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Directors Report of KM Sugar Mills Ltd.

Mar 31, 2015

The Directors have pleasure in placing the 42nd Director's Report along with the Audited Statement of Accounts for 18 months ended on 31st March, 2015. It is also pertinent to mention here that in terms of the requirement of section 2(41) of the Companies Act, 2013, the Company aligned its financial year from April- March. Hence, accounts for the 18 months started on 1st October 2013 to 31st March, 2015 are being placed. Further, subsequent financial years of the Company shall begin on 1st April and end as on 31st March.

Financial Performance

The Financial performance of the Company during the year 18 months ended 31st March 2015 as under:

(Rupees in Lacs) For 18 as at Months 30th ended as at September, 31st 2013 March,2015 (Rs.) (Rs.)

Profit before interest, 3700 3504 depreciation & tax

Less: Interest (1373) (1324)

Depreciation (1426) (901)

Profit before tax 901 1279

Provision for taxation (including (103) -

FBT) (49) (19)

Provision for taxation (deferred)

Net Profit before extraordinary 749 1260 Items

Add: Extra ordinary item (0) (0)

Net Profit 749 1260

Earning Per Share of Rs 2/- each 0.81 1.37

Overall Performance

For the period of 18 months ended on 31st March, 2015, sales stood at Rs. 55044.84 Lacs (net of excise duty) against the Rs. 27258.79 (net of excise duty) of previous financial year 2012-13( 12months ended on 30-09-2013). During the financial year under review, the company had done trading of sugar for Rs. 1330.34 lacs whereas during the preceding financial year sugar trading was Nil). Profit after interest and depreciation stood at Rs. 901 Lacs as against the profit of Rs. 1279 Lacs in preceding year. Profit after tax for the 18 months ended March 31, 2015 was Rs.749 Lacs compared to profit of Rs. 1260 Lacs in the preceding year.

Dividend

Due to accumulated losses your directors have not recommended any dividend for the financial year ended 31st March 2015.

Transfer to reserves:

Performance of Divisions:- Sugar Division

Crushing season till 31st March, 2015 consisted of two sugar seasons for 18 months for the Company. The company has crushed 183.48 Lacs qtls. of cane and the season ran for 263 days. Sugar sale was Rs.47441 lacs as against Rs.23249 lacs. The other details are as under:

18 months Season ended 2012-2013 31-03-2015 (12 months)

Gross Working days 263 142

Total Cane Crushed (qtls.) 18348401 9156678

White sugar Produced 1708881 877655 (qtls)

Average Recovery 9.32% 9.60%

Co-Generation:

During the crushing season reported the company produced 16,44,42,230 KWH power and exported 9,82,95,057 KWH to UPPCL. Power sale was Rs.4668 lacs as against Rs.2395 lacs.

Distillery

During the 18 months ended as at 31-03-2015, Company Produced 167.48 Lacs BL of Rectified Spirit with a recovery of 21.12% which is better in comparison of preceding year production of 85.96 Lacs BL. with a recovery of 20.41% during preceding Financial Year 2012-2013 ( twelve months). Sale of RS and Country liquor were Rs.6475 lacs as against Rs.2587 lacs

Reference to BIFR Under Section 15 and Other Applicable provisions of the Chapter III of the Sick Industrial Companies ( Special Provisos ) Act , 1985

As mentioned in the last report that due to erosion of the Net worth of the Company, the reference was registered with the Board for Industrial and Financial Reconstruction (BIFR) in terms of the provisions of the Sick Industrial Companies ( Special Provisions) Act , 1985 on 28-02-2013 on the basis of audited accounts for the year ended 30th September,2012. The reference made with BIFR is still pending.

Auditors

M/s. Mehrotra & Mehrotra, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 139 of the Companies Act, 2013. Pursuant to the provisions of Section 139, 142 and other applicable provisions, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 the existing Auditors can be re-appointed to hold office maximum up to the conclusion of 44th Annual general meeting of the Company, where after new Auditor shall be required to be appointed. Accordingly the Board propose for re- appointment of existing Auditors to hold office up to the conclusion of 44th Annual General Meeting for audit of financial statements for year ending at 31st March, 2017, subject to ratification their continuance by shareholders at annual general meeting.

Auditors' Report

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to the accounts.

Secretarial Auditors

M/s Amit Gupta & Associates, Practicing Company Secretaries were appointed as secretarial auditors of the Company for the year 2013-15 as required under Section 204 of the Companies Act, 2013 and Rules made thereunder. The secretarial audit report for FY 2013-15 forms part of the Annual Report (Annexure to the Directors' Report in Form MR. 3) and carries no qualifications, reservations, adverse remarks or disclaimers and hence no explanations are required. The Board has further appointed M/s Amit Gupta & Associates, Practicing Company Secretaries, as secretarial auditor of the Company for the financial year 2015-16.

