Your Directors have pleasure in placing the 43rd Director's Report along with theAudited Statement of Accounts for the year ended on 31st March 2016..
The Financial performance of the Company during the year ended 31st March 2016 asunder:
(Rupees in Lacs)
| ||For the year ended as at 31st March 2016 (Rs.) ||For 18 months ended as at 31st March 2015 (Rs.) |
|Profit before interest depreciation & tax ||3550 ||3700 |
|Less: Interest ||(1624) ||(1373) |
|Depreciation ||(930) ||(1426) |
|Profit before tax ||996 ||901 |
|Provision for taxation (including FBT) ||(50) ||(103) |
|Provisionfor taxation (deferred) ||223 ||(49) |
|Net Profit before extraordinary Items ||1169 ||749 |
|Add: Extra ordinary item ||(0) ||(0) |
|Net Profit ||1169 ||749 |
|Earning Per Share of Rs 2/- each ||1.27 ||0.81 |
For the year ended on 31st March 2016 sales stood at Rs.35286.67(net of excise duty)against the Rs. 55044.84 Lacs (net of excise duty) of previous financial year ended as at31-03-2015 (18 months ended on 31-03-2015). During the financial year under review thecompany had done trading of sugar for Rs. 1726.35 lacs whereas during the precedingfinancial year sugar trading was Rs. 4893.65 lacs). Profit after interest and depreciationstood at Rs. 996 Lacs as against the profit of Rs. 901 Lacs in theprevious year. Profitafter tax for the year ended March 31 2016 was Rs.1169 Lacs compared to profit of Rs. 749Lacs in the previous year.
Due to accumulated losses your directors have not recommended any dividend for thefinancial year ended 31ST March 2016.
Transfer to reserves:
The entire surplus of Rs. 1169.02 lacs has been transferred to Reserve and Surplus.
Performance of Divisions:- Sugar Division
Crushing season till 31st March 2016 consisted of sugar seasons of 2015. The companyhas crushed 74.69 Lacs qtls. of cane and the season ran for 105 days. Sugar sale wasRs.27297 lacs as against Rs.47441 lacs during the previous financial year ended for 18months. The other details are as under:
| ||Year 31-03-2016 ||18 months ended 31-03-2015 |
|Gross Working days ||105 ||263 |
|Total Cane Crushed (qtls.) ||7468723 ||18348401 |
|White sugar Produced (qtls) ||769838 ||1708881 |
|Average Recovery ||10.30% ||9.32% |
During the year ended as at 31-03-2016 Company Produced 100.50 Lacs BL of RectifiedSpirit with a recovery of 20.55 % which is better in comparison of preceding year ended31-03-2015 (18 months) production of 167.48 Lacs BL. with a recovery of 21.12% duringpreceding year ended 31-03-2015. Sale of RS and Country liquor were Rs.6462 lacs asagainst Rs.6375lacs.
Reference to BIFR Under Section 15 and Other Applicable provisions of the Chapter IIIof the Sick Industrial Companies (SpecialProvisos)Act 1985
Due to erosion of the Net worth of the Company the reference was registered with theBoard for Industrial and Financial Reconstruction (BIFR) in terms of the provisions of theSick Industrial Companies (Special Provisions) Act 1985 on 28-022013 on the basis ofaudited accounts for the year ended 30th September2012. The reference made with BIFR isstill pending.
M/s. Mehrotra&Mehrotra Chartered Accountants New Delhi Auditors of the Companyretires at the conclusion of the forthcoming Annual General Meeting and being eligibleoffer themselves for reappointment. They have furnished a certificate to the effect thattheir proposed reappointment if made will be in accordance within the limits specifiedu/s 139 of the Companies Act 2013. Pursuant to the provisions of Section 139 142 andother applicable provisions of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the existing Auditors can be reappointed to hold office maximum upto the conclusion of 44th Annual general meeting of the Company whereafter new Auditorshall be required
to be appointed. Accordingly the Board propose for reappointment of existing Auditorsto hold office up to the conclusion of 44th Annual General Meeting for audit of financialstatements for year ending at 31st March 2017 subject to ratification their continuanceby shareholders at annual general meeting.
The comments on the statement of account referred to in the report of the auditors areself-explanatory and explained in the appropriate notes to the accounts.
