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Bannari Amman Sugars Ltd.

BSE: 500041 Sector: Agri and agri inputs
NSE: BANARISUG ISIN Code: INE459A01010
BSE LIVE 15:16 | 28 Apr 1997.55 6.60
(0.33%)
OPEN

1990.10

HIGH

2010.00

LOW

1980.60

NSE 15:30 | 28 Apr 1981.35 -17.70
(-0.89%)
OPEN

2053.00

HIGH

2053.05

LOW

1975.00

OPEN 1990.10
PREVIOUS CLOSE 1990.95
VOLUME 54
52-Week high 2325.00
52-Week low 1722.00
P/E 15.27
Mkt Cap.(Rs cr) 2504.93
Buy Price 1982.00
Buy Qty 5.00
Sell Price 1997.00
Sell Qty 38.00
OPEN 1990.10
CLOSE 1990.95
VOLUME 54
52-Week high 2325.00
52-Week low 1722.00
P/E 15.27
Mkt Cap.(Rs cr) 2504.93
Buy Price 1982.00
Buy Qty 5.00
Sell Price 1997.00
Sell Qty 38.00

Bannari Amman Sugars Ltd. (BANARISUG) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 32nd Annual Report of thecompany together with audited financial statements for the year ended 31stMarch 2016

Amalgamation of M/s Madras Sugars Limited with the Company

The Hon'ble High Court of Judicature at Madras has approved the Scheme of Amalgamationof Madras Sugars Limited with your company on 15th November 2016 The Appointeddate for the Scheme of Amalgamation was fixed as 1.1.2016

In view of the Amalgamation the Annual General Meeting of the Company could not be heldbefore 30.9.2016 Extension of time has been obtained from the Registrar of the CompaniesCoimbatore

(Rs in Lakhs)

Financial Results Financial Year
2015-16 2014-15
Profit for the year before depreciation 9139.79 5159.42
Less: Depreciation 6154.07 5125.55
Profit Before Tax 2985.72 33.87
Less: Provisions: Income Tax - Current 634.99 8.38
MAT Credit Entitlement (634.99) (8.38)
Deferred Tax (193.68) (69.16)
Profit After Tax 3179.40 103.03
Add : Surplus brought forward from previous year 1906.26 2117.66
Amount available for appropriation 5085.66 2220.69
Appropriations
Provision for diminution in value of investment (Long term) (1.94) (29.78)
Provision for Proposed Dividend on equity shares 857.98 285.99
Provision for Tax on Dividend 174.66 58.22
Transfer to General Reserve 2000.00 ---
Surplus carried over to Balance Sheet 2054.96 1906.26
T O T A L 5085.66 2220.69

Dividend

Your Directors are glad to recommend dividend @ Rs 7.50 per share on 11439700 equityshares of Rs10/- each Review of Operations Sugar Division

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

Particulars

Sugar Unit I Alathukombai Tamilnadu

Sugar Unit II Alaganchi Karnataka

Sugar Kunthur Unit III Karnataka

Sugar Unit IV Kolundampattu Tamilnadu

Sugar Unit V * Vengur Tamilnadu
2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16 2014-15 2015-16
No of days crushed 170 117 256 214 249 194 200 105 86
Sugarcane crushed (Lakh tonnes) 3.67 2.20 13.05 11.88 7.65 5.97 7.88 4.12 3.19
Recovery (%) 9.30 9.37 9.80 10.16 9.91 10.12 9.02 9.04 9.49
Sugar bagged (Lakh quintals) 3.38 1.99 12.80 12.09 7.59 5.96 7.05 3.64 3.01

* Acquired by way of amalgamation with effect from 1.1.2016 Co-generation of Power

The Co-generation plants had generated 424.72 million units of power and exported292.23 million units of power to grids compared to the generation of 304.18 million unitsand export of 205.46 million units in the previous year The 25 MW Co-generation plant inthe sugar factory acquired by way of amalgamation had generated 39.86 million units ofpower and exported 29.36 million units of power during the period from 1.1.2016 to31.3.2016

DistiNery Division

During the year the distilleries had produced 28.70 miNion B.Ltrs of Alcohol as against29.26 miNion BLtrs in the previous year Granite Division

In the Granite Processing Unit 128150 square metres of Granite Slabs and 38262 squaremetres of Tiles were produced compared to production of 170381 square metres of GraniteSlabs and 28420 square metres of Tiles in the previous year

Wind Mill

Wind Mills had generated 8.61 million units of power and exported 7.50 million units togrid compared to the generation of 11.67 million units and export of 10.07 miNion units inthe previous year