Cost Auditors

The Central Government approved the appointment of M/s. Aman Malviya & Company, Cost Auditor, Lucknow as Cost Auditors for conducting Cost Audit for Sugar and Industrial Alcohol businesses for the 18 months ended 31st March 2015, report of which shall be submitted in due course of time The Board has approved their appointment for the year 2015-16 and their remuneration is subject to approval by the Company in the forthcoming Annual General Meeting.

Directors

At the ensuing Annual General Meeting Shri L.K. Jhunjhunwala and Shri Adiya Jhunjhunwala, Directors of your Company, retire by rotation u/s 152 of the Companies Act, 2013 and being eligible had offered themselves for re-appointment at the ensuing Annual General Meeting.

Ms. Shruti Modi who was appointed as an Additional Director of the Company by passing a resolution by circulation on 30-03-2015, resigned on 28-05-2015. Further, Shri L.K. Jhunjhunwala, Chairman-cum- Director, Shri Aditya Jhunjhunwala, Managing Director, Shri Sanjay Jhunjhunwala, Jt. Managing Director and Shri S.C. Agarwal, Executive Director were appointed at the Annual General Meeting held on 19-03-2012 for a period of three years w.e.f. 1st March,2013 to 28th February,2015 and their term expire thereafter. After having been recommended by the Nomination & Remuneration Committee of the Company, the Board recommended their appointment in the Board meeting held on 14-02-2015 for a period of 5 ( five ) years w.e.f. 1st March,2015 to 29th February,2020. Mrs. Madhu Mathur were appointed as Independent Directors of the Company by the Board in their meetings held on 28-05-2015 and Mr. H.P. Singhania, Mr. S.K. Gupta, Dr. Kirti Singh and Mr. R.S. Shukla were appointed as Independent Directors of the Company by the Board in their meetings held on 11-08-2015 respectively, subject to approval of the shareholders at general meeting. In terms of Section 149, 150 and 152 read with Schedule IV and any other applicable provisions, if any of the Companies Act, 2013 and rules made thereunder and Clause 49 of the Listing Agreement, the approval of the shareholders is sought for their appointment as Independent Directors for a term of five consecutive years from the original date of appointment. The Board considers that their continued association would be of immense benefit to the Company and it is desirable to continue to avail their services.

Public Deposits

During the financial year ended 31-03-2015 for the period 18 of months, the company has not accepted any public deposits.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited and listing fees for 2015-16 had been duly paid.

Directors' Responsibility Statement In pursuance of sub-section (5) of Section 134 of the Companies Act, 2013, in respect of Directors' Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for the 18 months ended on March 31, 2015 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, 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 of the Company for the year ended on that date.

(iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the company and for detecting fraud and other irregularities; and

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis.

(v) that 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.

(vi) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

Audit committee and vigil mechanism

Pursuant to requirement of section 177(1) of Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Clause 49 of Listing Agreement, your Company has already formed the Audit Committee, composition of which is covered under Corporate Governance report section of this Annual Report. The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement, includes appointment of a Whistle Officer who will look into the matter, conduct detailed investigation and take appropriate disciplinary action. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Whistle Blower Officer or to the Chairman of the Audit Committee. The Policy on vigil mechanism and whistle blower policy will be uploaded very soon on the Company's website at the link: http://www.kmsugar.com. During the year under review, no employee was denied access to Whistle Blower Officer or Audit Committee.

Extract of annual return

Extract of Annual Return of the Company is annexed herewith in form no. MGT-9 as Annexure 7 to this Report.

Internal financial controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Risk management

The Company aims to have a formalised and systematic approach for managing risks across the Company. It encourages knowledge and experience sharing in order to increase transparency on the key risks to the Company to the extent possible. This approach increases risk awareness, and ensures proper management of risks as part of the daily management activities.

During the year, the Company has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in:

- Reviewing and approving the Company's Risk

Management Policy so that it is consistent with the Company's objectives; and ? Ensuring that all the risks that the Company faces such as strategic, operational, financial, compliance and other risks are identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee. The policy on Risk Management will be uploaded very soon on the Company' s websi te at the link: http://www.kmsugar.com

The objective of the Company's risk management process is to support a structured and consistent approach to identify, prioritize, manage, monitor and report on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has introduced several initiatives for risk management including the introduction of audit functions and processes to identify and create awareness of risks, optimal risk mitigation and efficient management of internal control and assurance activities.

