Your Board of Directors are pleased to present the 30th Annual Report on the operationsof your Company and the Audited Statement of accounts for the year ended 31st March 2017.
Rs. In Crores
|Particulars ||Year Ended 31.03.2017 ||Year Ended 31.03.2016 |
|Total Revenue ||539.87 ||382.78 |
|Profit before Interest || || |
|Depreciation and Tax ||80.16 ||46.38 |
|Interest and Finance Charges ||72.83 ||65.97 |
|Cash Profit / (Loss) ||7.33 ||(19.59) |
|Depreciation ||22.88 ||23.00 |
|Profit/(Loss) before Tax ||(15.55) ||(42.59) |
|Deferred Tax-Asset/(Liability)/ || || |
|MAT Reversal ||(1.87) ||30.60 |
|Profit/(Loss) After Tax ||(17.42) ||(11.99) |
|Dividend proposed ||- ||- |
|Dividend Tax ||- ||- |
|Transfer to General Reserve ||- ||- |
|Profit/(Loss) Brought forward from || || |
|last year ||117.45 ||129.44 |
|Profit/(Loss) carried forward to || || |
|Balance Sheet ||100.03 ||117.45 |
Your Company has adopted the new Indian Accounting Standard w.e.f.01.04.2016 inaccordance with Companies (Indian Accounting Standards) Rules 2015 as amended by IndianAccounting Standards- Amendment Rules 2016. The financial statements have been prepared tobe in compliance with these new standards. As per instructions the comparative gures forthe previous year also have been recast to be in accordance with the new standards.Complete and detailed explanation has been given for the changes that have becomenecessary in the presentation of the gures. The new accounting standards enable theCompany to present its state of affairs finances net worth etc. in a more realisticmanner.
Financial Performance: During the year under review the total Gross income was Rs.539.87 crores as against Rs.382.78 crores in the previous year. The Gross Profit hasincreased to Rs. 80.16 crores as against Rs 46.38 crores in the previous year. Afterconsidering interest the cash Profit works out to Rs.7.33 crores as against the cash lossof Rs.19.59 crores in the previous year.
However after depreciation and Tax the nal gure for this year comes to loss of Rs.17.42crores as against the loss of Rs 11.99 crores in the previous year.
During the year the paid up capital of the Company has gone up from Rs.2938.98 Lakhsto Rs.3320.00 Lakhs due to the allotment of 3810154 equity shares to Corporate Promoter onpreferential basis as advised by consortium bank.
Sugar: During the year under review the Company has crushed 13.49 lakh tonnes of caneas against 10.51 lakh tonnes of cane in the previous year. Consequently the total sugarproduction was 11.66 lakh qtls as against 9.24 lakh qtls in the previous year. The totalsugar sold was 11.88 lakh qtls as against 10.85 Lakh qtls in the previous year. Theaverage free sale sugar realization for the year ended was Rs.3444/- qtl as against theaverage realization of Rs.2413/- in the previous year.
Power: During the year the Company had not used coal for generation of power at UnitIII.Therefore the total power generation has decreased to 1086.24 lakh units from 1179.26lakh units in the previous year. The export of the power to the TNEB grid has alsodecreased to 600.68 lakh units from 783.20 lakh units in the previous year. IndustrialAlcohol: During the year under review the production of industrial Alcohol was 162.98lakh litres as against 159.92 lakh litres in the previous year. The total alcohol sold was164.78 lakh litres as against 152.98 lakh litres in the previous year. The averagerealization has improved to Rs. 44.06 per litre as against Rs.37.60 per litre in theprevious year.
No amount is proposed to be transferred to General Reserves account on account oflosses.
Due to absence of Profits in the current year the Board of Directors is unable torecommend any dividend for the year 2016-17.
EXTRACT OF ANNUAL RETURN
Extract of the Annual Return in form MGT-9 is attached herewith as Annexure I.
During the year 2016-17 four Board Meetings were held on 26.05.2016 12.08.201604.11.2016 11.02.2017. Details of Attendance of each director furnished in the report onCorporate Governance in page No.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr T Pitchandi and Dr K N Sivasubramanian Directors were treated as having relinquishedtheir of ce of Director with effect from 26.05.2016 & 12.08.2016 respectively due tooperation of Section 167(1) (b) of the Companies Act 2013.
