Material changes and commitments
No material changes or commitments have occurred between the end of the
financial year to which the financial statements relate and the date of
this Report, affecting the financial position of the Company.
Subsidiary/ Associate Companies
The Company has a non-material subsidiary, Daurala Foods & Beverages
Pvt. Ltd.(DFBL), which is not carrying on any operations presently. DCM
Hyundai Limited (DHL) is an associate company.
The required information with regard to the performance and financial
position of the subsidiary and associate companies are annexed in Form
AOC - I as annexure to the Annual Financial Statements for the year
ended 31.3.2015.
There has been no change in relationship of any subsidiary/ associate
company during the year. BOARD MEETINGS AND DIRECTORS Meetings of the
Board
During the year 2014-15 the Board met five times. The dates of the
meetings, attendance, etc., are given in the Corporate Governance
Report annexed hereto.
Declaration u/s 149(6) of the Act
All the Independent Directors (IDs) have given declarations u/s 149(6)
of the Act confirming that they meet the criteria of independence as
laid down under the said Section.
Familiarization Programme for Independent Directors
Four of the six IDs in the Company have been on the Board for a long
time and are fully conversant with the business of the Company, nature
of the industries in which it operates, business model, etc. The two
IDs appointed during the year have been fully briefed about the Company
and its operations. The IDs, at the time of appointment, have been
provided with the details of their roles, rights and responsibilities
as IDs through the letter of appointment issued to them.
The Directors are also kept updated with information on the Company,
the industry and developments in different segments at the Board
meetings while reviewing the operations, quarterly/annual financial
results and considering the budgets.
Your Company will arrange visits of the IDs to the Plants according to
their convenience in future.
A familiarization programme for IDs, to be laid down by the Board, will
be put on the Company's website - www.dcmsr.com in due course.
Directors Appointment and Remuneration
Appointment of directors on the Board of the Company is based on the
recommendations of the Nomination & Remuneration Committee (NRC). NRC
identifies and recommends to the Board, persons for appointment on the
Board, after considering the necessary and desirable competencies. NRC
takes into account positive attributes like integrity, maturity,
judgement, leadership position, time and willingness, financial acumen,
management experience and knowledge in one or more fields of finance,
law, management, sales, marketing, administration, research, etc.
In case of Independent Directors (IDs) they should fulfill the criteria
of independence as per the Act and Clause 49 of the Listing Agreement
in addition to the general criteria stated above. It is ensured that a
person to be appointed as director has not suffered any
disqualification under the Act or any other law to hold such an office.
The directors of the Company are paid remuneration as per the
Remuneration Policy of the Company, the gist of which is given under
the heading 'Remuneration Policy' herein below. The details of
remuneration paid to the directors during the year 2014-15 are given in
Form MGT-9 annexed hereto and also in the Corporate Governance Report
forming part of this Report.
Changes in Directors or KMP
Pursuant to Section 161 (4) of the Act, Shri K.N. Rao, who was
appointed in a casual vacancy on the Board, effective from 1.2.2014,
holds office till the ensuing AGM and being eligible offers himself for
appointment as a director liable to retire by rotation. Shri K.N. Rao
is presently Director & CEO (Rayons).
Shri C. Vikas Rao was appointed as an ID on the Board, on the
recommendation of NRC, for a term of 5 years w.e.f. 14.8.2014. His
appointment is subject to the approval of the shareholders in the
ensuing Annual General Meeting. Particulars of Shri C.Vikas Rao have
been given in the explanatory statement annexed to the notice for the
AGM.
Mrs. Kavitha Dutt Chitturi has been appointed on the Board as an I
ndependent Director, on recommendation of the NRC, for a term of 5
years w.e.f. 2.2.2015, subject to the approval of the shareholders in
the ensuing AGM. With this appointment, your Company has complied with
the requirement of having a woman director on its Board as per the Act
and the Listing Agreement. Particulars of Mrs. Kavitha Dutt Chitturi
have been given in the explanatory statement annexed to the notice for
the ensuing AGM.
Dr. V.L. Dutt, who had joined the Board in May, 1990 and continued on
the Board with a break between 2001-2005, resigned from the Board as an
ID due to restrictions on his travel and other business engagements,
effective from 12.1.2015. The Board of Directors placed on record its
appreciation of the valuable advice and guidance provided by Dr. V.L.
Dutt during his long tenure with the Company.
Shri B.P. Khandelwal demitted office as Company Secretary effective
from 04.11.2014, to take up his new assignment in the Company as
President. The Board appointed, on the recommendation of NRC, Shri Y.D.
Gupta, Sr. General Manager (Law & Taxation), as Company Secretary from
the said date.
Annual Evaluation of Board and Directors
As required under the Act and the Listing Agreement, an evaluation of
the performance of the IDs was carried out by the Board of Directors
during the year, based on the criteria laid down by the NRC. A copy of
the 'criteria' is annexed as Annexure 2 hereto. On an overall
assessment, it was found that all the IDs have given a good account of
themselves. The Board concluded that the IDs individually and
collectively were well qualified and their contributions were in the
interest of the Company.
The IDs in a separate meeting held on 02.02.2015 reviewed and evaluated
the performance of non- Independent Directors, the Board as a whole,
the Board Committees and the performance of the Chairman of the Company
taking into account the views of executive and non-executive directors.
Keeping the requirements under the Act and the Listing Agreement, the
IDs have laid down broad areas for evaluation. After detailed
discussion, it was concluded that the performance of the Board/
Committees collectively and the directors individually on all counts of
evaluation were appreciable.
The performance of the Chairman and other Executive Directors was
evaluated for leadership and direction to the Company judging as per
the parameters of the evaluation criteria and noted that the
performance was satisfactory. It was further noted that the Chairman
was duly following long term strategy for the Company generally.
Directors' Responsibility Statement
As required under Section 134(3)(c) of the Act your Directors state
that:
a) in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) the directors had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year and of the profit or loss
of the Company for that period;
c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern
basis;
e) the directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively; and
f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Internal Financial Controls
The Company has over the years evolved effective systems and procedures
to ensure internal financial controls in all its establishments. An
internal audit process is in place under the overall supervision of the
Audit Committee of the Board. The services for the internal audit are
outsourced. Qualified and experienced professionals are engaged to
ensure effective and independent evaluation of, inter alia, the
internal financial controls. The appointment of internal auditors are
approved by the Board on recommendations of the Audit Committee. The
Audit Committee also lays down the schedule for internal audit.
Internal audit reports are placed before the Committee with management
comments. Suggestions are implemented and reported to the Audit
Committee.
Apart from the above, an effective budgeting and monitoring system is
also in place. Budgets are reviewed by Audit Committee and approved by
the Board. The operating results are compared and monitored with the
approved budgets periodically. An Executive Committee comprising of
senior management team meets every month, reviews all aspects of
operations and chalks out remedial measures and strategies, wherever
required.
An effective communication/ reporting system operates between the
Units, Divisions and Corporate Office to keep various establishments
abreast of regulatory changes and ensure compliances.
The Company has, with a view to further strengthen the internal
financial controls, engaged the services of an expert agency to draw
out a more comprehensive internal financial control system for the
Company. The Company expects to commence implementation of its
recommendations during the current financial year.
Loans, Guarantees and Investments
The Company has not given any loan or made any investment covered u/s
186 of the Act during the year.
The Company has agreed to act as facilitator for disbursement of crop
loan of up to Rs.100 cr. to the designated cane growers attached to the
Company's Unit, Daurala Sugar Works from IDBI Bank Limited. In this
regard the Company has executed a Deed of Guarantee for providing
necessary services and to ensure repayment of the crop loans by the
cane growers who avail the facility. No disbursement has so far been
made under the Scheme.