M/s Amit Gupta & Associates Practicing Company Secretaries were appointed assecretarial auditors of the Company for the year 2015-16 as required under Section 204 ofthe Companies Act 2013 and Rules made thereunder. The secretarial audit report for FY2013-15 forms part of the Annual Report (Annexure to the Directors' Report in Form MR. 3)and carries no qualifications reservations adverse remarks or disclaimers and hence noexplanations are required.
The Board has further appointed M/s Amit Gupta & Associates Practicing CompanySecretaries as secretarial auditor of the Company for the financial year 2016-17.
The Central Government approved the appointment of M/s. AmanMalviya& Company CostAuditor Lucknow as Cost Auditors for conducting Cost Audit for Sugar and IndustrialAlcohol businesses for the year 31st March 2016 report of which shall be submitted in duecourse of time. The Board has approved their appointment for the year 2016-17 and theirremuneration is subject to approval by the Company in the forthcoming Annual GeneralMeeting.
At the ensuing Annual General Meeting Shri SanjayJhunjhunwala and Shri S.C. AgarwalDirectors of your Company retire by rotation u/s 152 of the Companies Act 2013 and beingeligible had offered themselves for re-appointment at the ensuing Annual General Meeting.
During the financial year ended 31-03-2016 the company has notaccepted any publicdeposits.
The equity shares of the company are listed with the
Bombay Stock Exchange Limited and National Stock Exchange Limitedand listing fees for2016-17 had been duly paid.
Directors' Responsibility Statement
In pursuance of sub-section (5) of Section 134 of the Companies Act 2013 in respectof Directors' Responsibility Statement the Board of Directors confirms:
(i) that in the preparation of the annual accounts for year ended on March 31 2016 theapplicable accounting standard have been followed by the Company.
(ii) that the directors of the company have selected such accounting policies appliedthem consistently made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for the year ended on that date.
(iii) that the directors of the Company have taken proper and sufficient care for themaintenance of adequate accounting in accordance with provisions of the Companies Act2013 for safeguarding the assets of the company and for detecting fraud and otherirregularities; and
(iv) that the directors of the Company have prepared the annual accounts on a goingconcern basis.
(v) that the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(vi) that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Significant and material orders
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and the Company's operations in future.
Audit committee and vigil mechanism
Pursuant to requirement of section 177(1) of Companies Act 2013 read with Rule 6 ofthe Companies (Meeting of Board and its Powers) Rules 2014 and Clause 49 of ListingAgreement your Company has already formed the Audit Committee composition of which iscovered under Corporate Governance report section of this Annual Report.
The Vigil Mechanism of the Company which also incorporates a Whistle Blower Policy interms of the Listing Agreement includes appointment of a Whistle Officer who will lookinto the matter conduct detailed investigation and take appropriate disciplinary action.The Company has formulated a vigil mechanism to provide appropriate avenues to theDirectors and employees to bring to the attention of the management their genuine concernabout behavior of employees the details of which are incorporated in the report on thecorporate governance. Protected disclosures can be made by a whistle blower through ane-mail or dedicated telephone line or a letter to the Whistle Blower Officer or to theChairman of the Audit Committee. During the year under review no employee was deniedaccess to Whistle Blower Officer or Audit Committee and no cases under this mechanism werereported in the company and any of its subsidiary / associates.
The Policy on vigil mechanism and whistle blower policy has been uploaded on theCompany's website atthe link: http://www.kmsugar.com.
Extract of annual return
Extract of Annual Return of the Company is annexed herewith in form no. MGT-9 asAnnexure 8 to this Report.
Internal financial controls
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.
The Company aims to have a formalized and systematic approach for managing risks acrossthe Company. It encourages knowledge and experience sharing in order to increasetransparency on the key risks to the Company to the extent possible. This approachincreases risk awareness and ensures proper management of risks as part of the dailymanagement activities.
During the year the Company has constituted a Risk Management Committee which has beenentrusted with the responsibility to assist the Board in:
Reviewing and approving the Company's Risk Management Policy so that it isconsistent with the Company's objectives; and
Ensuring that all the risks that the Company faces such as strategicoperational financial compliance and other risks are identified and assessed and thereis an adequate risk management infrastructure in place capable of addressing those risks.