Mr R K Viswanathan and Dr V R S Sampath were appointed as Additional Directors. Theirnames are proposed for appointment as Independent Directors in this Annual GeneralMeeting.
Mr A Sennimalai (DIN 00062791) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. Mr M Ramalingam ManagingDirector had completed the tenure of 5 years as Managing Director on 31.03.2017. Board hasdecided to reappoint him for a further period of 5 years from 01.04.2017 to 31.03.2022.Special Resolution seeking the approval of Shareholders is proposed in the Annual GeneralMeeting.
DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the directors state that: i) Inthe preparation of the annual accounts the applicable accounting standards have beenfollowed. ii) The directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the Profit or loss of the Company for the year under review. iii)The directors have taken proper and suf cient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. iv)The directors have prepared the annual accounts on a going concern basis. v) The directorshad laid down internal financial controls to be followed by the company and that suchinternal financial controls are adequate and were operating effectively. vi) The directorshad devised proper systems to ensure compliance with the provisions of all applicable lawsand that such systems were adequate and operating effectively.
DECLARATION OF INDEPENDENT DIRECTORS
The independent directors have submitted their declaration as per Sec.149 (7) that theycontinue to meet the criteria of independence as provided in Sec.149 (6).
POLICY ON DIRECTOR APPOINTMENT & REMUNERATION
The Nomination & Remuneration Committee constituted as per Section 178 of theCompanies Act 2013 has formulated the policy for appointment of Directors SeniorManagement etc. and this has been approved by the Board and posted on the Company'sWebsite. The Remuneration policy of the Company comprising the appointment andremuneration of the Directors Key Managerial Personnel and Senior Executives of theCompany including criteria for determining quali cations positive attributesindependence of a Director and other related matters are given below. i. For ExecutiveDirectors: The remuneration of the Whole Time/Executive Directors shall comprise of a xedcomponent and a performance linked pay as may be xed by the Nomination and RemunerationCommittee (NRC) and subsequently approved by the Board of Directors and Members.Performance Linked Pay shall be payable based on the performance of the individual and theCompany during the year. Remuneration trend in the industry and in the region academicbackground quali cations experience and contribution of the individual are to beconsidered in xing the remuneration. These Directors are not eligible to receive sittingfees for attending the meetings of the Board and Committees.
For Non-Executive Directors: The Non-Executive Directors will be paid sitting fees forattending the Board and Committee Meetings as per the stipulations in the Act and theArticles of Association of the Company and as recommended by the NRC. Different scales ofsitting fee may be xed for each category of the directors and type of meeting. Howeverthe fees payable to the Independent Directors and Woman Directors shall not be lower thanthe fee payable to other categories of directors. In addition to this the travel andother expenses incurred for attending the meetings are to be met by the Company. TheCompany shall have no other pecuniary relationship or transactions with any Non-ExecutiveDirectors.
There are no quali cations reservations or adverse remarks in the Auditors' Reportexcept pointing out brief delay in transferring the unpaid dividend to Investors Education& Protection Fund. This delay was on account of delay in reconciliation and conrmation at the Banks level. Advance action has been taken to avoid such delays in thecurrent year. No frauds were reported by the Auditors.
M/s Srinivasan & Shankar Chartered Accountants Chennai (FRN 005093S) retire asStatutory Auditors on the conclusion of this Annual General Meeting as they havecompleted their maximum tenure. New Auditors are proposed to be appointed.
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed Mr M Damodaran and Associates Company Secretaries in practice to undertake theSecretarial Audit of the Company. Their Audit report is annexed herewith as"Annexure". There are no quali cations reservations or adverse remarks in theAuditors' Report except pointing out the delay in transferring the unpaid dividend toInvestors Education & Protection Fund and Non ling of the Form IEPF -2. Con rmationand reconciliation with the Bank resulted in this delay which will be avoided in thecurrent year.
