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Andhra Sugars Ltd.

BSE: 590062 Sector: Others
NSE: ANDHRSUGAR ISIN Code: INE715B01013
BSE 00:00 | 20 Oct 286.30 2.40
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NSE 00:00 | 20 Oct 286.65 2.90
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HIGH

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OPEN 282.00
PREVIOUS CLOSE 283.90
VOLUME 3749
52-Week high 378.65
52-Week low 119.00
P/E 4.57
Mkt Cap.(Rs cr) 776
Buy Price 286.30
Buy Qty 27.00
Sell Price 290.00
Sell Qty 35.00
OPEN 282.00
CLOSE 283.90
VOLUME 3749
52-Week high 378.65
52-Week low 119.00
P/E 4.57
Mkt Cap.(Rs cr) 776
Buy Price 286.30
Buy Qty 27.00
Sell Price 290.00
Sell Qty 35.00

Andhra Sugars Ltd. (ANDHRSUGAR) - Director Report

Company director report

To

The Shareholders

Your Directors have pleasure in presenting this SEVENTY SECOND ANNUAL REPORT along withthe audited Statement of Accounts for the year ending 31st March 2019.

Financial Results:

(Rupees in lakhs)
This Year Last Year
Sales 97436.36 98454.93
Other Income 3742.69 2679.31
101179.05 101134.24
Profit for the year 30375.06 19627.30
Depreciation 4972.53 4863.20
Profit after depreciation 25402.53 14760.60
Add: Income Tax Refund received 3.00 104.96
Short entitlement of MAT Credit - 371.38
Less:
Provision for Current Tax (Includes MAT Utilisation of Rs.1290.20 Lakhs) 8360.00 3885.46
Provision for Deferred Tax 473.52 1425.06
MAT Credit
Profit after Tax 16572.01 9926.42
Add: Balance brought forward from last year 30259.51 24562.30
Profit available for utilisation 46831.52 34492.22
UTILISATION
Equity Dividend 2710.71 2710.71
Tax on Distributed Profits 537.10 522.00
Transfer to General Reserve 15000.00 1000.00
Balance carried forward to next year 28583.71 30259.51

PERFORMANCE:

Your Directors are glad to report that for the year 2018-19 your Company made a Profitof Rs. 254.03 Crores (before tax) against a Profit of Rs. 147.61 Crores made last yearwhich reflect another year of consistent performance. This profit achieved is the highestsince inception. The Net Profit (After Tax) was Rs. 165.72 Crores against Rs. 99.26 Croresmade 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 2018-19. With this Dividend if approved yourCompany would have the distinction of rewarding its Shareholders with 100% Dividend forthe last 3 consecutive years. The outflow towards Dividend payment (including tax ondistributable profits) would be Rs.32.48 Crores.

CAPITAL & RESERVES:

Authorised and Paid Up Capital:

As on 31.3.2019 the Authorised Capital of the Company is Rs.30.00 Crores and thePaid-up Capital is Rs. 27.11 Crores.

The Andhra Sugars Limited

Reserves:

With the transfer of Rs. 150.00 Crores during the year under report the total Reservesas on 31.3.2019 stands at Rs. 593.46 Crores against Rs. 443.46 Crores on 31.3.2018.

REVIEW OF OPERATIONS: SUGAR UNITS:

The Sugar Units II and III crushed in aggregate 769073 M.T. of cane during the2018-19 season against 488589 M.T. crushed by Two Units last year. The crushingoperations and cane price paid to cane suppliers for the 2018-19 Season are:

SUGAR UNIT – II SUGAR UNIT – III
TADUVAI BHIMADOLE
Fin. Year 2018-19 Fin. Year 2017-18 Fin. Year 2018-19 Fin. Year 2017-18
(A) Crushing details:
Total cane crushed (MT) 462325 328578 306748 160011
Total No. of days crushed 148 104 113 49
Total Sugar produced(MT) 47822 35071 30707 15528
Average Recovery 10.34% 10.67% 10.01% 9.70%
(B) Cane price:
Fair & Remunerative price (per M.T.) 2950.00 2820.00 2670.00 2605.00
Cane price paid (per M.T)* 3029.31 3210.33 2928.52 3228.12

• Includes Transport Subsidy.

