Directors Report of Empee Sugars and Chemicals Ltd.
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting their Report together with
audited accounts for the year ended March 31, 2015.
FINANCIAL RESULTS
(Rs. in lacs)
2014-15 2013-14
Particulars (Year ended (Year ended
31.3.2015) 31.3.2014)
Operating Profit/
(Loss) before Interest (15103.60) 1065.48
and Depreciation
Other income 682.94 134.73
Less: Interest 7081.58 6375.51
Less: Depreciation 2518.30 2070.97
Pro fit / (Loss) before (24020.54) (7246.27)
Tax
Prior period items - 493.04
Provision for Taxation - 324.29
(earlier year)
Deferred TaX Liability/ 4978.16 (1619.06)
(Asset)
Profit/(Loss) after Tax (28998.70) (5458.46)
Brought Forward
Pro?t /(Loss) (14346.64) (8888.18)
Prior period expense 1135.59 -
(Depreciation)
Carry ForWard Profit/ (44480.93) (14346.64)
(Loss)
BIFR.
As reported in last year''s Annual Report and consequent to erosion of
100% of the net worth of the Company and upon a reference made to BIFR
under the provisions of the Sick Industries Companies Act, the Company
has been registered as a sick Company on 14.11.2014 under case no.
69/2014. The Company under the direction of the BIFR has intimated
about its reference under BIFR to various statutory authorities, banks
and creditors.
Review of Financial Performance.
The operating loss before interest and depreciation for the year under
review was Rs.15103.60 lacs. As reported in the Annual Report last
year, the Sugar mill at Ambasamudram could not be operated due to
non-availability of sugar cane. As a consequence the 50MW power plant
had to run using coal as fuel instead of bagasse which was not
available from the Sugar factory due to its shut down.
During the year under review the 50 MW power plant could generate
11,69,10,500 Units upto November 2014 and the same become non
operational due to working capital crunch.
During the year under review Naidupet Sugar plant crushed 187588 MTs of
cane and produced 16630.60 MTs of sugar and achieved a recovery rate of
8.86% as against 8.96% in the previous year.
The IAP plant has produced 56,19,693 litres of ENA during the year
under review.
Feature Outlook
Naidupet Unit:
The Sugar Plant which normally crushes 3.00 lac MT to 4.00 lac MT of
Sugar cane is dependent on availability of cane. The Sugar industry
prospects and economic scenario are the deciding factors in future to
enhance sugar production.
IAP : The production of ENA in future is lucrative given the blending
options of ENA with petrol and other fuel elements, are being
contemplated by the Government of India.
Ambasamudram Unit:
Due to non-availability of sugar cane in and around Ambasamudram, the
chances to restart the crushing operations poses challenge.
Power: As working capital requirements are not available, the
generation of electricity is affected.
However the Company is confident to resume electricity generation soon.
Dividend.
Being referred to BIFR and in view of losses in the successive years
from FY 2012, the Company is unable to declare any dividend.
Share Capital.
The paid up share capital of the Company is 41972900 equity shares of
Rs.10 each. The share application money of Rs.140.36 crs remains
unallotted in favour of the holding company namely Empee Distilleries
Ltd due to non-obtainment of statutory approvals.
Deposits
Your Company has not invited or accepted any fixed deposits either from
the public or from the shareholders of the Company, during the period
under review.
Change in the nature of business, if any
There is no change in the nature of the business during the year.
Transfer to Reserves
Due to losses of the Company for the year ended 31.3.2015, your
Directors have not proposed any amount to be transferred to the General
Reserves of the company.
Particulars of Loans, Guarantees or Investments under section 186
The particulars of loans, guarantees and investments u/s 186 of the
Companies Act, 2013 is annexed herewith as Annexure-A.
Management Discussion and Analysis Report.
The Management Discussion and Analysis Report is annexed herewith as
Annexure-B.
Details of Directors or Key Managerial personnel who were appointed or
have resigned during the year.
There were no Directors or Key Managerial personnel appointed during
the year under review.
Company Secretary.
Mr.S.S.K.Swarup, Company Secretary resigned w.e.f 30th April 2015.
CFO
The company has taken necessary steps to appoint CFO and Company
Secretary and the same is delayed due to BIFR status of the company.
Declaration by Independent Directors.
The Independent Directors namely, Mr.M.K. Mohan, Mr.TS. Raghavan,
Mr.M.P. Mehrotra and Mr.Shankar Menon have given declarations that they
meet the criteria required under section 149(6) of the Companies Act,
2013. Details of web link for familiarization program of independent
Directors are given at www.empeegroup.co.in
Auditors qualification:
a. Write off of Rs.99.10 crores relating to Inventories:
The write off is due to the diminution in the realizable value of
inventories, due to Quality, Moisture and GCV contents of Coal,etc.
The reduction is also due to TRS contents in Molasses and deterioration
in the quality of sugar over the years.
b. Write off receivables amounting to Rs.44 crs.
Due to difference in the electricity unit rates applied by TANGEDCO,
the Company had to revise the invoices raised against TANGEDCO and the
difference of Rs.44 crs had to be written off.
c. Accumulated losses and reference to BIFR
Since the net worth of the Company has been completed eroded during the
FY 2013 the Company took necessary steps to register the same with BIFR
under the provisions of Sick Industrial Companies (Spl. Provisions )
Act, 1985. Accordingly the Company has been registered as a sick
company under case no: 69/2014 on 14th November 2014 by BIFR.
d. Share Application money of Rs.140.36 crs received from Empee
Distilleries Ltd.(EDL)
The Company could not allot convertible preference shares to EDL, due
to non- receipt of certain statutory approvals. Further Empee
Distilleries Ltd. had recalled the share application money to be
refunded and the Company expressed its inability to refund the same due
to present status.
e. Confirmation of Sundry Debtors, Trade payables etc:
The confirmation from Sundry Debtors, Trade payables advance to
suppliers, cane advances, harvest labourers advance could not be
verified by the Auditors, due to the fact that there are large number
of accounts.
Number of Board Meetings held during the year 2014-15.
The Company has duly complied with the provisions of the Companies Act,
2013 in holding Board meetings and the details of the meetings are
furnished in the Corporate Governance Report.
Details of Polices.
a. Nomination and Remuneration Policy :
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The Company''s Remuneration
Policy is available on the Company''s website www.empeegroup.co.in and
the same is attached herewith as Annexure - C.
b. Risk Management Policy
Business Risk Evaluation and Management is an ongoing process within
the Organization.
Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Board has
framed a Risk Management Policy for the Company. The Company has in
place a mechanism to identify, assess, monitor and mitigate various
risks to key business objectives. Major risks identified by the
business and functions are systematically addressed through mitigating
actions on a continuing basis.
At present the company has not identified any element of risk which may
threaten the business (or) existence of the company.
c. Whistle Blower Policy
Your Company has formulated a Vigil Mechanism Policy with a view to
provide a mechanism for employees and directors of the Company to
approach the Audit Committee to ensure adequate safeguards against
victimisation. This policy would help to create an environment wherein
individuals feel free and secure to raise an alarm, whenever any
fraudulent activity takes place or is likely to take place. It will
also ensure that complainant(s) are protected from retribution, whether
within or outside the organization. The details of establishment of the
Vigil Mechanism Policy as per Annexure D is displayed on the website of
the Company www.empeegroup.co.in.
Corporate Governance.
As required by Clause 49 of the Listing Agreement with the Stock
Exchanges, the Corporate Governance Report and the Auditor''s
Certificate regarding compliance of conditions of Corporate Governance,
form part of the Annual Report.
Board Committees
Name of the Composition Details of Meetings
Committee held during the
year 2014-15
Mr.T.S.Raghavan- Chairman 14.5.2014,26.5.2014
Audit Committee Ms.Nisha Purushothaman 9.8.2014,25.10.2014
Mr.M.P.Mehrotra & 11.02.2015
Nomination & Mr.M.K.Mohan - Chairman
Remuneration
Committee Mr.T.S.Raghavan 11.2.2015
Ms.Nisha Purushothaman
Stakeholders'' 16.4.2014,23.5.2014,
Relationship 12.6.2014,23.6.2014,
Committee Mr.M.K.Mohan - Chairman 7.7.2014, 21.7.2014,
20.8.2014,10.9.2014,
Mr.T.S.Raghavan 20.9.2014,7.10.2014,
1.12.2014,19.12.2014
Ms.Nisha purushothaman 7.1.2015, 27.1.2015,
17.2.2015, 5.3.2015,
20.3.2015, 31.3.2015
Details of recommendation of audit committee which were not accepted by
the Board along with reasons.
The same is not applicable as the Audit Committee''s recommendations
were accepted and implemented by the Board.
Names of Companies which have become or ceased to be its subsidiaries,
joint ventures or associate Companies during the year - Not applicable
Subsidiaries
The consolidated accounts of the company includes the audited accounts
of subsidiaries namely Empee Power Company (India) Ltd and M/s.Appollo
Wind Energy Pvt Ltd.
A statement containing salient features of the subsidiaries in form AOC
1 is annexed herewith marked as Annexure - E and forms part of this
report. Details of web link for Policy for determining material
subsidiaries are given at www.empeegroup.co.in.
Auditors''
Statutory Auditors
Pursuant to AGM resolution dated 26.9.2014, the Board has appointed
M/s. Venkatesh& Co., Chartered Accountants as Statutory Auditors for
five years in terms of Sec.139, 141 of the Companies Act, 2013 to hold
office from the conclusion of 23rd AGM till the conclusion of the 28th
AGM of the Company to be held in the year 2018, however subject to
ratification of their appointment at every AGM.
The Company has received a letter from the Statutory Auditors of the
Company, Venkatesh & Co, (ICAI Firm Registration Number: 0046365)
Chartered Accountants, to the effect that their appointment, if made,
will be as per the requirements laid down under Section 139 and 141 of
the Companies Act, 2013 read with Rule 4 of the Companies (Audit and
Auditors) Rules, 2014, subject to approval of the Members and
ratification of the appointment at this Annual General Meeting.
Secretarial Auditors
M/s. S Dhanapal & Associates, a firm of Practising Company Secretaries,
Chennai has been appointed as Secretarial Auditors of the Company for
the Financial Year ended 31.03.2015 vide Board resolution dated
11.2.2015.
The Secretarial audit report received from the Secretarial Auditors is
annexed to this report marked as Annexure - F and forms part of this
report.
Cost Auditors
Since Mr. G.Sundaresan, Cost Auditor of the Company has resigned, the
Board has appointed Mr.N.Thagarajan as Cost Auditor of the Company in
terms of Section 148 of the Companies Act, 2013 for the financial year
2015-16 in the Board meeting held on 23.5.2015. A resolution to ratify
the payment of remuneration to Mr.G.Sundaresan, Cost Auditor for the
financial year 2014-15 is set out in the notice convening the AGM.
Conservation of Energy, Technology Absorption and Foreign Exchange
outgo.
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo is given as Annexure - G and forms
part of this Report.
Status on Amalgamation.
As already intimated to the Stock Exchanges, the Scheme of Amalgamation
of your company with Empee Distilleries Ltd. and Appollo Wind Energy
Pvt. Ltd has been withdrawn. However the Hon''ble High Court, Andhra
Pradesh, is yet to pass orders in this regard.
Related party Transactions
The details of Related Party Transactions during the year ended
31.03.2015, being arm''s length transactions have been reported in the
Financial statements and forms part of this report. Details of web link
dealing with Related Party Transactions are given at
www.empeegroup.co.in.
Managerial Remuneration
The details of employees/managerial persons remuneration as required to
be given u/s 197 of the Companies Act, 2013 read along with Rule 5(2)
of the Companies (Appointment and Remuneration of Managerial personnel)
Rules 2014 as applicable is attached herewith as Annexure - H.
Details of Pecuniary relationship or transaction of the non-executive
independent directors Vis a Vis the Company
There is no pecuniary relationship or transactions of the Non-Executive
Independent Directors vis-a-vis the company for the period ended
31.3.2015.
Board''s Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out the annual performance
evaluation of its own performance, the Directors individually as well
as the evaluation of the working of its Audit, Nomination and
Remuneration and Compliance Committees.
While independent directors in their separate meeting have carried out
to assess the performance of Chairman and Managing Director and other
Directors of the Board more particularly about their business acumen
and contribution to the Company, the performance evaluation of the
Independent Directors was carried out by the entire Board.
The Independent Directors expressed their satisfaction with the
evaluation process, functioning such as adequacy of the composition of
the Board and its Committees, Board culture, execution and performance
of duties, obligations, responsibilities and governance.
Adequacy of Internal Financial Controls.
The Company has a proper and adequate internal control system to ensure
that all assets are safeguarded and protected against loss from
unauthorized use or disposition and those transactions are authorised,
recorded and reported correctly.
The Internal Audit/Control is exercised through an external auditor
namely, M/s.Ramesh Subramaniam & Co., Chartered Accountants, Chennai.
The audit observations and corrective action taken thereon are
periodically reviewed by the audit committee to ensure effectiveness of
the internal audit/control system.
Significant and material orders passed by the regulators or courts or
tribunals impacting the going concern status and company''s operations
in future.
There is no significant and material orders passed by the regulators or
courts or tribunals impacting the going concern status and company''s
operations in future
Extract of Annual Return.
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as Annexure - I.
Industrial Relations.
The Industrial relations continued to remain congenial during the year.
Director''s Responsibility Statement
In terms of Section 134 (5) of the Companies Act, 2013, the directors
would like to state that: In the preparation of the annual accounts,
the applicable accounting standards have been followed.
The directors have selected such accounting policies and applied them
consistently and made judgments and estimates that were 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 the year under review.
The directors have 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
detecting fraud and other irregularities.
The directors have prepared the annual accounts on a going concern
basis.
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.
The directors had devised proper system to ensure compliance with the
provisions of all applicable laws and that such system were adequate
and operating effectively.
Acknowledgement
Your Directors wish to express their gratitude for the continuous
assistance and support extended by the Banks, Financial Institutions,
Customers and Government authorities and also to the shareholders for
their forbearance and their confidence in the management. Further, your
Directors also place on record their deep sense of appreciation for the
contributions made by employees at all levels to the growth and success
of the company.
For and on behalf of the Board of Directors
M.P.Purushothaman
Chairman & Managing Director
Place : Chennai
Date : 14.08.2015
Mar 31, 2014
Dear Members,
The Directors take pleasure in presenting their 23rd annual Report
together with the audited financial statements for the financial year
ended 31st March, 2014.
Financial Results
(Rs. in Lacs)
Particulars 2013-14 2011-13
(Year ended (Period ended
31.3.2014) 30.9.2013)
(12 months) (18 months)
Operating Profit/(Loss) before
Interest and Depreciation (1334.94) 5226.21
Other income 134.73 118.25
Less: Interest 6375.51 7673.64
Less: Depreciation 2070.97 3108.11
Profit / (Loss) before Tax (7246.27) (5344.46)
Prior period items 493.04 -
Provision for Taxation (earlier year) 324.29 -
Deferred Tax Liability/(Asset) (1619.06) (1793.49)
Profit/(Loss) after Tax (5458.46) (3550.97)
Brought Forward Profit/(Loss) (8888.18) (5337.21)
Carry Forward Profit/(Loss) (14346.64) (8888.18)
Performance of the for the period under review:
Particulars 2013-14 2011-13
(Year ended (Period ended
31.3.2014) 30.9.2013)
(12 months) (18 months)
Cane Crushed (MTS) 275069 659970
Recovery of Sugar from Cane (%) 8.96 8.71%
Production of Sugar (Qtls) - Cane 246481 574684
Production of Sugar (Qtls) - Raw sugar - -
Total Production of Sugar (Qtls) 246481 574684
Production of Sprits (Ltrs) 6957815 10539246
Sale of Sugar (Qtls) - Cane 304017 505915
Sale of Sugar ( Qtls) - Raw sugar - -
Total Sale of Sugar (Qtls) 304017 505915
Sale of Spirits (Ltrs) 6041942 9423534
Power sales (Kwh) 30,56,88,000 33,03,40,600
The operating loss before interest and Depreciation for the year is Rs.
1334.94 lacs as against operating profit of Rs. 5226.21 lacs in the
previous 18 months Period. During the period under review the Sugar
mill at Ambasamudram could not be operated due to non availability of
sugar cane. However, the 50 MW power plant in Ambasamudram generated
33,59,60,600 KWH and 30,56,88,000 KWH exported to Tamilnadu State Grid
using coal as fuel during the said period.
During the period under review Naidupet sugar plant crushed 275069
lakhs MTs of cane and produced 24648 MTs of sugar and achieved a
recovery of 8.96% as against 8.71% in the previous 18 months period.
Dividend:
In view of the losses incurred by the company during the period under
review, the Directors are unable to recommend any dividend.
Subsidiaries:
a) Empee Power Company (India) Ltd: 100% subsidiary.
During the period under review, the 20 MW (Licensed) co-gen power plant
at Naidupet has incurred a loss of Rs.10.60 Lacs. The loss incurred by
the company is mainly on account of low power tariff and increase in
the interest rates to 14.30% on the loans availed by the company.
b) Appollo Wind Energy Pvt Ltd. : 100% subsidiary with share capital of
Rs.1 lakh.
There was no operations in the Company.
The consolidated accounts of the Company include the accounts of above
subsidiaries.
Future Outlook:
50 MW co-generation plant at Ambasamudram is working independently as
IPP, although the sugar mill is not functioning due to non-availability
of sugarcane. The company''s 50 MW Power plant at Amabasamudram is
earning TNEB tariff rate of Rs.5.50 per unit and from third parties
Rs.6/- per unit. Management is considering various proposals to
restructure the sugar mill /assets.
The company expects around 3 lacs tons of cane will be crushed in
Naidupet unit during the sugar season 2014-15.
Directors:
Mr.M.P.Mehrotra, Mr.Shankar Menon and Mr.T.S.Raghavan, Directors are
retiring by rotation at the ensuring annual general meeting and being
eligible offer themselves for re-appointment.
Further during the period Mr.Sheeju Purushothaman has been
re-designated as Director of the company due to expiry of his term as
Joint Managing Director on 31.3.2014. Mr.M.K.Mohan has been proposed
for re-appointment in the ensuing annual general meeting who holds
office upto this AGM.
Mr.M.K.Mohan, Mr.M.P.Mehrotra, Mr.Shankar Menon and Mr.T.S.Raghavan
will be appointed has Independent Directors of the company under
section 149 of the Companies Act, 2013.
Auditors:
M/s.Venkatsh & Co., Statutory Auditors of the Company will retire at
the conclusion of the ensuing annual general meeting and being eligible
offer themselves for re-appointment as Auditors of the company and has
provided the necessary certificates in compliance of sec. 139 of the
Companies Act, 2013 read with the Companies (Audit and Auditors) Rules,
2014.
Key Managerial Personnel
In terms of Sec. 203 of the Companies Act, 2013, Mr.M.P.Purushothaman,
Chairman & Managing Director and Mr.S.S.K.Swarup, Company Secretary are
KMPs of the company. Report to the Board for Industrial and Financial
Reconstruction:
As the members are aware, the company had reported the erosion in the
net worth of the company by more than 50% of the peak networth as
required under sec 23 of the Sick Industrial Companies (Special
Provisions) Act, 1985 to the Board for Industrial and Financial
Reconstruction for rehabilitation.
Qualifications in Auditors'' Report:
Share Application Money:
The company has approval from the shareholders to obtain share
application money up to Rs.150 Crores on preferential basis from Empee
Distilleries Limited. Accordingly, the share application money of
Rs.140.37 Crores received as at 31-03-2014 from EDL was utilized for
the setting up of Integrated sugar complex at Ambasamudram.
The company has filed its application for composite Scheme of
arrangement for amalgamation of Empee Distilleries Limited with the
judicature of Andhra Pradesh, Hyderabad which has been approved by the
shareholders pending for approval of High Court. Once the Scheme is
approved, the share application money will be automatically transferred
to the amalgamating company, Empee Sugars and Chemicals Ltd and the net
worth of the company will improve post implementation of the Scheme.
The other qualifications made by the Auditors in their report are self
explanatory.
Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the period.
Employees:
The Particulars of employees drawing remuneration within the provision
of Section 217(2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
Directors'' Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
a) in the preparation of the profit and loss account for the year ended
31.3.2014 and the balance sheet as at that date ("Financial
Statements") all applicable accounting standards have been followed;
b) appropriate accounting policies have been selected and applied
consistently and such judgments and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state
of affairs of the Company as at the end of the said period and of the
profit/(Loss) of the company for that period.