Corporate social responsibility

The Company strongly believes in concept of sustainable development and is committed to operate and grow its operations in a socially and environmentally responsible way. Our vision is to expand our operations whilst reducing the environmental impact of our operations and increasing the positive social impact on our community. As per the Companies Act, 2013, all companies with a net worth of Rs. 100 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising of three or more directors, at least one of whom should be an independent director and such company shall spend at least 2% of the average net profits of the company's immediately preceding three financial years on CSR activities. The provision regarding CSR were not applicable on the Company during the period under report.

The Company has duly constituted a Corporate Social Responsibility (CSR) Committee pursuant to the requirement of Section 135(1) of Companies Act, 2013 and the Rules made thereunder.

Conservation Of Energy, Technology Absorption and Foreign Exchange and Outgo Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annx-1.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in annexure to this report.

Particulars of Employees

The disclosure as required under the provisions of Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company has been given in 'Annexure 2' and forms part of this Report.

Corporate Governance

As stipulated in Clause 49 of the Listing Agreement, a separate section on Corporate Governance forming part of the Directors' Report and Management Discussion & Analysis Report and the certificate from Practicing Company Secretary confirming the compliance of the conditions on Corporate Governance are included in the Annual Report. The Report on Corporate Governance is attached as Annexure-3 to this report. A certificate from M/s. Amit Gupta & Associates, Company Secretaries regarding compliance of conditions of Corporate Governance as stipulated under 49 of the Listing Agreement is also annexed to this report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report on the business and operations of the company is attached to this report as 'Annexure-4'.

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Subsidiary Company

Your Company has a subsidiary a company viz. M/s. K.M. Energy Private Limited, incorporated on 01-12- 2014 for setting up of Solar Power Project. There was no operational activities during the period under review. However, this company has loss Rs.6.77 lacs for the year ended 31-03-2015. Further, your Company had given a loan of Rs.285.00 lacs to it at interest @10%. In terms of proviso to section 139(3) of the Companies Act,2013, the salient features of the financial statements of the subsidiary is set out in the prescribed form (AOC-1) under Rule-5 of the Companies (Accounts) Rules,2014 as Annex.5 The consolidated financial statements presented by the Company include financial information of its subsidiary prepared in compliance with applicable Accounting Standards.

The Company will make available the annual report of subsidiary Company upon request by any shareholder of the Company interested in obtaining the same. Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiary, are available on the website of the Company.

Number of meetings of the Board

The Board met six times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the Listing Agreement.

Policy on directors' appointment and remuneration

The Company seeks to maintain an appropriate mix of executive and independent directors in order to maintain the independence of the Board and segregate the functions of governance and management. As at year end, the Board consists of 10 members, four of whom are Whole-time directors, five are Independent directors and one is a Nominee director. The Company has five independent directors and all are qualified personnel with requisite qualifications, experience, positive attributes and satisfy all the criteria as set out under Schedule IV of Companies Act, 2013. These appointees are only eligible for sitting fees for attending Board meetings and Committee meetings and other out of pocket expenses duly made for attending meetings of the Board or any committee of the Board thereof. Remuneration proposed for whole time directors is in accordance withj the Remuneration Policy approved by Nomination and Remuneration Committee of the Board.

Your Company, in compliance with section 178(1) of the Companies Act, 2013 read with The Companies (Meeting of Board and its Powers) Rules, 2014, has duly constituted a Nomination and Remuneration Committee. This committee is chaired by an independent director and formulates the criteria for determining qualifications, positive attributes, independence of a director and other matters. Appointment and the remuneration of Board members, key managerial personnel or one level below the Board level is fixed on the basis of the recommendation of the Nomination and Remuneration Committee made to the Board, which may ratify them, with or without modifications. Disclosures pursuant to the requirements of section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been made in Annexure 2 of this Board Report.

Declaration by independent directors

As per the requirement of section 149(7), the Company has received a declaration from every Independent Director that he or she meets the criteria of independence as laid down under section 149(6) read with rule 5 of the Companies (Appointment and Qualification of Directors) Rule, 2014 and Clause 49 of the Listing Agreement.

Board evaluation

Pursuant to the requirement of the Companies Act, 2013, a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. The Act states that the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board as explained under the Corporate Governance section of this Annual Report. In a separate meeting of independent Directors, performance of non-independent directors was evaluated.

