Your Directors present herewith the 5th Annual Report on the business & operationsof the Company along with the Audited Financial Statements for the financial year ended31st March 2019.
1. Financial Results
(Rs. in lacs)
|Particulars || |
Year ended 31st March 2019
Year ended 31st March 2018
|Revenue from Operations (Gross) || ||213016.59 || ||236844.35 |
|Profit before Finance Costs Tax Depreciation and Amortization || ||29494.09 || ||27298.40 |
|Less: Depreciation & Amortization Expenses ||4365.24 || ||4446.35 || |
|Finance Costs ||9692.21 ||14057.45 ||11427.95 ||15874.30 |
|Profit/(Loss) Before Tax || ||15436.64 || ||11424.17 |
|Less: Provision for Tax: || ||3449.24 || ||2607.78 |
|Profit/(Loss) After Tax || ||11987.40 || ||8816.39 |
2. Operating Performance
During the year under review your Company continued to registered top line growthdespite depressed market sentiments in first half of the fiscal and a fall in sugar priceseven after putting in place the quota sales system as well as MSP (minimum sale price)concept by the Govt. prima-facie due to over production and aggressive sales. A detailedanalysis of the Company's operations future expectations and business environment hasbeen given in the Management Discussion & Analysis Report which is made an integralpart of this Report and marked as "Annexure A".
3. Financial Performance 2018-19
The Company recorded Total Revenue of Rs. 213368.26 lacs (including other incomeaggregating to Rs. 351.67 lacs) during the financial year ended 31st March 2019. TheRevenue from Operations (Gross) of the Company for the year 2018-19 stood at Rs.213016.59 lacs. The Profit before Finance Costs Tax Depreciation and Amortisation forthe year under review stood at Rs. 29494.09 lacs representing 13.82 % of the totalrevenue.
There is no change in the nature of business of the Company. There were no significantor material orders passed by regulators courts or tribunals impacting the Company'soperation in future.
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year i.e. 31st March 2019 anddate of this report.
Your Company had adopted a dividend distribution policy that balances the dualobjectives of appropriately rewarding Members through dividends and retaining capital inorder to maintain a healthy capital adequacy ratio to support long term growth of yourCompany. There has been no change in this policy during the year under review. his policyis also available on the website of the Company www.birla-sugar.com
The Company does not intend to carry any amount to Reserves.
Consistent with this policy your Board has recommended a dividend on 8.5 %Non-convertible Cumulative Redeemable Preference Shares for the financial year 2018-19aggregating to Rs. 206.98 lacs ; and dividend of Rs. 3/- on Equity Shares (30 %) for thefinancial year 2018-19 to the Members of your Company. The proposal is subject to theapproval of the Members at the 5th Annual General Meeting (AGM) of your Company scheduledto be held on September 2 2019. The dividend together with the dividend distribution taxwill entail a cash outflow of Rs. 611.55 lacs (previous year Rs. 619.73 lacs).
5. Public Deposits
During the year the Company has not accepted any deposits from the public underChapter V of the Companies Act 2013. There was no public deposit outstanding as at thebeginning and end of the financial year 2018-19.
6. Share Capital
The Authorized Share Capital of the Company stood at Rs.1700500000/-(Rupees Onehundred seventy crore and five lacs) divided into 56050000 (Five crore sixty lacs fiftythousand) Equity Shares of Rs. 10/- (Rupees ten) each; 80000000 (Eight crore)Preference Shares of Rs.10/- and 3400000 (Thirty-four lacs) Preference Shares ofRs.100/- each and there is no change in the authorised capital.
Your Company has not issued any shares/securities during the Financial Year 2018-19.
7. Redemption of Preference Shares
During the year under review your Company had redeemed 24350000 8.5%Non-convertible Cumulative Redeemable Preference Shares of Rs.10/- each (NCCRPS) to thePreference Shareholders along with the accrued dividend on 1st March 2019. Accordinglythe paid up share capital post partial redemption of 8.5% NCCRPS stood at Rs.343592100/.
8. Subsidiary Associate and Joint Venture
The Company does not have any subsidiary company or any associate company or any jointventure with any person. However the Company has in place a policy for determiningmaterial subsidiaries in line with the requirement of SEBI (LODR) Regulations 2015 asamended from time to time. The said Policy is being disclosed on the Company's website atthe weblink www.birla-sugar.com .