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities. To ensure
this; the company has established internal control systems, consistent
with its size and nature of operations. In weighing the assurance
provided by any such system of internal controls its inherent
limitations should be recognized. These systems are reviewed and
updated on an ongoing basis. Periodic internal audits are conducted to
provide reasonable assurance of compliance with these systems. The
audit committee meets at regular intervals to review the internal audit
function.
d) The financial statements have been prepared on a going concern
basis.
e) The financial statements have been audited by M/s.Venkatesh & Co.,
Statutory Auditors and their report is appended thereto.
Conservation of Energy, Technology absorption and Foreign Exchange
earnings and outgo:
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo in accordance with the
provisions of Section 217(1) (e) of the Companies Act, 1956 read with
Companies (Disclosure of particulars in the Report of Directors) Rules,
1988 is annexed to this Report.
Corporate Governance:
The company is committed to maintain the highest standards of Corporate
Governance and adhere to the Corporate Governance requirements as set
out by SEBI and is in conformity with most of the requirements of the
voluntary guidelines on Corporate Governance issued by the Ministry of
Corporate Affairs. As per Clause 49 of the Listing Agreement entered
into Stock Exchanges, Corporate Governance report is attached and forms
part of this annual report.
CEO & CFO Certifications
Mr.M.P.Purushothaman, Chairman & Managing Director and Ms.Nisha
Purushothaman, Chief Financial Officer of the company have given a
certificate to the Board as contemplated under Clause 49 of the Listing
Agreement.
Cost Auditors:
Mr.G.Sundaresan has been appointed as Cost Auditor for the company for
the financial year 2013-14 during the period. The Company has filed its
Cost Audit Report for the previous Financial period 2011- 13 (18
months) on 6.9.2013.
Management Discussion and Analysis
In terms of the provisions of Clause 49 of the Listing Agreement, the
Management Discussion and Analysis forms part of this annual report.
Acknowledgement:
Your Directors acknowledge and express their sincere appreciation to
Banks, Central and State Government authorities, customers, farmers,
suppliers, employees and shareholders for their confidence reposed by
them in the management and all other stake holders for their whole
hearted support and cooperation.
For and on behalf of the Board of Directors
Chennai M.P.Purushothaman
9.8.2014 Chairman & Managing Director
Mar 31, 2013
To the Members,
The Directors take pleasure in presenting their report together with
the audited accounts for the period ended 31st March, 2013 (18 months).
Financial Results
(Rs.in Lakhs)
2011-13 2010-11
(Period ended (Period ended
Particulars 31.3.2013) 30.9.2011)
(18 months) (18 months)
Operating Profit before Interest
and Depreciation 5319.04 6,736.32
Other income 118.25 672.89
Less: Interest 7673.64 9,634.78
Less: Depreciation 3108.11 3,445.72
Profit/(Loss) before Tax (5344.46) (5,671.29)
Provision for Taxation (MAT)
"Deferred Tax Liability/(Asset) (1793.49) (1,816.59)
Profit/(Loss) after Tax (3550.97) (3,854.70)
Brought Forward Profit/(Loss) (5337.21) (617.05)
"Carry Forward Profit/(Loss) (8888.18) (5,337.21)
Performance for the period under review:
2011-13 2010-11
(Period ended (Period ended
Particulars 31.3.2013) 30.9.2011)
(18 months) (18 months)
Cane Crushed (MTS) 659970 433106
Recovery of Sugar from Cane
(%) 8.71% 9.50%
Production of Sugar (Qtls) - Cane 574684 411450
Production of Sugar (Qtls) - Raw
sugar 0 396434
Total Production of Sugar (Qtls) 574684 807884
Production of Sprits (Ltrs) 10539246 12209094
Sale of Sugar (Qtls) - Cane 505915 252943
Sale of Sugar ( Qtls) - Raw sugar 0 396434
Total Sale of Sugar (Qtls) 505915 649377
Sale of Spirits (Ltrs) 9423534 13399856
Power sales (Kwh) 33,03,40,600 35,60,59,350
The operating profit before interest and Depreciation for the 18 Months
Period is 5319.04 lacs as against 6736.32 lacs in the previous 18
Months Period. During the period under review the Sugar mill at
Ambasamudram was temporarily stopped due to non availability of sugar
cane on account of continuous monsoon failures. However, the 50 MW
power plant in Ambasamudram generated 36, 22, 89,304 KWH and exported
33,03,40,600 KWH using coal as fuel during the said period.
During the period under review Naidupet sugar plant crushed 6.60 lakhs
MTs of cane and produced 574684 Qtls of sugar and achieved a recovery
of 8.71% as against 9.50% in the previous period.
Dividend:
In view of the losses incurred by the company during the period under
review, the directors are unable to recommend any dividend.
Subsidiary:
During the period under review, the 20 MW (Licensed) co-gen power plant
at Naidupet has incurred a Loss of 341.35 Lacs. The loss incurred by
the company is mainly on account of low power tariff and increase in
the interest rates by around 6% on the loans availed by the company.
The consolidated accounts of the Company include the accounts of 100%
Subsidiary, (M/s.Empee Power Company (India) limited) which can be made
available to the members upon request.
Future Outlook:
50 MW co-generation plant at Ambasamudhram is working independently as
IPP, due to non availability of sugar cane. Management is considering
various proposals including to shift the sugar mill at Ambasamudhram to
the adjoining States.
The company expects around 4 lacs tons of cane will be crushed in
Naidupet unit during the sugar season 2013-14. The companys Ambai 50 MW
Power plant is earning TNEB tariff rate of Rs. 5.50 per unit and from
third parties Rs. 6/- per unit.
Directors:
Ms.Nisha Purushothaman and Mr.T.S.Raghavan, Directors are retiring by
rotation at the ensuring annual general meeting and being eligible
offer themselves for re-appointment. Further during the period Ms.Nisha
Purushothaman has been appointed as Vice Chairperson of the company by
the Board of Directors.
Auditors:
During the period M/s.K.S.Aiyar & Co., Statutory Auditors have resigned
and the company has convened an Extra Ordinary General Meeting on
30.01.2013 and the share holders have appointed M/s.D.Sampathkumar &
Co., as Statutory Auditors of the company to hold from the date of
appointment to the conclusion of the annual general meeting.
M/s.D.Sampathkumar & Co., Statutory Auditors of the Company will retire
at the conclusion of the ensuing annual general meeting and being
eligible offer themselves for re-appointment. The company has received
a certificate from the Auditor to the effect that their re-appointment
if made would be in accordance with Section 224(1B) of the Companies
Act, 1956. The Board recommends their re- appointment.
Qualifications in Auditors Report
i. Share Application Money:
The company has approval from the shareholders to obtain share
application money up to Rs. 150 Crores on preferential basis from Empee
Distilleries limited. The share application money stood at Rs. 140.37
Crores as at 31-03-2013 which was utilized for the setting up of
Integrated sugar complex at Ambasamudram as against Rs. 137.95 crores as
at the previous reporting period 30-09-2011. The increase of Rs. 2.42
crores was brought in by Empee distilleries limited as part of the
promoters contribution for the on going implementation of Corporate
Debt restructuring scheme by the Corporate Debt Restructuring Empowered
Group (CDREG) lead by Bank of India as monitoring institution.
ii. Erosion of Net worth :
Though the accumulated losses of the company have exceeded the net
worth of the company, the management is of the view that there is no
erosion of networth requiring the company to make a reference to the
BIFR in view of the share application money of Rs.140.37 Crores.
The company has filed its application for composite Scheme of
arrangement for amalgamation of Empee Distilleries Limited with the
judicature of Andhra Pradesh, Hyderabad which has been approved by the
shareholders pending for approval of High Court. Once the Scheme is
approved, the share application money will be squared off and the net
worth of the company will improve post implementation of the Scheme and
the company will not come under the purview of Sick Company.
The Qualifications made by the Auditors in their report are self
explanatory and do not have any impact on the current profits/Losses of
the company.
Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the period.
Employees:
The Particulars of employees drawing remuneration within the provision
of Section 217 (2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
(Annexure.1)
Directors Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
a) in the preparation of the profit and loss account for the period (18
Months) ended 31.3.2013 and the balance sheet as at that date
(Financial Statements) all applicable accounting standards have been
followed;
b) appropriate accounting policies have been selected and applied
consistently and such judgments and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state
of affairs of the Company as at the end of the said period and of the
profit/(Loss) of the company for that period.
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities. To ensure
this; the company has established internal control systems, consistent
with its size and nature of operations. In weighing the assurance
provided by any such system of internal controls its inherent
limitations should be recognized. These systems are reviewed and
updated on an ongoing basis. Periodic internal audits are conducted to
provide reasonable assurance of compliance with these systems. The
audit committee meets at regular intervals to review the internal audit
function.
d) The financial statements have been prepared on a going concern
basis.
e) The financial statements have been audited by M/s.D.Sampathkumar &
Co., Statutory Auditors and their report is appended thereto.
Conservation of Energy, Technology absorption and Foreign Exchange
earnings and outgo:
Information regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules, 1988 is
annexed to this Report. (Annexure 2)
Corporate Governance:
The Management discussion and analysis and the compliance of
recommendations on corporate governance are annexed to this report.
(Annexure.3)
Cost Auditors:
Mr.G.Sundaresan has been appointed as Cost Auditor for the company for
the financial period (18 Months) 2011-13 in place of M/s.Vivekanandhan
& Associates who have submitted their resignation during the period.
The Company has filed its Cost Audit Report for the previous Financial
Period (18 months) 2010-11 on 9th February, 2013.
Acknowledgement:
Your Directors thank for the continuous assistance and support extended
by the Banks, cane growers, customers and government authorities and
also to the shareholders for their forbearance and their faith in the
management. Further, your Directors also place on record their deep
sense of appreciation for the contributions made by employees at
various levels to the growth and success of the Company.
For and on behalf of the Board of Directors
Chennai M.P.Purushothaman
11.5.2013 Chairman & Managing Director
Sep 30, 2011
To the Members,
The Directors take pleasure in presenting their report together with
the audited accounts for the year ended 30th September, 2011 (18
months).
FINANCIAL RESULTS (Rs. in Lacs)
Particulars 2010-11 2009-10
(Year ended (Year ended
30.9.2011) 31.3.2010)
(18 months) (12 months)
Operating Profit before
Interest and Depreciation 6,593.53 876.60
Other income 672.89 29.90
Less: Interest 9,491.99 494.10
Less: Depreciation 3,445.72 353.88
Profit / (Loss) before Tax (5,671.29) 58.53
Provision for Taxation (MAT) - 9.04
Deferred Tax Liability/(Asset) (1,816.59) (34.11)
Profit/(Loss) after Tax (3,854.70) 92.64
Brought Forward Profit /(Loss) (617.05) (656.39)
Carry Forward Profit/(Loss) (5,337.21)* 617.05
* includes interim dividend (Rs..244.72 lacs including dividend
distribution tax thereon) and prior period expenses of (Rs..620.74 lacs).
Performance of the year under review:
Quantitative Particulars 2010-11 2009-10
(Year ended (Year ended
30.9.2011) 30.9.2010)
(18 months) (12 months)
Cane Crushed (MTS) 433106 107772
Recovery of Sugar from Cane (%) 9.50 7.17
Production of Sugar (Qtls) Â Cane 411450 78310
Production of Sugar (Qtls)Â Raw sugar 396434 12675
Total Production of Sugar (Qtls) 807884 90985
Production of Sprits (Ltrs) 12209094 4388727
Sale of Sugar (Qtls) Â Cane 252943 129148
Sale of Sugar ( Qtls) - Raw sugar 396434 -
Total Sale of Sugar (Qtls) 649377 129148
Sale of Spirits (Ltrs) 13399856 4727179
The operating profit before interest and Depreciation for the year is
Rs..6591.68 lacs as against Rs..876.60 lacs in the previous year. During
the year the company''s Integrated Sugar complex at Ambasamudram,
Tirunelveli District, Tamilnadu in which Sugar plant and Co-gen started
commercial operations. The quantum of jump in turnover from Rs..4768 lacs
to Rs..40677.96 lacs is mainly on account of raw-sugar conversion, Govt
pricing policy on sugar exports, power sales to Tamilnadu Electricity
Board and Power Trading Corporation Ltd.
The year ending 30th September, 2011 has witnessed severe shortage of
sugar cane availability. The sugar cane availability around the new
sugar mill in Ambasamudram was drastically hit due to failure of the
monsoon and drought conditions were prevailing and the company could
not achieve the expected quantity of crushing. No production during
April 2011 to September 2011 and the increase in the rate of interest
by around 6% on the loans availed from the banks by the company had a
blow on the performance of the company which resulted in a net loss of
Rs..5671.29 lacs after depreciation and interest.
The company made an application to Corporate Debt Restructuring (CDR)
for rescheduling repayment of term loans and interest which has been
admitted on 1st July 2011 and approved by the Corporate Debt
Restructuring Empowered Group (CDREG) lead by Bank of India as
monitoring institution on 29th November 2011. The letter of approval
(LOA) is expected in due course of time.
Dividend:
In view of the losses incurred by the company during the year under
review, the directors are unable to recommend any dividend.
Qualifications in Auditors Report:
Dividend:
The company has declared and paid an interim dividend of 5% on the
equity capital of Rs..4197.29 Lacs amounting to Rs..209.86 Lacs calculated
on available profits of Rs..1499.41 Lacs (unaudited) as on 30.9.2010 for
the 6 months period. The cumulative net profit /(loss) reported by the
company for quarters ending 31st December 2010, 31st March 2011 and
30th June 2011 are Rs..2643.68 Lacs, Rs..623.76 Lacs and Rs..(2356.85) Lacs.
The profit made for the year 2010-11 (12 months) ending is sufficient
to justify the payment of interim dividend which was remaining after
making provision for depreciation for the full year of 12 months and
unabsorbed depreciation for the earlier years. Consequent to the
losses of Rs..(2356.85) Lacs and Rs..(874.09) Lacs incurred by the company
during 5th and 6th quarters of the extended financial year ending 30th
September 2011 (18 months) the available profits and reserves were
eroded and the 18 months cumulative results ended with net loss of
Rs..(3854.70) Lacs. In this regard the company proposes to seek
exemption from the Company Law Board.
Share Application money pending allotment:
The shareholders have approved issue of 0% Convertible Preference
Shares of Rs..10/- each at a premium of Rs..140/- each aggregating to Rs..150
Crores on preferential basis to M/s.Empee Distilleries Limited (EDL)
through postal ballot on 23-08-2010. EDL has already brought in
Rs..137.95 crores as share application money which has already been
utilized in the project. The Company is exploring alternatives to make
allotment of shares at the earliest taking into account the current
share prices and market movements.
The qualifications made by the Auditors in their report are self
explanatory and do not have any impact on the current profits /losses
of the company.
Subsidiary:
During the year the 20 MW (Licensed) cogen power plant at Naidupet has
incurred a Loss of Rs..758.10 Lacs. The loss incurred by the company is
mainly on account of low power tariff and increase in the interest
rates by around 6% on the loans availed by the company. The
consolidated accounts of the Company include the accounts of 100%
Subsidiary, (M/s.Empee Power Company (India) limited) which can be made
available to the members upon request.
Future Outlook:
The Company''s Greenfield integrated sugar complex at Idaikkal Village,
Ambasamudram Taluk, Tirunelveli District, Tamilnadu consisting of 5000
TCD Sugar plant expandable to 8000 TCD, 50MW co-generation plant have
started commercial operations and 100 KL/day Distillery plant is under
progress.
The company expects around 4.5 lacs tons of cane will be crushed in
Naidupet unit and around 2 lacs tons of cane in Ambasamudram unit
during the sugar season 2011-12. The Company expects increase in sugar
productions on account of the aggressive steps taken by the company to
increase the area of sugar cane cultivation in the allotted lands,
continuous efforts to increase efficiency and productivity in existing
operations, contribution expected from cogen power plant in view of
increased power tariff from TNEB and also expected higher price from
Power Trading Corporation. The company has entered into an agreement
with TNEB to sell 25% of the excess power produced over and above our
captive consumption and the balance 75% to any third parties. The
company expects that on account of these developments barring
unforeseen circumstances your Directors are confident that the company
will generate good revenues and post better performance in the current
financial year and years to come.
Directors:
Mr. Shankar Menon, and Mr. M.P.Mehrotra, Directors are retiring by
rotation at the ensuring annual general meeting and being eligible
offer themselves for re- appointment. Mr. K.Jayachandran, Joint
Managing Director has resigned on 14th June 2011.
Auditors:
M/s. K.S.Aiyar & Co., Statutory Auditors of the Company will retire at
the conclusion of the ensuring annual general meeting and being
eligible offer themselves for re-appointment. The company has received
a certificate from the Auditor to the effect that their re-appointment
if made would be in accordance with Section 224(1B) of the Companies
Act, 1956. The Board recommends their re- appointment.
Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the year.
Employees:
The Particulars of employees drawing remuneration within the provision
of Section 217 (2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
(Annexure.1)
Directors'' Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
a) in the preparation of the profit and loss account for the year ended
30.9.2011 (18 months) and the balance sheet as at that date ("Financial
Statements") all applicable accounting standards have been followed;
b) appropriate accounting policies have been selected and applied
consistently and such judgments and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state
of affairs of the Company as at the end of the year and of the
profit/(Loss) of the company for that year.
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities. To ensure
this; the company has established internal control systems, consistent
with its size and nature of operations. In weighing the assurance
provided by any such system of internal controls its inherent
limitations should be recognized. These systems are reviewed and
updated on an ongoing basis. Periodic internal audits are conducted to
provide reasonable assurance of compliance with these systems. The
audit committee meets at regular intervals to review the internal audit
function.
d) The financial statements have been prepared on a going concern
basis.
e) The financial statements have been audited by M/s.K.S.Aiyar & Co.,
Statutory Auditors and their report is appended thereto.
Conservation of Energy, Technology absorption and Foreign Exchange
earnings and outgo:
Information regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules, 1988 is
annexed to this Report. (Annexure 2)
Corporate Governance:
The Management discussion and analysis and the compliance of
recommendations on corporate governance are annexed to this report.
(Annexure.3)
Cost Auditors:
M/s. Vivekanandan Unni & Associates have been appointed as Cost
Auditors for the Sugar units and
Co-gen Unit of the company for the financial year 2010-11.
Extension of Financial Year:
The present financial year of the company commencing from 1st April
2010 to 31st March 2011 has been extended to 18 months and there by
ended on 30th September 2011 (18 months) with the approval of Registrar
of Companies, Andhra Pradesh in view of the company submitting a
Corporate Debt Restructuring (CDR) Package admitted on 1st July 2011.
CDR package has been approved by Corporate Debt Restructuring Empowered
Group (CDREG) and the Bank of India has been appointed as the
Monitoring Institution on 29-11-2011 and the letter of Approval (LOA)
is expected in due course of time.
Acknowledgement:
Your Directors thank for the continuous assistance and support extended
by the Banks, cane growers, customers and government authorities and
also to the shareholders for their forbearance and their faith in the
management. Further, your Directors also place on record their deep
sense of appreciation for the contributions made by employees at
various levels to the growth and success of the Company.
Chennai M.P.Purushothaman
30.11.2011 Chairman & Managing Director
Mar 31, 2010
The Directors take pleasure in presenting their report together with
the audited accounts for the year ended 31st March, 2010.
FINANCIAL RESULTS
(Rs.in Lacs)
2009-10 2008-09
Particulars (12 months year (9 months period
ended 31.3.2010) ended 31.3.2009)
Operating Profit before
Interest and Depreciation 876.60 858.55
Other income 29.90 62.93
Less: Interest 494.10 393.87
Less: Depreciation 353.88 329.70
Profit before Tax 58.53 197.91
Provision for Taxation (MAT)
including FBT
Deferred Tax Liability/
(Asset) (34.11) 81.18
ProW(Loss) after Tax 92.64 95.48
Brought Forward Loss 656.39 575.81
Carry Forward Loss 617.05 656.39
Performance of the Year under Review:
2009-10 2008-09
(12 months year (9 months period
Quantitative Particulars ended 31.3.2010> ended 31.3 2009)
Cane Crushed (MTS) 107772 188451
Recovery of Sugar From 717 8.90
Cane (%)
Production of Sugar (Qtls) 78310 167810
-Cane
Production of Sugar (Qtls) 12675 --
- Raw sugar
Total Production of Sugar 90985 167810
(Qtls)
Production of Sprits (Ltrs) 4388727 5175156
Sale of Sugar (Qtls) cane 129148 193430
Sale of Sugar ( Qtls) raw -- --
Sugar
Total Sale of Sugar (Qtls) 129148 193430
Sale of Spirits (Ltrs) 4727179 4064084
The operating profit before interest and Depreciation for the year is
Rs.876.60 lacs which is 19.13% of sales as against Rs 858.55 lacs which
is 18.49 % of Sales in the previous year. This increase of 0.64% in
operating profit is mainly due to increase in the free sale price of
sugar.
