Your Directors have pleasure in presenting their Eighty Ninth annual report and theaudited financial statements for the year ended March 31 2021.
The summarised financial results of the Company for the year ended March 31 2021 arepresented below:
| ||Year ended March ||Year ended March |
| ||31 2021 ||31 2020 |
|Sales and other income ||6688.20 ||6676.61 |
|Profit/(Loss) before depreciation interest and tax ||195.57 ||408.89 |
|Depreciation and amortisation ||215.16 ||215.87 |
|Profit/(Loss) after depreciation but before interest and tax ||(19.59) ||193.02 |
|Finance costs (Net) ||263.09 ||300.75 |
|Profit/(Loss) before tax ||(282.68) ||(107.73) |
|Provision for taxation (Net) ||(3.08) ||(2.36) |
|Profit/(Loss) after tax ||(279.60) ||(105.37) |
|Opening balance b/f ||(1205.37) ||(1099.18) |
|Disposable surplus after adjustments ||(1484.97) ||(1204.55) |
|Transfer to reserve for molasses storage tank ||0.96 ||0.82 |
|Balance carried to balance sheet ||(1485.93) ||(1205.37) |
On a standalone basis the Company achieved a turnover (including other income) of Rs6688.20 crore for the year ended March 31 2021 as compared to Rs 6676.61 crore in theprevious year. The loss after tax is Rs 279.60 crore as compared to the loss of Rs 105.37crore in the previous year. On a consolidated basis the turnover including other incomeis Rs 6688.56 crore as compared to Rs 6681.32 crore in the previous year. The loss aftertax and minority interest is Rs 290.82 crore as against loss of Rs 49.99 crore in theprevious year.
In view of loss during the year under review your Directors do not recommend anydividend for the current Financial Year. (Previous Year - Nil)
Dividend distribution policy
The Board of Directors at its meeting held on February 13 2017 approved the DividendDistribution Policy containing the requirements mentioned in regulations 43A of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. The policy is annexed as "Annexure I" and forms part of thisReport.
The Company continues to be the leading sugar and ethanol manufacturing Company inIndia with its fourteen sugar plants having an aggregate sugarcane crushing capacity of136000 TCD six distilleries having aggregate capacity to produce Industrial Alcohol of800 kilolitres per day and fourteen co-generation plants having a total power generationcapacity of 449 MW.
Detailed analysis of operations of the Company are given in the Management discussionand analysis report under financial analysis of Operations of the Company.
During the year ended March 31 2021 the Company crushed 15.603 MMT of sugarcane asagainst 15.845 MMT in the previous year. This year sugar recovery was 11.06% as against11.65% in the previous year. During the year 2020-21 the Company has diverted 3.915 MMT (25.09 %) sugarcane for producing B-heavy molasses owing to which sugar recovery was lower.Had there been no diversion sugar recovery for the year would have been 11.47 % ascompared to 11.65 % in previous year. During the year the Company produced 1725981 MTsugar (previous year 1845270 MT) and 532403 MT C - molasses (previous year 712011MT) and 251560 MT B-heavy molasses (previous year Nil).
The Company sold 1852660 MT of sugar and 423397 MT of molasses during the year asagainst 1870362 MT of sugar and 465568 MT of molasses during the previous year.Approximately 64256 MT of sugar production is estimated to have been sacri_ced in favorof ethanol production through B-heavy molasses.
The Industrial Alcohol / Ethanol production was 90903 KL as against 57221 KL in theprevious year. Alcohol / Ethanol sale during the year was at 84262 KL as against 62174KL during the previous year.
The Company's endeavour to produce ethanol from B-heavy molasses route by divertingcane for the same. The Company produced 29335 KL of Ethanol out of B-heavy molassesduring the year.
Ethanol sales during the year produced from B-heavy molasses stood at 24970 KL at anaverage realization of Rs 57593 per KL. Ethanol sales from molasses produced from C-heavyroute stood at 59292 KL at an average realization of Rs 42702 per KL as compared to62174 KL at an average realization of Rs 41641 per KL in previous year. Ethanol salesfrom molasses produced from C-heavy route was lower in the current year as the Companychose to produce and sale Ethanol produced from B-heavy molasses route. Blendedrealisation for total industrial alcohol (including ENA) sales stood at Rs 47115 per KLas compared to Rs 41641 per KL in previous year.
The operations of power generation were smooth at all the fourteen plants. While mostof the power generated by us continued to be used for captive consumption to run ourplants the surplus power was sold to the Uttar Pradesh state grid.
