To the Members
The Board of Directors of the Company presents its Annual Report together with theAudited Financial Statements of the Company for the year ended 31st March 2016
|FINANCIAL HIGHLIGHTS || ||(Rs.in lakhs) |
|Particulars ||2015-16 ||2014-15 |
|Sales (Net) || || |
|Sugar Division ||36254.73 ||42455.46 |
|Distillery Division ||14462.74 ||10654.66 |
|Cogeneration Division ||19278.44 ||16884.29 |
|Soya Division ||12104.64 ||13656.46 |
|Total sales ||82100.59 ||83650.87 |
|Other Income ||3667.52 ||3245.53 |
|Total Income ||85768.11 ||86896.40 |
|Profit before Finance Cost and Depreciation & Amortisation ||7762.23 ||14375.67 |
|Finance Cost ||7849.43 ||12934.20 |
|Provision for Depreciation and Amortisation ||7437.00 ||6379.36 |
|Net Profit before Tax ||(7524.20) ||(4937.89) |
|Provision for Tax ||(2017.09) ||(1460.96) |
|Net Profit after Tax ||(5507.11) ||(3476.93) |
|Balance of Profit brought forward ||(31302.54) ||(27402.41) |
|Add: Transfer from Revaluation Reserve ||1719.28 ||-- |
|Less: Previous year depreciation adjustment ||-- ||423.20 |
|Surplus carried to Balance Sheet ||(35090.37) ||(31302.54) |
REVIEW OF OPERATION
While the operational performance of Distillery and Power Divisions has been betterthan the previous financial year Sugar Division has been affected due to reduction inrecovery percentage as well as very low realisation on sugar. There has been a slight dipin the selling price of industrial alcohol which has been compensated to certain extent byincreased quantum of sale as compared to the previous financial year. The performance ofsoya unit is satisfactory. There has been no change in the nature of business during thefinancial year and until the date of this report.
The quantum of sugarcane crushed at various units of the Company during the year2015-16 is as under:
|Name of the Units ||Cane crushed (in tonnes) |
|Sakthinagar ||699806 |
|Sivaganga ||220159 |
|Modakkurichi ||270659 |
|Dhenkanal ||371865 |
During the year under review 1.22 lakh MT of sugar was produced by the Company whichis less by 0.10 lakh MT as compared to the previous year. The quantum of sugar sales andthe sale value have also come down as compared to the previous year.
During the year under review 270.82 lakh litres (previous year 161.18 lakh litres) ofindustrial alcohol was produced at Sakthinagar Distillery Unit and 63.51 lakh litres(previous year 84.26 lakh litres) at Dhenkanal Distillery Unit.
21016 tonnes (previous year 23056 tonnes) of soya bean was crushed in the soya plantduring the year under review. This division had exported products worth Rs.1278.01 lakhsto various countries.
The total power generated in the co-generation plants during the year was 4424.94 lakhunits (previous year 3922.77 lakh units) out of which 3580.77 lakh units (previous year3179.21 lakh units) of power was exported to Tamilnadu Electricity Board. The Agreementwith TANGEDCO has expired on 31st May 2016 and the Company is selling the power generatedto Indian Power Exchange (IEX) as the Tamilnadu Government has withdrawn its restrictionon free sale of power subject to review in October 2016.
The sugar industry has undergone a period of stress and strain for the past few yearsand is in its recovery path. The selling price of sugar is on the increase and is expectedto settle at a reasonable price. On account of very weak south west monsoon there may bereduction in the total availability of sugar cane in the country. While the consumptionremains stable with the shortage in supply realisation on sugar is expected to rule highduring the year. The mills in the southern region may be in an advantageous position asthe north east monsoon was normal last year.
The performance of industrial alcohol sector is expected to be better with growth indemand. With the growth in the industrial activities as envisaged by the Central and StateGovernments the demand for power may go up. The performance of soya division is alsoexpected to improve with the improvement in the product range.
In general the outlook of sugar industry is expected to be better than the previousfinancial year.
The Company has not accepted any deposit from public during the financial year underreview. At the end of the financial year 1 deposit amounting to Rs.0.21 lakh (includinginterest) remained unclaimed.
The holders of majority of Foreign Currency Convertible Bonds (Series B) had desired tohave modification of the Scheme of Arrangement filed with the Hon'ble High Court ofJudicature at Madras or settlement of the outstanding amount at discount. On mutualdiscussion it was agreed to settle holders of USD 11.7 million at 65% of the face value.In view of this the Scheme of Arrangement has been withdrawn. The above bondholders havebeen paid as agreed. The Company is yet to settle the holders of FCCB (Series B) of USD 1million with whom a compromise has been arrived at. An agreement has been reached with theholders of the balance USD 2.9 million of FCCB (Series B) for settlement at discount at75% of the face value and the approval of the Reserve Bank of India for the same isawaited.