• Operations of Sugar Unit-I were suspended during the Season 2018-19.

• 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 14880958Units of Power.

PERFORMANCE OF CHEMICAL DIVISION:

During the year under report the performance of Caustic Soda Division at Saggonda wasimpressive. Turnover of Rs.574.59 Crores was achieved the Profit after depreciationachieved this year was higher at Rs. 220.56 Crores against Rs. 191.66 Crores last year.

Aspirin Division has also performed impressively by posing a profit of Rs. 9.73 Croresas against 4.78 Crores.

WIND POWER UNITS:

The Power generated at Ramagiri Wind Mills during this year is Units 1622939.

The Power generation at the Tamil Nadu Wind Mills during the year under report is26295166 Units. This Power is being fed into the Tamil Nadu State Electricity Boardgrid.

PROJECTS:

Your Company has successfully implemented 33 MW Coal Based Captive Generation Plant atSaggonda. Power generated will be utilized by Chemical Plants.

Your Company is operating a 400 TPD Caustic Soda Plant at Saggonda. Keeping in view ofthe increasing requirement of end user industry a 100 TPD Caustic Soda Plant is being setup at Saggonda where the existing 400 TPD Plant is in operation. The proposed 100 TPDPlant is based on the latest 6th Generation Membrane

Technology. This process has the lower production cost simple operations EnergyEfficient & Environmental friendly. Salt and Power constitute two main inputs forproduction of Caustic Soda. As your Company is already in the production of Caustic Sodaprocurement of Salt can be sourced from the existing vendors. Power another major inputcan be availed from the 33 MW Coal based Captive Power Plant in operation. The total costof this Plant is estimated at Rs.80.00 Crores which will be met by Internal Accruals.Necessary application has been made to Pollution Control Board and requisite approval isexpected shortly. With this expansion the total capacity of Caustic Soda Plant would be500 TPD.

Existing 300 TPD Hydrochloric Acid Plant is being expanded to 800 TPD in order toutilize Chlorine emerging from the production Caustic Soda.

Your company is setting up a project at J.N.Pharmacity Parawada Visakhapatnam innon-sez area to manufacture 100 TPD Sodium Hypochlorite. The estimated project cost isabout Rs.10 crores. The important raw materials required are Sodium Hydroxide and Chlorinegas which can be supplied from our Chemicals Division Saggonda.

Sodium Hypochlorite has its applications in Bulk drugs / Pharmaceuticals Finechemicals Water treatment and Sea food industries.

Most of the civil construction works are completed. All the bought-out componentsrequired for this project have already been procured. Fabrication of all the processequipments and main storage tanks are completed.

Fabrication and erection of pipe racks / bridges are also completed.

Erection of process equipment is in progress. It is expected to complete the project bythe end of December 2019.

To meet the International customers' requirement capacity of Aspirin Plant has beenexpanded to 2000 TPA from 1000 TPA.

DEMATERIALISATION OF EQUITY SHARES:

As of 31st March 2019 Equity Shares representing 53.29% 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 2019-20 of Rs.1550000/- which isbeing sought for your approval at the ensuing Annual General Meeting.

COST AUDITORS:

For the year 2018-19 M/s Narasimha Murthy & Co. Cost Accountants Hyderabad werethe Cost Auditors of the Company for the products which are subject to Cost Audit. Forthe year ended 2019-20 your Board of Directors have approved the appointment of M/s.Narasimha Murthy & Co. Hyderabad as Cost Auditors and recommend to Shareholders toratify the remuneration 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 RaoDr. P. Kotaiah and Sri V.S. Raju. Sri A. Ranga Rao is the Chairman of this Committee.

