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|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
|BSE: N.A.||Sector: N.A.|
|NSE: N.A.||ISIN Code: N.A.|
|BSE 05:30 | 01 Jan||Stock Is Not Traded.|
|NSE 05:30 | 01 Jan||Stock Is Not Traded.|
To the members of Parrys Sugar Industries Limited
The Directors have pleasure in presenting their Thirtieth Annual Report together withthe audited financial statements for the Financial Year ended March 312016.
The financial summary performance highlights operations/state of affairs of theCompany for the year are summarised below:
Rs. in Lakh
DIVIDEND & RESERVES
In view of the losses incurred your Board is unable to recommend any dividend for thefinancial year ended March 312016. The Company has not transferred any amount to thereserves for the year ended March 312016.
During the year the Company has allotted 35000000 8% Redeemable CumulativePreference shares of Rs. 10/- each to E.I.D.- Parry (India) Limited the Holding Companyaggregating to Rs. 35 Crore. Consequently the paid up share capital of the Company stoodat Rs. 115.52 Crore w.e.f. March 312016.
During the year the Company has not issued any equity shares. As on March 31 2016none of the Directors of the Company hold any shares or convertible instruments of theCompany.
During the year under review the total revenue of the Company from operations was Rs.29121.44 lakh 46.80% higher than Rs. 19836.63 lakh in the previous year. Operating Loss(Loss before Interest and Tax) was Rs. 1071.78 lakh as against Rs. 92.45 lakh profit inthe previous year. The interest cost was Rs. 1526.85 lakh during the current FinancialYear as against Rs. 1666.43 lakh during the previous year. During the year under reviewthe Company achieved an all around improvement on many operating parameters. The canecrushed was higher at 7.39 LMT as against 5.55 LMT in the previous year; the powergeneration was at 540.84 lakh Units as against 382.75 lakh Units in the previous year. Theamount realized on power export was higher at Rs. 1442.13 lakh as against Rs. 785.64 lakhin the previous year. There was also improvement in most efficiency parameters this year.However the sugar recovery dropped to 11.91% as against 12.14% in the previous year buthigher as compared to many other factories in North Karnataka in the face of adverseagro-climatic conditions caused by lack of rain and drought like situation. The Companyalso worked on improving its sales mix to enhance sales to Institutions and get a bettermargin on its products. Inspite of all the above the Company reported a loss before taxof Rs. 2598.63 lakh during the Financial Year. The primary reason for the loss was lowsugar prices during the first 9 months of the Financial Year which offset the achievementsof the Company on all other fronts.
The Sugar Industry in India went through an unprecedented crisis due to all time lowsugar selling prices caused by fifth straight year of surplus production as well as a dropin global prices. In fact it went below the cost of production for a substantial portionof the year. The sugar prices which remained subdued showed an upward trend only duringthe last quarter of the financial year.
In spite of the low sugar selling prices the Company paid the Fair & RemunerativePrice (FRP) of Rs. 2200/T for the SY 14-15 and Rs. 2300/T for the SY 15-16 the pricebeing linked to a recovery percentage of 9.5%. Since your Company achieved higherrecovery the FRP was prorated. In fact the Company is one of the few Mills in Karnatakato have discharged its obligations towards the farmers in time.
During the Financial Year the Central Government announced a number of measures toalleviate the difficulties faced by the Industry including grant of a direct cane subsidyof Rs. 45/- MT as part of the FRP. The Government also took a series of measures viz.compulsory export of sugar linked to the Cane Subsidy hike in import duty of sugarabolition of the Duty Free Import Authorization Scheme Interest Subvention schemesubsidy for sugar exports direct subsidy to farmers remunerative prices for ethanolprocurement and waiver
of excise duties on ethanol to further incentivize ethanol supplies for the EthanolBlending Program. All these steps were taken by the Central Government with a view toimprove the cash flows of sugar mills so that the Mills would be in a position to makecane payments to sugarcane farmers in time. This also improved the general sentiments inthe Industry and had a positive impact on the sugar price during Q4 of the Financial Year.
