Your Board of Directors are pleased to present the 32nd Annual Report on the operationsof the Company and the Audited Statement of accounts for the year ended 31st March 2019.
Rs. In Crores
|Particulars ||Year Ended 31.03.2019 ||Year Ended 31.03.2018 |
|Total Revenue ||319.35 ||505.34 |
|Profit/(Loss) before Interest Depreciation and Tax ||(33.76) ||14.16 |
|Interest and Finance Charges ||74.55 ||76.28 |
|Cash Profit / (Loss) ||(108.31) ||(62.12) |
|Depreciation ||22.59 ||22.57 |
|Profit/(Loss) before Tax ||(130.90) ||(84.69) |
|Deferred Tax-Asset/(Liability)/ MAT Reversal ||(18.43) ||(0.69) |
|Profit/(Loss) After Tax ||(149.33) ||(85.38) |
|Other Comprehensive Income ||0.55 ||0.75 |
|Total Loss for the period ||(148.78) ||(84.63) |
|Transfer to General Reserve ||- ||- |
|Profit/(Loss) Brought forward from last year ||56.55 ||141.18 |
|Profit/(Loss) carried forward to Balance Sheet ||(92.23) ||56.55 |
The financial statements have been prepared to be in compliance with the IndianAccounting Standards.
Financial Performance : During the year under review the total Gross income wasRs.319.35 crores as against Rs.505.34 crores in the previous year. The Gross operatingloss was Rs.33.76 crores as against the profit of Rs 14.16 crores in the previous year.After providing interest the cash loss works out to Rs.108.31 crores as against the cashloss of Rs.62.12 crores in the previous year. The net loss after depreciation and taxworks out to Rs.148.78 crores as against the loss of Rs 84.63 crores in the previous year.The loss was mainly due to lower volume of cane crushing due to drought and substantialfall in the sugar realisation during the year. The sugar realisation has also come downsharply and the average realisation was only Rs 3024/- per Qtl as against the averagerealisation Rs 3607/- per Qtl in the previous year. This alone has resulted in a loss ofRs. 50.43 crores.
Sugar: During the year under review the Company has crushed 5.23 lakh tonnes ofcane as against 7.20 lakh tonnes of cane crushed in the previous year and the Company hasprocessed 0.12 lakh tonnes of Raw sugar. Consequently the total sugar production was 5.44lakh quintals as against 8.89 lakh quintals in the previous year. The total sugar sold was8.65 lakh quintals as against 10.73 Lakh quintals in the previous year.
Power: During the year power generation has decreased to 339.87 lakh units from589.01 lakh units in the previous year due to lower volume of cane crushing. The export ofthe power to the TNEB grid has also decreased to 139.68 lakh units from 293.11 lakh unitsin the previous year.
Industrial Alcohol: During the year under review the production of IndustrialAlcohol was 101.36 lakh liters as against 164.89lakh liters in the previous year. Thetotal Alcohol sold was 102.48 lakh liters as against 167.82 lakh liters in the previousyear. The average realization has decreased to Rs.47.00 per liter from Rs50.59 per literin the previous year.
No amount is proposed to be transferred to General Reserves account on account of lossduring the year.
Due to absence of profits in the current year the Board of Directors is unable torecommend any dividend for the year 2018-19.
EXTRACT OF ANNUAL RETURN
Extract of the Annual Return in form MGT-9 is attached herewith as Annexure I.
During the year 2018-19 five Board Meetings were held on 28.05.2018 13.08.201826.09.2018 09.11.2018 and 13.02.2019. Details of Attendance of each director furnished inthe report on Corporate Governance in page No.33.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Dr Palani G Periasamy Whole Time Director and Executive Chairman whose term of officehas come to a close on 24.06.2019 is proposed for reappointment for a fresh term of 5years.
Mr A Sennimalai (DIN 00062791) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. His name has been proposedfor reappointment.
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 them consistentlyand made judgments and estimates that were 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 ofthe profit or loss of the Company for the year under review.
iii) The directors have 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 have 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.