During the year Power generation was at 751.43 Million Units (MUs) as against 780.52MUs in the previous year. The Company exported 186.66 MUs of power as against 217.94 MUsduring the previous year.
Impact of Covid-19
The outbreak of deadly Covid-19 virus and the ensuing lockdown imposed across thecountry affected the business operation. However Indian sugar industry was permitted tocrush cane on the grounds that sugar was categorized as an essential commodity. For theCompany the focus immediately shifted to ensuring the health and well-being of allemployees.
India is currently experiencing a massive second wave of Covid 19 infections. Howeverwe expect no major changes in the economic activity as the nation is preparing to face thepandemic with vaccines and preparedness.
Listing of securities
The Company's equity shares are listed on the BSE Limited and National Stock Exchangeof India Limited. The Annual Listing fees to each of these Stock Exchanges have been paidby the Company.
Subsidiary and Associate Companies
As on March 31 2021 the Company had the following Subsidiaries and Associates all ofthem are presently unlisted: Subsidiaries:
1. Bajaj Aviation Private Limited (BAPL) (Holding 100%).
2. Bajaj Power Generation Private Limited (BPGPL) (Holding 100%).
3. Bajaj Hindusthan (Singapore) Private Limited (BHSPL) (Holding 100%).
4. PT. Batu Bumi Persada Indonesia (step down subsidiary being 99.00%subsidiary of BH(S)PL).
5. PT. Jangkar Prima Indonesia (step down subsidiary being 99.88% subsidiary ofBH(S)PL). Associate:
1. Bajaj Ebiz Private Limited (Holding 49.50%).
Performance and financial positions of subsidiaries and associates
a) Bajaj Aviation Private Limited: During the year ended March 31 2021 Bajaj AviationPrivate Limited continued to provide Air Transport Services through Air Craft Falcon LX 2000. In addition to this the company also leased out its Helicopter - Bell 407to another company providing Air Transportation Services.
b) Bajaj Power Generation Private Limited: No substantial progress could be made asregards proposed 1980 MW (3x660 MW) power project to be set up by the company through itswholly-owned subsidiary Bajaj Power Generation Private Limited (BPGPL) primarily due tonon-execution of water use agreement. While the company continued its all-out efforts toseek confirmation from Uttar Pradesh Power Corporation Limited (UPPCL) to facilitatesupply of water in absence thereof it could not obtain coal linkage from Standing LinkageCommittee. On the other hand the company received a termination notice from UPPCL toterminate Power Purchase Agreement (PPA). The notice was duly contested by the companyleading to litigation in this regard. Consequently pursuant to an order passed by UttarPradesh Electricity Regulatory Commission the PPA stands terminated.
In view of the progress already made during the earlier years BPGPL is exploringvarious alternatives and taking necessary steps for setting up the project.
c) Bajaj Hindusthan (Singapore) Private Limited: BHSPL through its two subsidiaries inIndonesia continued to hold coal mines in Indonesia which are in the process of beingdeveloped.
d) PT. Jangkar Prima (PTJP) Indonesia and PT. Batu Bumi Persada (PTBBP) Indonesia:PTJP and PTBBP are engaged in the business of Mining and Mining services includingconsulting planning implementation and testing of equipment in the field of constructionof mining. These subsidiaries are in the process of development of a coal mine andreceived various clearances in this regard except for the forestry clearance and theclearance for the jetty site for which necessary efforts to expedite the matter withconcerned authorities are being made. Operation of coal mine is expected to start in thenext one year.
e) Bajaj Ebiz Private Limited: Bajaj Ebiz did not carry out any business during theyear.
Pursuant to the provisions of Section 129 of the Companies Act 2013 and Rule 5 of theCompanies (Accounts) Rules 2014 statement containing the salient features of thefinancial statements of its subsidiaries/associate companies in the manner prescribedunder the Companies Act 2013 is given as Annexure to the Consolidated FinancialStatements.
Consolidated Financial Statements
In compliance with Section 129(3) of the Companies Act 2013 and Rules made thereunderIndian Accounting Standard (Ind AS) 110 SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Consolidated Financial Statements form part of thisAnnual Report. Consolidated Financial Statements presented by your Company includefinancial information about its aforesaid subsidiaries and associates. The standalonefinancial statements of BHSL as well as its aforesaid subsidiaries and its associates willbe available on the website of the Company (www.bajajhindusthan.com).