The year ending 31st March, 2010 have witnessed severe shortage of
sugar cane availability worse than the previous period, accordingly the
crushing of cane has come down drastically and the season came to an
end in the first week of February, 2010 as against February end in the
previous period. The shortage of sugar cane is mainly due to the
conscious switchover by the farmer community to other competing crops
that now fetch him a much higher realization. Further there is also
shortage of efficient harvesting labour for cutting the sugar cane.
Price parity being the bedrock of market economics, sugarcane price
must match with and measure up to other competing crops to reignite
farmers interest in cane.
Dividend:
In view of the past accumulated losses and to source the expansion
plans to achieve growth oriented stability in future financial
performance the Directors are unable to recommend any Dividend for the
year under review.
Subsidiary:
20 MW Multi fuel based cogen power plant at the factory site at
Naidupet has commenced its commercial operations effective from 12th
March, 2010 and started selling power to APSPDCL against the power
purchase agreement executed by the subsidiary company.
Future Outlook:
The Companys prestigious greenfield integrated sugar complex at
Idaikkal Village, Ambasamudram Taluk, Tirunelveli District, Tamilnadu
consisting of 5000 TCD Sugar plant expandable to 8000 TCD, 50MW
co-generation plant have started commercial operations and 100 KL/day
Distillery plant is under progress.
The Company expects increase in sugar production on account of the
steps taken by the company to increase the area of sugar cane
cultivation in the allotted lands, continuous efforts to increase
efficiency and productivity in existing operations, contribution
expected from cogen power plant in view of increased power tariff from
TNEB and also expected higher price from Power Trading Corporation. The
company has entered into an agreement with TNEB to sell 25% of the
excess power produced over and above our captive consumption and the
balance 75% to any third parties. The company expects that on account
of this developments barring unforeseen circumstances your Directors
are confident that the company will generate good revenues and post
better performance in the current financial year and years to come.
Directors:
Mr.T.S.Raghavan, Director and Mr,M.K.Mohan, are retiring by rotation at
the ensuring annual general meeting and being eligible offers
themselves for re- appointment.
The three years term of Mr.K.Jayachandran, Joint Managing Director has
expired on 27th April, 2010 whose appointment was renewed by the Board
for a further period of three years which will be subject to the
approval of the members in the ensuing annual general meeting.
Auditors:
Mr.R.Rajagopalan, the Auditor of the Company has submitted his
resignation to act as Auditor of the company from the financial year
2010-11.
The Board has identified M/s. K.S. AIYAR & Co., Chartered Accountants
as Auditors of the Company for the year 2010-11. The company has
received a certificate from the Auditors to the effect that their
appointment, if made would be in accordance with Section 224(1 B) of
the Companies Act, 1956. The Board recommends their appointment.
Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the year.
Employees:
The Particulars of employees drawing remuneration within the provision
of Section 217 (2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
(Annexure.1)
Directors Responsibility Statement:
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
to the best of their knowledge and belief confirm that:
a) in the preparation of the profit and loss account for the year ended
31.3.2010 and the balance sheet as at that date ("Financial
Statements") applicable accounting standards have been followed;
b) appropriate accounting policies have been selected and applied
consistently and such judgments and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state
of affairs of the Company as at the end of the year and of the profit
of the company for that year.
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities, to ensure
this, the company has established internal control systems, consistent
with its size and nature of operations. In weighing the assurance
provided by any such system of internal controls its inherent
limitations should be recognized. These systems are reviewed and
updated on an ongoing basis. Periodic internal audits are conducted to
provide reasonable assurance of compliance with these systems. The
audit committee meets at regular intervals to review the internal audit
function.
d) the financial statements have been prepared on a going concern
basis.
e) the financial statements have been audited by Mr.R.Rajagopalan,
Statutory Auditor and his report is appended thereto.
Conservation of Energy, Technology absorption and Foreign Exchange
earnings and outgo:
Information regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217(1 )(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules, 1988 is
annexed to this Report. (Annexure 2)
Corporate Governance:
The Management discussion and analysis and the compliance of
recommendations on corporate governance are annexed to this report.
(Annexure.3)
Cost Auditors:
M/s. Vivekanandan Unni & Associates, have been appointed as Cost
Auditors for the sugar unit of the company for the financial year
2009-10.
Acknowledgement:
Your Directors thank for the continuous assistance and support extended
by the Banks, cane growers, customers and government authorities and
also to the shareholders for their forbearance and their faith in the
management. Further, your Directors also place on record their deep
sense of appreciation for the contributions made by employees at
various levels to the growth and success of the Company.
For and on behalf of the Board of Directors
Sd/-
Chennai M.P.Purushothaman
29/05/2010 Chairman & Managing Director
Mar 31, 2009
The Directors take pleasure in presenting their report together with
the audited accounts for the period ended 31st March, 2009.
FINANCIAL RESULTS
(Rs.in Lakhs)
2008-2009 2007-2008
Particulars (9 months period (12 months period
ended 31.3,2009) ended 30,6.2008)
Operating Profit before 858.55 845.30
Interest and Depreciation_
Other income 62.93 43.12
Less: Interest 393.87 573.78
Less: Depreciation 329.70 270.82
Profit before Tax 197.91 43.82
Provision for Taxation (MAT) 21.25 6.01
including FBT_
Deferred Tax Liability/(Asset) 81.18 (91.85)
Profit/(Loss) after Tax 95.48 129.66
Brought Forward Loss 575.81 610.08
Carry Forward Loss 656.39* 575.81
* includes Rs. 176.06 lakhs of income tax and fringe benefit tax paid
for earlier years. Performance of the Year under Review:
(Rs.in Lakhs)
2008-2009 2007-2008
Particulars (9 months period (12 months period
ended 31.3,2009) ended 30,6.2008)
Cane Crushed (MTS) 188451 361066
Recovery of Sugar From 8.90 9.20
Cane(%)_
Production of Sugar (Qtls) 167810 332200
Total Production of Sugar 167810 332200
(Qtls)
Production of Sprits (Ltrs) 5175156 8653961
Sale of Sugar (Qtls) 193430 307280
Total Sale of Sugar (Qtls) 193430 307280
Sale of Spirits (Ltrs) 4064084 7301754
The operating profit before interest and Depreciation for the year is
Rs.858.55 lakhs which is 18.49% of sales as against Rs.845.30 lakhs
which is 14.18% of Sales in the previous year. This increase of 4.31%
in operating profit is mainly due to increase in the free sale price of
sugar.
The period ending 31st March, 2009 ( 9 Months) have witnessed severe
shortage of sugar cane availability, accordingly the crushing of cane
has come down drastically and the season came to an end in February,
2009 as against May every year. The shortage of sugar cane is mainly
due to the conscious switchover by the farmer community to other
competing crops that now fetch him a much higher realization. Further
there is also shortage of efficient harvesting labour for cutting the
sugar cane. Price parity being the bedrock of market economics,
sugarcane price must match with and measure up to other competing crops
to reignite farmers interest in cane.
Dividend:
In view of the past accumulated losses and to source the expansion
plans to achieve growth oriented stability in future financial
performance the Directors are unable to recommend any Dividend for the
year under review.
Subsidiary:
20 MW Multi fuel based cogen power plant at the factory site at
Naidupet is ready to commence its operations and is awaiting final
clearances from Government of Andhra Pradesh and trail runs are taken
and the plant will be ready to commission and synchronizing with the
grid on 31st July, 2009.
Future Outlook:
The progress of the Companys prestigious greenfield integrated sugar
complex at Idaikkal Village, Ambasamudram Taluk, Tirunelveli District,
Tamilnadu consisting of 5000 TCD Sugar plant expandable to 8000 TCD,
50MW co-generation plant and 100 KL/day Distillery plant is under
progress.
The expected date of commissioning of cogen power plant, sugar plant
and distillery are 15th December, 2009,15th January, 2010 and 15th
April, 2010 respectively. Required statutory clearances for
establishment of the project are obtained and orders for the
machinery/equipment were placed and the plant & machinery and other
necessary equipment are started reaching the project site and erection
works under progress in full swing. With regard to financial tie-up,
seven nationalized banks have tied up for financial closure.
With the present trend of increase in sugar prices, the steps taken by
the company to increase the area of sugar cane cultivation in the
allotted lands, continuous efforts to increase efficiency and
productivity in existing operations, contribution expected from cogen
power plant and expansion plans envisaged by the company into
integrated sugar complex, barring unforeseen circumstances your
Directors are expecting that the company will generate good revenues
and post better performance in the years to come.
Directors:
Mr. M.P.Mehrotra, Director and Ms.Nisha Purushothaman, are retiring by
rotation at the ensuring annual general meeting and being eligible
offers themselves for re-appointment.
Lt. Gen. R.S.Nagra (Retd), Director has resigned from the Board and his
resignation was effective from 1/1/2009, the Board places on record its
appreciation of his contribution as Director during his tenure.
Mr. Shankar Menon has been appointed as additional director of the
company during the year will be retiring at the conclusion of the
annual general meeting. Company has received notice under section 257
of the Companies Act, 1956 from members proposing his candidature for
the office of the Director. Accordingly resolution is proposed in the
notice for the annual general meeting for his appointment.
Auditors:
Mr. R.Rajagopalan, the Auditor of the Company will retire at the
conclusion of the ensuing annual general meeting and being eligible
offer himself for reappointment. The company has received a certificate
from the Auditor to the effect that his re- appointment, if made would
be in accordance with Section 224 (1B) of the Companies Act, 1956. The
Board recommends his re-appointment. Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the year. Employees:
The Particulars of employees drawing remuneration within the provision
of Section 217 (2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
(Annexure.1) Directors Responsibility Statement: Pursuant to Section
217(2AA) of the Companies Act, 1956, the Directors to the best of their
knowledge and belief confirm that:
a) In the preparation of the profit and loss account for the period
ended 31.3.2009 and the balance sheet as at that date ("Financial
Statements") applicable accounting standards have been followed;
b) Appropriate accounting policies have been selected and applied
consistently and such judgments and estimates that are reasonable and
prudent have been made so as to give a true and fair view of the state
of affairs of the Company as at the end of the period and of the profit
of the company for that period.
c) Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities, to ensure
this, the company has established internal control systems, consistent
with its size and nature of operations. In weighing the assurance
provided by any such system of internal controls its inherent
limitations should be recognized. These systems are reviewed and
updated on an ongoing basis. Periodic internal audits are conducted to
provide reasonable assurance of compliance with these systems. The
audit committee meets at regular intervals to review the internal audit
function.
d) The financial statements have been prepared on a going concern
basis.
e) The financial statements have been audited by Mr.R.Rajagopalan,
statutory auditor and his report is appended thereto.
Conservation of Energy, Technology Absorption and Foreign Exchange
outgo:
Information regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217 (1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules, 1988 is
annexed to this Report. (Annexure 2)
Corporate Governance:
The Management discussion and analysis and the compliance of
recommendations on corporate governance are annexed to this report.
(Annexure.3)
Cost Auditors:
Messrs. Vivekanandan Unni & Associates, have been appointed as cost
auditors for the sugar unit of the company for the financial year
2008-09.
Financial Year:
The company has closed the books of account for 9 months ending
31/03/2009 to change the financial year of the company from 1st April
to 31st March of every year.
Acknowledgement:
Your Directors thank for the continuous assistance and support extended
by the Banks, cane growers, customers and government authorities and
also to the shareholders for their forbearance and their faith in the
management. Further, your Directors also place on record their deep
sense of appreciation for the contributions made by employees at
various levels to the growth and success of the Company.
For and on behalf of the Board of Directors
Sd/-
Chennai M.P.Purushothaman
31/07/2009 Chairman & Managing Director
Jun 30, 2008
The Directors take pleasure in presenting their report together with
the audited accounts for the year ended 30th June, 2008.
FINANCIAL RESULTS
(Rs. in Lacs)
Particulars 2007-08 2006-07
Operating Profit before Interest 845.30 575.16
and Depreciation
Other income 43.12 37.14
Less: Interest 573.78 346.70
Less: Depreciation 270.82 211.34
Profit before Tax 43.82 54.26
Provision for Taxation (MAT) 6.01 6.25
including FBT
Deferred Tax Liability/(Asset) (91.85) (39.56)
Profit/ (Loss) after Tax 129.66 87.57
Brought Forward Loss 610.08 653.62
Carry Forward Loss 575.81 610.08
Performance of the Year under Review:
Quantitative Particulars 2007-08 2006-07
Cane Crushed (MTS) 361066 394789
Recovery of Sugar from Cane (%) 9.20 8.59
Production of Sugar (Qtls) 332200 339030
Production of Sugar from Raw
Sugar (Qtls)
Total Production of Sugar (Qtls) 332200 339030
Production of Sprit (Ltrs) 8653961 8092172
Sale of Sugar (Qtls) 307280 284248.50
Sale of Sugar from Processed
Raw Sugar (Qtls) - -
Total Sale of Sugar (Qtls) 307280 284248.50
Sale of Spirit (Ltrs) 73017541 7772565
The operating profit before interest and Depreciation for the year is
Rs.845.30 lacs which is 14.18% of sales as against Rs. 575.16 lacs
which is 9.46% of Sales in the previous year. This increase of 4.72%
in operating profit is mainly due to the operational efficiency and
improved recovery of sugar.
The increase in interest of Rs.227.08 lacs when compared to the last
year is attributable partly to the interest on term loans availed for
IAP division for Ethanol plant and partly for utilization of working
capital.
Dividend:
In view of the past accumulated losses and to source the expansion
plans to achieve growth oriented stability in future financial
performance the Directors do not recommend any Dividend for the year
under review.
Subsidiary:
The implementation of 20 MW bagasse based cogen power plant at the
factory site at Naidupet is scheduled to commence its operations by end
November, 2008. Project works implementation is in full swing.
Future Outlook:
Your Company is setting up a greenfield integrated sugar complex at
Idaikkal Village, Ambasamudram Taluk, Tirunelveli District, Tamilnadu
consisting of 5000 TCD Sugar plant expandable to 8000 TCD, 50MVV co-
generation plant and 100 KL/day Distillery plant which will be
operational by end November, 2009. All the technical clearances are
being obtained and orders for the machinery/equipment are under
process.
With the expected gradual increase in sugar prices and increase in
efficiency and productivity in existing operations and expansion plans
envisaged by the company into integrated sugar complex, your Directors
are confident that the company will generate good revenues and post
better performance in the years to come.
Directors:
Mr. M.P. Purushothaman, Chairman & Managing Director is re-appointed
with revised remuneration considering the current salary levels in the
Industry. During the year the remuneration of Mr. K. Jayachandran,
Joint Managing Director has been revised w.e.f.1 -04-2008 as per the
Notice dated 10th March, 2008 circulated to the members.
Mr. T.S. Raghavan, Director and Mr. Sheeju Purushothaman, Joint
Managing Director who were appointed as additional directors of the
Company during the year will be retiring at the conclusion of this
annual general Meeting. Company has received notices under section 257
of the Companies Act, 1956, from members proposing their candidature
for the office of the Directors. Accordingly resolutions are proposed
in the notice for the annual general meeting for their appointment.
Mr. M.K. Mohan, Director and Lt. Gen. R.S. Nagra (Retd), Director are
retiring by rotation at the ensuring annual general meeting and being
eligible offers themselves for re-appointment.
Auditors:
Mr. R. Rajagopalan, the Auditor of the Company will retire at the
conclusion of the ensuing annual general meeting and being eligible
offer himself for reappointment. The company has received a certificate
from the Auditor to the effect that his re- appointment, if made would
be in accordance with Section 224 (1B) of the Companies Act, 1956. The
Board recommends his re-appointment.
Fixed Deposits:
Your Company has not accepted any fixed deposits from the public during
the year.
Employees:
Your Directors place on record their appreciation of the efforts and
valuable contributions put in by the employees at all levels of the
Company.
The Particulars of employees drawing remuneration within the provision
of Section 217 (2A) of the Companies Act, 1956 read with Companies
(Particulars of Employees) Rules 1975 is annexed to this Report.
(Annexure.1)
Directors Responsibility Statement:
Pursuant to the requirements under Section 217(2AA) of the Companies
Act, 1956 your Directors hereby state and confirm that:
a). In the preparation of the annual accounts, the applicable
accounting standards have been followed;
b). The Directors have selected 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 as at 30th June, 2008 and of the profit or loss of the
company for the year ended on that date.
c). The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
d). The Directors have prepared the annual accounts on a Going
Concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
outgo:
Information regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo in accordance with the provisions
of Section 217 (1) (e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules, 1988 is
annexed to this Report. (Annexure 2)
Corporate Governance:
The Management discussion and analysis and the compliance of
recommendations on corporate governance are annexed to this report.
(Annexure.3)
Registrars & Share Transfer Agents:
Your Company has appointed M/s. Cameo Corporate Services Limited,
"Subramanian Building", V Floor, 1, Club House Road, Chennai-600 002 as
the Registrars and share transfer agents of the Company w.e.f. 9th
June, 2008.
Acknowledgement:
Your Directors thank for the continuous assistance and support extended
by the Banks, cane growers, customers and government authorities and
also to the shareholders for their forbearance and their faith in the
management. Further, your Directors also place on record their deep
sense of appreciation for the contributions made by employees at
various levels to the growth and success of the Company.
For and on behalf of the Board
Place : Chennai Sd/- M.P. PURUSHOTHAMAN
Date : 24/09/2008 Chairman & Managing Director
Jun 30, 2007
The Directors take pleasure in presenting their Report together with
the audited Accounts for the year ended 30th June 2007
FINANCIAL RESULTS (Rs. in lacs)
2006-07 2005-06
Operating Profit before Interest
and Depreciation 612.30 1500.68
Less Interest 346.70 459.75
Depreciation 211.34 210.44
Profit before Tax 54.26 830.49
Provision for Taxation (MAT) including FBT 6.25 1.55
Deferred Tax (Liability)/Asset 39.56 202.14
Profit /(Loss) After Tax 87.57 1031.08
Brought Forward Loss 653.62 1684.71
Carried Forward Loss 610.08 653.62
Performance of the year under Review
Quantitative Particulars 2006-07 2005-06
Cane Crushed (Mts) Recovery of Sugar 394789 331063
from Cane (%) 8.59 8. 40
Production of Sugar (Qtls) 339030 269110
Production of Sugar from . Raw Sugar (Qtls) - 241490
Total Production of Sugar (Qtls) 339030 510600
Production of Spirits (Ltrs) 8092172 6121626
Sale of Sugar (Qtls) 284248.50 293180
Sale of Sugar from Processed
Raw Sugar (Qtls) - 200000
Total Sale of Sugar (Qtls) 284248.50 493180
Sale of Spirits (Ltrs) 7772565 5872724
In view of the past accumulated losses, the Directors not in a position
recommend any Dividend for the year under review.
Crushing started in the last week of November 2006 and continued till
May 2007. The company was able to increase crushing of cane by -19.25%
over the previous year due to the availability of cane and by
increasing the operational efficiency of crushing. Steps are underway
to further raise the operational efficiency in the current year. On
account of the excess production of sugar the price realization of
sugar registered a steep fall which severely hampered the profitability
of the Sugar unit considerably. The policy of Government of India with
regard to export of sugar was actually misplaced and contributed to the
misfortune of sugar industry to an extent. Exports were banned when the
price of sugar was favourable and was reopened when the International
sugar prices were unfavourable. Further the sluggish off take of sugar
in the local market and the non lifting of sugar by the Public
Distribution System resulted in huge piling of sugar in the godowns.
The country witnessed a peculiar situation of the free sugar being sold
at a price lesser than the levy sugar. All these factors resulted in a
substantial drop in the profitability of the Sugar unit The series of
measures taken by the Government in providing relief to the sugar
industry is a belated move to salvage this industry and its results are
to be seen in future in the current year. The Central Government and
the State Government are still uncertain about any relief measures to
the sugar industry. Notwithstanding these difficulties the company was
able to increase the cane crushing and the production of sugar
significantly during the year.
The Industrial Alcohol plants remained satisfactory. There was growth
in production and sale compare the previous year. Operational
efficiency was also higher in terms of yield of molasses and other
higher operation norms.
In spite of the highly depressed sugar realization, the company has
been able to settle the entire SMP of sugar cane to the farmers as on
date.
Irrigation Development
The Government of Andhra Pradesh is in the verge of completing the
Irrigation-barrage cum bridge in the Swarnamukhi river near Vakadu in
the companys command zone. This is expected to provide irrigation and
also recharge the ground water in a big way which would increase the
command area for Sugar cane as well.
