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SBEC Sugar Ltd.

BSE: 532102 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE948G01019
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VOLUME 200
52-Week high 17.90
52-Week low 8.13
P/E 22.65
Mkt Cap.(Rs cr) 53
Buy Price 0.00
Buy Qty 0.00
Sell Price 11.10
Sell Qty 1800.00
OPEN 11.10
CLOSE 11.65
VOLUME 200
52-Week high 17.90
52-Week low 8.13
P/E 22.65
Mkt Cap.(Rs cr) 53
Buy Price 0.00
Buy Qty 0.00
Sell Price 11.10
Sell Qty 1800.00

SBEC Sugar Ltd. (SBECSUGAR) - Director Report

Company director report

To

The Shareholders SBEC Sugar Limited

Your Directors take pleasure in presenting the 22nd Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2016.

FINANCIAL RESULTS

The summarised financial results of SBEC Sugar Ltd. as well as Consolidated with itssubsidiaries i.e. M/s. SBEC Bioenergy Ltd. M/s. SBEC Stockholding and Investment Ltd forthe financial year ended 31st March 2016.

(Rs. in Lacs)
STANDALONE CONSOLIDATED
Financial Parameters

Period ended 31.03.2016

Period ended 31.03.2015

Period ended 31.03.2016

Period ended 31.03.2015
Sales and other income

39478.31

43096.67

40465.59

44187.24
Profit/(Loss) Before Interest Depreciation & Tax

1356.66

(1635.97)

1647.61

(1155.73)
Interest and Finance Charges

526.94

921.36

1034.37

1287.14
Depreciation and Amortisation

311.14

281.15

353.93

324.19
Prior period expenses (net)

2.44

22.98

20.97

33.35
Profit/(Loss) before Extra-Ordinary Expenses &
Provision for Taxation

516.14

(2861.45)

238.34

(2800.41)
Exceptional Items

-

-

-

-
Profit/(Loss) before Tax

516.14

(2861.45)

238.34

(2800.41)
Provision for Taxation

-

-

12.97

-
Deferred Tax Charge/ (Credit)

-

-

(65.26)

16.59
Taxes for earlier years
MAT credit written back

-

-

-

-
Profit/(Loss) After Tax

516.14

(2861.45)

290.63

(2817.00)
Transfer to Minority Interest

-

-

(82.54)

20.39
Transfer to Molasses Storage Fund

3.34

1.52

3.34

1.52
Profit/(Loss) for the period after appropriation

512.80

(2862.97)

369.83

(2838.91)
Earning Per Share (in Rs.)

1.08

(6.00)

0.78

(5.95)

OPERATIONS

For the Financial Year 2015-16 there is a Profit of Rs. 516.14lac as against a loss ofRs. (2861.45) lac in the previous year for 12 months period. Higher recovery and increasedsugar prices have generated the cash profits after so many years and the same shall helpin liquidating the cane arrears to some extent.

DIVIDEND & RESERVES

In view of inadequate profits your Board is unable to recommend any dividend for thefinancial year ended March 31 2016. The Company has not transferred any amount to thereserves for the year ended March 31 2016.

SHARE CAPITAL

The paid up equity capital as on March 31 2016 was Rs.47.65 Lacs. During the yearunder review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity.

OPERATIONS

The crushing for the season 2015-16 started on 20.11.2015 i.e.9 days earlier ascompared to 2014-15 in the previous season and ended on 10.04.2016 as against 2014-15 17days earlier than the previous season. During the season the plant crushed 107.20 lacquintals of sugarcane in 159 days as against 111.03 lac quintals in 155 days in theprevious season. The crushing was increased by

3.83 lac quintals during this season due to increase period of crushing .The sugarrecovery overall was increase at 9.55% as against 9.17% in the previous season. TheCompany continued to focus on cane development activities comprising clean cane varietalchange and modern agriculture practices that is expected to improve recovery in the comingyears.

MATERIAL CHANGES AND COMMITMENTS

No material changes or commitments have occurred between the end of the financialperiod to which the financial statements relate and the date of this report affecting thefinancial position of the Company.