9. Credit Rating
CARE Ratings Limited - a Credit Rating Agency vide its letter dated 30 March 2019 hasrevised the Credit Rating of the Company to "BBB+" with respect to long-termbank facilities whereas short-term bank facilities rating was revised at "A2".
10. Human Resources
The Company continued to create a productive learning and caring environment byimplementing robust and comprehensive HR processes fair transparent performanceevaluation and taking new initiatives to further align its Human Resource policies to meetthe growing needs of its business.
The Board of Directors comprises of seven Non-Executive Directors having experience invaried fields and a Whole time Director. Out of seven Non-Executive Directors five ofthem are Independent Directors and other two directors are Promoter Directors. Mrs NandiniNopany is the Chairperson of the Company whereas Mr Chandra Shekhar Nopany isCo-Chairperson of the Company. During the year Mrs Kausalaya Madhavan was appointedw.e.f. 11th February 2019 as an Additional Director in the category of IndependentDirector and who shall hold office upto the date of ensuing 5th Annual General Meeting.The Company has received notice in writing from a member proposing her candidature. TheBoard recommends to the shareholders for her appointment as an Independent Director for aperiod of three consecutive years. Mr Sunil Kanoria an Independent Director has resignedfrom the directorship of the Company vide his letter dated March 27 2019. The Boardrecords its appreciation for his unstinted support and counselling towards development ofthe Company while being in the office of Director.
Mrs. Nandini Nopany will retire by rotation at the ensuing Annual General Meeting andbeing eligible has offered herself for re-appointment as Director of the Company.
The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that they meet the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 read with Regulation 25 of SEBI(LODR) Regulations 2015.
Other information on the Directors including required particulars of Director retiringby rotation is provided in the Notice convening the Annual General Meeting.
In pursuance of the provisions of the Companies Act 2013 and according to Regulation25(3) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 the Performance Evaluation Criteria has been laid downfor effective evaluation of performance of the Board of Directors the Committees thereofand individual Directors including the Chairperson of the Company. After detaileddiscussion at Board level as well as taking input from each Director Nomination andRemuneration Committee finalized the format / questionnaires containing various parametersto evaluate the performance of Board and its committee(s) Individual Directors andChairperson of the Company. The performance evaluation parameters are based on their rolesand responsibilities contribution to the Company's goals decision making process flowof information and various other aspects. The evaluation of performance of the Board as awhole Committees of the Board Individual Directors including the Chairperson of theCompany was carried out for the Financial Year 2018-19. Nomination and RemunerationCommittee evaluated the performance of the individual Director.
The Independent Directors in their separate meeting held on 15th March 2019 carriedout the evaluation of the Board of Directors as a whole Chairperson of the Company andNon-Independent Directors. The evaluation of Independent Directors was carried out withoutthe presence of concerned Director.
The Chairman of Nomination and Remuneration Committee has submitted report of therespective evaluations to the Chairperson of the Company. Based on the questionnairesreceived from the Directors and considering the reports of Chairman of Nomination andRemuneration Committee the Board has evaluated its own performance and that of itscommittees and individual directors including independent directors.
12. Key Managerial Personnel
The Board of Directors of the Company at its meeting held on 30th March 2017 hadappointed following persons as Key Managerial Personnel of the Company viz:
a. Mr. Devendra Kumar Sharma Whole time Director
b. Mr. Dilip Patodia Chief Financial Officer
c. Mr. Anand Sharma Company Secretary
During the year under review there was no change in the Key Managerial Personnel.
All Directors Key Managerial Personnel and Senior Management of the Company haveconfirmed compliance with the Code of Conduct applicable to Directors & employees ofthe Company and a declaration to the said effect by the Whole-time Director is made partof Corporate Governance Report which forms part of this report. There has been no changein this policy during the year under review. The Code is available on the Company'swebsite at the weblink http://birla-sugar.com/Assets/Avadh/Avadh-Sugar-Code-of-Conduct.pdf. All Directors have confirmed compliance with the provisions of Section 164 of theCompanies Act 2013.
13. Familiarisation Programme
Periodic presentations are made at the Board Meetings on business performance updates& business strategy of the Company. The details of the familiarisation programme(other than through meeting of Board and its Committees) imparted to Independent Directorare uploaded on the website of the Company and available at the weblink-http://www.birla-sugar.com/Assets/Avadh/ASEL-Famiiarisation-Programme.pdf .
14. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act 2013 and ListingRegulations the Company has formulated a Remuneration Policy. There has been no change inthis policy during the year under review and a copy of the said Policy is available at thewebsite of the Company at the weblinkhttp://www.birla-sugar.com/Assets/Avadh/ASEL-Nomination-and-Remuneration-Policy.pdf .
The Remuneration Policy inter-alia includes the appointment criterion &qualification requirements process for appointment & removal retirement policy andremuneration structure & components etc. of the Directors Key Managerial Personnel(KMP) and other senior management personnel of the Company. As per the RemunerationPolicy a person proposed to be appointed as Director KMP or other senior managementpersonnel should be a person of integrity with high level of ethical standards. In case ofappointment as an independent director the person should fulfil the criteria ofindependence prescribed under the Companies Act 2013 rules framed thereunder and theListing Regulations. The Remuneration Policy also contains provisions about the payment offixed & variable components of remuneration to the Whole-time Director and payment ofsitting fee & commission to the non-executive directors.
15. Corporate Social Responsibility Policy
Your Company believes in long term strategy to contribute to the well-being anddevelopment of the society especially the rural population around its plants at HargaonHata Rosa & Seohara . As part of its CSR initiatives the Company is working mainlyin the areas of imparting School Education Technical & Vocational Education RuralDevelopment Community Healthcare etc. This multi-pronged CSR approach is showing notableimprovement in the quality of life of rural population. The Company continues to spend tosupport local initiatives to improve infrastructure as well as support in other corporatesocial responsibilities. The CSR Policy as approved by the Board is available on Company'sweblink http://birla-sugar . com/Assets/Avadh/Avadh-Sugar-CSR-Policy.pdf. There has beenno change in this policy during the year under review.
The composition and terms of reference of Corporate Social Responsibility Committee aregiven in the Corporate Governance Report. The Annual Report on CSR activities (includingthe details of the development and implementation of the Corporate Social ResponsibilityPolicy) as prescribed under Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility Policy) Rules 2014 is attached as "Annexure J"to this Report.
For the purpose of Section 135 of the Companies Act 2013 the amount equivalent to 2%of the average net profits of the Company made during the immediately preceding threefinancial years works out to Rs. 251.19 lacs. As against this the Company had spent Rs.250.13 lacs on CSR projects / programs during the Financial Year 2018-19.
A calendar of Meetings is prepared and circulated in advance to the Directors. TheBoard evaluates all the decisions on a collective consensus basis amongst the Directors.The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013. During the financial year ended 31st March 2019 6 (six) Meetings ofthe Board of Directors of the Company were held. The details of the Board Meetings heldduring the financial year 2018-19 have been furnished in the Corporate Governance Reportforming a part of this Annual Report.
The Company has complied with the applicable Secretarial Standards prescribed underSection 118(10) of the Companies Act 2013.
17. Audit Committee
The Audit Committee was constituted on March 14 2017. The Committee now comprises ofMr. Anand Ashvin Dalal Mr. Pradip Kumar Bishnoi Mr. Kalpataru Tripathy Mrs. KausalyaMadhavan and Mr. Devendra Kumar Sharma. The Company Secretary acts as the Secretary to theCommittee and the Chief Financial Officer is a permanent invitee to the meetings. Duringthe year there were no instances where Board has not accepted the recommendation of AuditCommittee.
The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report.
18. Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee was constituted on March 14 2017. TheCommittee now comprises of Mr. Gaurav Swarup Mr. Anand Ashvin Dalal Mr. Pradeep KumarBishnoi and Mr. Devendra Kumar Sharma. The Company Secretary acts as the Secretary to theCommittee. The details of the terms of reference number and dates of meetings heldattendance of the Directors and remuneration paid to them are separately provided in theCorporate Governance Report.
19. Nomination and Remuneration Committee
The Nomination and Remuneration Committee was constituted on March 14 2017. TheCommittee now comprises of Mr. Gaurav Swarup Mr. Anand Ashvin Dalal Mr. KalpataruTripathy and Mrs. Kausalya Madhavan. The Company Secretary acts as the Secretary to theCommittee. The details of the terms of reference number and dates of meetings heldattendance of the Directors and remuneration paid to them are separately provided in theCorporate Governance Report.
20. Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee was constituted on March 14 2017. TheCommittee now comprises of Mrs Nandini Nopany Mr. Pradip Kumar Bishnoi and Mr. DevendraKumar Sharma. The Company Secretary acts as the Secretary to the Committee. The details ofthe terms of reference number and dates of meetings held attendance of the Directors andremuneration paid to them are separately provided in the Corporate Governance Report.
21. Finance & Corporate Affairs Committee
The Finance & Corporate Affairs Committee was constituted on March 14 2017 and theCommittee now comprises of Mrs. Nandini Nopany Mr. Chandra Shekhar Nopany Mr. GauravSwarup and Mr. Devendra Kumar Sharma. The details of the terms of reference number anddates of meetings held attendance of the Directors and remuneration paid to them areseparately provided in the Corporate Governance Report.
22. Internal Complaints Committee
An Internal Complaints Committee was constituted by the Company in terms of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. TheAct aims at protecting women's right to gender equality life and liberty at workplace toencourage women participation at work. The Committee meets all the criteria including itscomposition mentioned in the Act and relevant Rules. No complaint has been received by theCommittee during the year under review.
23. Loans Guarantee and Investments
It is the Company's policy not to give any loans directly or indirectly to any person(other than to employees under contractual obligations) or to other body corporate orperson. In compliance with Section 186 of the Companies Act 2013 loans to employees bearapplicable interest rates. During the year under review the Company has not made anyinvestment in securities of other body corporate. The details of Investments Loans andGuarantees covered under the provisions of Section 186 of the Companies Act 2013 aregiven in the notes to the Financial Statements.
24. Related Party Contracts / Arrangements
All Related Party Transactions entered during the year were on arm's length basis andin the ordinary course of business. There have been no materially-significant relatedparty transactions made by the Company with the Promoters the Directors or the KeyManagerial Personnel which may be in conflict with the interests of the Company at large.Accordingly disclosure of contracts or arrangements with Related Parties as requiredunder Section 134(3)(h) of the Companies Act 2013 in Form AOC-2 is not applicable.
The Policy on Related Party Transactions as approved by the Board can be accessed onthe Company's website at following web-linkhttp://www.birla-sugar.com/Assets/Avadh/Avadh-Sugar-Related-Party-Transaction-Policy-.pdf. The Policy on Related Part Transactions was aligned with the changes recommended by theMCA/SEBI in this regard.
The details of related party transactions are set out in the notes to the financialstatements.
25. Risk Management
In line with the regulatory requirements the Company has formally framed RiskManagement Policy to identify and assess the key risk areas monitor and report thecompliance and effectiveness of the same. A Risk Management Committee though notmandatory has been constituted voluntarily comprising of an Independent Director Wholetime Director Chief Financial Officer and the Group President to oversee the riskmanagement process in the Company with an objective to review the major risks which effectthe Company from both the external and the internal environment perspective. Appropriateactions have been initiated to either mitigate partially mitigate transfer or accept therisk (if need be) and monitor the risks on a regular basis. The details of the terms ofreference number and date of meeting attendance of director and remuneration paid tothem are separately provided in the Corporate Governance Report.
26. Internal Financial Controls
The Company has laid down internal financial control's through a combination of Entitylevel controls Process level controls and IT General controls inter-alia to ensureorderly and efficient conduct of business including adherence to the Company's policiesand procedures accuracy and completeness of accounting records and timely preparation andreporting of reliable financial statements/information safeguarding of assets preventionand detection of frauds and errors. The evaluations of these internal financial controlswere done through the internal audit process and were also reviewed by the StatutoryAuditors. The Directors confirm that for the preparation of financial statements for thefinancial year ended March 312019 the applicable Accounting Standards have been followedand the internal financial controls are generally found to be adequate and were operatingeffectively & that no significant deficiencies were noticed.
27. Whistle Blower / Vigil Mechanism
The Company has established a vigil mechanism and adopted whistle blower policypursuant to which whistle blowers can report concerns about unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct policy. During the yearunder review there has been change in this policy with respect to leak or suspected leakof Unpublished Price Sensitive Information has been incorporated so that whistle blowerscan report concerns. The mechanism provides adequate safeguards against victimisation ofpersons who use this mechanism. The brief detail about this mechanism may be accessed onthe Company's website at the weblink http://www .birla-sugar.com/Assets/Avadh/Avadh-Sugar-Whistle-Blower-Policy.pdf.