The Telugu Ganga Canal which traverses through this area is also
bringing more and more assured areas under irrigation which also
promises to augment the area under sugar cane.
The entire cane command area is divided into 6 divisions. Each division
is being looked into by a qualified Agri Officer who looks after the
2000 acres under his direct supervision. Each division is further
broken down into six/seven circles under various well experienced Cane
Assistants. These officials take care of the entire gamut of
supervision right from selection of soil, quality of seeds and
appropriate integrated pest and disease management, judicious
application of organic and inorganic fertilize/and close monitoring of
the yield of these individual fields.
Cane Development Programmes
The intensive Cane Development Programme is implemented in a systematic
manner in the entire cane command area which tale care of the following
interalia:
* Soil Enrichment - thru green manure and bio fertilizer after
considering the nature of the soil.
* Seed Development - Nursery Programme -Farmers are encouraged to avail
the high yield variety suited to the soil and climatic conditions in a
three phased seed nursery programme.
* Input supplies - The company has tied up with a bank which gives the
farmers directly loans at concessional interest for the purchase of
seeds and fertilizer. These loans are recovered from the farmers from
the payments towards cane.
* Organization of Demonstration plots - The company has taken upon
itself to educate the farmers of the benefits of the right kind of
fertilizer application which the farmers can learn and implement the
same in their plots.
* Reduction of Cutting to Milling time - Steps are being taken to
minimize the time taken from cutting to milling in order to ensure the
maximization of the recovery of sugar from cane. Various modern methods
of communi cation are being provided to the Cane develop ment
assistants for ensuring that no waiting time and unnecessary traffic at
the gate arise.
Outlook for the Future
The company has already taken up the expansion capacity to 3500 TCD
and is also going for a Bagasse based Co-gen Plant of 20MW which is
being set up though the wholly owned subsidiary viz. Empee Power
Company (India) Ltd. The company also takne steps required for the
production of Ethanol. It is also expected during 2008-09 the sugar
production will increase based on the expanded crushing capacity.
The company has also obtained necessary permission to put up an
integrated Sugar Complex (Consisting of Sugar, Cogen and Industrial
Alcohol includng Ethanol) in Tamilnadu. Land has been identified and is
being acquired. the company has already recieved the Industrial
Enterprise Memorandum (IEM) for the same for the crushing of sugar,
Cogeneration and Industrial Alcohol facilities.
Discharge of Companys social responsibility
The company has been able to obtain loans from the Bank on behalf of
its farmers for providing quality seeds and fertilizers at a
concessional rate of interest. The farmers therefore would be able to
get a higher remuneration thru better yield of cane per acre. However
the escalating cost of Harvesting is a constraint to the farmers.
Harvesting Labour has to be obtained from far off places at a higher
cost for the cutting of cane. The company is taking steps to encourage
farmers to take up local labour in order to reduce the cost of
harvesting which in turn would increase the realization to the farmers.
Efforts are also being made to get Hawestar Machines to reduce the
burden on cane growers.
Further with a twin objective of reducing the pollution of the soil and
to provide enriched manure to the farmers the company has gone in for a
bio composting in a big way and is providing the farmers with quality
manure for a better yield for the future.
The company is sparing no efforts in providing quality cane to the
farmers in order to obtain a better yield. Various programmes are also
being arranged to educate the farmers in modern techniques of cane
cultivation. "Karshaka Sadassus" programme (Growers meet with eminent
Scientists) has also been well appreciated by the farmers which
provides them with the latest technologies in cane cultivation.
Sugar is still considered to be more profitable than other crops like
rice and ground nut and a series of measures have been taken to
increase the command zone for cane which in turn also enables the
company to increase its crushing capacity.
The expected expansion of the cane crushing capacity of cane to 3500
TCD and the Bagasse Cogen plant would also bring about an increase in
the engagement of manpower resulting in increase in the welfare of the
local community.
Industry Scenario
Sugar and allied industry is witnessing turbulent times with a bumper
crop of 37% over the previous year is in the offing. The spectrum of
the cane payment to farmers not being related to the prices of sugar is
also causinga heavy burden on the mills. Delicencing of the sugar
industry is the need of the hour.
Unremunerative export prices and plummeting domestic prices in the
background of a record high sugar production points out to a dangerous
possibility of arrears to the farmers which will jeopardize the entire
sugar industry as they are the backbone. Realising the gravity of the
situation, the Government has come out with a series of measures like
increasing the buffer stock to 50 lacs Mts and in providing other
series of relief. The various State Governments has also followed suit
in providing relief to the beleaguered Industry. The outcome of these
measures is to be seen in the current year.
It is now evident that a standalone sugar mill is no longer competitive
and need to have other products like Cogeneration, Industrial Alcohol
including Ethanol to make it a viable unit.
Subsidiary
During the year under review, Empee Power Co (India) Ltd (EPCIL) became
a wholly owned subsidiary of the company. EPCIL is currently
implementing a project for a Bagasse based Cogen Power Plant at the
factory site at Naidupet.
Directors
Lt.Gen.R.S.Nagra (Retd.), Director is retiring by rotation at the
ensuing Annual General Meeting and being eligible offers himself for
reappointment.
Mr.M.P.Mehrotra, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers himself for reappointment.
During the year under review, Mr.M.Ravindran and Mrs.A.K.Aruna resigned
from the Board. The Board places on record its appreciation of the
valuable services rendered by them during their tenure.
Ms.Nisha Purushothaman joined the Board on 9th August 2007 as a
Director under Section 260 of the Companies Act, 1056. In accordance
with the said Section she vacates the office at the AGM and stands for
election as a Director.
During the year under review, Mr. K Jayachandran joined the company as
the Executive Director. He has over 39 years of rich experience in
Sugar and related areas. He brings with him the latest technologies and
expertise in Sugar and is expected to implement the increase of Sugar
Expansion Project and the Cogen Project without any major hurdles. He
has served in many sugar companies with distinction.
He was subsequently appointed as the Director in the Board and
designated as the Joint Managing Director for a period of three years
effective from April 28, 2007. In accordance with the Section 260 of
the Companies Act 1956 he vacates the office at the Annual General
Meeting of the shareholders and stands for election as a Director and
Joint Managing Director.
Auditors
Mr. R. Rajagopalan, the Auditors of the Company will retire at the
conclusion of the ensuing Annual General Meeting and being eligible
offer themselves for reappointment. The company has received a
certificate from the Auditors to the effect that their reappointment,
if made would be in accordance with Section 224 (1B) of the Companies
Act, 1956. The Board recommends his re-appointment.
The Notes to the Accounts referred to in the Auditors Report are
self-explanatory and therefore do not call for any further explanation.
Employees
The Directors place on record their appreciation of the efforts and
valuable contributions put in by the employees at all levels of the
Company.
There is no employee falling within the provision of Section 217(2A) of
the Companies Act, 1956 read with companies (Particulars of Employees)
Rules 1975. Fixed Deposits
TheCompany has not accepted any fixed deposits from the public during
the year.
Conservation of Energy, Technology Absorption and Foreign Exchange
outgo
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed to this Report.
Corporate Governance Report
A Report in line with the requirement of clause 49 of the Listing
Agreement on the Corporate Governance practices followed by the Company
and the Certificate from the Statutory Auditors on Compliance of
mandatory requirements along with Management Discussion and Analysis,
are given as an annexure to this report.
Directors Responsibility Statement
Pursuant to the requirements under Section 217(2AA) of the Companies
Act, 1956 the Directors hereby state and confirm that:
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) The Directors have selected 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 as at 30th June 2007 and of the profit or loss of the
company for the year ended on that date;
c) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) The Directors have prepared the annual accounts on a going concern
basis.
Acknowledgement
The Directors wish to express their gratitude for the continuous
assistance and support extended by the Banks, Financial Institutions,
Cane Growers, Customers and Government authorities and also to the
shareholders for their forbearance and their faith in the management.
Further, the Directors also place on record their deep sense of
appreciation for the contributions made by employees at various levels
to the growth and success of the company.
Note : Figures, statistics, observations, inferences etc. stated/made
herein relating to national/global industry scenario are based on
reliable reports gathered from various sources such as news
articles/websites etc. The accuracy of which is not vouched by us.
ANNEXURE TO THE DIRECTORS REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988 and forming part of the
Directors report for the period ended 30th June 2007.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as per
the standard specification list prescribed by the Government of India
for the factory of its size.
(C) TECHNOLOGY ABSORPTION AND RESEARCH AND DEVELOPMENT
The Company has been carrying out research and development in the
following specific areas :
i) Selection of sugar cane seed materials and multipli cation in three
tier seed nursery programme,
ii) Innovative techniques and methods of fertilizer,
iii) Heat therapy to eradicate seed born diseases,
iv) Pest control measures to protect cane from diseases & soil testing
Laboratory,
v) Ratoon crop management helping increase yield and recovery,
vi) Biological control laboratory for sugarcane pest management.
With the above efforts a higher yield of disease free cane will be
available to the company, resulting in a higher return to the company
and the cane growers. The expenditure incurred in research and
development cannot be segregated because of its nature of expenses.
Such expenses are clubbed under the head of expenses "Cane development
expenses" .
Jun 30, 2006
Your Directors are pleased to present the Sixteenth Annual Report
together with the Audited Accounts for the financial year ended 30th
June 2006.
FINANCIAL RESULTS
Financial Financial
year ended year ended
30.6.2006 30.6.2005
(15 months)
(Rs.in Lakhs) (Rs.in Lakhs)
Sales Income 10627 9272
Profit before Interest,
Depreciation and tax 1501 1170
Interest and Depreciation 670 698
Profit before tax 831 472
Profit after tax 1031 510
The company has turned around and is making profit continuously since
2003-04. The Board records its appreciation for the team work of all
employees and staff in this context. Looking to the on-going efforts
and favourable conditions in the Sugar and Liquor industries, it is
felt that by next year, the entire accumulated loss will be wiped off.
DIVIDEND
In view of the accumulated losses, your directors have not recommended
any dividend for the financial year 2005-06.
OPERATIONS
(i) Sugar Division: Financial Financial
Year ended year ended
30.6.2006 30.6.2005
(15 months)
Quantity of cane crushed (Tonnes) 331063 216553
Recovery (%) 8.40 9.45
Quantity of Sugar
produced (Qtls) From Sugar cane 269110 187720
From Raw Sugar 241490 200960
TOTAL 510600 388680
(ii) Industrial Financial Financial
Alcohol Division: Year ended year ended
30.6.2006 30.6.2005
(15 months)
Quantity of RS produced (Ltrs) 5133785 8195946
Quantity of ENA
produced by
redistillation of the RS
stock (Ltrs) 987841 5643125
PERFORMANCE OF THE COMPANY
From a situation of unmanageable production surplus in year 2002-03
(20.1 million tons), sugar production in India moved to a state of
deficit for two consecutive seasons i.e. 2003-04 & 2004-05. Sugar
production registered a fall of almost 31% to 13.8 million tons in
2003-04 and then further fall of 7% to 12.8 million tons in season
2004-05, owing to acute drought conditions and consequent drop in sugar
cane output.
Season 2005-06 has seen a revival of fortunes with sugar production
picking upto 190 lakh Mt. Cane crushing in your company increased over
the previous season and the company crushed 3,31,063 Mt of sugarcane
and produced 2,69,110 quintals of sugar. In addition to this, your
company processed raw sugar under advanced license scheme and produced
2,41,490 quintals of sugar.
Realisations
Decline in production in the country in the last two consecutive
seasons led to correction in imbalance between demand and supply and to
a reasonable improvement in sugar prices. Your company capitalized
effectively on this improvement through enhanced operational scale,
product integration, and enhanced capacity utilization, ongoing cost
cutting, and optimization.
Cane dues
The company has paid the cane price in time. It has embarked on
measures to expand cane cultivation in new areas in the command area.
The company is consistently endeavoring to convert the other crops to
sugar cane by extending timely financial and other assistance,
educating the farming community, providing required seed and manures
including better varieties, fertilizers etc.
Distillery
During 2005-06, there was a decline in Industrial alcohol production.
This was due to the high cost of Molasses and also correspondingly
lower realisation from sale of Industrial alcohol. However in the
coming financial year, we have alreadymade firm arrange ments for
Molasses & Industrial alcohol production will improve.
The new plant-wash to ENA 30KL capacity-is almost ready for
operation. Being a high tech plant, it will help us producing better
quality of alcohol and will give much better yield per tonne of
molasses. Needless today, it will have a very positive impact on the
profitability of the company.
OPPORTUNITIES AND OUT LOOK
Indian Sugar Industry
After two years of consistent drop in production, sugar output of the
country has shown an increasing trend and production in year 2005-06
was 190 lakh Mt. With remunerative price of cane, growers in the entire
country are attracted towards cane cultivation and are extending area
under cane. Sugar production during the current year is expected to
increase over 20 % as compared to the year 2005-06.
Ethanol
Ethanol is an efficient, environment-friendly fuel whose use is being
encouraged world over for reasons of economy and
environment-friendliness. The government of India is bringing in
long-term policy to facilitate the blending of ethanol with petrol,
which will impart a long-term viability to the alcohol business and
ensure better realisations. Your company is planning to supply Ethanol
to the oil companies from the year 2007-08 onwards.
Co-generation of Power
The Central and State Governments are encouraging the generation of
power from non-conventional renewable energy sources. Electricity Act
2003 has made it mandatory for power suppliers to buy a certain
percentage of clean power generated from renewable energy sources.
Various state governments in the country have come forward to announce
their policy initiatives to encourage the cogeneration of power. This
trend will result in a long term sustainability of Indias sugar
industry.
Your company is steadily increasing cane crushing capacity and also is
in the process of establishing a Cogeneration unit to utilize the
bagasse produced from sugar mill as fuel along with other available
biomass.
PRESENT AND FUTURE
Command Area
The Govt. of A.P. has declared 12 revenue mandate of Gudur division in
Nellore district comprising of 396 villages as the reserved zone for
your company. Sugarcane cultivation is mainly in Nayudupet, Gudur,
Kota, Vakadu, Chittamuru, Ozili and Pellakuru mandate. About 2500
families cultivate sugarcane from these mandals. The size of the land
holdings large and the source of irrigation is mainly ground water
sourced through bore wells and filter points. Crops cultivated in these
areas are mainly paddy followed by commercial crops i.e. sugarcane and
Ground nut. For the past 10 years considerable area under cultivation
from different crops was converted to Aqua Culture. However now.
aquaculture is slowly vanishing due to immunity deficiency against
infections. Therefore, farmers are now switching over to cultivation
of agricultural crops. Due to power deficiency the farmers were not
able to irrigate paddy crop, which needs water 2-3 times as much as
sugar cane. Hence most of the farming communities prefer to switch over
to sugarcane crop.
Pricing Policy:
The policies of the Govt. of India in respect of cane price are also
remunerative to the farmers. Sugarcane is the only crop, which is
totally protected in respect of statutory minimum price fixed by the
Govt. of India. The State Govt. also encourage sugarcane cultivation
by passing on the purchase tax @Rs.60/MT to the growers.
Irrigation development:
i) Major Irrigation Project-Vakadu Barrage :
The Swarnamukhi river is traversing through the command area. The Govt.
of A.P has taken up a major irrigation-barrage cum bridge project on
this river near Vakadu located in companys reserved zone with
balancing reservoir. The up coming project is likely to be completed
shortly. Once the project is completed there will not be any dearth of
ground water in the command area. There is ample scope to develop
further area under sugarcane crop by extensive field work.
ii) Telugu Ganga Canal:
The Govt. of A.P. has taken up the development of irrigation channels
through Telugu Ganga Canal-which will help the farmers of Gudur,
Venkatagiri, Pellakuru, Naidupeta, Ozili and Balayapalli Mandals, in
bringing additional areas under assured irrigation. This will also help
to re-charge the ground water in these areas in a big way.
iii) Bank loan for Bore wells & PVC Pipes:
To improve the irrigation facilities, we are discussing with banks for
obtaining loan facilities at reduced interest for digging borewells and
providing pipelines.
Structure of cane development department:
The Company has a strong Cane Department headed by a Deputy General
Manger (Cane) who is a Post Graduate in Agriculture and having 25 years
experience in sugar industry supported by Chief Cane Manager & Cane
Managers.
The entire command area is divided into 6 divisions. Each division is
being looked after by a qualified Sr. Agrl. Officer, who looks after
2000 acres under his supervision. Each division is again divided into
six/seven circles. Each circle is looked after by a qualified and
well-experienced Field Assistant, who takes care of 300 to 350 acres.
Cane development starts right from selection of soil, quality seed,
appropriate packages of practices, integrated pest, and disease
management, judicious application of organic and inorganic fertilizer
management and close monitoring/supervision of the individual field.
Cane development programmes:
An intensive Cane Development Programme is implemented in an extensive
manner in the reserved area.
A) Soil Enrichment-Through Green manure & Bio-Fertiliser supply:
The majority of the soils in area are light soils. Your Company is
encouraging the growers to raise green manure crops and in the
application of bio-fertiliser, which is rich in nutrients, in their
fields before sugarcane planting. Your company is manufacturing and
supplying bio-fertiliser to growers at a subsidized rate.
B) Seed Development-Nursery Programme:
The success of the sugar factory mainly depends on selection of
sugarcane seed material. Your company is identifying and procuring
suitable varieties with high vigor and sugar content in different
maturity groups from sugarcane research stations for its multiplication
in three tier seed nursery programme.
C) Input Supplies :
Application of fertilizer on time increases the cane yield and
recovery. Your Company is providing recommended quantity of fertilizers
on loan basis for timely application to the cane crop. The company also
educates the farmers about the different methods of fertilizer
application like plough furrow method, pocketing and foliar spray etc.,
Your company is also providing weedicide, pesticides, agricultural
implements on subsidized prices.
D) Organizing Demonstration Plots:
Your company is conducting field demonstrations like trash mulching,
paired row planting, drip irrigation, green manuring, ratoon
management, different methods of fertilizer applications etc., in the
growers fields to bring these recent cultivation techniques to all
growers for immediate adoption in their respective fields. Your company
is also providing financial help to growers for conducting
demonstrations.
E) Imparting Technical Knowledge:
Your company is conducting Karshaka Sadassus (Growers meetings with
eminent scientists) to clear the doubts in sugar cane cultivation and
to know about new technologies to improve yield and quality. Your
company releases pamphlets regularly to the cane growing community on
sugar cane cultivation, pest and disease management.
Your company is conducting agricultural tours for progressive cane
growers to different cane growing areas with in and outside the state
for studying the different techniques implemented.
F) Infrastructure Development:
Your company is taking utmost care in developing internal roads from
field point to the public road for easy transportation of cane to
factory.
G) Harvest and Transport Management:
In sugarcane cultivation harvesting of cane is a major activity. Your
company is arranging experienced and well trained harvesting labour to
the cane growers at reasonable rates mobilising them from different
places to motivate farmers for cane cultivation.
Your company always works to maintain a cordial relationship with the
growers and follow the philosophy that "LET US CULTIVATE THE GROWER,
THE GROWER IN TURN CULTIVATES QUALITY CANE FOR US"
Distillery operation
With the increased sugar cane crushing, sufficient molasses will be
available for spirit production. Demand for spirit is consistently
firming up coincident to the growth of the IMFL industry. Spirit prices
are also firming up. Your Company has undertaken expansion of the
spirit manufacturing facility from 30 KL to 60 KL per day. (License for
capacity expansion already in place). The expanded facility will be
based on the latest technology of spirit manufacturing.
Your Directors expect consistent growth in turnover and profitability.
Keeping in view the upcoming business opportunities your company will
consciously expand its volume of operation and also diversify in allied
activities and the company will consciously plough back to fund for the
expansion activities.
By 2006-07, your company will have a well diversified business model
with revenue streams for Sugar, Alcohol, Ethanol and Power.
DIRECTORS
Mrs.A.K.Aruna, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers herself for reappointment.
Mr.M.K.Mohan, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers himself for reappointment.
Mr.M.P.Mehrotra was appointed as an additional director of the company,
by the board of directors on 23.12.2005. He retires at the conclusion
of this Annual General Meeting. Company has received a notice under
section 257 of the Companies Act 1956, from a member proposing his
candidature for the office of the Director. Accordingly a resolution is
proposed in the notice for the Annual General Meeting for the
appointment of Mr.M.P.Mehrotra as Director of the Company, liable to
retire by rotation.
AUDITORS AND AUDITORS REPORT
Mr. R. Rajagopalan, the Auditors of the Company will retire at the
conclusion of the ensuing Annual General Meeting and being eligible
offer themselves for reappointment. The company has received a
certificate from the Auditors to the effect that their reappointment,
if made would be in accordance with Section 224 (1B) of the Companies
Act, 1956. The Board recommends their re-appointment.