STATUS OF SICKNESS UNDER 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 net worth as required under Section 23 of the SickIndustrial Companies (Special Provisions) Act 1985 to BIFR and the BIFR has declared theCompany as sick and appointed IDBI as operating agency u/s 17(3) of the Act in its hearingheld on dated 04th February 2014.

SUBSIDIARY COMPANIES

As on March 31st 2016 the Company has one Wholly Owned Subsidiary i.e. SBECStockholding & Investments Limited and one Subsidiary i.e. SBEC Bioenergy Limited.There are no associates companies within the meaning of Section 2(6) of the Companies Act2013 ("Act"). There has been no material change in the nature of the business ofthe subsidiaries.

In accordance with Section 129(3) of the Companies Act 2013 the Companyhasprepared financialstatementof the consolidated

Company and all its subsidiary companies which is forming part of the Annual Report. Astatement containing salient features of the financial statements of the subsidiarycompanies is also included in theAnnual Report in "Annexure-A".

In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company www.sbecsugar.com.Further as per fourth proviso of the said section audited annual accounts of each of thesubsidiary companies have also been placed on the website of the Companywww.sbecsugar.com. Shareholders interested in obtaining a copy of the audited annualaccounts of the subsidiary companies may write to the Company Secretary at theCompany’s registered office.

On the basis of Audited Financials Accounts of the Company for the FY. 15-16 theCompany has two Material Subsidiaries Company i.e. SBEC Bioenergy Limited and SBECStockholding & Investment Limited. The Minutes of the Board Meetings of the subsidiarycompanies are placed at the Board Meetings of the Company.Detailsofsignificanttransactions and arrangements entered into by the subsidiary companiesare noted by the Board. The Audit Committee of the Company reviews the financial Statementof the subsidiary companies including investments made. There has been no change inrelationship of any subsidiary company during the financial year.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company for the financial period 2015-16are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and SEBI (LODR) Regulations 2015.

DIRECTORS

Shri. Manmohan expired on 16.02.2016 Shri. O.P. Modi expired on 03.06.2016 and Shri.G.C. Jain resigned from the office of Director of the Company with effect from 07.04.2015due to old age.

The Board of Directors placed on record its sincere appreciation for the valuablesupport and guidance given by Shri. Manmohan Shri. O.P. Modi and Shri. G.C. Jain to theCompany during their tenure as Director of the Company.

Shri. Rohit Garg was appointed as an Independent Director w.e.f. 25.03.2016 in casualvacancy caused due to untimely demise of Shri. Manmohan.

Shri. Vijay Kumar Modi appointed as Non-executive Director on the Board of the Companyw.e.f. 24th September 2015 and will be appoint as an Independent Director of the Companyin the forthcoming Annual General Meeting.

Shri. Rohit Garg and Shri. Vijay Kumar Modi have submitted declarations confirming thatthey meet the criteria of independence as prescribed under Section 149(6) of the CompaniesAct 2013.

In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the Company Smt. Kumkum Modi (DIN 00522904) Non-ExecutiveDirector of the Company retire by rotation at the ensuing Annual General Meeting and beingeligible offer herself for re-appointment.

Shri. Rajeev Kumar Agarwal Shri. Jagdish Chandra Chawla and Shri. Shyam Babu Vyas wasappointed as a Non-executive Independent Director of the Company who holds office for aterm of five 2015 .consecutive years commencing from September24 Shri. Norland L.C. Suzorand Shri. Claude Philogene ceased to be the director of the Company under Section 167 ofthe Companies Act 2013 w.e.f. 27th May 2015. Shri. N.P. Bansal who has been appointed asan alternate director during the absence of Shri. Philogene Jacques Henri Claude be and ishereby ceased to be the alternate director and appointed Non-executive Director on theBoard of the Company w.e.f. 27th May 2015.

