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Directors Report of Sukhjit Starch & Chemicals Ltd.

Mar 31, 2014

Dear Share Holders :

The Directors are pleased to present before you the 70th Annual Report and the Audited Statement of Accounts

For the year ended 31st March, 2014 :-

1. FINANCIAL RESULTS 2013-14 2012-13 (Rs. in Crores) (Rs. in Crores)

Sales & Other income 508.91 420.10

Earning before Interest, tax and Depreciation 51.58 51.33

Less :-

- Interest 16.65 14.12

- Depreciation 12.27 8.85

- Provision for taxes (including Deferred Tax) 6.62 6.78

Profit After Tax 16.04 21.58

Surplus brought forward from previous year 12.41 10.15

Surplus available for appropriation 28.45 31.73

Proposed dividend (including Corporate Tax) 3.02 4.32

Transfer to General Reserves 15.00 15.00

Surplus carried forward 10.43 12.41

2. PERFORMANCE

The sales and other income of the company have increased from Rs. 420.10 crores for the year ended 31/03/2013 to Rs. 508.91 crores for the year ended 31/03/2014 registering an increase of over 21%. The operating profits have, however, remained static owing to higher cost of raw material as there was a undue revision in MSP of Maize (our basic raw material) by the Government last year and this higher cost could not be immediately factored into the selling prices of finished goods due to recessive trends in the economy during the year under review. The raw material prices have, however stabilized in the running year and we expect that sufficient quantity of maize will be available at reasonable prices to ensure continuous running of all our manufacturing facilities with reasonable profits.

3. FUTURE PROSPECTUS

As required under the Corporate Governance, Management Discussion and Analysis, forming part of this report annexed hereto, reflects the current state of affairs of business.

A higher capacity utilization of the expansions of Malda Unit and Gurplah Unit is expected to contribute to the sales of the company significantly with reasonable increase in profits. The overall turnover of the company may further show a growth of about 15% during the running year.

4. CORPORATE GOVERNANCE

Your company is fully committed to the philosophy of transparency and believes in conducting its business with due compliance of all the applicable laws, rules and regulations. The Company has duly implemented the system of Corporate Governance as per the requirements of the Listing Agreement. The detailed report appearing in the Annexures forms part of this report.

5. DIVIDEND

The Directors are pleased to recommend a dividend of 35% for the financial year ended 31st March, 2014 against 50% last year owing to lower net profits and to conserve funds for expanding business operations.

6. CREDIT RATING

The company continues to enjoy good credit rating i.e. A1 (A one) for its short term bank facilities and A (A Plus) for its long term facilities from Credit Analysis and Research Ltd. (CARE). The rating reflects company''s financial discipline & prudent working capital management.

7. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2A) of the Companies Act, 1956, the Directors confirm :

(i) that in the preparation of the Annual Accounts for the Financial Year ended 31st March, 2014, the applicable Accounting Standards have been followed alongwith proper explanations relating to material departures;

(ii) that 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 at the end of the financial year and of the profit of the Company for the year so ended ;

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

(iv)that the Directors have prepared the Annual Accounts for the Financial Year ended 31st March, 2014 on a ''going concern'' basis.

8. DEPOSITS

All the deposits have been renewed/repaid during the finanical year ended 31/03/2014, as per the provisions of Section 58-A of the Companies Act, 1956 and rules made thereunder. The company had no unclaimed/ unpaid deposits on 31/03/2014.

9. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

(a) The Vijoy Steel & General Mills Company Ltd., Phagwara : The company has shown a turn around with a net profit for the year under reference. The company is expected to improve upon its performance in the years to come.

(b) Sukhjit Finance Ltd., Phagwara : The operations of the company have almost been shut down to ward off unnecessary losses and efforts are being made to realize overdues and the available assets of the Company.

(c) Scott Industries Ltd., Phagwara : The company has shut down its operations owning to huge losses over the years. Most of its assets have been disposed off during the year under reference, and efforts are on to realize the dues from its customers.

There has been no material change in the nature of business of the Subsidiaries.