The Notes to the Accounts referred to in the Auditors Report are
self-explanatory and therefore do not call for any further explanation.
EMPLOYEES
Your Directors place on record their appreciation of the efforts and
valuable contributions put in by the employees at all levels of the
Company.
There is no employee falling within the provision of Section 217(2A) of
the Companies Act, 1956 read with companies (Particulars of Employees)
Rules 1975.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits from the public,
during the year.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
OUTGO
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed to this Report.
CORPORATE GOVERNANCE REPORT
A Report in line with the requirement of clause 49 of the Listing
Agreement on the Corporate Governance practices followed by the Company
and the Certificate from the Statutory Auditors on Compliance of
mandatory requirements along with Management Discussion and Analysis,
are given as an annexure to this report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 your Directors hereby state and confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) the Directors have selected 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 as at 30th June 2006 and of the profit or loss of the
company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
d) the Directors have prepared the annual accounts on a `going concern
basis.
ACKNOWLEDGEMENT
Your Directors wish to express their gratitude for the continuous
assistance and support extended by the Banks, Financial Institutions,
Cane Growers, Customers and Government authorities and also to the
shareholders for their forbearance and their faith in the management.
Further, your Directors also place on record their deep sense of
appreciation for the contributions made by employees at various levels
to the growth and success of the company.
For and on behalf of the Board of Directors
Place : Chennai Sd/- M.P. PURUSHOTHAMAN
Date : 25.10.2006 Chairman & Managing Director
"Note: Figures, statistics, observations, inferences etc. stated/made
herein relating to national/global industry scenario are based on
reliable reports gathered from various sources such as news articles/
websites etc. The accuracy of which is not vouched by us"
ANNEXURE TO THE DIRECTORS REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988 and forming part of the
Directors report for the period ended 30th June 2006.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as per
the standard specification list prescribed by the Government of India
for the factory of its size.
FORMA
2005-2006 2004-2005
(12 months) (15 months)
(A) POWER AND FUEL CONSUMPTION
1. Electricity
a. Purchased units(Kwh) 659898 965481
Total Amount (Rs.) 3595118 4693719
Rate/Unit (Rs.) 5.44 4.86
b. Own generation
(i) Through Diesel Generator
Units (Kwh) 40928 49803
Units/(liter) of Diesel Oil 2.29 2.54
Cost/Unit (Rs.) 14.36 10.50
(ii) Through steam turbine
(generated out of our own
bagasse Consumption) units (Kwh) 9765934 9765960
2. Coal 600.00 1118.00
Cost/Ton (Rs.) 2200.00 2040.35
3. Furnace Oil Nil Nil
4. Others/Internal generation
a) Fire wood (MTs) 483.500 7003
Rate per Mt(Rs.) 1174.00 991.16
b) Husk (MTs) 788 15876
Rate per Mt (Rs.) 1285 931.50
(B) CONSUMPTION PER QUINTAL OF SUGAR
Sugar Produced (Qtl) 510600 388680
Electricity (Kwh/Qtl) 1.29 2.48
Coal (M.T/Qtl) 0.001 0.003
Furnace Oil (K.LVQtl) Nil Nil
Fire wood (M.T/Qtl) 0.001 0.018
(C) TECHNOLOGY ABSORPTION AND RESEARCH AND DEVELOPMENT
Your Company has been carrying out research and development in the
following specific areas :
i) Selection of sugar cane seed materials and multiplication in three
tier seed nursery programme.
ii) Innovative techniques and methods of fertilizer.
ii) Heat therapy to eradicate seed born diseases.
iii) Pest control measures to protect cane from diseases & Soil testing
Laboratory.
iv) Ratoon crop management helping increase yield and recovery.
v) Biological control laboratory for sugarcane pest management.
With the above efforts a higher yield of disease free cane will be
available to the company, resulting in a higher return to the company
and the cane growers.
The expenditure incurred in research and development cannot be
segregated because of its nature of expenses. Such expenses are clubbed
under the head of expenses "Cane development expenses".
(0) FOREIGN EXCHANGE EARNINGS Rs.2,000.00 Lakhs FOREIGN EXCHANGE OUTGO
Rs.2,684.97 Lakhs
For and on behalf of the Board
Place : Chennai. Sd/- M.P. PURUSHOTHAMAN
Date : 25.10.2006 Chairman & Managing Director
Jun 30, 2005
The Directors are pleased to present the Fifteenth Annual Report
together with the Audited Accounts for the financial year ended 30th
June 2005.
FINANCIAL RESULTS
Financial Financial
year ended year ended
30.6.2005 31.3.2004
(15 months) (12 months)
(Rs.`000)
Sales 881024 643871
Profit before Interest and Depreciation 117661 46946
Interest and other financial charges 44544 23965
Profit before depreciation 73117 22981
Depreciation 25908 20392
Net Profit/(Loss) 51001 2589
Performance of your company has turned around. The management of your
company has been putting its' effort all round to improve turn over and
profitability, by continuously improving utilization, efficiency
parameters and cost reduction and optimization, besides quality control
and improvement.
Change of the financial year
Keeping in view the Sugar crushing season of the Company, the financial
year has been changed from "April to March" to "July to June". With the
change, the financial year will cover the entire crushing season and
will reflect the true financial result of the total crushing operation.
As a result the financial year under review that began on 1.4.2004
ended on 30.6-2005 and not on 31.3.2005. Financial year under review is
for a period of 15 months. The previous year under comparison is from
1.4.2003 to 31.3.2004 consisting of 12 months.
DIVIDEND
In view of the accumulated losses, the directors have not recommended
declaration of dividend for the year.
OPERATIONS
(i) Sugar Division : Season Season
2004-2005 2003-2004
Quantity of cane crushed (Tonnes) 216553 267997.96
Recovery (%) 9.45 9.28
Quantity of Sugar produced (Qtls)
From Sugar cane 204751 248180
From Raw Sugar 200960 nil
TOTAL 405711 248180
(ii) Industrial Alcohol Division:
Period Year
2004-2005 2003-2004
Quantity of RS
produced (Ltrs) 8195946 5977364
Quantity of ENA produced
by redistillation
of the RS stock (Ltrs) 5643125 4738753
PERFORMANCE OF THE COMPANY
The company's performance needs to be appraised against the backdrop of
the industry's performance during 2004-05. From a situation of
unmanageable production surpluses, the Indian sugar Industry has moved
to a state of deficit for the second year in a row. Sugar production
touched a record 20.1 million tons in 2002-03 registered a fall of
almost 31% to 13.8 million tons in 2003-04 and then further fall of 7%
to 12.8 mn tons in the season 2004-05, owing to acute draught
conditions and consequent drop in sugar cane output.
There was a decline in India's sugar output by around 36% in two
consecutive years in the same line your company's cane crushing dropped
by 36% to 216553 tons in 2004-05 compared to 341022 tons in 2002-03.
This was due to the severe draught condition in the command area. The
loss in production was however compensated by taking up raw sugar
processing for the first time.
Recovery : The heartening point is that there has been a consistent
improvement in the throughput. The recovery in the season 2004-05
improved to 9.45% from 9.28% in 2003-04 and 9.14% in 2002-03.
Realisations : Sugar prices revived during the year under review from
abnormally low levels in the previous financial year as the country's
production recorded a decline during the last two consecutive seasons.
This decline corrected the imbalance between demand and supply,
strengthening realizations. Your company capitalized effectively on
this improvement through enhanced operational scale, product
integration, and enhanced capacity utilization, ongoing cost cutting,
and optimization, improvement in efficiency etc. in all areas of
operation.
Cane dues
The company has paid off all old cane dues. It has embarked measures
now plans to expand cane cultivation in new areas in the command area.
The company is consistently endeavoring to convert the other crops to
sugar cane by extending timely financial and other assistance,
educating farming community, providing required seeds, manures
including better varieties, fertilizers etc. for cultivation.
Raw sugar processing : Your Company has imported 44000 MT of raw sugar
under advance license scheme and processed 20096 Mt during the year
under review. Upto the date of this report company processed 42000 Mt
of Raw sugar. Your company achieved yield of as high as 95% from Raw
sugar processed.
Distillery
The performance of the distillery improved substantially during year
under review. There was a significant improvement in the yield, overall
production and quality. The unit operated at a higher capacity and
lower operational cost. The products of your company were well accepted
by the market. There was a unprecedented hike in the price of molasses
owning to fall in sugar cane crushing. India for the first time, had to
import molasses in large quantities to cover the sort fall, at much
higher prices. The cost impact, however was setoff by the increased
selling price of spirit. The IMFL industry is consistently growing, due
to which demand and price for Spirit is firming up. The distillery
continued to perform satisfactorily.
Keeping in view the increased demand for spirit owing to growth in the
IMFL industry, your Company has undertaken expansion of the spirit
manufacturing facility from 30 KL to 60 KL per day.(License for
capacity expansion already in place). The expanded facility will be
based on the latest technology of spirit manufacturing. The expanded
capacity will be commissioned during the current financial year.
ONE TIME SETTLEMENT (OTS)
The Company fully settled the term loan dues of Industrial Development
Bank of India (IDBI) under OTS, during the year under review. In the
similar lines Industrial Finance Corporation of India has also granted
an OTS. Your Company has accepted the OTS and has paid Rs.100 lacs in
the month July 2005. The balance will be settled within 6 months
thereafter.
OPPORTUNITIES, THREAT AND OUT LOOK
Indian Sugar Industry
Indian sugar Industry has moved to a state of deficit for the second
year in a row due to fall in sugar production from 20.1 million tons in
2002-03 to 13.8 million tons in 2003-04 and the 12.8 million tons in
04-05 . The sugar season of 2005-06 is expected to stage a strong
recovery of more than 36 % over 2004-05, in production to about 17.4 mn
tons. With expected consumption of 19.5 mn tons in 2005-06, production
will fall short of the consumption in the next season. This would mean
that the phenomenon of inventory feeding India's consumption will
continue for the third consecutive year in season 05-06. This analysis
shows that the ratio of closing inventory to next year's consumption is
expected to fall further in season 05-06. The decline in the Inventory
position will further correct the imbalance in the demand and supply
and thereby strengthen the realization. A lower production in the
preceding two seasons helped the industry liquidate its surplus
inventory, as a result of which sugar prices are expected to firm up in
2005-06.
Raw Sugar Imports
With the Government relaxing Import of Raw sugar under Advance licence
scheme with the obligation to re-export white sugar within 36 months.
India has imported more than 2.00 mn tons raw sugar during 2004-05.
Continued demand growths in 2005-06 as well as an export of 2.5 mn
tonnes of hitherto imported raw sugar are expected to off set the
import of raw sugar under advance licence scheme.
Ethanol & Co-Generation
Ethanol is an efficient, environment-friendly fuel whose use is being
encouraged world over for reasons of economy and
environment-friendliness. The Government of India is contemplating a
long-term policy to facilitate the blending of ethanol with petrol,
which will impart a long-term viability to the business of distillation
and ensure better molasses realisations. Besides, the Central and State
Governments are encouraging the generation of power from
non-conventional renewable energy sources. Electricity Act 2003 has
made it mandatory for power suppliers to buy a certain percentage of
clean power generated from renewable energy sources. Whilst this has
been implemented in various countries, various state governments in the
country have come forward to announce their policy initiatives to
encourage the cogeneration of power .This trend will result in a long
term sustainability of the co-generation business in India's sugar
industry.
Favourable government policy
The government is likely to accept the Tuteja Committee Report on
partial decontrol of the industry by dispensing off with the monthly
release system for free sale sugar. Decontrol of sugar releases will
help the sugar mills to plan and time their sales as per the market
conditions and thus realize better prices.
Several financial support schemes are also extended by the Govt. of
India.for "the revival of sugar industry. The import of raw sugar
under advance licence scheme with export obligation within 36 months
has helped the sugar industry to utilize their idle capacity
utilization and increase profitability. Sugar industry being a agro
base as well a essential commodity, it is expected that Government at
all levels will extend their supporting hand to the industry.
Global Sugar deficit
The global sugar market has experienced production deficit for the
seasons 03-04 and 04-05. The global dynamics will revolve around
Brazil, India and China as together they account for 35% of global
production. Brazil's sugar production is closely linked to its ethanol
policy, China is expected to become the largest importer by 2008 and
India's production will barely meet its consumption. Hence, global
sugar prices is expected to remain firm.
Around 50% of the sugar cane cultivated in Brazil is used for direct
production of alcohol. Brazil's alcohol stocks has drastically come
down. Hence there is a strong possibility of cane diversion for
ethanol. With global oil prices remaining firm, significant amount of
sugarcane diversion may happen for ethanol production. This would in
turn have major impact on sugar production in Brazil which is the
biggest sugar exporter in the world.
The global stock/consumption ratio has declined from a high of 47% in
season 01-02 to 41.6% in season 04-05. Global sugar prices have
significantly appreciated.
PRESENT AND FUTURE
Command Area
The Govt. of A.P. has declared 12 revenue mandate of Gudur division in
Nellore district comprising of 396 villages as the reserved zone for
your company. Sugarcane cultivation is majorly in Nayudupet, Gudur,
Kota, Vakadu, Chittamuru, Ozili and Pellakuru mandals. About 2500
families cultivate sugarcane from these mandals. Size of the land
holdings are/large and the sources Of irrigation is mainly ground water
sourced through bore wells and fitter points. Crops cultivated in these
areas are majorly paddy followed by commercial crops i.e. sugarcane and
Ground nut. For the past 10 years considerable area under cultivation
from different crops was converted to Aqua Culture. Aquaculture is
slowly vanishing due to immunity deficiency against infections to the
Aquaculture. Therefore, the farmers are now switching over to
cultivation of agricultural crops. Due to power deficiency the farmers
could not able to irrigate paddy crop/which needs water 2-3 times more
than the sugar cane. Hence most of the farming communities prefer to
switch over to sugarcane crop.
Our survey reveals that the company's command area is having about
50,000 acres under cultivation, which has got the potential source of
irrigation covered with 10,500 borewells and fitter points. One
borewell can cover about minimum 5 acres of cane. Even if we take 50%
of the area for sugarcane crop in rotation with paddy crop, there is a
bright scope to develop 20,000 to 25,000 acres under sugarcane crop to
produce 7 - 7.5 Lakh Tons of sugarcane.
Pricing Policy:
The policies of the Govt. of India in respect of cane price are also
remunerative to the farmers. Sugarcane is the only crop, which is
totally protected in respect of statutory minimum price fixed by the
Govt. of India. The State Govt. also encourage sugarcane cultivation by
passing on the purchase tax @ Rs.60/MT to the growers.
Irrigation development:
i) Major Irrigation Project:
The Swarnamukhi river is traversing through the command area. The Govt.
of A.P has taken up a major irrigation-barrage cum bridge project oh
this river near Vakadu located in company's reserved zone with
balancing reservoir. The up coming project is likely to be completed
within a period of 18 months. Once the project is completed there will
not be any dearth for ground water in the command area. There is ample
scope to develop further area under sugarcane crop by extensive field
work.
ii) Canal Development - Telugu Ganga Canal :
The Govt. of A.P. has taken up the development of irrigation channels
through Telugu Ganga Canal - which will help the farmers of Gudur,
Venkatagiri, Pellakuru, Naidupeta, Ozili and Balayapalli Mandals, in
bringing additional areas under assured irrigation. This will also help
to re-charge the ground water in these areas in a big way.
iii) Subsidizing - Bore wells & PVC Pipes :
To improve the irrigation sources, company encourage the farming
community for drilling of deep bore wells by providing subsidy for the
deep bore wells drilled. For effective utilization of available water,
company is providing PVC pipes on subsidized prices, This will help to.
increase cane area and yield considerably.
Structure of cane development department :
The Company has a strong Cane Development Department headed by the
Chief. Cane Manger who is a Post Graduate in Agriculture and having 25
years experience in sugar industry supported by Cane Manger & Dy Cane
Manager.
The entire command area made into 6 divisions. Each division is being
looked after by a qualified Sr. Agrl. Officer, who looks after 2000
acres under his supervision. Each division again divided into six/seven
circles. Each circle is looked after by a qualified and
well-experienced Field Assistant, who takes care of 300 to 350 acres.
Entire cane development starts right from selection of soil, quality
seed, appropriate packages of practices, integrated pest, and disease
management, judicious application of organic and inorganic fertilizer
management and close monitoring/supervision of the individual field.
Cane development programmes:
An intensive Cane Development Programme is implemented in an extensive
manner in the reserved area.
A) Soil Enrichment - Through Green manure & Bio-Fertilise supply :
The majority of the soils in area are light soils. Company is
encouraging the growers to raise green manure crops and application of
bio-fertiliser, which is rich in nutrients in their fields before
sugarcane planting. Your company is manufacturing and supplying
bio-fertiliser to growers at subsidized rate.
B) Seed Development - Nursery Programme :
The success of the sugar factory mainly depends on selection of
sugarcane seed material. Your company is identifying and procuring
suitable varieties to the areas with high vigor and rich in sugar in
different maturity groups from sugarcane research stations for its
multiplication in three tier seed nursery programme.
C) Input Supplies :
Application of fertilizer on time increase the cane yield and recovery.
Your Company is provides recommended quantity of fertilizers on loan
basis for timely application to the cane crop. The company also
educates the farmers about the different methods of fertilizer
application like plough furrow method, pocketing and foliar spray etc.,
The company is also providing weedicide, pesticides, agricultural
implements on subsidized prices.
D) Organizing Demonstration Plots :
The company is conducting field demonstrations like trash mulching,
paired row planting, drip irrigation, green manuring, ratoon
management, different methods of fertilizer applications etc., in the
growers fields to bring these recent cultivation techniques to all
growers for immediate adoption in their respective fields. Your company
is also providing financial help to growers for conducting
demonstrations.
E) Imparting Technical Knowledge :
The company is conducting Karshaka Sadassus (Growers meetings with
eminent scientists) to clear the doubts in sugar cane cultivation and
to know about new technologies to improve yield and quality. Your
company releases pamphlets regularly to cane growing community on sugar
cane cultivation, pest and disease management to take necessary steps
in cultivation of sugar cane in time and to get higher yields in turn
to make the crop profitable.
The company is conducting agricultural tours for progressive cane
growers to different cane growing areas with in the state and outside
state for studying the different techniques implemented and to adopt
the same for better results.
F) Infrastructure Development:
The company is taking utmost care in developing internal roads from
field point to road for easy transportation of cane to factory.
G) Harvest and Transport Management:
In sugarcane cultivation harvesting of cane is a major activity. Your
company is arranging experienced and well trained harvesting labour to
the cane growers at cheaper rates mobilising them from different places
to motivate farmers for cane cultivation.
The company always work to maintain cordial relationship with the
growers and practice and follow the philosophy that" LET US CULTIVATE
THE GROWER, THE GROWER IN TURN CULTIVATE QUALITY CANE FOR US"
Distillery operation
With the increased sugar cane crushing, sufficient molasses will be
available for spirit production. Demand for spirit is consistently
firming up coincident to the growth of the IMFL industry. Spirit prices
are also firming up. Your Company has undertaken expansion of the
spiritl manufacturing facility from 30 KL to 60 KL per day. (License
for capacity expansion already in place). The expanded facility will
be based on the latest technology of spirit manufacturing. The expanded
capacity will be commissioned during the current financial year.
The Directors expect consistent growth in turnover and profitability.
Keeping in view the upcoming business opportunities your company will
consciously expand its volume of operation and also diversify in allied
activities, and the profit and the company will consciously plough back
to fund for the expansion activities.
The company will by 2006-07 have a well diversified business model with
revenue streams for Sugar, Alcohol, Ethanol and Power.
DIRECTORS
The tenure of appointment of Mr.M.P.Purushothaman as Chairman &
Managing Director expires on 24.12.2005. Keeping in view his
experience and expertise and the increased activities of the company, a
resolution is proposed in the notice for the Annual General Meeting for
the reappointment of Mr.M.P.Purushothaman as Chairman and Managing
Director, on terms detailed in the resolution. The proposed tenure of
reappointment is for 5 years w.e.f . 25.12.2005.
Mr. M. Ravindran, Director is retiring by rotation at the ensuing
Annual General Meeting and being eligible offers himself for
reappointment.