KEY MANAGERIAL PERSONNEL (KMP)

During the financial period ended 31.03.2016 following persons are Whole Time KeyManagerial personnel (KMP) of the Company in terms of provisions of Section 203 of theCompanies Act 2013:

SI. No. Name Designation
1. Shri. Abhishek Modi Whole Time Director
2. Shri. L.C. Sharma* Chief Financial Officer
3. Shri. Shobit Nehra** Company Secretary

* Shri. Lakhmi Chand Sharma was appointed as Chief Financial Officer of theCompany.e.f. 27th May 2015. **Shri. Shobit Nehra was appointed as Company Secretary andCompliance Officer of the Company.e.f. 07th April 2015.

BOARD MEETINGS

The Board met Eight times during the financial year 2015-16 the details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013 and the SEBI (LODR)Regulations 2015.

FORMAL ANNUAL EVALUATION

Pursuant to the requirements of Section 134(3)(p) of the Companies Act 2013 read withRegulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) 2015 theBoard has carried out an annual performance evaluation of its own performance theDirectors individually and the Committees viz. Audit Nomination & Remuneration andStakeholders Relationship Committee. A structured questionnaire was prepared after takinginto consideration the inputs received from the Directors covering various aspects of theBoard’s functioning such as adequacy of the composition of the Board and itsCommittees Board culture execution and performance of specific duties obligation andgovernance. A separate exercise was carried out to evaluate the performance of individualdirectors including the Chairman of the Board who were evaluated on parameters such aslevel of engagement and contribution independence of judgement safeguarding theinterests of the Company and its minority shareholders etc. The performance evaluation ofIndependent Directors was carried out by the entire Board. The performance evaluation ofthe Chairman and the Non Independent Directors was carried out by the IndependentDirectors at their meeting held separately. The Directors expressed their satisfactionwith the evaluation process.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to the provisions contained in Section 134 (5) of the Companies Act 2013your Directors to the best of their knowledge and belief and according to information andexplanations obtained from the management confirm that: a) in the preparation of theannual accounts for the financial year ended March 31 2016 the applicable accountingstandards have been followed and there are no material departures from the same; b) theDirectors have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2016 and of the profit andloss of the Company for the year ended on that date; c) the Directors have taken properand sufficientcareforthemain tenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d) The Directors have preparedthe Annual Accounts on a going concern basis. e) The Directors have laid down properinternal financial controls to be followed by the Company and such controls are adequateand operating effectively; and f) The Directors have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.

DECLARATION FROM INDEPENDENT DIRECTORS

All Independent Directors of the Company have given declarations that they meet thecriteria of Independence as laid down under Section 149(6) of the Companies Act 2013 andSEBI (LODR) Regulations 2015.

INTERNAL FINANCIAL CONTROLS

Your company has in place an adequate internal control system in order to ensure thatall transactions are authorized recorded and reported correctly and that all assets areprotected against the perils of unauthorized use or disposition. Towards enhancing theefficiency of internal controls services of consultants are hired wherever necessaryimplemented. Your Company has in place an Internal Audit system whereby an independentprofessionals firm of Internal Auditors conducts regular audit across the Company andtheir scope and findings are reviewed by the Management and Audit Committee on a regularbasis.

The Audit Committee of the board also meets periodically to review the internalcontrols internal audit findings action taken reports and to advise the management oncorrective policies if any.

STATUTORY AUDITORS

M/s Doogar & Associates. Chartered Accountant Statutory Auditors of the Companywho are our Auditors retire at the ensuing Annual General Meeting and are eligible forreappointment.

As required under the provisions of Section 139 of the Companies Act 2013 the Companyhas received a written consent from the auditors to their re-appointment and a certificateto the effect that their re-appointment if made would be in accordance with theCompanies Act 2013 and the rules framed there under and that they have satisfiedCompanies Act 2013.

The Board recommends the re-appointment of M/s. Doogar & Associates. CharteredAccountants as statutory auditors of the Company from the conclusion of Annual GeneralMeeting till the conclusion of the next Annual General Meeting.

STATUTORY AUDITOR’S REPORT

The Auditors Report contains qualifications and the Company has given its comments onAuditor Qualified Opinion for the Financial Year 2015-16. The details are mentioned hereunder:

Qualified Opinion (a)

Non-provision for interest on late payment of cane dues it is hereby clarified thatthe company has not made provision of interest on late payment of cane dues as it isnegotiating with the farmers for its waiver. In case it has to be paid it will beaccounted for in the year of payment.

