Your Directors have pleasure in placing the 44th Director's Report along with theAudited Statement of Accounts for the year ended on 31st March 2017.
The Financial performance of the Company during the year ended 31st March 2017 as under:
(Rupees in Lacs)
| ||For the year ended as at 31st March2017 ||For year ended as at 31st March2016 |
| ||(Rs.) ||(Rs.) |
|Profit before interest depreciation & tax ||5443 ||3550 |
|Less: Interest ||(665) ||(1624) |
|Depreciation ||(943) ||(930) |
|Profit before tax ||3835 ||996 |
|Provision for taxation (including FBT) ||(661) ||(50) |
|Provision for taxation (deferred) ||64 ||223 |
|Net Profit before extraordinary Items ||3238 ||1169 |
|Add: Extra ordinary item ||(0) ||(0) |
|Net Profit ||3238 ||1169 |
|Earning Per Share of Rs 2/- each ||3.52 ||1.27 |
For the year ended on 31st March 2017 sales stood at Rs.33618.53 Lacs (net of exciseduty) against the Rs. 35286.67 Lacs (net of excise duty) of previous financial year endedas at 31-03-2016). During the financial year under review the company had done trading ofsugar for Rs.1127.57 lacs whereas during the preceding financial year sugar trading wasRs. 1726.35 lacs). Profit after interest and depreciation stood at Rs. 3835.00 Lacs asagainst the profit of Rs. 996.00 Lacs in the previous year. Profit after tax for the yearended March 31 2017 was Rs.3238.00 Lacs compared to profit of Rs. 1169.00 Lacs in theprevious year.
Your directors have not recommended any dividend for the financial year ended 31stMarch 2017 as the Company was under Corporate Debt Restructured (CDR).
Transfer to reserves:
The entire surplus of Rs. 3238.18 lacs has been transferred to Reserve and Surplus.
Performance of Divisions:-
Crushing season till 31st March 2017 consisted of sugar seasons of 2016. The companyhas crushed 88.32 Lacs qtls. of cane and the season ran for 121 days. Sugar sale wasRs.28182 lacs during the year under review as against Rs.27297 lacs during the previousfinancial year. The other details are as under:
| ||Year 31-03-2017 ||Year 31-03-2016 |
|Gross Working days ||121 ||105 |
|Total Cane Crushed (qtls.) ||8832402 ||7468723 |
|White sugar Produced (qtls) ||859577 ||769838 |
|Average Recovery ||9.76% ||10.30% |
During the crushing season under report the company produced 67720130 KWH power andexported 38198272 KWH to UPPCL. Power sale was Rs.1749 lacs as against Rs. 1968 lacs.
During the year ended as at 31-03-2017 Company Produced 103.45 Lacs BL of RectifiedSpirit with a recovery of 22.41 % which is better in comparison of preceding yearproduction of 100.50 Lacs BL. with a recovery of 20.55%. Sale of RS was Rs.4125 Lacs asagainst Rs. 3823 Lacs while the sale of Country liquor was nil as against Rs.2639 lacsduring the preceding year due to prohibition in the State of Bihar.
Economy and Market :
The Year has marked by two major domestic policy developments the passage ofconstitutional amendment paving the way of implementing the transformational Goods andService Tax (GST) and the action to Demonetize the highest denomination notes. GST willcreate a common Indian market improve Tax compliance and the governance and boostinvestment and growth; it is also a bold new experiment in the governance of India'scooperative federalism. Demonetization has short-term cost but holds the potential forlong term benefit.
Reference to BIFR - Under Section 15 and Other Applicable provisions of the ChapterIII of the Sick Industrial Companies (Special Provisos ) Act 1985 Due to erosion of theNet worth of the Company the reference was registered with the Board for Industrial andFinancial Reconstruction (BIFR) in terms of the provisions of the Sick IndustrialCompanies ( Special Provisions) Act 1985 on 28-02-2013 on the basis of audited accountsfor the year ended 30th September2012. The Company has been absolved from SICA as theSICA is repelled.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules2014 the term of appointment of M/s. Mehrotra & MehrotraChartered Accountants New Delhi is expiring from the date of ensuing Annual GeneralMeeting of the Company. Hence it becomes necessary to appointment some other StatutoryAuditors at their place. The Company received a letter from M/s. Agiwal & CoChartered Accountants New Delhi getting them appointed as the Statutory Auditors of theCompany. After having been reviewed and recommended by the Audit Committee the Boardrecommended the appointment of M/s. Agiwal & Co Chartered Accountants New Delhi asthe Statutory Auditors of the Company for a term of 5 years. The Company has also receiveda confirmation from the said Auditors that they are not disqualified to act as theAuditors and are eligible to hold the office as Auditors of the Company. Necessaryresolution for appointment of the said Auditors is included in the Notice of AGM forseeking approval of members.
However their appointment as Statutory Auditors of the Company shall also be requiredto be ratified by the Members at every 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 2016-17 as required under Section 204 ofthe Companies Act 2013 and Rules made there under. The Secretarial Audit report for FY2016-17 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 appointed Ms. PRAGATI GUPTA Practicing CompanySecretaries (Membership no. ACS- 19302) as Secretarial Auditor of the Company for thefinancial year 2017-18 in place of M/s Amit Gupta & Associates Practicing CompanySecretaries who expressed their inability to continue as Secretarial Auditors of theCompany .
The Central Government approved the appointment of M/s. Aman Malviya & CompanyCost Auditor Lucknow as Cost Auditors for conducting Cost Audit for Sugar and IndustrialAlcohol businesses for the year 31st March 2017 report of which was placed before theBoard. The Board approved their appointment for the year 2017-18 and their remuneration issubject to approval by the Company in the forthcoming Annual General Meeting.