Directors and Key Managerial Personnel
Retirement by rotation
Mr. Amir Singh Yadav (DIN: 08481111) Nominee director of the Company will retire byrotation and being eligible offers himself for reappointment.
Appointment of Mr. Amir Singh Yadav is in compliance with the provisions of Section164(2) of the Companies Act 2013.
Cessation of Director
Mr. Vipulkumar S Modi (DIN: 06985276) Independent Director of the Company ceased as adirector of the Company with effect from January 06 2021. The Board placed on record itsappreciation for the valuable services rendered by the aforesaid directors.
Appointment of Directors and Key Managerial Personnel
Mr. Vinod C Sampat (DIN: 09024617) was appointed as Independent Director of the Companywith effect from January 21 2021. The profile of Mr. Vinod C Sampat is given in theCorporate Governance Report.
Mr. Pradeep Parakh Group President (GRC) and Company Secretary ceased as CompanySecretary of the Company with effect from May 05 2020.
Mr. Kausik Adhikari was appointed as the Company Secretary of the Company with effectfrom May 06 2020. Mr. Adhikari is working with the Company since 2010 and is a qualifiedCompany Secretary and Masters in Commerce. He has more than 15 years of experience inCorporate Secretarial functions. Mr. Adhikari has worked extensively in the areas likeCorporate Governance Compliances and Mergers & Acquisitions. Prior to joining BajajHindusthan Mr. Adhikari has worked with organisations like The Pratappur Sugar andIndustries Limited and Reliance Industries Limited.
Re-appointment of Managing Director
Mr. Ashok Kumar Gupta (DIN: 02608184) Managing director was re-appointed as ManagingDirector of the Company at the 88th Annual General Meeting for a period of Five (5) yearswith effect from April 15 2021 upto April 14 2026.
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of theSecurities and Exchange Board of India (SEBI) (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has carried out an annual performanceevaluation of its own performance the Directors individually as well as the evaluation ofthe working of its Audit Nomination and Remuneration and other Committees. The manner inwhich the evaluation has been carried out has been explained in the Corporate GovernanceReport.
Induction and training of Board members
The process followed by the Company for induction and training to Board members hasbeen explained in the Corporate Governance Report.
Independent Directors' Declaration
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 2013 that he/she meets the criteriaof independence as laid out in sub-section (6) of Section 149 of the Companies Act 2013and Regulation 16(1)(b) of Securities and Exchange Board of India (SEBI) (ListingObligations and Disclosure Requirements) Regulations 2015.
Directors' responsibility statement
Pursuant to the requirement of clause (c) of sub-section (3) of Section 134 of theCompanies Act 2013 your Directors confirm that:
(i) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(ii) the directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and lossof the Company for that year;
(iii) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the directors had prepared the annual accounts on a going concern basis;
(v) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(vi) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Auditors and auditors' report
Auditors and their report
M/s R. S. Dani & Co. Chartered Accountants (Firm Registration No. 000243C) wasappointed as Statutory Auditors of the Company at the 88th Annual General Meeting of theCompany in place of retiring auditors M/s. Chaturvedi & Shah LLP CharteredAccountants (Firm Registration No. 101720W/W100355) to hold office from the conclusion ofthe 88th Annual General Meeting (AGM) until the conclusion of the 93rd AGM of theCompany." The auditors in their report to the members have given qualificationobservation emphasis of matter and key audit matters and the explanation/comments of yourdirectors with respect to it are as follows:
1. Explanation to 3rd para of the Audit report regarding Qualified opinion
As per the Master Framework Agreement (MFA) executed between the Company and Lenders onDecember 16 2017 pursuant to the S4A Scheme the Company is regularly servicing thecoupon rate attached to the Optionally Convertible Debentures (OCDs). The differencebetween weighted average interest and coupon rate being Yield to Maturity (YTM) thoughaccruing on annual basis from the date of allotment is payable as redemption premium in aphased manner in 13 equal instalments commencing from the Financial Year 2024-25. Themanagement is of the view that such YTM as redemption premium is payable only in the eventof redemption of OCDs and not upon the conversion of the OCDs into the equity shares ofthe Company based on the right of conversion as may be exercised by the holders from timeto time. Accordingly the Management considers such YTM as a contingent liability and hasnot provided the premium in the books of the Company.
2. Explanation to para no. 4 of the Audit report regarding Material Uncertaintyrelated to Going Concern
Management expects to generate positive cash flow from operation this year based onimprovement in sugar recovery percentage and also expects further improvement in theoperational efficiencies in other parameters based on various corrective measures taken bythe Company including the restructuring of debts as stated in the said note and theCompany expects to receive Benefits under the Sugar Promotion Policy 2004.