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.
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 POLICY
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 qualifications positive attributesindependence of a Director and other related matters are given below.
I. For Executive Directors : The remuneration of the Whole Time/ExecutiveDirectors shall comprise of fixed component and a performance linked pay as may be fixedby the Nomination and Remuneration Committee (NRC) and subsequently approved by the Boardof Directors and Members. Performance Linked Pay shall be payable based on the performanceof the individual and the Company during the year. Remuneration trend in the industry andin the region academic background qualifications experience and contribution of theindividual are to be considered in xing the remuneration. These Directors are not eligibleto receive sitting fees for attending the meetings of the Board and Committees.
II. For Non-Executive Directors : The Non-Executive Directors will be paidsitting fees for attending the Board and Committee Meetings as per the stipulations in theAct and the Articles of Association of the Company and as recommended by the Nominationand Remuneration Committee. Different scales of sitting fee may be fixed for each categoryof the directors and type of meeting. However the fees payable to the IndependentDirectors and Woman Directors shall not be lower than the fee payable to other categoriesof directors. In addition to this the travel and other expenses incurred for attendingthe meetings are to be met by the Company. The Company shall have no other pecuniaryrelationship or transactions with any Non- Executive Director.
There are no qualifications 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 conformation 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 CNGSN Associates & LLP Chartered Accountants Chennai (FRN No.027501)appointed as Statutory Auditors of the Company in the Annual General Meeting held in 25thSeptember 2017 for a period of 5 years will continue as Auditors.
The following observation was mentioned in the audit report as of 31st March 2019 bythe statutory auditors.
|S.No. Observations ||Reasons |
|1. The Company's net worth is negative and the borrowings from banks and financial institutions have been classified by the lenders as non-performing assets during the year. Subsequent to the balance sheet date few banks issued notice to recall the loans. ||The Company was not able to service the interest and principal to the banks/ financial institutions/sugar development fund due to glut in sugar and lower-availability of Sugarcane due to drought in Tamilnadu had a cascading effect on the cogeneration and industrial alcohol business of the Company which has resulted in the company incurring losses during the last few years.This is a problem facing the entire sugar industry.In addition Tamil Nadu has faced continous drought for the last 4 years resulting in substantial reduction in cane availability. The capacity utilisation in Tamil Nadu is around 35% during the last 2 years. |
| ||On account of the above the company has incurred losses during the last four years and has not been able to service debts to the banks/ financial instutions from May 2018. |
|2. Significant uncertainty on the Company's ability to continue as a going concern. Pending the resolution of the above uncertainties the Company has prepared the aforesaid statement on a going concern basis. ||The Govt. of India has announced various supportive measures for the Sugar Industry revival during the last one year Viz. Export subsidy for export of sugar Fixation of higher price for Ethanol Permission to convert B Heavy molasses in to Ethanol reintroduction of monthly sugar release mechanism Soft loans for setting of ethanol plants. |
| ||The Govt. of India have also fixed minumum selling price of Rs.31/- per KG for sugar below which the mills are not allowed to sell the sugar and this price is likely to increase in line with the increase in the cane price announced by the Govt.of India . These steps are expected to improve the performance of sugar industry in the coming years. |
| ||The company has submitted a resolution plan to the consortium banks for restructuring the loans and the consortium banks have suggested to the company to plan for a one time settlement (OTS) of the loans. The companies is con dent of bringing up the funds and initiate the process of OTS with the banks shortly. The monsoon is also expected to be normal. |
| ||The Company therefore expects that the industry will revive with the support from Governments and your Company will also be able to settle all the dues and continue to function as a going concern. |
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 the Secretarial Audit of the Company. TheirSecretarial Audit report as of 31st March 2019 is annexed herewith as"Annexure".-II.
The following are the qualifications mentioned.
