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Sri Chamundeswari Sugars Ltd.

BSE: 522300 Sector: Agri and agri inputs
NSE: SRICHAMUND ISIN Code: INE004H01019
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Sri Chamundeswari Sugars Ltd. (SRICHAMUND) - Director Report

Company director report

Dear Members

The Directors have pleasure in presenting their 44th Annual Report together with theAudited Financial Statements of the Company for the financial year ended 31st March 2017.

FINANCIAL RESULT

Particulars 2016-17 2015-16
Profit Before Interest and Depreciation 1784.08 (374.30)
Less:Interest 2504.63 3983.75
Depreciation and Amortisation 1498.93 1469.32
(4003.56) (5453.07)
Add : Exceptional items - 5996.50
Profit / (Loss) Before Tax (2219.48) 169.13
Less : Income Tax Expenses
Deferred Tax Liability/ (Asset) (894.43) 56.28
Profit / (Loss) after Tax (1325.05) 112.85

COMPANY PERFORMANCE:

During the year Company crushed 4.13 lakh Mt as against 8.65 lakhs Mts of cane crushedin the previous year. The company produced 3.48 Lakhs qtls of sugar as against 7.75 lakhsqtl of sugar during the previous year. The recovery of sugar from sugar cane was at 8.33%at KM Doddi unit as against 8.94% during the previous year.

The expansion of crushing capacity and establishment of Co-gen plant at SrinivaspuraUnit are under implementation and expected to commence operations before the year end.

The company generated 5.76 Crore units of power as against 13.58 Crore units during theprevious year and company exported 3.52 Crore units as against 10.45 Crore units duringthe previous year.

The company produced 96.06 lakhs liters of Alcohol as against 160.08 lakhs liters ofAlcohol during the previous year.

During the year under review total revenue from operation stood at 199.40 crores asagainst 334.05 crores in the previous year.

Due to unprecedented drought conditions the cane availability came down substantiallywith consequent adverse impact on the working results of the company.

Outlook for 2017-18:

1. The cane availability for the year 2017-18 is expected to be about the same as lastyear consequent to the monsoon deficit previous year. The monsoon is below average thisyear also as on date.

2. For the Co-generation division along with other sugar mills company has enteredinto 5 years Power Purchase Agreement with effect from January 2017 as per the tariffapproved by Hon'ble KERC (Karnataka Electricity Regulatory Commission).

INFORMATION ABOUTSUBSIDIARY/ JV/ ASSOCIATE COMPANY Company does not have anySubsidiary or Associate Companies. TRANSFER OF UNCLAIMED DIVIDEND / DEPOSIT TO INVESTOREDUCATION AND PROTECTION FUND

As per the provisions of Section 125 of Companies Act 2013 the unclaimed depositshave to be transferred to the Investor Education and Protection Fund account as there wasno such deposits Company has not transferred any amount this Year.

MATERIAL CHANGES AND COMMITMENTS

No Material changes occurred subsequent to the close of the financial year of theCompany to which the balance sheet relates and the date of this report. There is no changein the nature of business of the company.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return as required under section 92(3) of the Companies Act 2013and rule 12(1) of the Companies (Management and Administration) Rules 2014 in Form MGT-9is annexed.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 read with Section 134(5) of the Companies Act 2013 Director's herebyconfirmed that-

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any

(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 profit and loss of the company for that period;

(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 as on 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.

AUDITORS and AUDITORS REPORT thereon M/s P.N Raghvendra Rao 8i Co (Firm Regn No.003328S) Chartered Accountants shall hold office till the conclusion'f the 44th AnnualGeneral Meeting accordance to the provision of section 139 (2) of the Companies Act 2013your Board wish to place on record the excellent professional services received from themall along these years. Pursuant to the provisions of Section 139 and other applicableprovisions if any of the Companies Act 2013 and the Rules made thereunder and onrecommendation of the Audit Committee M/s P.K NAGARAJAN & CO. Chartered Accountants(FRN: 016676S) Coimbatore be and is hereby appointed as the Statutory Auditors of theCompany to hold office for a term of five consecutive years from the conclusion of this44th Annual General Meeting (AGM) until the conclusion of 49th Annual General Meeting(AGM) Subject to ratification at every AGM during their term of office if required onsuch remuneration as may be decided by the Board of directors of the Company.