DIRECTORS AND KMP:

Directors Sri Mullapudi Narendranath and Sri P. Achuta Ramayya retire by rotation atthe ensuring 72nd Annual General Meeting and being eligible offer themselves forre-appointment.

Your Directors are happy to inform that Sri Mullapudi Narendranath was Awarded the"LIFE TIME ACHIEVEMENT AWARD" by The Sugar Technologists Association of India& The "SUGAR INDUSTRY EXCELLENCE AWARD" by the South Indian Sugarcane &Sugar Technoloists Association for his Contribution to the Indian Sugar Industry.

Appointment of Independent Directors Sri A. Ranga Rao Dr. P. Kotaiah Sri V. S. RajuDr. A.V. Rama Rao Sri P. A. Chowdary and Dr. D. Manjulata for 2nd term is being placedfor the approval of Shareholders at the ensuing Annual General Meeting.

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

Sri P. Narendranath Chowdary Chairman & Managing Director Sri M. PalachandraCompany Secretary and Sri P.V.S. Viswanadha Kumar General Manager (Finance) & Addl.Secretary 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) 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 2018-19 on 30.05.201828.07.2018 03.11.2018 and 02.02.2019.

INDEPENDENT DIRECTORS MEETING:

A Meeting of Independent Directors was held on 29th May 2019. 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 abreast of the plantoperations and Developments. 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 and Directors interms of :

Measured and appropriate contribution by the Directors to the discussions on the AgendaItems

- 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 and Board'sdeliberations.

- 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 whole and the Directors haveperformed effectively as per the terms of the above parameters. The respective Committeesperformed 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 un-ethical 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 SriP.Narendranath Chowdary Managing Director Sri Mullapudi Thimmaraja Joint ManagingDirector and Sri V.S. Raju Independent Director as members of the Committee. ThisCommittee has formulated a CSR Policy which has been approved by the Board. This Policyenvisages CSR Activities to be taken up amount of expenditure to be incurred andmonitoring of CSR Activities from time to time.

This Policy aims to achieve the CSR objectives by undertaking one or more of theactivities to be in alignment with Schedule VII of the Companies Act 2013 either on ownor through any Trust / Society or any 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 annexed 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 mitigate the Risk

The Major Segments of operations of the Company are Sugar and Chlor Alkali.

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 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 constitutes 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 annexured 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 as providedby Nekkanti SRVV Satyanarayana & Co. Hyderabad Company Secretaries in practice isannexed in 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 31.3.2019 isgiven hereunder.

2018-19 2017-18
(a) Accepted during the year. 346855000 315580000
(b) Remained unpaid or unclaimed as at the end of the year. 4685000 7130000
(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

CONSOLIDATED ACCOUNTS:

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 and Associate Company as approved by their respective Boards.

The Accounts of the Subsidiary Companies for the year 2018-19 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 31.3.2019 your subsidiary Company JOCIL Ltd. posted aprofit of Rs.126.07 lakhs (before taxation) against Rs. 494.86 lakhs (before taxation)last year. Board of Directors of this Company has recommended a Dividend of Re.1/- perShare to Shareholders for the Financial Year 2018-19.

THE ANDHRA FARM CHEMICALS CORPORATION LIMITED:

The Andhra Farm Chemicals Corporation Limited (Subsidiary Company) Posted other incomeof Rs. 60828/- and Loss of Rs. 54/-.

HINDUSTAN ALLIED CHEMICALS LIMITED:

Hindustan Allied Chemicals Limited (Subsidiary Company) Posted other income of Rs.16.00 lacs and Profit of Rs. 11.79 lacs.

THE ANDHRA PETROCHEMICALS LIMITED:

The Andhra Petrochemicals Limited (Associate Company) Posted a turnover of Rs.66858.17 lacs Profit of Rs. 9499.10 lacs and paid Dividend of Rs. 1.50 per Share.

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 2019-20 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
10.08.2019 Chairman Managing Director

.