Lt.General R.S. Nagra(Retd.) was appointed as an additional director
of the company, by the board of directors on 04.03,2005. He retires at
the conclusion of this Annual General Meeting. Company has received a
notice under section 257 of the Companies Act 1956, from a member
proposing his candidature for the office of the Director. Accordingly a
resolution is proposed in the notice for the Annual General Meeting for
the appointment of Lt.General R.S. Nagra(Retd.) as Director of the
Company, liable to retire by rotation,
AUDITORS
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES
The Directors place on record their appreciation of the efforts and
valuable contributions put in by the employees at all levels of the
Company.
There is no employee falling within the provision of Section 217(2A) of
the Companies Act, 1956 read with companies (Particulars of Employees)
Rules 1975.
PUBLIC DEPOSIT
The Company has not accepted any Deposit from the Public during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
CORPORATE GOVERNANCE
The importance of Corporate Governance has always been recognized by
your Company and is manifest in the Company's vision. As a proactive
step your Company has been following the Corporate Governance practices
like striking out reasonable balance in the Composition of Board of
Directors, setting up Audit Committee and other Business Committees,
adequate disclosures and business to be deliberated by the Board etc,
even before the code became mandatorily applicable.
A Report in line with the requirement of clause 49 of the Listing
Agreement on the Corporate Governance practices followed by the Company
and the Auditor's Certificate on Compliance of mandatory requirements
along with Management Discussion and Analysis, are given as an annexure
to this report.
DIRECTORS'RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217(2AA) of the Companies
Act, 1956 your Directors hereby state and confirm that:
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) They have selected 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) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
The Directors are grateful to the valuable assistance and consistent
support extended by the Banks, Financial Institutions, Cane Growers,
Customers and Government authorities. We express our thanks to the
shareholders for their forbearance and. their faith in the management.
For and on behalf of the Board
Place : Chennai. M.P. PURUSHOTHAMAN
Date : 27.10.2005 Chairman & Managing Director
Note: Figures, statistics, observations, inferences etc. stated/made
herein relating to national/global industry scenario are based on
reliable reports gathered from various sources such as news
articles/websites etc. The accuracy of which is not vouched by us"
ANNEXURE TO THE DIRECTOR'S REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988 and forming part of the
Director' report for the period ended 30th June 2005.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as per
the standard specification list prescribed by the Government of India
for the factory of its size.
(B) TECHNOLOGY ABSORPTION AND RESEARCH AND DEVELOPMENT
The Company has been carrying out research and development in the
following specific areas :
i) Selection of sugar cane seed materials and multiplication in three
tier seed nursery programme.
ii) Innovative techniques and methods of fertilizer.
ii) Heat therapy to eradicate seed born diseases.
iii) Pest control measures to protect cane from diseases &soil testing
Laboratory.
iv) Ratoon crop management helping increase yield and recovery.
v) Biological control laboratory for sugarcane pest management.
With the above efforts a higher yield of disease free cane will be
available to the company, resulting in a higher return to the company
and the cane growers.
The expenditure incurred in research and development cannot be
segregated because of iys natute of expenses. Such expenses are clubbed
under the head of expenses "Cane development expenses".
(D) FOREIGN EXCHANGE EARNINGS Nil
FOREIGN EXCHANGE OUTGO US$ 5797500*
* The company imported 21178 Tons of Raw Sugar at a total cost of
2522.46 lakhs in INR equalentto US $ 5797500.
For and on behalf of the Board
Place : Chennai. M.P. PURUSHOTHAMAN
Date : 27.10.2005 Chairman & Managing Director
Mar 31, 2004
The Directors present the Fourteenth Annual Report together with the
Audited Accounts for the financial year ended 31st March 2004.
FINANCIAL RESULTS
Financial Financial
year ended year ended
31.3.2004 31.3.2004
(Rs.`000) (Rs.`000)
Sales 643871 358611
Profit before Interest and Depreciation 46946 148743*
Interest 23965 37890
Profit before Depreciation 22961 100853
Depreciation 20392 19840
Net Profit/(Loss) 2589 91013
* Include Extra ordinary income of Rs. 1626.52 lakhs (Insurance Claims
Rs. 915.38 lakhs and Profit on sale of shares Rs. 711.14 lakhs)
DIVIDEND
In view of the accumulated losses, the directors have not recommended
declaration of dividend for the year.
OPERATIONS
(i) Sugar Division: Season Season
2003-2004 2002-2003
Quantity of
cane crushed (Tonnes) 267997.96 341022.55
Recovery (%) 9.28 9.14
Quantity of Sugar
produced (Qtls) 248180 311208
(ii) Industrial Alcohol Division:
Year Year
2003-2004 2002-2003
Quantity of RS produced (Ltrs) 5977364 4379516
Quantity of ENA produced
by redistillation of the
RS stock (Ltrs) 4738753 3595908
PERFORMANCE OF THE COMPANY
During the season 2003-04 the total cane crushed decreased to 2.68
lakhs mts from 3.41 lakhs mts. for the previous season. Average
recovery of sugar was 9.28% and average selling price (net of Excise
duty) was about Rs. 1204.75 per quintal for the season 2003-04.
The company has been Accredited with ISO-900112000 during the Period
under review.
DIRECTORS
Mrs. A. K. Aruna, Director is retiring by rotation at the ensuing
Annual General Meeting and being eligible offers herself for
reappointment.
AUDITORS
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES
The Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees falling within the provision of Section 217(2A)
of the Companies Act, 1956 read with companies (Particulars of
Employees) Rules 1975.
PUBLIC DEPOSIT
The Company has not accepted any Deposit from the Public during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
CORPORATE GOVERNANCE
The importance of Corporate Governance has always been recognized by
your Company and is manifest in the Company's vision. As a proactive
step your Company has been following the Corporate Governance practices
like striking out reasonable balance in the Composition of Board of
Directors, setting up Audit Committee and other Business Committees,
adequate disclosures and business to be deliberated by the Board etc,
even before the code became mandatorily applicable.
A Report in line with the requirement of clause 49 of the Listing
Agreement on the Corporate Governance practices followed by the Company
and the Auditor's Certificate on Compliance of mandatory requirements
along with Management Discussion and Analysis, are given as an annexure
to this report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 217 (2AA) of the Companies
Act, 1956 your Directors hereby state and confirm that:
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed;
b) They have selected 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) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing, and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
The Directors are grateful to the valuable assistance and consistent
support extended by the Banks, Financial Institutions, Cane Growers,
Customers and Government authorities. We express our thanks to the
shareholders for their forbearance and their faith in the management.
For and on behalf of the Board
Place : Chennai. M.P. PURUSHOTHAMAN
Date : 29.11.2004 Chairman & Managing Director
ANNEXURE TO THE DIRECTOR'S REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988.
(A) TECHNOLOGY ABSORPTION : NIL
(B) FOREIGN EXCHANGE EARNINGS AND OUTGO : NIL
Mar 31, 2003
The Directors present the Thirteenth Annual Report together with the
Audited Accounts for the financial year ended 31st March 2003.
FINANCIAL RESULTS
Financial Financial
year ended year ended
31.3.2003 31.3.2002
(Rs.`000) (Rs.`000)
Sales 358611 363778
Profit before Interest
and Depreciation 138742 69253
Interest 37890 50687
Operating Profit 100852 18565
Depreciation 19840 19586
Net Profit/(Loss) 81012 (1021)
DIVIDEND
In view of the accumulated losses, the directors are not recommended
for declaration of dividend for the year.
OPERATIONS
(i) Sugar Division:
Season Season
2002-2003 2001-2002
Quantity of cane
crushed (Tonnes) 341022.55 219610.28
Recovery (%) 9.14 8.38
Quantity of Sugar
produced (Tonnes) 311208 185395
(ii) Industrial Alcohol Division:
Year Year
2002-2003 2001-2002
Quantity of RS
produced (Ltrs) 4379516 2898907
Quantity of ENA produced
by redistillation of the
RS stock (Ltrs) 3595908 2596528
PERFORMANCE OF THE COMPANY
During the year under review the sales turnover of the company appears
to be less by Rs.51.67 lakhs compare to the previous year due to low
price for sugar prevailed in the market. With the receipt of insurance
claim of Rs.915.38 lakhs and the profit on sale of share amounting to
Rs.711.14 lakhs, the income of the company resulted in a profit of
Rs.811.00 lakhs against the loss of Rs. 10.21 lakhs of the previous
year. The total cane crushed during the season 2002-03 increased to
3.41 lakhs mts against the 2.19 lakhs mts. for the previous season.
Average recovery of sugar was 9.14% and average selling price was about
Rs.1170 per quintal for the season 2002-03.
DIRECTORS
Mr.M.Ravindran, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers himself for reappointment.
Mr.M.K.Mohan, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers himself for reappointment.
Mr.Shaji Purushothaman, Joint Managing Director cum Vice Chairman and
Ms.Nisha Purushothaman, Director resigned from the office during the
period. Your Directors place on record their appreciation of the
valuable services rendered by the said Directors during the tenure of
their office.
AUDITORS
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES
The Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees falling within the provision of Section 217(2A)
of the Companies Act, 1956 read with companies (Particulars of
Employees) Rules 1975.
PUBLIC DEPOSIT
The Company has not accepted any Deposit from the Public during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the said Listing Agreement, (a) Management
Discussion and Analysis, (b) the Report of the Directors on the
practices prevalent on Corporate Governance in the Company and (c) the
Auditors Certificate on compliance of mandatory requirements of
Corporate Governance are given in the annexure to this report.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that:
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same.
b) They have selected 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) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
The Directors are grateful to the valuable assistance and consistent
support extended by the Banks, Financial Institutions, Cane Growers,
Customers and Government authorities. We express our thanks to the
shareholders for their forbearance and their faith in the management.
For and on behalf of the Board
Place : Chennai M. P. PURUSHOTHAMAN
Date : 27.11.2003 Chairman & Managing Director
ANNEXURE TO THE DIRECTOR'S REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as per
the standard specification list prescribed by the Government of India
for the factory of its size.
(C) TECHNOLOGY ABSORPTION Nil
(D) FOREIGN EXCHANGE EARNINGS & OUTGO Nil
For and on behalf of the Board
Place : Chennai M. P. PURUSHOTHAMAN
Date : 27.11.2003 Chairman & Managing Director
Mar 31, 2002
Your Directors present the Twelfth Annual Report together with the
Audited Accounts for the financial year ended 31st March 2002.
FINANCIAL RESULTS
Financial Financial
year ended year ended
31.3.2002 31.3.2001
(Rs.`000) (Rs.`000)
Sales 363778 383027
Profit before Interest
and Depreciation 69253 73061
Interest 50687 60561
Operating Profit 18565 12500
Depreciation 19586 18158
Net Profit / (Loss) (1021) (5658)
DIVIDEND
In view of the accumulated losses, the directors are not recommending
for declaration of dividend for the year.
OPERATIONS
(i) Sugar Division :
Season Season
2001-2002 2000-2001
Quantity of cane
crushed (Tonnes) 219610.28 195456
Recovery (%) 8.38 9.31
Quantity of Sugar
produced (Tonnes) 185395 18168.6
(ii) Industrial Alcohol Division :
Year Year
2001 - 2002 2000 - 2001
Quantity of RS
produced (Ltrs) 2898907 5406129
Quantity of ENA produced by
redistillation of the
RS stock (Ltrs) 2596528 4078415
PERFORMANCE OF THE COMPANY
In spite of severe calamity due to cyclone and flood during October
2001, the mill could crush 2.20 lakhs tonnes of cane during the season.
Due to severe draught like all other mills in the region average
recovery came down to 8.38% for the season. The Company had to face
difficult period after cyclone and flood. Within a short period, the
mill could start crushing. Shortage of Molasses continued for the
current year also, which effected production of Alcohol to a major
extend. However availability of cane and molasses for the sugar season
2002-2003 is very bright. The Company is following with Insurance
Company for compensation towards loss and the claim is expected to be
settled shortly.
DIRECTORS
Ms. Nisha Purushothaman, Director is retiring by rotation at the
ensuing Annual General Meeting and being eligible offers herself for
reappointment.
Mr. R. Chandramohan, Director of the Company retires at the ensuing
Annual General Meeting and has expressed his intention not to opt for
reappointment.
Mr. Shaji Purushothaman is proposed to be appointed as Joint Managing
Director & Vice Chairman of the Company w.e.f. 01.01.2003.
AUDITORS
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES
Your Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees falling within the provision of Section 217(2A)
of the Companies Act, 1956 read with companies (Particulars of
Employees) Rules 1975.
PUBLIC DEPOSIT
Your Company has not accepted any Deposit from the Public during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information regarding conservation of Energy, Technology absorption
and Foreign Exchange earnings and outgo in accordance with the
provisions of Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of particulars in the Report of Directors)
Rules 1988 is annexed.
CORPORATE GOVERNANCE
The code on Corporate Governance introduced by the Securities and
Exchange Board of India (SEBI) is required to be implemented by your
Company in terms of the Listing Agreements with the Stock Exchanges.
Pursuant to Clause 49 of the said Listing Agreement, (a) Management
Discussion and Analysis, (b) the Report of the Directors on the
practices prevalent on Corporate Governance in the Company and (c) the
Auditors Certificate on compliance of mandatory requirements of
Corporate Governance are given in the annexure to this report.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that :
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed and that no material departures have been
made from the same.
b) They have selected 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) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d) They have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT
Your Directors are grateful to the valuable assistance arid consistent
support extended by the Banks, Financial Institutions, Cane Growers
Customers and Government authorities. We express our thanks to the
shareholders for their forbearance and their faith in the management.
ANNEXURE TO THE DIRECTORS REPORT
information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Director) Rules, 1988.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as
per the standard specification list prescribed by the Government of
India for the factory of its size.
FORM A
2001-2002 2000-2001
(A) POWER AND FUEL CONSUMPTION
1. Electricity
a. Purchased units(Kwh) 812189 818643
Total Amount (Rs.) 4295599 4160587
Rate/Unit (Rs.) 5.16 5.08
b. Own generation
(i) Through Diesel Generator
Units (Kwh) 37340 63561
Units/(litre) of Diesel Oil 2.34 2.48
Cost / Unit (Rs.) 7.43 6.59
(ii) Through steam turbine
(generated out of our own
begasse Consumption)
units (Kwh) 4492124 6503925
2. Coal Nil Nil
3. Furnace Oil Nil Nil
4. Others/Internal generation
a) Fire wood (M.Ts) 384.190 192.700
Rate per Mt(Rs.) 800 850
b) Husk (M.Ts) 6938.389 11438.623
Rate per Mt(Rs.) 800 710
(B) CONSUMPTION PER QUINTAL OF SUGAR
Sugar Produced (Qtl) 173490 188219
Electricity (Kwh/Qtl) 4.68 4.35
Coal (M.T/Qtl) Nil Nil
Furnace Oil (K.L/Qtl) Nil Nil
Fire wood (M.T/Qtl) 0.002 0.001
(C) TECHNOLOGY ABSORPTION Nil
(D) FOREIGN EXCHANGE
EARNINGS & OUTGO Nil
For and on behalf of the Board
Place : Chennai M. P. PURUSHOTHAMAN
Date : 30.11.2002 Chairman & Managing Director
For and oh behalf of the Board
Place : Chennai M. P. PURUSHOTHAMAN
Date : 30.11.2002 Chairman & Managing Director
Mar 31, 2001
Your Directors present the Eleventh Annual Report together with the
Audited Accounts for the financial year ended 31st March 2001.
FINANCIAL RESULTS
31.3.2001 31.3.2000
(Rs.'000) (Rs.'000)
Sales 383027 389313
Profit before Interest and Depreciation 73061 81023
Interest 60561 48118
Operating Profit 12500 32905
Depreciation 18158 18143
Net Profit/(Loss) (5658) 14762
DIVIDEND
In view of the accumulated losses, the directors are not recommending
for declaration of dividend for the year.
OPERATIONS
(i) Sugar Division :
Season Season
2000-2001 1999-2000
Quantity of cane curshed (Tonnes) 195456 223815
Recovery (%) 9.31 9.02
Quantity of Sugar produced (Tonnes) 18168.6 20471
(ii) Industrial Alcohol Division :
Quantity of RS produced (Ltrs) 5406129 6592584
Quantity of ENA produced by
redistillation of the RS stock (Ltrs) 4078415 5371890
PERFORMANCE OF THE COMPANY
The quantity of cane crushed has came down by about 12%. However the
average recovery has improved from 9.02% from 9.31%. The reason for the
low crushing of below 2 lakhs tonnes of cane is diversion to other
crops by growers due to remunerative prices obtained for those crops
compared to sugar cane. It is expected that the crushing quantity will
improve in the year 2001-2002. As regards the Industrial Alcohol unit,
we have suffered set back in the alcohol production. The quantity of
production has come down by 18% due to non availability of molasses.
The export of molasses resulted in its scarcity locally concomitant
with price increase.
The interest on loans has increased by about 25%. The Company has paid
interest on the loan availed from the group company, Empee Distilleries
Ltd to the extent of Rs. 3,13,12,583/-. This was at the request of the
Company to convert its borrowing including interest into equity at a
discounted rate of Rs. 4 per share.
DEMATERIALISATION OF SHARES
Pursuant to the Notification issued by the Securities & Exchange Board
of India, the equity shares of your Company have been activated for
trading in electronic form for all investors effective February 26,
2001 in both NSDL and CDSL. As per SEBI directions, trading in equity
shares of your Company is in dematerialised form. Shareholders are free
to hold shares in demat form with a 'Depository Participant' or can
keep shares in physical form. Dematerialised shares can also be
rematerialised at any time.
DIRECTORS
Mrs.A.K.Aruna, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers herself for reappointment.
Mr.M. Ravindran, Director is retiring by rotation at the ensuing Annual
General Meeting and being eligible offers himself for reappointment.
Mr. R.Chandramohan and Mr.M.K.Mohan who were appointed as additional
Directors of the Company w.e.f. 29.1.2001 retires at the conclusion of
the ensuing Annual General Meeting. Notices have been received from
members proposing the candidature of Mr. R. Chandramohan and
Mr.M.K.Mohan as Directors of the Company. Accordingly in the Notice for
the Annual General Meeting resolutions are proposed for their
appointment as Directors of the Company.
AUDITORS
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES
Your Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees falling within the provision of Section 217(2A)
of the Companies Act 1956 read with Companies (Particulars of
Employees) Rules 1975.
PUBLIC DEPOSIT
Your Company has not accepted any Deposit from the public during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
DISCOUNT ISSUE
The discount issue of shares to Empee Distilleries Ltd by conversion of
its loan has been duly completed with the allotment of 2,50,00,000
shares on 19.2.2001 to Empee Distilleries Ltd.
SUBSIDIARY
Consequent on the allotment of 2,50,00,000 shares to Empee Distilleries
Ltd on conversion of its loan, the Company has become a subsidiary of
Empee Distilleries Limited.
CORPORATE GOVERNANCE
Securities and Exchange Board of India has recently notified the code
of Corporate Governance applicable to all listed Companies. As per the
Schedule of implementation specified by the Stock Exchanges, your
Company has to comply with the Code's requirements within the financial
year 2001-2002 but not later than 31.3.2002. While your company is
already complying with many of the Code's requirements, it would be our
endeavour to achieve total compliance of the Code well ahead of the
stipulated time frame.
RESPONSIBILITY STATEMENT
The Directors confirm that :
(a) In the preparation of the annual accounts, the applicable
accounting standards have been followed and that no material departures
have been made from the same.
(b) They have selected 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) They have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) They have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENT :
Your Directors are grateful to the valuable assistance and consistent
support extended by the Banks, Financial Institutions, Cane Growers,
Customers and Government authorities. We express our thanks to the
shareholders for their forbearance and their faith in the management.
For and on behalf of the Board
Place: Chennai M.P. PURUSHOTHAMAN
Date : 29.8.2001 Chairman & Managing Director
Mar 31, 2000
The Directors present the Nineth Annual Report together with the
Audited Accounts for the financial year ended 31st March 2000.
FINANCIAL RESULTS :
Financial Financial
year ended year ended
31.3.2000 31.3.99
(Rs. `000)
Sales 389313 439944
Profit before Interest
and Depreciation 81023 57436
Interest 48118 48619
Operating Profit 32905 8817
Depreciation 18143 --
Net Profit 14762 8817
DIVIDEND :
In view of the accumulated losses, the directors are not recommending
for declaration of dividend for the year.
