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Andhra Sugars Ltd.

BSE: 590062 Sector: Others
NSE: ANDHRSUGAR ISIN Code: INE715B01013
BSE LIVE 15:53 | 23 Jun 345.10 5.50
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NSE 15:40 | 23 Jun 342.60 2.75
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OPEN

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HIGH

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OPEN 339.55
PREVIOUS CLOSE 339.60
VOLUME 22414
52-Week high 349.80
52-Week low 194.05
P/E 7.76
Mkt Cap.(Rs cr) 936
Buy Price 345.10
Buy Qty 950.00
Sell Price 0.00
Sell Qty 0.00
OPEN 339.55
CLOSE 339.60
VOLUME 22414
52-Week high 349.80
52-Week low 194.05
P/E 7.76
Mkt Cap.(Rs cr) 936
Buy Price 345.10
Buy Qty 950.00
Sell Price 0.00
Sell Qty 0.00

Andhra Sugars Ltd. (ANDHRSUGAR) - Director Report

Company director report

To

The Shareholders

Your Directors have pleasure in presenting this SIXTY NINETH ANNUAL REPORT along withthe Audited Statement of Accounts for the year ending 31st March 2016.

Financial Results:

(Rupees in lakhs)

This Year Last Year
Sales 86932.29 77853.95
Other Income 1750.68 1065.83
88682.97 78919.78
Profit for the year 12082.14 4332.59
Depreciation 4310.65 3569.06
Profit after depreciation 7771.49 763.53
Add: Excess provision of Income-tax credited back 187.97 (12.00)
Add: Income Tax Refund received 90.41 --
Less: Short Provision of Income Tax -- --
Less: Exceptional Item (Electricity FSA charges relating to
earlier years) -- --
8049.87 775.53
Provision for Current Tax 2643.66 110.00
Provision for Deferred Tax (175.76) 434.27
MAT Credit 106.34 (106.34)
Profit after Tax 5475.63 337.60
Add: Balance brought forward from last year 12373.45 13264.87
Profit available for appropriation 17849.08 13602.47
APPROPRIATIONS
Transfer to General Reserve 1000.00 300.00
Interim Dividend on Equity Shares at Rs.5 /-per share 1355.35 813.21
Tax on distributable profits 146.60 115.81
Balance brought forward to next year 15347.13 12373.45
17849.08 13602.47

PERFORMANCE:

Your Directors are glad to report that for the year 2015-16 your Company’sperformance was impressive. Profit before tax Rs. 77.71 Crores against a Profit of Rs.7.64 Crores made last year. The Net Profit (After Tax) was Rs. 54.76 Crores against Rs.3.38 Crores made last year.

The Andhra Sugars Limited

DIVIDENDS:

A Dividend of Rs. 3/- per Equity Share was paid for the year 2014-15. An InterimDividend of Rs.5/- per share was paid on 28th March 2016 involving an outflow of Rs.15.02Crores (including Tax on Distributable Profits). Your Directors now recommend this InterimDividend as Final Dividend for the Financial Year 2015-16.

CAPITAL & RESERVES:

Authorised and Paid Up Capital:

As on 31.3.2016 the Authorised Capital of the Company is Rs.30.00 Crores and thePaid-up Capital is Rs. 27.11 Crores.

Reserves:

With the transfer of Rs. 10.00 Crores during the year under report the total Reservesas on 31.3.2016 stands at Rs.402.53 Crores against Rs. 392.53 Crores on 31.3.2015.

REVIEW OF OPERATIONS: SUGAR UNITS:

The Sugar Units II and III crushed in aggregate 609579 M.T. of cane during the 2015-16season against 565781 M.T. crushed by three Units last year. The crushing operations andcane price paid to cane suppliers for the 2014-15 Season are:

SUGAR UNIT – I

SUGAR UNIT – II

SUGAR UNIT - III

TANUKU

TADUVAI

BHIMADOLE

Fin. Year Fin. Year Fin. Year Fin. Year Fin. Year Fin. Year
2015-16 2014-15 2015-16 2014-15 2015-16 2014-15
(A) Crushing details:
Total cane crushed (MT) -- 140761 362979 291534 246600 133486
Total No. of days crushed -- 69 110 88 85 66
Total Sugar produced(MT) -- 12952.50 38440.69 30946 23683.34 12562.50
Average Recovery % 8.70% 10.59% 10.50% 9.60% 8.70%
(B) Cane price:
Fair & Remunerative price (per M.T.) -- 2200.00 2542.00 2469.12 2300.00 2200.00
Cane price paid (per M.T)* -- 2350.00 2602.00 2530.00 2360.00 2350.00

• inclusive of Purchase Tax Incentive of Rs.60/- per M.T.

