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Bannari Amman Sugars Ltd.

BSE: 500041 Sector: Agri and agri inputs
NSE: BANARISUG ISIN Code: INE459A01010
BSE LIVE 15:40 | 09 Dec 1862.65 32.65
(1.78%)
OPEN

1850.00

HIGH

1935.00

LOW

1820.80

NSE LIVE 15:31 | 09 Dec 1876.55 50.65
(2.77%)
OPEN

1842.95

HIGH

1925.50

LOW

1842.95

OPEN 1850.00
PREVIOUS CLOSE 1830.00
VOLUME 316
52-Week high 2242.25
52-Week low 940.50
P/E 14.25
Mkt Cap.(Rs cr) 2130.87
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1850.00
CLOSE 1830.00
VOLUME 316
52-Week high 2242.25
52-Week low 940.50
P/E 14.25
Mkt Cap.(Rs cr) 2130.87
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bannari Amman Sugars Ltd. (BANARISUG) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 31st Annual Report of the companytogether with audited financial statements for the year ended 31st March 2015

(Rs in Lakhs)

Financial Year
Financial Results 2014-15 2013-14
Profit for the year before depreciation 5159.42 8410.18
Less: Depreciation 5125.55 5195.53
Profit Before Tax 33.87 3214.65
Less: Provisions: Income Tax - Current 8.38 674.43
MAT Credit Entitlement (8.38) (674.43)
Deferred Tax (69.16) 345.90
Profit After Tax 103.03 2868.75
Add : Surplus brought forward from previous year 2117.66 2916.80
Amount available for appropriation 2220.69 5785.55
Appropriations
Provision for diminution in value of investment (Long Term) (29.78) (5.09)
Provision for Proposed Dividend on equity shares 285.99 1429.96
Provision for Tax on Dividend 58.22 243.02
Transfer to General Reserve 2000.00
Surplus carried over to Balance Sheet 1906.26 2117.66
TOTAL 2220.69 5785.55

Dividend

Your Directors are glad to recommend dividend @ Rs 2.50/- per equity share of Rs.10/-each (25 % on equity capital)

Review of Operations

Sugar Division

The comparative operational performances for the last two years are as under

Sugar Unit I Sugar Unit II Sugar Unit III Sugar Unit IV
Particulars Alathukombai Tamilnadu Alaganchi Karnataka Kunthur Karnataka Kolundampattu Tamilnadu
2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14
No of days crushed 117 135 214 262 194 -- 105 156
Sugarcane crushed (Lakh tonnes) 2.20 3.75 11.88 16.06 5.97 -- 4.12 6.02
Recovery (%) 9.37 9.80 10.16 10.12 10.12 -- 9.04 9.21
Sugar bagged (Lakh quintals) 1.99 3.69 12.09 16.24 5.96 3.64 5.62

Drought prevailing in the cane area has affected the cane availability and recovery Theexpansion of crushing capacity from 2500 TCD to 3600 TCD in the sugar factory at KunthurVillage Karnataka has been completed and the factory commenced its operation with theexpanded capacity from 27.8.2014

Co-generation of Power

The Co-generation plants have generated 304.18 million units of power and exported205.46 million units of power to grids compared to the generation of 326.44 million unitsand export of 224.56 million units in the previous year The 20 MW co-generation plant inthe sugar factory at Kunthur Village Karnataka was synchronized with the grid on 27.8.2014

Distillery Division

During the year the distilleries have produced 29.26 million B Ltrs of Alcohol asagainst 27.30 million B Ltrs in the previous year

Granite Division

The Granite Processing Unit has produced 170381 square metres of Granite Slabs and28420 square metres of Tiles compared to production of 183974 square metres of GraniteSlabs and 25160 square metres of Tiles in the previous year

Wind Mill

Wind Mills have generated 11.67 million units of power and exported 10.07 million unitsof power to grid compared to the generation of 12.10 million units and export of 10.48million units in the previous year

Prospects for the current year 2015 - 2016

It is estimated to crush 30 lakh tonnes of sugarcane in aggregate Performance ofco-generation plant will be based on bagasse availability in the sugar mills It isestimated to produce 30 million BLtrs of alcohol in the Distillery Units Improved workingresults are expected in Granite Division With the continued surplus in both domestic andinternational sugar markets sugar prices are expected to remain under pressure

Directors and Key Managerial Personnel

In accordance with the provisions of Companies Act 2013 Sri S V Balasubramaniam isliable to retire by rotation and is eligible for re-appointment

