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Andhra Sugars Ltd.

BSE: 590062 Sector: Others
NSE: ANDHRSUGAR ISIN Code: INE715B01013
BSE 00:00 | 15 Nov 286.60 -10.75
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299.00

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299.00

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NSE 00:00 | 15 Nov 288.45 -9.85
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OPEN

298.00

HIGH

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LOW

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OPEN 299.00
PREVIOUS CLOSE 297.35
VOLUME 2027
52-Week high 416.35
52-Week low 257.00
P/E 4.17
Mkt Cap.(Rs cr) 777
Buy Price 286.60
Buy Qty 101.00
Sell Price 286.60
Sell Qty 5.00
OPEN 299.00
CLOSE 297.35
VOLUME 2027
52-Week high 416.35
52-Week low 257.00
P/E 4.17
Mkt Cap.(Rs cr) 777
Buy Price 286.60
Buy Qty 101.00
Sell Price 286.60
Sell Qty 5.00

Andhra Sugars Ltd. (ANDHRSUGAR) - Director Report

Company director report

To

The Shareholders

At the outset your Board of Directors convey with profound grief the sad passing awayof your beloved Chairman Managing Director Dr. B.B. Ramaiah on 14-02-2018. Your Board ofDirectors place on record the valuable contribution made by him during six decades andmore of his association with the Company in various positions as General Manager ManagingDirector (Tech.) and Chairman & Managing Director. He was instrumental steering youCompany's growth and diversification into multi-unit business conglomerate to the presentlevel. Though he is not amidst us today his spirits will continue to guide us in all ourfuture endeavours.

Your Directors have pleasure in presenting this SEVENTY FIRST ANNUAL REPORT along withthe audited Statement of Accounts for the year ending 31st March 2018.

Financial Results:

(Rupees in lakhs)

This Year Last Year
98454.93 97199.98
Sales 2679.31 2254.14
Other Income
101134.24 99454.12
Profit for the year 19627.30 20385.84
Depreciation 4863.20 4420.43
Profit after depreciation 14764.10 15965.41
Add: Income Tax Refund received 104.96 4.54
Short entitlement of MAT Credit 371.38 --
Less:
Provision for Current Tax (Includes MAT Utilisation of Rs.844.28 Lakhs) 3885.46 3337.99
Provision for Deferred Tax 1425.06 2134.39
MAT Credit (1553.48)
Profit after Tax 9929.92 12051.05
Add: Balance brought forward from last year 24562.30 14511.25
Profit available for appropriation 34492.22 26562.30
APPROPRIATIONS
Equity Dividend 2710.71 --
Tax on Distributed Profits 522.00 --
Transfer to General Reserve 1000.00 2000.00
Balance carried forward to next year 30259.51 24562.30

PERFORMANCE:

Your Directors are glad to report that for the year 2017-18 your Company made a Profitof Rs. 147.64 Crores (before tax) against a Profit of Rs. 159.65 Crores made last yearwhich reflect another year of consistent performance. The Net Profit (After Tax) was Rs.99.30 Crores against Rs. 120.51 Crores made last year.

DIVIDENDS:

Your Directors are glad to recommend a Dividend of Rs. 10 /- per Equity Share i.e.100% (Face Value Rs.10/-) for the year 2017-18 which is same as that of last year. Theoutflow towards Dividend payment (including tax on distributable profits) would beRs.32.43 Crores.

CAPITAL & RESERVES:

Authorised and Paid Up Capital:

As on 31.3.2018 the Authorised Capital of the Company is Rs.30.00 Crores and thePaid-up Capital is Rs. 27.11 Crores.

Reserves:

With the transfer of Rs. 10.00 Crores during the year under report the total Reservesas on 31.3.2018 stands at Rs.443.46 Crores against Rs. 433.46 Crores on 31.3.2017.

REVIEW OF OPERATIONS:

SUGAR UNITS:

The Sugar Units II and III crushed in aggregate 488589 M.T. of cane during the2017-18 season against 413655 M.T. crushed by Two Units last year. The crushing operationsand cane price paid to cane suppliers for the 2017-18 Season are:

SUGAR UNIT – II TADUVAI

SUGAR UNIT – III BHIMADOLE

Fin. Year 2017-18 Fin. Year 2016-17 Fin. Year 2017-18 Fin. Year 2016-17
(A) Crushing details:
Total cane crushed (MT) 328578 262759 160011 150896
Total No. of days crushed 104 89 49 50
Total Sugar produced(MT) 35071 27590 15528 14634
Average Recovery 10.67% 10.50% 9.70% 9.70%
(B) Cane price:
Fair & Remunerative price (per M.T.) 2820.00 2563.78 2605.00 2324.20
Cane price paid (per M.T)* 3210.33 2896.18 3228.12 2894.56

• Purchase Tax Incentive and Transport Subsidy

• Operations of Sugar Unit-I was suspended during the Season 2017-18.