Committees of the board

Currently, the Board has 4 nos of committees. A detailed note on the Board and its committees is provided in the Corporate Governance Report section of this Annual Report. The composition of the committees and compliances, as per applicable provisions of the Act and Rules, are as follows:

Particulars of Loans, Guarantee or Investments

As per the requirement of section 186(4) of Companies Act, 2013, particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements. The Company is in compliance with the limits as prescribed under Section 186 of Companies Act, 2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules, 2014.

Particulars of contracts or arrangements with Related Party

The Company's policy on related party transactions may be accessed on the Company's website at http://www.kmsugar.com.. Particulars of contracts or arrangements with Related Parties referred in Section 188(1) of the Companies Act, 2013 is furnished in accordance with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given Not to Accounts no.2.29-(12-D) also in Form AOC-2 as Annexure-6.

Material changes and commitments affecting financial position between the end of the financial year and date of report

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

Acknowledgement

Yours Directors place on record their acknowledgement and sincere appreciation of all the bankers and financial institutions for their continued assistance. They further appreciate and acknowledge with gratitude the co-operation and assistance received from all executives, staff and workmen of the Company.

For and on behalf of the Board

of K. M. Sugar Mills Ltd.

Sd/-

L K. Jhunjhunwala

Chairman

Date : 11.08.2015 Place: Lucknow


Sep 30, 2013

The Directors have pleasure in placing the 41st Director''s Report along with the Audited Statement of Accounts for the financial year ended on 30th September, 2013.

Financial Performance

The Financial performance of the Company during the year 2012-13 as under: (Rupees in Lacs)

2012- 2011- 2013 2012

Profit before interest, depreciation & tax 3504 1862

Less: Interest (1324) (1390)

Depreciation (901) (1034)

Profit before tax 1279 (562)

Provision for taxation (including FBT)

Provision for taxation (deferred) (19) (62)

Net Profit before extraordinary Items 1260 (624)

Add: Extra ordinary item (0) (0)

Net Profit 1260 (624)

Earning Per Share of Rs 2/ - each 1.37 0.68

Overall Performance

For the year ended on 30th September, 2013 sales stood at Rs. 27258.79 Lacs (net of excise duty) against the Rs. 25456.41 (net of excise duty) of last year. During the financial year under review, the company had done trading of sugar for Rs. Nil lacs whereas during the preceding financial yeartrading activity was done for Rs. 1330.34 lacs). Profit after interest and depreciation stood at Rs. 1279 Lacs as against the loss of Rs. 562. Lacs in preceding year. Profit after tax for the year ended September 30, 2013 was Rs.1260 Lacs compared to loss of Rs. 624 Lacs in the preceding year.

Dividend

Due to accumulated losses your directors have not recommended any dividend for the financial year ended September30,2013.

Performance of Divisions:- Sugar Division Crushing season 2012-2013 was comparatively a long Season for the Company. The company has crushed 91.57 Lacs qtls. of cane and the season ran for 142 days. The other details are as under:

Co-Generation:

During the crushing season reported the company produced 8,06,32,125 KWH power and exported 5,78,05,627 KWH to UPPCL.

Distillery

The year 2012-2013 Company Produced 85.96 Lacs BL of Rectified Spirit with recovery of 20.41% which is much better in comparison of preceding year production of 71.51 Lacs BL. , but recovery has decreased by 0.63% from preceding Financial Year 2011-2012.

In current year 2013-14, the Company expects better margins due to increase in alcohol price in the market.

Reference to BIFR Under Section 15 and Other Applicable provisions of the Chapter III of the Sick Industrial Companies ( Special Provisos ) Act , 1985

It was reported in the last report that the Net worth of the Company was completely eroded during the financial year 2011-12 and accordingly a reference was registered with the Board for Industrial and Financial Reconstruction (BIFR) as required by the provisions of the Sick Industrial Companies ( Special Provisions) Act, 1985 on 28-02-2013. Auditors

M/s. Mehrotra & Mehrotra, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 224 (IB) of the Companies Act, 1956. Auditors'' Report

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to the accounts. Cost Auditors

The Central Government approved the appointment of M/s. Aman Malviya & Company, Cost Auditor, Lucknow as Cost Auditors for conducting Cost Audit for Sugar and Industrial Alcohol businesses for the financialyear2013-14. Directors

Mr. P. N .Mathur was appointed as the Nominee Director in the meeting of the Board of Directors of the Company held on 10-08-2013, pursuant to Clause 41of Annexurel of CDR and letter of approval dated 27-03-2012. Mr. P.N. Mathur is Circle Head, Punjab National Bank, Lucknow Circle and has a vast experience in Banking services. His guidance and suggestions will be in the interest of the Company. The Board recommended his appointment as Director, subject to confirmation by the Shareholders in the General Meeting.

