Mar 31, 2016
The Directors have pleasure in presenting their Thirtieth Annual Report together with the audited financial statements for the Financial Year ended March 31, 2016.
FINANCIAL RESULTS
The financial summary, performance highlights, operations/state of affairs of the Company for the year are summarized below:
Rs, in Lakh
Particulars |
2015-16 |
2014-15 |
Gross Income |
29,233.96 |
19,946.53 |
Profit/(Loss) Before Interest and Depreciation (EBITDA) |
(328.64) |
805.00 |
Finance Charges |
1,526.85 |
1,666.43 |
Gross Profit/(Loss) |
(1,855.49) |
(861.43) |
Provision for Depreciation |
743.14 |
712.55 |
Net Profit/(Loss) Before Tax |
(2,598.63) |
(1,573.98) |
Taxes |
- |
- |
Net Profit/(Loss) After Tax |
(2,598.63) |
(1,573.98) |
DIVIDEND & RESERVES
In view of the losses incurred, your Board is unable to recommend any dividend for the financial year ended March 31, 2016. The Company has not transferred any amount to the reserves for the year ended March 31, 2016.
SHARE CAPITAL
During the year, the Company has allotted 3,50,00,000, 8% Redeemable Cumulative Preference shares of Rs,10/- each to E.I.D.- Parry (India) Limited, the Holding Company aggregating to Rs,35 Crore. Consequently, the paid up share capital of the Company stood at Rs,115.52 Crore w.e.f. March 31, 2016.
During the year, the Company has not issued any equity shares. As on March 31, 2016, none of the Directors of the Company hold any shares or convertible instruments of the Company.
COMPANY PERFORMANCE
During the year under review, the total revenue of the Company from operations was Rs,29121.44 lakh, 46.80% higher than Rs,19836.63 lakh in the previous year. Operating Loss (Loss before Interest and Tax) was Rs,1071.78 lakh as against Rs,92.45 lakh profit in the previous year. The interest cost was Rs,1526.85 lakh during the current Financial Year as against Rs,1666.43 lakh during the previous year. During the year under review, the Company achieved an all around improvement on many operating parameters. The cane crushed was higher at 7.39 LMT as against 5.55 LMT in the previous year; the power generation was at 540.84 lakh Units as against 382.75 lakh Units in the previous year. The amount realized on power export was higher at Rs,1442.13 lakh as against Rs,785.64 lakh in the previous year. There was also improvement in most efficiency parameters this year. However, the sugar recovery dropped to 11.91% as against 12.14% in the previous year but higher as compared to many other factories in North Karnataka in the face of adverse agro-climatic conditions caused by lack of rain and drought like situation. The Company also worked on improving its sales mix to enhance sales to Institutions and get a better margin on its products. Inspite of all the above, the Company reported a loss before tax of Rs,2598.63 lakh during the Financial Year. The primary reason for the loss was low sugar prices during the first 9 months of the Financial Year which offset the achievements of the Company on all other fronts.
The Sugar Industry in India went through an unprecedented crisis due to all time low sugar selling prices caused by fifth straight year of surplus production as well as a drop in global prices. In fact it went below the cost of production for a substantial portion of the year. The sugar prices which remained subdued showed an upward trend only during the last quarter of the financial year.
In spite of the low sugar selling prices, the Company paid the Fair & Remunerative Price (FRP) of Rs,2200/T for the SY 14-15 and Rs,2300/T for the SY 15-16, the price being linked to a recovery percentage of 9.5%. Since your Company achieved higher recovery, the FRP was prorated. In fact, the Company is one of the few Mills in Karnataka to have discharged its obligations towards the farmers in time.
During the Financial Year, the Central Government announced a number of measures to alleviate the difficulties faced by the Industry including grant of a direct cane subsidy of Rs, 45/- MT as part of the FRP. The Government also took a series of measures viz. compulsory export of sugar linked to the Cane Subsidy, hike in import duty of sugar, abolition of the Duty Free Import Authorization Scheme, Interest Subvention scheme, subsidy for sugar exports, direct subsidy to farmers, remunerative prices for ethanol procurement and waiver of excise duties on ethanol to further incentivize ethanol supplies for the Ethanol Blending Program. All these steps were taken by the Central Government with a view to improve the cash flows of sugar mills so that the Mills would be in a position to make cane payments to sugarcane farmers in time. This also improved the general sentiments in the Industry and had a positive impact on the sugar price during Q4 of the Financial Year.
There are reports which suggest that due to less rainfall and lower water availability in reservoirs in some Districts in Maharashtra and North Karnataka, the acreage of sugarcane available for harvesting in SY 16-17 will be lower. Therefore, there is an expectation that sugar production during SY 16-17 from the States of Maharashtra and Karnataka, due to lower acreage in some of their districts, will be lower than the current sugar season. This is expected to have an impact on the demand supply equilibrium of Cane and Sugar but positively impact the selling price.
Effective February 2016, the Central Government created a Sugarcane Price Stabilization Fund, funded through a levy of Special Cess as advocated by the Commission on Agricultural Costs and Prices. We hope that the Central Government will continue this since it will augur well for the Industry in the long run and help the Government in providing subsidies directly to the farmers in the event sugar prices go below the economic levels of the sugar prices linked to FRP. This could also resolve the financial crisis faced by the Sugar Industry to a large extent.
The major challenges for the Company is to continuously strive towards safeguarding the cane area in the face of stiff competition, improve recovery and yield, operating efficiencies with the Central Government playing its role by providing due subsidy in the event of low sugar prices.
PERFORMANCE OF BUSINESS SEGMENTS Sugar
During the year, the Company crushed a total 7.39 lakh MT of cane as against 5.55 lakh MT of cane crushed in the previous year. The Company produced 8.80 lakh quintals of sugar as against 6.73 lakh quintals of sugar produced during the previous year. The recovery of sugar from sugar cane was at 11.91% during the year as against the recovery of 12.14% during the previous year.
Power
The total power generated by our Co-generation plant was 540.84 lakh units as against the 382.75 lakh Units generated during the previous year. The revenue from sale of power was at Rs,1442.13 lakh as against Rs, 785.64 lakh during the previous year.
SUBSIDIARY
The Company has no subsidiary.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(5) of the Companies Act, 2013, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management, confirm that:
- in the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards have been followed and there are no material departures from the same;
- the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the loss of the Company for the year ended on that date;
- the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- The Directors have prepared the Annual Accounts on a going concern basis.
- The Directors have laid down proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively.
- the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. K. Balasubramanian resigned with effect from the close of business hours on July 24, 2015. Mr. K. Balasubramanian was the Chairman from 24.10.2005 to 29.10.2007; 27.10.2009 to 27.08.2010; and from 23.07.2013 to 24.07.2015. The Board records its deep appreciation for the commendable services rendered by him. Mr. C. R.Rajan was elected as the Chairman of the Board with effect from November 5, 2015.
In accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Articles of Association of the Company, Mr. V. Ravichandran, Director retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for reappointment. The details required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 of Mr. V. Ravichandran are annexed to the Notice convening the 30th Annual General Meeting of the Company.
All the Independent Directors viz., Mr. C. R.Rajan, Mr. K. Ramadoss and Ms. Lalitha Balakrishnan have submitted declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015.
The Board met 6 times during the financial year 2015-16, the details of which are given in the Corporate Governance Report.
Board Evaluation
In accordance with the provisions of Section 134 of the Act and SEBI (LODR) Regulations, 2015, the Board has carried out an evaluation of its own performance, the performance of Committees of the Board, namely, Audit Committee, Risk Management Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee and also the directors individually. The manner in which the evaluation was carried out and the process adopted has been mentioned in the Corporate Governance Report.
The Board, on the recommendation of the Nomination & Remuneration Committee has laid down a policy for selection and appointment of Directors, Senior Management and their remuneration and also framed the criteria for determining qualifications, positive attributes and independence of directors. The Remuneration Policy and criteria for Board nominations are given in Annexure - A to this Report.
Mr. V. Ramesh, Managing Director; Mr. V. Suri, Chief Financial Officer and Mr. Amar Kumar Dora, Company Secretary are the Key Managerial Personnel of the Company as per Section 203 of the Companies Act, 2013.
AUDITORS AND AUDITOR''S REPORT
Statutory Auditors
The Shareholders at the 28th Annual General Meeting held on July 25, 2014, had appointed M/s R.G.N. Price & Co., as Statutory Auditors of the Company to hold office until the conclusion of 30th Annual General Meeting. As per the Companies Act, 2013 M/s R.G.N. Price & Co., are eligible to be appointed for a second term. M/s R.G.N. Price & Co., have expressed their willingness to continue as auditors of the Company and accordingly, their appointment is recommended to the Shareholders at the ensuing meeting.
Cost Auditors
As per Section 148 of the Companies Act 2013 read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014, the cost records maintained by the Company in respect of its Sugar and Cogeneration activity are required to be audited by a Cost Auditor. The Board of Directors, based on the recommendation of the Audit Committee, have appointed M/s Narashima Murthy & Co, Cost Accountants (FRN: 000042), as the Cost Auditors for auditing the cost accounting records maintained by the Company for the financial year 2016-17 on a remuneration of Rs, 90,000/- plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, a resolution seeking members approval of the remuneration payable to the Cost Auditor forms part of the notice convening the Annual General Meeting.
The Cost Audit Report for the year 2014-15 was filed with the Ministry of Corporate Affairs on September 28, 2015.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s V. Sreedharan & Associates, Company Secretaries in practice as the Secretarial Auditor to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit for the year 2015-16 is given in Annexure-B to this Report.
There are no qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors/Secretarial Auditors in their respective reports. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review.
RISK MANAGEMENT
The Company has voluntarily constituted a Risk Management Committee as per the terms given under Regulation 21 of the SEBI (LODR) Regulations, 2015. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report.
The Company has a mechanism to identify, assess, monitor and mitigate various risks to its key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. The Company has formulated a Risk Management Policy which is also available on the Company''s website at www.parrysugar.com.