Related Party Transactions
The transactions entered with related parties during the year under
review were on Arm's Length basis and in the ordinary course of
business. The provisions of Section 188 of the Companies Act, 2013 are
therefore, not attracted. All related party transactions were approved
by the Audit Committee and the Board. The relevant information
regarding related party transactions has been set out in Note 38 of the
Standalone Financial Statement for the y.e. 31.3.2015. Thus, disclosure
in Form AOC-2 is not required.
The Board has framed a Policy on related party transactions and placed
the same on the Company's website.
CSR Activities
Pursuant to Section 135 of the Act read with the Companies (Corporate
Social Responsibility Policy) Rules, 2014, a report in the prescribed
proforma is annexed - Annexure 3.
Risk Management
The Board of Directors in its meeting held on 30.01.2006 undertook a
comprehensive review of the risk assessment and minimization
procedures/ policies followed by the Company at its various operations.
While taking note of the same, the Board laid down that a half yearly
status report of the risk assessment and steps taken to minimize the
risks be placed before the Board. Such a report in respect of all the
operations of the company is regularly placed before the Board and
suggestions, if any, are implemented.
In view of the diversified business, there are no elements of risks,
which in the opinion of the Board may threaten the existence of the
Company.
Public Deposits
i. The Company has not accepted any deposit covered under Chapter V of
the Act during the year.
ii. No deposit remained unpaid as at the end of the year. An amount of
Rs.1.54 lacs remained unclaimed as at the close of the year.
iii. There has been no default in repayment of public deposits during
the year.
iv. The Company has not accepted any deposits after the commencement of
the Act.
Significant Material Orders Passed by Regulators or Courts or Tribunals
No significant orders have been passed by any Regulators, Courts or
Tribunals impacting the going concern status and Company's operations
in future.
Extract of the Annual Return
Extract of the Annual Return for the year 2014-15 in Form MGT-9 is
annexed - Annexure 4.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The required information as per Rule 8 (3) A, B & C of Companies
(Accounts) Rules, 2014 is annexed - Annexure 5.
REMUNERATION POLICY
The Board of Directors in its meeting held on 14.8.2014 laid down a
Remuneration Policy as recommended by the NRC relating to remuneration
of the Directors, Key Managerial Personnel (KMP), Sr. Management
Personnel (SMP) and other employees of the Company. The Remuneration
Policy is in accordance with Section 178 of the Act and the Rules made
thereunder. The salient features of the Policy are given below:
i. Guiding principle
The guiding principle of the Policy is that the remuneration and other
terms of employment should effectively help in attracting and retaining
committed and competent personnel. The remuneration packages are
designed keeping in view industry practices and cost of living.
ii. Directors
Non-executive directors are paid remuneration in the form of sitting
fees for attending Board/ Committee meetings as fixed by the Board from
time to time subject to statutory provisions. Presently sitting fee is
Rs. 50,000 per Board meeting and Rs. 25,000 per Committee meeting.
Remuneration of Executive Directors (Whole-time Directors) including
Managing Director is fixed by the Board of Directors on the
recommendation of the NRC, subject to the approval of the shareholders.
The NRC, while recommending the remuneration, takes into account pay
and employment conditions in the industry, merit and seniority of the
person and paying capacity of the Company. The remuneration which
comprises of salary, perquisites, performance based reward/ profit
based commission and retirement benefits as per Company Rules is
subject to the limits laid down under the Act.
iii. KMP and SMP
Appointment and cessation of service of KMP are subject to the approval
of the NRC and Board of Directors. Remuneration of KMP and SMP are
approved by CMD on the recommendation of the concerned Executive
Director, keeping in view the Remuneration Policy.
iv. Other employees
The remuneration of other employees is fixed from time to time by the
Management as per the guiding principle laid down in the Remuneration
Policy and considering industry standards and cost of living. In
addition to salary, they are also provided perquisites and retirement
benefits as per Schemes of the Company and statutory requirements,
where applicable.
The Remuneration Policy of the Company is available on its website.
Managerial Remuneration
The information required as per Rule 5 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 pertaining to
remuneration of Directors, KMP and comparisons are annexed - Annexure
6. It is affirmed that the remuneration is as per the Remuneration
Policy of the Company.
Particulars of employees who have drawn remuneration of Rs.60 lacs or
more during the year 2014-15 are annexed - Annexure 7.
Audit Committee
The Audit Committee presently comprises of three IDs and one executive
director. Shri P.R. Khanna is the Chairman and Shri S.B. Mathur, Shri
S.C. Kumar and Shri K.N. Rao, Director & CEO (Rayons) are Members.
There was no instance of the Board not accepting the recommendation of
the Audit Committee.
Vigil Mechanism
Pursuant to Section 177 of the Act and Clause 49 of the Listing
Agreement, the Board of Directors, on the recommendation of the Audit
Committee, adopted a Vigil Mechanism (Whistle Blower Policy) in its
meeting held on 14.8.2014. The Policy has been widely circulated
amongst the employees and also put on the website of the Company.
The Policy provides a channel to the employees to report to the
management concerns about unethical behavior, actual or suspected fraud
or violation of the code of conduct or policies. The mechanism provides
for adequate safeguards against victimization of employees who avail of
the mechanism and also provides for direct access to the Chairman of
the Audit Committee in exceptional cases.
Share Capital
During the year, the Company has not issued any share capital with
differential voting rights, sweat equity or ESOP nor provided any money
to the employees or trusts for purchase of its own shares.
Statutory Auditors
The statutory auditors of the Company are M/s A. F. Ferguson & Co.
(Registration No.112066W), Chartered Accountants, 9, Scindia House,
K.G. Marg, New Delhi - 110001. There was no change in the statutory
auditors during the year. They being eligible, are being recommended to
the shareholders for re-appointment for holding office as statutory
auditors from the close of the ensuing AGM till the conclusion of the
next AGM. As required under the provisions of Section 139 of the
Companies Act, 2013, the Company has obtained written confirmation from
M/s. A.F. Ferguson & Co. that their appointment, if made, would be in
conformity with the limits specified in the said Section.
Cost Auditors
M/s Ramanath Iyer & Co., Cost Accountants , 808, Pearls Business Park,
Netaji Subhash Place, Pitampura, Delhi - 110034, who were appointed as
Cost Auditors of the Company for the year 2013-14, submitted the Cost
Audit report, due for filing on or before 27.9.2014, to the Central
Government on 15.9.2014. They have been reappointed as Cost Auditors
for the years 2014-15 and 2015-16. A resolution for ratification of
their remuneration for the years 2014-15 and 2015-16, as required under
the Companies Act, 2013, forms part of the Notice convening the AGM.
Corporate Governance
Reports on Corporate Governance and Management Discussion & Analysis
are annexed - Annexure 8. Anti-Sexual Harassment Policy
Pursuant to the "Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013," the Company constituted
Internal Complaints Committees at all its workplaces. There has not
been any instance of complaint reported in this regard to any of the
Committees.
Acknowledgement
The Directors acknowledge the continued co-operation and support
received from the banks and various government agencies, and all our
business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
New Delhi
May 29, 2015 CHAIRMAN
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Annual Report and the
Audited Accounts of your Company for the year ended 31st March 2014.
In the year 2013-14, the Economy languished and the Manufacturing
sector stagnated, affecting overall growth. High Infation and rising
prices, compounded by some debatable and retrospective tax measures,
resulted in a less than optimal investment climate.