At the ensuing Annual General Meeting Shri Sanjay Jhunjhunwala and Shri Subhash Chandra Agarwal Directors of your Company, retire by rotation u/s 256 of the Companies Act, 1956 and are being eligible, offer themselves for re-appointment at the ensuing Annual General Meeting.

Public Deposits

During the year 2012-2013 the company has not accepted any public deposits.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock

Exchange Limited.

Directors''Responsibility Statement

In pursuance of sub-section (2AA) of Section 217 of the Companies Act, 1956, in respect of Directors'' Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for the year ended on September 30, 2013 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, 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 of the Company for the year ended on that date.

(iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the company and for detecting fraud and other irregularities; and

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis. Conservation of Energy, Technology Absorption and Foreign Exchange and Outgo

The particulars required under Section 217(l)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors), Rules, 1988 are given in ''Annexure 1'' and forms part of this Report.

Particulars of Employees

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended are given in ''Annexure 2'' and forms part of this Report.

Corporate Governance

The Directors'' Report on Corporate Governance is attached as Annexure-3 to this report. A certificate from M/s. Amit Gupta & Associates, Company Secretaries regarding compliance of conditions of Corporate Governance as stipulated under 49 of the Listing Agreement is also annexed to this report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report on the business and operations of the company is attached to this report as ''Annexure-4''.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in Form B of the this report as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Acknowledgements

Yours Directors place on record their acknowledgment and sincere appreciation of all the bankers and financial institutions for their continued assistance.

They further appreciate and acknowledge with gratitude the co-operation and assistance received from all executives, staff and workmen of the Company.

For and on behalf of the Board

of K. M. Sugar Mills Ltd.

Sd/-

Date: 08.02.2014 L K.Jhunjhunwala

Place: Lucknaw Chairman


Sep 30, 2012

To, The Members,

The Directors have pleasure in placing the director''s report along with the Audited Statement of Accounts for the financial year ended on 30th September, 2012.

Financial Performance

The Financial performance of the Company during the year 2011-2012 as under:

(Rupees in Lacs)

2011- 2010- 2012 2011

Profit before interest, depreciation & tax 1862 1571

Less: Interest (1390) (1420)

Depreciation (1034) (1229)

Profit before tax (562) (1078)

Provision for taxation (including FBT)

Provision for taxation (deferred) (62) (47)

Net Profit (624) (1125)

Earning Per Share of Rs 2/- each (0.68) (1.22)

Overall Performance

For the year ended on 30th September, 2012 sales stood at Rs. 25471.35 Lacs (net of excise duty) against the Rs. 28707.11 (net of excise duty) of last year. During the last financial year the company had done trading of sugar for Rs. 6837.87 lacs whereas during the reported financial year trading activity was done for Rs. 8206.96 lacs). Loss after interest and depreciation stood at Rs. 562 Lacs against the loss of Rs. 1078 Lacs in last year. Loss after tax for the year ended September 30, 2012 was Rs. 624 Lacs compared to loss of Rs. 1125 Lacs of the previous year.

Dividend

Rue to accumulated losses your directors have not declared any dividend for the financial year ended September 30,2012

Performance of Divisions

Sugar Division

Crushing seasbn 2011-2012 was long Season for the Company. The company has crushed 68.41 Lacs qtl. and the season runs for 116 days. The other details are asunder:

Season Season

2011-2012 2010-2011

Gross Working days 116 104

Total Cane Crushed (qtls.) 6841970.96 5485290.31

White sugar Produced (qtls) 653710 517375

Average Recovery 9.57% 9.45%

Cane Management

Cane management is the most indispensable part of the whole sugar manufacturing process. It is said "Sugar is produced in the field and extracted in the factory ''''This makes the Cane management as most important part of the Sugar Industry. The Uttar Pradesh Government through an order dated 08.11.2012 , raised the State Advised Cane Price ( SAP ) for the early maturing varieties from Rs. 205/- per quintals for the Sugar Season 2010-2011 to Rs. 240/- per quintal forthe Sugar Season 2011-2012 and that for the early maturing varieties from Rs 210/- per quintals to Rs. 250/- per quintal. For the rejected varieties, the SAP was raised from Rs. 200/- perquintalto Rs. 235/- perquintal. Sugar Mills in UP pay SAP for sugar cane which historically is significantly higher than the FRP fixed by the Central Government.

Co-Generation:

During the crushing season reported the company produced only 56949160 MWh power and exported 40005496 MWh to UPPCL.