There are reports which suggest that due to less rainfall and lower water availabilityin reservoirs in some Districts in Maharashtra and North Karnataka the acreage ofsugarcane available for harvesting in SY 16-17 will be lower. Therefore there is anexpectation that sugar production during SY 16-17 from the States of Maharashtra andKarnataka due to lower acreage in some of their districts will be lower than the currentsugar season. This is expected to have an impact on the demand supply equilibrium of Caneand Sugar but positively impact the selling price.
Effective February 2016 the Central Government created a Sugarcane Price StabilizationFund funded through a levy of Special Cess as advocated by the Commission on AgriculturalCosts and Prices. We hope that the Central Government will continue this since it willaugur well for the Industry in the long run and help the Government in providing subsidiesdirectly to the farmers in the event sugar prices go below the economic levels of thesugar prices linked to FRP. This could also resolve the financial crisis faced by theSugar Industry to a large extent.
The major challenges for the Company is to continuously strive towards safeguarding thecane area in the face of stiff competition improve recovery and yield operatingefficiencies with the Central Government playing its role by providing due subsidy in theevent of low sugar prices.
PERFORMANCE OF BUSINESS SEGMENTS Sugar
During the year the Company crushed a total 7.39 lakh MT of cane as against 5.55 lakhMT of cane crushed in the previous year. The Company produced 8.80 lakh quintals of sugaras against 6.73 lakh quintals of sugar produced during the previous year. The recovery ofsugar from sugar cane was at 11.91% during the year as against the recovery of 12.14%during the previous year.
The total power generated by our Co-generation plant was 540.84 lakh units as againstthe 382.75 lakh Units generated during the previous year. The revenue from sale of powerwas at Rs. 1442.13 lakh as against Rs. 785.64 lakh during the previous year.
The Company has no subsidiary.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134(5) of the Companies Act 2013 yourDirectors to the best of their knowledge and belief and according to information andexplanations obtained from the management confirm that:
in the preparation of the annual accounts for the financial year ended March 312016 the applicable accounting standards have been followed and there are no materialdepartures from the same;
the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 312016 andof the loss of the Company for the year ended on that date;
the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
The Directors have prepared the Annual Accounts on a going concern basis.
The Directors have laid down proper internal financial controls to be followedby the Company and such controls are adequate and operating effectively.
the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year Mr. K. Balasubramanian resigned with effect from the close of businesshours on July 24 2015. Mr. K. Balasubramanian was the Chairman from 24.10.2005 to29.10.2007; 27.10.2009 to 27.08.2010; and from 23.07.2013 to 24.07.2015. The Board recordsits deep appreciation for the commendable services rendered by him. Mr. C. R.Rajan waselected as the Chairman of the Board with effect from November 5 2015.
In accordance with the provisions of Section 152 of the Companies Act 2013 read withthe Articles of Association of the Company Mr. V. Ravichandran Director retires byrotation at the forthcoming Annual General Meeting and being eligible offers himself forreappointment. The details required under Regulation 36 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 of Mr. V. Ravichandran are annexed to theNotice convening the 30th Annual General Meeting of the Company.
All the Independent Directors viz. Mr. C. R.Rajan Mr. K. Ramadoss and Ms. LalithaBalakrishnan have submitted declarations confirming that they meet the criteria ofindependence as prescribed under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) of the SEBI (LODR) Regulations 2015.
The Board met 6 times during the financial year 2015-16 the details of which are givenin the Corporate Governance Report.
In accordance with the provisions of Section 134 of the Act and SEBI (LODR)Regulations 2015 the Board has carried out an evaluation of its own performance theperformance of Committees of the Board namely Audit Committee Risk ManagementCommittee Stakeholders Relationship Committee and Nomination and Remuneration Committeeand also the directors individually. The manner in which the evaluation was carried outand the process adopted has been mentioned in the Corporate Governance Report.