At the instance of majority of Banks the CDR EG had approved exit of the Company fromthe Corporate Debt Restructuring Scheme and most of the banks have sold their loanportfolios in respect of the Company to Asset Reconstruction Company (India) Limited(Arcil) and Edelweiss Asset Reconstruction Company Limited (Edelweiss). Arcil andEdelweiss have restructured the loan portfolios acquired by them wherein they have givenremission of liability of Rs.124.23 crores.The Company has requested the remaining Banksalso for restructure of the loans sanctioned by them.
In terms of the restructure package approved by Arcil the Company has allotted toArcil 22635757 equity shares of Rs.10 each at a price of Rs.27 per share by conversionof a portion of the loans amounting to Rs.61.12 crores. These equity shares are listed onBSE Limited and National Stock Exchange of India Limited and they rank pari passu with theexisting equity shares of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr. M. Manickam (DIN: 00102233) retires by rotation at the ensuing Annual GeneralMeeting and is eligible for re-appointment.
Sri S.Audiseshiah Chief Executive Officer and Sri M.K.Vijayaraghavan Chief FinancialOfficer had resigned from the Company during the financial year under review and Sri S.Baskar Sr.Vice President-Finance & Company Secretary was appointed as Chief FinancialOfficer pursuant to Section 203 of the Companies Act 2013 and re-designated as ChiefFinancial Officer & Company Secretary.
DIRECTORS RESPONSIBILITY STATEMENT
In pursuance of section 134(5) of the Companies Act 2013 the Directors hereby confirmthat:
(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 loss of the company for that financial 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;
(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; and
(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.
MEETINGS OF BOARD OF DIRECTORS
The Board met 4 times during the financial year ended 31st March 2016. The details ofthe Board Meetings and the attendance of the Directors are given in the CorporateGovernance Report.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee was reconstituted by the Board on 08.08.2015. The Audit Committeecomprises the following Directors as its members:
1. Sri C.Rangamani Chairman
2. Sri N.K.Vijayan
3. Sri K.V.Ramachandran and
4. Smt Priya Bhansali
Details regarding meetings of the Audit Committee and the attendance of the members aregiven in the Corporate Governance Report.
Pursuant to the provisions contained in the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anannual performance evaluation of its own performance Committees of Directors andindividual directors. The manner of evaluation is given in the Corporate GovernanceReport.
DETAILS OF REMUNERATION TO DIRECTORS
Details of ratio of remuneration to each Director to the median employee's remunerationand other disclosures required under Section 197(12) of the Companies Act 2013 and Rule5(1) and 5(2) of the Companies (Appointment and Remuneration) Rules 2014 are given inAnnexure-A.
RISK MANAGEMENT POLICY
The Company has constituted a Risk Management Committee and the details of theCommittee are set out in the Corporate Governance Report. Pursuant to Regulation 17(9) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board haslaid down risk management policy to identify evaluate and mitigate risks. It seeks toensure transparency and to minimise adverse impact on the business operations of theCompany.
With effect from 24th May 2016 ABT Investments (India) Private Limited has become theholding company in view of vesting the entire equity shareholding of ABT Limited in theCompany with ABT Investments (India) Private Limited pursuant to the Scheme of Demergerof ABT Limited approved by the Honourable High Court of Judicature at Madras.
Pursuant to Rule 6 of the Companies (Accounts) Rules 2014 the financial statements forthe financial year ended 31st March 2016 of Sakthi Auto Component Limited AssociateCompany have been consolidated and the consolidated financial results of the Company andthe Associate Company form part of the audited financial statements of the Company. Interms of Rule 8 of the said Rules highlights on the performance of the said AssociateCompany are given hereunder:
(Rs. in lakhs)
| ||31.3.2016 ||31.3.2015 |
|Revenue from operations ||68284.96 ||64074.40 |
|Profit before tax ||5141.61 ||2869.68 |
|Profit after tax ||3198.58 ||1922.56 |
The statement containing the salient features of the Associate Company in Form AOC-1forms part of the financial statement.
The Company has internal control system commensurate with the size of the Company.Adequate procedures are set out for detecting and preventing frauds and for protecting theCompany's assets. The head of Internal Audit Team reports to the Chairman of the AuditCommittee for the purpose of maintaining independence and Internal Audit Reports areplaced before the Audit Committee together with statement of significant audit observationand the suggested corrective action followed by a report on action taken thereon. Furtherthe Company has adequate internal financial control with respect to the financialstatements.
The Company has a whistle blower policy and a vigil mechanism for directors andemployees to report genuine concerns in the prescribed manner. The vigil mechanismprovides adequate safeguards against victimisation and for direct access to the Chairmanof the Audit Committee in appropriate or exceptional cases. The details of the whistleblower policy are posted on the website of the Company. No complaint has been receivedunder this mechanism during the year under review.