INTERNAL FINANCIAL CONTROLS
The Company has adequate Internal Financial Controls with proper checks to ensure that transactions are properly authorized, recorded and reported apart from safeguarding its assets. These systems are reviewed and improved on a regular basis. It has a comprehensive budgetary control system to monitor revenue and expenditure against approved budget on an ongoing basis. The internal auditors of the Company review the controls across the key processes and submits reports periodically to the Management and significant observations are also presented to the Audit Committee for review. Follow up mechanism is in place to monitor the implementation of the various recommendations.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.
As the Company does not fall under any of the threshold limits given under the provisions of Section 135 of the Companies Act, 2013, the compliances under CSR are not applicable to the Company.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into during the financial year with the related parties were on arm''s length basis and were in the ordinary course of business. Section 188(1) of the Companies Act, 2013 exempts related party transactions that are in the ordinary course of business and are on arm''s length basis. However, under erstwhile clause 49 of the Listing Agreement and Regulation 23 of the SEBI (LODR) Regulations, 2015, all material Related Party Transactions requires approval of the shareholders. Accordingly, the Company has obtained the approval of the shareholders by way of special resolution for the material related party transactions. The Board of Directors and the Audit Committee have also approved the said related party transactions. There were no loans and advances from / to the Holding / associate Company or to the firms/companies in which the Directors are interested.
There are no materially significant related party transactions with the promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
The policy on dealing with Related Party Transactions as approved by the Board is available at the Web Link: www.parrysugar.com/html/ corporate_governance.html.
The particulars of contracts/arrangements entered into by the Company with related parties as required to be disclosed are given in Annexure-C to this Report.
CORPORATE GOVERNANCE
The Report on corporate governance as stipulated under the SEBI (LODR) Regulations, 2015 forms part of this Report. The requisite certificate from M/s V. Sreedharan & Associates, Practicing Company Secretaries confirming compliance with the conditions of corporate governance is attached to the Corporate Governance Report. The report also contains the details as required to be provided on Board evaluation, remuneration policy, implementation of risk management policy, whistle blower policy/vigil mechanism etc.
The Managing Director and the Chief Financial Officer have submitted a certificate to the Board regarding the financial statements and other matters as required under the SEBI (LODR) Regulations, 2015.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI (LODR) Regulations, 2015, forms part of this Annual Report.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
During the year, the Company has transferred an amount of '' 504,493/- being the unclaimed dividend for the year 2007-08 to the Investor Education and Protection Fund established by the Central Government.
LISTING AGREEMENT
The Securities and Exchange Board of India (SEBI), on September 2, 2015 issued SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015. The said regulations which became effective December 1, 2015 required all Listed Companies to enter into the fresh Listing Agreements within six months from the effective date. Accordingly, the Company entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited during December, 2015.
DISCLOSURES Committees of the Board
The Company has the following Committees constituted in accordance with the Companies Act, 2013 and SEBI (LODR) Regulations, 2015:
- Audit Committee
- Nomination & Remuneration Committee
- Stakeholders Relationship Committee
- Risk Management Committee
The details of all the Committees along with their composition, terms of reference and meetings held during the year are provided in the "Report on Corporate Governance" forming part of this Annual Report.
Vigil Mechanism & Whistle Blower Policy
The Company has a vigil mechanism and a whistle blower policy. The same has been posted on the Company''s website and the details of the same are given in the Corporate Governance Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure-D to this Report.
Particulars of Loans, Guarantees or Investments
During the financial year 2015-16, the Company has not given any guarantees/loan or made any investments.
Credit Rating
The Rating Committee of CRISIL has downgraded its rating on the Company''s long-term and short term bank loan facilities of ''200 Crore to CRISIL A/Stable and CRISIL A1 from CRISIL A /Stable and CRISIL A1 and the Short Term Debt (including commercial paper) of Rs,100 Crores to CRISIL A1 from CRISIL A1 .
Particulars of Employees
The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure -E to this Report.
Extract of the Annual Return
The details of the extract of the Annual Return in Form MGT-9 are given in Annexure-F to this Report.
Report to the Board for Industrial and Financial Reconstruction (BIFR)
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 net worth as required under Section 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 to BIFR. The Company has been filing quarterly reports with BIFR from time to time.
GENERAL
Your Directors state that no disclosure is required in respect of the following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act, 2013.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operations in future.
PERSONNEL RELATIONS
Your directors hereby place on record their appreciation for the services rendered by the executives, staff and workers of the Company for their hard work, dedication and commitment. During the year under review, relations between the employees and the management continued to remain cordial.
APPRECIATION
Your directors thank the various Central and State Government Authorities and Agencies for the continued help and cooperation extended by them. The Directors gratefully acknowledge all stakeholders of the Company viz., farmers, customers, members, dealers, vendors and banks for their excellent support during the year. The Directors also place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued cooperation to the Company.
For and on behalf of the Board of Directors
Chennai C. R. Rajan
May 2, 2016 Chairman
Mar 31, 2015
To all the members of Parrys Sugar Industries Limited
The Directors have pleasure in presenting their Twenty Ninth Annual
Report together with the audited financial statements for the Financial
Year ended March 31,2015.
FINANCIAL RESULTS
The financial summary, performance highlights, operations/state of
affairs of the Company for the year are summarised below:
Rs in Lakhs
Particulars 2014 -15 2013- 14
Gross Income 19946.53 17252.83
Profit/(Loss) Before Interest and Depreciation 805.00 (660.66)
(EBITDA)
Finance Charges 1666.43 2303.17
Gross Profit/(Loss) (861.43) (2963.83)
Provision for Depreciation 712.55 639.91
Net Profit/(Loss) Before Tax (1573.98) (3603.74)
Taxes - -
Net Profit/(Loss) After Tax (1573.98) (3603.74)
DIVIDEND & RESERVES
In view of the losses incurred, your Board is unable to recommend any
dividend for the financial year ended March 31,2015.
The Company has not transferred any amount to the reserves for the year
ended March 31,2015.
SHARE CAPITAL
During the year, the Company has allotted 1,30,00,000, 8% Redeemable
Cumulative Non-Convertible Preference shares of Rs.10/- each to the
Holding Company aggregating to Rs.13 Crores. Consequently, the paid up
share capital of the Company stood at Rs.80.52 Crores w.e.f. March
21,2015.
During the year, the Company has not issued any equity shares. As on
March 31, 2015, none of the Directors of the Company hold any shares or
convertible instruments of the Company.
The Paid up Equity Share Capital of the Company as on March 31,2015 was
Rs.80.52 Crores.
COMPANY PERFORMANCE
During the year under review, the total revenue of the Company from
operations was Rs.19836.63 lakhs, 15.24% higher than Rs.17213.81 lakhs
in the previous year. Operating profit (EBITDA) was Rs.805 Lakhs as
against the loss of Rs660.66 Lakhs in the previous year. The interest
cost was Rs.1666.43 Lakhs as against Rs.2303.17 Lakhs during the last
year. The year was a challenging year for the Company in the face of
high sugarcane procurement cost and a volatile sugar price. Operation
-ally, Company has performed well in as much as the Company could bring
down the losses by 56.32% as compared to the losses of the previous year.
The Sugar industry in India at present is going through an
unprecedented crisis due to an all time low sugar selling price caused
by fifth straight year of surplus production as well as a drop in
global prices and high sugarcane procurement cost. For the 2014-15
sugar season, the Central Government fixed the Fair and Remunerative
Price @ Rs.2200/- per Tonne for a basic recovery rate of 9.5% with a
premium of Rs.2.34 for every 0.1% increase in the recovery rate. The
steep rise in sugar cane price year after year which accounts for about
70 percent of total operation costs is expected to significantly impact
the profitability of sugar mills this year. The continuous losses of
several years have already made cane dues across the country to hit a
record high. The Government is contemplating a series of measures to
check the falling prices of sugar in the domestic market so that mills
earn more revenue to clear the mounting sugar cane arrears due to
farmers. The Indian Sugar Mills Association (ISMA) estimates that
around a quarter of mills across the country could go into negative net
worth and may not be able to crush cane next season. Though the linking
sugar cane prices to the prices of end-products has long been advocated
for long-term financial health and sustenance of the industry, the same
is yet to be implemented by the State Governments effectively.
The major thrust of the Company is to work towards improving the yield,
increasing the cane cultivation in its command area, further improving
the operating efficiency and take measures to counter the challenge of
low sugar price and threat of continuous increase in cane price.
PERFORMANCE OF BUSINESS SEGMENTS Sugar
During the year, the Company crushed a total 5.55 Lakhs MT of cane as
against 4.96 Lakhs MT of cane crushed in the previous year. The Company
produced 6.73 Lakhs quintals of sugar as against 5.85 Lakhs quintals of
sugar produced during the previous year.
The recovery of sugar from sugar cane was at 12.14% during the year as
against the recovery of 11.80% during the previous year.
Power
The total power generated by our Co-generation plant was 382.75 Lakhs
units as against the 329.16 Lakhs Units generated during the previous
year. The revenue from sale of power was at Rs.785.64 Lakhs as against
Rs.628.56 Lakhs during the previous year.
SUBSIDIARY
The Company has no subsidiary.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(3) of the Companies
Act, 2013, your Directors to the best of their knowledge and belief and
according to information and explanations obtained from the management,
confirm that:
- in the preparation of the annual accounts for the financial year
ended March 31, 2015, the applicable accounting standards have been
followed and there are no material departures from the same;
- the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31,2015 and of the loss of the Company for
the year ended on that date;
- the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
- The Directors have prepared the Annual Accounts on a going concern
basis.
- The Directors have laid down proper internal financial controls to
be followed by the Company and such controls are adequate and operating
effectively.
- the Directors have devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. D. Kumaraswamy retired as Managing Director of the Company w.e.f.
September 1, 2014. Mr. Kumaraswamy was appointed as a Director in May
2010 and became the Managing Director of the Company from August 28,
2010. The Board records its deep appreciation for the commendable
services rendered by him in steering the company through the most
difficult and challenging times.
The Board appointed Mr. V. Ramesh as the Managing Director with effect
from September 1,2014 subject to approval of the members at the Annual
General Meeting.
Ms. Lalitha Balakrishnan was appointed as an Additional & Independent
Director of the Company by the Board of Directors with effect from
March 30, 2015. Ms. Lalitha Balakrishnan holds office as a Director
until the ensuing Annual General Meeting and is eligible for
appointment as Director. The Company has received notice under Section
160 of the Companies Act, 2013 from a member signifying his intention
to propose the candidature of Ms. Lalitha Balakrishnan.