LOANS GUARANTEES OR INVESTMENTS
Your Company has not given any loans or provided any guarantees or acquired securitiesas Defined in Section 186 of the Companies Act 2013.
CONTRACTS ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)
All transactions entered into by the Company with Related Parties were in the OrdinaryCourse of Business and at arm's length pricing basis. The Audit Committee granted omnibusapproval for the transactions (which are repetitive in nature) and the same was reviewedby the Audit Committee and the Board of Directors. There were no materially significanttransactions with Related Parties during the financial year 2016-17 which were in con ictwith the interest of the Company or which requires the approval of shareholders. Suitabledisclosures as required under AS-18 have been made in Note 40 of the Notes to thefinancial statements. Details of the transactions are provided in Form AOC-2 which isattached as Annexure-III to this Report.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thereport. During the year the Company has issued 1540154 and 227000 equity shares of Rs.10/-each with a premium of Rs.12/- per share in the share allotment committee meeting held on14.5.2016 and 10.10.2016 on a preferential basis by converting the unsecured loans withthe approval of the shareholders as advised by the Lenders thro the CDR Scheme. This willreduce the Company's liability towards payment of interest on the unsecured loans.Consequent to this allotment the paid up share capital has gone up to Rs.33.20 crores.
The Audit committee consists of the following Directors.
|1. Mr P S Gopalakrishnan ||Independent Director |
|2. Dr K C Reddy ||Director |
|3. Dr S Muthu ||Independent Director |
|4. Mr A Sennimalai ||Director |
|5. Mr R K Viswanathan ||Independent Director |
The Committee met 4 times on 26.05.2016 12.08.2016 04.11.2016 and 11.02.2017.
Details of Attendance of each director furnished in the report on Corporate Governancein page No. 37 There were no instances where the Board has not accepted therecommendations of the Audit Committee.
FOREIGN EXCHANGE EARNINGS AND OUT-GO CONSERVATION OF ENERGY & TECHNOLOGYABSORPTION
The details of measures taken for conservation of energy technology absorptionforeign exchange earnings and outgo are given in the Annexure.
The Company does not have any subsidiary or any associate Company. Hence no report onsubsidiary associate joint venture Company is included.
RISK MANAGEMENT POLICY
The Company has developed a risk management policy. Pursuant to Section 134 (3) (n) ofthe Companies Act 2013 details of the Policy are disclosed in the Company's Website.
At present the Company has not identi ed any element of risk which may threaten theexistence of the Company.
SIGNIFICANT AND MATERIAL ORDERS
There were no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations in future.
The GST Council on 18th and 19th May 2017 approved the GST rates and the impact for thesugar industry is as under.
GST rates on sugar bagasse and other waste products -5%
GST rate on molasses -28% . Alcohol Products- 18%.
GST exemption available for wide range of services provided in relation to sugarcanecultivation harvest transportation and host of related services.
Services of Good Transport Agency (GTA) under reverse charge mechanism GST rate 5% withno ITC.
General rate of service 18% with ITC bene t. Overall impact on industry may not bematerial.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isDefined by this Audit Committee. To maintain its objectivity and independence theInternal Auditor reports to the Chairman of the Audit Committee of the Board & to theChairman of the Company.
The Internal Audit Department monitors and evaluates the ef cacy and adequacy ofinternal financial control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the report ofinternal audit function process flowners undertake corrective action in their respectiveareas and thereby strengthen the nal controls. Significant audit observations if any andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
During the year 2016-17 the Company has not accepted deposits as Defined in Section 73and 74 of chapter V of the Companies Act 2013. Your Company has complied with theprovisions of Sec.73 & 74 and the rules prescribed thereunder. Your Company has nounpaid deposits which were due or repayable as on 31st March 2017. Your Company has notdefaulted in repayment of the deposits on the due dates. As on the date of this reportthere are no deposits and unclaimed deposits.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As per section 135 of the Companies Act a Corporate Social Responsibility (CSR)Committee has been formed. CSR policy has been framed and is available on the Website.Members of the Committee are:
(1) Mr. P. S. Gopalakrishnan (Non-executive -Independent Director) (2) Mr. A.Sennimalai (Non-executive Director) (3) Mr. M. Ramalingam (Executive Director) However asthe average of the net Profits for the last 3 years is negative no CSR expenditure hasbeen earmarked on this account.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anevaluation of its flown performance the directors individually as well as the evaluationof the working of its Audit Nomination & Remuneration Committees as also theIndependent Directors. Criteria for evaluation of the performance of the IndependentDirectors: The criteria for evaluation of the performance of Independent Directors includetheir quali cation experience competency knowledge understanding of respective roles(as Independent Director and as a member of the Committees of which they areMembers/Chairpersons) adherence to Codes and ethics conduct attendance andparticipation in the meetings etc.