Qualified Opinion (b)

The company had executed a deed of assignment with a subsidiary company "SBECBioenergy Limited" to transfer its claim and all securities and charges created byModi Industries Limited in its favour for a consideration of Rs. 12500 lacs of which Rs.8300 lacs shall be received as per the mutually agreed installments within a period offive years from the date of execution of the deed. In view of current cash flow of theSubsidiary Company (i.e. SBEC Bioenergy Limited) the management on request has agreed toextend the time period of deed of assigement for a further period of five years. TheStatutory Auditors have not reported any incident of fraud to the Audit Committee of theCompany during the year under review.

COST AUDITORS

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 appointed M/s.M.K. Singhal & Co. Cost Accountants as the Cost Auditors for auditing the costaccounting records maintained by the Company for the financial year 2016-17 on aremuneration of Rs.60000/- plus service tax as applicable and reimbursement of out ofpocket expenses. As required under the Companies Act 2013 a resolution seekingmember’s approval of the remuneration payable to the Cost Auditor forms part of thenotice convening the Annual General Meeting.

SECRETARIAL AUDITOR

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 R. Singhal & Associates Company Secretaries in practice as theSecretarial Auditor to undertake the Secretarial Audit of the Company. The Report of theSecretarial Audit is given in "Annexure-B" to this Report.

The observation in secretarial audit report are self-explanatory and therefore not callfor any further explanation.

FIXED DEPOSITS

During the financial year the Company has not accepted any public deposits. TheCompany has repaid all its Fixed Deposits of Rs.65825000/- due for repayment. TheCompany does not have any fixed deposits at the end of financial year March 31 2016

RISK MANAGEMENT POLICY

As per Section 134(3) (n) of the Companies Act 2013 the Company has a Risk ManagementPolicy to identify assess monitor and mitigate various risks to key business objectives.Major risks identified are systematically addressed through mitigating actions on acontinuing basis. These are discussed at the meetings of the Audit Committee and the Boardof Directors of the Company.

AUDIT COMMITTEE

The Audit Committee comprises of four Independent Directors viz. Shri. R.K. Agarwalas Chairman Shri. J.C. Chawla Shri. Manmohan and Shri. O.P. Modi as Members. The detailsof terms of reference of the Audit Committee number and dates of meeting heldattendance among others are given separately in the attached Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

Pursuant to the provisions of Section 178 of the Companies Act 2013 read with Rulesmade there under the Board has constituted a Nomination & Remuneration Committee andthe details of terms of reference number & dates of meeting held attendance andother details are given separately in the attached Corporate Governance Report. The Boardon the recommendation of Nomination & Remuneration Committee framed a policy i.e.Nomination and Remuneration Policy for selection and appointment of Directors seniormanagerial personnel and their remuneration. The aforesaid policy can be accessed on theCompany’s website www.sbecsugar.com

REMUNERATION POLICY

The Company has adopted a Remuneration Policy for executive and non-executive directorsand persons who may be appointed in Senior Management and Key Managerial positions and todetermine their remuneration as approved by the Board of Directors on the recommendationof Nomination and Remuneration Committee. The remuneration so approved is subject to theapproval by the shareholders and such other authorities as the case may be. Theremuneration policy is also placed on Company’s website. The Non-Executive Directorsdo not draw any remuneration from the Company except sitting fee paid to them for eachmeeting of the Board/ Committee thereof attended by them.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.

Section 135 of the Companies Act 2013 provides the threshold limit for applicabilityof the CSR to a Company i.e. (a) net worth of the Company to be Rs. 500 crore or more; or(b) turnover of the company to be Rs. 1000 crore or more; or (c) net profit of thecompany to be Rs.5 crore or more. As the Company does not fall under any of the thresholdlimits given above the provisions of Section 135 are not applicable to the Company.