• Operations of Sugar Unit-I was suspended during the Season 2015-16 due tounviability.

• Cane crushed at sugar unit II & III was higher compared to the last Season.

• Recovery achieved at Sugar Unit II& III was higher compared to previousSeason.

• Sugar Unit-II stood first in the State of Andhra Pradesh in achieving therecovery percent cane.

• To encourage farmers to plant cane your Company opted to pay a cane pricehigher than the Fair Remunerative Price fixed by the Government.

POWER GENERATION :

During the year under report the Co-generation Unit at Taduvai generated 20114150Units of Power against 13130300 Units generated last year.

PERFORMANCE OF CHEMICAL DIVISION:

During the year under report the Caustic Soda Division at Saggonda achieved a turnoverof Rs.376.50 Crores compared to Rs. 370.11 Crores achieved last year. The Profit afterdepreciation achieved this year was higher at Rs.77.47 Crores against Rs. 62.12 Croreslast year.

Aspirin Division also made a profit of Rs.440.80 lakhs due to export activites.

WIND POWER UNITS:

The Power generated at Ramagiri Wind Mills during the year is Units 1828182 against2286500 Units generated last year.

The Power generation at the Tamil Nadu Wind Mills during the year under report is18429228 Units against 23102512 Units of last year. This Power is being fed into theTamil Nadu State Electricity Board grid.

PROJECTS:

Your Company continues to focus its strategy on expansion and diversificationprogramme.

Your company is setting up a project at J.N.Pharmacity Parawada Visakhapatnam inNon-Sez area to manufacture 100 TPD Sodium Hypochlorite. The estimated project cost isabout Rs.10 crores. The important raw materials required are Sodium Hydroxide and Chlorinegas which can be supplied from our Chemicals Division Saggonda. Most of the civilconstruction works are completed. All the bought-out components required for this projecthave already been procured. Fabrication of all the process equipments and main storagetanks are completed. Construction of main process plant building office buildingchlorine cylinder shed MCC building D.G. set shed Chilling unit shed and Stores &Maintenance shed are completed. Fabrication and erection of pipe racks / bridges are alsocompleted. Fabrication and erection of storage tanks in tank farm area and main processplant equipment are in progress.

It is expected to complete the project by the end of October 2016.

An Energy Efficient Caustic Soda plant is in operation at Saggonda.

Power is an essential input for your Company's Chlor Alkali Plants. To ensure requiredPower for operations your Company is implementing a 33 MW Coal Based Power Plant atSaggonda. Erection of Boiler Electro Static Precipitation Coal Handling Plant AirCooled condensers and other works are in progress. Around 70% of Civil Works have beencompleted. 132 KV Switchyards and Transmission works have been received and its erectionwork is in progress. 33 MW Steam Turbine has arrived at the site and its erection work isexpected to commence. Overall progress is above 40%. The Project cost has been estimatedat Rs.200.00 Crores. A Term Loan of Rs.140.00 Crores has been tied up with Andhra Bank(Rs.100.00 Crores) and Axis Bank (Rs.40.00 Crores) and balance Rs.60.00 Crores is beingmet from internal generation. Barring unforeseen circumstances the commercial operation isexpected to commence during the last Quarter of Financial Year 2016-17.

The Power generated from this Power Plant will be utilized for the Chemical Plantslocated at Saggonda.

During the year under report a Solar Power Plant based on Photovoltaic Technology wasin operation. The Power generated by this plant is being utilized in house at Kovvuru.

DEMATERIALISATION OF EQUITY SHARES:

As of 31st March 2016 Equity Shares representing 44.63% of the Share Capital have beendematerialised.

AUDITORS:

M/s Brahmayya & Co. Chartered Accountants Vijayawada the present Auditors wereappointed at 67th Annual General Meeting for a period of 3 Financial Years i.e. 2014-152015-16 and 2016-17.

They retire at this Annual General Meeting and offer themselves for re-appointment.Their remuneration for the current Financial Year 2016-17 requires your approval.