The Risk Management Policy was reviewed and approved by the Committee. The policy onRisk Management has been uploadedon the Company's website at the link:http;//www.kmsugar.com The objective of the Company's risk management process is tosupport a structured and consistent approach to identify prioritize manage monitor andreport on the principal risks and uncertainties that can impact its ability to achieve itsstrategic objectives.
The Company has introduced several initiatives for risk management including theintroduction of audit functions and processes to identify and create awareness of risksoptimal risk mitigation and efficient management of internal control and assuranceactivities.
Corporate social responsibility The Company constituted a Corporate SocialResponsibility (CSR) Committee pursuant to the requirement of Section 135(1) of CompaniesAct 2013. The CSR policy of the Company interalia list the activities that canundertaken or supported by the Company for CSR composition and meetings of CSR committeeannual allocation for CSR activities area of CSR projects criteria for selection of CSRmodalities of execution / implementation of CSR activities and the monitoring mechanism ofCSR activities / projections. During this year under report the company spent Rs. 20.52Lacs towards CSR. The details of CSR activities undertaken by the company are mentioned inthe prescribed format in the Annexure -4 to this report.
Conservation of Energy Technology Absorption and Foreign Exchange and Outgo
Information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m)oftheCompaniesAct 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure 1.
Research and Development
The details relating to Research and Development activities carried out by the companyduring the year are stated in annexure to this report.
Particulars of Employees
The disclosure as required under the provisions of Section 197 (12) of the CompaniesAct 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 in respect of the employees of the Company has beengiven in 'Annexure 2' and forms part of this Report. Corporate Governance
As required under Regulation 34 of SEBI (Listing Obligations & DisclosureRequirements) Regulation2015 a separate section on Corporate Governance forming part ofthe Directors' Report and the certificate from Practicing Company SecretaryM/s. Amit Gupta& Associates confirming the compliance of the conditions on Corporate Governance isattached as Annexure-3 to this report.
Management Discussion and Analysis Report The Management Discussion and AnalysisReport on the business and operations of the company is attached to this report as'Annexure-5'.
The industrial relations have been cordial at all plants of the Company during theyear.
Your Company has a subsidiary a company viz. M/s. K.M. Energy Private Limitedincorporated on 01-122014 for setting up of Solar Power Project. There was no operationalactivities during the period under review as the setting up of the plant is underprogress. However this company hadsurplus of Rs.1.91 lacs for the year ended 31-03-2016.Further your Company had given a loan of Rs.285.00 lacs to it at interest @10% which hadbeen converted into 9% Non cumulative Preference shares of Rs.10/- per share at premium ofRs.40/- per share. In terms of proviso to section 139(3) of the Companies Act2013 thesalient features of the financial statements of the subsidiary is set out in theprescribed form (AOC-1) under Rule-5 of the Companies (Accounts) Rules 2014 as Annexure6.
In accordance with section 129 (3) of the Act and regulation 34 of the SEBI (LOADR)Regu. 2015 the consolidated financial statements of the Company include financialinformation of its subsidiary prepared in compliance with applicable Accounting Standardsand form the part of Annual Report. Pursuant to the provisions of section 136 of the Actthe financial statements of the Company consolidated financial statements along withrelevant documents and separate audited accounts in respect of subsidiary are availableon the website of the Company.The Company will make available the annual report ofsubsidiary Company upon request by any shareholder of the Company interested inobtainingthesame.
Number of meetings of the Board The Board met five times during the financial yearthe details of which are given in the Corporate GovernanceReport that forms part of thisAnnual Report. The intervening gap between any two meetings was within the periodprescribed by the Companies Act 2013 and the SEBI (LOADR) Regu. 2015.
Policyon directors' appointment and remuneration
The Company seeks to maintain an appropriate mix of executive and independent directorsin order to maintain the independence of the Board and segregate the functions ofgovernance and management. As at year end the Board consists of 10 members four of whomare Whole-time directors five are Independent directors and one is a Nominee director.The Company has five independent directors and all are qualified personnel with requisitequalifications experience positive attributes and satisfy all the criteria as set outunder Schedule IV of Companies Act 2013. These Independent Directors are only eligiblefor sitting fees for attending Board meetings and Committee meetings and other out ofpocket expenses duly made for attending meetings of the Board or any committee of theBoard thereof. Remuneration proposed for whole time directors is in accordance with theRemuneration Policy approved by Nomination and Remuneration Committee of the Board.
