Andhra Sugars Ltd.
|BSE: 590062||Sector: Others|
|NSE: ANDHRSUGAR||ISIN Code: INE715B01013|
|BSE 00:00 | 27 Sep||624.15||
|NSE 00:00 | 27 Sep||624.10||
|Mkt Cap.(Rs cr)||1,692|
|Mkt Cap.(Rs cr)||1692.07|
Andhra Sugars Ltd. (ANDHRSUGAR) - Director Report
Company director report
Your Directors have pleasure in presenting this SEVENTY THIRD ANNUALREPORT along with the audited Statement of Accounts for the year ending 31stMarch 2020.
(Rupees in lakhs)
Your Directors are glad to report that for the year 2019 2020your Company made a Profit of Rs.203.26 Crores (before tax) against a Profit of Rs. 254.03Crores made last year which reflect another year of consistent performance. The NetProfit (After Tax) was Rs.190.16 Crores against Rs. 165.72 Crores made last year.
Your Directors paid an Interim Dividend of Rs. 20 /- per Equity Sharei.e. 200% (Face Value Rs.10/-) for the year 2019-20. This is the highest Dividend paidsince inception. Your Directors recommended this interm Dividend as Final Dividend for theyear 2019-20.
CAPITAL & RESERVES:
Authorised and Paid Up Capital:
As on 31.3.2020 the Authorised Capital of the Company is Rs.30.00Crores and the Paid-up Capital is Rs. 27.11 Crores.
With the transfer of Rs.100. Crores during the year under report thetotal Reserves as on 31.3.2020 stands at Rs. 693.30 Crores against Rs. 593.46 Crores on31.3.2019.
REVIEW OF OPERATIONS: SUGAR UNITS:
The Sugar Units II and III crushed in aggregate 484820 M.T. of caneduring the 2019-2020 season against 769073 M.T. crushed by Two Units last year. Thecrushing operations and cane price paid to cane suppliers for the 2019-2020 Season are:
? Includes Transport Subsidy.
? Crushing Operations for the Season 2019-20 has been lower compared toSeason 2018-19 due to non-availability of Cane.
? Operations of Sugar Unit-I was suspended for the Season 2019-2020.
? To encourage farmers to plant cane your Company opted to pay a caneprice higher than the Fair Remunerative Price fixed by the Government.
? Board of Directors decided to suspend Operations at Sugar Unit-IIIBhimadole for the Crushing Season 2020-21.
During the year under report the Co-generation Unit at Taduvaigenerated 15305000 Units of Power.
PERFORMANCE OF CHEMICAL DIVISION:
During the year under report the performance of Caustic Soda Divisionat Saggonda was good. Turnover of Rs.496.79 Crores was achieved Profit after depreciationachieved this year was Rs 152.57. Crores against Rs. 214.90 Crores last year.
Aspirin Division has also performed impressively by posing a profit ofRs.11.72 Crores as against 9.73 Crores.
WIND POWER UNITS:
The Power generated at Ramagiri Wind Mills during this year is Units1495250.
The Power generation at the Tamil Nadu Wind Mills during the year underreport is 26754863. Units. This Power is being fed into the Tamil Nadu StateElectricity Board grid.
The Power generated by 33 MW Coal Based Power Plant put up by theCompany at Saggonda is 218940800 units during this year. This Power is being used foroperation of Our Chemical Plants at Saggonda.
Your Company has successfully expanded 100 TPD Caustic Soda Plant atSaggonda in the Financial Year 2019-20. With this the total Plant Capacity is 500 TPD. ThePlant is based on the latest 6th Generation Membrane Technology. This processhas the lower production cost simple operations Energy Efficient & Environmentalfriendly. Salt and Power constitute two main inputs for production of Caustic Soda. Asyour Company is already in the production of Caustic Soda procurement of Salt can besourced from the existing vendors. Power another major input can be availed from 33 MWCoal based Captive Power Plant in operation.
Hydrochloric Acid Plant is operating at capacity of 600 TPD in order toutilize Chlorine emerging from the production of Caustic Soda.
Your company is setting up a project at J.N.Pharmacity ParawadaVisakhapatnam in non-sez area to manufacture 100 TPD Sodium Hypochlorite. The estimatedproject cost is about Rs.10 crores. The important raw materials required are SodiumHydroxide and Chlorine gas which can be supplied from our Chemicals Division Saggonda.Sodium Hypochlorite has its applications in Bulk drugs / Pharmaceuticals Fine chemicalsWater treatment and Sea food industries. Most of the civil construction works arecompleted. All the bought-out components required for this project have already beenprocured. Fabrication of all the process equipments and main storage tanks are completed.Fabrication and erection of pipe racks / bridges are also completed. Erection of processequipment is in progress. It is expected to complete the project by the end of December2020.