COST AUDITORS:

M/s Narasimha Murthy & Co. Cost Accountants Hyderabad are appointed by your Boardof Directors as Cost Auditors of the Company for the products which are subject to CostAudit for the year ended 31-3-2016. The remuneration proposed to be paid to them is beingplaced for your ratification at the ensuing 69th Annual General Meeting.Cost AuditorsReport in respect of Financial Year 2014-15 has been filed with the Ministry of CorporateAffairs within the stipulated due date.

CORPORATE GOVERNANCE:

As per the amended provisions of the Listing Agreement a Report on CorporateGovernance along with Management Discussion and Analysis forming part of the Directors'Report is annexed.

COMPLIANCE CERTIFICATE OF THE AUDITORS:

The Statutory Auditors have certified that the Company has complied with the conditionsof Corporate Governance as stipulated in the Listing Agreement with the Stock Exchangesand the same is annexed to the Report of Directors.

AUDIT COMMITTEE:

Audit Committee comprises of 3 non Whole-time Independent Directors Sri A. Ranga RaoDr. P. Kotaiah and Sri V.S. Raju. Sri A. Ranga Rao is the Chairman of this Committee.

DIRECTORS AND KMP:

Appointment of Dr. B. B. Ramaiah as Managing Director (overall Incharge) for a furtherperiod of 5 years with effect from 1.11.2016 is being placed for the approval ofShareholders at the ensuing 69th Annual General Meeting.

Directors Sri Mullapudi Thimmaraja and Sri P. S.R.V.K. Ranga Rao retire by rotation atthe ensuing 69th Annual General Meeting and being eligible offer themselves forre-appointment.

Independent Directors have given a statement of declaration as per Section 149(6) ofthe Companies Act 2013. Dr. B.B. Ramaiah Chairman & Managing Director Sri M.Palachandra Company Secretary and Sri P.V.S. Viswanadha Kumar General Manager (Finance)& Asst. Secretary had been designated as Key Managerial Personnel.

Compliance under Companies Act 2013

Pursuant to Sec.134 of the Companies Act 2013 read with Companies (Accounts) Rules2014 your company complied with the compliance requirement the details of which areenumerated hereunder.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements of Section 134(1)(c) of the Companies Act 2013 and on thebasis of explanation and compliance certificate given by the executives of the Companyand subject to disclosures in the Annual Accounts and also on the basis of discussionswith the Statutory Auditors of the Company from time to time we state as under : a) thatin the preparation of the annual accounts the applicable accounting standards have beenfollowed alongwith proper explanation relating to material departure;

b) that the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

c) that the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) that the directors had prepared the annual accounts on a going concern basis;

e) that the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

BOARD MEETINGS:

The Board of Directors met 6 times during the financial year 2015-16 on 26-05-201528-07-2015 8-09-2015 31-10-2015 6-02-2016 and 14-03-2016.

INDEPENDENT DIRECTORS MEETING:

A Meeting of Independent Directors was held on 19th April 2016. The IndependentDirectors have evaluated the performance of the Non-independent Directors the Board as awhole and Chairman of the Board. The Board was briefed on the deliberations made at theIndependent Directors Meeting.

FAMILARISATION PROGRAMME:

Your Company through a Policy has in place a familiarisation programme to all theDirectors with a view to update them on the Company's Policies and Procedures. IndependentDirectors make a periodical visit to plants to keep themselves abrest of the plantoperations. Respective Plant Heads interact with the Independent Directors and explain tothem about the various process operations.

FORMAL ANNUAL EVALUATION OF THE BOARD

The Board evaluated its own performance and that of its Committees and Directors interms of :

Measured and appropriate contribution by the Directors to the discussions on the AgendaItems - Each Director exercising the responsibilities in a bonafide manner.

- Understanding of the Company's business strategic plans and other key issues.

- Special Skills and expertise of each Director contributing to the Board's overalleffectiveness. - Respecting the confidentiality of the Company's business information andBoard's deliberations.

- Satisfactory attendance and active participation of each Director at the meetings ofthe Board and Committee.

The Board members were of the opinion that the Board as a whole and Directors haveperformed effectively as per the terms of the above parameters. The respective Committeeperformed as per its terms of reference.

VIGIL MECHANISM:

As a part of Vigil Mechanism a Whistle Blower Policy has been established and approvedby the Board. This Policy envisages reporting of wrong doing or non-ethical activitiesobserved by Employees at any level directly to the Chiarman of the Audit Committee or tothe Chairman & Managing Director. The matter reported will be investigated and if thewrong doer is found guilty a disciplinary action will be initiated depending upon themateriality of the non-ethical doings. During the year under report there has been no suchinstances which required reporting.