VIGIL MECHANISM FOR DIRECTORS & EMPLOYEES
Pursuant to Section 177(9) and 177(10) of the Companies Act 2013 read with Rule 7 ofthe Companies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of theListing Obligation and Disclosure Requirement Regulations 2015 the Board of Directors hadapproved a Policy on Vigil Mechanism/ Whistle Blower and the same is hosted on the websiteof the Company. This Policy inter-alia provides a direct access to the Chairman of theAudit Committee. Your Company hereby af rms that no Director/ employee has been deniedaccess to the Chairman of the Audit Committee and that no complaints were received duringthe year.
Your Company is in compliance with the Corporate Governance regulations as laid out inSEBI (Listing Obligation and Disclosure Requirement) Regulations 2015. A report onCorporate Governance in line with SEBI prescribed format incorporated in the ListingObligations and Requirement Regulations is attached herewith. A certi cate from theStatutory Auditors on compliance of conditions of Corporate Governance has been obtainedand copy enclosed to this report.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe Company. The Code has been posted on the Company's website www.dharanisugars.in TheCode lays down the standard procedure of business conduct which is expected to be followedby the Directors and the designated employees in their business dealings and in particularon matters relating to integrity in the work place in business practices and in dealingwith stakeholders. All the Board Members and the Senior Management personnel have con rmedcompliance with the Code. All Management Staff were given appropriate training in thisregard.
PREVENTION OF SEXUAL HARASSMENT
The Company has in place an Anti Sexual harassment policy in line with the requirementsof the Section 4 of the Sexual harassment of Women at Work Place (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received about sexual harassment. All employees are covered under this policy.Details have been displayed prominently in the work place and also in the Company'sWebsite.
No complaints were received during the year 2016-17.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Annexure attached to the Board's Report
PROHIBITION OF INSIDER TRADING
The Company has adopted a Code of disclosures & a Code of Conduct for Prohibitionof Insider Trading with a view to regulate trading in securities by the Directors anddesignated employees of the Company. The Code requires pre-clearance for dealing in theCompany's shares and prohibits the purchase or sale of Company shares by the Directors andthe designated employees while in possession of unpublished price sensitive information inrelation to the Company and during the period when the Trading Window is closed. The Boardis responsible for implementation of the Code.
Directors of the Board and the designated employees have con rmed compliance with theCode.
The Board of Directors places on record its appreciation of the support assistance andco-operation received from the Central Government Government of Tamil Nadu variousgovernmental agencies ICICI Bank Limited IREDA the Company's bankers Indian BankState Bank of India The South Indian Bank Limited Bank of India Central Bank of IndiaThe Federal Bank Limited Union Bank of India IDBI Bank Ltd and Indian Overseas Bank.
The Board of Directors also wishes to place on record its appreciation for the canegrowers without whose help and support it could not have achieved the progress that hasbeen made so far. With our encouragement and their initiative we hope for improved caneavailability for the ensuing years.
Your Directors are thankful to the employees of the Company for their wholeheartedco-operation and unstinted dedication to duty leading to cordial industrial relationsduring the year under review.
The Board is thankful and grateful for the continuing cooperation to the managementfrom the shareholders family since inception and is con dent that this partnership willsustain forever.
| ||for and on behalf of the Board of Directors |
| ||DR PALANI G PERIASAMY |
| ||Executive Chairman |
|Place : Chennai || |
|Dated : 29th May 2017 || |