The Board of Directors recommended to the Shareholders, the appointment
of Ms. V. Ramesh as Managing Director without any remuneration and Ms.
Lalitha Balakrishnan as an Independent Director.
In accordance with the provisions of Section 152 of the Companies Act,
2013 read with the Articles of Association of the Company, Mr. V.
Ravichandran, Director retires by rotation at the forthcoming Annual
General Meeting and being eligible, offers himself for re-appointment.
As required under clause 49 of the Listing Agreement a brief resume,
expertise and details of other directorships of Mr. V. Ramesh, Mr. V.
Ravichandran and Ms. Lalitha Balakrishnan are annexed to the Notice
convening the 29th Annual General Meeting of the Company.
All the Independent Directors viz., Mr. K. Balasubramanian, Mr. K.
Ramadoss, Mr. C. R. Rajan and Ms. Lalitha Balakrishnan have submitted
declarations confirming that they meet the criteria of independence as
prescribed under Section 149(6) of the Companies Act, 2013 and Clause
49 of the Listing Agreement with the Stock Exchanges.
The Board met 5 times during the financial year 2014-15, the details of
which are given in the Corporate Governance Report.
In accordance with the provisions of Section 134 of the Act and Clause
49 of the Listing Agreement, the Board has carried out an evaluation of
its own performance, the performance of Committees of the Board,
namely, Audit Committee, Risk Management Committee, Stakeholders
Relationship Committee and Nomination and Remuneration Committee and
also the directors individually. The manner in which the evaluation was
carried out and the process adopted has been mentioned in the Corporate
Governance Report.
The Board, on the recommendation of the Nomination & Remuneration
Committee, has framed a policy for selection and appointment of
Directors, Senior Management and their remuneration and also framed the
criteria for determining qualifications, positive attributes and
independence of directors. The Remuneration Policy and criteria for
Board nominations are given in Annexure - A to this Report.
Mr. V. Ramesh, Managing Director; Mr. V. Suri, Chief Financial Officer
and Mr. Amar Kumar Dora, Company Secretary are the Key Managerial
Personnel of the Company as per Section 203 of the Companies Act, 2013.
AUDITORS AND AUDITOR'S REPORT Statutory Auditors
The Shareholders at the 28th Annual General Meeting held on July 25,
2014, have appointed M/s R.G.N. Price & Co., as Statutory Auditors of
the Company to hold office until the conclusion of 30th Annual General
Meeting subject to ratification of their appointment at every
intermittent AGM. M/s R.G.N. Price & Co., being eligible have expressed
their willingness to continue as auditors of the Company and
accordingly, the ratification of their appointment is recommended to
the Shareholders.
Cost Auditors
As per Section 148 of the Companies Act 2013 read with Rule 4 of the
Companies (Cost Records and Audit) Rules, 2014, the cost records
maintained by the Company in respect of its Sugar and Cogeneration
activity are required to be audited by a Cost Auditor. The Board of
Directors, based on the recommendation of the Audit Committee,
appointed M/s Narashima Murthy & Co, Cost Accountants (FRN: 000042), as
the Cost Auditors for auditing the cost accounting records maintained
by the Company for the financial year 2015-16 on a remuneration of '
90,000/- plus service tax as applicable and reimbursement of out of
pocket expenses. As required under the Companies Act, 2013, a
resolution seeking members approval of the remuneration payable to the
Cost Auditor forms part of the notice convening the Annual General
Meeting.
The Cost Audit Report for the year 2013-14 was filed with the Ministry
of Corporate Affairs in August 2014.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013
read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed M/s V. Sreedharan &
Associates, Company Secretaries in practice as the Secretarial Auditor
to undertake the Secretarial Audit of the Company. The Report of the
Secretarial Audit is given in Annexure-B to this Report.
There are no qualifications, reservations or adverse remarks or
disclaimers made by the Statutory Auditors/Secretarial Auditors in
their respective reports. The Statutory Auditors have not reported any
incident of fraud to the Audit Committee of the Company during the year
under review.
RISK MANAGEMENT
As required under Clause 49 of the Listing Agreement, the Company has
constituted a Risk Management Committee. The details of Committee and
its terms of reference are set out in the Corporate Governance Report
forming part of the Board's Report.
The Company has a mechanism to identify, assess, monitor and mitigate
various risks to its key business objectives. Major risks identified by
the business and functions are systematically addressed through
mitigating actions on a continuing basis. The Company has formulated a
Risk Management Policy which is also available on the Company's website
at www.parrysugar.com.
INTERNAL FINANCIAL CONTROLS
The Company has adequate Internal Financial Controls with proper checks
to ensure that transactions are properly authorised, recorded and
reported apart from safeguarding its assets. These systems are reviewed
and improved on a regular basis. It has a comprehensive budgetary
control system to monitor revenue and expenditure against approved
budget on an ongoing basis. The internal auditors of the Company
reviews the controls across the key processes and submits reports
periodically to the Management and significant observations are also
presented to the Audit Committee for review. Follow up mechanism is in
place to monitor the implementation of the various recommendations.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.
Section 135 of the Companies Act, 2013 provides the threshold limit for
applicability of the CSR to a Company i.e. (a) net worth of the Company
to be Rs500 crore or more; or (b) turnover of the company to be Rs1,000
crore or more; or (c) net profit of the company to be Rs5 crore or
more. As the Company does not fall under any of the threshold limits
given above, the provisions of Section 135 are not applicable to the
Company.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into during the
financial year with the related parties were on arm's length basis and
were in the ordinary course of business. Section 188(1) of the
Companies Act, 213 exempts related party transactions that are in the
ordinary course of business and are on arm's length basis. However,
under clause 49 of the Listing Agreement, all material Related Party
Transactions requires approval of the shareholders through special
resolution. Accordingly, the Company has obtained the approval of the
shareholders by way of special resolution for the material related
party transactions. The Board of Directors and the Audit Committee have
also approved the said related party transactions.
There are no materially significant related party transactions with the
promoters, Directors, Key Managerial Personnel or other designated
persons which may have a potential conflict with the interest of the
Company at large.
The policy on dealing with Related Party Transactions as approved by
the Board is available at the investors section of the Company's
website at www.parrysugar.com
The particulars of contracts/arrangements entered into by the Company
with related parties as required to be disclosed are given in
Annexure-C to this Report.
CORPORATE GOVERNANCE
The Report on corporate governance as stipulated under the Listing
Agreement forms part of this Report. The requisite certificate from M/s
V. Sreedharan & Associates, Practicing Company Secretaries confirming
compliance with the conditions of corporate governance is attached to
the Corporate Governance Report. The report also contains the details
as required to be provided on Board evaluation, remuneration policy,
implementation of risk management policy, whistle blower policy/vigil
mechanism etc.
The Managing Director and the Chief Financial Officer have submitted a
certificate to the Board regarding the financial statements and other
matters as required under the Listing Agreement.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under
review, as stipulated under Clause 49 of the Listing Agreement, form
part of this Annual Report.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
During the year, the Company has transferred an amount of Rs647,641/-
being the unclaimed dividend for the year 2006-07 to the Investor
Education and Protection Fund established by the Central Government.
DISCLOSURES
Committees of the Board
During the year, in accordance with the Companies Act, 2013 the Board
re-constituted/re-named some of its Committees and presently the
Company has the following Committees:
- Audit Committee
- Nomination & Remuneration Committee
- Stakeholders Relationship Committee
- Risk Management Committee
The details of all the Committees alongwth their composition, terms of
reference and meetings held during the year are provided in the "Report
on Corporate Governance" forming part of this Annual Report.
Vigil Mechanism & Whistle Blower Policy
The Company has a vigil mechanism and a whistle blower policy. The same
has been posted on the Company's website and the details of the same
are given in the Corporate Governance Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo pursuant to Section
134(3) of the Companies Act, 2013 read with Rule 8 of the Companies
(Accounts) Rules, 2014 is given in Annexure-D to this Report.
Particulars of Loans, Guarantees or Investments
During the financial year 2014-15, the Company has not given any
guarantees/loan or made any investments.
Credit Rating
The Rating Committee of ICRA has reaffirmed the rating at [ICRA] BBB
(pronounced as ICRA triple B plus) for the long term credit to the
Company and [ICRA] A2 (pronounced as ICRA A two) for the short term
credit to the Company. The outlook on the long term rating is Stable.
The aforesaid ratings are valid till November 30, 2015.
Particulars of Employees
The information required pursuant to Section 197 of the Companies Act,
2013 read with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is given in Annexure -E to this
Report.
Extract of the Annual Return
The details of the extract of the Annual Return in Form MGT-9 are given
in Annexure-F to this Report.
Report to the Board for Industrial and Financial Reconstruction (BIFR)
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 Section 23 of the Sick Industrial Companies (Special
Provisions) Act, 1985 to BIFR. The Company has been filing quarterly
reports with BIFR from time to time.
GENERAL
Your Directors state that no disclosure is required in respect of the
following items as there were no transactions on these items during the
year under review:
1. Details relating to deposits covered under Chapter V of the
Companies Act, 2013.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme.
No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and the
Company's operations in future.
PERSONNEL RELATIONS
Your directors hereby place on record their appreciation for the
services rendered by the executives, staff and workers of the Company
for their hard work, dedication and commitment. During the year under
review, relations between the employees and the management continued to
remain cordial.
APPRECIATION
Your directors thank the various Central and State Government
Authorities and Agencies for the continued help and cooperation
extended by them. The Directors gratefully acknowledge all stakeholders
of the Company viz., farmers, customers, members, dealers, vendors and
banks for their excellent support during the year. The Directors also
place on record their sincere appreciation to all employees of the
Company for their unstinted commitment and continued cooperation to the
Company.
For and on behalf of the Board of Directors
Chennai K. Balasubramanian
April 24, 2015 Chairman
Mar 31, 2013
The Directors have pleasure in presenting their 27th Annual Report
together with the audited fnancial statements for the year ended March
31, 2013.