Keeping in view the need for your Company to expand the base of itsChlor-Alkali operations an application to the concerned authorities has been made forestablishment of Plants at J.N.Pharmacity Parawada Visakhapatnam for 245 TPD CausticSoda 50 TPD Caustic Potash 600 TPD Hydrochloric Acid 300 TPD Sulphuric Acid and 200 TPDChlorine.
To meet the International customers' requirement capacity ofAspirin Plant has been expanded to 2000 TPA from 1000 TPA.
DEMATERIALISATION OF EQUITY SHARES:
As of 31st March 2020 Equity Shares representing 53.81% ofthe Share Capital have been dematerialised.
M/s K.S. Rao & Co. Chartered Accountants Hyderabad the presentAuditors were appointed at 70th Annual General Meeting for a period of 5Financial Years i.e. 2017-18 2018-19 2019-20 2020-21 and 2021-22. Their remunerationfor the Financial Year 2020-21 of Rs1700000./- is being sought for your approval at theensuing Annual General Meeting.
For the year 2019-2020 M/s Narasimha Murthy & Co. CostAccountants Hyderabad were the Cost Auditors of the Company for the products which aresubject to Cost Audit. For the year ended 2020-21 your Board of Directors have approvedthe appointment of M/s. Narasimha Murthy & Co. Hyderabad as Cost Auditors andrecommend to Shareholders to ratify the remuneration of Rs.600000/- as fixed by theBoard on the recommendation of Audit Committee.
As per the amended provisions of the Listing Agreement a Report onCorporate Governance along with Management Discussion and Analysis forming part of theDirectors' Report is annexed.
As per the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 top listed Companies based on the Market Capitalization BusinessResponsibility Report is annexed.
COMPLIANCE CERTIFICATE OF THE AUDITORS:
The Statutory Auditors have certified that the Company has compliedwith the conditions of Corporate Governance as stipulated in the Listing Agreement withthe Stock Exchanges and the same is annexed to the Report of Directors.
Consequent up on the sad demise of Independent Director Sri A. RangaRao who was the Chairman of the Audit Committee the Audit Committee was re-constitutedby the Board by inducting Sri P.A. Chowdary Independent Director on the Committee. Assuch the Audit Committee presently comprises of 3 non Whole-time Independent DirectorsDr. P. Kotaiah Sri V.S. Raju and Sri P.A.Chowdary.
DIRECTORS AND KMP:
Sri A. Ranga Rao ceased to be Director due to his sad demise on08.03.2020. The Board places on record its commendable appreciation of the service andguidance received from him during his tenure as Director for more than two and halfdecades.
Directors Sri Mullapudi Thimmaraja and Sri P. S.R.V.K. Ranga Rao retireby rotation at the ensuring 73rd Annual General Meeting and being eligibleoffer themselves for re-appointment.
Approval for the appointment of Sri P. Narendranath Chowdary asManaging Director for a period of 5 years with effect from 12.01.2021 is being placed atthe ensuing Annual General Meeting.
Statements of declaration as per Section 149(6) of the Companies Act2013 have been given by the Independent Directors.
Sri P. Narendranath Chowdary Chairman & Managing Director Sri M.Palachandra Company Secretary and Sri P.V.S. Viswanadha Kumar General Manager (Finance)& Addl. Secretary (CFO) have been designated as Key Managerial Personnel.
Compliance under Companies Act 2013
Pursuant to Sec.134 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 your company has complied with the compliance requirement thedetails of which are enumerated hereunder.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirements of Section 134(1)(c) of the Companies Act2013 and on the basis of explanation and compliance certificate given by the executives ofthe Company and subject to disclosures in the Annual Accounts and also on the basis ofdiscussions with the Statutory Auditors of the Company from time to time we state asunder :
a) that in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdeparture;
b) that the directors selected such accounting policies and appliedthem consistently and made judgments and estimates that they are reasonable and prudent soas to give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
c) that the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities.
d) that the Directors have got prepared the annual accounts on a goingconcern basis;
e) that the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively.
f) that the Directors got devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
The Board of Directors met 5 times during the financial year 2019-2020on 29.05.2019 10.08.2019 07.11.2019 08.02.2020 and 14.03.2020.
INDEPENDENT DIRECTORS MEETING:
A Meeting of Independent Directors was held on 14th March2020. The Independent Directors have evaluated the performance of the Non-independentDirectors the Board as a whole and Chairman of the Board. The Board was briefed by LeadIndependent Director on the deliberations made at the Independent Directors Meeting.
Your Company through a Policy has in place a familiarisation programmeto all the Directors with a view to update them on the Company's Policies andProcedures. Independent Directors make a periodical visit to plants to keep themselvesabreast of the plant operations. Respective Plant Heads interact with the IndependentDirectors and explain to them about the various processes and operations.