• To encourage farmers to plant cane your Company opted to pay a cane pricehigher than the Fair Remunerative Price fixed by the Government.

POWER GENERATION :

During the year under report the Co-generation Unit at Taduvai generated 14958300Units of Power.

PERFORMANCE OF CHEMICAL DIVISION:

During the year under report the performance of Caustic Soda Division at Saggonda wasimpressive. Turnover of Rs.600.73 Crores was achieved the Profit after depreciationachieved this year was higher at Rs. 193.35 Crores against Rs. 122. 71 Crores last year.

Aspirin Division made a profit of Rs. 4.78 Crores as against 9.09 Crores.

WIND POWER UNITS:

The Power generated at Ramagiri Wind Mills during this year is Units 1765608.

The Power generation at the Tamil Nadu Wind Mills during the year under report is32351817 Units. This Power is being fed into the Tamil Nadu State Electricity Boardgrid.

PROJECTS:

A 33 MW Coal Based Captive Generation Plant has been put up at Saggonda. Powergenerated will be utilized by the Chemical Plants located at Saggonda.

Demand for Caustic Soda is on the rise. Our Major customers in private and publicsectors have been consistently lifting their commitments. As a part of ongoing marketprogramme efforts are directed towards widening the customer base. Further aluminiumIndustry a major consumer of Caustic Soda Lye is now more dependent on domesticmanufacturers to get their requirement as the imports have considerably reduced. Keepingthis in mind your Company has gone in for expansion from existing 400 Tonnes per day to500 Tonnes per day Membrane Cell Caustic Soda facility at Chemical Complex Saggonda. Thisexpansion is based on the latest generation of Environmental friendly and Energy efficientMembrane Cell Technology supplied by M/s. Thyssenkrupp Industrial Solutions India Ltd. arenowned International organization having expertise and experience in establishingChemical Plants. Major Civil Works have been completed. All structural works are nearingcompletion. Process equipment fabricated in-house at your Tanuku Complex has been receivedat site. Equipment received from suppliers have been erected. Project cost of Rs.80.00Crores is being met by internal generation. The Plant is expected to commence operationsduring the current financial year.

Establishment of a 33 TPD Poly Aluminium Chloride (PAC) Powder Plant at Saggonda is inprogress. A part of Chlorine generated from the production of Caustic Soda will be the rawmaterial for this Plant. Civil foundations are completed in respect of Plant building andWarehouse. Major works relating to this Plant has been completed. Pre-commissioningactivities are in progress. Plant is expected to be in operation in the current year.

At Cotton & Oil Products Division (COP) Guntur a 25 TPD Cattle Feed Plant was inoperation. In view of the demand for this product the capacity of this Plant has beenexpanded to 100 TPD. The expanded Plant came into operation during the year under report.

At Jawaharlal Nehru Pharma city Parawada Visakhapatnam in Non-SEZ Area 100 TPDSodium Hypo Chloride is being setup. Basic raw materials Sodium Hydroxide and Chlorine Gaswill be sourced from Chemical Division Saggonda. This product has applications inPharmaceuticals Fine Chemicals and Sea Food Industries. Major Civil works have beencompleted. All bought-out components required for the Project have already been procured.Erection of Process equipment is in progress. The Plant is expected to commence operationsduring the current financial year.

To meet the International clients requirement capacity of Aspirin Plant has beenexpanded to 2000 TPA.

DEMATERIALISATION OF EQUITY SHARES:

As of 31st March 2018 Equity Shares representing 50.25% of the Share Capital have beendematerialised.

AUDITORS:

M/s K.S. Rao & Co. Chartered Accountants Hyderabad the present Auditors wereappointed at 70th Annual General Meeting for a period of 5 Financial Years i.e. 2017-182018-19 2019-20 2020-21 and 2021-22.

Their remuneration for the current Financial Year 2018-19 which is being sought foryour approval at the ensuing Annual General Meeting.