After a period of three decades, the recent elections have given the
new government a clear mandate for development & change, unhindered by
the vagaries of coalition formations. This change promises to kick
start economic development and put an end to the stagnation of the last
few years. A strong government at the Centre is the need of the day and
will go a long way in raising the status of the Country in the comity
of nations.
The sugar industry''s problems continued for most part of the year. The
Governments at Centre and States had initiated certain measures to
ameliorate the crisis faced by this industry, but they were too little
too late.
FINANCIAL RESULTS
In spite of the adverse business climate, your Company could achieve an
all time high turnover including other income of Rs.1329 cr. against
Rs.1109 cr. in the previous year. There was a gross profit of Rs.67.9
cr. as compared to Rs.40.9 cr. in the previous year and net profit of
Rs.29 cr. as compared to Rs.11.2 cr in the previous year.
DIVIDEND
Looking into the improved all-round performance, the Board of Directors
is pleased to recommend a dividend of Rs.3.50 per equity share of Rs.10
(35%) for the year ended 31.3.2014. The dividend payout for the year
under review, inclusive of Corporate Tax on Dividend distribution, is
Rs.7.12 cr.
After provision for proposed dividend and transfer of Rs.3 cr. to
General Reserve (previous year Rs.1 cr) the balance carried forward in
the profit & Loss Account will be Rs.115.3 cr., which includes Rs.96.5
cr. brought forward from the previous year.
OPERATIONS
Sugar
During the year, the Unit produced 1.32 Lac MT of Sugar by crushing
14.12 Lac MT of cane as against 1.26 Lac MT of Sugar and 13.80 Lac MT
of crush respectively during previous year. During the Season 2013-14,
the Unit achieved the highest cane crush out of all the Units in the
State of U.P.
Supply of surplus power to the grid was further optimised this year.
After much delay, the Unit has been issued the due Renewable Energy
Certifcates (RECs) against its consumption of green energy. Going
forward, this will add to revenues, through sale of RECs.
The Financial Year 2012-13 had ended on a promising note with the
Central Government removing the levy sugar obligation from Mills and
decontrolling sugar sales. After the initial euphoria, the Financial
Year 2013-14 progressed with the sugar market taking on a bearish tone.
Despite the declining sugar price, the U.P. Govt. announced a cane
price of Rs.280 per qtl. for Sugar Season 2013-14, which was same as
last year, with some minor reliefs in taxation on cane etc. However,
the continued excess of the State Advised Price over the Fair and
Remunerative Price declared by the Central Government, resulted in
continued losses and high cane dues. Some Sugar Mills especially in
U.P. resorted to distress sales at low prices.
High sugar stocks alongwith a drop in international prices to around
US$ 450 per MT leading to heavy imports by Coastal Refneries, further
affected the sentiment adversely. Sugar prices fell from Rs.3200 per
qtl. in April, 2013 to around Rs.2800 per qtl. by February, 2014.
Considering, the dire financial position of the Sugar Mills due to huge
losses and high cane dues, the Central Govt. notifed a Scheme to extend
financial assistance with interest subvention upto 12%. To encourage raw
sugar exports, it declared an incentive of Rs.3333 per MT.
Consequently, during March 2014, there was slight improvement in sugar
prices.
Going forward, the sugar scenario would depend to a large extent on the
emerging demand supply situation. The sugar stocks continue to be
high. In a situation where the domestic sugar market has been
effectively deregulated, as per the recommendation of the Rangarajan
Committee, it is necessary that the remaining recommendations also be
implemented as soon as possible. Foremost amongst them are
establishment of a linkage between the sugar and sugar cane price and
the rationalization of EXIM Policy to ensure that the industry has the
paying capacity to meet its obligation towards the statutorily mandated
cane price.
The operations of the Unit continued to be satisfactory and continuous
efforts are being made to improve effciencies and operating parameters.
The Unit is also making efforts to improve the sugar recovery in
cooperation with farmers who are being educated to grow high yielding
cane varieties to get better results in the near future.
Alcohol
The performance of the Alcohol business showed considerable improvement
over the previous year as the Company was able to increase both sales
volumes and selling prices. This has more than offset the substantial
increase in the cost of the main input i.e. Molasses.
Demand remained strong particularly from the Chemicals sector. There
was some revival of the Ethanol blending programme of the Government,
though not to the expected level.
Chemicals
The Chemicals business of the Company showed strong performance with
substantial increase in sales and profits relative to the previous year.
This was achieved mainly by increasing selling prices of key products,
which offset the continued rise in the prices of major raw materials.
Also, the operations and volumes of an intermediate manufactured on
contract basis showed improvement, and the Company also benefited due to
higher rates of export benefits under Govt''s Focused Product Scheme
(FPS) for exports.
Demand for the main products remained strong as Chinese manufacturers
were not as aggressive as in the past in selling their products due to
strengthening of the Chinese currency and increase in their
manufacturing costs.
The Company continued with its active R&D programme for optimization of
processes and developing new products.
Rayon
The Unit achieved its highest turnover for the third consecutive year.
The strategy for achieving broader customer base, wider geographic
distribution and increasing value addition resulted in higher sales
with improved margins.
The Unit has been able to further control wastages, improve quality and
plant productivity, resulting in lower cost of production.
Steps for debottlenecking capacity, increasing value addition and
improving energy effciency were taken during the year.
Nylon Chafer sales were maintained despite the depressed domestic
automobile market.
The Unit has been able to significantly reduce its coal consumption and
increase use of agro fuel. The Unit is implementing further energy
related projects to improve the operational economics.
Subsidiary
Plant & Machinery of Daurala Foods & Beverages Pvt. Limited continue to
be operated by the Company on lease basis.
RESEARCH & DEVELOPMENT
Research & Development are ongoing activities which have an important
role in providing inputs for developing new products, devising energy
saving measures, upgrading methods of production and quality of
products. These activities have helped the Company in attaining
leadership in its chemical products and substantial qualitative change
in other operational areas.
UNCLAIMED SHARES SUSPENSE ACCOUNT
The position with regard to the unclaimed equity shares transferred to
the Demat Suspense Account as required under Clause 5A of the Listing
Agreement is as under:
No. of Folios No. of Shares
Position as on 1st April, 2013 6107 84620
Shares released during 2013-14 11 191
Balance as on 31.3.2014 6096 84429
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors state:
- While preparing annual accounts the applicable accounting standards
had been followed.
- The Company had selected such accounting policies and applied them
consistently and made judgements that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit or loss of the Company
for the period.
- That the Company had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- That the Company had prepared the annual accounts on a going concern
basis.
AUDITORS'' OBSERVATIONS
The Auditors have been qualifying their Report on the annual financial
statements of the previous years to the effect that various issues
arisen/arising out of the reorganization arrangement of 1989-90 of DCM
Limited will be settled and accounted for as and when the liabilities /
benefits are finally determined. During the year, based on a detailed
assessment of the maximum possible exposure on ultimate settlement of
these issues, the Company has made a provision for contingencies of
Rs.1 cr in the accounts. Based on this the Auditors have deleted the
qualification in their report for the year 2013-14.
CORPORATE GOVERNANCE
Reports on Corporate Governance, Management Discussion & Analysis and
Corporate Social Responsibility are given in Annexure-I.
DIRECTORS
Pursuant to Section 152 of the Companies Act, 2013 Shri Madhav B.
Shriram retires by rotation at the forthcoming Annual General Meeting
and being eligible offers himself for reappointment.
