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Dwarikesh Sugar Industries Ltd.

BSE: 532610 Sector: Agri and agri inputs
NSE: DWARKESH ISIN Code: INE366A01041
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VOLUME 116698
52-Week high 75.92
52-Week low 20.70
P/E 6.62
Mkt Cap.(Rs cr) 1,209
Buy Price 64.10
Buy Qty 150.00
Sell Price 64.25
Sell Qty 377.00
OPEN 65.40
CLOSE 64.55
VOLUME 116698
52-Week high 75.92
52-Week low 20.70
P/E 6.62
Mkt Cap.(Rs cr) 1,209
Buy Price 64.10
Buy Qty 150.00
Sell Price 64.25
Sell Qty 377.00

Dwarikesh Sugar Industries Ltd. (DWARKESH) - Director Report

Company director report

The Members of the Company

Your Directors take pleasure in presenting their twenty third Annual Report togetherwith the audited accounts for the year ended 31st March 2017.

1. Financial Results

Rs. in Lakhs
Year Ended 31.3.17 Year Ended 31.3.16
Gross profit before depreciation interest & tax 28079.88 11683.04
Less: Depreciation 2994.18 3076.46
Finance Costs 4193.75 5159.02
Profit / (Loss) before tax and exceptional items 20891.95 3447.56
Add: Exceptional income (Net of taxes) 322.71 491.83
Profit / (Loss) before tax 21214.66 3939.39
Less: Provision for taxes (Net of MAT credit entitlement) 144.14 9.55
Deferred tax liability / (asset) 5224.02 33.21
Profit /(Loss) after tax 15846.50 3896.63

2. Dividend

Your directors have recommended equity dividend of C10/- per share (100%) for the year2016-17 aggregating to C2266.35 Lakhs (including dividend distribution tax)

The dividend on Cumulative Redeemable Preference Shares (Series I II III & IV) isaccumulated and is recommended to be paid with arrears thereon in this year aggregating toC1828.23 Lakhs (including dividend distribution tax) since the company has earnedadequate profits in the year 2016-17.

3. Year in Retrospect

Operations:

Distinguishing features of the crushing operations in your company are given below:

Metrics of sugarcane crushed sugar produced and recovery achieved during the year isgiven hereunder:

FY 2016-17 (From 1.4.2016 to 31.3.2017) includes a small part of season 2015-16 and amajor part of season 2016-17

Particulars 2016-17 2015-16 % Change
Crushing (Lakhs/Quintals) – total at all three units 260.74 224.65 16.07
Recovery % (Combined) 11.71 11.67 0.34
Production (Lakhs/Quintals) – total at all three units 30.34 26.28 15.44

Crushing season 2016-17 is now consummated. Comparison of full season 2016-17 &full season 2015-16 is as below:

Season 2016-17 (completed season)

Particular 2016-17 2015-16 % Change
Crushing (Lakhs/Quintals) – total at all three units 283.40 210.49 34.64
Recovery % (Combined) 11.78 11.67 0.94
Production (Lakhs/Quintals) – total at all three units* 33.38 24.71 35.10

*Including small quantity of non-marketable (Brown) sugar.

Highlights-Season 2016-17

• Sugarcane crushing up by 34.64%.

• Small increase in recovery by 0.42%

• Sugar production up by an impressive 35.10%

• Higher crushing during 2016-17 a Pan-Uttar Pradesh phenomenon.

• Higher yield across Uttar Pradesh resulted in higher sugarcane availability.Demonetization also resulted in lesser diversion of sugarcane to alternative sweeteners.

• Impressive recoveries on account of superior varietal mix withincreasing thrust on early maturing varieties such as Co 0238. Impressive recoveryin spite of early start of the crushing season

• Highest ever group recovery of 11.78% with recovery at DN plant at 12.34% and DPplant at 12.11% accomplishing the coveted number 1 and 2 position in North India.Recovery clocked at DN and DP among the highest in India.

Performance of cogeneration division: Metrics of power sold:

Year 2016-17 Period 2015-16
Unit (01.04.2016 to 31.03.2017) (01.04.2015 to 31.03.2016)
Power sold in lakhs units Amount in D Lakhs Power sold in lakhs units Amount in D lakhs
DN 278.66 1273 249 1092
DP 561.30 2868 567 2830
DD 745.84 3811 561 2797
Total *1585.80 *7952 1377 6719

*Includes sale of 6.33 lakh units (C29.67 lakhs) from unutilized power banked in season2015-16

During the completed season 2016-17 value of power evacuated to the power grid isapproximately D90.45 crores

Performance of Distillery:

During the year 7964691.2 Litres of rectified Spirit (previous period 5701769Litres) was produced. The rectified spirit was further reprocessed and 6354581.6 LitresEthanol (previous period 5168428) was produced at Dwarikesh Nagar Unit of the Company.