FORMAL ANNUAL EVALUATION OF THE BOARD
The Board evaluated its own performance and that of its Committees andDirectors in terms of : Measured and appropriate contribution by the Directors to thediscussions on the Agenda Items - Each Director exercising the responsibilities in abonafide manner.
- Understanding of the Company's business strategic plans andother key issues.
- Special Skills and expertise of each Director contributing to theBoard's overall effectiveness. - Respecting the confidentiality of the Company'sbusiness information and Board's deliberations.
- Satisfactory attendance and active participation of each Director atthe meetings of the Board and Committee. The Board members were of the opinion that theBoard as a whole and the Directors have performed effectively as per the terms of theabove parameters. The respective Committee performed as per its terms of reference.
As a part of Vigil Mechanism a Whistle Blower Policy has beenestablished and approved by the Board.
This Policy envisages reporting of wrongdoing or un-ethical activitiesobserved by Employees at any level directly to the Chairman of the Audit Committee or tothe Chairman & Managing Director.
The matter when ever reported is investigated and if the wrong doer isfound guilty disciplinary action will be initiated depending upon the materiality of theun-ethical doings. During the year under report there has been no instances which requiredreporting.
NOMINATION AND REMUNERATION COMMITTEE :
As required by the Provisions of the Companies Act 2013 and ListingAgreement a Nomination and Remuneration Committee comprising of Independent Directors SriV.S. Raju (Chairman) Sri P.A. Chowdary and Sri A. Ranga Rao was constituted by the Board.Member Sri A. Ranga Rao passed away on 08.03.2020 and in his place Dr. D. Manjulata wasappointed as Member of the Committee with effect from 14.03.2020.
This Nomination and Remuneration Committee has formulated Nominationand Remuneration Policy which has been approved by the Board. This Nomination &Remuneration Policy has laid down criteria and terms and conditions with regard toidentifying persons who are qualified to become Directors (Executive and Non-Executive)and persons who may be appointed in Senior Management and Key Managerial positions and todetermine their remuneration based on the Company's size and financial position andtrends and practices on remuneration prevailing in the industry. Appointment of ManagingDirector / Whole-time Director / KMP and Functional Heads are placed before Nomination andRemuneration Committee for its consideration and recommendation to the Board.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
As required by the Provisions of the Companies Act 2013 a CorporateSocial Responsibility (CSR) Committee has been constituted by the Board of the Companywith Sri P.Narendranath Chowdary Managing Director Chairman of the Committee SriMullapudi Thimmaraja Joint Managing Director and Sri V.S. Raju Independent Director areMembers of the Committee.
This Committee has formulated a CSR Policy which has been approved bythe Board.
This Policy envisages CSR Activities to be taken up amount ofexpenditure to be incurred and monitoring of CSR Activities from time to time.
This Policy aims to achieve the CSR objectives by undertaking one ormore of the activities to be in alignment with Schedule VII of the Companies Act 2013either on own or through any Trust / Society or any other recognized Agency.
As per the provisions of Section 135(5) of the Companies Act 2013company should spend in every Financial Year at least 2% of the average net profits of thecompany made during the three immediately preceding Financial Years. In pursuance of itsCorporate Social Responsibility Policy the company gives preference to the local area andareas around it where it operates or any other permissible location for spending theamount earmarked for Corporate Social Responsibility activities.
Accordingly for achieving its CSR objectives through implementation ofmeaningful and sustainable CSR programmes your Company allocates at least 2% of itsaverage Net Profits calculated as per Section 198 of the Companies Act 2013 as itsAnnual CSR Budget in each Financial Year.
From the Annual CSR Budget allocation a provision is made towards theexpenditure to be incurred on identified areas for undertaking CSR activities on a yearto year basis.
Allocation of the Annual Budget for CSR activities in any given yearwould be as per the provisions of the Companies Act 2013 and rules made thereunder asamended from time to time. Any unspent / unutilised CSR allocation of a particular yearwill be carried forward to the next year i.e. the CSR budget will be non-lapsable innature.
As required by Rule 8 of the Companies (CSR Policy) Rules 2013 aReport on CSR Activities and the amount of expenditure incurred are annexured to thisReport.
With a view to support the State Government in its efforts to tacklethe crisis arising from Pandemic Covid-19 your Company contributed Rs2.00 Crores to ChiefMinister's Relief Fund. Besides this Company also supplied 800 MT of SodiumHypochlorite and 7500 Liters of Sanitizers to the required Villagers/ Persons.
There has been no material impact on the operations of the Company dueto Covid-19. The Company is taking all steps to adhere to the guidelines of Ministry ofHome Affairs with a view to ensure that appropriate precautionary measures are in placefor the prevention of the effects of Covid-19 on the work force.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The Company has duly complied with the Provisions of Section 186 of theCompanies Act 2013 with regard to Loans Guarantees or Investments the details of whichas applicable are provided in the Notes to Balance Sheet.