In compliance with Section 149 of the Companies Act, 2013, as far as it
relates to independent directors, Shri P.R. Khanna, Dr. V.L. Dutt, Shri
S.B. Mathur, Shri Ravinder Narain and Shri S.C. Kumar, independent
directors, who were liable to retire by rotation as per the Companies
Act, 1956, demitted office with effect from the close of 29.5.2014 and
have been appointed as independent directors with effect from
30.05.2014 by the Board of Directors for terms not exceeding 5 years
i.e. upto 31.3.2019, subject to the approval of the shareholders at the
ensuing AGM. These directors have given declarations to the effect that
they meet the criteria of independence as provided in Sub-section 6 of
Section 149 of the Companies Act, 2013 at the time of their
appointment.
Shri Tilak Dhar, Chairman & Managing Director, and Shri Madhav B.
Shriram, Whole-Time Director, have been reappointed for a period of 5
years with effect from 1.4.2014. Their remuneration and other terms and
conditions of appointments have been approved by the shareholders
through postal ballot by resolution dated 24.12.2013.
The term of Shri Anil Gujral, Director & CEO (Chemicals & Alcohol),
expired on 31.1.2014. The Board of Directors have inducted Shri K.N.
Rao in the casual vacancy and appointed him as Director & CEO (Rayons)
for a period of 3 years with effect from 1.2.2014. The remuneration and
other terms and conditions of Shri K.N. Rao have been approved by the
shareholders through postal ballot by resolution dated 24.12.2013.
AUDIT
M/s. A.F. Ferguson & Co., Chartered Accountants, 9, Scindia House,
Kasturba Gandhi Marg, New Delhi, who are Statutory Auditors of the
Company, hold office up to the forthcoming Annual General Meeting and
are recommended for re-appointment to audit the accounts of the Company
for the financial year 2014-15. M/s A. F. Ferguson and Co. have provided
necessary certifcate under section 139 (1) read with section 141 of the
Companies Act, 2013.
As per the requirement of Central Government and pursuant to Section
233B of the Companies Act, 1956 your Company was required to carry out
cost audit of sugar, industrial alcohol, chemicals, rayon and nylon
products. M/s. Ramanath Iyer & Co., Cost Auditors, 808, Pearls Business
Park, Netaji Subhash Place, Delhi - 110 034, had carried out the cost
audit of the above products for the F.Y. 2012-13. The Company''s cost
audit report due for fling on or before 27.9.2013 was fled on 6.9.2013.
The said firm was reappointed as Cost Auditors for the F.Y. 2013-14.
Appointment for F.Y. 2014-15 will be considered after notifcation of
Cost Audit Rules to be prescribed u/s 148 of the Companies Act, 2013.
OTHER INFORMATION
The information required under Section 217 (2A) of the Companies Act,
1956 and the Rules framed thereunder relating to particulars of
employees is given in Annexure II to this report.
The information pursuant to Section 217(1 )(e) of the Companies Act on
conservation of energy, technology absorption and foreign exchange
earnings/ outgo is given in Annexure - III.
The Central Government has granted general exemption from annexing the
Annual Report of subsidiary companies with the holding companies''
annual report as required under Section 212 of the Companies Act, 1956.
Accordingly, the Company has presented in this report the consolidated
financial statements of the holding and subsidiary companies. The annual
accounts of the subsidiary company will be kept for inspection by any
member at the Registered office of the Company and that of the
subsidiary company. A copy of the audited annual accounts and related
information of the subsidiary will be made available to any member upon
request.
ACKNOWLEDGEMENT
The Di recto rs acknowl edge the continued co -operation and support
received from the financial institutions, banks and various government
agencies, and all our business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
New Delhi
May 30, 2014 CHAIRMAN
Mar 31, 2013
The Directors have pleasure in presenting the Annual Report and the
Audited Accounts of your Company for the year ended 31st March 2013.
The tremors faced by the global economy in the year 2008-09 continue to
cause problems for economies world over from time to time. When signs
of recovery start showing, one or the other crisis crops up at
different places, even affecting those economies, which were feeling
insulated earlier. Indian economy which continued to be on a growth
path till the year 2011-12, has also felt the impact on its growth and
prospects. The GDP growth came down to just about 5% in 2012-13 from
over 8%, lowest in a decade. Failure to tame inflation and high
interest rates adversely affected every sector. The investment slowdown
is one of the major challenges that India faces today. Certain taxation
measures adversely impacted foreign investments. Uncertain political
climate, failure to put in place progressive policies/ reforms and
legislations for lack of consensus, unearthing of scam after scams -
all created a sense of pessimism. National interest appears to have
taken a back seat to petty political considerations. Unless a national
consensus emerges towards inclusive development and all concerned work
together to achieve this goal the economy would continue to suffer.
FINANCIAL RESULTS
Turnover for the year including other income was Rs.1109 cr. against
Rs.1001 cr. in the previous year. There was a gross profit of
Rs.40.9cr. as compared to Rs.13.2cr. (before exceptional item) in the
previous year and net profit of Rs.11.2cr. as compared to net loss of
Rs.17.4 cr. in the previous year.
DIVIDEND
The Board is pleased to recommend a dividend of Rs.1.50 per equity
share of Rs.10 (15%) for the year ended 31.3.2013. The dividend payout
for the year under review, inclusive of Corporate Tax on Dividend
distribution, is Rs.3 cr.
After provision for proposed dividend and transfer of Rs.1 cr. to
General Reserve (previous year nil) the balance carried forward in the
Profit & Loss Account will be Rs.96.5 cr., which includes Rs.89.3 cr.
brought forward from the previous year.
OPERATIONS
Sugar
During the year the Unit produced 1.26 lac MT of sugar, by crushing
13.80 lac MT of cane as against 1.32 lac MT of sugar by crushing 15.06
lac MT of cane in the previous year. For the crushing season 2012-13,
the crush was the highest in Western U.P. and the second highest
amongst the factories in the State. As crushing started somewhat late
in November, the crop condition was better and with all round efforts
put in, the Unit achieved a sugar recovery of 9.27% in the season as
against 8.74% during the last season.
During the current year, the performance of the factory on energy
efficiency and that of the power plant also improved. Consequently we
exported more power this season.
The financial year 2012-13 continued to be difficult for the industry,
in the absence of linkage between cane and sugar prices. The U.P.
sugar Industry was further burdened with an unwarranted increase of
Rs.40 per qtl. of cane by the State Government. Despite the
significant steps taken by the Unit to reduce conversion cost, the cost
of production continued to be higher than sugar price realized.
At the end of the year, the Central Government took the much needed
steps of abolition of the levy sugar obligation on the sugar mills and
disbanding the free sugar release mechanism. This has helped the
industry in reducing the substantial burden of Levy subsidy, and given
the industry the freedom to sell sugar as per its own sales strategy.
The effect of the latter has yet to be seen in terms of its impact on
the industry.
Even with the large opening stock of sugar, due to a reasonable
quantity of sugar being exported, the sugar prices improved during the
first and second quarter of the year and were at a reasonable level in
the third quarter also. Moreover, drought like conditions in
Maharashtra and Karnataka aided the sugar sentiment. However, due to
higher than expected sugar production and import of raw sugar for
domestic consumption, sentiments became bearish and sugar prices fell
steadily to a level of around Rs.3200 per qtl. in February and March,
2013 after touching a high of Rs. 3700 per qtl. in August, 2012.
Internationally, the prices of white sugar are range bound between US$
500- 530/ MT, at a level where it is not possible for India to export
its surplus sugar.
The sugar sentiments can improve only if the demand supply balance is
restored. It is reported that in some States the next year''s crop might
be lower due to drought conditions. However, the trade sentiment and
prices can improve only if imports are put on a level playing field by
imposition of adequate import duty.
