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Kesar Enterprises Ltd.

BSE: 507180 Sector: Agri and agri inputs
NSE: KESARENT ISIN Code: INE133B01019
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OPEN 67.00
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VOLUME 1508
52-Week high 139.80
52-Week low 31.10
P/E 11.07
Mkt Cap.(Rs cr) 63
Buy Price 60.55
Buy Qty 44.00
Sell Price 63.15
Sell Qty 10.00
OPEN 67.00
CLOSE 61.20
VOLUME 1508
52-Week high 139.80
52-Week low 31.10
P/E 11.07
Mkt Cap.(Rs cr) 63
Buy Price 60.55
Buy Qty 44.00
Sell Price 63.15
Sell Qty 10.00

Kesar Enterprises Ltd. (KESARENT) - Director Report

Company director report

To

The Shareholders Kesar Enterprises Ltd. Dear Members

Your Directors present to you the 82nd Annual Report and audited Statement of Accountsfor the year ended 31st March 2017.

Alignment of Financial Year

As per Section 2(41) of the Companies Act 2013 to follow a homogeneous Financial Yearstarting from 1st April to 31st March of the following year the previous Financial Yearof the Company was made for 15 months i.e. from 1.1.2015 to 31.3.2016. Hence theFinancial Year under review is for 12 months.

FINANCIAL RESULTS:

(Rs. in Lakh)

2016-17 [12 Months] 2015-16 [15 Months]
1.4.2016 to 31.3.2017 1.1.2015 to 31.3.2016
Profit / (Loss) before interest depreciation & taxation 6761.32 1887.63
Less: Interest and Finance Charges 4033.26 4210.33
Profit / (Loss) before Depreciation & taxation (Cash Loss) 2728.06 (2322.70)
Less:Depreciation 1897.64 2582.51
Less: Taxation (Deferred Tax) 9.05 417.01
Profit / (Loss) 821.37 (5322.22)

For the Financial Year 2016-17 there is a profit of Rs.821.37 lakh as against a lossof Rs.5322.22 lakh in the previous year

[15 months].

During the year under review the Company has made a profit and the cash flow ispositive. However over the last few years the Sugar Industry was facing severedifficulties on account of high sugar cane prices set by the State Government lower sugarprices and consequential inadequate recovery of cost of production. These factors haveadversely affected the Company's operations and financial performance. Hence the entirenet worth of the Company is eroded and its current liabilities are in excess of currentassets. In view of the above your Directors have not recommended any dividend for theyear 2016-17.

WORKING OF THE DIVISIONS Sugar Division

The crushing for the Season 2016-17 started on 13.11.2016 i.e. 14 days earlier ascompared to 27.11.2015 in the previous season and ended on 10.03.2017 as against 24.2.2016i.e. 24 days later than the previous season. During the season the plant crushed 65.08lakh quintals of sugarcane in 118 days as against 44.47 lakh quintals in 89 days in theprevious season. Crushing was higher by 20.61 lakh quintals during this season due tobetter cane yield and more supply of sugarcane by the farmers due to timely cane pricepayment to the farmers. The sugar recovery overall was higher at 10.81% as against 10.19%in the previous season. This was due to our cane development programme of changing thevarieties into early maturing high sugar canes. The production of sugar was higher at 7.04lakh quintals as against 4.58 lakh quintals in the previous season.

For the Season 2016-17 the Central Government had announced a Fair & RemunerativePrice [FRP] of sugarcane at Rs.230/- a quintal at a base recovery of 9.50%. The UPGovernment had announced a State Advised Price (SAP) of sugarcane of Rs.305/- (normalvariety) a quintal as against Rs.280/- a quintal in the previous season. The said pricewas to be paid to the farmers within 14 days. The UP State Government has not extended anyrelief to the Sugar industry during the crushing season 2016-17 in view of better sugarrealisations. Besides this the Hon'ble High Court in two different matters has quashedthe Orders of the Cane Commissioner / Government through which the Society Commission wasreduced / refunded and interest on late payment of cane price waived for the previousyear. The industry has decided to take up these issues with the High Court and alsothrough a SLP in the Supreme Court. During the last few years the cost of production inUP was the highest in the country which rendered the UP Sugar Industry unviablecash-starved and uncompetitive. There is an urgent need to rationalize the cane pricingpolicy in UP and adopt a