Prospects for the current year 2016 - 2017

In the current financial year the operational performances of the sugar units till 31stOctober 2016 are

Particulars Unit I Unit II Unit III Unit IV Unit V
No of days crushed (from 1.4.2016 to 31.10.2016) 87 68 59 76 106
Sugarcane crushed (Lakh tonnes) 1.78 2.75 1.56 2.64 3.50
Recovery (%) 9.82 9.23 9.62 8.27 8.34
Sugar produced (Lakh quintals) 1.85 2.56 1.51 2.33 3.03

During the period from 1.4.2016 to 31.10.2016 the co-generation plants have generated168.31 million units of power and exported 115.24 million units of power to grids

The distilleries have produced 17.26 million B.Ltrs of Alcohol from 1.4.2016 to31.10.2016

98762 square metres of Granite Slabs and 9803 square metres of Tiles were produced inthe Granite Processing Unit during the period from 1.4.2016 to 31.10.2016

Wind Mills have generated 11.43 miNion units of power and exported 9.85 miNion units tothe grid from 1.4.2016 to 31.10.2016

It is estimated to crush another 22 lakh tonnes of sugarcane in aggregate in theremaining months Performance of co-generation plants will be based on bagasse availabilityin the sugar mills Improved working results are expected in the Distillery and GraniteDivision The sugar prices are expected to be steady at current level The financial resultsare expected to be satisfactory

Directors and Key Managerial Personnel

In accordance with the provisions of Companies Act 2013 read with the Articles ofAssociation of the Company Sri B Saravanan is liable to retire by rotation

All the independent directors have given declarations that they meet the criteria ofindependence as specified under Section 149 (6) of the Companies Act 2013 All IndependentDirectors hold office for a fixed term of five years and are not liable to retire byrotation

The Company has devised a policy on director's appointment remuneration and forperformance 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 operations business models and related matters are placed on the website of thecompany at the link http://www.bannari.com/InvestorInformation.html

Sri S V Balasubramaniam Chairman Sri B Saravanan Managing Director Sri C PalaniswamyCompany Secretary and Sri M Ramprabhu Chief Financial Officer were designated as "KeyManagerial Personnel" of the Company in terms of Sections 2(51) and 203 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

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 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is furnished in AnnexureII forming part of 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

The company has constituted Board Committees and framed policies as required under theprovisions of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 The details are furnished in the Corporate GovernanceReport attached herewith

Corporate Governance and Management Discussion and Analysis Report

A separate section on Corporate Governance Management Discussion and Analysis Reportand a certificate from the Auditors of the company regarding compliance of conditions ofCorporate Governance are annexed as Annexure - III

Corporate Social Responsibility Committee

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 induding 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 vigil mechanism for Directors and Employees to reportconcerns about the unethical behavior actual or suspected incidents of fraud or violationof the code of conduct or ethics policy. The Whistle Blower Policy is posted in thecompany's website at the link http://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 Listing Agreementswith Stock Exchanges/ SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 There is no materially significant related party transaction made by the company withPromoters Directors or Key Managerial Personnel etc. which may have potential conflictwith the interest of the company at large and therefore disclosure in Form AOC-2 is notrequired. All the related party transactions are placed before the Audit Committee andapproved by the Audit Committee. The Related Party Transactions Policy as approved by theBoard is uploaded on the company's website athttp://www.bannari.com/InvestorInformation.html

The details of transactions with Related Parties are provided in the accompanyingfinancial statements

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has evaluatedthe performance of Independent Directors The Independent Directors at their meetingwithout participation of non-independent directors and management considered and evaluatedthe Boards' performance and performance of the Chairman and Managing Director

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

Material changes and commitments

The Hon'ble High Court of Judicature at Madras has approved the Scheme of Amalgamationof Madras Sugars Limited with your company on 15.11.2016 The appointed date fixed for theAmalgamation is 1st January 2016 Accordingly workings of Madras Sugars Limitedduring the period from 1.1.2016 to 31.3.2016 have been incorporated in the financialstatements of the company As per the scheme of Amalgamation the Company has to allot1100000 equity shares of Rs 10/- each to the shareholders of Madras Sugars Limited

There is no change in the nature of business of the company

Directors' Responsibility Statement

As stipulated in Section 134(3)(c) and 134 (5) of the Companies Act 2013 your Directorsconfirm 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 made?udgments 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 that period

c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany 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