Industry has taken up the matter with the Government. t Overall, the
performance of the Unit on all operational parameters was better, and
efforts will be made to further improve all areas. Extensive efforts
are being made to increase the acreage under higher sugared varieties
of cane and we hope to improve the sugar recovery further.
Alcohol
The performance and profitability of the Alcohols Business Group
improved, relative to the previous year due to higher selling prices
and exports. Demand for alcohol remained strong even though the
programme for blending alcohol with petrol proceeded at a slow pace.
Relatively high international prices made imports unviable and boosted
exports.
Efficiencies in use of raw material and energy were maintained at high
levels.
Chemicals
The profitability of the Chemicals Business improved relative to the
previous year, despite high prices of raw materials. The Company was
able to increase selling prices of its major products to more than
offset the cost increases, in spite of continued aggressive
international competition, mainly from China.
Demand for major products remained stable, except for a few products
like Benzyl Alcohol whose demand was depressed due to stagnating
requirement of the user industries, both domestic and international.
The Company has commissioned a plant for manufacturing a high value
product on contract basis for a large multinational corporation. This
could open new opportunities in future.
The Company continues its focus on R & D and process improvements.
Rayon
In the face of the continuing global recession, impacting the
automobile industry worldwide, the Unit achieved its highest ever
turnover for the second consecutive year. Capability built up in the
last few years to supply value added fabric along with a broadened
customer base helped the Unit to achieve this.
The Unifs improved and consistent product quality is well established
in the market, making it one of the preferred sources by the
international tyre manufacturers in the high performance segment.
Our products are currently at advanced stages of trials with new
consumers. Based on the expected approvals, the requirement of our
product is expected to increase. To meet the anticipated increased
requirement, the Unit is currently debottlenecking its Rayon capacity.
Nylon Chafer production facilities have also been upgraded. The Unit
achieved its highest Nylon Chafer sale during the year. The Unit
continues efforts to diversify the product base.
To control the energy cost and to protect the environment, thrust on
enhancing agro fuel consumption continued. Shriram Rayons met 40% of
its fuel requirement from renewable sources during the year.
Subsidiary
The bottling facilities having been acquired by the Company earlier and
the remaining plant & machinery leased to it, the operations of Daurala
Foods & Beverages Pvt. Limited remain temporarily suspended.
RESEARCH & DEVELOPMENT
Research & Development have always been and continue to be a priority
area in the Company''s scheme of things. The outcome of these activities
helped the Company by providing inputs for developing new products,
energy savings, upgrading production processes and quality. These are
essential to remain competitive and maintain leadership position in its
chemical products and achieve substantial qualitative change in other
operations.
UNCLAIMED SHARES SUSPENSE ACCOUNT
As required under Clause 5A of Listing Agreement, the Company had
transferred 84620 unclaimed equity shares, which were standing
registered under 6107 folios into the Unclaimed Shares Demat Suspense
Account, after sending three reminders to those shareholders.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors state:
- While preparing annual accounts the applicable accounting standards
had been followed.
- The Company had selected such accounting policies and applied them
consistently and made judgements that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit or loss of the
Company for the period.
- That the Company had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- That the Company had prepared the annual accounts on a going concern
basis.
AUDITORS'' OBSERVATIONS
The explanations/ information in respect of the observations of the
Auditors in their Report on the standalone Accounts are given in detail
in Note 31 (b) of notes to the financial statements. The said note read
with the relevant audit observations are self-explanatory.
CORPORATE GOVERNANCE
Reports on Corporate Governance, Management Discussion & Analysis and
Corporate Social Responsibility are given in Annexure-I.
DIRECTORS
Shri P.R. Khanna and Shri S.B. Mathur, Directors, retire by rotation at
the forthcoming Annual General Meeting and being eligible offer
themselves for reappointment.
On the Company clearing all its dues, IFCI Limited has withdrawn the
nomination of Shri S.C. Kumar on the Board w.e.f. 08.01.2013.
Considering Shri S.C. Kumar''s wide experience and in-depth knowledge of
the segments in which the Company operates, the Board co-opted him on
the Board as an Additional Director under independent category and also
nominated him to the Audit and Remuneration Sub-committees of the
Board. Proposal is being placed before the shareholders for approval to
his appointment as a regular director, liable to retire by rotation.
*''''
AUDIT
M/s. A.F. Ferguson & Co., Chartered Accountants, 9, Scindia House,
Kasturba Gandhi Marg, New Delhi, who are Statutory Auditors of the
Company, hold office up to the forthcoming Annual General Meeting and
are recommended for re-appointment to audit the accounts of the Company
for the financial year 2013-14. As required under the provisions of
Section 224(1 B) of the Companies Act, 1956, the Company has obtained
written confirmation from M/s. A.F. Ferguson & Co. that their
appointment, if made, would be in conformity with the limits specified
in the Section.
As per the requirement of Central Government and pursuant to Section
233B of the Companies Act, 1956 your Company was required to carry out
cost audit of sugar, industrial alcohol and rayon. M/s. Ramanath Iyer &
Co., Cost Auditors, 808, Pearls Business Park, Netaji Subhash Place,
Delhi -110034, had carried out the cost audit of the above products for
the F.Y. 2011 -12. The Company''s cost audit report due for filing on
or before 31.1.2013 was filed on 3.1.2013.
The said firm was reappointed as Cost Auditors for the F.Y. 2012-13 and
subject to the approval of the Government, has been reappointed for the
F.Y. 2013-14.
OTHER INFORMATION
There was no employee in the Company whose particulars are required to
be given under Section 217(2A) of the Companies Act, 1956.
The information pursuant to Section 217(1)(e) of the Companies Act on
conservation of energy, technology absorption and foreign exchange
earnings/outgo is given in Annexure-ll.
The Central Government has granted general exemption from annexing the
Annual Report of subsidiary companies with the holding companies''
annual report as required under Section 212 of the Companies Act, 1956.
Accordingly, the Company has presented in this report the consolidated
financial statements of the holding and subsidiary companies. The
annual accounts of the subsidiary company will be kept for inspection
by any member at the Registered Office of the Company and that of the
subsidiary company. A copy of the audited annual accounts and related
information of the subsidiary will be made available to any member upon
request.
ACKNOWLEDGEMENT
The Directors acknowledge the continued co-operation and support
received from the financial institutions, banks and various government
agencies, and all our business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
New Delhi
May 23,2013 CHAIRMAN
Mar 31, 2012
The Directors have pleasure in presenting the Annual Report and the
Audited Accounts of your Company for the year ended 31 st March 2012.
Just as the world economy was emerging from the crisis caused by the
volatility in South East Asia and the devastating Tsunami and nuclear
catastrophe in Japan, a new crisis situation has emerged in the Euro
Zone, threatening not only the European economy but other countries
around the world, including India.
The Indian economy which had weathered the earlier storms reasonably
well has since been affected and growth is stagnating. Internal
pressures and uncertainties at various levels are affecting policy and
decision making and this is affecting the developmental process.
Spiralling inflation and depreciation of the Rupee have compounded the
problem and desirable measures such as reduction of subsidies are not
being taken. The steps taken by the Government and the RBI have not
been enough to achieve the desired results. All concerned will need to
act in tandem in matters of national interest, which presently is not
happening, causing concern.
FINANCIAL RESULTS
Turnover for the year including other income for the first time crossed
the rupees thousand crore mark at Rs.1001 Cr. against Rs.913 Cr. in the
previous year. There was a gross profit of Rs.13.2 Cr. before
exceptional item as compared to Rs. 10.2 Cr. in the previous year and
net loss of Rs. 17.4 Cr. as compared to net loss of Rs.5.5 Cr. in the
previous year.