As required under the Listing Agreement with the Bombay Stock Exchange, the Consolidated Financial Statements of the Company and its subsidiaries are attached, which have been prepared in accordance with the relevant Accounting Standard(s) prescribed under Section 211 (3C) of the Companies Act, 1956. In pursuance to the general circular issued by the Ministry of Corporate Affairs, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. A statement containing the requisite financial details of the company''s subsidiaries for the financial year ended 31st March, 2014 is annexed to the consolidated results in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any shareholder of the Company/its subsidiaries who may be interested in seeking such information and are also available for inspection by any shareholder of the Company/its subsidiaries at the registered office of the Company/its subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any shareholder on demand.

10. CONTINGENT LIABILITY

Disputed Liabilities, not provided as expense in the accounts, comprise ofRs. 22.15 Crores mainlyRs. 20.90 Crores on account of disputed Central Excise Duty on Maize Starch excluding penalty and interest since 01/04/1997 alleging the sale of Maize Starch as that of Modified Starch. The product has been repeatedly got tested by the Department from its Central Revenue Laboratory where it has been clearly held to be Maize Starch. So the demand is totally baseless and without any substance and the matter is subjudice. The company has been manufacturing Maize Starch by following the standard Wet Milling Process for the last many decades and the product is sold and accepted by the market as Maize Starch, so the company does not foresee any liability to crystallize on this account. Other major item relates to show cause notice concerning demand ofRs. 1.19 crores on exempted goods and the case is pending before The Commissioner, Central Excise.

11. PERSONNEL

In terms of the provisions of section 217 (2A) of The Companies Act, 1956 and rules made thereunder (amended to date), the names and other particulars of employees are set out in the Annexure to the Directors'' Report. However, in view of the provisions of section 219(b)(iv) of the said Act, the aforesaid schedule is not annexed to the Annual Report being sent to the Members of the Company. Any member interested in obtaining the particulars may write to the company.

12. DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Shri V.K. Sardana retires by rotation and being eligible, the Board recommend his reappointment.

13. AUDITORS

M/s. Y.K. Sud & Company, Chartered Accountants, the retiring Auditors of the Company, have confirmed their eligibility to be re-appointed as Auditors of the Company at the ensuing Annual General Meeting. The Board of Directors have recommend the re-appointment of M/s. Y.K. Sud & Company, Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the 73rd Annual General Meeting subject to ratification in the Annual General Meeting as per the provisions of Companies Act, 2013.

The Board of Directors recommend, subject to the approval of the Central Government, the re-appointment of M/s. Khushwinder Kumar & Associates, Cost Accountants, as Cost Auditors of the Company for the financial year 2014-15. The cost audit report for the financial year ended 31st March, 2014 is due to be filed with the Ministry of Corporate Affairs on or before the 30th September, 2014 and the cost audit report for the financial year ended 31/03/2013 was duly filed on 28/09/2013.

14. ACKNOWLEDGEMENT

Your Directors would like to express their grateful appreciation for the co-operation received from the bankers, customers and other business associations. They place on record their deep sense of appreciation for the devoted services of the executives, staff and workers of the Company for its success.

Yours truly,

For and on behalf of the Board,

S.C.JINDAL

Chairman

Dated : 30th May, 2014


Mar 31, 2013

Dear Share Holders :

The Directors'' are pleased to present before you the 69th Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2013 :-

1. FINANCIAL RESULTS 2012-13 2011-12 (Rs. in Crores) (Rs. in Crores)

Sales & Other income 4 20.10 354.94

Earning before Interest, tax and Depreciation 51.33 45.99

- Less Interest 14.12 11.19

- Depreciation 8.85 7.14

- Provision for taxes (including Deferred Tax) 6.78 5.56

Profit After Tax 21.58 22.10

Surplus brought forward from previous year 10.15 6.91

Surplus available for appropriation 31.3 29.01

Proposed dividend (including Corporate Tax) 4.32 3.86

Transfer to General Reserve 15.00 15.00

Surplus carried forward 12.41 0.15

2. PERFORMANCE

The sales and other income of the company have increased from Rs. 354.95 crores for the year ended 31/03/ 2012 to Rs. 420.10 crores for the year ended 31/03/2013 registering an increase of over 18% (year over year). The interest cost has continued to take a heavy toll on the profits of the Company due to high rates of interest prevailing through out the year. The prices of the finished goods also remained under pressure due to addition of new capacities in the industry and having operationalised during the current year. The earnings before depreciation, interest and tax have increased from Rs. 45.99 crores to Rs. 51.32 crores for the current year which after providing financial cost Rs. 14.12 crores (Rs. 11.19 crores), depreciation of Rs. 8.85 crores (Rs. 7.14 crores) and tax expense including deferred tax of Rs. 6.78 crores (Rs. 5.56 crores) leave a net profit of Rs. 21.58 crores (Rs. 22.10 crores).