The fnancials for the year 2012-13 are summarised below:
(Rs. in Lakhs)
2012-13 2011-12
particulars (9 months)
Revenue from operations 10,073.46 46,739.09
Other Income 10.19 5.75
Total Income 10,083.65 46,744.84
Proft before Interest
and Depreciation 625.36 5,515.20
Interest 1,428.72 5,178.17
Depreciation 489.91 2,349.96
(Loss) before taxation (1,293.27) (2,012.93)
Provision for tax:
Current
Deferred Tax (1,375.60)
(Loss) after Tax (1,293.27) (637.33)
DIVIDEND
In view of the losses incurred, your Board is unable to recommend any
dividend for the year ended March 31, 2013.
DemerGer of the units at sankilli and Haliyal
Subsequent to the approval accorded by the Board of Directors and
shareholders at their respective meetings held on April 25, 2012 and
October 8, 2012, the Scheme of Arrangement (Demerger) between the
Company and the Holding Company, E.I.D.-Parry (India) Ltd., (EID Parry)
under Sections 391 to 394 of the Companies Act, 1956 for transfer and
vesting of the CompanyÂs manufacturing facilities located at Haliyal
and Sankili to and into EID Parry w.e.f April 1, 2012 has been
sanctioned by the HonÂble High Court of Karnataka and HonÂble High
Court of Judicature, Madras vide their respective order dated February
01, 2013 & February 18, 2013. The Scheme has become efective from March
18, 2013 pursuant to fling of the orders of the HonÂble High Courts of
Karnataka and Madras with the Registrar of Companies, Bangalore and
Registrar of Companies, Chennai, respectively.
Accordingly, the fnancial results of the Company for the year ended
March 31, 2013 pertains to that of Ramdurg Unit only. However, the
audited results of the Company for the year ended March 31, 2012
included the results of the demerged business undertakings also and
hence, to that extent, previous year fgures are not comparable with the
current year fgures.
CompanY performanCe
During the year under review, your companyÂs total income was
Rs.10,083.65 lakhs as against Rs.46,744.84 lakhs in the previous year. The
proft before interest and depreciation was Rs.625.36 lakhs as against
Rs.5,515.20 Lakhs of last year. After providing for Rs.489.91 Lakhs for
depreciation and Rs.1,428.72 Lakhs for interest, the loss for the year
was Rs.1,293.27 Lakhs. The loss is after providing for Rs. 799.75 Lakhs
towards cane price for 2011-12.
During the year, on completion of the expansion project, the operations
at the Ramdurg Unit was stabilised at 4250 TCD. The capacity
enhancement and the ongoing debottlenecking of the facility helped the
Company to achieve sustained performance during the current sugar
season. The Company also successfully commissioned the cogeneration
unit of 13 MW and the enhanced capacity was operational resulting in
higher earnings from the export of power.
During the year, the Ramdurg Unit crushed a total 5.75 Lakhs MT of
cane, produced 6.31 Lakhs qtls of sugar. The average recovery rate was
10.98%. The recovery of all the sugar mills in North Karnataka was
lower mainly on account of prolonged drought and less water in
reservoirs and bore wells leading to more dryness in the cane and the
fowering of cane as early as November 2012.
The total power generated by the Ramdurg Co-generation plant was 339
Lakh units and export of power was at 141 Lakh units in the current
year as against 6 Lakh units during last year. The revenue on power
sales was better than last year due to higher export on account of the
commissioning of the 13 MW cogeneration plant.
The major challenge for the Company is to protect its cane area,
further improve its operating efciencies and improve the quality of
output. The Company proposes to take various measures in this
direction, the key being to improve the recovery and also stabilise the
operations at the present capacity.
Cane prICe
For the sugar year 2012-13, the Government of India declared the Fair
Remunerative Price (FRP) at Rs.1700/MT of cane linked to a recovery of
9.5% with additional Rs. 17.90 for every 0.1% recovery increase. In
Karnataka, till the 2012-13 sugar seasons, the cane price was fxed by
mutual discussions between the Mills and Sugarcane growers association
with limited intervention of the Government of Karnataka. The cane
price has been showing a steady increase year after year with no
corresponding improvement in sugar price and recovery. The cane price
for the 2012/13 sugar season was Rs. 2500 per tonne (ex-feld). Besides
this, the company also had to pay an additional price of Rs. 350 per
tonne for the 2011/12 sugar season. The high cane price resulted in a
major dent in the performance of the company without corresponding
increase in selling price and recovery .
Similar to the practice prevailing in U.P and other sugar cane growing
states, the Legislative Council of the Government of Karnataka on
February 13, 2013 passed the Karnataka Sugarcane (Regulation of
Purchase and Supply) Bill, 2013 which has a provision for constitution
of Sugarcane Control Board to advise regarding State Sugarcane Advisory
Price (SAP). This bill empowers the state government to make rules to
decide sugarcane price on revenue sharing basis taking into
consideration actual revenue realised from sugar, bagasse, molasses and
press mud which takes into account some of the recommendations made by
the Rangarajan Committee appointed by the Govt of India to advise on
the sugar decontrol.
sugar Industry & sugar price
Sugar price which had shown improvement during the period July to
September 2012 giving a huge relief to the millers who could recover
some of their losses, subsequently shown a reverse trend unfavourably
afecting the mills across the country. The decline was primarily driven
by abundant sugar, as expected during the start of the domestic
crushing season in November, 2012. Additionally, the high non-levy
sugar quota announced by the Government for four months of December
2012 to March 2013 afected the domestic sugar prices. The then
prevailing muted global sugar prices trends, was also a supplementary
factor. At the current prices, it would be very difcult for the sugar
mills to make payments to cane farmers in time which might force
farmers to look at other crops which would be a threat to the sugar
industry prospects.
The cost of production for most of the sugar companies in 2012/13 was
higher than 2011/12, as sugarcane costs increased by 16%-17% over the
last season. Also, particularly for mills based in Karnataka and
Maharashtra, a decline in sugarcane availability and recovery from
unfavourable climatic conditions impacted cost. Rise in the cost of
sugar production and decline in sugar prices resulted in lower
operating margins for sugar mills across the country.
Recently, the government of India announced partial de-control of the
sugar industry by dismantling the release mechanism. The Government
had also abolished the levy-sugar mechanism, under which private
millers were under an obligation to give 10% of production to the
government at concessional rates. These welcome measures are a huge
plus for the long-term sustainability of the industry.
CHanGe In CapItaL struCture
Upon the Scheme of Arrangement (Demerger) becoming efective, the share
capital of the Company was restructured as follows as envisaged in the
Scheme.
10,00,00,000 Crores 8% Redeemable Cumulative Preference shares of Rs.10/-
each aggregating to Rs.100 Crores and 105,05,460 8% Redeemable
Non-Cumulative Preference shares of Rs.11/- each aggregating to Rs.11.55
Crores held by EID Parry, the holding Company, were extinguished.
Further, during the year the Company allotted 150 Lakh, 8% Cumulative
Redeemable Preference shares of Rs.10/- each to the Holding Company
aggregating to Rs.15 Crores. Consequently, the paid up share capital of
the Company stands at Rs.37.52 Crores.
DIreCtors
Mr. C. R.Rajan and Mr. P. Gopalakrishnan were appointed as Additional
Directors of the Company in accordance with Section 260 of the
Companies Act, 1956 on April 24, 2013. Mr. C. R.Rajan and Mr. P.
Gopalakrishnan will hold ofce till the date of the Annual General
Meeting to be held on July 22, 2013. The requisite notices together
with necessary deposit have been received from members pursuant to
Section 257 of the Companies Act, 1956 proposing the candidature of Mr.
C. R.Rajan and Mr. P. Gopalakrishnan as Directors of the Company.
Mr.S. Sandilya and Mr. K. Balasubramanian, Directors retire by rotation
in terms of Article 108 of the Articles of Association of the Company
and being eligible, ofer themselves for re-appointment. A brief resume,
expertise and details of other directorships of Mr. S.Sandilya, Mr.
K.Balasubramanian, Mr. C. R.Rajan and Mr. P. Gopalakrishnan are
provided in the Corporate Governance Report.
DIreCtors responsIBILItY statement
Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the
basis of explanation given by the executives of the Company and also
subject to disclosures in the Annual Accounts, your Directors to the
best of their knowledge and belief confrm as under:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed along with proper explanations
relating to material departures.
ii. that the Directors had selected such accounting policies and
applied them consistently and made judgements and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of afairs of the Company at the end of the fnancial year and of the
loss of the Company for the period.
iii. that the Directors had taken proper and sufcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv. that the Directors had prepared the annual accounts for the
fnancial year ended 31st March 2013 on a going concern basis.
FIXED DEPOSITS
During the year under review, your Company has neither invited nor
accepted any fxed deposits from the public as per the provisions of
Section 58A of the Companies Act 1956. As such, no amount of principal
or interest was outstanding as on the date of the Balance Sheet.
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 Afairs.
Ceo/Cfo CertIfICatIon
Mr. D.Kumaraswamy, Managing Director and Ms.G. Jalaja, Chief Financial
Ofcer, have given a certifcate to the Board as contemplated under
Clause 49 of the Listing Agreement with the Stock Exchanges.
transfer to tHe InVestor eDuCatIon anD proteCtIon funD
In terms of Section 205C of the Companies Act, 1956, an amount of
Rs.10,41,623/- being the unclaimed dividend was transferred during the
year to the Investor Education and Protection Fund established by the
Central Government.
CreDIt ratInG
During the year, rating agency ICRA has reafrmed the Long term ratings
at [ICRA] BBB (Pronounced as ICRA triple B Plus) and Short term ratings
at [ICRA] A2 (Pronounced as ICRA A two). The aforesaid ratings are
valid till December 31, 2013.
personneL reLatIons
Your directors hereby place on record their appreciation for the
services rendered by the executives, staf and workers of the Company.
During the year under review, relations between the employees and the
management continued to remain cordial.
ConserVatIon of enerGY, teCHnICaL aBsorptIon anD foreIGn eXCHanGe
earnInGs anD outGo
The information relating to conservation of energy, technical
absorption and foreign exchange earnings and outgo pursuant to Section
217(1) (e) of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the report of Board of Directors) Rules,
1988 is given in the Annexure forming part of this Report.
auDItors
The Auditors, M/s.R.G.N Price & Co., retire at the conclusion of the
ensuing Annual General Meeting. The Auditors have confrmed their
willingness to act as Auditors of the Company for the fnancial year
2013-14 and have confrmed that their appointment, if made, would be
within the prescribed limits under Section 224 (1B) of the Companies
Act, 1956.