At the ensuing Annual General Meeting Shri Aditya Kumar Jhunjhunwala and Shri L.KJhunjhunwala Directors of your Company retire by rotation u/s 152 of the Companies Act2013 and being eligible offered themselves for re-appointment at the ensuing AnnualGeneral Meeting.
During the financial year ended 31-03-2017 the company has not accepted any publicdeposits.
Corporate Debt Restructuring-(CDR)
The Company has successfully exit from CDR vide CDR EG letter dated 26-07-2017 andremitted the full payment against RoR.
The equity shares of the company are listed with the Bombay Stock Exchange Limited andNational Stock Exchange Limited and listing fees for 2017-18 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 2017 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 Regulation 18 andRegulation 22 of SEBI(LODR)Regulation 2015 your Company has already formed the AuditCommittee composition of which is covered under Corporate Governance report section ofthis 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 at the 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. 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 managementincluding the introduction of audit functions and processes to identify and createawareness of risks optimal risk mitigation and efficient management of internal controland assurance activities.
CORPORATE SOCIAL RESPONSIBILITY
The Company constituted a Corporate Social Responsibility (CSR) Committee (for detailsplease refer Corporate Governance Report) pursuant to the requirement of Section 135(1) ofCompanies Act 2013. The CSR policy of the Company interalia list the activities thatcan undertaken or supported by the Company for CSR composition and meetings of CSRcommittee annual allocation for CSR activities area of CSR projects criteria forselection of CSR modalities of execution / implementation of CSR activities and themonitoring mechanism of CSR activities / projections. During the year under report theCompany spent Rs.21.18 lacs towards CSR. The details of CSR activities undertaken by thecompany are mentioned in the 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) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is given in
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.
As required under Regulation 34 of SEBI (Listing O b l i gat i o n s & D i s c l os u re Re q u i re m e nt s ) Regulation2015 a separate section on Corporate Governanceforming part of the Directors' Report and the certificate from Practicing CompanySecretary M/s. Amit Gupta & Associates confirming the compliance of the conditions onCorporate Governance is attached as Annexure-5 to this report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report on the business and operations of thecompany 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 01-12-2014 for setting up of Solar Power Project. Power Project wascompleted and successfully commissioned in Oct. 2016. It started commercial operationfrom Oct 14 2016. However this company had occurred loss of Rs. 413.71 lacs for the yearended 31-03-2017 as it had Deferred Tax Liabilities( Net) for Rs. 384.57 lacs. In terms ofproviso to section 139(3) of the Companies Act2013 the salient features of the financialstatements of the subsidiary is set out in the prescribed form (AOC-1) under Rule-5 of theCompanies (Accounts) Rules2014 as Annex.6 .
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 in obtainingthe same.
NUMBER OF MEETINGS OF THE BOARD
The Board met four times during the financial year the details of which are given inthe Corporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013 andthe SEBI (LOADR) Regu. 2015.
POLICY ON 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 one of whomis Managing Director three of whom are Whole-time directors five are Independentdirectors and one is a Nominee director . The Company has five independent directors andall are qualified personnel with requisite qualifications experience positive attributesand satisfy all the criteria as set out under Schedule IV of Companies Act 2013. TheseIndependent Directors are only eligible for sitting fees for attending Board meetings andCommittee meetings and other out of pocket expenses duly made for attending meetings ofthe Board or any committee of the Board thereof. Remuneration proposed for whole timedirectors is in accordance with the Remuneration Policy approved by Nomination andRemuneration 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 Board members key managerial personnel or onelevel below the Board level is fixed on the basis of the recommendation of the Nominationand Remuneration Committee made to the Board which may ratify them with or withoutmodifications. Disclosures pursuant to the requirements of section 197 (12) read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014have been made in Annexure 2 of this Board Report.
DECLARATION BY INDEPENDENT DIRECTORS
As per the requirement of section 149(7) the Company received a declaration from everyIndependent Director that he or she meets the criteria of independence as laid down undersection 149(6) read with rule 5 of the Companies (Appointment and Qualification ofDirectors) Rule 2014 and SEBI ( Listing Obligations and Disclosure Requirements)Regulations2015.
Pursuant to the requirement of the Companies Act 2013 the performance evaluation ofthe independent directors shall be done by the entire Board of Directors excluding thedirector being evaluated.
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 committees. A detailed note on the Board and its committeesis provided in the Corporate Governance Report section of this Annual Report. Thecomposition of the committees and compliances as per applicable provisions of the Act andRules are as follows:
|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. |
| || The Company has formed the Related Party Transaction Policy. |
|Nomination and remuneration committee || 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 Companys policy on Corporate Social Responsibility (CSR). |
| || The CSR policy will be uploaded very soonon Company website www.kmsugar.com |
Particulars of Loans Guarantee or Investments
As per the requirement of section 186(4) of Companies Act 2013 particulars of loansgiven investments made guarantees given or securities provided along with the purposefor which the loan or guarantee or security is proposed to be utilized by the recipientare provided in the standalone financial statements. The Company is in compliance with thelimits as prescribed under Section 186 of Companies Act 2013 read with rule 11 of theCompanies (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 Note to Accountsno.2.29-(9-C) 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.
Yours Directors place on record their acknowledgement and sincere appreciation of allthe bankers and financial institutions for their continued assistance. They furtherappreciate and acknowledge with gratitude the cooperation and assistance received from allexecutives 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: 10.08.2017 || |
|Place: Lucknow || |