Distillery

During the year 2011-2012 Company Produced 71.510 Lacs BL of Rectified Spirit with recovery of 21.04%, which is much better in Comparison of last year production of 53.98 Lacs BL. and has improved the recovery by 0.44% from last Financial Year 2010-2011

Reference to BIFR Under Section 15 and other Applicable provisions of the Chapter III of the Sick Industrial Companies (Special Provisions) Act , 1985

The Net worth of the Company has fully eroded. Accordingly the Directors have filed a reference with the Board for Industrial and Financial Reconstruction (BIFR) as required by the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985

Auditors

M/s. Mehrotra & Mehrotra, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 224 (IB) of the Companies Act, 1956.

Auditors'' Report

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to the accounts.

Directors

At the Annual General Meeting Shri H P

Singhania and Shri S K Gupta both are independent f2f$|jS@ors of your Company are due to retire by lifSlation u/s 256 of the Companies Act, 1956. They are eligible for re-appointment and offer themselves for the same

Public Deposits

During the year 2011-2012 the company has not accepted any public deposits.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited.

Directors'' Responsibility Statement

In pursuance of sub-section (2AA) of Section 217 of the Companies Act, 1956, in respect of Directors'' Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for the year ended on September 30, 2012 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, made judgments 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 loss of the Company for the year ended on that date.

(iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the company and for detecting fraud and other irregularities; and

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis.

Conservation Of Energy, Technology Absorption and Foreign Exchange and Outgo

The particulars required under Section 217(l)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors), Rules, 1988 are given in ''Annexure 1'' and forms this Report.

Particulars of Employees ;

Particulars of employees as required "|Ser 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended are given in ''Annexure 2'' and forms part of this Report.

Corporate Governance

A certificate from M/s. Amit Gupta & Associates, Company Secretaries, regarding compliance of conditions of Corporate Governance as stipulated under clause 49 of the Listing Agreement along with the report on Corporate Governance is attached to this report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report on the business and operations of the company is attached to this report.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in Form B of the this report as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Acknowledgments

Yours Directors place on record their acknowledgment and sincere appreciation of all the bankers and financial institutions for their continued assistance. They further appreciate and acknowledge with gratitude the co-operation and assistance received from all executives, staff and workmen of the Company.

For and on behalf of the Board

K. M. Sugar Mills Ltd.

Sd/-

Date: 11.02.2013 L.K. Jhunjhunwala

Place: Lucknow Chairman


Sep 30, 2010

The Directors have pleasure in placing the directors report along with the Audited Statement of Accounts for the financial year ended on 30th September, 2010.

Financial Performance

The Financial performance of the company during the year 2009-10 is as under: 2009-10 2008-09

Profit before interest, depreciation & tax 172 3203

Less: Interest (1284) (1196)

Depreciation (1359) (1581)

Profit before tax (2471) 426

Provision for taxation (including FBT) (2)

Provision for taxation (deferred) (643) (36)

Net Profit before extraordinary Items (1828) 460

Add: Extra ordinary item (1) (39)

Net Profit (1829) 421

Add: Balance brought forward from Previous year (2548) (2967)

Transfer to Molasses Reserve Fund (3) (2)

Amount available for Appropriation (4380) (2548)

Transfer to general reserve NIL NIL

Balance carried to Balance Sheet (4680) (2548)

Overall Performance

For the year ended on 30th September, 2010 your company recorded sales of Rs. 1782.45 lacs(net of excise duty) against the Rs. 1511.18 Lacs (net of excise duty) of last year. During the last financial year the company had done trading of sugar for Rs. 1760.98 Lacs whereas during the reported financial year trading activity was done only for Rs. 749.79 Lacs . Loss after interest and depreciation stood at Rs.2471 lacs against the Profit of Rs. 426 Lacs in last year. Loss after tax for the year ended September 30,2010 was Rs. 1829 Lacs compared to profit of Rs. 421 iacs of the previous year.

Dividend

Your directors have not declared any dividend for the financial year ended September 30,2010.