‘linkage formula' as recommended by the Rangarajan Committee linking sugar caneprice to sugar prices. The two major sugar producing States i.e. Maharashtra andKarnataka who together contribute for almost 50% of the country's sugar production haveadopted and implemented the ‘linkage formula' for determining cane price. It isunderstood that a team of senior officials from UP had visited Maharashtra and Karnatakato study their cane pricing system and have submitted their report to the State Governmentbut no decision is taken till date in the matter. The U P Government had announced theformation of a high level Committee to determine a fair Sugarcane Pricing Policy. This isthe only long term solution for stability & viability of the Sugar industry.

During the Season 2016-17 Molasses produced was 2.74 lakh quintals as against 2.10lakh quintals the previous season 2015-16.

The UP Government had announced the Molasses Policy for 2016-17 (November-October)wherein the molasses reservation rate for the country liquor manufacturers had beenretained at 25%. The Policy had been specifically formulated to help country liquormanufacturers reserving a part of their total molasses production for the country liquormanufacturers at a rate much lower than the market specified prices.

During the year under review there has been an increase in sugar prices from thelevels prevailing in December 2015. This has resulted in the Company generatingoperational profits for the quarter ended March 31 2017. The industry outlook is alsopositive in the short term and long term with sugar prices expected to hold.

Power Division

During the Sugar Season 2016-17 the Plant started on 11.11.2016 as against 27.11.2015and operated for 152 days as against 93 days higher by 59 days than in the previousSeason due to higher crushing of sugarcane and purchase of additional alternate fuel. ThePlant consumed 2.37 lakh MT of bagasse/alternate fuel to generate 1.21 lakh MW power asagainst 1.48 lakh MT of bagasse/alternate fuel to generate 0.69 lakh MW power in theprevious Season. The total power exported to the grid was 0.91 lakh MW amounting toRs.51.44 crore as against 0.49 lakh MW amounting to Rs.27.05 crore in the previous Season.

Spirits Division

During the year under review the production of Rectified Spirit (RS) was nil asagainst 23.16 lakh bulk litres in 15 months period of the previous year. The production ofExtra Neutral Alcohol (ENA) was nil as against 17.07 lakh bulk litres in 15 months periodof the previous year. The quantity of Country Liquor supplied was nil as against 5.50 lakhcases in 15 months period of the previous year.

The Spirits Division was put out of operations as the Company is required to installmultiple effect evaporation system to reduce the effluent volume as well as to domodifications in the Reverse Osmosis Plant & Bio-composting which would enable the

Distillery to become zero discharge compliant. As the Company does not have suchcapability the Company has voluntarily taken a shut down for Distillery operations sinceOctober 2015. Hence the Molasses was sold directly in the market.

SUBSEQUENT FINANCIAL YEAR 2017-18 Sugar Division

The crushing for the Season 2017-18 is expected to start in November 2017.

During the Financial Year 2017-18 there may be a steady increase in sugar prices. Thismay result into the Company generating operational profits gradually. The industry outlookis also positive in the short term and long term with sugar prices expected to be stable.

Power Division

The Cogen Power Plant is also planned to start in November 2017.

SHARE CAPITAL

The Paid up Share Capital as on 31.3.2017 was Rs.10.08 crore. During the year underreview the Company has not issued any shares.

BOARD MEETINGS

During the year 6 Board Meetings and 4 Audit Committee Meetings were heId. The detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.

DIRECTORS & KEY MANAGERIAL PERSONNEL

During the year under review Shri A S Ruia resigned as Director of the Company witheffect from 29.4.2016 due to personal reasons. The Board of Directors placed on record itssincere appreciation for the valuable support and guidance given by Shri A S Ruia to theCompany during his tenure as Director of the Company.