4. Sugar industry – year at a glance.

• The performance of India's sugar industry was marked by a paradox in FY 2016-17.Conventionally when the domestic sugar industry performed well it did so uniformlyacross the country; this was not the case in FY2016-17 when the industry performed well incertain states and under-performed in others.

• The Indian sugar industry is characterized by cyclicality wherein bountifulyears are followed by weak years. In this agriculture sector lower cane output usuallytranslates into a lower sugar production which in turn corrects the country's sugar supplyvis a vis demand strengthening sugar realizations. When mills begin to report highersurpluses cane arrears to farmers are cleared and there is a larger inducement to growmore sugarcane. In the next cyclical leg this inducement to plant more cane inevitablyenhances cane planting leading to a higher sugar production a couple of seasons later.When higher output moderates sugar realizations mills relatively under-perform whichcould enhance cane arrears culminating in farmers being discouraged to grow low sugarcanequantities.

During the last few years there was no reduction in sugarcane planting area in UttarPradesh as the annual increase in sugarcane remuneration paid to farmers enhanced farmerviability and cane planting even as the sector was marked by high accumulated arrears.

During FY 2016-17 the country's sugar production was impacted by drought inMaharashtra. While Maharashtra and Karnataka sugar manufacturers were affected bysub-optimal rainfall on the one hand Uttar Pradesh sugar manufacturers reported superiorproduction.

• The Central Government and ISMA were compelled to revise their productionestimates on a number of occasions in the course of a single season as drought in SouthernIndia during FY 2015-16 blurred production outlook. The result was that Maharashtra andKarnataka sugar production estimates continued to shrink even as Uttar Pradesh estimatescontinued to improve. It is now estimated that sugar season FY 2016-17 will reportproduction of around 20 million tons compared with 25.1 million tons produced in FY2015-16 a substantial decline. The reality is that Maharashtra's sugar production nearlyhalved when compared with the previous year while Uttar Pradesh's output increased over28%.

The result was that the Indian sugar industry reported a mixed year marked by anencouraging performance in Uttar Pradesh but weak output in Maharashtra Karnataka andTamil Nadu.

The Uttar Pradesh government strengthened the sugar industry's viability with theannouncement of a reasonable increase of C25 per quintal in the state advised price (SAP)for season 2016-17. However the State Government withdrew benefits to the sugar industrylike waiver of purchase tax entry tax and society commission. Besides the two-tierpayment mechanisms that had been provided earlier were also done away with.

The responsible handholding by the Central and State Governments played a crucial rolein the sugar industry's revival in Uttar Pradesh. The government focused on the timelyclearance of cane price paid to farmers and improved sugarcane yields.

The year under review was marked by a domestic production deficit as well as aprojected global deficit of nearly 5 million tons. While international prices peaked inSeptember 2016 domestic prices staged an extended recovery. NY Raw which had declinedto a low of 10.5 cents per pound traded at nearly 23 cents in September 2016. Domesticprices ranged broadly betweenC3500 to C3600 per quintal marked by occasional spikes anddeclines.

The Uttar Pradesh sugar sector reported higher volumes coupled with improvedrealizations; the industry in Southern and Western India suffered lower volumes andsub-optimal capacity utilization. However it would be relevant to indicate that despite arecovery in Uttar Pradesh a number of sugar companies in that state were not able totranslate the sectoral rebound into improved Balance Sheet hygiene.

Uttar Pradesh sugar companies reported attractive improvements in operating recoveries.The average State recovery was 10.50% or higher compared to 9.25% and 9.50% recoveryrecorded in the earlier years. Sugar mills in Uttar Pradesh engaged in a number of canedevelopment initiatives comprising propagation of the early maturing variety trenchfarming autumn planting etc.

These initiatives helped improve recovery and yields which in turn increased farmerincomes. The industry is increasingly convinced that the Government's vision to doublefarmer incomes by 2022 can be achieved by optimizing the varietal mix maximizing plantingof the proven Co 0238 variety.