Cost auDItors
M/s. Narasimha Murthy & Co, Cost Accountants, were appointed as the
Cost Auditors for the fnancial year 2012-13. M/s. Narasimha Murthy &
Co have confrmed their willingness to act as Cost Auditors of the
Company for the fnancial year 2013-14 and have confrmed that their
appointment, if made, would be within the prescribed limits under
Section 224 (1B) of the Companies Act, 1956.
partICuLars of empLoYees
The information required under Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 is
given in Annexure forming part of this Report.
aCKnoWLeDGement
Your directors acknowledge and express their grateful appreciation for
the co-operation and assistance received from Banks, Government
Authorities, Customers, Farmers and Suppliers.
Your directors also thank the shareholders for the confdence reposed by
them in the management of the Company and for their continued support
and co-operation.
For and on behalf of the Board of Directors
Chennai s. sandilya
April 24, 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting their 26th Annual Report
together with the audited financial statements for the Financial Year
(9 months) ended 31st March 2012.
The financials for the year 2011-2012 are summarized below.
(Rs in Lakhs)
2011-12 2010-11
(9 months) (15 months)
Revenue from operations 46739.09 41784.06
Other Income 5.75 10.61
Total Income 46744.84 41794.67
Profit before Interest and Depreciation 5515.20 1035.42
Interest 5178.17 7823.24
Depreciation 2349.96 3665.80
(Loss) before taxation (2012.93) (10453.62)
Provision for tax:
- Current - (123.97)
- Deferred Tax (1375.60) (862.24)
(Loss) after Tax (637.33) (9467.41)
CHANGE IN FINANCIAL YEAR
The financial year 2010-11 of the Company was extended up to 30th June
2011. Consequently the current financial year of the Company is for a
period of 9 months ended on 31st March 2012 and hence not comparable
with the results of the previous financial year 2010-2011 which was for
a 15 months period.
DIVIDEND
In view of the losses incurred, your Board is unable to recommend any
dividend for the financial year ended 31st March 2012. COMPANY
PERFORMANCE
During the year under review, your Company's total income was Rs
46744.84 lakhs as against Rs 41794.67 lakhs in the previous year. The
profit before interest and depreciation was Rs 5515.20 lakhs vs. Rs
1035.42 Lakhs of last year. The interest cost was Rs 5178.17 Lakhs vs Rs
7823.24 Lakhs last year. During the year the operations of the Company
improved across all parameters. The cane crushed was higher, the
average recovery was higher, the Company could mobilise harvesting
labour in time leading to consistent and continuous operation at all
the units. The capacity enhancement at Haliyal and Ramdurg and
debottlenecking of the facilities helped the Company to achieve
sustained performance during the current sugar season. The operations
at Sankili was stabilized.
The sugar prices which showed an increasing trend till the start of
season 2011-12 in October 2011 fell once new sugar started coming to
the market and remained sluggish till March 2012 due to anticipated
higher sugar output during sugar year 2011- 12. With the close of
season, prices have started showing some improvement. The sugar
production in the Country witnessed a 16% percent growth over the last
two years driven mainly by improved cane acreage in response to higher
cane prices. In line with the industry in North Karnataka, the Company
had to pay Rs 200 per tonne of cane as additional cane price for the
cane supplied in Karnataka units during the previous sugar season. The
continued increase of cane price year after year with no significant
and proportionate increase in sugar sales price is a challenge for the
sugar industry in the long term to sustain performance. The
Government's continued control over the sugar industry through release
mechanism, cane price and other restrictions affect the Industry.
In Karnataka, the unit at Haliyal performed significantly better with
improved reliability of machinery and equipment. The unit recorded a
peak recovery of 13.3%, which is the highest in Karnataka and average
recovery of 12.2%. The unit crushed a total quantity of 5.52 lakhs MT
of Cane vs. 3.48 Lakhs MT last year, an increase of 59%. The average
cane crushed per day was 3248 MT with the crushing touching a maximum
of 4835 MT in a particular day. The crushing of cane in the month of
March 2012 was affected due to the limited availability of cane and
drop in the cane yield.
The performance of the plant at Ramdurg was also significantly better
than last year with a crushing of 5.39 Lakhs MT of cane vs 3.95 Lakhs
MT last year, an increase of 36%. The average annual recovery was at
12.10% and the crushing touched a maximum of 4000 MT in a particular
day. The Company has already placed order for the enhancement of its
cogen unit at Ramdurg to 13 MW and the enhanced capacity is expected to
be operational before the next crushing season resulting in higher
earnings for the unit.
The performance of the plant at Sankili was also significantly better
than last year with a crushing of 5.55 Lakhs MT of cane vs 3.67 Lakhs
MT last year, an increase of 51%. The average annual recovery was at
9.88% and the crushing touched a maximum of 4348 MT in a particular
day.
During the year, the Company crushed a total 16.45 Lakhs MT of cane,
produced 18.77 Lakhs qtls. of sugar as against 11.11 Lakhs MT of cane,
11.95 Lakhs qtls. of sugar during the previous year, an increase of 48%
and 58% respectively. The average recovery rate was 11.41% vs 10.76 %
last year.
The major challenge for the Company for the future is to further
improve operating efficiencies and improve the quality of output.
Distillery Division
The distillery division produced 186 Lakh liters of industrial Alcohol
/Ethanol/ENA as against 139 Lakh litres in the previous year
registering an increase of 34%. In value terms, the sale of industrial
alcohol/Ethanol/ENA during the year was Rs 51.22 Crores as against Rs
41.88 Crores in the previous year registering an increase of 22%.
Increase in production and sale was due to higher cane crushing
resulting in higher production of molasses. The sale of ENA/Ethanol
produced at Distilleries fetches better revenue and can act as a
stabilizer to the threat of cyclicality of sugar business. The Company
is availing the Certified Emission Reduction (CER) benefits for its
distillery unit at Sankili, Andhra Pradesh under Clean Development
Mechanism (CDM) of United Nations Framework Convention on Climate
Change (UNFCCC).
Power Division
The total power generated by our Co-generation plants were 1345 Lakhs
units as against 1267 Lakhs units in the previous year mainly due to
availability of more bagasse from higher sugarcane crushing. The
Company has not purchased any coal during the year due to maximum
availability of bagasse thereby substantially improving the performance
and operations of its cogen units. The sale of power was at Rs 2842
Lakhs in the current year as against Rs 2263 Lakhs recorded in the
previous year registering an increase of 26%. The revenue on power
sales was better than last year due to higher export coupled with
higher rate on account of the sale through power exchange by the
Haliyal unit which was earlier under the power purchase agreement with
the State Government Utility. The issuance of Order by the Government
of Karnataka under Section 11 of the Electricity Act, 2003 mandating to
supply to the State Government utilities at a remunerative rate had
also contributed to the revenue. At Sankili the Company continues to
reel under pressure due to the lower tariff offered by the State
Government under the long term Power Purchase Agreement entered into by
the Company. The dispute pertaining to the revision of power tariff
from the Year 2004 as pronounced by the State Commission is pending
before the Appellate Tribunal for Electricity (ATE). Any favourable
Order by the ATE will be in the interest of the Cogen power producers
in the state of Andhra Pradesh. Increase in power generation capacity,
both during the season and off season shall be the future thrust area
for the Company.
The Government has launched the Renewable Energy Certificate (REC)
mechanism to mainstream the renewable energy sources across the nation.
Though REC is a market based instrument enabling the obligated entities
to meet their Renewable Purchase Obligation (RPO) and in the process
enabling the renewable energy producers to get higher revenue through
sale of such Certificates, the regulations framed by the State
Electricity Commissions pose a hindrance to avail such benefit. Going
forward it is expected that the various State Commissions will modify
the regulations in due course to enable all renewable energy producers
to take advantage and benefit from the REC Mechanism.
CHANGE IN CAPITAL STRUCTURE
During the year, the Company allotted 250 Lakhs, 8% cumulative
preference shares of Rs 10/- each to the Holding Company, E.I.D. - Parry
(India) Ltd. aggregating to Rs 25 Crores. Consequently, the paid up
share capital of the Company has increased to Rs 134.08 Crores w.e.f.
30th August, 2011.
SOCIAL RESPONSIBILITY
The Company in collaboration with Help Age India, have launched a
project to run a Mobile Medicare Unit in and around Rajam, Srikakulam
District, Andhra Pradesh to provide basic and essential medicare, to
the poor, needy and elderly population of the society irrespective of
caste, creed or religion. At Sankili, the Company is providing
assistance to children of sugar cane farmers for quality education by
rembursing their school fees. The Company has taken measures to provide
drinking water facilities in the villages in and around its command
area. During the year, medical facilities were provided and blankets
were distributed during the winter to the harvesting and transportation
labourers working in the cane field. The Company is in the process of
improving the infrastructure to provide better facilities to these
migrant labourers and their children in the field of education and
health care. The Company is also rembursing the collage fees, cost of
books etc., for one child in the family of those who have sold land to
the company in Haliyal.
SUBSIDIARY COMPANY
The Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt.
Ltd. (ABSPL), proposes to set up an integrated sugar plant at Raibagh,
Karnataka and the land acquisition process has been completed. The
Company is in the process of conversion of land and obtaining various
other clearances/approvals.
SUBSIDIARY ACCOUNTS
In terms of the Circular No.: 2 /2011 dated 8th February 2011 issued by
the Central Government u/s 212(8) of the Companies Act, 1956, copies of
the Balance Sheet, Profit & Loss Account, and Reports of the Board and
the Auditors of the Company's wholly owned subsidiary, Alagawadi
Bireshwar Sugars Pvt. Ltd. have not been attached to the Balance Sheet
of the Company as at 31st March 2012.