On 18.8.2016 Shri Mahesh A Kuvadia was appointed as Independent Director of theCompany by the Shareholders of the Company for the 1st term of 5 years and Shri H RKilachand was reappointed as Managing Director of the Company designated as "Chairman& Managing Director" subject to approval of the Central Government by theShareholders of the Company for a further period of 3 years with effect from 14.8.2016 ona remuneration within the limits prescribed under the Companies Act 2013 and Schedule Vthereof. Accordingly the application was made to the Central Government by the Companythe approval for which is awaited.

Pursuant to Section 152 of the Companies Act 2013 Shri D J Shah Director &Company Secretary retires by rotation at the ensuing Annual General Meeting and beingeligible offers himself for reappointment. As per the SEBI (LODR) Regulations

2015 a brief profile of Shri D J Shah retiring by rotation forms part of theCorporate Governance Report.

All the Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013 and the SEBI(LODR) Regulations 2015.

Pursuant to the provisions of Regulation 25 of the SEBI (LODR) Regulations 2015 theCompany has formulated a programme for familiarising the Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company etc through various initiatives.The details of the aforementioned programme are available at the Company's website www.kesarindia.com/Investor's Corner/ Corporate Governance/ Policies.

BOARD EVALUATION / APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS AND SENIORMANAGEMENT

Pursuant to the provisions of the Companies Act 2013 the Board carried out an AnnualPerformance Evaluation of its own performance the Directors individually as well as theevaluation of the working of its Audit Committee and Nomination & RemunerationCommittee.

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report. Thedetails of the Nomination & Remuneration Policy are available on the website of theCompany www. kesarindia.com/ Investor's Corner/ Corporate Governance/ Policies.

MATERIAL CHANGES & COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THEFINANCIAL YEAR & DATE OF THIS REPORT:

There are no material changes & commitments affecting financial position.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(3)(c) of the Companies Act 2013 the Boardof Directors to the best of their knowledge hereby state that : i) in preparation of theannual accounts for the financial year ended on 31st March 2017 the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures; ii) 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 for that period; iii) the Directors had taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; iv) the Directors had prepared the AnnualAccounts for the financial year ended on 31st March 2017 on a going concernbasis. v) the Directors had laid down proper internal financial controls in place and thatsuch internal financial controls are adequate and were operating effectively. vi) theDirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

There are no contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 and hence Form AOC-2 is not annexed. The Members mayrefer Note 33 to the Notes to Accounts for further details of routine transactions enteredinto with the Related Parties.

A policy of Related Party Transactions as approved by the Audit Committee and the Boardof Directors is uploaded on the website of the Company www.kesarindia.com / Investor'sCorner/ Policies.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to Accounts. Some of the creditfacilities have been classified as Non-Performing Assets (NPA) by Banks.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

The Company had filed a reference with BIFR under Section 15 of SICA on 15.5.2015.Thereafter BIFR intimated the

Company by a letter dated 21.9.2015 that the said reference was registered.

As the Sick Industrial Companies Act (SICA) was repealed with effect from 1.12.2016the Reference filed by the Company under Section 22 of SICA stood abated. However theCompany has been allowed 180 days time to file fresh reference with the National CompanyLaw Tribunal (NCLT) under the recently notified the Insolvency and Bankruptcy Code 2016& Regulations

(IBC) issued thereunder.

MANAGEMENT DISCUSSION & ANALYSIS REPORT AND CORPORATE GOVERNANCE REPORT

The Management Discussion & Analysis Report is annexed and forms part of thisAnnual Report. The Company has complied with the Corporate Governance requirements asstipulated under Regulation 34 of the SEBI (LODR) Regulations 2015. A separate section onCorporate Governance along with a Certificate from the Secretarial Auditors confirmingthe compliance is also annexed and forms part of the Annual Report.

INSIDER TRADING

In compliance with the SEBI regulation on prevention of Insider Trading your Companyhas framed a comprehensive code which lays down guidelines and advises the Directors andemployees of the Company on procedures to be followed and disclosures to be made whiledealing in securities of the Company. During the year under review the Company adoptedCode of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation and the Code of Conduct for Prohibition of Insider Trading in accordance withSEBI (Prohibition of Insider Trading) Regulations 2015.