In view of the net loss for the year under review, the Directors have
not recommended any dividend for the year.
OPERATIONS
Sugar
During the year Company achieved a sugar production of 1.32 lac MT by
crushing 15.06 lac MT of cane as against 1.38 lac MT of sugar and 15.10
lac MT of cane crushed in the previous year.
The Company has been endeavouring to increase its revenue from
co-generation of power and towards this end made changes to achieve a
peak export of 25 MW as against 23 MW last year.
The financial year 2011-12 was turbulent for the sugar industry
especially in U.P. Besides low sugar prices and low recovery in the
region, the U.P. sugar industry faced a serious mismatch of sugar cane
and sugar prices. The State Government further increased the SAP for
cane payable by the industry. Additionally, the Supreme Court passed an
adverse judgement directing sugar factories to pay cane price
differential for the previous two years. The Company had to pay Rs.
18.75 crores on this account.
On the other hand, sugar prices remained soft because of weak sentiment
and traders' reluctance to carry inventory due to uncertainties in
marketing policies. The prices were further impacted by sale of sugar
by some mills against Court Orders. Sugar prices which at the beginning
of the year were Rs.2900 per qtl. remained range bound through-out the
year, though the cane price increased by 17% over last year.
During the year, Government took some positive steps such as allowing 3
Million MT of exports and replacing the monthly release mechanism by
quarterly releases for the current year. Though these steps have
stabilised the sugar prices despite surplus sugar production in the
Country, more needs to be done to provide relief and stability to the
Industry. Considering a projected surplus sugar position,
Government's support would be essential to keep the sugar industry on
an even keel.
The Unit's performance during the season on key operating parameters
such as cane crushed, sugar losses, steam consumption and co-generation
of power was satisfactory. Recovery in the entire region was adversely
impacted by climatic and other agronomic conditions.
Alcohol
The overall performance and profitability of the Alcohol Business
improved relative to the previous year due to improved selling prices
and increased sales of high value added products (Anhydrous Alcohol and
Extra Neutral Alcohol). Also, there were improvements in efficiencies
and reduction in energy consumption. Overall demand for alcohol
increased in most sectors, except for blending with petrol where the
demand remained static.
Chemicals
The profitability of the Chemical business was adversely affected by a
sharp increase in the cost of several raw materials, which could only
be partially passed on to the market, as Chinese competitors, faced
with surplus capacity and stocks, adopted aggressive pricing and
marketing strategies. To mitigate the impact of the above, the Company
continues to focus on new products and process/efficiency improvement.
Rayon
In spite of difficult global market conditions, especially in Europe,
Shriram Rayons (SR) achieved its highest ever turnover during the year.
Increase in sale, both in export and domestic markets, coupled with
improved realisation helped the Unit achieve the same.
SR consolidated improvement in product quality and operational
efficiency leading to wider acceptance of its products.
With regular off-take of greige and treated fabric by two new European
tyre customers, SR has been able to achieve higher value addition and
export volumes. The Unit is pursuing approval of its products with new
customers and expects further increase in export volumes.
To meet the market requirement, the Unit is implementing a project for
Rayon expansion and modification. The yarn production capability is
being increased by modification of the existing machines and installing
balancing equipment. The higher fabric requirement anticipated will be
met through enhancement of conversion capacity in the Textile Section.
Considering consistent growth in sale of Nylon Chafer, SR has upgraded
nylon chafer dipping facilities during the year. Steps are being taken
to increase the grey chafer conversion capacity.
SR further increased agro-fuel consumption and met 35% of the fuel
requirement from renewable sources during the year to control energy
cost and to promote clean fuel usage.
Subsidiary
The Company having acquired/ taken on lease its bottling facilities,
Daurala Foods & Beverages Pvt. Limited's operations remain
suspended.
RESEARCH & DEVELOPMENT
Research & Development is integral to an industry to maintain/ improve
the quality of products and services so as to make them competitive and
economical. R & D is also essential to innovate and invent new products
and improve efficiency in operations. This is particularly important in
the case of chemicals, drug intermediaries and energy. The Company has
R & D facilities to match its operations. These facilities are upgraded
from time to time according to operational requirements.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors state:
- While preparing annual accounts the applicable accounting standards
had been followed.
- The Company had selected such accounting policies and applied them
consistently and made judgements that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit or loss of the
Company for the period.
- That the Company had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- That the Company had prepared the annual accounts on a going concern
basis.
AUDITORS' OBSERVATIONS
The explanations/ information in respect of the observations of the
Auditors in their Report on the standalone accounts are given in detail
in note no. 31 (b) of notes forming part of the financial statements.
The said note read with the relevant audit observations are
self-explanatory.
CORPORATE GOVERNANCE
Reports on Corporate Governance, Management Discussion & Analysis and
Corporate Social Responsibility are given in Annexure-I.
DIRECTORS
Shri Alok B. Shriram, retires by rotation at the forthcoming Annual
General Meeting and being eligible offers himself for reappointment.
Shri Anil Gujral, who was appointed as a director in the casual vacancy
caused by the retirement of Shri G. Kumar, effective from 1.2.2011,
holds office till the ensuing AGM. The Company has received a notice
u/s 257 of the Companies Act from a member signifying intention to
propose Shri Anil Gujral's candidature for the office of director at
the forthcoming AGM.
AUDIT
M/s. A.F. Ferguson & Co., Chartered Accountants, 9, Scindia House,
Kasturba Gandhi Marg, New Delhi, who are Statutory Auditors of the
Company, hold office up to the forthcoming Annual General Meeting and
are recommended for re-appointment to audit the accounts of the Company
for the financial year 2012-13. As required under the provisions of
Section 224(1 B) of the Companies Act, 1956, the Company has obtained
written confirmation from M/s. A.F. Ferguson & Co. that their
appointment, if made, would be in conformity with the limits specified
in the Section.
As per the requirement of Central Government and pursuant to Section
233B of the Companies Act, 1956 your Company was required to carry out
cost audit of sugar, industrial alcohol and rayon. M/s. Ramanath Iyer &
Co., Cost Auditors, BL- 4, Shalimar Bagh (Paschimi), Delhi - 110 088,
had carried out the cost audit of the above products for the F.Y.
2010-11. The reports due for filing on or before 27.9.2011 were filed
on 8.9.2011 (sugar and rayon) and on 9.9.2011 (industrial alcohol).
The said firm was reappointed as Cost Auditors for the F.Y. 2011-12 and
subject to the approval of the Government, has been reappointed for the
F.Y. 2012-13 also.
OTHER INFORMATION
There was no employee in the Company whose particulars are required to
be given under Section 217(2A) of the Companies Act, 1956.
The information pursuant to Section 217(1 )(e) of the Companies Act on
conservation of energy, technology absorption and foreign exchange
earnings/ outgo is given in Annexure - II.
The Central Government has granted general exemption from annexing the
Annual Report of subsidiary companies with the holding companies'
annual report as required under Section 212 of the Companies Act, 1956.
Accordingly, the Company has presented in this report the consolidated
financial statements of the holding and subsidiary companies. The
annual accounts of the subsidiary company will be kept for inspection
by any member at the Registered office of the Company and that of the
subsidiary company. A copy of the audited annual accounts and related
information of the subsidiary will be made available to any member upon
request.
ACKNOWLEDGEMENT
The Directors acknowledge the continued co-operation and support
received from the financial institutions, banks and various government
agencies, and all our business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
New Delhi
May 30, 2012 CHAIRMAN
Mar 31, 2011
The Directors have pleasure in presenting the Annual Report and the
Audited Accounts of your Company for the year ended 31st March 2011.