However, as directed by the Central Government, the financial data of
the subsidiary has been separately furnished forming part of this
Annual Report. These documents will also be available for inspection at
the Registered Office of the Company and of the concerned subsidiary
company during working hours up to the date of the Annual General
Meeting. However, the related detailed information of the Annual
Accounts of the Subsidiary Company will be made available to the
Holding Company's shareholders seeking such information at any point of
time. The Annual Accounts of the Subsidiary Company will also be kept
for inspection by the investors at the Registered Office of the Company
and that of the Subsidiary Company.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared by the Company
in accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors' Report thereon form part of the Annual Report.
REPORT TO THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION
As the Members are aware, a meeting of the Members was convened on
November 17, 2011 to consider the erosion in net worth of the Company
as on June 30, 2011 by more than 50% of the peak net worth during the
immediately preceding four financial years and to report the fact of
such erosion to the Board for Industrial and Financial Reconstruction
("BIFR") as required under Section 23 of the Sick Industrial Companies
(Special Provisions) Act, 1985. Accordingly, the Company has reported
the fact of such erosion to the BIFR"
CREDIT RATING
During the year, rating agency ICRA has reaffirmed the Long term
ratings at [ICRA] BBB (Pronounced as ICRA triple B Plus) and Short
term ratings at [ICRA] A2 (Pronounced as ICRA A two). The aforesaid
ratings are valid till January 2, 2013.
DIRECTORS
Mr. K. Ramadoss and Mr. V. Ravichandran, Directors retire by rotation
in terms of Article 108 of the Articles of Association of the Company
and being eligible, offers themselves for re-appointment. A brief
resume, expertise and details of other directorships of Mr. K. Ramadoss
and Mr. V. Ravichandran are provided in the Corporate Governance
Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the
basis of explanation given by the Executives of the Company and also
subject to disclosures in the Annual Accounts, your Directors to the
best of their knowledge and belief confirm as under:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed along with proper explanations
relating to material departures.
ii. that the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
loss of the Company for that period.
iii. that the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv. that the Directors had prepared the annual accounts for the
financial year ended 31st March 2012 on a going concern basis.
FIXED DEPOSITS
During the year under review, your Company has neither invited nor
accepted any fixed deposits from the public as per the provisions of
Section 58A of the Companies Act, 1956. As such, no amount of principal
or interest was outstanding as on the date of the Balance Sheet.
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.
CEO/CFO CERTIFICATION
Mr. D. Kumaraswamy, Managing Director and Ms. G. Jalaja, Chief
Financial Officer, have given a certificate to the Board as
contemplated under Clause 49 of the Listing Agreement with the Stock
Exchanges.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
In terms of Section 205C of the Companies Act, 1956, an amount of Rs
10.09 Lakhs being the unclaimed dividend was transferred during the
year to the Investor Education and Protection Fund established by the
Central Government.
PERSONNEL RELATIONS
Your directors hereby place on record their appreciation for the
dedication and competence of all the executives, staff and workers of
the Company. During the year under review, relations between the
employees and the management continued to remain cordial.
CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technical
absorption and foreign exchange earnings and outgo pursuant to Section
217(1) (e) of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the report of Board of Directors) Rules,
1988 is given in the Annexure forming part of this Report.
AUDITORS
The Auditors, M/s. R.G.N Price & Co., retire at the conclusion of the
ensuing Annual General Meeting. The Auditors have confirmed their
willingness to act as Auditors of the Company for the financial year
2012-13 and have confirmed that their appointment, if made, would be
within the prescribed limits under Section 224 (1B) of the Companies
Act, 1956.
COST AUDITORS
M/s Narasimha Murthy & Co., Cost Accountants, were appointed as the
Cost Auditors for conducting the cost audit of Sugar, Distillery and
Cogen divisions of the Company for the financial year 2011-12. M/s
Narasimha Murthy & Co. have confirmed their willingness to act as Cost
Auditors of the Company for the financial year 2012-13 and have
confirmed that their appointment, if made, would be within the
prescribed limits under Section 224 (1B) of the Companies Act, 1956.
PARTICULARS OF EMPLOYEES
The information required under Section 217 (2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 is
given in Annexure forming part of this Report.
ACKNOWLEDGEMENT
Your directors acknowledge and express their grateful appreciation for
the co-operation and assistance received from Banks, Government
Authorities, Customers, Farmers, Vendors and also the Members for the
confidence reposed by them in the management of the Company and for
their continued support and co-operation. Your Directors also wish to
place on record their deep sense of appreciation for the committed
services by the executives, staff and workers of the Company.
For and on behalf of the Board of Directors
Chennai S. Sandilya
April 24, 2012 Chairman
Jun 30, 2011
Dear Members,
The Directors have pleasure in presenting their 25th Annual Report
together with the audited financial statements for the 15-month period
ended 30th June 2011.
The financials for the year 2010-2011 are summarised below.
(Rs. in Lakhs)
2010-11 2009-10
(15 months)
Sales Income 41381.30 19764.50
Other Income 413.37 2991.76
Total Income 41794.67 22756.26
Profit before Interest
and Depreciation 1035.42 913.73
Interest 7823.24 4209.89
Depreciation 3665.80 2687.48
(Loss) before taxation (10453.62) (5983.64)
Provision for tax:
Earlier year (123.97) 55.56
Deferred Tax (862.24) (196.11)
(Loss) after Tax (9467.41) (5843.09)
Balance in Profit and loss
account brought forward
from previous year (270.42) 5572.66
Balance carried forward
to Balance Sheet (9737.83) (270.42)
CHANGE IN FINANCIAL YEAR
The financial year 2010-11 of the Company was extended upto June 30,
2011 to fully refect the performance of the Company for the sugar
season 2010-11 which continued beyond March 2011 due to availability of
cane. Hence, the financial results for the year under review cover a
period of 15 months and not comparable with the results of the previous
financial year 2009-2010 which is a 12 months period.
DIVIDEND
In view of the losses incurred, your Board is unable to recommend any
dividend for the financial year ended on June 30, 2011.
COMPANY PERFORMANCE
During the year under review your Company's total income was Rs. 41794.67
lakhs as against Rs. 22756.26 lakhs for the previous year. The Profit
before interest and depreciation of Rs. 1035.42 lakhs was marginally
higher compared to last year. The loss before taxation was Rs. 10453.62
lakhs compared to a loss of Rs. 5983.64 lakhs of the last year.
The performance of the Company was adversely affected mainly due to the
low sugar selling price and high cost of sugarcane. The sugar prices
remained sluggish due to higher sugar output during the year 2010-11
which witnessed a 30-35 percent growth driven mainly by improved cane
acreage in response to higher cane prices paid in last two sugar years.
Further, during the year in line with the industry, the Company had to
pay Rs. 200 per tonne of cane in Karnataka units as additional cane price
for the cane supplied during the previous year.
In Karnataka, the unit at Haliyal had a major technical breakdown which
affected the production for nearly a month during the peak season
thereby seriously affecting performance of the unit. The performance of
the plant at Ramdurg was signifcantly better than last year with a
crushing of 457703 MT of cane Vs 205071 MT last year, an increase of
123%. The Company has more or less stabilised the operation of
mobilising the harvesting and transportation labour to ensure smooth,
continued and unhindered crushing operations.
The performance of the plant at Sankili was better than last year
despite adverse impact due to heavy rains leading to delay in start of
the crushing season and disruptions in cane supply.
During the year, the Company crushed a total 1295502 MT of cane,
produced 1397519 qtls of sugar as against 585352 MT of cane and 566855
qtls of sugar during the previous year, an increase of 121.32% and
146.54% respectively. The average recovery rate was 10.80% Vs 9.70%
last year.
The major challenge for the Company in the coming year is to remove the
production bottlenecks and to stabilise the plants at all locations to
enhance the crushing operations. The Haliyal plant which is equipped
with all modern equipments such as diffuser for milling to achieve
higher recovery and low power consumption, in-line shredder to achieve
better cane preparations and high pressure Boiler to achieve better
efficiencies, have to be tested for the frst time with crushing at peak
capacity. Most of these equipments have been used for the frst time by
the Company and the various defciencies in the system alignments have
to be rectifed which is expected to improve the recovery and
performance of the unit the coming year. The Company is also poised to
increase the capacity of Haliyal unit and Ramdurg Unit up to 4000 TCD
and the coming season will see an increase in the operations of the
Company's Karnataka Units. The growth of Sugar industry in South India
is expected to be in Karnataka and it is imperative that the Company
ramps up production capabilities within the next three years to take
advantage of the up-cycle in the sugar cycle as cane is likely to be
abundantly available in the next two/three years.
Distillery Division
The distillery division produced 188.85 lakh litres of industrial
Alcohol/Ethanol against 95.92 lakh litres in the previous year
registering an increase of 96.88% due to commencement of operations of
the distillery unit at Haliyal. In value terms, the sale of industrial
alcohol/ethanol during the year was Rs. 57.38 crores as against Rs. 35.37
crores in the previous year registering an increase of 62.21%. Increase
in production and sale was due to availability of more sugarcane
resulting in higher production of molasses.
Power Division
The total power generated by our Co-generation plants was 1508.06 lakhs
units as against 1025.57 lakhs units in the previous year mainly due to
availability of more bagasse from sugarcane crushing. The sale of power
was at Rs. 3179.31 lakhs in the current year as against Rs. 3238.01 lakhs
recorded in the previous year. The power exported during the previous
year includes export during the off season realising a better tariff.
The revenue of the Company is affected by lower tariff of the State
Govt. utilities and the Company is exploring the possibility of higher
revenue through third party exports and sale through power exchange.
Increase in power generation capacity, both season and off season shall
be the future thrust area of the Company. The Company is also
completing the post registration formalities to avail certified Emission
Reduction (CER) benefits under Clean Development Mechanism (CDM) of
United Nations Framework Convention on Climate Change (UNFCCC).
In an attempt to boost renewable energy production in the country, the
Govt. has launched the Renewable Energy Certifcate (REC) mechanism
which aims at mainstreaming renewable energy sources across the nation.
Renewable Energy Certifcate is a market based instrument which enables
the obligated entities to meet their Renewable Purchase Obligation
(RPO). In India, all energy distribution licensees are entitled to buy
a minimum level of renewable energy as per the Electricity Act imposed
by the State Electricity Regulatory Commission. The Company is actively
exploring to avail the benefit of the REC mechanism.