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) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is enclosed in"Annexure-C" and forms part of this Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197(12) read with Rule 5 (1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 relating toratio of the remuneration of each Director to the median employee’s remuneration andother details shall be provided on request in accordance with the provisions of Section136 of the Act the Report and Accounts are being sent to the Members and others entitledthereto excluding the information on employees particulars which is available forinspection by the Members at the Registered Office of the Company during business hours onworking days of the Company up to the date of the ensuing Annual General Meeting. If anyMember is interested in obtaining a copy thereof such Member may write to the CompanySecretary in this regard. In terms of the provisions of Section 197(12) of the CompaniesAct 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 none of the employee is drawing remuneration in excessof the limits set out in the said Rules.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

During the financial year 2015-16 the company has not made any investment nor givenany loans or guarantees covered under the provisions of section 186 of the Companies Act2013.

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 ofbusiness. Section 188(1) of the Companies Act 2013 exempts related party transactionsthat are in the ordinary course of business and are on arm’s length basis. Howeveras per Regulation 23 of SEBI (LODR) Regulations 2015 (Earlier clause 49 of the ListingAgreement) all material Related Party Transactions requires approval of the shareholdersthrough special resolution. Accordingly the Company has obtained the approval of theshareholders by way of special resolution for the material related party transactions. TheBoard of Directors and the Audit Committee have also approved the said related partytransactions. There are no materially significant related party transactions with thepromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.

The particulars of the material contract and arrangements entered into by the Companywith related parties referred to in sub-section (1) of section 188 of the Companies Act2013 read with Regulation 23 of SEBI (LODR) Regulations 2015 (Earlier clause 49 of theListing Agreement) is disclosed separately in Form No. AOC -2 as "Annexure–D"and forms part of this report.

The Board has framed a Policy on related party transactions and placed the same on theCompany’s website at www.sbecsugar.com. Your director draw attention of members toNote No. 38 of the financial statement which sets out related party disclosures.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

The Company has formulated and implemented the Whistle Blower Policy/ vigil mechanism.This has provided a mechanism for directors and employees of the Company and other personsdealing with the Company to report to the Chairman of the Audit Committee; any instance ofunethical behavior actual or suspected fraud or violation of the Company’s code ofconduct. The aforesaid policy has also been uploaded on the Company’s website atwww.sbecsugar.com.

EXTRACT OF THE ANNUAL RETURN

The details of the extract of the Annual Return in Form MGT-9 as per the provisions ofSection 92 of Companies Act 2013 read with rule Rule 12 of Companies (Management andAdministration) Rules 2014 is annexed herewith and marked as "Annexure-E"to this Report.

BOARD DIVERSITY

The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors. The Board Diversity Policy is available on our website www.sbecsugar.com.

CORPORATE GOVERNANCE

In Compliance with Regulation 17 to 27 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 a detailed Corporate Governance Report has been givenelsewhere in this report along with Management Discussion and Analysis Report which forman integral part of the Annual Report.

& Associates a firm of Company Secretaries in practice confirming compliance bythe Company with the Acertificate conditions of Corporate Governance as stipulated underpart E of schedule V of SEBI (Listing Obligation and Disclosure Requirements)Regulations 2015 is attached to this report.

The Whole Time Director and the Chief Financial Officer havesubmitted certificateto theBoard regarding the financial and other matters as required under SEBI (LODR)Regulations 2015.

PERSONNEL RELATIONS

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.

APPRECIATION

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.

For & behalf of the Board
SBEC Sugar Limited
Sd/- Sd/-
Abhishek Modi R.K. Agarwal
Place: New Delhi (Whole Time Director) (Director)
Date: 12th August 2016 (DIN: 00002798) (DIN: 00298252)

ANNEXURES TO THE BOARD’S REPORT

"ANNEXURE -A " "FORM- AOC-1"

Pursuant to first proviso to sub-section (3) of section 129 of the CompaniesAct 2013read with rule 5 of Companies (Accounts) Rules 2014 Statemement containing salientfeatures of The Financial Statements of Subsidiaries or associate companies or Jointventures.