The Board of Directors at its meeting held on 29.5.2015 has re-appointed Sri S VBalasubramaniam as the Chairman of the company with substantial powers of management andSri B Saravanan as the Managing Director for a period five years with effect from 2.6.2015on the recommendation of Nomination and Remuneration Committee

Dr Radha Ramani has been appointed as an Additional Director (Independent) on 11.2.2015She holds office up to the date of ensuing Annual General Meeting The company has receivednotice from a member along with requisite deposit under Section 160 of the Companies Act2013 proposing Dr Radha Ramani for the office of Independent Director

All the Independent Directors have given declarations that they meet the criteria ofindependence as specified under Section 149 (6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement

The Company has devised a policy on Directors’ appointment and remuneration andfor performance evaluation of Independent Directors Board Committees and other IndividualDirectors which include performance evaluation of Non-Executive and Executive Directors

The details of programmes for familiarization of Independent Directors with the companytheir roles rights responsibilities in the company nature of the industry in which thecompany operates business models and related matters are placed in the website of thecompany at the link http://www.bannari.com/InvestorInformation.html

At the Board Meeting held on 11.2.2015 Sri S V Balasubramaniam Chairman Sri B SaravananManaging Director Sri C Palaniswamy Company Secretary and Sri M Ramprabhu Chief FinancialOfficer were designated as "Key Managerial Personnel" of the Company pursuant toSection 203 of the Companies Act 2013 read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014

The Directors have confirmed that they are not disqualified from being appointed asDirectors of the company

Particulars of Loans Guarantees or Investments

During the year the company has not made any loan or guarantee or investment orprovided any security under Section 186 of the Companies Act 2013

Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Companies Act 2013 areprovided in Annexure I to this Report

Particulars of Employees

The information required as per Section 197 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is furnishedin Annexure II to this Report

Meetings of the Board

Five Meetings of the Board of Directors were held during the year The details arefurnished in the Report on Corporate Governance attached herewith

Committees and Policies

In terms of the provisions of the Companies Act 2013 and the Listing Agreement thecompany has constituted Board Committees and framed required polices The details arefurnished in the Corporate Governance Report attached herewith

Corporate Governance and Management Discussion and Analysis Report

A separate section on Corporate Governance Management Discussion and Analysis Reportand the certificate from the Auditors of the company regarding compliance of conditions ofCorporate Governance as stipulated under Clause 49 of the Listing Agreement form part ofthis Report and annexed as Annexure III

Corporate Social Responsibility (CSR)

Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 the company has formulated a policy on CorporateSocial Responsibility and the policy was uploaded in the company's website athttp://www.bannari.com/InvestorInformation.html

The report on CSR activities is attached as Annexure IV to this report

Risk Management / Risk Management Policy

The company has formulated a Risk Management Policy including risk assessment andminimization procedures The Risk Management Committee has been assigned with the functionsof monitoring and reviewing the risk management plans of the company In the opinion of theBoard no element of risk that may threaten the existence of the company has beenidentified

Vigil Mechanism / Whistle Blower Policy

The company has established a whistle blower policy/vigil mechanism for Directors andEmployees to report concerns about unethical behavior actual or suspected incidents offraud or violation of the code of conduct or ethics policy This mechanism providesadequate safeguards against victimization of directors/employees who avail of themechanism and also provide for direct access to the Chairman of the Audit Committee Thewhistle blower policy is posted in the company's website at the linkhttp://www.bannari.com/InvestorInformation.html

Related Party Transactions

All the related party transactions are entered on arm's length basis and are incompliance with the applicable provisions of the Companies Act 2013 and the ListingAgreement All the related party transactions are placed before the Audit Committee andapproved by the Audit Committee Since there are no transactions which are not onarm’s length basis and material in nature the requirement of disclosure of suchrelated party transactions in Form AOC-2 does not arise The Related Party TransactionsPolicy as approved by the Board is uploaded in the company's website athttp://www.bannari.com/InvestorInformation.html

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement Independent Directors at their meeting without participation of non-independentdirectors and management considered and evaluated the performance of Board performance ofthe Chairman and the Managing Director

The Board has carried out an annual evaluation of its own performance and of theindividual directors as well as the Committees of Directors

Material changes and commitments

During the period from the end of financial year and till the date of this report thereis no material changes and commitments affecting the financial position of the companyThere is no change in the nature of business of the company