COST AUDITORS:

For the 2017-18 M/s Narasimha Murthy & Co. Cost Accountants Hyderabad were theCost Auditors of the Company for the products which are subject to Cost Audit. For theyear ended 2018-19 your Board of Directors have approved the appointment of Ms. NarasimhaMurthy & Co. Hyderabad as Cost Auditors and recommend to Shareholders to ratify theremuneration of Rs.500000/- as fixed by the Board.

CORPORATE GOVERNANCE:

As per the amended provisions of the Listing Agreement a Report on CorporateGovernance along with Management Discussion and Analysis forming part of the Directors'Report is annexed.

COMPLIANCE CERTIFICATE OF THE AUDITORS:

The Statutory Auditors have certified that the Company has complied with the conditionsof Corporate Governance as stipulated in the Listing Agreement with the Stock Exchangesand the same is annexed to the Report of Directors.

AUDIT COMMITTEE:

Audit Committee comprises of 3 non Whole-time Independent Directors

Sri A. Ranga Rao Dr. P. Kotaiah and Sri V.S. Raju. Sri A. Ranga Rao is the Chairman ofthis Committee.

DIRECTORS AND KMP:

Dr. B.B. Ramaiah ceased to be Director due to his sad demise on 14.02.2018.

Appointment of Sri P.S.R.V.K. Ranga Rao as Executive Director for a further period of 5years with effect from 1.5.2019 is being placed for the approval of Shareholders at theensuing 71st Annual General Meeting.

Directors Sri Mullapudi Thimmaraja and Sri P. S.R.V.K. Ranga Rao retire by rotation atthe ensuring 71st Annual General Meeting and being eligible offer themselves forre-appointment.

Statements of declaration as per Section 149(6) of the Companies Act 2013 have beengiven by the Independent Directors.

Sri P. Narendranath Chowdary Managing Director Sri M. Palachandra Company Secretaryand Sri P.V.S. Viswanadha Kumar General Manager (Finance) & Dy. Secretary has beendesignated as Key Managerial Personnel.

Compliance under Companies Act 2013

Pursuant to Sec.134 of the Companies Act 2013 read with Companies (Accounts) Rules2014 your company has complied with the compliance requirement the details of which areenumerated hereunder.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirements of Section 134(1)(c) of the Companies Act 2013 and on thebasis of explanation and compliance certificate given by the executives of the Companyand subject to disclosures in the Annual Accounts and also on the basis of discussionswith the Statutory Auditors of the Company from time to time we state as under :

a) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departure;

b) that the directors selected such accounting policies and applied them consistentlyand made judgments and estimates that they are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit of the Company for that period;

c) that 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;

d) that the Directors have got prepared the annual accounts on a going concern basis;

e) that the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

f) that the Directors got devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

BOARD MEETINGS:

The Board of Directors met 4 times during the financial year 2017-18 on 27.05.201728.07.2017 28.10.2017 and 03.02.2018.

INDEPENDENT DIRECTORS MEETING:

A Meeting of Independent Directors was held on 24th May 2018. The IndependentDirectors have evaluated the performance of the Non-independent Directors the Board as awhole and Chairman of the Board. The Board was briefed by Lead Independent Director on thedeliberations made at the Independent Directors Meeting.

FAMILARISATION PROGRAMME:

Your Company through a Policy has in place a familiarisation programme to all theDirectors with a view to update them on the Company's Policies and Procedures. IndependentDirectors make a periodical visit to plants to keep themselves abrest of the plantoperations. Respective Plant Heads interact with the Independent Directors and explain tothem about the various processes and operations.

FORMALANNUAL EVALUATION OF THE BOARD

The Board evaluated its own performance and that of its Committees and Directors interms of : Measured and appropriate contribution by the Directors to the discussions onthe Agenda Items - Each Director exercising the responsibilities in a bonafide manner.

- Understanding of the Company's business strategic plans and other key issues.

- Special Skills and expertise of each Director contributing to the Board's overalleffectiveness. - Respecting the confidentiality of the Company's business information andBoard's deliberations.

- Satisfactory attendance and active participation of each Director at the meetings ofthe Board and Committee. The Board members were of the opinion that the Board as a wholeand the Directors have performed effectively as per the terms of the above parameters. Therespective Committee performed as per its terms of reference.

VIGIL MECHANISM:

As a part of Vigil Mechanism a Whistle Blower Policy has been established and approvedby the Board. This Policy envisages reporting of wrong doing or un-ethical activitiesobserved by Employees at any level directly to the Chairman of the Audit Committee or tothe Chairman & Managing Director. The matter reported is investigated and if the wrongdoer is found guilty disciplinary action will be initiated depending upon the materialityof the unethical doings. During the year under report there has been no instances whichrequired reporting.