MEASURES TAKEN FOR CANE DEVELOPMENT
Your Company has undertaken a comprehensive Cane Development Program to
improve cane acreage and yield in the coming years. Major cane
development programmes will continue to be initiated by the Company
aiming at improving area under cultivation, cane yield and improving
the quality of cane to cater to the enhanced crushing capacity.
SHARE PURCHASE AGREEMENT
As informed in the last year's report, pursuant to the Share Purchase
Agreement dated April 25, 2010 entered into by E.I.D.- Parry (India)
Ltd. (EID Parry) with the erstwhile promoters and the consequent open
offer made under the SEBI (Substantial Acquisition of Shares and
Takeover) Regulations,1977 (Takeover Code), EID Parry have acquired
12975110 shares representing 65% of the paid up share capital of the
Company. Consequently, your Company has become a subsidiary of EID
Parry with effect from August 27, 2011 and EID Parry has become the
promoter of the Company under the applicable Regulations.
CHANGE IN CAPITAL STRUCTURE
During the year, the Company allotted 750 Lakhs, 8% cumulative
preference shares of Rs. 10/- each to the Holding Company aggregating to
Rs. 75 crores. Consequently the paid up share capital of the Company has
increased to Rs. 109.08 crores with effect from June 30, 2011.
SOCIAL RESPONSIBILITY
The Company through its CSR initiatives seeks to provide quality
education, improve access to public health system, nutritional inputs
and enhance economic opportunities of families and community through
the promotion of sustainable agriculture and by providing training to
farmers. The Company in collaboration with HelpAge India, has launched
a project to run a Mobile Medicare Unit in and around Rajam, Srikakulam
District, Andhra Pradesh to provide basic & essential Medicare, to the
poor, needy and elderly population of the society.
SUBSIDIARY COMPANY
The Company's wholly owned subsidiary, Alagawadi Bireshwar Sugars Pvt.
Ltd. (ABSPL), proposes to set up an integrated sugar plant at Raibagh,
Karnataka and the land acquisition process is completed. The Company is
in the process of conversion of land and obtaining various other
clearances/approvals.
SUBSIDIARY ACCOUNTS
In terms of the Circular No: 2 /2011 dated February 8, 2011 issued by
the Central Government u/s 212(8) of the Companies Act, 1956, copies of
the Balance Sheet, Profit and Loss Account, and Reports of the Board and
the Auditors of the Company's wholly owned subsidiary, Alagawadi
Bireshwar Sugars Pvt. Ltd. have not been attached to the Balance Sheet
of the Company as at June 30, 2011.
However, as directed by the Central Government, the financial data of
the subsidiary have been separately furnished forming part of this
Annual Report. These documents will also be available for inspection at
the Registered office of the Company and of the subsidiary company
during working hours up to the date of the Annual General Meeting.
However, the related detailed information of the Annual Accounts of the
Subsidiary Company will be made available to the Holding Company's
investors seeking such information at any point of time. The Annual
Accounts of the Subsidiary Company will also be kept for inspection by
the investors at the Registered office of the Company and that of the
Subsidiary Company.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company
in accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditors' Report thereon form part of the Annual Report.
DIRECTORS
Consequent to change in the ownership of the Company there was a
reconstitution of the Company's Board. Effective August 27, 2010, Mr.
R. Ramakrishnan, Mr. V.P. Singh, Mr. Uday M. Chitale, Mr. T. C. S.
Reddy and Mr. N.V. Varadarajulu resigned from the directorship of the
Company and Mr. V.Ravichandran, Mr. N. Srinivasan, Mr. K. Ramadoss were
appointed as Additional Directors of the Company.
The Board places on record its appreciation for the valuable
contributions made by Mr. R. Ramakrishnan, Mr. V.P. Singh, Mr. Uday, M.
Chitale, Mr. T. C. S. Reddy and Mr. N. V.Varadarajulu.
Mr. K. Balasubramanian resigned as the Chairman of the Company but
continues as a Director of the Company. Mr. S. Sandilya was appointed
as the Chairman of the Company.
Consequent to the resignation of Mr. R. Ramakrishnan as the Managing
Director, Mr. D. Kumaraswamy was appointed as the Managing Director of
the Company with effect from August 28, 2010.
Mr. V. Ravichandran, Mr. N. Srinivasan and Mr. K. Ramdoss hold office
till the ensuing Annual General Meeting. The Company has received
notices from members proposing the appointments of Mr. V. Ravichandran,
Mr. N. Srinivasan and Mr. K.Ramadoss as Directors of the Company. A
brief resume, expertise and details of other directorships of Mr. V.
Ravichandran, Mr. N. Srinivasan and Mr. K.Ramadoss are provided in the
Corporate Governance Report.
Mr. S. Sandilya retires by rotation in terms of Articles 108 of the
Articles of Association of the Company and being eligible, offers
himself for re-appointment. A brief resume, expertise and details of
other directorships of Mr. S. Sandilya are provided in the Corporate
Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the
basis of explanation given by the Executives of the Company and also
subject to disclosures in the Annual Accounts, your Directors to the
best of their knowledge and belief confrm as under:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed along with proper explanations
relating to material departures.
ii. that the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the financial year and of the
loss of the Company for that period.
iii. that the Directors had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv. that the Directors had prepared the annual accounts for the
financial year ended June 30, 2011 on a going concern basis.
FIXED DEPOSITS
During the year under review, your Company has neither invited nor
accepted any fixed deposits from the public as per the provisions of
Section 58A of the Companies Act, 1956. As such, no amount of principal
or interest was outstanding as on the date of the Balance Sheet.
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.
CEO/CFO CERTIFICATION
Mr. D. Kumaraswamy, Managing Director and Ms. G. Jalaja, Chief
Financial officer, have given a certifcate to the Board as required
under Clause 49 of the Listing Agreement with the stock exchanges.
PERSONNEL RELATIONS
Your directors hereby place on record their appreciation for the
services rendered by the executives, staff and workers of the Company.
During the year under review, relations between the employees and the
management continued to be cordial.
CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technical
absorption and foreign exchange earnings and outgo pursuant to Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the report of Board of Directors) Rules,
1988 is given in the Annexure forming part of this Report.
AUDITORS
The Auditors, M/s. Pricewaterhouse, retire at the conclusion of the
ensuing Annual General Meeting and have expressed that they do not wish
to be reappointed at the ensuing Annual General Meeting. M/s. R.G.N
Price & Co, Chartered Accountants have confrmed their willingness to
act as Auditors of the Company for the financial year 2011-12 and have
confrmed that their appointment, if made, would be within the
prescribed limits under Section 224(1B) of the Companies Act, 1956.
COST AUDITORS
Narashima Murthy & Co., Cost Accountants, was appointed as the Cost
Auditor for conducting the cost audit of Sugar Units of the Company for
the financial year 2010-11. As per the Circular No.52/26/CAB/2010 dated
02.05.2011 of the Central Government, the Company is also required to
conduct the cost audit of its distillery and cogen units with effect
from the financial year 2011-12. Accordingly, Narashima Murthy & Co. has
also been appointed as Cost Auditor for conducting the cost audit of
Sugar, Distillery and Cogen Units of the Company for the financial year
2011-12.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 is
given in the Annexure forming part of this Report.
ACKNOWLEDGEMENTS
Your directors acknowledge and express their grateful appreciation for
the co-operation and assistance received from Banks, Government
Authorities, Customers, Farmers and Suppliers.
Your directors also thank the shareholders for the confdence reposed by
them in the management of the Company and for their continued support
and co-operation.
For and on behalf of the Board
Place: Chennai S. Sandilya
Date: July 25, 2011 Chairman
Mar 31, 2010
The directors have pleasure in presenting their 24th annual report
together with the audited fnancial statements for the year ended 31st
March, 2010.
The fnancials for the year ended 31st March, 2010 are summarized below.
(Rs. in Lakhs)
2009-10 2008-09
Sales Income 19764.49 12684.33
Other Income 2991.76 806.66
Total Income 22756.25 13490.99
Proft before Interest and depreciation 1745.02 3061.35
Interest 4209.89 2051.50
Depreciation 2687.48 1781.46
Proft before prior period expenses & tax (5152.35) (771.61)
Extraordinary items 831.29 -
Proft before taxation (5983.64) (771.61)
Provision for tax Earlier years 55.56 -
Deferred Tax (196.11) (859.21)
fringe Beneft Tax - 26.30
Proft after Tax (5843.09) 61.30
Balance brought forward from previous year 5572.66 5551.02
Less: Adjustment on account of foreign
Exchange differences - (39.65)
Balance available for appropriations (270.43) 5572.67
Set-off against General Reserve (270.43) -
Appropriations:
Proposed Preference Dividend - -
Proposed Equity Dividend - -
Taxes on Dividends - -
Transfer to General Reserve - -
Balance carried forward to Balance Sheet - 5572.67
DIVIDEND
In view of the losses incurred, your Board does not recommend any
dividend for the fnancial year ended 31 March, 2010.
COMPANY PERFORMANCE
during the year under review, your companyÃs turnover was Rs. 19764.49
lakhs as against Rs.12684.33 lakhs for the previous year. The proft
before interest and depreciation of Rs. 1745.02 Lakhs was lower by 43%
as compared to the last year.
The performance of the Company was adversely affected mainly due to low
availability of sugarcane, leading to lower production of sugar and
lower bagasse and molasses availability impacting the entire value
chain. In Karnataka both the units at Haliyal and Ramdurg had initial
technical problems leading to lower production. At Haliyal, after the
crushing started the plant could not work at full capacity for nearly
50 days due to design issues of the Evaporator. There was also
considerable delay in getting the license for Distillery operations
from the Government of Karnataka; this combined with plant
stabilization challenges led to low production at Distillery. At
Ramdurg, there was a breakdown of the turbo-generator and collapse of
spray pond during the beginning of the season due to which commencement
of crushing was delayed by about 4 weeks. Both plants have, however,
stabilized towards the end of the season.