During the year the auditors the secretarial auditors and cost auditors have notreported any fraud under Section 143(12) of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014.
28. Corporate Governance & Annual Return
Your Directors strive to maintain highest standards of Corporate Governance. TheCorporate Governance Report for the Financial Year 2018-19 is attached as "AnnexureB" to this Report. The declaration of the Whole-time Director confirming compliancewith the 'Code of Conduct' of the Company is enclosed as "Annexure C" to thisReport and Auditor's Certificate confirming compliance with the conditions of CorporateGovernance is enclosed as "Annexure D" to this Report
The extract of the Annual Return of the Company is attached as "Annexure E"to this Report.
29. Research & Development
During the year under review the Company has undertaken Research & Developmentinitiatives with an intention to improve the sugar recovery ratio and to educate the canegrowers to cultivate improved variety of sugarcane and to otherwise increase the sucrosecontents in their produce.
30. Auditors Audit Qualifications and Board's Explanations Statutory Auditors
At the 3rd Annual General Meeting (AGM) of your Company held on 31st July 2017 MessrsB S R & Co LLP Chartered Accountants having Firm Registration No. 101248W/W-100022were appointed as Statutory Auditors of your Company to hold office for a term of 5 (five)years from the conclusion of the 3rd AGM (subject to ratification of such appointment bythe Members at every AGM) till the conclusion of the 8th AGM of your Company. Howeversince the first provision to Sec 139(1) has been omitted by the Companies Amendment Act2017 with effect from 7th May 2018 the ratification of such appointment at every AGM isnot required. Accordingly Messrs B S R & Co LLP Chartered Accountants shallcontinue as Statutory Auditors of your Company till the conclusion of the 8th AGM of yourCompany.
The Notes to the Financial Statements read with the Auditor's Reports areself-explanatory and therefore do not call for further comments or explanations. Therehas been no qualification reservation adverse remark or disclaimer in the Auditor'sReports.
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its Sugar activity is required to be audited. Your Directors have on therecommendation of the Audit Committee appointed Mr Somnath Mukherjee Cost Accountant asthe Cost Auditor to audit the cost accounts of the Company for the financial year 2019-20.As required under the Companies Act 2013 the remuneration payable to the cost auditor isrequired to be placed before the Members in a general meeting for their ratification.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hadappointed Messrs Vinod Kothari & Co. Practising Company Secretaries to undertake theSecretarial Audit of the Company for the financial year 2018-19. The Secretarial AuditReport is annexed herewith as "Annexure F" and which is self-explanatory.
There has been no qualification reservation observation disclaimer or adverse remarkin the Secretarial Audit Report.
31. Investor Education and Protection Fund
The provisions pertaining to Investor Education and Protection Fund (Uploading ofInformation regarding unpaid and unclaimed amounts lying with Companies) Rules 2012 theCompany are not applicable to your company.
32. Energy Conservation Technology Absorption and Foreign Exchange Earnings &Outgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as"Annexure G".
33. Particulars of Employees
The human resource is an important asset which has played pivotal role in theperformance and growth of the Company over the years. Your Company maintains very healthywork environment and the employees are motivated to contribute their best in the workingof the Company. The information required to be disclosed in pursuance of Section 197 ofthe Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is annexed as "Annexure H" to this Reportand forms an integral part of this Report.
34. Directors' Responsibility Statement
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for the year ended March312019 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. that such accounting policies as mentioned in Note 3 of the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 312019 and of the profit of the Company for theyear ended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
35. CEO/CFO Certification
Mr. Devendra Kumar Sharma the Whole time Director and Mr. Dilip Patodia ChiefFinancial Officer have submitted certificates to the Board as contemplated underRegulation 17(8) of the SEBI (LODR) Regulations 2015.
Your Directors take this opportunity of recording their appreciation of theshareholders financial institutions bankers suppliers and cane growers for extendingtheir support to the Company. Your Directors are also grateful to various ministries inthe Central Government and State Government of Uttar Pradesh the Sugar Directorate andthe Sugar Development Fund for their continued support to the Company. The Board ofDirectors also convey its sincere appreciation of the commitment and dedication of theemployees at all levels.
For and on behalf of the Board
Place: Kolkata Chandra Shekhar Nopany
Dated: 13th May 2019 Co-Chairperson