The Board on the recommendation of the Nomination & Remuneration Committee haslaid down a policy for selection and appointment of Directors Senior Management and theirremuneration and also framed the criteria for determining qualifications positiveattributes and independence of directors. The Remuneration Policy and criteria for Boardnominations are given in Annexure - A to this Report.
Mr. V. Ramesh Managing Director; Mr. V. Suri Chief Financial Officer and Mr. AmarKumar Dora Company Secretary are the Key Managerial Personnel of the Company as perSection 203 of the Companies Act 2013.
AUDITORS AND AUDITOR'S REPORT Statutory Auditors
The Shareholders at the 28th Annual General Meeting held on July 25 2014 hadappointed M/s R.G.N. Price & Co. as Statutory Auditors of the Company to hold officeuntil the conclusion of 30th Annual General Meeting. As per the Companies Act 2013 M/sR.G.N. Price & Co. are eligible to be appointed for a second term. M/s R.G.N. Price& Co. have expressed their willingness to continue as auditors of the Company andaccordingly their appointment is recommended to the Shareholders at the ensuing meeting.
As per Section 148 of the Companies Act 2013 read with Rule 4 of the Companies (CostRecords and Audit) Rules 2014 the cost records maintained by the Company in respect ofits Sugar and Cogeneration activity are required to be audited by a Cost Auditor. TheBoard of Directors based on the recommendation of the Audit Committee have appointed M/sNarashima Murthy & Co Cost Accountants (FRN: 000042) as the Cost Auditors forauditing the cost accounting records maintained by the Company for the financial year2016-17 on a remuneration of Rs. 90000/- plus service tax as applicable and reimbursementof out of pocket expenses. As required under the Companies Act 2013 a resolution seekingmembers approval of the remuneration payable to the Cost Auditor forms part of the noticeconvening the Annual General Meeting.
The Cost Audit Report for the year 2014-15 was filed with the Ministry of CorporateAffairs on September 28 2015.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s V. Sreedharan & Associates Company Secretaries in practice as theSecretarial Auditor to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit for the year 2015-16 is given in Annexure-B to this Report.
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditors/Secretarial Auditors in their respective reports. The StatutoryAuditors have not reported any incident of fraud to the Audit Committee of the Companyduring the year under review.
The Company has voluntarily constituted a Risk Management Committee as per the termsgiven under Regulation 21 of the SEBI (LODR) Regulations 2015. The details of Committeeand its terms of reference are set out in the Corporate Governance Report forming part ofthe Board's Report.
The Company has a mechanism to identify assess monitor and mitigate various risks toits key business objectives. Major risks identified by the business and functions aresystematically addressed through mitigating actions on a continuing basis. The Company hasformulated a Risk Management Policy which is also available on the Company's website atwww.parrysugar.com.
INTERNAL FINANCIAL CONTROLS
The Company has adequate Internal Financial Controls with proper checks to ensure thattransactions are properly authorised recorded and reported apart from safeguarding itsassets. These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis. The internal auditors of the Company review the controls across the keyprocesses and submits reports periodically to the Management and significant observationsare also presented to the Audit Committee for review. Follow up mechanism is in place tomonitor the implementation of the various recommendations.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.
As the Company does not fall under any of the threshold limits given under theprovisions of Section 135 of the Companies Act 2013 the compliances under CSR are notapplicable to the Company.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into during the financial year with therelated parties were on arm's length basis and were in the ordinary course of business.Section 188(1) of the Companies Act 2013 exempts related party transactions that are inthe ordinary course of business and are on arm's length basis. However under erstwhileclause 49 of the Listing Agreement and Regulation 23 of the SEBI (LODR) Regulations 2015all material Related Party Transactions requires approval of the shareholders.Accordingly the Company has obtained the approval of the shareholders by way of specialresolution for the material related party transactions. The Board of Directors and theAudit Committee have also approved the said related party transactions. There were noloans and advances from / to the Holding / associate Company or to the firms/companies inwhich the Directors are interested.