OPERATIONS :
(i) Sugar Division :
Season Season
1999-2000 1998-99
Quantity of cane
crushed (Tonnes) 223815 300553
Recovery (%) 9.02 8.29
Quantity of Sugar
produced (Tonnes) 20471 24888
(ii) Industrial Alcohol Division :
Year Year
1999-2000 1999-99
Quantity of RS produced (Ltrs) 6592584 56,99,238
Quantity of ENA produced by
redistillation of the
RS stock (Ltrs) 5371890 45,50,636
PERFORMANCE OF THE COMPANY :
During the year under review the sales turnover of the company appears
to be lesser than last year by about Rs. 5 crores. But if we take into
account the closing stock increase of over Rs. 6 crores the total
revenue earned is slightly higher than last year. The stock pilling at
the end of the year is because of low monthly sugar release orders
issued by the Government. The total cane crushed during the season
1999-2000 came down from 3 lakh tonnes to 2.24 lakh tonnes. This is
because of lesser availability of cone resulting from switching over to
other crops by the cane growers in the factory zone. The growers who
switched over due to better price obtained for paddy and ground nut are
expected to return to sugar cane plantation in view of the fall in
price of the said alternate crops. For the season 2001-2002 crushing
of not less than 31 lakh tonnes is estimated. Despite the low quantity
of crushing, the quantity of sugar producted was more than last year.
It was due to the achievement of very good recovery. Average recovery
of sugar touched all time high of 9.02% during 1999-2000 season. It
will be consolidated in the next season. This achievement however
could not be converted into monetary gain due to very low selling price
prevailing throughout the year. Average selling price was about just
Rs. 1250 per quintal. Currently the price has however improved to Rs.
1400 per quintal which is fairly a reasonable price.
Alcohol sales turnover also appears to be lesser. But quantity wise
you may observe that ENA is produced about 8.2 lakh litres more than
last year. Because of all in price in ENA, the sales turnover is less.
You may appreciate that the entire RS produced is converted into value
added product of ENA. The profit margin in Alcohol sales is maintained
because the price of raw material, molasses has come down.
FUTURE OUTLOOK :
After a sustained representation by the domestic sugar industry, the
Government has taken some far reaching steps to help domestic sugar
producers. Import of sugar is curtailed due to increase of import duty
on sugar and by making imported sugar subject to levy system. Failure
of sugar crop in major sugar producing countries also made the
international price high thereby reducing import into the country.
Reduction of levy quota for domestic factories from 40% to 30% is a
welcome step taken by the Government. India is now trying to export
sugar by giving various concessions. This will help sizable export of
sugar from India. As a whole the sugar industry is expected to do well
in the years to come.
EROSION OF MORE THAN 50% OF PEAK NET WORTH :
The erosion of net worth by more than 50% of the peak net worth is not
yet corrected. As mentioned above, the company is taking necessary
efforts to improve the performance and make the net worth positive.
ONE TIME SETTLEMENT (OTS) :
While the Company was paying regularly to ICICI w.e.f. May 1999 a sum
of Rs.20 lakhs per month as per the interim order passed by the Mumbai
High Court in the suit filed by ICICI, the Company represented to ICICI
to freeze the liability of the Company and to allow the Company to
settle the amount in monthly instalments. Appreciating the Company's
genuine difficulties, excluding the amount of Rs. 1.65 Crores paid as
per the Mumbai High Court's order, ICICI fixed the liability at Rs.5.80
crores and agreed for repayment thereof in one instalments of Rs.30
lakhs and thereafter in 22 instalments of Rs.25 lakhs each. The
Company since paid the first instalment of Rs.30 lakhs and thereafter
is paying Rs.25 lakhs per month w.e.f. February 2000 regularly.
In line with our settlement with ICICI we submitted a proposal to IFCI
to settle their dues. IFCI freezed their claim at Rs. 7.20 crores,
made it payable in 41 instalments of Rs. 17.50 lakhs each and one last
instalment of Rs.2.50 lakhs. With effect from July 2000 the Company is
paying the instalments.
Negotiation is going in with IDBI for settlement of their dues provided
they freeze their claim in line with the other two Institutions, as
their claim is considered exhorbitant and disputed by the Company. In
the meantime the Company has paid Rs.55 lakhs since April 2000 to IDBI.
ISSUE OF SHARES BY CONVERSION OF OUTSTANDING DUES TO EMPEE DISTILLERIES
LTD. :
The Company needs further borrowings for the business. With the
existing poor debt - equity ratio no fresh borrowing is possible. The
prospective lending banks put a condition to improve the ratio. The
Chief Promoter Company, Empee Distilleries Ltd. is aggreeable for
conversion of their dues into equity at a discounted rate. Necessary
resolution is proposed in the AGM Notice.
AUDIT REPORT :
Regarding the Auditors' remarks in their report, the Directors wish to
clarify as follows :
Annexure A
18. The networth of the company as determined from the audited Balance
Sheet of the company is not fully eroded. The company has not provided
for certain items enumerated in Annexure B of audit report after due
consideration of them. Under the circumstances, the company is not
falling within the purview of Sec.3(1)(0) of SICA. However as more
than 50% of the networth has already been eroded, the company is
falling within the purview of Sec.23 of SICA.
Annexure B
1. (i) The other two term lending institutions namely ICICI and IFCI
have agreed for one time settlements waiving substantial interest dues.
The company is making monthly payments to them as stipulated by them.
Similar OTS proposal has been submitted to IDBI also and it is under
their consideration. It is hoped that similar waiver of interest will
obtained from IDBI also. Hence no interest provision is made for IDBI
term loan.
ii) Pending resolution of the whole matter, the company is of the view
that the dabt of Rs.28.40 lacs is recoverable and hence no provision is
made therefor.
iv) Purchase tax payable to the grower (33.33% of whole claim) is
provided for. The portion that is payable to the AP State government
(66.66%) is not provided for based on the representation made to the
State government for waiver thereof and the possibility of getting the
said waiver.
v) The company is of the view that the interest due is recoverable.
Therefore no provision is made.
vi) The supplier's advance of Rs.5.54 lakhs is recoverable. Therefore
provision not made.
2. Please refer to Note 3 of Notes on Accounts.
3. Letters seeking confirmations were sent to the concerned parties.
Whatever replies received were given to the auditors.
4. Please refer Note No.19 which is self explanatory.
5. Please refer to Note No.23 which is self explanatory.
DIRECTORS :
Dr. M.Shashidran, the Director of the Company retires at the ensuing
Annual General Meeting and has expressed his intention not to opt for
reappointment.
Ms.Nisha Purushothaman, Director is retiring by rotation at the ensuing
AGM and being eligible offers herself for reappointment.
Mr. M.P. Purushothaman's term as the Managing Director is expiring
shortly. He is proposed to be re-appointed for one more term of 5
years. A resolution for the purpose is included in the Notice of AGM.
AUDITORS :
Mr. R. Rajagopalan, the Auditor of the Company retires at the ensuing
Annual General Meeting and is eligible for reappointment.
EMPLOYEES :
The Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees falling within the provision of Section 217(2A)
of the Companies Act 1956 read with Companies (Particulars of
Employees) Rules 1975.
PUBLIC DEPOSIT :
The Company has not accepted from the Public any Deposit during the
year under review.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE :
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
Mar 31, 1999
DIRECTORS REPORT
To the members,
The Directors present the Nineth Annual Report together with the
Audited Accounts for the financial year ended 31st March 1999.
FINANCIAL RESULTS :
Financial Financial
year ended period ended
31.3.99 31.3.98
(12 months) (18 months)
(Rs. '000)
Sales 439944 526937
Profit before Interest 57436 88914
and Depreciation
Interest 48619 71149
Operating Profit 8817 17765
Depreciation -- --
Net Profit 8817 17765
Due to the accumulated losses no depreciation has been provided for the
year.
You will notice that during the year under review, the volume of
business has increased substantially. Comparatively, IAP unit has
performed well with a sale turnover of Rs.12.60 crores against Rs.5.17
crores in the previous year (18 months period). Sugar division has
also done better than the previous year. Over 3 lakh tonnes of cane
was crushed against just 2 lakh tonnes in the previous year. In spite
of such performance the profitability could not be improved because of
various reasons. The selling price of sugar has come down from Rs.1400
to Rs.1270 per quintal during the year and ENA price has also fallen.
In the current year due care has been taken to save costs and to
increase yield.
DIVIDEND :
Due to the accumulated losses, the directors are not recommending for
declaration of dividend for the year.
OPERATIONS :
(i) Sugar Division :
Season Season
1998-99 1997-98
Quantity of cane
crushed (Tonnes) 300553 193595
Recovery (%) 8.29 8.68
Quantity of Sugar
produced (Tonnes) 24888 16646
(ii) Industrial Alcohol Division :
Year Year
1998-99 1996-98
(12 months) (18 months)
Quantity of R.S.
produced (Ltrs) 56,99,238 58,18,450
Quantity of ENA produced
by redistillation of the
RS stock (Ltrs) 45,50,636 7,54,285
FUTURE OUTLOOK :
To improve the Recovery ratio, steps are being taken to crush more cane
during the peak period. We are also concentrating on development of
more cane area. The sugar industry is more affected by the policies of
Government allowing free import of sugar. The industry has taken up
with the Government to crub import to help getting reasonable price for
sugar. To curtail cost of power & fuel the company has offered to a
group company to supply the company's bagasse in exchange of steam and
power which will reduce the operating cost of sugar mill and IAP
considerably.
Erosion of More than 50% of Peak net Worth :
The erosion of net worth by more than 50% of the peak net worth is not
yet corrected. As mentioned above, the company is taking necessary
efforts to improve the performance and make the net worth positive.
ONE TIME SETTLEMENT (OTS) :
We have submitted a revised proposal to the Institutions for
reschedulement of loans with waiver of interest with effect from
1.4.96. In the meantime ICICI has filed a suit against the Company in
Mumbai High Court. Pursuant to the interim order passed by the Court,
a sum of Rs.20 lakhs per month is being paid to ICICI w.e.f. May 1999.
However during the discussions, Institutions have advised us to bring
in substantial amount as lumpsum and agreed to waive all other charges.
The company is taking steps to mobilise the funds through various
sources including from group companies.
AUDIT REPORT :
Regarding the Auditors' remarks in their report, the Directors wish to
clarify as follows :
Item No. in Annexure & Clarification for the respective item :
Annexure A
1. The fixed assets register with current year's details has already
been updated.
6. The stock of finished goods is valued on the average realisation
thereof in the two months subsequent to the close of the account year,
whereas six month's average is taken by the auditors. The Board is of
the view that in a fluctuating market conditions the price that
prevailed proximate to the time of availability of the stock is the
true value thereof. Therefore there is no excess valuation of stock.
Regarding the stocks of spares, stores and packing materials, in view
of the innumerable items of stock on hand and the frequency of
purchase/outgo and pending completion of conputerisation of stock
records, the system adopted by the company for valuation of stock is
more practical and reasonable. It is also a recognised method of
valuation of stock. The difference between the valuation under this
method and other methods is not found feasible to ascertain.
15. For a part of the financial year the internal audit department was
functioning.
20. The networth of the company as determined from the audited Balance
Sheet of the company is not fully eroded. The company has not provided
for certain items enumerated in Annexure B of audit report after due
consideration of them. Under the circumstances, the company is not
falling within the purview of Sec.3(1)(0) of SICA. However as more
than 50% of the networth has already been eroded, the company is
falling within the purview of Sec. 23 of SICA.
Annexure B
1. (i) The company had agreed to an OTS with financial institutions
with ICICI in the lead. The company is also discussing with ICICI on
the ways and means of restructuring the whole proposal and the
institutions are also keen to help the company to get out of its
financial difficulties. In this background, the board is of the view
that the company will pay the principal only with waiver of interest
accrued thereon. Hence, no provision has been made for this liability.
(ii) Pending resolution of the whole matter, the company is of the view
that the debt of Rs.28.40 lacs is recoverable and hence no provision is
made therefor.
(iii) In view of inadequacy of profits and there being no proposal for
payment of dividend no provision for depreciation has been made.
(iv) Sugar Industry has represented to the Government of Andhra Pradesh
for waiver of purchase tax levy and on this basis the company has not
provided for purchase tax.
(v) The company is of the view that the interest due is recoverable.
Therefore no provision is made.
(vi) The supplier's advance of Rs.5.54 lakhs is recoverable. Therefore
provision is not made.
2 & 7. Please refer to our reply to remarks under Note No.6 of Annexure
A.
3. Please refer Note 4 of Notes on Accounts.
4. Letters seeking confirmations were sent to the concerned parties.
Whatever replies received were given to the auditors.
5. Please refer Note No.23 which is self explanatory.
6. Please refer to Note No.27 which is self explanatory.
DIRECTORS :
The directors deeply regret the demise of Dr. B. Ramachandra Rao
(Nominee Director of ICICI) during the period. Mr. T.M. Gopalaswamy,
Director resigned from the office during the period. The Directors
place on record their appreciation of the valuable services rendered by
the said Directors during the tenure of their office.
Mrs. A.K. Aruna and Mr. M. Ravindran, Directors are retiring by
rotation at the ensuing AGM and being eligible they offer themselves
for reappointment.
AUDITORS :
M/s. S.V. Jayaraman & Co., Chartered Accountants, `Gurukripa', No. 6,
77th Street, 16th Avenue, Ashok Nagar, Chennai-600083 the Auditors of
the Company retire at the ensuing Annual General Meeting and have
expressed their intention not to opt for reappointment and in their
place Mr. R. Rajagopalan, Chartered Accountant, 27, Sydoji Street, 2nd
Floor, Triplicane, Chennai - 5 is proposed to be appointed as auditor
of the company to hold office till the conclusion of the next Annual
General Meeting.
EMPLOYEES :
The Directors place on record their appreciation of the efforts put in
by the employees at all levels of the Company.
There are no employees tailing within the provision of Section 217(2A)
of the Companies Act, 1956 read with Companies (Particulars of
Employees) Rules, 1975.
PUBLIC DEPOSIT :
The Company has not accepted from the public any deposit during the
year under review except two deemed deposits accepted from close
circles for which exemption from the provisions of Companies Act 1956
has been applied for.
ENERGY, TECHNICAL AND FOREIGN EXCHANGE :
Information regarding conservation of Energy, Technology absorption and
Foreign Exchange earnings and outgo in accordance with the provisions
of Section 217(1)(e) of the Companies Act, 1956 read with Companies
(Disclosure of particulars in the Report of Directors) Rules 1988 is
annexed.
ANNEXURE TO THE DIRECTOR'S REPORT
Information pursuant to the Companies (Disclosure of Particulars in the
Report of Board of Directors) Rules, 1988.
A. CONSERVATION OF ENERGY
The Company has installed necessary energy conserving machinery as per
the standard specification list prescribed by the Government of India
for the factory of its size.
B. TECHNOLOGY ABSORPTION Nil Nil
C. FOREIGN EXCHANGE EARNINGS
& OUTGO Nil Nil
Mar 31, 1998
The Directors hereby present the Eighth Annual Report together with the
Audited Accounts for the financial year ended 31st March 1998.
FINANCIAL RESULTS :
The financial year of the Company starting 1.10.96, has been extended
by six months and as such the results are for the eighteen months
period ended 31.3.98.
Financial Financial
period ended year ended
31.3.98 30.9.96
(18 months) (12 months)
(Rs. '000)
Sales 526937 365330
Profit before Interest and Depreciation 88914 188373
Interest 71149 131577
Operating Profit 17765 56796
Depreciation - 19554
Net Profit 17765 37242
Due to accumulated losses in earlier years no depreciation has been
provided for the year.
DIVIDEND :
In view of the accumulated losses, the directors are not recommending
for declaration of dividend for the year.
OPERATIONS :
(i) Sugar Division :
During the period under review (upto the date of this Report), there
were two sugar crushing seasons and the salient features of the same
are given below :
Season Season
1996-97 1997-98
Quantity of Cane crushed (Tonnes) 201736 193595
Recovery (%) 8.82 8.68
Quantity of Sugar produced (Tonnes) 17713 16646
Due to reduced availability of cane, the overall quantity of cane crushed was lower. However, based on the cane plantations already
achieved, the availability of cane for the ensuing season is expected
to be higher.
(ii) Industrial Alcohol Division :
During the period under review, the performance of rectified spirit
(RS) plant has improved. With the lifting of prohibition partially by
Government of Andhra Pradesh, (the ban on arrack however continuing)
and with the commissioning of Extra Neutral Alcohol (ENA) plant with a
capacity of 20000 litres per day the off-take of our products has
increased considerably. In the coming years, the performance of both
RS & ENA plants is expected to improve further.
FUTURE OUTLOOK :
The various cane development measures undertaken by the Company in the
recent past have started yielding results and the cane availability for
the ensuing season is expected to be of the order of 3 lakh tonnes and
with the improved plant maintenance, the recovery of 9% is expected to
be achieved.
With the recent imposition of 5% duty and 7% CVD on sugar imports,
subsequently increased to 15% & 7% respectively, the domestic selling
price of sugar is expected to be at remunerative levels.
The above factors combined with the satisfactory performance of the
Industrial Alcohol division are expected to help the Company improve
its performance compared to the previous years.
EROSION OF MORE THAN 50% OF PEAK NET WORTH :
The accumulated losses of the Company have resulted in an erosion of
more than 50% of the peak net worth of the Company. As mentioned above, the Company is taking necessary efforts to improve the performance. A detailed report on this is furnished elsewhere in this Annual Report.
ONE TIME SETTLEMENT (OTS) :
The Financial Institutions - ICICI, IDBI & IFCI - had sanctioned an OTS
proposal for settlement of their Term loan dues by 31.3.97. The Company paid Rs. 2.75 Crores but could not make further payments as the Company's plans to raise money through financial market sources/other
sources did not materialise. The Company has approached a few other
Institutions/Companies for loans to be utilised for full settlement of
OTS and in the meantime has requested the Institutions to grant time
for payment of OTS amount as also for waiver of interest on OTS dues.
The Company is hopeful of raising adequate funds and complete the OTS
transaction as expeditiously as possible.
Audit Report :
Regarding the Auditors' remarks in their report, the Directors wish to
clarify as follows :
Item No. in Annexures & Clarification for the respective item :
Annexure A
1. The fixed assets register with current year's details has already
been updated.
20. The networth of the Company as determined from Balance Sheet of the
Company is not fully eroded. The Company has not provided for certain
items enumerated in Annexure B of audit report after due consideration
of them. Under the circumstances, the Company is not falling within
the purview of Sec. 3(1)(o) of SICA. However as more than 50% of the
networth has already been eroded, the Company is falling within the
purview of Sec. 23 of SICA and accordingly the matter will be placed
before shareholders in the AGM and with BIFR.
Annexure B
1. The Company had agreed to an OTS with financial institutions with
ICICI in the lead. The company is also discussing with ICICI on the
ways and means of restructuring the whole proposal and the institutions
are also keen to help the company to get out of its financial
difficulties. In this background, the company will settle OTS and will
only pay the principal with waiver of interest accrued thereon. Hence,
no provision has been made for this liability.
2. The amount of Rs. 52.42 lacs due by the supplier to the company is
against escalation on structures supplied by him in earlier years and
adjusted now.
3. Please refer Note 6 of Notes on Accounts.
4. Pending resolution of the whole matter, the company is of the view
the debit of Rs. 29.22 lacs is recoverable and hence no provision is
made therefor.
5&7. Sugar Industry has represented to the Govt. of Andhra Pradesh for
waiver of purchase tax levy and on this basis the Company has not
provided for purchase tax.
6. In view of inadequacy of profits and there being no proposal for
payment of dividend no provision for depreciation has been made.
8. Please refer Note 18 which is self explanatory.
9. As and when Gratuity is paid, the same will be accounted.
PUBLIC DEPOSIT :
The Company has not accepted from the public any deposit during the
year under review :
DIRECTORS :
Two Directors viz., Dr. M. Shashidharan and Ms. Nisha Purushothaman are
retiring at the ensuing Annual General Meeting and being eligible they
offer themselves for re-election.
AUDITORS :
M/s. S.V. Jayaraman & Co., Chartered Accountants, the Auditors of the
Company retire at the ensuing Annual General Meeting and are eligible
for reappointment.
EMPLOYEES :
There are no employees falling within the provision of Section 217(2A)
of the Companies Act, 1956 read with Companies (Particulars of
Employees Rules) 1975.
The Directors place on record their appreciation of the sincere and
dedicated service of all the officers and Staff.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE :
Information in accordance with the provisions of Section 217(1)(e) of
the Companies Act, 1956 read with Companies (Disclosure of particulars
in the Report of Directors) Rules 1988 regarding conservation of
Energy, Technology absorption and Foreign Exchange earnings and outgo,
is given in the annexure to this Report.
B. TECHNOLOGY ABSORPTION Nil
C. FOREIGN EXCHANGE EARNINGS AND OUTGO Nil
Sep 30, 1996
Your Directors present the Seventh Annual Report together with the Audited Accounts for the Financial Year ended on 30th September 1996.