NOMINATION AND REMUNERATION COMMITTEE :

As required by the Provisions of the Companies Act 2013 and listing Agreement aNomination and Remuneration Committee comprising of Independent Directors Sri V.S. Raju(Chairman) Sri P.A.Chowdary and Sri A. Ranga Rao has been constituted by the Board.

This Nomination and Remuneration Committee has formulated Nomination and RemunerationPolicy which has been approved by the Board. This Nomination & Remuneration Policy haslaid down criteria and terms and conditions with regard to identifying persons who arequalified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration based on the Company's size and financial position and trends and practiceson remuneration prevailing in the industry.

CORPORATE SOCIAL RESPONSIBILITY (CSR) :

As required by the Provisions of the Companies Act 2015 a Corporate SocialResponsibility (CSR) Committee has been constituted by the Board of the Company with Dr.B.B.Ramaih Chairman & Managing Director Sri P.Narendranath Chowdary ManagingDirector Sri Mullapudi Thimmaraja Joint Managing Director and Sri V.S. Raju IndependentDirector as members of the Committee. This Committee has formulated a CSR Policy which hasbeen approved by the Board. This Policy envisages CSR Activities to be taken up amount ofexpenditure to be incurred and monitoring of CSR Activities from time to time.

This Policy aims towards the achievement of CSR objectives by undertaking any one ormore of the activities to be in alignment with Schedule VII of the Companies Act 2015either on a own or through any Trust / Society or any other recognized Agency.

As per the provisions of Section 135(5) of the Companies Act 2013 company shouldspend in every Financial Year at least 2% of the average net profits of the company madeduring the three immediately preceding Financial Years. In pursuance of its CorporateSocial Responsibility Policy the company gives preference to the local area and areasaround it where it operates or any other permissible location for spending the amountearmarked for Corporate Social Responsibility activities.

Accordingly for achieving its CSR objectives through implementation of meaningful andsustainable CSR programmes ASL shall allocate at least 2% of its average Net Profitscalculated as per Section 198 of the Companies Act 2013 as its Annual CSR Budget in eachFinancial Year.

From the Annual CSR Budget allocation a provision will be made towards the expenditureto be incurred on identified areas for undertaking CSR activities on a year on yearbasis.

Allocation of the Annual Budget for CSR activities in any given year shall be as perthe provisions of the Companies Act 2013 and rules made thereunder as amended from timeto time. Any unspent / unutilised CSR allocation of a particular year will be carriedforward to the next year i.e. the CSR budget will be non-lapsable in nature.

As required by Rule 8 of the Companies (CSR Policy) Rules 2013 a Report on CSRActivities and the amount of expenditure incurred are annexured to this Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :

The Company has duly complied with the Provisions of Section 186 of the Companies Act2013 with regard to Loans Guarantees or Investments the details of which as applicableare provided in the Notes to Balance Sheet.

RISK MANAGEMENT POLICY:

The company has framed a Risk Management Policy which envisages the following

• Identification of areas of Risk

• Assessing the impact of Risks

• Steps taken to mitigating the Risk

The Major Segments of operations of the Company are Sugar and Chlor Alkali.

The major aspects of concern for the Sugar Sector are:

1) Harvesting Labour

2) Power to operate the irrigation requirements

3) Proper Cane Varieties that give good Cane and Sugar yield and that are suitable formechanical harvesting.

To get around the 1st aspect the Company has embarked upon locating the right CaneHarvester suited to our Grower Farm sizes. The 2nd aspect is being taken care of bysetting up a Solar Powered Pumping System at our R & D Farm so that our Growers couldultimately be provided the right guidance in this aspect. The 3rd aspect is being met bythe Cane Breeding Programme undertaken by the Company.

Chlor Alkali segment is power intensive where Power constitute a major input cost.Restricted power supply and increased power cost have become a cause of concern. Tomitigate this impact a Solar Power Plant has been commissioned at Kovvur. At Saggondalocation a coal based Power Plant is being set up. This would improve the poweravailability to the Chemical Plants.

INDUSTRIAL RELATIONS:

The relations with your Company's employees continue to be cordial and harmoniousduring the year under report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY:

The Company has in place a Prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 (Act.) An Internal Compliance Committee (ICC) has been set up toredress the complaints received regarding sexual harassment. All employees are coveredunder this Policy. As on the date of this report there were no complaints received by theICC.

SAFETY HEALTH AND ENVIRONMENT:

Safety Occupational Health and Environment Protection continue to be accorded highpriority.