Your Company in compliance with section 178(1) of the Companies Act 2013 read withThe Companies (Meeting of Board and its Powers) Rules 2014 has duly constituted aNomination and Remuneration Committee. This committee is chaired by an independentdirector and formulates the criteria for determining qualifications positive attributesindependence of a director and other matters. Appointment and the remuneration of Boardmembers key managerial personnel or one level below the Board level is fixed on the basisof the recommendation of the Nomination and Remuneration Committee made to the Boardwhich may ratify them with or without modifications. Disclosures pursuant to therequirements of section 197(12) read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 have been made in Annexure 2 of thisBoard Report.
Declaration by independent directors As per the requirement of section 149(7) theCompany has received a declaration from every Independent Director that he or she meetsthe criteria of independence as laid down under section 149(6) read with rule 5 of theCompanies (Appointment and Qualification of Directors) Rule 2014 and Clause 49 of theListing Agreement.
Pursuant to the requirement of the Companies Act 2013 a formal annual evaluationneeds to be made by the Board of its own performance and that of its committees andindividual directors. The Act states that the performance evaluation of the independentdirectors shall be done by the entire Board of Directors excluding the director beingevaluated.
The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board as explained under the Corporate Governancesection of this Annual Report. In a separate meeting of independent Directors performanceof non-independent directors was evaluated.
Committees of the Board
Currently the Board has 4 nos of committees. A detailed note on the Board and itscommittees is provided in the Corporate Governance Report section of this Annual Report.The composition of the committees and compliances as per applicable provisions of the Actand Rules are as follows:
Particulars of Loans Guarantee or Investments
As per the requirement of section 186(4) of Companies
|Name of the committee || |
Composition of the committee
|Highlights of duties responsibilities and activities |
|Audit committee || || All recommendations made by the committee during the year were accepted by the Board. |
| || || The Company has adopted the Whistle Blower Mechanism for directors and employees to report concerns about unethical behavior actual or suspected fraud. |
|Nomination and remuneration committee || || The Company has formed the Related Party Transaction Policy. |
| || || The Committee oversees and administers executive compensation. |
| || || All recommendations made by the committee during the year were accepted by the Board. |
|Stakeholders relationship committee || || The Committee reviews and ensures redressal of investor grievances. |
| || || The committee noted that no grievances of the investors have been reported during the year. |
|Corporate social responsibility committee || || The Board as laid down the Company's policy on Corporate Social Responsibility (CSR). |
| || || The CSR policy will be uploaded very soonon Company website www.kmsugar.com |
Act 2013 particulars of loans given investments made guarantees given or securitiesprovided along with the purpose for which the loan or guarantee or security is proposed tobe utilized by the recipient are provided in the standalone financial statements. TheCompany is in compliance with the limits as prescribed under Section 186 of Companies Act2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules 2014.
Particulars of contracts or arrangements with Related Party
The Company's policy on related party transactions may be accessed on the Company'swebsite at http://www.kmsugar.com.. Particulars of contracts or arrangements with RelatedParties referred in Section 188(1) of the Companies Act 2013 is furnished in accordancewith Rule 8(2) of the Companies (Accounts) Rules 2014 is given Not to Accountsno.2.29-(12-D) also in Form AOC-2 as Annexure-7.
Material changes and commitments affecting financial position between the end of thefinancial year and date of report
No material changes and commitments have occurred after the close of the year till thedate of this Report which affect the financial position of the Company. Acknowledgement
Yours Directors place on record their acknowledgment and sincere appreciation of allthe bankers and financial institutions for their continued assistance. They furtherappreciate and acknowledge with gratitude the co-operation and assistance received fromall executives staff and workmen of the Company.
| ||For and on behalf of the Board |
| ||of K. M. Sugar Mills Ltd. |
| ||Sd/- |
| ||L. K. Jhunjhunwala |
| ||Chairman |
|Date: 12.08.2016 || |
|Place: Lucknow || |