OPERATIONS:
(i) SUGAR PLANT:
During the 1995-96 Crushing Season, the entire country had surplus Cane and accordingly our Mill also crushed 4,31,218 MTs of cane. Since the cane available was higher than expected, we had to extend crushing operation till August 1996 which has resulted in a low recovery of 7.01%. The recovery during the months of June-July reduced to 4% However taking that as an experience, we had eliminated Cane for the months beyond May and restricted availability of Cane till the middle of May only. By doing so, though we crush reduced quantity, we anticipate higher recovery during the period of December-May in the forthcoming Season. Due to glut in the Sugar market, the price of Sugar was not allowed to increase beyond Rs.1250.00 per quintal. The Mill was holding huge stock during the period and had to face liquidity problem for payment of Cane dues. Due to accumulated losses the Directors regret their inability to declare any Dividend.
(ii) INDUSTRIAL ALCOHOL PLANT:
Owing to the Prohibition Policy prevailing in the State of Andhra Pradesh, Alcohol could not be sold for potable purpose in the State of Andhra Pradesh. However, there was heavy demand till end of March 1995 from the State of Kerala and we were able to realise considerable price for our Alcohol by export.
FUTURE OUTLOOK:
Based on the past experience, we had limited our Cane for the forthcoming season to around 2.5 lakhs MTs, so as to complete the
crushing before middle of May to get higher recovery. Shortage of Cane throughout the Nation is projected during the next two years. We have taken steps to get the required quantum of Cane for the next two seasons. With higher recovery and increase in sale price, marginal profit is expected out of the Sugar Mill. Further there is a proposal to lift prohibition in the State of Andhra Pradesh. We are also putting up an extra Neutral Column for manufacturing Extra Neutral Alcohol. We are hopeful of realising higher price for the Extra Neutral Spirit from the IMFL Units in the States of Andhra Pradesh and Kerala. The Company holds huge stock of Alcohol and Molasses and the possibility of making sizeable profit out of this stock is imminent
The Company is taking all efforts to meet the commitments of the One
Time Settlement offered by the Financial Institutions. The Company was able to make payment of Rs. 2.75 Crores to the institutions and has sought extension of time for making further payments. In the meantime, sizeable amount is being organised to meet the commitment.
With the reduced interest burden and increase in profit margin the
Company is hopeful of reducing the accumulated loss to a greater extent during the next season.
DIRECTORS:
Two Directors, viz. Smt. A.K Aruna and Mr. M. Ravindran are retiring at the ensuing Annual General Meeting and, being eligible, offer themselves for re-election.
AUDITORS:
M/s. S.V. Jayaraman & Co., Chartered Accountants, the Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment
EMPLOYEES:
Your Directors place on record their appreciation of the sincere and
dedicated service of all the Officers and Staff.
There are no employees falling within the provision of S.217 (2A) of the Companies Act 1956 read with Companies (Particulars of Employees Rules 1975).
PUBLIC DEPOSIT:
Your Company has not accepted from the Public any Deposit during the year under review.
ENERGY, TECHNICAL AND FOREIGN EXCHANGE:
Information in accordance with the provisions of Section 217 (1) (1E) of the Companies Act 1956 read with Companies (Disclosure of particulars in the Report of Directors) Rules 1988 regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo, is given in the annexure to this Report.
Sep 30, 1995
The Directors present the Sixth Annul Report together with the Audited Accounts for the Financial Year ended on 30th September 1995.
FINANCIAL RESULTS:
The financial results of the Company for the Financial Year ended 30.9.95, with corresponding figures of previous year, are summarised below:
Financial Financial
Year Year
1994-95 1993-94
(12 Months) (18 Months)
Rs. in Lakhs.
Sales 2992.10 3337.74
Profit/Loss before
Interest & Depreciation 395.28 1638.25
Interest 1223.71 1313.40
Operating Loss (828.43) 324.85
Depreciation 187.14 251.26
Net Profit/Loss (1015.57) 73.59
OPERATIONS:
(i) SUGAR FACTORY:
The 1994-95 Crushing Season commenced on 14.12.94 and continued upto 15.7.95. During the season about 3,90,000 Tonnes of sugarcane was crushed and 31,034.70 Tonnes of Sugar was produced. The overall recovery was 8.01%.
(ii) INDUSTRIAL ALCOHOL FACTORY:
Commercial production of Industrial Alcohol started on 14.12.94. During the year under review, 18,57,235 litres of Alcohol was produced. Owing to the prohibition policy introduced by the State Govt. of Andhra Pradesh the alcohol could not be sold for potable purpose in the State of Andhra Pradesh.
The Company was able to crush the targetted quantity of 3.90 Lakhs Tonnes of Cane but was not able to achieve the aimed recovery. Low recovery of 8.01% was the reason for the loss incurred by the Company during the season. The Company was not able to reach the projected recovery of over 9% due to the following reasons:
1) Cyclone during November 1994 which affected the cane extensively.
2) unseasonal rain during the months of January and February 1995 which affected cane cutting. Rate of crushing came down drastically.
3) Non-availability of skilled labour during the peak season.
4) Though we commenced our Industrial Alcohol Plant during December '94, the spirit manufactured could not be sold due to AP Government's prohibition Policy introduced during January '95.
5) Since import of Sugar was permitted, sale price of sugar came down to as low as Rs.1,050.00 per bag.
6) With effect from January 1995, AP Government has increased Purchase Tax on Cane from Rs.22.00 to Rs.90.00 per tonne.
FUTURE OUTLOOK:
Immediately after the season was over we made a thorough study of the Mill. We have appointed Messrs J.P. Mukherjee associates Pvt. Ltd.. an internationally reputed Sugar Mill consultants, to study the working of the mill and for its improvements. We have started crushing as planned and are confident of crushing over 4.00 lakh tonnes of Cane with a
recovery of over 9.00%.
Further, in view of the difficulties as stated above, we have approached the Financial Institutions for waiver of interest on Term Loans to the maximum extent possible and are making alternative arrangements to adjust the Term Loan component to reduce the interest burden. With lesser interest burden and improved recovery, we are hopeful of giving a better performance during the current year.
ADDENDUM TO AUDITORS REPORT:
Regarding the Note No. (xx) of the Auditors Report mentioning the application of SICA, BIFR has replied that our Company has not come under the purview of the SICA, since we have not completed 5 years of commercial production, for our reference made to them last year when
50% of our net worth was eroded. Since we have not completed 5 years of commercial production, in the current year also we do not come under the purview of SICA. However we have sought confirmation from BIFR.
DIRECTORS:
Two Directors, viz., Mr. M. Sreenivasulu Reddy and Mr. T.M.Goplaswamy, are retiring at the ensuing Annual General Meeting and being eligible they offer for re-election.
AUDITORS:
Mr. N.S. Subramanyam, Chartered Accountant, the Auditor of the Company, is retiring at the ensuing Annual General Meeting and he has not opted for reappointment and in his place M/s. S.V. Jayaraman & Co., Chartered Accountants, are proposed to be appointed as the Auditor of the Company, for holding the office for the period from the conclusion of this Annual General Meeting (AGM) till the conclusion of the next AGM.
EMPLOYEES:
There are no employees falling within the provision of S.217 (2A) of the Companies Act, 1956.
The Directors place on record their appreciation of the sincere and dedicated services of all the officers, staff and workers of the Company.
Sep 30, 1994
To the Members
Your Directors are pleased to present the Fifth Annual
Report together with the audited Statement of Accounts for
the financial year ended 30th September 1994.
EXTENSION OF THE FINANCIAL YEAR OF THE COMPANY
To correlate the performance in line with sugar season, the
Company has extended the financial year by six months. The
extension of the financial year is only for the purpose of
the Companies Act, 1956. This Report is for 18 months
period from 1.4.93 to 30.9.94.
FINANCIAL RESULTS
The financial results for the financial year ended 30th
September 1994 viz-a-viz that of the previous periods are
summarised below:
-------------------------------------------------------
6 Months
18 Months ended 12 Months
ended 30-9-93 ended
30-9-94 (Un- 31-3-93
audited)
-------------------------------------------------------
Rs. In Lakhs)
------------------------------------
Sales 3367.74 655.83 695.53
Profit/(Loss)before
Interest and
depreciation 1638.25 (47.48) (310.87)
Interest 1313.40 533.10 686.02
Operating Profit/
(Loss) 324.85 (485.62) (996.89)
Depreciation 251.26 139.59 268.33
Net Profit/(Loss) 73.59 (625.21) (1265.22)
-------------------------------------------------------
OPERATIONS
During the 1993-94 crushing season 341636 Mts. of sugarcane
was crushed. The season commenced on 23rd January '94
continued upto 15th July '94. 27,094 Mts. of sugar was
produced. Overall recovery was low at 7.90%. The recovery
was affected mainly due to extension of the crushing
operation during summer months to fulfil the cane
commitment. Quantity of molasses produced was 17350 Mts.
Performance of the factory was good throughout the season
without any major stoppages. The Installed crushing
capacity of 2500 tonnes per day has been achieved.
Technical efficiency of the factory was satisfactory in all
respects.
FUTURE OUTLOOK
For the coming season adequate cane area has been developed
to achieve a total crush of about 4.25 lakh Mts. Condition
of the standing crop is good and better sugar recovery is
expected. It has been programmed to start crushing by 1st
week of December 94 and try to close before the end of
May '95 minimising crushing during summer months. About
38,000 tonnes of Sugar and 18,000 tonnes of Molasses are
expected to be produced. Thorough overhaul of all the
equipments of the factory has been taken up to achieve
highest possible crushing rate with maximum efficiency,
avoiding breakdowns.
INDUSTRIAL ALCOHOL PLANT
For the better utilisation of molasses produced in the
sugar factory the Company envisaged setting up of an
Industrial Alcohol Project with capacity of 10,000 KL
alcohol per annum at the sugar factory premises. The
Company invested a sum of about Rs. 2 crores during the
financial year 1992-93. But the project could not be
completed for want of additional funds resulting in idle
investment.
In order to effectively utilise the above investment the
Company decided to implement the project in phases and
during the year under review the Company could arrange
required funds and the first phase of the project is almost
completed. The commercial production is likely to start
during the first week of December 1994.
The value addition by converting molasses produced in the
sugar factory into Industrial Alcohol will be about Rs. 2
crores in a year. Since the molasses produced by our sugar
factory will cater to just 50% of the requirement of the
Industrial Alcohol unit, we will be procuring the balance
quantity from other sugar factories. Once the Industrial
Alcohol unit stabilises we have proposals for establishing
Alcohol based down stream chemical projects.
ISSUE OF 20,00,000 EQUITY SHARES BY CONVERSION OF UNSECURED
LOAN
An interest free unsecured loan of Rs.2 crores availed by
the Company from Mr. M.P. Purushothaman was outstanding.
Mr. M.P. Purushothaman was agreeable to convert the loan
into equity. In lieu of the loan 20,00,000 equity shares
of Rs. 10 each of the company were allotted at par in the
name of Mr. M.P. Purushothaman on 16.03.94.
DIRECTORS
Mr. G.R Apparaj and Mr.S.Mohammed Farooq, Directors retire
by rotation at the conclusion of this Annual General
Meeting. The names of Dr. M.Sashidaran and Ms. Nisha. P.
are proposed for the office in their place. Notices under
section 257 of the Companies Act, 1956 have been received
by the company proposing their candidature for the office.
AUDITOR
Mr. N.S. Subramanyam, Chartered Accountant, auditor of the
Company retires at the ensuing Annual General Meeting and
is eligible for reappointment.
EMPLOYEES
Your Directors place on record their appreciation of the
sincere and dedicated services of all the officers and
staff. The statement covering employees required pursuant
to Section 217(2A) of the Companies Act, 1956 read with
Companies (particulars of Employees) Rules 1975, as amended
does not arise as no employee falls within the salary limit
prescribed for the purpose.
PUBLIC DEPOSIT
Your Company has not accepted from the public any deposit
during the year under review.
CONSERVATION OF ENERGY
The Company has installed all energy conserving machinery
as per the standard specification list prescribed by the
Government of India for the factory of its size.
FORM A
1993-94
(18 months)
Power and Fuel Consumption
1. Eectricity
(a) Purchased Units (Kwh) 534562
Total Amount (Rs.) 1428948
Rate/Units (Rs.) 2.67
(b) Own generation
(i) Through Diesel Generator
Units (Kwh) 26944
Units per Litre of Diesel Oil 8691
Cost/Unit (Rs.) 3.10
(ii) Through steam turbine/generator
(Generated out of our own bagasse
consumption) units (Kwh) 97,33,222
2. Coal Nil
3. Furnace Oil
Quantity (K.Ltrs) 1.20
Total Cost (Rs.) 6852
Average rate per K.Ltr. (Rs.) 5710
4. Others/Internal Generation
Firewood quantity (M.Ts.) 163.820
Total Cost (Rs.) 129418
Rate/M.T.(Rs.) 790
Consumption per quintal of sugar
Sugar produced (quintal) 333836
Electricity (Kwh/QtI) 1.60127
Coal (M.T/QtI) Nil
Furnace Oil (K.L./qtl) 0.0000036
Firewood (M. T/qtl) 0.0004907
B. Technology Absorption Nil
C. Foreign Exchange Earnings Nil
D. Foreign Exchange Outgo Nil
Mar 31, 1993
To the members,
Your rectors present this Fourth Annual Report together with the
audited Statement of Accounts for the year ended 31st March
1993.
COMMISSIONING OF PLANT AND OPERATIONS:
The company's sugar plant was commissioned and crushing
operations commenced for the first time on 14th April '92 which
was nearly four months behind schedule as a result of delayed
supply and erection of the plant. The factory was obliged to
carry on crushing operations till 1st September '92 with a total
crush of 1,72,053 M.Ts of cane at low recovery in view of the
availability of cane in the factory zone area. In the financial
year under review, the company also operated part of the 1992-93
season's crushing which commenced on 10th February '93. Upto the
close of the financial year on 31st March '93, a total of
2,10,267 M.Ts was handled. The average recovery for the total
quantity of cane crushed during the financial year was 6.05%. The
total quantity of cane crushed for the 1992-93 season which
included a special season between June and August was 1,32,730
M.Ts.
The low recovery is directly attributable to the crushing
operations having been carried out during severe summer months
as a result of the delay in supply, erection and commissioning
of the plant by over four months. The company had undertaken
cane development activity well in advance during October 1990
with about 6000 acres of land being brought under sugarcane
cultivation by over 2500 farmers. Due to inordinate delay in
commissioning of the factory, the cane had to be crushed during
summer months resulting in poor recovery.
FUTURE OUTLOOK:
For the third season commencing from January '94, the company
expects to crush about 3.60 Iakh tonnes of cane based on the
plantations already completed. The company is also exploring the
possibilities of obtaining supplies of cane from a neighbouring
factory which has some surplus cane in order to achieve a crush
of about 4 lakh tonnes. For the subsequent seasons, the company
has planned to increase the cultivable area to 9500 acres so as
to achieve a total crush of about 4.50 lakh tonnes. For this
purpose, the company has approached the Sugar Development Fund
constituted by the Government of India to finance at low
interest, well laid out cane development programmes. Your
Directors are confident that the company will be able to turn
the corner and achieve satisfactory results in the next year
itself.
INDUSTRIAL ALCOHOL PLANT:
Your company is taking all steps to convert the Letter of Intent
issued by the Government of Andhra Pradesh into Industrial
Licence for the manufacture of 10,000 KL per annum of Ethyl
Alcohol from Molasses. Orders for the plant have been placed
with Alfa Laval (India) Ltd. on a turnkey basis and orders for
other equipments have also been placed. The company is in the
process of firming up funding arrangements for this project.
RIGHTS ISSUE OF PCDs:
At the last Annual General Meeting, shareholders had approved
resolutions for issue of partly Convertible Debentures of the
value of Rs. 14.97 crores on a rights basis to meet part of the
cost of the Industrial Alcohol Plant and to augment working
capital requirements. Your Directors have to report that the
proposed issue could not be made owing to the unforeseen and
unfortunate developments in the stock market which brought out a
scam and also resulted in a severe crash in the markets
resulting in failure of many issues. It was felt that the time
was not appropriate for the issue of PCDs as proposed.
FIXED DEPOSITS:
During the year under review, your company had accepted Fixed
Deposits and state that there are no overdue deposits or
unclaimed deposits at the close of the year.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE:
Information in accordance with the provisions of 217(1) (e) of
the Companies Act, 1956, read with Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules 1986
regarding conservation of energy, technology absorption and
foreign exchange earnings and outgo is given in Annexure II to
this Report.
CONSERVATION OF ENERGY
The company has installed all energy conserving machinery as per
the standard specification list prescribed by the Government of
India for the factory of its size. Due to lower capacity
utilisation, the consumption of energy per tonne of cane crushed
is on the higher side which will improve substantially once full
rated capacity utilisation is achieved in the next season.
Technology Absorption: NIL
Foreign Exchange Earnings: NIL
Foreign Exchange Outgo: NIL
Mar 31, 1992
Your Directors have pleasure in presenting this Third Annual Report together with the audited financial accounts of the company for the year ended 31st March, 1992.
COMPLETION OF PROJECT :
Your Directors are happy to report that during the year, the project for establishment of the sugar factory with a cane crushing capacity of 2500 Tonnes per day was completed. However, commercial production could commence only in April, 1992 after a delay of four months as compared to original project schedule.
For the year under review therefore, there have been no operations and the expenditure incurred till 31st March, 1992 has been capitalised.
COST OF THE PROJECT AND FUNDING
The cost of implementation of the project has been Rs. 3680 lakhs against Rs 3050 lakhs originally estimated. The escalation in the Project cost was mainly due to increase in pre-operative expenses as a result of delay in completion of the project and upward revision of interest from 14% to 20% per annum besides increases under other heads.
To meet this overrun in cost of Rs. 630 lakhs the financial institutions have agreed in principle, to sanction additional term, loans of Rs. 310 lakhs while the balance has been met by equity capital of Rs. 195 lakhs (15% retention from oversubscription in Public issue) and unsecured loans from promoters of Rs. 125 lakhs.
PUBLIC ISSUE :
The company's public issue of Equity Shares of Rs. 550 lakhs made in December, 1991 was subscribed to the extent of 6.72 times thanks to the generous response of the Shareholders.
As permitted by the Controller of Capital Issues, 15% of the oversubscription has been retained and utilised to meet the cost over-run in the project as detailed above in this report.
Conseqent to the Public Issue the share capital of the company has increased from Rs. 2.29 lakhs to Rs. 1497.29 lakhs and we have shareholders exceeding 61,000.
The company's shares have been listed on the Stock Exchange at Hyderabad, Madras and Bombay.
OPERATIONS
As stated earlier, there were no operations in the year under review. The regular cane crushing operations commenced from 8th April, 1992 are still in progress and a total quantity of 1,70,000 MTs of cane is expected to be crushing for the season 1991-92. The delay in implementation of the project has caused the cane crop to become overmature and state and together with the crushing in summer months has resulted in low recovery of sugar. However, normal crushing operations in latter part of the current accounting year, i.e. 1992-93 crushing season with higher recovery of sugar will to a great extent offset losses incurred due to the low recovery.
OUTLOOK FOR THE CURRENT YEAR
The working of the factory has stabilised after overcoming the initial teething problems and the plant is crushing at its rated capital. The factory is now confident of achieving its full capacity in the forthcoming 1992-93 season. A total of about 300,000 Mts is expected to be cruhshed in the season at normal rates of recovery.
CANE PRICE :
Considering the various difficulties expressed by the canegrowers in regard to loss in yield, driage and loss of intermediary crop, cane price has been fixed at Rs. 425/- per M.T. upto 23-6-92 and Rs. 450/- per M.T. thereafter, inclusive of the incentive of Rs. 16/- per tonne from purchase tax payable to the State Government. The cane price fixed is much above the State advised price.
INDUSTRIAL ALCOHOL PROJECT :
Your company has been issued a Letter of Intent by the Government of Andhra Pradesh for manufacture of 10,000 KL per annum of Ethyl Alcohol from molasses. The project estimated to cost about Rs. 1100 lakhs is being actively pursued and orders for part of the equipment have already been placed with M/s. ALFA LAVAL INDIA LTD., PUNE.
RIGHTS ISSUE OF PARTLY CONVERTIBLE DEBENTURES
To finance the cost of the Industrial Alcohol Plant and to augment long term resources for working capital, your Directors propose to issue 14,97,290-17% Partly convertible Debentures of Rs. 100/- each of total face value of Rs. 14,97,29,000/- on a rights basis to existing shareholders in the ratio of one debenture for every 10 Equity Shares. Details of the issue are given in the Notice to Shareholders. Necessary resolutions in this regard are to be passed by the members.
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