3. FUTURE PROSPECTUS

As required under the Corporate Governance, Management Discussion and Analysis, forming part of this report annexed hereto, reflects the current state of affairs of business.

A higher capacity utilization of the expansion of Malda Unit during the running year is expected to contribute to the sales of the company significantly with reasonable increase in profits. The overall turnover of the company may further show a growth of about 20% during the running year.

4. CORPORATE GOVERNANCE

Your company is fully committed to the philosophy of transparency and believes in conducting its business with due compliance of all the applicable laws, rules and regulations. The Company has duly implemented the system of Corporate Governance as per the requirements of the Listing Agreement. The detailed report appears in the Annexures forming part of this report.

5. DIVIDEND

The Directors are pleased to recommend a dividend of 50% during the financial year ended 31st March, 2013 against 45% last year.

6. DIRECTORS''RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2A) of the Companies Act, 1956, the Directors confirm :

(i) that in the preparation of the Annual Accounts for the Financial Year ended 31st March, 2013, the applicable Accounting Standards have been followed alongwith proper explanations relating to material departures;

(ii) that 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 at the end of the financial year and of the profit of the Company for the year so ended ;

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

(iv) that the Directors have prepared the Annual Accounts for the Financial Year ended 31st March, 2013 on a ''going concern'' basis.

7. DEPOSITS

All the deposits have been renewed/repaid as per the provisions of Section 58-A of the Companies Act, 1956 and rules made thereunder. The company had no unclaimed/unpaid deposits on 31/03/2013.

8. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

(a) The Vijoy Steel & General Mills Company Ltd., Phagwara : The company has shown a turn around with a net profit for the year under reference. The company is expected to improve upon its performance in the years to come.

(b) Sukhjit Finance Ltd., Phagwara : The operations of the company have almost been shut down to ward off unnecessary losses and efforts are being made to realize overdues and the available assets of the Company.

(c) Scott Industries Ltd., Phagwara : The company has shut down its operations owning to huge losses over the years. Most of its assets have been disposed off in May, 2013 to redeem the maximum investment and efforts are on to realize the dues from its customers.

There has been no material change in the nature of business of the Subsidiaries.

As required under the Listing Agreement with the Bombay Stock Exchange, a Consolidated Financial Statements of the Company and its subsidiaries are attached, which have been prepared in accordance with the relevant Accounting Standard(s) as prescribed under Section 211 (3C) of the Companies Act, 1956. In pursuance to the general circular issued by the Ministry of Corporate Affairs, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. A statement containing the requisite financial details of the company''s subsidiaries for the financial year ended 31st March, 2013 is annexed to the consolidated results in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any shareholder of the Company/its subsidiaries who may be interested in seeking such information and are also available for inspection by any shareholder of the Company/its subsidiaries at the registered office of the Company/its subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any shareholder on demand.

9. CONTINGENT LIABILITY

Disputed Liabilities, not provided as expense in the accounts, comprise of Rs. 20.38 Crores mainly Rs. 19.12 Crores on account of disputed Central Excise Duty excluding penalty and interest. The amount is on account of demand raised by Central Excise Department since 01/04/1997 alleging the sale of Maize Starch as that of Modified Starch. The product has been repeatedly got tested by the Department from its Central Revenue Laboratory where it has been clearly held to be Maize Starch. So the demand is totally baseless and without any substance and the matter is subjudice. The company has been manufacturing Maize Starch by following the standard Wet Milling Process for the last many decades and the product is sold and accepted by the market as Maize Starch, so the company does not foresee any liability to crystallize on this account. Other items include show cause notice concerning demand of Rs. 1.19 crores on exempted goods and the case is pending before The Commissioner, Central Excise.

10. PERSONNEL

In terms of the provisions of section 217 (2A) of The Companies Act, 1956 and rules made thereunder (amended to date), the names and other particulars of employees are set out in the Annexure to the Directors'' Report. However, in view of the provisions of section 219(b)(iv) of the said Act, the aforesaid schedule is not annexed to the Annual Report being sent to the Members of the Company. Any member interested in obtaining the particulars may write to the company.

11. DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Shri A.K. Sardana and Shri Naresh Sardana retire by rotation and being eligible, the Board recommend their reappointment.

12. AUDITORS

M/s. Y.K. Sud & Company, Chartered Accountants, the retiring Auditors of the Company, have confirmed their eligibility to be re-appointed as Auditors of the Company at the ensuing Annual General Meeting. The Board

of Directors recommend the re-appointment of M/s. Y.K. Sud & Company, Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting.

The Board of Directors recommend, subject to the approval of the Central Government, the appointment of M/s. Khushwinder Kumar & Associates, Cost Accountants, as Cost Auditors of the Company for the financial year 2012-13. The cost audit report for the said year is due to be filed with the Ministry of Corporate Affairs on or before the 30th September, 2013 and the cost audit report for the financial year ended 31/03/2012 was duly filed on 29/12/2012 (i.e. within the extended due date for the said filing).

13. ACKNOWLEDGEMENT

Your Directors would like to express their grateful appreciation for the co-operation received from the bankers, customers and other business associations. They place on record their deep sense of appreciation for the devoted services of the executives, staff and workers of the Company for its success.

Yours truly,

For and on behalf of the Board,

S.C.JINDAL

Chairman

Dated : 31st May, 2013


Mar 31, 2012

The Directors are pleased to present before you the 68th Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2012

1. FINANCIAL RESULTS 2011-12 2010-11

(Rs. in Crores) (Rs. in Crores)

Sales & Other income 354.94 339.41

Earning before Interest, tax and Depreciation 45.99 63.06

- Less Interest 11.19 6.97

- Depreciation 7.14 6.64

- Provision for taxes 5.56 10.67

Profit After Tax 22.10 38.78

Surplus brought forward from

previous year 6.91 5.00

Surplus available for

appropriation 29.01 43.78

Proposed dividend (including

Corporate Tax)

3.86 6.87

Transfer to General Reserve 15.00 30.00

Surplus carried

forward 10.15 6.91

2. PERFORMANCE

The revenue from operations have not shown the expected growth due to pricing pressure on the sale of finished goods owing to uncertain economic conditions. The company has, however, achieved higher export turnover of Rs. 6.95 Crores during the year against Rs. 1.79 crores previous year showing a remarkable increase of 288%. The Company intends to increase its focus on exports in order to diversify its markets and secure high realization for finished goods.

The profits of the Company have shown a downward trend due to higher cost of raw material i.e. maize which is an agriculture produce, production and availability of which violently fluctuated during the year. The prices of finished goods remained under pressure for most part of the year and the interest cost has also increased exorbitantly (by over 60%) due to repeated hikes in the interest rates by the banks during the year under reference.

3. FUTURE PROSPECTUS

As required under the Corporate Governance, Management Discussion and Analysis, forming part of this report, reflects the current state of affairs of business.

The expansion of Malda Unit has reached its final stage and trial runs have already begun for some plants. The higher capacities are expected to be fully operational from July, 2012 enabling the Company to achieve higher level of sales during the current year.

4. CORPORATE GOVERNANCE

Your company is fully committed to the philosophy of transparency and believes in conducting its business with due compliance of all the applicable laws, rules and regulations. The Company has duly implemented the system of Corporate Governance as per the requirements of the Listing Agreement. The detailed report appears in the Annexures forming part of this report.

5. DIVIDEND

The Directors are pleased to recommend a dividend of 45% for the financial year ended 31st March, 2012 against 80% last year. The Board has recommended lower dividend with a view to conserve resources for financing the expanding operations of Malda Unit and owing to lower profitability during the year under reference.

6. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2A) of the Companies Act, 1956, the Directors confirm :

(i) that in the preparation of the Annual Accounts for the Financial Year ended 31st March, 2012, the applicable Accounting Standards have been followed alongwith proper explanations relating to material departures;

(ii) that 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 at the end of the financial year and of the profit of the Company for the year so ended ;

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

(iv)that the Directors have prepared the Annual Accounts for the Financial Year ended 31st March, 2012 on a 'going concern' basis.

7. DEPOSITS

All the deposits have been renewed/repaid as per the provisions of Section 58-A of the Companies Act, 1956 and rules made thereunder. The company had no unclaimed/unpaid deposits on 31/03/2012.

8. SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

(a) The Vijoy Steel & General Mills Company Ltd., Phagwara : The company has incurred a small loss due to higher input cost. However, it continues to provide an adequate engineering support to the company.

(b) Sukhjit Finance Ltd., Phagwara : The operations of the company have almost been shut down to ward off unnecessary losses and efforts are being made to realize overdues and the available assets of the Company.

(c) Scott Industries Ltd., Phagwara : The company has continued with bad performance owing to overall poor performance of the textile sector in the country. The board is considering various alternatives for necessary turn around including change in the business line.

There has been no material change in the nature of business of the Subsidiaries.

As required under the Listing Agreement with the Bombay Stock Exchange, a Consolidated Financial Statements of the Company and its subsidiaries are attached, which have been prepared in accordance with the relevant Accounting Standard(s) as prescribed under Section 211 (3C) of the Companies Act, 1956.

In pursuance to the general circular issued by the Ministry of Corporate Affairs, the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. A statement containing the requisite financial details of the company's subsidiaries for the financial year ended 31st March, 2012 is annexed to the consolidated results in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any shareholder of the Company/its subsidiaries who may be interested in seeking such information and are also available for inspection by any shareholder of the Company/its subsidiaries at the registered office of the Company/its subsidiary companies. The Company shall furnish a copy of details of annual accounts of subsidiaries to any shareholder on demand.

9. CONTINGENT LIABILITY

Disputed Liabilities, not provided as expense in the accounts, of Rs. 18.80 Crores mainly include Rs. 17.54 Crores on account of disputed Central Excise Duty excluding penalty and interest. The amount is on account of demand raised by Central Excise Department since 01/04/1997 alleging the sale of Maize Starch as that of Modified Starch. The product has been repeatedly got tested by the Department from its Central Revenue Laboratory where it has been clearly held to be Maize Starch. So the demand is totally baseless and without any substance and has since been stayed by the Hon'ble Punjab and Haryana High Court.

10. PERSONNEL

Pursuant to Section 217(2A) of the Companies Act, 1956 details of the employees who were in receipt of remuneration over Rs. 60.00 Lacs if employed throughout the year or Rs. 5.00 Lacs p.m. if employed for a part of the year is given below :

(A) Persons employed through out the year and were in receipt of remuneration aggregating not less than 60,00,000/- for the year :

Sr.

No. Name Age Designation Gross Remuneration (Rs. Lacs)

1. Shri I.K. Sardana 66 Managing Director 70.99

2. Shri K.K. Sardana 64 Jt. Managing Director 64.05

Qualification Experience Date of Joining Last Employment / Designation Held

B.A. 46 Years 02.08.1967 The Sukjit Starch & Chemicals

Ltd., Phagwara Sales Manager

B.A. 41 Years 18.01.1972 The Sukjit Starch & Chemicals

Ltd., Phagwara G.M. (Commercial)

(B) Persons employed for a part of the year and were in receipt of remuneration at a rate not less than Rs. 5,00,000/- per month - NIL -

Note : The Remuneration shown above includes salaries, allowances, commission, contribution to provident fund and perquisites valued in accordance with Income tax rules.

11 DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Shri S.C. Jindal and Shri V.K. Sardana retire by rotation and being eligible, the Board recommend their reappointment.

12. AUDITORS

M/s. Y.K. Sud & Company, Chartered Accountants, the retiring Auditors of the Company, have confirmed their eligibility to be re-appointed as Auditors of the Company at the ensuing Annual General Meeting. The Board of Directors recommend re-appointment of M/s. Y.K. Sud & Company, Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting.

The company has appointed M/s Khushwinder Kumar & Associates, Cost Accountants, as Cost Auditors of the Company for the financial year 2011-12 with the deemed approval of the Central Government. The cost audit report for the said year is due to be filed with the Ministry of Corporate Affairs on or before 30th September, 2012.

15. ACKNOWELDGEMENT

Your Directors would like to express their grateful appreciation for the co-operation received from the bankers and place on record their deep sense of appreciation for the devoted services of the executives, staff and workers of the Company for its success.

Yours truly,

For and on behalf of the Board,

S.C. JINDAL

Chairman

Dated : 29th May, 2012

 
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