The Company has also taken steps and exploring the possibilities of monetising itsnon-core assets like investments in Lalitpur Power Generation Company. Operationalperformance of the Company is getting better year on year and matching with the industry.
Accordingly the Management is of the view that going concern of the accounting isappropriate.
3. Comments to para 5.
a) of the Audit report regarding Emphasis of Matter
As per the debt restructuring schemes obligation was casted on the Company andpromoters to recover the outstanding loans in phased manner. The Company also has takensteps for sale of non-core assets by way of sale of investments in Lalitpur PowerGeneration Company Limited.
4. Comments to para 5.
b) of the Audit report regarding Emphasis of Matter
So far there has not been any material impact of the pandemic and resultant lockdown onthe performance of the Company. During lockdown the operations of sugar mill wereclassified as essential activities and were kept out of lockdown. Hence the Companyfinished its sugarcane crushing season 2019-20 as a normal like any other earlierseasons. As per the assessment made the management is of the view that the Company willnot be impacted adversely. Now the Government is relaxing the lockdown in phased mannerconsequently the commercial activities are returning to normal.
5. Comments on Key audit matters of the Audit report regarding Impairmentassessment for Investments loans and interest on loan related party companies
Please refer the comments on Sr. 3 above regarding recovery of outstanding loans andsale of investment and accordingly no impairment have been identified by the managementbased on above assessment.
6. Comments on Key audit matters of the Audit report regarding physicalverification of inventory
Due to outbreak of pandemic COVID-19 and resultant national lockdown the auditorscould not visit the plants for physical verification of closing inventory. But themanagement facilitated the auditors with all the practical options like video conferencingwith the plants and providing live view of the Godowns and storages sharing all theofficial documents like manufacturing/despatch reports various returns which aresubmitted to tax and other authorities back tracing method etc. and provided all thealternative methods to develop a reasonable comfort on the point as per the guidelineslaid by the Institute of Chartered Accountants of India.
Statement on Impact of Audit Qualifications for Audit Report with Modified Opinion
Pursuant to Regulation 34(2)(a) statements on Impact of Audit Qualifications asstipulated in Regulation 33(3)(d) for Modified Opinions on standalone and consolidatedfinancial statements are attached as Annexure "IX" and "X" and formspart of this report.
Cost auditors and their report
Pursuant to Section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee appointed M/s. B.J.D. Nanabhoy & Co. CostAccountants Mumbai (Firm Registration No. 000011) as the Cost Auditors of the Company forfinancial year 2021-22 and has recommended their remuneration to the shareholders forratification at the ensuing Annual General Meeting. The Cost Audit Reports for thefinancial year ended March 31 2020 for the products Sugar Industrial Alcohol andElectricity was filed with the Ministry of Corporate Affairs on November 29 2020.
Secretarial auditor's reports
Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and Regulation 24A of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 M/s. Anant B Khamankar & Co. Company Secretaries were appointed as SecretarialAuditor of the Company. The Secretarial Audit Report and Annual Secretarial ComplianceReport are annexed as "Annexure II and Annexure III" and forms part of thisreport. The report does not contain any qualification reservation or adverse remark ordisclaimer.
The Company has not accepted deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposits)Rules 2014. Deposits unclaimed at the end of the year was Nil.
Particulars of loans guarantees or investments
Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in "Annexure IV" and forms part of thisreport.
The Company constituted Audit Committee as required under Section 177 of the CompaniesAct 2013 and Regulation 18 of Securities and Exchange Board of India (SEBI) (ListingObligations and Disclosure Requirements) Regulations 2015. Composition of Audit Committeeis given in Corporate Governance Report. There is no such instance during the year underreview where the Board had not accepted any recommendation of Audit of the AuditCommittee.
Related party transactions
The details of transactions entered into with the Related Parties are enclosed in Formno. AOC 2 is annexed herewith as "Annexure V" and forms part of this report.
Internal financial control
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of business including adherence to Company's policies the safeguardingof its assets the prevention and detection of fraud and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialdisclosures. The Company has in place adequate internal financial controls with referenceto financial statements. During the year such controls were tested and no reportablematerial weaknesses in the design or operation were observed.