Despite occasional hiccups, the world witnessed the process of economic
recovery during the year. Tumultuous conditions prevailed in South
East Asia and the devastating earthquake and tsunami followed by a near
nuclear catastrophe in Japan dampened the economic scene, which was
otherwise on an upswing.
Our Country to a great extent was successful in insulating itself from
the economic upheaval by taking timely measures and attained economic
growth, envied even by developed countries. However, the momentum was
somewhat disturbed by continued high infation driven by surging global
commodity prices and disclosures of a slue of incidents of economic
misgovernance in the realm of public affairs, unprecedented in the
history of the Country. In light of strong public opinion and growing
intolerance to economic misgovernance, the Government is taking/
planning various measures and it is hoped that the Country will emerge
stronger.
The recent assembly elections witnessed unprecedented levels of turnout
for voting, refecting the vibrancy of the Countrys democracy. The
results seem to point towards a desire for more transparent governance
and faster progress and development.
For the Company 2010-11 was a diffcult year. For most part of the year,
the Companys sugar business suffered from the overhang of the severe
mismatch of last years cane and sugar prices, which situation improved
in the last quarter. Linkage of these two through rational policy
initiatives is an imperative need for survival of the industry.
Overall, infationary pressure and competition were countered by various
steps taken during the year.
FINANCIAL RESULTS
Turnover for the year including other income at Rs.913 cr. was at an
all time high against Rs.874 cr. in the previous year. There was a
gross Profit of Rs.10.2 cr. as compared to Rs.76.3 cr. in the previous
year and net loss of Rs.5.5 cr. as compared to net Profit after tax of
Rs.38.9 cr. in the previous year.
In view of the net loss for the year under review, the Directors have
not recommended any dividend for the year.
OPERATIONS
Sugar
During the year your Company achieved a sugar production of 1.38 lac MT
by crushing 15.10 lac MT of cane against 1.20 lac MT of sugar and 13.05
lac MT of cane in the previous year. The crushing at the Unit was
highest in the State for the second consecutive year. The crushing
capacity at the Unit was increased by 500 TCD and it achieved a peak
crush of 12,500 TCD during this season. Additionally, a 15 MW TG Set
was commissioned, so as to generate more power with the same amount of
fuel. With this, the peak export of the power to the grid was around 23
MW, as against 19 MW last year.
The fnancial year 2010-11 has been a diffcult year for the industry
because of low sugar prices and high cane prices. The year started with
the Government putting pressure and checks on institutional buyers,
which drove them to contracting large quantities of imported white
sugar (equivalent to 8-9 months of their consumption). The State
Government announced an SAP of Rs.205/Qtl. of cane for the season
2010-11, which was relatively high in light of market prices of sugar.
The lack of off-take by the institutional buyers through most of the
year impacted the sentiment and the prices remained sluggish and
range-bound with a negative bias. This was despite the international
prices being high with prices of white sugar touching an all time high
of USD 800 per MT. The industry made repeated representations to the
Government to lift controls imposed on institutional buyers and also to
allow exports. The Government took some minor steps in the later half
but they were all too little and too late, to prevent the year from
being fnancially unsatisfactory for the industry. This was a year,
wherein the Indian sugar industry lost a golden opportunity to export
surplus sugar at attractive prices and recoup some of its losses
considering the shortage of sugar in international markets.
Overall, while the Units operations were satisfactory, it suffered
losses due to the sugar industrys environment. The set back was
minimized through appreciable showing in other areas such as power,
alcohol and chemicals.
Alcohol
Due to higher availability of captive molasses, and consequently higher
production, the sales volumes of bulk alcohol more than doubled as
compared to the previous year. As a result, there was a substantial
increase in Profitability of the alcohol business. The alcohol market
remained relatively stable due to resumption of the programme for
blending of ethanol with petrol, and slight revival of demand from the
alcohol-based chemical industry.
Chemicals
While sales revenue of chemical business of the Company was broadly at
last years level, the Profit was lower due to higher cost of raw
materials on the one hand, and lower selling prices arising out of
intensifed international competition on the other.
To mitigate the impact of the above adverse factors, the Company is
working on cost reduction, productivity improvement, and product mix
changes, as also exploring development of new products.
Various initiatives at the Daurala complex towards conserving water,
electricity, fuel and numerous steps towards "going green" have been
recognized by various authorities. For our efforts in the direction of
environment protection, conservation of natural resources and its
utilisation, we were awarded "Frost & Sullivans - Green Manufacturing
Excellence - Aspirants Award 2011" in the large industry category. It
is a matter of pride for us that we are the frst sugar complex to be
given this recognition and award. This is an achievement, which is the
result of past and present efforts at being environment friendly.
Rayon
The global recession continued to take its toll on the automobile
industry. This was further compounded by the problems in the European
economies in the frst half of the year. Shriram Rayons, however, was
able to improve the export tonnage marginally. The selling prices were
also increased, but the Rupee realisations were affected due to adverse
exchange movements.
The Units efforts to get approval of the value added dipped fabric
materialized and it achieved substantial increase in the sale of dipped
fabric. Renewed efforts were made to widen the customer base by
pursuing approvals from new customers. The Unit has been successful in
getting approval from two more European Tyre Manufacturers and the
supply of material has commenced. Shriram Rayons also maintained
consistent growth in sale of Nylon Chafer.
The prospects in the coming year appear favourable, and in view of
higher demand steps have been taken to technologically upgrade the
textile operations. These efforts will continue this year also.
SR maintained continued thrust on quality and reduction in wastages.
The Unit was accredited with Environmental Management System
Certifcation (ISO 14001 : 2004) during the year. To control the energy
cost and also promote clean fuel usage, the Unit undertook modification
of Power House. The Unit met 30% of energy requirement from renewable
sources during the year.
Subsidiary
The bottling plant of Daurala Foods & Beverages Pvt. Limited, which was
leased to the Company, having been relocated to the Companys
Distillery for better control and economy, the Company has acquired the
super structure and some other equipments of DFBPL for alternate use.
RESEARCH & DEVELOPMENT
At a time of fast changing technology and formulations, Research &
Development activities have a pivotal role not only in developing new
products but also in innovating measures for upgrading quality,
production processes and energy saving measures. This is all the more
important in case of chemicals and drug intermediaries having
international market. The Company is fully seized of the importance of
R&D and has facilities to match its operations, which are kept upgraded
from time to time according to the need of the segments in which the
Company operates.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors state:
- While preparing annual accounts the applicable accounting standards
had been followed.
- The Company had selected such accounting policies and applied them
consistently and made judgements that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the fnancial year and of the Profit or loss of the Company
for the period.
- That the Company had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- That the Company had prepared the annual accounts on a going concern
basis.
AUDITORS OBSERVATIONS
The explanations/ information in respect of the observation of the
Auditors in their Report on the standalone Accounts are given in detail
in Notes to Accounts - (2)(b) of Schedule 11. This Note read with the
relevant Audit observation is self-explanatory.
CORPORATE GOVERNANCE
Reports on Corporate Governance, Management Discussion & Analysis and
Corporate Social Responsibility are given in Annexure-I.
DIRECTORS
Shri G. Kumar, Whole-time Director, retired on 31.1.2011 and Shri Anil
Gujral has been appointed as a Whole-time Director from 1.2.2011 for a
period of 3 years. His appointment and terms of remuneration were
approved by the shareholders by postal ballot.
Shri Madhav B. Shriram and Shri Ravinder Narain, retire by rotation at
the forthcoming Annual General Meeting and being eligible offer
themselves for reappointment.
OTHER INFORMATION
There was no employee in the Company whose particulars are required to
be given under section 217(2A) of the Companies Act, 1956.