SEXUAL HARASSMENT POLICY

The Company has constituted an Internal Complaint Committee (ICC) for prevention andredressal of complaints / grievances on the sexual harassment of women at work places. Aspart of this policy during the year under review the Company had arranged a session onWomen's Safety by Madhukar Katragadda Major (Retd). During the year under review noincident had taken place.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 aregiven in the Annexure "A" forming part of this Report. During the yearunder review there were no foreign Exchange Earnings (Previous year Nil) and ForeignExchange Outgo was Nil (Previous Year Nil).

INSURANCE

The Company has taken adequate insurance for all its properties.

FIXED DEPOSITS

As per the Companies Act 2013 the Company is not eligible to raise Fixed Deposits interms of Section 73 of the Act. Hence the Company has not accepted / renewed any FixedDeposits. Further as per Section 74(1) of the Companies Act 2013 the Company has repaidthe entire Fixed Deposit.

AUDITORS

In terms of the provisions of the Section 139(1) of the Company's Act 2013 theappointment made of Haribhakti & Co. LLP

Chartered Accountants is placed before the Shareholders for their ratification.

AUDITORS' REPORT

There is no qualification in the Auditors' Report. With respect to para 40 of the notesforming Financial Statement the explanation thereto is given in the above paraSignificant & Material Orders Passed by the Regulators or Courts.

INTERNAL CONTROL SYSTEM & INTERNAL AUDITORS

The Company has an adequate Internal Control System. All transactions are properlyauthorized recorded and reported to the Management. The Company has Independent AuditorsM/s. Ashok Jayesh & Co. Chartered Accountants to review critical areas of operations.The Audit Reports are reviewed periodically by the Management and the Audit Committee ofthe Board and appropriate measures are taken to improve the process.

COST AUDITOR

Pursuant to Sections 148 read with Rule 14 of the Companies (Audit and Auditors) Rules2014 and all other applicable provisions of the Companies Act 2013 the Board hadappointed Rishi Mohan Bansal Cost Accountant as Cost Auditor of the Company to conductCost Audit for the products `Sugar & Alcohol' and `Electricity Generation' for theyear ended 31.3.2017. The Cost Audit Report for the same will be submitted to the CentralGovernment before 30.09.2017.

Similarly as recommended by the Audit Committee and approved by the Board of Directorsof the Company the appointment and payment of remuneration to Rishi Mohan Bansal CostAccountant Kanpur as Cost Auditor will be placed before the

Shareholders at the ensuing Annual General Meeting for their ratification to conductthe audit of the Cost records of the

Company relating to Sugar & Industrial Alcohol and Generation of Power for the yearending 31st March 2018.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure "B".

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act 2013 read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed Ragini Chokshi & Co. Practicing Company Secretary as Secretarial Auditorof the Company to undertake the Secretarial Audit and provide Secretarial Audit Report inForm MR3. The Report of the Secretarial Audit Report is annexed herewith as Annexure-"C". There are no qualifications reservations or remarks in the SecretarialAudit Report.

CORPORATE SOCIAL RESPONSIBILITY

As required under Section 135 of the Companies Act 2013 the Company has constituted aCorporate Social Responsibility

Committee as the Company had a Net Profit of more than Rs.5 crore for the financialyear 2016-17. However the Company is not required to spend any amount during thesubsequent financial year as per the applicable provisions of the Act. The

Company has continued to play its role as a responsible corporate citizen adding valueto society and addressing the contemporary societal needs and challenges. The CorporateSocial Responsibility philosophy ensures that while business objectives are met andshareholder value is enhanced the Company equally focuses on engaging with the widercommunity and sustainably addressing environmental concerns in its sphere of operations.

EMPLOYEES

Relation with the employees remained cordial throughout the year. Your Directors placeon record their sincere appreciation for the devoted services of the employees of theCompany.

The information required pursuant to Section 197(12) of the Companies Act 2013 readwith Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 in respect of employees on the payroll of the Company in India is providedas Annexure-"D" which forms part of this report.