RISK MANAGEMENT POLICY:
The company has framed a Risk Management Policy which envisages thefollowing Identification of areas of Risk Assessing the impact of Risks Stepstaken to mitigate the Risk
The Major Segments of operations of the Company are Sugar and ChlorAlkali.The major aspects 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 that aresuitable for mechanical harvesting. To get around the 1st aspect the Companyhas embarked upon locating the right Cane Harvester suited to our Grower Farm sizes. The 2ndaspect is being taken care of by setting up a Solar Powered Pumping System at our R &D Farm so that our Growers could ultimately be provided the right guidance in this aspect.The 3rd aspect is being met by the Cane Breeding Programme undertaken by theCompany. Chlor Alkali segment is power intensive where Power constitute a major inputcost. 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.
The relations with 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 inline with the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (Act.) An Internal Compliance Committee (ICC) hasbeen set up to redress the complaints received regarding sexual harassment. All employeesare covered under this Policy. As on the date of this report there were no complaintsreceived by the ICC.
SAFETY HEALTH AND ENVIRONMENT:Safety Occupational Health andEnvironment Protection continue to be accorded high priority.
EXTRACT OF ANNUAL RETURN:As required by Section 92 (3) of theCompanies Act 2013 and relevant rules an Extract of Annual Return in MGT9 is placed onthe Company's website. You can find the same on www.theandhrasugars.com
RELATED PARTY TRANSACTIONS:
There is no transaction with Related Party which requires disclosureunder Section 134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies(Accounts) Rules 2014.
SECRETARIAL AUDIT REPORT:
As required by Provisions of Companies Act 2013 Secretarial AuditReport has been provided by Nekkanti S R V V Satyanarayana & Co. Hyderabad CompanySecretaries in practice is annexured to this Report.
PARTICULARS OF EMPLOYEES:
Information in accordance with the provisions of the Companies Act2013 read with the relevant Rules made thereunder regarding employees is annexed asAnnexure "A" forming part of this Report.
RATIO OF REMUNERATION OF EACH DIRECTOR:
Details of ratio of Remuneration of each Director to the medianemployees remuneration is enclosed.
Significant and Material Orders Passed by the Regulators or Courts orTribunals impacting the Going Concern status of the Company
There are no significant and material orders passed by the Regulatorsor Courts or Tribunals or Competiton Commission of India which would impact the goingconcern status of the Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNING AND OUTGO:
Information pursuant to Section 134 of the Companies Act 2013 readwith relevant rules is given in Annexure "B" forming part of this Report.
As required by the Companies Act 2013 the details of Fixed Deposits ason 31.3.2020 is given hereunder.
In accordance with the Accounting standards consolidated financialstatements of the Company and its Subsidiaries form part of the Report and Accounts. Theseconsolidated statements have been prepared on the basis of audited results received fromthe Subsidiary Companies as approved by their respective Boards. The Accounts of theSubsidiary Companies for the year 2019-20 have not been attached to the Company'sAccounts. However Shareholders desirous of obtaining the Annual Accounts of theSubsidiaries 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:
For the Financial Year ending 31.3.2020 your subsidiary Company JOCILLtd. posted a profit of Rs.1764.82 lakhs (before taxation) against Rs. 126.07 lakhs(before taxation) last year. Board of Directors of this Company has recommended a Dividendof Rs3/- per Share to Shareholders for the Financial Year 2019-2020.
THE ANDHRA FARM CHEMICALS CORPORATION LIMITED:
The Company incurred a loss (before Tax) of Rs.102909/- against theloss of Rs. 54/- last year.
HINDUSTAN ALLIED CHEMICALS LIMITED:
Directors are on the look out for the suitable projects to be taken.The company has sold the only fixed asset i.e. Land during the year. Thus the company donot have any fixed assets at the end of the year.
THE ANDHRA PETROCHEMICALS LIMITED:
The Company achieved sales of Rs.45593.27 lakhs against Rs. 66586.22lakhs and earned profit (before Tax) of Rs. 2102.31 lakhs against Rs. 9499.10 lakhs lastyear.
INTERNAL CONTROL SYSTEM:
Your Company conducts a review of the financial and operating controlsof the various Units. The Internal Control System of your Company is commensurate with itssize and nature of business. The Board has also laid down a policy on Internal FinancialControl as required by the provisions of the Companies Act 2013. The same has been postedon Company's Website.
LISTING ON STOCK EXCHANGE:
Company's Equity Shares are listed on National Stock Exchange andAnnual Listing Fee for the Financial Year 2019-20 has been paid.
Your Directors wish to place on record their appreciation for theco-operation extended by the State & Central Government authorities Banks Farmersand all and one associated with the Company in its Business process. They also expresstheir appreciation to the employees at all levels for the successful working of theCompany.