PART A - SUBSIDIARIES

(Amount in Rs.) (except % of Shareholding)

S.No Name of the Subsidiary Comapany Date of which when Subsidiary was acquired Financial period ended Exchange Rate Share Capital Reserves & Surplus Total Assets Total Liabilities Invest- ments Turnover Profit before Taxation Profit after Taxation Proposed Dividend % of Sharehold- ing
1. SBEC Bioenergy Limited 12.03.1997 31-Mar-16 INR 230000000 206482073 1918968025 1918968025 500100 93855842 (23571101) (18342576) Nil 55%
2. SBEC Stockholding Investments Limited 09.06.2001 31-Mar-16 INR 45500000 (4588972) 349852337 349852337 349251000 - (4208088) (4208088) Nil 100%

 

For & behalf of the Board
SBEC Sugar Limited
Sd/- Sd/-
Abhishek Modi R.K. Agarwal
Place: New Delhi (Whole Time Director) (Director)
Date: 12th August 2016 (DIN: 00002798) (DIN: 00298252)

"ANNEXURE- B"

Form No. MR-3

SECRETRIAL AUDIT REPORT

For The Financial Year Ended On 31st March 2016

(Pursuant to section 204(1) of the Companies Act 2013 and Rule No. 9 of the Companies(Appointment and Remuneration Personnel) Rules 2014)

To The Members

SBEC SUGAR LIMITED

Vill. Loyan Malakpur Baraut Distt Baghpat Uttar Pradesh

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by SBEC SUGAR LIMITED (hereinaftercalled the Company). Secretarial Audit was conducted in a manner that provided us areasonable basis for evaluating the corporate conducts/statutory compliances andexpressing our opinion thereon. Based on our verification of the Company’s bookspapers minute books forms and returns filed and other records maintained by the Companyand also information provided by the Company its officers agents and authorizedrepresentatives during the conduct of secretarial audit We hereby report that in ouropinion the company has during the audit period covering the financialyear ended on 31stMarch 2016 complied with the statutory provisions listed hereunder and also that theCompany has proper Board-processes and compliance-mechanism in place to the extent in themanner and subject to the reporting made hereinafter: We have examined the books papersminute books forms and returns filed and other records maintained by the companyfor thefinancial year ended on 31st March 2016 according to the provisions of:

(i) The Companies Act 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA) and the rules madethereunder;

(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent ofForeign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings;

(v) The Regulations and Guidelines prescribed under the Securities and Exchange Boardof India Act 1992 (‘SEBIAct’) viz.:

(a) The Securities and Exchange Board of India (Substantial Acquisition of SharesandTakeovers) Regulations2011; as amended from time to time;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations1992;

(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations2009;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee StockPurchase Scheme) Guidelines 1999 and The Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 notified on 28th October 2014(Notapplicable to the Company during the audit period);

(e) The Securities and Exchange Board of India (Issue and Listing of DebtSecurities)Regulations. 2008 (Not applicable to the Company during the audit period);

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009(Not applicable to the Company during the audit period) and;

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998(Not applicable to the Company during the audit period).

(vi) OTHER APPLICABLE ACTS

(a) The Factories Act 1948

(b) The Payment of Wages Act 1936 and rules made thereunder

(c) The Minimum Wages Act 1948 and rules made thereunder

(d) The Payment of Gratuity Act 1972 (e) The Employees Provident Fund &Miscellaneous Provisions Act 1952.

(f) The Payment of Bonus Act 1965 and rules made thereunder

(g) The Industrial Dispute Act 1947

(h) The Water (Prevention & Control of Pollution) Act 1974 Read withWater(Prevention & Control ofPollution) Rules 1975

(i) The Air (Prevention & Control of Pollution) Act 1981Read with the Air(Prevention & Control of Pollution) Rules 1982

(j) The Contract Labour (Regulation and Abolition) Act 1970

(k) The Industrial Employment (Standing Orders) Act 1946

(l) The Sugar Cess Act 1982 (m) The Levy Sugar Price Equilisation Fund Act 1976

(n) The Food & Safety Standards Act 2006

(o) The Essential Commodities Act 1955

(p) The Sick Industrial Companies (Special Provisions) Act 1985 We have also examinedcompliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreements entered into by the Company with Bombay Stock Exchange.