Directors' Responsibility Statement

As stipulated in Section 134(3) (c) read with Section 134 (5) of the Companies Act 2013your Directors confirm that

a) in the preparation of the annual accounts all the applicable accounting standardshad been followed along with proper explanation relating to material departures

b) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitof the company for the year under review

c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities

d) they had prepared the annual accounts on a going concern basis

e) they had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively and

f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively

Extract of Annual Return

An extract of Annual Return in Form No MGT-9 is annexed as Annexure V

Auditors / Auditors' Report

At the last Annual General Meeting M/s P N Raghavendra Rao & Co was appointed asStatutory Auditors of the company for a period of 3 years and they shall hold office untilthe conclusion of 33rd Annual General Meeting of the company Their appointment is subjectto ratification by members at every Annual General Meeting Accordingly necessaryresolution ratifying their appointment is placed for the approval of members The Auditors'Report does not contain any qualification reservation or adverse remark

Secretarial Auditors and Secretarial Audit Report

M/s C Thirumurthy & Associates Company Secretaries Coimbatore were appointed asSecretarial Auditors to conduct secretarial audit for the financial year 2014-2015 TheReport of Secretarial Auditors is annexed to this report as Annexure VI The Report doesnot contain any qualification reservation or adverse remark

Internal Control Systems and their Adequacy

Details of internal control system and their adequacy are provided in the ManagementDiscussion Analysis Report attached herewith

Cost Audit

Sri M Nagarajan Cost Accountant Coimbatore was appointed as Cost Auditor to conductaudit of cost accounting records for the financial year 2014-15

Industrial Relations

The relationship with employees continued to remain cordial throughout the year underreview

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transaction on these items during the year under review

i. Details relating to deposits covered under Chapter V of the Act

ii. Issue of equity shares with differential rights as to dividend voting or otherwise

iii. Issue of shares (including sweat equity shares) to employees of the company underany scheme

Your Directors state that no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and company'soperations in future

Your Directors further state that during the year under review no case was filedpursuant to Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013

Acknowledgement

Your Directors acknowledge with gratitude the timely assistance and help extended bythe Government of India Governments of Tamilnadu and Karnataka Banks Karnataka PowerTransmission Corporation Limited and Tamilnadu Electricity Board Your Directors thank thecane growers who have supplied sugarcane to the factories and wish to place on recordtheir appreciation of the contributions made by all the employees

By Order of the Board
Coimbatore S V BALASUBRAMANIAM
27.7.2015 Chairman

ANNEXURE - I

Conservation of Energy Technology Absorption Foreign Exchange earnings and outgo

(Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014)

A) Conservation of energy

i) the steps taken or impact on conservation of energy

• Flash Vapour Recovery System (FVRS) has been installed to reduce steamconsumption

• PHE for Super Heater Water Wash (SHWW) system installed with 3 ata steam insteadof 8 ata steam

• 4th body vapour utilized to refinery pan instead of 3rd body vapour

• SRT flash vapour connected to refinery melt and molasses for avoiding 2nd bodyvapour utilization

ii) the steps taken by the company for utilising alternate sources of energy

• By utilizing the methane gas exit from the effluent treatment plant-digestor asfuel to the bio-gas operated generator

During the year under review the distillery unit in Tamilnadu has consumed 1595866units of wind power from one of the wind mills of the company

iii) the capital investment on energy conservation equipments

• Rs 9.07 lakhs

B) Technology absorption

i) the efforts made towards technology absorption

• Nil

ii) the benefits derived like product improvement cost reduction product development orimport substitution

• Nil

iii) in case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)

• Nil

Details 2011-12 2012-13 2013-14
a) the details of technology imported -- --
b) the year of import -- --
c) whether the technology been fully absorbed -- --
d) if not fully absorbed areas where absorption has not taken place and the reasons thereof -- --

iv) the expenditure incurred on Research and Development

• Rs 15.03 lakhs

C) Foreign exchange earnings and outgo

• The Foreign Exchange earned in terms of actual inflows during the year Rs19485.83 lakhs

• The Foreign Exchange outgo during the year in terms of actual outflows Rs4234.97 lakhs

By Order of the Board
Coimbatore S V BALASUBRAMANIAM
27.7.2015 Chairman

ANNEXURE - II

Particulars of Employees

A) Information as per Section 197(12) read with Rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014

1. The ratio of the remuneration of each director to the median remuneration of theemployees of the company for the financial year