The extract of Annual Return in MGT 9 is annexed as Annexure

V Auditors / Auditors' Report

M/s P N Raghavendra Rao & Co was appointed as Statutory Auditors of the company fora period of 3 years and they shall hold office until the conclusion of 33rdAnnual General Meeting of the company Their appointment is sub?ect to ratification bymembers at every Annual General Meeting Accordingly required resolution is placed forratifying their appointment The Auditors' Report does not contain any qualificationreservation or adverse remark

Secretarial Auditors and Secretarial Audit Report

M/s C Thirumurthy & Associates Company Secretaries Coimbatore was appointed asSecretarial Auditor to conduct secretarial audit for the financial year 2015-2016 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 Nagara?an Cost Accountant Coimbatore was appointed as Cost Auditor to conductaudit of cost accounting records for the financial year 2015-16 The cost Audit Report doesnot contain any qualification reservation or adverse remark

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 o 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 (induding sweat equity shares) to employees of the company underany scheme

iv) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future

Your Directors further State that during the year under review no cases were filedpursuant to the Sexual Harassment or Women at Workplace (Prevention Prohibition andRedressal) 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 andTamilnadu Electricity Authorities. Your Directors thank the cane growers who have suppliedsugarcane to the factories and wish to place on record their appreciation to thecontributions made by all the employees

By Order of the Board
Place: Coimbatore S V BALASUBRAMANIAM
Date : 23.11.2016 Chairman
DIN :00002405

ANNEXURE - I

Particulars of Conservation of Energy Technology Absorption Foreign Exchange earningsand outgo (Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of theCompanies (Accounts) Rules 2014)

A) Conservation of energy

i) the steps taken or impact on conservation of energy

• 56 Nos of LED lamps have been provided in the place of old S V lamps to saveenergy and improved illumination

• Raw sugar melter vent out vapour utilized for melt heating

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

• Nil

iii) the Capital investment on energy conservation equipments

• Nil

B) Technology absorption

i) the efforts made towards technology absorption

• Nil

ii) the benefits derived like product improvement cost reduction product developmentor import substitution

• Nil

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

• Nil

Details 2013-14 2014-15 2015-16
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 10.33 lakhs

C) Foreign exchange earnings and outgo

• The Foreign Exchange earned in terms of actual inflows during the year Rs21677.78 lakhs

• The Foreign Exchange outgo during the year in terms of actual outflows Rs1547.86 lakhs

By Order of the Board
Place: Coimbatore S V BALASUBRAMANIAM
Date : 23.11.2016 Chairman
DIN 00002405

ANNEXURE - II

The Information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014

A) Information as per Section 197(12) read with Rule 5(1) of The Companies (Appointment& 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 Executive Chairman 52.62
Sri B Saravanan Managing Director 35.68

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 165.75
Sri B Saravanan Managing Director 159.44
Sri C Palaniswamy Company Secretary 3
Sri M Ramprabhu Chief Financial Officer 36

Due to inadequate profit the commission was not paid to the Chairman and the ManagingDirector in the previous year

3 Percentage increase in the median remuneration of employees in the financial year12.50%

4 Number of permanent employees on the rolls of company 1596

5. 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

The average percentile increase in salaries of employees other than managerialpersonnel was 13% Due to inadequate profit the commission was not paid to the Chairman andthe Managing Director in the previous year Hence it cannot be compared with the percentileincrease in the salaries of other employees

6. Affirmation that the remuneration is as per the remuneration policy of the company

The company affirms that remuneration is as per the Remuneration 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 throughout the year ended March 31 2016 with remuneration aggregating tothe amount specified in the above Rules

Name Sri S V Balasubramaniam Sri B Saravanan
Designation Chairman Managing Director
Remuneration Received (Rs in lakhs) 151.32 102.61
Nature of employment whether contractual or otherwise Contractual Contractual
Qualifications B Com ACA ACS B Com
Experience 51 Years 16 Years
Date of commencement of employment 9.10.1985 5.7.2000
Age in years as on 31.3.2016 76 43
Last employment Vice Chairman Sakthi Sugars Limited Joint Managing Director Shiva Distilleries Limited
Percentage of equity shares held by the employee who drawn remuneration in excess of that the remuneration drawn by the Managing Director - -
Whether any such employee is a relative of any director or manager of the company and if so name of such director or manager Sri S V Balasubramaniam Chairman and Sri B Saravanan Managing Director are related to each other

2) Employed for part of the year ended March 31 2016 with remuneration aggregating tonot less than the amount specified in the above Rules

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
S V BALASUBRAMANIAM
Place: Coimbatore Chairman
Date : 23.11.2016 DIN :00002405