The information required pursuant to Section 197 read with Rule 5(2)&(3) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided upon request. In terms of Section 136 of theAct the Report and Accounts are being sent to the Members and others entitled theretoexcluding the information on employees' particulars which is available for inspection bythe Members at the Registered Office of the

Company during business hours on working days of the Company up to the date of theensuing Annual General Meeting. Any member interested in obtaining such particulars maywrite to the Company Secretary at the registered office of the Company.

ACKNOWLEDGEMENT

Your Directors would like to place on record their grateful appreciation for theassistance and cooperation extended by the Banks Financial Institutions and thewholehearted support extended by the Shareholders during the year under review.

By Order of the Board of Directors
H R KILACHAND
Chairman & Managing Director
DIN: 00294835
19th May 2017

Pursuant to Section 134(3)(m) of the Companies Act 2013 Forming part of the Directors'Report FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY

1. We have replaced steam driven drives with electric drives with the latest technologywith VFDs along with automation through Distributed Control System(DCS). The electricdrives consume much less energy to drive the mills and thereby results in additionalsaving of bagasse ultimately benefiting by an increase in power sales.

2. After reviewing the benefits of Mono Magnetic System installed in the previous yearwe have added few more such systems in our process

A. POWER AND FUEL CONSUMPTION 2016-17 (01-04.2016 To 31.03.2017) 12 months 2015-16 (01.01.2015 to 31.3.2016) 15 months
1. ELECTRICITY
a Purchased
Unit Kwh 348608 748774
Total Amount Rs. 3819522 9789856
Rate/Unit Rs. 10.96 13.07
b Own Generation
i) THROUGH DIESEL GENERATOR
Unit Kwh 14113 23275
Units Per Ltr. Of Diesel Oil Kwh 2.49 3.14
Rate / Unit Rs. 22.12 17.49
ii) THROUGH STEAM TURBINE
Unit Kwh 112633950 135034900
Units Per M. T. of Steam Kwh 194.25 186.14
Rate / Unit * Rs. 858.00 800.00
2. COAL
Quantity M.T. - -
Cost Rs. - -
Average Rate Rs. - -
3. BAGASSE (OWN)
Quantity M.T. 169979 249397
Cost Rs. - -
Average Rate Rs. (M.T.) - -
4. OTHER FUEL (Outside)
Quantity M.T. 5439 2824
Cost Rs. 67825908 51416782
Average Rate# Rs. 12470 18207
5. Rice Husk
Quantity M.T. - -
Cost Rs. - -
Average Rate Rs. - -
6. Cane Trash
Quantity M.T. - -
Cost Rs. - -
Average Rate Rs. - -
7. H. S. DIESEL
Quantity Ltr. 5672 7408
Cost Rs. 312202 407169
Average Rate Rs. 55.04 54.46

* Not applicable as the bagasse is a by-product and is used as fuel.

Consumption per unit of production

Product (Sugar)
Electricity Kwh / M.T. 286.19 321.77
Bagasse / Risk Husk / Cane Trash M.T. / M.T.
Diesel Oil Ltr. / M.T.
Product (Industrial Alcohol)
Electricity Kwh /000' Ltrs - 57.43
Coal Qtls./000' Ltrs - -
Bagasse (Pith) M.T./000' Ltrs - -
Rice Husk Ltr./000' Ltrs - -
Diesel Oil Ltr. / 000'Ltrs - -

FORM B

FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION OF TECHNOLOGY RESEARCHAND DEVELOPMENT

A. RESEARCH AND DEVELOPMENT B. BENEFITS DERIEVED

Expenditure on R & D 2016-17 2015-16
a) Capital - -
b) Recurring - -

The information on Foreign Exchange Earnings and Outgo is furnished in the Notes to theAccount. (Please refer to Note

No.35 of Notes forming part of financial statements)

EXTRACT OF ANNUAL RETURN
As on financial year ended 31.03.2017
Pursuant to Section 92(3) of the Companies act 2013 read with
The Companies (Management and Administration) Rules 2014