During the period under review the Company has complied with the provisions of the ActRules RegulationsGuidelines Standards etc mentioned above except to the extent asmentioned below:

1. That in accordance to the Internal Audit Report the Company has formulated policiesand procedures for implementation of the Internal Financial Control(IFC) with respect tothe Financial Reporting(FR) as required U/s 134 (5) of The Companies Act 2013 Howeverthe compnay is in process of its implementation and effective control.

2. The Company has defaulted in payment of undisputed liability ofWater Cess of Rs.562265/- and interest of Rs. 159674/- to U.P. Pollution Control Board for the year2012-13 for which a fresh demand order dated 16th Feb 2015 has been received by thecompany.

We further report that

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda were sent at least seven days in advance and a system exist forseeking and obtaining further information and clarifications on agenda items before themeeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members’ views arecaptured and recorded as part of the minutes. We further report that there are adequatesystems and processes in the company commensurate with the size and operations of thecompany to monitor and ensure compliance with applicable laws rules regulations andguidelines.

We further report as under:

1. That based on the Audited Financial Statements the Company filed reference underSection 15(1) of The Sick Industrial Companies (Special Provisions) Act 1985 which wasduly registered on 28.08.2013. The Company was declared Sick Industrial Company in termsof section 3(1) clause (o) of The Sick Industrial Companies (Special Provisions) Act 1985by the Hon’ble Board of Industrial & Financial Reconstruction (BIFR) in itshearing on 04.02.2014 and appointed IDBI as the Operating Agency (OA) U/s 17(3) of theAct. The Bench directed the Company to prepare a fully tied up draft rehabilitation scheme(DRS) within 6 weeks. The said DRS is still under compilation. However in accounts havebeen prepared on ‘going concern basis’ in view of the facts that the Company hascontinued its normal manufacturing operations. During the year under review the Companyhas generated business profits.

2. The Company has two material subsidiaries M/s SBEC Bio-energy Limited and M/s SBECStockholding And Investment Limited (Wholly Owned Subsidiary).

For R. Singhal & Associates
Company Secretaries
Sd/-
(Rahul Singhal)
PLACE: NEW DELHI Prop.
DATED: 12.08.2016 M. No. 29599

Note: This report is to be read with the note given belowwhich forms an integral partof this report.

1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts arereflectedinsecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have relied on the audited financialstatements for the year ended on 31.03.2016for the correctness and appropriateness of financial records and Books of Accounts ofthecompany.

4. Where ever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. That the details of disputed liabilities and demands raised by various authoritiesincluding U P VAT Central Excise Service Tax Authorities Corporate Guarantee given toGovt. of Jharkhand against soft loan given to group company Bihar Sponge Iron Ltd.Guarantee given on behalf of SBEC Bio Energy Ltd. interest and RCC charges on CaneArrears payment that have not been acknowledged as debts by the company have been detailedin Notes to the Financial Statements. We have relied on the statement issued by thecompany and as incorporated in the audited Financial Statements for the year ending31.03.2016.

7. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.

For R. Singhal & Associates
Company Secretaries
Sd/-
(Rahul Singhal)
PLACE: NEW DELHI Prop
DATED: 12.08.2016 M.No. 29599

Information to be given under Section 134 read with Rule 8(3) of the Companies(Accounts) Rules 2015

A. CONSERVATION OF ENERGY i) The steps taken or impact on conservation of energy

Installed Waste Heat recovery system at Sulphur furnance station.

Modified vapour bleeding arrangement for soda boiling sugar melting molassesconditioning massecuite/magma pumps and centrifugal Machines screen cleaning.

Steps taken to avoid blow off/ wastage of exhaust steam/ vapour.

Started melting of B/C and Rori sugar in clear juice instead of hot water.

V.F.D. installed at Raw Juice Pump Mill Belt conveyor Rake Evevator De super heatingstation and Milk of lime pump & crystallisers.

DCS installed at Boilers which eliminates fluctuation in steam pressure & flow.

Hot imbibition of 80 degree celcius applied at mills.