Performance of Divisions

Sugar Division

During crushing Season 2009-10, the company has crushed 5070800.71 qtl. and the season ran for 93 days. The other details are as under:

Season 2009-10 Season 2008-09

Gross Working days 93 79

Total Cane Crushed (qtls.) 5070800.71 3274866.32

Average cane crushed per day (qtls.) 54524.74 41514.01

Average Recovery 8.97%_8.92%

Cane Management

Sugar Cane is the primary raw material for this business and

constitutes the majority portion of the cost, therefore, the cane management is one of the most essential part of the sugar manufacturing process. The quality as well as price of sugar cane determines the prospects of the company. For the season 2009-10 the State Government of Uttar Pradesh announced State advised price of cane at Rs. 165 per qtl., an approximately 18% increase over the last year price of Rs. 140 per Qtl. The Central Government provided a mechanism for Fair & Remunerative Price for cane which stood at Rs. 129.85 per qtl. which represented an increase of 60% against the earlier practice of fixing Statutory Minimun of Rs. 81.18 per qtl. However, because of the overall shdrtage of cane and the price hike of the sugar in domestic market the sugar mill paid a higher price for cane. Moreover, to meet the challenges of low sugar cane yield the company has started immense drive for cane development in the area by distributing pesticides, seeds, fertilizers etc. We are expecting good sugar cane during the current season 2010-11.

Co-Generation:

Sugar is a power demanding business and the saving grace lies in the Companys ability to generate power from sugar by- product bagasse. The bagasse- based Co- generation units qualify as a Clean Development Mechanism (CDM) project that helps the company to earn the carbon credits. The company has an exportable surplus of 20 MW Co- generation capacities.

Distillery The year2009-10

During the year the production of Alcohol increased by 25% in comparison of last sugar season. But due to higher cane price vis-a-vis higher Molasses price the cost of Production increased, however the Alcohol price in Market did not pick up in proportion to Molasses price, which increased the loss of the unit.

The Company expect better Alcohol Price in current season 2010-11 due to blending of Etnanol restarted by Petroleum Companies. In the other hand the company also expect better cane crushing during current season, which will increase availability of captive Motasses as well as molasses in market.

Auditors

M/s. Mehrotra & Mehrotra, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment. They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 224 (1B) of the Companies Act, 1956.

AuditorsReport

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to the accounts. Directors

At the ensuing Annual General Meeting Shri H.P. Singhania, Shri R. S. Shukla, Shri S. K. Gupta, Dr. Kirti Singh and Shri S. C. Agrawal Directors of your Company are retiring by rotation and being eligible offer themselves for re-appointment.

Public Deposits

During the year 2009-10 the company has not accepted any public deposits.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited. The suspension of trading from National Stock Exchange of India Ltd. has been revoked during the year 2009-10. The company has completed all the compliances relating to listing agreement.

Directors Responsibility Statement

In pursuance of sub-section (2AA) of Section 217 of the Companies Act, 1956, in respect of Directors Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for the year ended on September 30, 2010 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, made judgments estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company of the financial year and of the loss of the Company at the end for the year ended on that date.

(iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the company and for detecting fraud and other irregularities; and

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis.

Conservation Of Energy, Technology Absorption and Foreign Exchange and Outgo

The particulars required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors), Rules, 1988 are given in Annexure 1 and forms part of this Report.

Particulars of Employees

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended are given in Annexure 2 and forms part of this Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report on the business and operations of the company is attached to this report asAnnexure-4.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in Form B of this report as required under the Companies (Disclosure of

Particulars in the Report of the Board of Directors) Rules, 1988.

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Acknowledgements

Yours Directors place on record their acknowledgement and sincere appreciation of all the bankers and financial institutions for their continued assistance. They further appreciate and acknowledge with gratitude the co-operation and assistance received from all executives, staff and workmen of the Company.

For and on behalf of the Board of

K. M. Sugar Mills Ltd.

Sd/-

L. K. Jhunjhunwala

Chairman

Date: 14.02.2011

Place: Lucknow


Sep 30, 2009

The with the Audited Statement of Accounts for the financial year ended on 30th September, 2009. Financial Performance

After two consecutive financial years of losses your company has earned net profit for the year Rs. 426,32 Lacs before tax. However that is not sufficient to cover the accumulated losses of the last two financial years. The details are as under:

(Rupees in Lacs)

2008-09 2007-08

Profit before interest, depreciation & tax 3203 1534

Less: Interest (1196) (1029)

Depreciation (1581) (1605)

Protif before tax 426 (1100)

¦ Provision for taxation (including FBT) (2) (8)

Provision for taxation (deferred) 36 (111)

Net Profit before extraordinary Items 460 (1219)

Add: Extra ordinary item (39) 4

Net Profit 421 (1215)

Add Balace brought forward from Previous year (2967) (1746)

Transfer to Molasses Reserve Fund (2) (6)

Amount available for Appropriation (2548) (2967)

transfer to general reserve NIL NIL

Balance carried to Balance Sheet (2548) (2967)

Overall Performance

For the year ended on 30th September, 2009 sales stood at Rs, 1511.18 Lacs (net of excise duty) against the Rs. 3133.80 (net of excise duty) of last year. The fall in sales is due to absence of opportunity for trading of sugar activities during the reported financial year. During the last financial year the company had done trading of sugar for Rs. 2200.33 Lacs whereas during the reported financial year trading activity was done only for Rs. 749.79 Lacs. Profit after interest and depreciation stood at Rs. 426 Lacs against the loss of Rs. 1215 Lacs in last year. Profit after tax for the year ended September 30, 2009 was Rs. 421 Lacs compared to loss of Rs. 1219 lacs of the previous year. Dividend

Due to accumulated losses your directors have not declared any dividend for the financial year ended September 30,2009.