With regard to Statutory Auditors observation on receivables from Bangalore Metro railCorporation Limited (BMRCL) towards acquisition of land is doubtful of realization we wishto state that we are pursuing with BMRCL for settlement of balance money and we areconfident of realization.

With regard to Statutory Auditors and Secretarial Auditors observations on publicdeposits we wish to state that company has made an application to Company Law Board on23.03.2016 seeking extension of time to repay the balance deposit of ? 558.35 lakhs before31.03.2017 and the matter is pending before the board. In the meanwhile a sum of ? 532.31lakhs has been repaid before

31.03.2017. The balance outstanding of? 26.04 lakhs (24 depositors) as at 31.03.2017 isunclaimed by the deposit holders.

SECRETARIAL AUDIT REPORT

The Secretarial Audit Report as provided by Shri. G Vasudevan M/s G V AssociatesPracticing Company Secretaries Bangalore for the financial year ended 31st March 2017is annexed herewith.

DEPOSITS

The Company has not accepted any deposits during the year.

LOANS GUARANTEES AND INVESTMENTS

The Company has given guarantee to SBI Sinivasapura to the tune of ? 24.48 crores forloans taken by the farmers who are supplying the cane to the Company.

During the year your Company has made investments in accordance with the Section 186 ofthe Companies Act 2013. (Refer Note:13 of Schedule to Balance Sheet). These transactionsare in line with Section 186 of the Companies Act 2013.

RELATED PARTY TRANSACTIONS

All the transactions with related parties are in the ordinary course of business and onarm's length basis thus disclosure in form AOC-2 is not required.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:

(A) Conservation of energy:
(i) Steps taken / impact on conservation of energy / Heat and Electrical Energy with special reference to the following: Expansion from 1250 TCD to 3500 TCD along with Co-gen power plant at Srinivasapura is under implementation with inbuilt technology of heat electrical and energy conservation.
(ii) Steps taken by the company for utilizing alternate sources of energy including waste generated Nil
(iii) Capital investment on energy conservation equipment The Company have invested a round Rs.1850 Lacs in above project towards energy conservation Equipments.
(B) Technologyabsorption:
1. Efforts in brief made towards technology absorption. Nil
2. Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import substitution etc. Nil
3. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year) following information may be furnished:
a) Details of technology imported.
b) Yearofimport. Nil
c) Whether the technology been fully absorbed
d) If not fully absorbed areas where absorption has not taken place and the reasons therefore.
4. Expenditure incurred on Research and Development Nil

(C) Foreign exchange earnings and Outgo

Earnings ? 2285.23 lakhs
Outgo ? 17.77 lakhs

RISK MANAGEMENT

Periodic assessments to identify the risk areas are carried out and managementis briefed on the risks in advance to enable the company to control riskthrough a properlydefined plan. The risks are classified as financial risks operational risks and marketrisks. The risks are takeninto account while preparing the annual business plan for theyear. The Board is also periodically informed of the business risks and the actions takento manage them. The Company has formulated a policy for Risk Management.

NOMINATION AND REMUNERATION POLICY Please refer the policy of NominationRemuneration Committee for appointment of Directors and KMP as mentioned in CorporateGovernance Report.

DIRECTORS and KEY MANAGERIAL PERSONNEL

During the current financial year the following changes have occurred in theconstitution of Directors / KMP of the company:

Name Designation Date of appointment / cessation Appointment/ Cessation
Shri. M. Rajendraprasath Company Secretary & AGM Accounts 22nd October 2016 Cessation

CORPORATE SOCIAL RESPONSIBILITY

As there have been no average profits available during the last three years provisionsof section 135 pertaining to corporate social responsibility are not applicable to theCompany. As per Section 135 (5) of the Companies Act 2013 and Rule 8 of the Companies(Corporate Social Responsibility Policy) Rules 2014 and schedule VII of the CompaniesAct 2013 the Company has duly constituted CSR Committee. The committee would decide theactivities to be undertaken by the Company and the expenditures to be incurred on the sameand recommended the same to the board therefore the board approved CSR policy.

PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES

a) The ratio of the remuneration of each director to the median remuneration of employeesforthefinancialyear: Sri.M.Srinivaasan Managing Director-1:9.62
b) The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year: Managing Director - Nil Chief Financial Officer- Nil
c) The percentage increase in the median remuneration of employees in the financial year: 0.22%
d) The number of permanent employees on the rolls of company: 1026
e) Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in salaries is 0.73% for Employees other than Managerial Personnel
f) The key parameters for any variable component of remuneration availed by the directors: Except for the Managing Director no directors have been paid any remuneration as only Sitting Fees are paid to them. Variable component is paid as per the Compensation Policy of the Company
g) Affirmation that the remuneration is as per the remuneration policy of the company It is affirmed that the remuneration is as per the remuneration policy of the company

Information pertains to Rule 5 (2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

Name Designation Remuneration (CTC) Date of Commencement of employment Age (Yrs) Previous employment % of shares held
Shri. M. Srinivaasan Managing Director 2349095 09/06/1993 50 NA 0.09
Shri. K.R. Nachiappan President 2502456 22/01/1973 70 NA -
Shri. S. Viswanathan Executive Vice President 2243420 20/11/2014 62 Nghe An Sugar Company Vietnam
Shri.S. Britto Vice President 2248932 19/10/1995 63 Vanivilas Co-operative Sugar Factory Hiriyur
Shri.J.U. Srinivasan CFO 1337042 30/04/2010 51 URC Construction Pvt. Ltd. Erode -
Shri. R. Mani General Manager - (D&E / Admin 1327119 15/09/2005 53 Thiru Arooran Sugars Ltd. Thirumandankudi -
Shri. M. Nagaraju General Manager - (Admin & Public relations) 1264769 29/01/1982 59 NA -
Shri.N.Senthilkumar Sr. Deputy General Manager (Process) 1226731 27/04/2012 55 EID Parry India Ltd Pugalur "
Shri. N. Srinivasan General Manager- Systems & Finance 1206533 05/03/2008 56 IFCI Ltd. Bangalore -
Shri. Sredhar Arunachalam Dy. General Manager (Admin. & Commercial) 1206544 03/12/2012 50 NA -
Shri. V.S. Krishnaraj Dy. General Manager (Finance & Accounts) 738770 11/12/2016 54 Gen. Manager Finance Kovai Medical Centre & Hosp. Ltd.

Note :

(i) Nature of employment of the above employees is non- contractual except that ofSri.M.Srinivaasan Managing Director (period- 09.06.2013 to 08.06.2018)

(ii) Sri M. Srinivaasan is brother of Dr. M. Manickam and Shri. M. Balasubramanamdirectors of the Company except to this none of the above is related to any Director

ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act2013 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Audit Nomination & Remuneration andCompliance Committees.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the board and its Committees Board Culture execution andperformance of specific duties obligations and governance.

A separate exercise was carried out to evaluate on parameters such as level ofengagement and contribution independence of judgment safeguarding the interest of theCompany etc. The performance evaluation of the Independent Directors was carried out bythe entire Board. The performance evaluation of the Non Independent Directors was carriedout by the Independent Directors.

CORPORATE GOVERNANCE

Report on Corporate Governance along with the Certificate of the Auditors confirmingcompliance of conditions of Corporate Governance forms part of the Board Report.

STATEMENT OF DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS

All the Independent Directors have given the declaration pursuant to section 149(7) ofthe Act affirming that they meet the criteria of Independence as provided in sub section(6) of the Companies Act 2013.