Timely Central Government interventions and policies endeavored to ensure that sugarprices were largely stable and affordable. Concerned with the depleting national sugarinventory the Central Government announced a duty-free import of 500000 metric tons.However the allotment of the imported quantity was focused largely on sugar-deficitregions facilitating equitable distribution. The consignments of imported sugar andcorrection in the international sugar prices kept domestic prices range-bound in FY2017-18.

The Central government's 10% ethanol blending program was taken up in earnest; being aplan with long-term implications this decision could take time to yield results. During2017 Central Government reduced the ethanol procurement price and transactionalbottlenecks were addressed. For the program to be successful in the long term theGovernment plans to link ethanol procurement prices with international oil prices.

The year FY 2016-17 was marked by two historic national moments both relevant to theUttar Pradesh sugar industry. The first defining moment was the currency demonetizationannounced on 8 November 2016 intended to enhance financial transparency. The immediatefall out of this measure was a lower diversion of sugarcane to alternative sweetenerswhich increased the availability of sugarcane to sugar mills. Temporarily demonetizationresulted in sluggish demand and declining sugar realizations but the sector regained itsmomentum in a matter of months. The second important development was the election of theBJP Government in Uttar Pradesh. With the Central and State governments now of the samepolitical affiliation there is an expectation that policies will be cohesive andgrowth-oriented for the sugar industry in Uttar Pradesh catalyzing the rural economy. Thestate's sugar industry believes that the next positive reform initiative could comprise alinking of the cane cost to the sugar price ensuring a linkage of sectoral fortunes toraw material costs and evolving vendors into partners.

The FY 2016-17 was a buoyant one for the sugar industry in Uttar Pradesh. After anextensive trough the sugar industry encountered fresh hope marked by improvedfinancials plans of business development and business consolidation. One of the positivesto emerge from the extended slowdown was the progressive de-risking and risk-averseindustry planning. The industry is increasingly focused on efficiency enhancementvalue-addition and fiscal consolidation leading to business sustainability.

Dwarikesh - Financial Scorecard:

Particular 2016-17 2015-16
Lakhs % Lakhs %
Gross revenue 125610 83151
less: Excise duty 6570 3717
Net revenue (from operations) 119040 100.00% 79434 100.00%
EBIDTA 28403 23.86% 12175 15.33%
EBDTA 24209 20.34% 7016 8.83%
EBT 21215 17.82% 3939 4.96%
EAT 15847 13.31% 3897 4.91%

*Exceptional income of C323 lakhs (Previous year C492 Lakhs) is added to EBIDTA andEBDTA

The numbers for the year under review make impressive comparison with the numbers ofthe previous period.

EBDITA both in absolute numbers and in % terms is significantly better than in theprevious period. Margin of EBIDTA is 23.86% vis--vis margin of 15.33% in the previousyear. In absolute numbers the EBIDTA amount at C28403 lakhs is 133% more than the EBIDTAamount of C12175 lakhs in the previous FY.

During the year under review your company earned EBDTA of C24209 lakhs as compared toC7016 lakhs earned in the previous FY an increase of over 245%.

Earning before tax when viewed in juxtaposition with that of the previous FY is alsoimpressive.

Earnings after tax is C15847 lakhs. In % the same is 13.31% of the net revenue. Thismay be seen in conjunction with EAT of C3897 lakhs earned in the previous FY.

Standout reasons for the better performance are:

Liquidation of low cost stock carried forward from the previous FY. Sugar pricecontinued to be buoyant. Sugar season 2016-17 was a deficit year both internationally anddomestically.

With the restoration of sugar balance the sugar sales was brisk and healthy. Yourcompany sold in excess of 29.69 lakh quintals of sugar as compared to 25.86 lakh quintalssold in the previous FY. Average price at which sugar was sold was better than that inprevious FY

The company started its crushing operations early and hence crushed larger quantity ofsugarcane and commensurately produced more sugar. This resulted in reaping the benefits ofeconomics of scale. Not only was the Company able to produce more sugar it generated andsold more power to the State Grid.

Your company continued to record impressive recoveries during the year thus keepingthe raw material & other costs pegged at lower levels

Your company is relentlessly making efforts to recalibrate its debt profile and reduceits long-term debt burden with a view to keep the interest cost under control. Not onlyhas the company been able to reduce its long term debt with some aggressive andaccelerated debt repayment program the company has had the benefit of lower rate ofinterest on account its improved credit rating. The long term loans of the company arerated ‘A' (-) with stable outlook by ICRA. The company has thus been able to place alid on its interest costs.