Name of the Director Designation Ratio
Sri S V Balasubramaniam Chairman - Executive 21.87
Sri B Saravanan Managing Director 15.18
Sri A K Perumalsamy Director *
Sri E P Muthukumar Director *
Sri T Gundan Director *
Dr M P Vijayakumar Director *
Dr Radha Ramani Director *

* The Non-Executive Directors were paid only sitting fee for attending the meetings ofthe Board and Committees thereof

2. The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year

Name Designation % increase/ (decrease) in remuneration
Sri S V Balasubramaniam Chairman - Executive (64.38)
Sri B Saravanan Managing Director (63.02)
Sri A K Perumalsamy Director *
Sri E P Muthukumar Director *
Sri T Gundan Director *
Dr M P Vijayakumar Director *
Dr Radha Ramani Director *
Sri C Palaniswamy Company Secretary 9
Sri M Ramprabhu Chief Financial Officer 16

* The Non-Executive Directors were paid only sitting fee for attending the meetings ofthe Board and Committees thereof and hence not comparable

3. Percentage increase in the median remuneration of employees in the financial year :16.50

4. Number of permanent employees on the rolls of company : 1555

5. Explanation on the relationship between average increase in remuneration and companyperformance :

The remuneration policy is designed to attract motivate and retain talented employeesin a competitive market The performance of the company was impacted by the adverse marketconditions in the industry Normal increase was given to the employees in the managementcadre and for others based on wages settlement

6. Comparison of remuneration of Key Managerial Personnel against the performance ofthe company :

The revenue from operations has been increased from Rs 653.64 crores to Rs 946.17crores Due to inadequate profit commission was not paid to the Chairman and the ManagingDirector The remuneration to other Key Managerial Personnel has no direct correlation tothe performance of the company but determined in the normal course of business and in linewith the industry

7. i) Variations in the market capitalisation of the company price earning ratio as atthe closing date of the current financial year and previous financial year :

31.3.2014 31.3.2015 % Change
Market Capitalization of the Company (Rs in lakhs) 93805.54 92089.58 (0.01)
Closing Price at the BSE Ltd (in Rs) 820 805 (0.01)
Price Earning Ratio as at the closing date 32.69 894.44 --

ii) Percentage increase over decrease in the market quotations of the shares of thecompany in comparison to the rate at which the company came out with the last public offer: Not comparable as there was no public offer

8. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration : Theaverage percentile increase in salaries of employees other than managerial personnel was16.50% whereas the remuneration to managerial personnel has decreased by 63.70% Due toinadequate profit the Chairman and the Managing Director were not paid commission

9 Comparison of the each remuneration to the Key Managerial Personnel against theperformance of the company

Name Designation Remuneration (Rs in lakhs) Performance of the company
Sri S V Balasubramaniam Chairman - Executive 56.94 The revenue from operations has been increased from Rs 653.64 crores to Rs 946.17 crores Due to inadequate profit commission was not paid to the Chairman and the Managing Director The remuneration to other Key Managerial Personnel has no direct correlation to the performance of the company but determined in the normal course of business and in line with the industry
Sri B Saravanan Managing Director 39.55
Sri C Palaniswamy Company Secretary 24.23
Sri M Ramprabhu Chief Financial Officer 10.59

10. The key parameters for any variable component of remuneration availed by thedirectors :

The Non-executive Directors are paid only sitting fees for attending the meetings ofthe Board and Committee thereof The remuneration of Executive Directors are not consistingof variable component except commission based on the provisions of the Companies Act 2013

11. The ratio of the remuneration of the highest paid director to that of the employeeswho are not directors but received remuneration in excess of the highest paid directorduring the year : Not Applicable 12. Affirmation that the remuneration is as per theremuneration policy of the company : The company affirms that remuneration is as per theRemuneration Policy of the company

B) Information pursuant to Rules 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014

1) Employed through out the year ended March 31 2015 with remuneration aggregating tonot less than Rs 6000000 per annum : None

2) Employed for part of the year ended March 31 2015 with remuneration aggregating tonot less than Rs 500000 per month : None

3) The employee if employed throughout the financial year or part thereof was inreceipt of remuneration in that year which in the aggregate or as the case may be at arate which in the aggregate is in excess of that drawn by the managing director orwhole-time director or manager and holds by himself or along with his spouse and dependentchildren not less than two percent of the equity shares of the company : None

By Order of the Board
Coimbatore S V BALASUBRAMANIAM
27.7.2015 Chairman

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