NOMINATION AND REMUNERATION COMMITTEE :

As required by the Provisions of the Companies Act 2013 and listing Agreement aNomination and Remuneration Committee comprising of Independent Directors Sri V.S. Raju(Chairman) Sri P.A.Chowdary and Sri A. Ranga Rao was constituted by the Board.

This Nomination and Remuneration Committee has formulated Nomination and RemunerationPolicy which has been approved by the Board. This Nomination & Remuneration Policy haslaid down criteria and terms and conditions with regard to identifying persons who arequalified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration based on the Company's size and financial position and trends and practiceson remuneration prevailing in the industry. Appointment of Managing Director / Whole-timeDirector / KMP and Functional Heads are placed before Nomination and RemunerationCommittee for its consideration and recommendation to the Board.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

As required by the Provisions of the Companies Act 2013 a Corporate SocialResponsibility (CSR) Committee has been constituted by the Board of the Company with Dr.B.B.Ramaih Chairman & Managing Director (ceased to be Member with effect from14.02.2018) Sri P.Narendranath Chowdary Managing Director Sri Mullapudi ThimmarajaJoint Managing Director and Sri V.S. Raju Independent Director as members of theCommittee. This Committee has formulated a CSR Policy which has been approved by theBoard. This Policy envisages CSR Activities to be taken up amount of expenditure to beincurred and monitoring of CSR Activities from time to time. This Policy aims to achievethe CSR objectives by undertaking one or more of the activities to be in alignment withSchedule VII of the Companies Act 2013 either on own or through any Trust / Society orany other recognized Agency.

As per the provisions of Section 135(5) of the Companies Act 2013 company shouldspend in every Financial Year at least 2% of the average net profits of the company madeduring the three immediately preceding Financial Years. In pursuance of its CorporateSocial Responsibility Policy the company gives preference to the local area and areasaround it where it operates or any other permissible location for spending the amountearmarked for Corporate Social Responsibility activities.

Accordingly for achieving its CSR objectives through implementation of meaningful andsustainable CSR programmes your Company would allocate at least 2% of its average NetProfits calculated as per Section 198 of the Companies Act 2013 as its Annual CSR Budgetin each Financial Year.

From the Annual CSR Budget allocation a provision is made towards the expenditure tobe incurred on identified areas for undertaking CSR activities on a year to year basis.

Allocation of the Annual Budget for CSR activities in any given year would be as perthe provisions of the Companies Act 2013 and rules made thereunder as amended from timeto time. Any unspent / unutilised CSR allocation of a particular year will be carriedforward to the next year i.e. the CSR budget will be non-lapsable in nature.

As required by Rule 8 of the Companies (CSR Policy) Rules 2013 a Report on CSRActivities and the amount of expenditure incurred are annexured to this Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS :

The Company has duly complied with the Provisions of Section 186 of the Companies Act2013 with regard to Loans Guarantees or Investments the details of which as applicableare provided in the Notes to Balance Sheet.

RISK MANAGEMENT POLICY:

The company has framed a Risk Management Policy which envisages the following

• Identification of areas of Risk

• Assessing the impact of Risks

• Steps taken to mitigating the Risk

The Major Segments of operations of the Company are Sugar and Chlor Alkali. The majoraspects of concern for the Sugar Sector are:

1) Lack of Harvesting Labour

2) Power to operate the irrigation requirements

3) Proper Cane Varieties that give good Cane and Sugar yield and that are suitable formechanical harvesting.

To get around the 1st aspect the Company has embarked upon locating the right CaneHarvester suited to our Grower Farm sizes. The 2nd aspect is being taken care of bysetting up a Solar Powered Pumping System at our R & D Farm so that our Growers couldultimately be provided the right guidance in this aspect. The 3rd aspect is being met bythe Cane Breeding Programme undertaken by the Company.

Chlor Alkali segment is power intensive where Power constitute a major input cost.Restricted power supply and increased power cost have become a cause of concern. Tomitigate this impact a Solar Power Plant has been commissioned at Kovvur. At Saggonda a33 MW Coal Based Power Plant has been commissioned. This would improve the poweravailability to the Chemical Plants at Saggonda.