During the year the company successfully concluded a QIP program in which many amarquee investors participated. The company raised C59.4 crores which amount was used foraccelerated repayment of long term debt. The QIP was in the overall interest of theCompany and will have spiraling effect in pruning the debt profile of the company.

5. A - CANE & SUGAR POLICY

The main policies of the government in relation to the sugar industry during the yearwere:

a) Hitherto applicable levy and free sale sugar ratio of 10:90 for the period up to31st March 2013 has since been abolished pursuant to adoption of recommendationscontained in the report of Dr. Rangarajan. The sugar mills are now eligible to sell theirentire production as free sale sugar

b) The Fair & Remunerative Price (FRP) for the crushing season 2015-16 was C230 perquintal and the same has been retained at C230 per quintal for 2016-17 both are linked torecovery @ 9.50%.

c) Chronology of SMP /FRP announced by the Central Government on the basis of recoveryis given herein under:

Season SMP/F&RP D / Quintal
2000-01(SMP) 59.50*
2001-02 62.05*
2002-03 64.50*
2002-03 (Revised) 69.50*
2003-04 73.00*
2004-05 74.50*
2005-06 79.50&
2006-07 80.25&
2007-08 81.18&
2008-09 81.18&
2009-10 (SMP since replaced by F&RP) 129.84@
2010-11 139.12@
2011-12 145.00@
2012-13 170.00@
2013-14 210.00@
2014-15 220.00@
2015-16 230.00@
2016-17 230.00@

* Linked to recovery of 8.50%

& Linked to recovery of 9%

@ Linked to recovery of 9.50%

d) The Company is required to pay State Administered Price (SAP). For the crushingseason 2016-17 the State Government of Uttar Pradesh announced SAP of C305 per quintalfor general variety of Sugarcane C10 per quintal is extra payable for early variety &C5 per quintal is less payable for rejected variety.

B. Change in Nature of Business

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

C. Material Changes and Commitments if any Affecting the Financial Position of theCompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of the report

No Material changes have occurred subsequent to the close of the financial year of theCompany to which the balance sheet relates and the date of the report.

D. Details of Significant and Material Orders Passed by the Regulators or Courts orTribunals Impacting The Going Concern Status and Company's Operations in Future

No significant & Material orders have been passed impacting the Going concernStatus & Company's operations in future.

E. Details in respect of adequacy of internal financial controls with reference to thefinancial statements.

The Company has adequate internal financial control in place. The Company has gotrobust systems in place to ensure prepayment audits of transactions concurrent internalaudit of all transactions of various segments of activities of the company.

F. Share Capital

The company issued 2515471 equity shares @ C236.11 per shares by way of QualifiedInstitutional Placement to Qualified Institutional Buyers during the year.

G. Extract of the Annual Return

The extract of the annual return in Form No. MGT – 9 is annexed herewith asAnnexure III forming part of the Board's report

H. Corporate Social Responsibility

The company made profits in last financial year 2015-16 but incurred losses in earlier2 years & thus average profits of past 3 years is negative and hence a requirement ofincurring CSR expenditure is not applicable to the Company for the Current financial yearunder Section 135 of the Companies Act 2013 read with the relevant rules. However as perthe requirement of the Act the Company has already constituted CSR Committee. Although asaforesaid the requirement of spending on CSR is not applicable however the Company hasbeen carrying out CSR in various fields including education health medical facilitiesetc. for the common benefits of employees farmers villagers from time to time.

I. Number of Meetings of The Board of Directors

Details of Composition of Board Audit Committee & details of their meetings aregiven in Corporate Governance Report.

J. Vigil Mechanism

The Company has adopted policy on Vigil Mechanism in the Board meeting held on May 92014. No complaints were received under this policy during the year.

K. Nomination & Remuneration Committee

Details of Composition of the Committee & details of their meetings are given inCorporate Governance report.

L. Particulars of Loans Guarantees or Investments Under Section 186

No Loans Guarantees or investments are made during the year.

M. Particulars of Contracts or Arrangements with Related Parties:

The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section(1) of section 188 of the Companies Act 2013are approved by the Board & if required approval is sought from shareholders inGeneral meeting.