The information pursuant to Section 217(1)(e) of the Companies Act on
conservation of energy, technology absorption and foreign exchange
earnings/ outgo is given in Annexure - II.
ACKNOWLEDGEMENT
The Directors acknowledge the continued co-operation and support
received from the fnancial institutions, banks and various Government
agencies, and all our business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
New Delhi
May 30, 2011 CHAIRMAN
Mar 31, 2010
The Directors have pleasure in presenting the Annual Report and the
Audited Accounts of your Company for the year ended 31st March 2010.
The earlier part of the year found the world gasping in the aftermath
of the economic upheaval faced in the previous year, taking various
measures to address the unprecedented crisis. Fortunately for the
Indian economy the impact was relatively mild, and the timely measures
initiated and implemented by an alert Central Government mitigated the
impact on the economy, and helped in steadying the path of growth.
It gives a sense of accomplishment to report that notwithstanding the
severe set back in the later part of the year, your Company achieved
its best ever results. Various measures, such as cost saving, energy
conservation, co-generation of power and quality improvement, initiated
and implemented during the last few years, yielded satisfactory
results. This is a continuous process and further areas for betterment
are being explored.
FINANCIAL RESULTS
Turnover for the year including other income at Rs.874 cr. was at an
all time high against Rs.835 cr. in the previous year. Gross profit and
net profit of Rs.76 cr. and Rs.57 cr. as compared to Rs.61 cr. and
Rs.44 cr., respectively are also the highest ever.
DIVIDEND
The Company has paid an interim dividend of Rs.1.50 (15%) per equity
share of Rs.10 in November, 2009. Considering the better results the
Board is pleased to recommend a final dividend of Rs.3.00 (30%) for the
year ended 31st March, 2010. The aggregate dividend for the year will
amount to Rs.4.50 (45%) per equity share against Rs.2.00 (20%) declared
last year.The total dividend payout for the year under review,
inclusive of corporate tax on dividend distribution, is Rs.9.14 cr.
After payment of dividend and transfer of Rs.5.00 cr to General Reserve
(previous year Rs. 10.00 cr.) the balance carried forward in the Profit
& Loss Account will be Rs. 110.10 cr, which includes Rs.82.54 cr
brought forward from previous year and Rs.2.78 cr Debenture Redemption
Reserve written back.
OPERATIONS
Sugar
During the year, your Company achieved a sugar production of 1.20 lac
MT by crushing 13.05 lac MT of cane against 1.25 lac MT sugar and 13.31
lac MT of cane in the previous year. The performance of the Unit was
satisfactory with crush being the highest in the State. The Unit
commissioned a new 90 TPH boiler and achieved a peak export of 19 MW
power to the Grid.
The first three quarters of the year saw sugar prices at very
attractive levels anticipating low domestic and international
production. The Government initiated various steps to control sugar
prices. However, the subsequent unexpected upward revision of domestic
and global sugar production estimates resulted in sugar prices
collapsing drastically. In the changed scenario, the high cane prices
paid in anticipation of the continued strength in the sugar markets, in
order to combat diversion of cane to the unorganised sector, became
unrealistic. Domestic prices remain weak due to the reluctance of the
Government to roll back the price control measures in place, as also, a
collapse of the global markets due to higher production prospects for
next year.
The State Government announced a higher SAP of Rs.165 per quintal of
cane for the season 2009-10. The Central Government in the meantime
amended the Sugar Cane (Control) Order, 1966 replacing "minimum price"
with "fair and remunerative price" (FRP). The intention was that if any
authority fixed a cane price above FRP, the said authority was to bear
the difference, so as to insulate sugar mills from any unrealistic cane
pricing. This provision was subsequently withdrawn, bringing the
situation back to square one, and leaving the mills vulnerable to
unrealistic cane pricing/ litigation once again.
Overall, considering the volatility seen in the industry last year, the
performance of the Companys Sugar Unit has been satisfactory.
The Company has taken in hand debottlenecking of cane crushing
capacity, as also an expansion of its co- generation facility so as to
increase the peak export of power to the Grid to 23 MW in the next
season.
Alcohol
Overall performance of the alcohol business was maintained despite
volumes being largely limited to captive molasses availability. The
market was sluggish because the alcohol based chemical sector reduced
purchases of domestic alcohol as imported alcohol and finished products
were cheaper, and off take by oil companies for blending with petrol
was low. Towards the end of the year, molasses availability as well as
alcohol demand from the chemical sector have shown some signs of
revival.
Chemicals
The performance of the Companys chemical business was largely
maintained despite appreciation of the Rupee and increased competition
leading to lower sales volumes and prices towards the year end. This
was achieved by focusing on raising productivity and cost reduction.
To further consolidate its market position, the Company is undertaking
expansion wherever viable and diversification in its range of products.
Rayon
In spite of the global recession we succeeded in maintaining our market
share. The Unit improved its operating margins through better
realizations and improved operating efficiencies. Continuous use of the
TQM philosophy enabled the Unit in improving product quality and reduce
process wastages.
To control energy costs and also promote clean fuel usage, one more
boiler is being modified to use agro fuels in place of coal. With this
the carbon foot print of the Unit should come down significantly in the
current year.
The Unit achieved higher domestic sale of Nylon Chafer as well as
Carbon di Sulphide.
Subsidiary
The bottling facility of Daurala Foods & Beverages Pvt. Ltd. continued
to be on lease with the Company.
RESEARCH & DEVELOPMENT
Research and Developments have always been and continue to be a
priority area in the Companys scheme of things. The outcome of these
activities helped the Company by providing inputs for developing new
products, energy saving, upgrading production processes and quality.
These are essential to remain competitive and maintain leadership
position in its chemical products and achieve substantial qualitative
change in other operational areas.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956 your
Directors state:
- While preparing annual accounts the applicable accounting standards
had been followed.
- The Company had selected such accounting policies and applied them
consistently and made judgements that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as
at the end of the financial year and of the profit or loss of the
Company for the period.
- That the Company had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities.
- That the Company had prepared the annual accounts on a going concern
basis.
AUDITORS OBSERVATIONS
The explanations/ information in respect of the observations of the
Auditors in their Report on the standalone Accounts are given in detail
in Notes to Accounts - (2)(b) of Schedule 11. These Notes read with the
relevant Audit observations are self-explanatory.
CORPORATE GOVERNANCE
Corporate Governance and Management Discussion and Analysis Reports are
given in Annexure-I.
DIRECTORS
Shri Atam Parkash, an independent director, resigned from the Board
with effect from 31.10.2009 on health grounds after serving on the
Board for about 2 decades. He passed away on 21.11.2009. The Company
all through immensely benefited from his mature advice. The Board of
Directors deeply mourns his passing away. The Board decided not to fill
the vacancy for the time being.
Dr. V. L. Dutt and Shri S.B. Mathur, retire by rotation at the
forth-coming Annual General Meeting and being eligible offer themselves
for re-appointment.
OTHER INFORMATION
The information required under Section 217(2A) of the Companies Act,
1956 and the Rules framed thereunder relating to particulars of
employees is given in Annexure-ll to this Report.
The information pursuant to Section 217(1)(e) of the Companies Act on
conservation of energy, technology absorption and foreign exchange
earnings/ outgo is given in Annexure - III.
ACKNOWLEDGEMENT
The Directors acknowledge the continued co-operation and support
received from the financial institutions, banks and various Government
agencies, and all our business associates.
The Directors also place on record their appreciation of the
contribution made by employees at all levels.
For and on behalf of the Board
CHAIRMAN
New Delhi
May 29, 2010