INDUSTRIAL RELATIONS:

The relations with your Company's employees continue to be cordial and harmoniousduring the year under report.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY:

The Company has in place a Prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 (Act.) An Internal Compliance Committee (ICC) has been set up toredress the complaints received regarding sexual harassment. All employees are coveredunder this Policy. As on the date of this report there were no complaints received by theICC.

SAFETY HEALTH AND ENVIRONMENT:

Safety Occupational Health and Environment Protection continue to be accorded highpriority.

EXTRACT OF ANNUAL RETURN :

As required by Section 92 (3) of the Companies Act 2013 and relevant rules an Extractof Annual Return in MGT9 is annexed as a part of this Annual Report.

RELATED PARTY TRANSACTIONS:

There is no transaction with Related Party which requires disclosure under Section134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules2014.

SECRETARIAL AUDIT REPORT :

As required by Provisions of Companies Act 2013 Secretarial Audit Report has beenissued by Nekkanti SRVV Satyanarayana & Co. Hyderabad Company Secretaries inpractice is annexured to this Report.

PARTICULARS OF EMPLOYEES:

Information in accordance with the provisions of the Companies Act 2013 read with therelevant Rules made thereunder regarding employees is annexed as Annexure "A"forming part of this Report.

RATIO OF REMUNERATION OF EACH DIRECTOR :

Details of ratio of Remuneration of each Director to the median employees remunerationis enclosed.

Significant and Material Orders Passed by the Regulators or Courts or Tribunalsimpacting the Going Concern status of the Company:

There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO:

Information pursuant to Section 134 of the Companies Act 2013 read with relevant rulesis given in Annexure "B" forming part of this Report.

FIXED DEPOSITS:

As required by the Companies Act 2013 the details of Fixed Deposits as on 31.3.2018 isgiven hereunder.

2017-18 2016-17
(a) Accepted during the year. 315580000 216920000
(b) Remained unpaid or unclaimed as at the end of the year. 7130000 4860000
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved. NO NO
i) at the beginning of the year NOT APPLICABLE NOT APPLICABLE
ii) maximum during the year -do- -do-
iii) at the end of the year -do- -do-
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act. NIL NIL

CONSOLIDATEDACCOUNTS:

In accordance with the Accounting standards consolidated financial statements of theCompany and its Subsidiaries form part of the Report and Accounts. These consolidatedstatements have been prepared on the basis of audited results received from the SubsidiaryCompanies as approved by their respective Boards.

The Accounts of the Subsidiary Companies for the year 2017-18 have not been attached tothe Company's Accounts. However Shareholders desirous of obtaining the Annual Accounts ofthe Subsidiaries may obtain them upon request. The Annual Report and the Accounts of theSubsidiary Companies will be kept for inspection at the Company's Registered Office aswell as at the offices of your Subsidiary Companies.

SUBSIDIARIES AND ASSOCIATE: JOCIL LIMITED:

For the Financial Year ending 31.3.2018 your subsidiary Company JOCIL Ltd. posted aprofit of Rs. 494.86 lakhs (before taxation) against Rs. 1018.61 lakhs (before taxation)last year. Board of Directors of this Company has recommended a Dividend of Rs.2/- perShare to Shareholders for the Financial Year 2017-18.

THE ANDHRA FARM CHEMICALS CORPORATION LIMITED:

The Company posted a profit of 62.82 lakhs against the loss of Rs. 71.46 lakhs lastyear.

HINDUSTAN ALLIED CHEMICALS LIMITED:

The Directors are on the look out for a suitable project to be taken up by the Company.

THE ANDHRA PETROCHEMICALS LIMITED:

The Company achieved sales of Rs.53275.25 lakhs against Rs. 37043.04 lakhs and earnedprofit (before Tax) of Rs. 4725.98 lakhs against the loss of Rs. 1090.47 lakhs incurredlast year.

INTERNAL CONTROL SYSTEM:

Your Company conducts a review of the financial and operating controls of the variousUnits. The Internal Control System of your Company is commensurate with its size andnature of business. The Board has also laid down a policy on Internal Financial Control asrequired by the provisions of the Companies Act 2013. The same has been posted onCompany's Website.

LISTING ON STOCK EXCHANGE:

Company's Equity Shares are listed on National Stock Exchange and Annual Listing Feefor the Financial Year 2018-19 has been paid.

ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the co-operation extendedby the State and Central Government authorities Financial Institutions and Banks. Theyalso express their appreciation to the employees at all levels for the successful workingof the Company.

For and on behalf of the Board
TANUKU P. NARENDRANATH CHOWDARY
28.07.2018 Chairman Managing Director