Important observations by the Auditor and the Company's explanations are given below.
|Observations ||Reasons |
|a The Company has not transferred shares pertaining to unpaid and unclaimed dividend to IEPF authority as per section 124(6) of the Companies Act 2013 read with Rule 6(5) of the Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016. ||The Company has initiated action for advertisement in the newspaper sending individual information to the affected shareholders allowing time for response. Thereafter the transfer process will be commenced and completed. Filing of IEPF 4 will be done after this. The whole process is likely take another 2 months. Delay was due to delay in reconciliation of the outstanding unpaid amounts with bank's figures. |
|b The Company has not led e-form IEPF - 4 under rule 6(5) of the Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016. || |
|c The company has not passed Special Resolution under regulation 17(1A) of SEBI (LODR) Regulations 2015 for continuing as non-executive directors who has attained the age of seventy five years. ||Necessary Special Resolution is being proposed in the ensuing Annual General Meeting to be held in September 2019 for regularizing the continuance of the concerned Non-Executive Directors. |
|d There was minor delay in intimation of Financial Results for the year ended 31.03.2018 to the stock exchange (NSE) under regulation 30 of the SEBI (LODR) Regulations 2015. ||The delay was incidental due to computer glitches and failure of net availability. The timing will be ensured in future. |
|e There was minor delay in intimation of Financial Results for the quarter ended 31.12.2018 to the stock exchange (NSE) under regulation 30 of the SEBI (LODR) Regulations 2015. || |
|f As per regulation 46 SEBI (LODR) Regulations 2015 the website of the company was updated with minor deviations. || |
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 2018-19 which were in conflictwith the interest of the Company or which requires the approval of shareholders. Suitabledisclosures as required under IND AS-24 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. The Federal Bank Limited Bank of India Central Bank of India State Bank ofIndia and IFCI Limited had declared as non- performing assets and issued notice to recallthe loans.
The Audit committee consists of the following Directors.
|1. Mr P S Gopalakrishnan ||Chairman & Independent Director |
|2. Dr K C Reddy ||Nominee Director (IREDA) |
|3. Mr A Sennimalai ||Director |
|4. Dr S Muthu ||Independent Director |
|5. Mr R K Viswanathan ||Independent Director |
|6. Mr P Selvam ||Independent Director |
The Committee met 4 times on 28.05.2018 13.08.2018 09.11.2018 and 13.02.2019.
Details of Attendance of each director is furnished in the report on CorporateGovernance in Page No. 33
There were no instances where the Board has not accepted the recommendations of theAudit Committee.
FOREIGN EXCHANGE EARNINGS AND OUT-GO CONSERVATION OF ENERGY & TECHNOLOGYABOSORPTION
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.
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 identified 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.
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 efficacy 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 auditor Company undertakes corrective action in their respective areas andthereby strengthen the financial controls. Significant audit observations if any andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
During the year 2018-19 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 Section 73 & 74 and the rules prescribed there under. Your Company hasno unpaid deposits which were due or repayable as on 31st March 2018. 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:
|S No Name of the Directors ||Category of Directors |
|1 Mr P S Gopalakrishnan ||Non-Executive Independent Director |
|2 Mr A Sennimalai ||Non-Executive Director |
|3 Mr M Ramalingam ||Executive Director |
However as the average of the net profits for the last 3 years is negative no CSRexpenditure has been earmarked on this account.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anevaluation of its own Performance the directors individually as well as the evaluation ofthe working of its Audit Nomination & Remuneration Committees as also the IndependentDirectors.
Criteria for evaluation of the performance of the Independent Directors:
The criteria for evaluation of the performance of Independent Directors include theirqualification experience competency knowledge understanding of respective roles (asIndependent 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 affirms that no Director/ Employee have been denied access to theChairman of the Audit Committee and that no complaints were received during the 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 certificate from thePractising Company Secretary on compliance of conditions of Corporate Governance has beenobtained and 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
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.
All the Board Members and the Senior Management personnel have con firmed compliancewith the Code. All Management Staff were given appropriate training in this regard.
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 2018-19.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Annexure attached in 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 firmed 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 |
|Place: Chennai 34 ||Executive Chairman |
|Date : 28th May 2019 ||(DIN No: 00081002) |