EXTRACT OF ANNUAL RETURN :

As required by Section 92 (3) of the Companies Act 2013 and relevant rules an Extractof Annual Return in MGT9 is annexured as a part of this Annual Report.

RELATED PARTY TRANSACTIONS:

There is no transaction with Related Party which requires disclosure under Section134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules2014.

SECRETARIAL AUDIT REPORT :

As required by Provisions of Companies Act 2013 Secretarial Audit Report has beenprovided by Nekkanti SRVV Satyanarayana & Co. Hyderabad Company Secretaries inpractice is annexured to this Report.

PARTICULARS OF EMPLOYEES:

Information in accordance with the provisions of the Companies Act 2013 read with therelevant Rules made thereunder regarding employees is annexed as Annexure "IIA" forming part of this Report.

RATIO OF REMUNERATION OF EACH DIRECTOR :

Details of ratio of Remuneration of each Director to the median employees remunerationis enclosed.

Significant and Material Orders Passed by the Regulators or Courts or Tribunalsimpacting the Going Concern status of the Company

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Information pursuant to Section 134 of the Companies Act 2013 read with relevant rulesis given in Annexure "II B" forming part of this Report.

FIXED DEPOSITS:

As required by the Companies Act 2013 the details of Fixed Deposits as on 31.3.2016 isgiven hereunder.

2015-16 2014-15
(a) Accepted during the year. 395565000 357935000
(b) Remained unpaid or unclaimed as at the end of the year. 5295000 4120000
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved. NO NO
i) at the beginning of the year NOT APPLICABLE NOT APPLICABLE
ii) maximum during the year -do- -do-
iii) at the end of the year -do- -do-
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act. NIL NIL

CONSOLIDATED ACCOUNTS:

In accordance with the Accounting standards consolidated financial statements of theCompany and its Subsidiaries form part of the Report and Accounts. These consolidatedstatements have been prepared on the basis of audited results received from the SubsidiaryCompanies as approved by their respective Boards.

The Accounts of the Subsidiary Companies for the year 2015-16 have not been attached tothe Company's Accounts. However Shareholders desirous of obtaining the Annual Accounts ofthe Subsidiaries may obtain them upon request. The Annual Report and the Accounts of theSubsidiary Companies will be kept for inspection at the Company's Registered Office aswell as at the offices of your Subsidiary Companies.

SUBSIDIARIES AND ASSOCIATE:

JOCIL LIMITED:

For the Financial Year ending 31.3.2016 your subsidiary Company JOCIL Ltd. posted aprofit of Rs..2713.91 lakhs (before taxation) against Rs. 1967.91 lakhs (before taxation)last year. This Subsidiary Company paid an Interim Dividend of Rs.7/- per Share which isbeing recommend to the Shareholders as Final Dividend for the Financial Year 2015-16.

THE ANDHRA FARM CHEMICALS CORPORATION LIMITED:

The Company achieved a sales of Rs.92.04 lakhs against Rs. 99.00 lakhs and incurred aloss (before Tax) of Rs.59.90 lakhs against the loss of Rs. 51.11 lakhs last year.

HINDUSTAN ALLIED CHEMICALS LIMITED:

The Directors are on the look out for a suitable project to be taken up by the Company.

THE ANDHRA PETROCHEMICALS LIMITED:

The Company achieved a sales of Rs.33565.83 lakhs against Rs. 14026.17 lakhs andincurred a loss (before Tax) of Rs. 2693.37 lakhs against the loss of Rs. 4749.04 lakhslast year. During the year under report the Plant was shut down over a prolonged perioddue to non-remunerative selling prices of the product. Hence the company incurred loss.

INTERNAL CONTROL SYSTEM:

Your Company conducts a review of the financial and operating controls of the variousUnits. The Internal Control System of your Company is commensurate with its size andnature of business. The Board has also laid down a policy on Internal Financial Control asrequired by the provisions of the Companies Act 2013. The same has been posted onCompany's Website.

LISTING ON STOCK EXCHANGE:

Company's Equity Shares are listed on National Stock Exchange and Annual Listing Feefor the Financial Year 2015-16 has been paid.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the co-operation extendedby the State and Central Government authorities Financial Institutions and Banks. Theyalso express their appreciation to the employees at all levels for the successful workingof the Company.

For and on behalf of the Board
TANUKU Dr. B.B.RAMAIAH
27.07.2016 Chairman & Managing Director