N. Managerial Remunartion

a) Details of the ratio of the remuneration of each director to the median employee'sremuneration and other details as required pursuant to Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given below:

Name of director Category Ratio to median employees remuneration
Shri G R Morarka Managing Director 316.83:1
Shri Vijay S Banka Whole Time Director & CFO 23.29:1
Shri B J Maheshwari Whole Time Director & CS cum CCO 23.50:1
Shri B K Agarwal Independent Director 0.49:1
Shri K N Prithviraj Independent Director 0.43:1
Ms. Malathi Mohan@ (upto 26th October 2016) Independent Director 0.08:1
Ms. Nina Chatrath$ (from 4th February 2017) Independent Director 0.12:1

@ Ceased to be Director on account of demise

$ Appointed as Director to fill in vacancy caused on account of death of Ms. MalathiMohan b) Median Remuneration

There is increase of 23.81% in median remuneration of employee during the currentaccounting year of 12 months over the previous accounting period consisting of 12 months.

c) Permanent employees

As at 31st March 2017 the Company has on its payroll 638 permanent employeesexcluding seasonal employees.

d) Affirmation that the remuneration is as per the remuneration policy of the company.

Remuneration paid to Managing Director & Whole Time Director is as per approvedpolicy of the Company.

e) A statement showing the name of every employee of the company who-

f) If employed throughout the financial year was in receipt of remuneration for thatyear which in the aggregate was not less than One crore & twenty lakh rupees; 1(Shri G R Morarka Managing Director).

g) If employed for a part of the financial year was in receipt of remuneration for anypart of that year at a rate which in the aggregate was not less than Eight lakh fiftythousand rupees per month: NIL.

B Any director who is in receipt of any commission from the company and who is aManaging Director or Whole-time Director of the Company shall receive any remuneration orcommission from any Holding Company or Subsidiary Company of such Company subject to itsdisclosure by the Company in the Board's Report: NOT APPLICABLE.

C Details of remuneration with break-up of components paid to Managing Director WholeTime Director terms of appointment are stated in Corporate Governance Report.

O. Secretarial Audit Report

A Secretarial Audit Report given by M/s. VKM & Associates a company secretary inpractice is submitted and annexed herewith as Annexure IV. There are no qualificationsreservation or adverse remarks or disclaimer in the Secretarial Audit Report.

P. Risk Management Policy

A statement indicating development and implementation of a risk management policy forthe Company including identification therein of elements of risk if any which in theopinion of the Board may threaten the existence of the company.

Q. Policy on Anti Sexual Harassment

The Company has put in place a policy on Anti Sexual harassment No complaints havebeen received under this policy during the year.

R. Related Party Transactions

Related party transactions that were entered during the financial year were on an arm'slength basis and were in the ordinary course of business. There were no materiallysignificant related party transactions with the Company's Promoters Directors Managementor their relatives which could have had a potential conflict with the interests of theCompany. Transactions with related parties entered by the Company in the normal course ofbusiness are periodically placed before the Audit Committee for its omnibus approval andthe particulars of contracts entered during the year as per Form AOC-2 is enclosedherewith and marked as Annexure II. The Board of Directors of the Company has on therecommendation of the Audit Committee adopted a policy to regulate transactions betweenthe Company and its Related Parties in compliance with the applicable provisions of theCompanies Act 2013 the rules thereunder and the Listing Regulations.

6. Directors

A) Changes in Directors and Key Managerial Personnel

Pursuant to the requirements of the Companies Act 2013 Managing Director &Independent directors are not liable to retire by rotation and hence all the Whole TimeDirectors are liable to retire by rotation. Accordingly Shri B J Maheshwari and Shri VijayS Banka retire by rotation and has offered themselves for re appointment. Ms. MalathiMohan has passed away during the year and the casual vacancy taken place due to her deathhas been filled up by appointment of Ms. Nina Chatrath.

B) Declaration by an Independent Director(s) and re-appointment

Pursuant to the requirements of section 149(7) of the Companies Act 2013 the companyhas received the declarations from all the independent directors confirming the fact thatthey all are meeting the eligibility criteria as stated in section 149(6) of the Companiesact 2013.

All the three independent directors are appointed/re appointed in the meeting of Boardof Directors held on August 13 2014 for a period of 5 years as per the requirements ofsection 149 of the Companies act 2013.

C) Formal Annual Evaluation

Pursuant to the requirements of section 134(3)(p) of the Companies Act 2013 read withRegulation 17 of the listing regulations the Board has carried out an annual performanceevaluation of its own performance the directors individually as well as the evaluation ofthe working of its Audit Nomination & Remuneration Committees.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the Chairmanand the Non Independent Directors was carried out by the Independent Directors who alsoreviewed the performance of the Secretarial Department. The Directors expressed theirsatisfaction with the evaluation process.