The Company also faced the challenge of mobilizing harvesting and
transport gangs in Karnataka. On the pricing front while the selling
price of sugar started going up in the frst two quarters, the Company
could not take advantage owing to low carry forward inventories. during
the season, high cane prices more than negated the improvement in
selling prices. Moreover in line with the Industry, the Company had to
pay over Rs. 831.29 Lakhs during the year in Karnataka as additional
cane price for the cane supplied during the previous year. The
Government has also enhanced the levy quota of sugar from 10% to 20%
without corresponding increase in the levy price, thus putting
additional burden on the Company.
During the year, the Company has written back Rs.1408.12 Lakhs being
the provision made towards ÃLÃ factor pursuant to an amendment made to
the sugarcane control order.
NEW PROJECTS
During the year, the Company acquired the balance share capital of
Alagawadi Bireshwar Sugars Pvt. Ltd. (ABSPL), which has become a
wholly-owned subsidiary of the Company w.e.f. 27th March, 2010. ABSPL
proposes to set up an integrated sugar plant at Raibagh, Karnataka and
the land acquisition process is almost completed. The acquisition of
land at Srikakulam is also in progress.
MEASURES TAKEN FOR CANE DEVELOPMENT
Implementation of the 5-year Cane Development Plan that your Company
had drawn last year is under progress and this is expected to improve
cane acreage and yield in the coming years. Major cane development
programs will continue to be initiated by the Company aimed at
improving area under cultivation, cane yield and improving the quality
of cane.
CLEAN DEVELOPMENT MECHANISM (CDM)
As the shareholders are aware, the Company has registered its Methane
Capture Project with uNfCCC-Clean development Mechanism (CdM). your
Company shall further pursue its effort in identifying fresh CdM
Projects in new locations at haliyal for energy effciency devices.
SHARE PURCHASE AGREEMENT
The promoters of the Company M/s. GMR Holdings Pvt. Ltd. have signed a
Share Purchase Agreement with EID Parry(India) Ltd (EID Parry) on 25th
April 2010 to sell up to 1,29,75,110 but not less than 1,01,80,471
Shares, i.e., constituting up to 65% but not less than 51% of the
issued and paid up equity share capital of our Company and the entire
preference share capital of the company viz., 12831880 Preference
shares of Rs.11/- each. The acquisition of equity shares in our Company
by EID Parry is subject to the compliance by EID Parry of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997
(Takeover Code). Pursuant to such requirement under the Takeover Code,
EId Parry has made a Public Announcement on 26th April 2010.
EId Parry, established in the year 1788, is part of Murugappa group,
one of the respected and largest business groups in the country. EId
Parry is a dominant player in Sugar with interests in promising areas
of Bio Pesticides and Nutraceuticals. Incorporated in 1975, the company
has fve sugar factories having a capacity to crush 19000 Tonnes of Cane
per day, generate 85 MW of power and two distilleries having a capacity
of 135 KLPD. EID Parry, being an established player in the Sugar
Industry with proven track record, we believe that this proposed
acquisition will enhance the shareholdersà value in the long run and
will further reinforce the CompanyÃs commitment to the sugar business
and strengthen our relationship with the farmers.
SUBSIDIARY ACCOUNTS
In terms of the approval granted by the Central Government u/s 212(8)
of the Companies Act, 1956, copies of the Balance Sheet, Proft & Loss
Account, and Reports of the Board and the Auditors of the Subsidiary
Company, Alagwadi Bireswar Sugars Pvt Ltd. have not been attached to
the Balance Sheet of the Company as at 31st March, 2010. however, as
directed by the Central Government, the fnancial data of the subsidiary
have been separately furnished forming part of the Annual Report. The
Company will make available the annual audited accounts and related
detailed information of the Subsidiary Company upon request by any
member of the Company. These documents will also be available for
inspection at the Registered Offce of the Company during working hours
up to the date of the Annual General Meeting.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated financial Statements have been prepared by the Company
in accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India and the same together with
Auditorsà Report thereon form part of the Annual Report.
DIRECTORS
Mr. B.v.N. Rao, Chairman resigned from the Board with effect from 19th
October, 2009. The Board places on record its grateful appreciation of
the valuable services rendered and contributions made by Mr. B.V.N. Rao
as the Chairman of the Company. Mr. K.Balasubramanian joined the Board
on 27th October, 2009 and was appointed as Chairman of the Company.
Mr. D. Kumaraswamy joined the Board as an Additional Director on 18th
May, 2010 in terms of the share purchase agreement signed by the
promoters of the Company with EID Parry (India) Ltd.
Both Mr. K. Balasubramanian and Mr. d. Kumaraswamy will hold offce till
the ensuing Annual General Meeting. The Company has received notices
from members proposing the appointments of K. Balasubramanian and Mr.
D. Kumaraswamy as Directors of the Company. A brief resume, expertise
and details of other directorships of K. Balasubramanian and Mr. D.
Kumaraswamy are provided in the Notice of the ensuing Annual General
Meeting.
Mr. Uday M.Chitale and Mr. N.V. Varadarajulu retire by rotation in
terms of Article 108 of the Articles of Association of the Company and
being eligible, offers themselves for re-appointment. A brief resume,
expertise and details of other directorships of Mr. Uday M.Chitale and
Mr. N.V. Varadarajulu are provided in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 and on the
basis of explanation given by the Executives of the Company and also
subject to disclosures in the Annual Accounts, your directors confrm as
under:
i. that in the preparation of the annual accounts, the applicable
Accounting Standards have been followed along with proper explanations
relating to material departures.
ii. that the Directors had selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company at the end of the fnancial year and of the
loss of the Company for that period.
iii. that the directors had taken proper and suffcient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
iv. that the directors had prepared the annual accounts for the
fnancial year ended 31st March, 2010 on a going concern basis.
SOCIAL RESPONSIBILITY
Through its CSR projects, the Company seeks to provide quality
education, improve access to public health system, nutritional inputs
and enhancing economic opportunities of families and community through
the promotion of sustainable agriculture and micro enterprises and by
providing vocational training to youth and girls. The CSR arm of the
Group, GMR varalakshmi foundation run preschools which provide care and
support to the children below 6 years of age.Through Bala Badi centers,
supplementary nutrition and regular health checkups are provided to the
children. Training and orientation are given to the mothers on best
child rearing practices and family planning methods. Other initiatives
of the foundation includes working with Government schools to improve
the quality of education, organizing Medical and health checkups for
the children/families, regular medical camps like eye-camp, dental
camps and diabetes camps, etc. The foundation also facilitates in tying
up with recognized training institutes for the skill development for
young boys in the area of driving, desk top publishing, garment making,
electrical wiring, mobile and Tv repair, etc. Apart from improving the
livelihood, the foundation also has facilitated self help groups and
village development committees in order to ensure peopleÃs
participation towards ensuring sustainability of its intervention.
PREFERENCE SHARE CAPITAL
The Company had issued 8% Redeemable Preference shares to the
Shareholders of erstwhile varalakshmi International Limited (vIL)
consequent upon VILÃs merger with the Company on August 14, 2004. The
entire 12831880 preference shares of the Company are currently held by
GMR Holdings Pvt. Ltd. the promoters of the Company. As per the consent
received from M/s GMR Holdings Pvt. Ltd. pursuant to the provisions of
Section 106 of the Companies Act, 1956, the terms of the said 8%
cumulative preference shares have been varied to be non-cumulative. The
Company has accordingly, treated the same in the Accounts for the year
ended 31.03.2010. The Share Purchase Agreement entered into by the
promoters with E.I.D.- Parry (India) Ltd. also includes the said
preference shares.
FIXED DEPOSITS
during the year under review, your Company has neither invited nor
accepted any fxed deposits from the public as per the provisions of
Section 58A of the Companies Act 1956. As such, no amount of principal
or interest was outstanding as on the date of the Balance Sheet.
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. The Ministry of Corporate Affairs recently announced a set
of voluntary guidelines on Corporate Governance. The Company in line
with its guiding principle of being committed to the philosophy and
practices of good corporate governance, is in conformity with many of
these guidelines and will evaluate the feasibility for its
implementation gradually. The report on Corporate Governance as
stipulated under Clause 49 of the Listing Agreement forms part of the
Annual Report. The requisite certifcate from a Practicing Company
Secretary confrming compliance with the conditions of Corporate
Governance as stipulated under the aforesaid clause 49 is attached to
this Report.
PERSONNEL RELATIONS
your directors hereby place on record their appreciation for the
services rendered by the executives, staff and workers of the Company.
during the year under review, relations between the employees and the
management continued to remain cordial.
CONSERVATION OF ENERGY, TECHNICAL ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technical
absorption and foreign exchange earnings and outgo pursuant to Section
217(1) (e) of the Companies Act, 1956 read with the Companies
(Disclosure of particulars in the report of Board of Directors) Rules,
1988 is given in the Annexure forming part of this Report.
AUDITORS
M/s. Price Waterhouse, Chartered Accountants (Registration No 007568S),
statutory auditors of the Company, who retire at the conclusion of the
ensuing Annual General Meeting of the Company have expressed their
desire to discontinue as Auditors of the Company for the fnancial year
2010-11. M/s. Price Waterhouse, Chartered Accountants (Registration No
301112E ) have expressed their willingness for appointment as statutory
auditors and confrmed that their appointment, if made, will be within
the prescribed limits under Section 224 (1B) of the Companies Act,
1956. Special notice has also been received from a member proposing the
appointment of M/s. Price Waterhouse, Chartered Accountants
(Registration No 301112E) as statutory auditors of the Company for the
fnancial year 2010-11.
COST AUDITORS
Mr. S. P. Sarma, Cost Accountant, was appointed as Cost Auditor of the
Company with the consent of the Government of India for conducting the
cost audit of Sugar units of the Company, for the fnancial year
2009-10. however, due to the sad demise of Mr. Sarma, the Company
appointed Mr. Narashima Murthy & Co., Cost Auditor to carry out the
cost audit for the year 2009-2010.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 is
given in Annexure forming part of this Report.
ACKNOWLEDGEMENTS
your directors acknowledge and express their grateful appreciation for
the co-operation and assistance received from Banks, Government
Authorities, Customers, farmers and Suppliers.
your directors also thank the shareholders for the confdence reposed by
them in the management of the Company and for their continued support
and co-operation.
for and on behalf of the Board
Place : Bangalore K. Balasubramanian
Date : June 18, 2010 Chairman