Performance of Divisions Sugar Division

Crushing season 2008-09 was one of the shortest seasons in the history of the Company from the point of view of the cane availability. The company has crushed only 32.74 Lacs qtl. and the season was ran only for 79 days. The other details are as under Season 2008-09 Season 2007-08

Gross Working days 79 117

Total Cane Crushed (qtls.) 3274866.32 5446935.57

Average cane crushed per day (qtls.) 4151 401 46556.52

Average Recovery 8.92% 9.50%

Cane Management

Cane management is the most indispensable part of the whole sugar manufacturing process, The quality as well as price of sugar cane determines the prospects of the company. For the season 2008-09 State Advisory Price was higher at Rs. 140 in comparison of last season. Whereas the ground realities was much different and to achieve the optimum level of cane crushing your company paid incentive. In spite- of that the company crushed merely 32.74 lacs qtl towards the end of the season, for which there were several reasons like untimely rains, shifting of farmers from cane crop to other crops and which reduced cane yield during the season 2008-09. Moreover, to meet the challenges of low sugar cane yield the company has started immense drive for cane development in the area by distributing pesticides, seeds, fertilizers etc. The results are overwhelming and we are expecting good sugar cane during the current season 2009-10.

Co-Generation;

Low cane crushing has also affected the power production during the crushing season 2008-09, The bagasse generated by the lower crushing was not enough to run the Co-Gen plant once the crushing was stopped. During the crushing season reported the capacity utilization was merely 46,58% as the company produced only 22079 MWh power and exported 19588 MWh to UPPCL.

Distillery

The year 2008-09 was not good for the distillery also. As the lower cane crushing not only affected the sugar division but all related activities. The distillery division was also no exception. Its performance was badly affected as the captive molasses was not available in required quantities. The price of molasses was also high leading to higher cost of production as the molasses price in open market peaked up to Rs. 500 per qtl.

Auditors

M/s. Mehrotra & Mehrotra, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offer themselves for reappointment, They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 224 (16) of the Companies Act, 1956.

Auditors Report

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate notes to the accounts.

Directors

At the ensuing Annual General Meeting Dr. Kirti Singh and Shri R, S.Shukla both are independent Directors of your Company are due to retire by rotation u/s 256 of the Companies Act, 1956. They- are eligible for re-appointment and offer themselves for the same Public Deposits During the year 2008-09 the company has not accepted any public deposits.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited, However, the National Stock Exchange Limited has suspended the trading on the basis of some non compliance of the Listing agreement. Although the company has completed all the compliances but the resumption of trading is awaited,

Directors Responsibility Statement

In pursuance of sub-section (2AA) of Section 217 of the Companies Act, 1956, in respect of Directors Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for the year ended on September 30,2009 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, made judgments 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 loss of the Company for the year ended on that date,

iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the company and for detecting fraud and other irregularities; an d

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis, Conservation Of Energy, Technology Absorption and Foreign Exchange and Outgo

The particulars required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors), Rules, 1988 are given in Annexure 1 and forms part of this Report.

Particulars of Employees

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended are given in Annexure 2 and forms part of this Report.

Corporate Governance

A separate section on Corporate Governance" including a certificate from the Auditors of the Company regarding the confirmation of the compliance of conditions of the Corporate Governance as stipulated under clause 49 of the Listing Agreement with Stock Exchanges is given in Annexure -3 and forms part of this report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report on the business and operations of the company is attached to this report asAnnexure-4.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in Form B of the this report as required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988.

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Acknowledgments

Your Directors place on record their acknowledgment and sincere appreciation of all the bankers and financial institutions for their continued assistance. They further appreciate and acknowledge with gratitude the co-operation and assistance received from alt executives, staff and workmen of the Company.

For and on behalf of the Board of K.M. Sugar Mills Ltd.

L. K.Jhunjhunwala Chairman Date: 29,01,2010 Place: Lucknow

 
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