D) Policy on Directors' Appointment and Remuneration Including Criteria for Determiningqualifications Positive Attributes Independence of a Director Key Managerial Personneland Other employees

The Board shall have minimum 3 and maximum 15 directors unless otherwise approved. Noperson of age less than 21 years shall be appointed as a director on the Board. Thecompany shall have such person on the Board who complies with the requirements of theCompanies Act 2013 Provisions of the Listing Regulations Memorandum of Association andArticles of Association of the company and all other statutory provisions and guidelinesas may be applicable from time to time. Composition of the Board shall be in compliancewith the requirements of Listing Regulations of the Stock Exchanges. Majority of theDirectors shall have specialised knowledge/ experience in the areas like Sugar sectorStrategic management Legal Risk Management Accountancy Finance etc. Except for wholetime directors no other directors are paid remuneration but are paid only sitting fees.The MD is paid remuneration as approved by other applicable authorities but are not paidsitting fees. MD Company Secretary and Chief Financial Officer shall be the KeyManagerial Personnel (KMPs) of the company. All persons who are Directors / KMPs membersof Senior Management and all other employees shall abide by the Code of Conduct.

Directors/KMPs shall not acquire any disqualification and shall be persons of soundintegrity and honesty apart from knowledge experience etc. in their respective fields.

Policy on Directors nomination and remuneration is available on company's website atwww.dwarikesh.com

7. Statement of Director's Responsibilities

As required under the provisions of Section 134(3)(c) of the Companies Act 2013 yourDirectors confirm that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that year;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

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

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

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

8. Management's Discussion and Analysis Report

Pursuant to Regulations 34 of the Listing Regulations of the Stock ExchangesManagement's Discussion and Analysis Report for the year under review is presented in aseparate segment which is forming part of the Annual Report.

9. Corporate Governance

As per Regulations 34 of the Listing Regulations with the Stock Exchanges a report onCorporate Governance together with the Auditors Certificate regarding compliance of theconditions of corporate governance Management Discussion and Analysis statement formspart of the Annual report.

10. Disclosure: CSR Committee

The CSR Committee comprises Shri B. K. Agarwal as Chairman Shri G. R. Morarka and ShriB. J. Maheshwari as other members.

Audit Committee

The Audit Committee comprises of Independent Directors namely Shri B. K. Agarwal asChairman Shri K. N. Prithviraj Ms. Nina Chatrath and Shri V. S. Banka as other members.

All the recommendations made by the Audit Committee were accepted by the Board.

11. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

Pursuant to section 134 (3)(m) of the Companies Act 2013 the particulars in respectof conservation of energy technology absorption and foreign exchange earnings & outgoare furnished in Annexure –I and form a part of this report.

12. Subsidiary Company's Report:

The Company does not have any subsidiary in terms of provisions of Companies Act 2013.

13. Auditors & Auditor's Report:

There are no qualifications in the Auditors report.

Pursuant to the provisions of section 139(2) of the Companies Act 2013 the existingAuditors M/s. S S Kothari Mehta & Co. Chartered Accountants have completed theirtenure and as proposed identified and recommended by audit committee and board. You arerequested to appoint M/s. NSBP & Co. Chartered Accountants New Delhi as statutorythe Auditors for the period of 5 years holding their office upto the conclusion of 28thAnnual General Meeting of the company.

All remarks of the auditors having reference to the accounting policies or notes to theaccount are self-explanatory and do not require any further explanation. There are noqualifications in the Auditors report.

14. Cost Auditors:

As per the directions issued by the Central Government pursuant to the provisions ofsection 148 of the Companies Act 2013 M/s. Ramanath Iyer & Co Cost Accountants wereappointed to conduct cost audits relating to sugar electricity and industrial alcohol forthe year ended March 31 2017.

15. Public Deposits

The Company does not have any fixed deposits at the beginning of the year in terms ofSection 74 of the Companies Act 2013. The Company did not accept any deposits during theyear.

16. Acknowledgement

Your directors wish to place on record their sincere gratitude and appreciation to itsmembers sugar cane growers employees bankers financial institutions Central &State Government Agencies for their valuable contribution in the growth of theorganisation.

By Order of the Board
For DWARIKESH SUGAR INDUSTRIES LIMITED
G. R. Morarka
Managing Director
(DIN - 00002078)
Vijay S Banka
Whole Time Director & CFO
(DIN - 00963355)
B J Maheshwari
Place: Mumbai Whole Time Director & CS cum CCO
Dated: May 18 2017 (DIN - 00002075)