A Report on Corporate Governance along with Auditors Certificate with respect to itscompliance forms part of this Report.
A detailed Management Discussion and Analysis Report also forms part of this Report.
OTHER DISCLOSURES UNDER THE COMPANIES ACT 2013
i. Extract of Annual Return Extract of the Annual Return is given in Annexure-B. ii.Changes in Share Capital
There has been no change in the share capital during the financial year 2015-16.However consequent upon allotment of 22635757 equity shares on 24th June 2016 asmentioned hereinabove the paid up share capital of the Company has gone up to Rs.118.85crores. iii. Policy on Directors' Appointment and Remuneration
The Company's policy for selection and appointment of directors senior managementpersonnel and fixation of their remuneration including criteria for determiningqualifications positive attributes independence of a director are given in Annexure-C.
iv. Related Party Transactions
All the related party transactions are at arm's length basis and have taken place inthe ordinary course of business. Omnibus approval of the Audit Committee is obtained forthe transactions which are foreseen and repetitive in nature. A statement of all relatedparty transactions is placed before the Audit Committee on quarterly basis. There has beenno contract or arrangement with related parties attracting the provisions of Section188(1) of the Companies Act 2013.
The Related Party Transactions Policy as approved by the Board is disclosed at theCompany's weblink www.sakthisugars.com/ investorinformation/rptpolicy.pdf. The details ofthe transactions with Related Party are provided in the accompanying financial statements.
v. Statement of declarations given by Independent Directors
The Independent Directors have given their declarations to the Board to the effect thatthey meet the criteria of independence as provided in Section 149(6) of the Companies Act2013 and the relevant rules.
vi. Significant material orders passed by court or authorities
There are no significant orders passed by Court or regulatory authorities which wouldimpact the status of the Company and its future operations.
vii. Particulars of loans guarantees or investments
The Company has not given any loan or guarantee or has acquired any security during thefinancial year 2015-16 under Section 186 of the Companies Act 2013.
viii. Energy Conservation Technology Absorption and Foreign Exchange Earnings andOutgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-D.
ix. There are no material changes affecting the financial position of the Company whichhas occurred between the end of the financial year and the date of this report.
Pursuant to Section 139(1) of the Companies Act 2013 and Rule 6 of the Companies (Auditand Auditors) Rules the members of the Company have appointed M/s.P.N.Raghavendra Rao& Co. Chartered Accountants Coimbatore as Statutory Auditors of the Company for aperiod of three consecutive years commencing from the conclusion of the 52nd AnnualGeneral Meeting of the Company upto the conclusion of the 55th Annual General Meetingsubject to ratification at the Annual General Meeting (AGM) each year. Necessaryresolution in this regard is included in the Notice for the ensuing AGM.
Pursuant to Section 204 of the Companies Act 2013 the Board of Directors of theCompany has appointed M/s.S.Krishnamurthy & Co. Company Secretaries Chennai asSecretarial Auditors to undertake the secretarial audit of the Company for the year ended31st March 2016. Secretarial Audit Report of M/s. S.Krishnamurthy & Co. CompanySecretaries Chennai is annexed as Annexure-E.
M/s. STR & Associates Cost Accountants Tiruchirapalli are the Cost Auditors forauditing the cost accounting records relating to Sugar Industrial Alcohol Power and SoyaDivisions of the Company for the year ended 31st March 2016. The said Firm has beenappointed for the financial year ending 31st March 2017 and necessary resolution forratification of its remuneration is included in the Notice for the ensuing Annual GeneralMeeting.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Pursuant to the provisions of Section 135 of the Companies Act 2013 and Schedule VIIthereto the Company has constituted a CSR Committee and has adopted a CSR Policy. As theCompany has incurred loss for the three preceding financial years the requirement ofincurring expenditure towards fulfilment of its corporate social responsibility did notarise during the financial year under review.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up at every workplace to redress complaints received regarding sexual harassment. All employees(permanent contractual temporary trainees) are covered under this policy. No sexualharassment complaint has been received during the financial year 2015-16.
With reference to the Statutory Auditors' remarks your Directors wish to state asunder:
a) The unprovided interest and guarantee commission to the holding company will beaccounted subject to the approval of the Lenders.
b) Non-provision of interest is as per the original agreement entered into with theAssociate Company.
The Statement of Impact on Auditors Qualification is attached as Annexure-F.
Your Directors wish to place on record their appreciation of the valuable assistanceand co-operation extended by the shareholders cane growers banks financial institutionsand Government authorities. They also wish to appreciate the dedicated services renderedby officers staff and workers of the Company.
| ||On behalf of the Board of Directors |
|Coimbatore ||M MANICKAM |
|12 August 2016 ||Executive Chairman |