COST AUDIT

Shri M Krishnamurthy (Membership Number.F-7568) Cost Accountant was appointed as thecost Auditor of the Company and their Audit report on the Cost Accounts of the Company forthe period ended March 31 2017 will be submitted to the Central Government in duecourse.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

As per Section 177(9) and (10) of the Companies Act 2013 the company has establishedVigil Mechanism for directors and employees to report genuine concerns and made provisionsfor direct access to the chairperson of the Audit Committee. Company has formulated thepresent policy for establishing the vigil mechanism/ Whistle Blower Policy to safeguardthe interest of its stakeholders Directors and employees to freely communicate andaddress to the Company their genuine concerns in relation to any illegal or unethicalpractice being carried out in the Company.

SHARES

During the year the Company has not made any Buy Back of Securities Issue of SweatEquity Bonus Shares and Employees Stock option Plan.

LISTING STATUS

The Company's shares were listed on Bangalore Stock Exchange and Madras Stock ExchangeLimited upto December 2014. Consequent to the voluntary exit and de- recognition ofMadras Stock Exchange Limited(MSE) as a stock exchange pursuant to Securities andExchange Board Of India (SEBI) circular dated 30th May 2012 companies exclusively listedon MSE were required to either seek listing on any other recognized stock exchange withdiluted listing norms or opt for voluntary delisting; or otherwise be moved to thedissemination Board of National Stock Exchange of India Limited (NSE) where shares of suchcompanies could be bought /sold by following a prescribed procedure.

Madras Stock Exchange Limited informed vide their letter dated 31st March 2015 that theCompany has ceased to be a listed Company with MSE and has been placed on theDissemination Board of NSE and NSE has allowed buying and selling of the shares of theCompany on the Dissemination Board with effect from 27th March 2015.

All Exclusively Listed Company were given 18 months' time to delist their shares orlist on BSE or NSE. As per SEBI circular the cutoff date was extended twice for all ELC(Exclusively Listed Companies) to submit their Plan of Action on or before 30th June 2017Accordingly your Company has submitted its Plan of Action to dissemination Board of NSEfor providing Exit Offer to Shareholders of the Company. ORDERS PASSED BYREGULATORS/COURTS/TRIBUNALS.

Apart from the Order received from Company Law Board Chennai Bench as detailed inAuditors report the Company has not received any significant and material order fromregulators/courts/tribunals impacting the status of going concern and future operations ofthe Company.

DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company is having an adequate Internal Financial Controls ("IFC") withinthe meaning of the explanation to Section 134 (5) (e) IFC of the Companies Act 2013. Forthe year ende^ 31st March 2017 the Board is of the opinion that the Company has soundIFC commensurate with the nature and size of its business operations; wherein controls arein place and operating effectively and no material weaknesses exist. The Company has alsoa process in place to continuously monitor the existing controls and identify gaps ifany and implement new and /or improved controls wherever the effect of such gaps wouldhave a material effect on the Company's operation.

SHARES IN UNCLAIMED SUSPENSE ACCOUNT

Particulars No of Shareholders No of Shares
Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the beginning of the year 2124 222197
Number of shareholders who approached the issuer for transfer of shares from the Unclaimed Suspense Account during the year Nil Nil
Number of shareholders to whom shares were transferred from the Unclaimed Suspense Account during the year Nil Nil
Aggregate number of shareholders and the outstanding shares lying in the Unclaimed Suspense Account at the end of the year 2124 222197

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be very cordial.The Company wishes to acknowledge the contribution of the employees at all levels of theorganisation.

The Company has placed an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints for sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy. The Company has not received any complaintsreceived for disposal off during the year.

ACKNOWLEDGEMENT

Your Directors wish to express their grateful appreciation to the continuedco-operation received from the Banks Government Authorities Customers Vendors andShareholders during the year under review. Your Directors also wish to place on recordtheir deep sense of appreciation for the committed service of the Executives staff andWorkers of the Company.

For and on behalf of the Board of Directors
Date : 11.08.2017 M. Srinivaasan V.K. Swaminathan
Place: Coimbatore Managing Director Director
(DIN-00102387) (DIN-00210869)