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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


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