Raw juice pipelines and tank insulated to minimize temperature.

All hot surfaces carrying useable energy insulated properly.

Automation in continuous pan operation also assisted in reduced steam consumption.

Complete mill automation helped in effectiveconstant and enhance utilization which inturn resulted into reduced energy consumption. Open storage tank of juice/ syrup arecovered. ii) The steps taken by the Company for utilizing alternate sources of energy -Nil iii) The Capital investment on energy conservation equipment - Nil

B. TECHNOLOGY ABSORPTION i) The efforts made towards technology absorption a)Efforts are initiated and implemented for heat energy conservation in boiling house. b)Waste heat recovery system installed at Sulphur furnace station. c) Vapour bleeding hasbeen made from exhaust steam to vapour for soda boiling sugar melting molassesconditioning masscuite/ magma pump and Centrifugal machines screen cleaning. d) Effortsdone to minimize steam/ vapours/ hot media leakages to arrest energy losses. ii) Thebenefits derived like product improvement cost reduction product development or importsubstitution

- Steam % cane reduced by 5%

- Power consumption per ton cane reduced by I Unit. iii) In case of importedtechnology (imported during the last three years reckoned from the beginning of thefinancial year

(a) The details of technology imported -
(b) The year of import -
(c) Whether the technology been fully absorbed -
(d) If not fully absorbed areas where absorption has not taken place and the reasons thereof; and -
(e) The expenditure incurred on Research and Development -

 

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs. In Lacs)
2015-16 2014-15
The foreign exchange earned in terms of actual inflows during the year and the Foreign exchange outgo during the year in terms of actual outflows.
Foreign Exchange earned - -
Foreign Exchange outgo 26.28 29.68

"ANNEXURE- D"

FORM NO. AOC-2- Related Party Transactions

[Pursuant to Clause (h) of sub-section (3) of Section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014

Form for disclosure of particulars of contracts/arrangements entered into by theCompany with the related parties referred to in sub-section (1) of Section 188 of theCompanies Act 2013 including certain arms-length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not at arm’s lengthbasis:

SI. No Name of the related party and nature of relationship Nature of contr- acts/Arrangements/ Transactions Duration of contracts/ arrangements/ transactions Salient features of contracts/arrangements/ transactions including value if any Justification for entering into such contracts/ arrangements/ Date (s) of approval by the board Amount paid as advances if any Date of which special resolution was passed in General Meeting u/s 188 (1).
1. Nil Nil Nil Nil Nil Nil Nil Nil

2. Details of material contracts or arrangements or transactions at arm's lengthbasis.

SI. No Name of the related party and nature of relationship Nature of contr- acts/Arrangements/ Transactions Duration of contracts/ arrangements/ transactions Salient features of contracts/arrangements/ transactions including value if any Date (s) of approval by the board Amount paid as advances if any Date of which special resolution was passed in General Meeting u/s 188 (1). and clause 49.
1. Modi Industires Limited Purchase Sale of Sugar Ongoing Market Value 07.04.2015 & 30.05.2016 - 23.05.2015
2. Modiline Travel Service Pvt. Ltd. Purchase of Air Ticket Ongoing Market Value 07.04.2015 & 30.05.2016 - 23.05.2015
3. Jayesh Tradex Pvt. Ltd. Purchase of Stationery Item Ongoing Market Value 07.04.2015 & 30.05.2016 - 23.05.2015
4. Modi Illva India Pvt. Ltd. Sale of Sugar Ongoing Market Value 07.04.2015 & 30.05.2016 - 23.05.2015
5. Win-Medicare Pvt. Ltd. Sale of Sugar Ongoing Market Value 07.04.2015 & 30.05.2016 - 23.05.2015
6. Longwell Investment Pvt. Ltd. Interest on Inter Corporate Deposits Ongoing subject to renewal as per contractual terms - 07.04.2015 & 30.05.2016 - 23.05.2015
7. Arvind Continental Pvt. Ltd. Interest on Inter Corporate Deposits Ongoing subject to renewal as per contractual terms - 07.04.2015 & 30.05.2016 - 23.05.2015