There are no materially significant related party transactions with the promotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
The policy on dealing with Related Party Transactions as approved by the Board isavailable at the Web Link: www.parrysugar.com/html/ corporate_governance.html.
The particulars of contracts/arrangements entered into by the Company with relatedparties as required to be disclosed are given in Annexure-C to this Report.
The Report on corporate governance as stipulated under the SEBI (LODR) Regulations2015 forms part of this Report. The requisite certificate from M/s V. Sreedharan &Associates Practicing Company Secretaries confirming compliance with the conditions ofcorporate governance is attached to the Corporate Governance Report. The report alsocontains the details as required to be provided on Board evaluation remuneration policyimplementation of risk management policy whistle blower policy/vigil mechanism etc.
The Managing Director and the Chief Financial Officer have submitted a certificate tothe Board regarding the financial statements and other matters as required under the SEBI(LODR) Regulations 2015.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of the SEBI (LODR) Regulations 2015 forms part of this AnnualReport.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
During the year the Company has transferred an amount of Rs. 504493/- being theunclaimed dividend for the year 2007-08 to the Investor Education and Protection Fundestablished by the Central Government.
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligation and Disclosure Requirement) Regulations 2015. The said regulationswhich became effective December 1 2015 required all Listed Companies to enter into thefresh Listing Agreements within six months from the effective date. Accordingly theCompany entered into Listing Agreement with BSE Limited and the National Stock Exchange ofIndia Limited during December 2015.
DISCLOSURES Committees of the Board
The Company has the following Committees constituted in accordance with the CompaniesAct 2013 and SEBI (LODR) Regulations 2015:
Nomination & Remuneration Committee
Stakeholders Relationship Committee
Risk Management Committee
The details of all the Committees alongwith their composition terms of reference andmeetings held during the year are provided in the "Report on CorporateGovernance" forming part of this Annual Report.
Vigil Mechanism & Whistle Blower Policy
The Company has a vigil mechanism and a whistle blower policy. The same has been postedon the Company's website and the details of the same are given in the Corporate GovernanceReport.
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-D to this Report.
Particulars of Loans Guarantees or Investments
During the financial year 2015-16 the Company has not given any guarantees/loan ormade any investments.
The Rating Committee of CRISIL has downgraded its rating on the Company's longterm andshort term bank loan facilities of Rs. 200 Crore to CRISIL A/Stable and CRISIL A1 fromCRISIL A+/Stable and CRISIL A1+ and the Short Term Debt (including commercial paper) ofRs. 100 Crores to CRISIL A1 from CRISIL A1+.
Particulars of Employees
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is given in Annexure -E to this Report.
Extract of the Annual Return
The details of the extract of the Annual Return in Form MGT-9 are given in Annexure-Fto this Report.
Report to the Board for Industrial and Financial Reconstruction (BIFR)
As the members are aware the Company had reported the erosion in the net worth of theCompany by more than 50% of the peak networth as required under Section 23 of the SickIndustrial Companies (Special Provisions) Act 1985 to BIFR. The Company has been filingquarterly reports with BIFR from time to time.
Your Directors state that no disclosure is required in respect of the following itemsas there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Companies Act 2013.
2. Issue of equity shares with differential rights as to dividend voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and the Company's operations in future.
Your directors hereby place on record their appreciation for the services rendered bythe executives staff and workers of the Company for their hard work dedication andcommitment. During the year under review relations between the employees and themanagement continued to remain cordial.
Your directors thank the various Central and State Government Authorities and Agenciesfor the continued help and cooperation extended by them. The Directors gratefullyacknowledge all stakeholders of the Company viz. farmers customers members dealersvendors and banks for their excellent support during the year. The Directors also place onrecord their sincere appreciation to all employees of the Company for their unstintedcommitment and continued cooperation to the Company.