Extract of Annual Return
Copy of the Annual Return as per Section 92(3) of the Companies Act 2013 is placed onthe website of the company at www.bajajhindusthan.com
Corporate Social Responsibility
As required under Section 135 of the Companies Act 2013 the Company has constituted aCorporate Social Responsibility (CSR) Committee. As per recommendation of the CSRCommittee the Board at its meeting held on September 25 2014 approved the CSR Policy ofthe Company. Report on CSR Activities/Initiatives is enclosed as "Annexure VI"and forms part of this report.
Policy for determining material subsidiary
During the year ended March 31 2021 the Company does not have any materiallisted/unlisted subsidiary companies as defined in Regulation 16 (c) of Securities andExchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements)Regulations 2015. The Company has framed a policy for determining "materialsubsidiary" and the same is available on the Company's website atwww.bajajhindusthan.com/investorcorner-policies.php
Policy on remuneration and other aspects of directors and KMP
The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy on directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of director and appointment ofDirectors Key Managerial Personnel and Senior Management and their remuneration. Thedetailed remuneration policy is placed on the Company's website atwww.bajajhindusthan.com/investorcorner-policies. php
Vigil mechanism/Whistle blower policy
The Company has formulated a Vigil Mechanism/Whistle Blower Policy in accordance withSection 177(9) of the Companies Act 2013 and Regulation 22 of Securities and ExchangeBoard of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations 2015.The details of the Vigil Mechanism/Whistle Blower Policy are provided in the CorporateGovernance Report and also posted on the website of the Company atwww.bajajhindusthan.com/ investorcorner-policies.php
The Company has a Risk Management Policy to identify evaluate business risks andopportunities. This framework seeks to create transparency minimise adverse impact on thebusiness objectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting. The framework has different risk models which helpin identifying risks trend exposure and potential impact analysis at a Company level asalso separately for business. The detailed remuneration policy is placed on the Company'swebsite at www.bajajhindusthan.com/investorcorner-policies.php The Board of Directors hadconstituted Risk Management Committee to identify elements of risk in different areas ofoperations and to develop policy for actions associated to mitigate the risks.
Related party transaction policy
Policy on dealing with Related Party Transactions as approved by the Board is uploadedon the Company's website at www.bajajhindusthan.com/investorcorner-policies.php
Corporate Social Responsibility (CSR) policy
Contents of Corporate Social Responsibility Policy in the Board's report are given inthe Report on CSR Activities in "Annexure VI" and on the Company's website atwww.bajajhindusthan.com/investorcorner-policies.php
Anti-sexual harassment policy
The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. An Internal committee has been set up to redress the complaints received regardingsexual harassment at workplace. All employees including trainees are covered under thispolicy.
The following is the summary of sexual harassment complaints received and disposed ofduring the current financial year. Number of Complaints received: Nil Number of Complaintsdisposed of: Nil
Compliance with secretarial standards
The Company has complied with the secretarial standards issued by the Institute ofCompany Secretaries of India on Board Meetings and Annual General Meetings.
Significant and material orders passed by the regulators or courts or tribunals
There have been no significant and material orders passed by the courts or regulatorsor tribunals impacting the going concern status and Company's operations. Howevermember's attention is drawn to the statements on contingent liabilities and commitments inthe notes forming part of the financial statements.
Particulars of employees and related disclosures
As required under the provision of Section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014in respect of employees of the Company are set out in "Annexure VII" and formspart of this report.
Transfer of unclaimed dividend and unclaimed shares to investor education andprotection fund
The details of Unclaimed Dividend and Unclaimed Shares forms part of the CorporateGovernance Report.
Conservation of energy technology absorption and foreign exchange earnings and outgo
The relevant particulars regarding the above are given in "Annexure VIII" andforms part of this report.
The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the Listing Regulations. A separate section on corporategovernance practices followed by the Company together with a certificate from theAuditors confirming compliance is annexed and forms part of this Report.
Management Discussion and Analysis and Business Responsibility Report
As per Regulation 34 of the Securities and Exchange Board of India (SEBI) (ListingObligations and Disclosure Requirements) Regulations 2015 Management Discussion andAnalysis Report and Business Responsibility Report are prescribed in separate Sectionsforming part of this Annual Report.
Industrial relations have been cordial at all the plants of the Company. The Directorsexpress their appreciation for the sincere co-operation and assistance of Central andState Government authorities bankers customers and suppliers and business associates.Your Directors also wish to place on record their deep sense of appreciation for thecommitted services by your Company's employees. Your Directors acknowledge with gratitudethe encouragement and support extended by our valued shareholders.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Kushagra Bajaj |
|Mumbai ||Chairman |
|June 08 2021 ||(DIN: 00017575) |