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Dwarikesh Sugar Industries Ltd.

BSE: 532610 Sector: Agri and agri inputs
NSE: DWARKESH ISIN Code: INE366A01041
BSE 00:00 | 13 Jul 23.95 -0.45
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NSE 00:00 | 13 Jul 23.95 -0.45
(-1.84%)
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OPEN 24.50
PREVIOUS CLOSE 24.40
VOLUME 44681
52-Week high 42.05
52-Week low 13.30
P/E 6.14
Mkt Cap.(Rs cr) 451
Buy Price 24.00
Buy Qty 1505.00
Sell Price 25.00
Sell Qty 100.00
OPEN 24.50
CLOSE 24.40
VOLUME 44681
52-Week high 42.05
52-Week low 13.30
P/E 6.14
Mkt Cap.(Rs cr) 451
Buy Price 24.00
Buy Qty 1505.00
Sell Price 25.00
Sell Qty 100.00

Dwarikesh Sugar Industries Ltd. (DWARKESH) - Director Report

Company director report

Your Directors take pleasure in presenting their 25th (Twenty Fifth) Annual Reporttogether with the Audited Accounts for the year ended 31st March 2019.

FINANCIAL RESULTS

Rs. in Lakhs

Particulars Year Ended Year Ended
31.03.2019 31.03.2018
Gross profit before depreciation interest & tax 16515.27 15997.16
Less: Depreciation 3294.99 3250.37
Finance Costs 2126.01 2531.14
Profit / (Loss) before tax and exceptional items 11094.27 10215.65
Profit / (Loss) before tax 11094.27 10215.65
Tax expenses 1583.65 70.90
Profit /(Loss) after tax 9510.62 10144.75
Total comprehensive income / (loss) 9778.35 10246.64

DIVIDEND

Your Directors recommend Preference dividend on 8% Cumulative Preference Shares (SeriesII) & equity dividend of 100% i.e C1/- per Equity Share of Face value of C1/- each.The outgo on account of equity dividend & Preference Dividend (series II) includingDividend distribution tax (DDT) shall be C241474019/-.

In August 2018 at the time of redemption an amount of C2123226/- (inclusive of[DDT]) was paid to preference shareholders of 12% Cumulative Preference Shares (Series I).

TRANSFER TO RESERVES

During the year a sum of C11000000/- has been transferred to Capital RedemptionReserves in terms of the requirement of section 55(2)(Rs.) of Companies Act 2013consequent to redemption of Preference Shares (series I) during the financial year.

YEAR IN RETROSPECT

Operations:

Distinguishing features of the crushing operations in your Company are given in thesucceeding paragraphs

Metrics of sugarcane crushed sugar produced and recovery achieved during the year isgiven hereunder:

(FY 2018-19 (From 01.04.2018 to 31.03.2019) includes a small part of season 2017-18and a major part of season 2018-19)

Particulars 2018-19 2017-18 % Change
Crushing (Lakhs/Quintals) – total at all three units 331.16 323.81 2.27
Recovery % (Combined) 12.29 11.84
Production (Lakhs/Quintals) – total at all three units 40.68 38.33 6.13

Comparison of sugar season 2018-19 & 2017-18 is as below:

Particulars 2018-19 2017-18 % Change
Crushing (Lakh/Quintals) – total at all three units 306.84 363.40 (15.57)
Recovery % (Combined) 12.31 11.88
Production (Lakh/Quintals) – total at all three units 37.77 43.16 (12.49)

Highlights- FY 2018-19

Sugarcane crushing up by 2.27%.

Smart increase in recovery by 0.45% (from 11.84% to 12.29%)

Sugar production up by 6.13%

Impressive recoveries on account of superior varietal mix with increasingthrust on early maturing varieties such as Co 0238.

During the season of 2018-19 just concluded both DN & DD units haveclocked their highest ever recovery.

Group recovery of SS 2018-19 at 12.31% is poised to be the highest in NorthIndia.

Performance of cogeneration division: Metrics of power sold:

Unit 2018-19 (01.04.2018 to 31.03.2019) 2017-18 (01.04.2017 to 31.03.2018)
Power sold in Amount in C/ Power sold in Amount in C/
lakhs units Lakhs lakhs units Lakhs
DN 301.38 1500 308.19 1470
DP 675.73 3392 682.62 3283
DD 1043.16 5237 946.51 4553
Total 2020.27 10129 1937.32 9306

Performance of Distillery:

During the year 76.91 lakh liters of industrial alcohol (previous period 86.90 lakhliters) was produced and 90.17 lakh liters of the same was sold aggregating to C36.32crores (previous period 64.06 lakh liters aggregating to C 24.91 crores) at DwarikeshNagar unit of the Company.

A SUGAR INDUSTRY OVERVIEW

Global sugar industry scenario

Decline in the sugar production in key sugar producing countries like Thailand andBrazil generated a lower global sugar output in 2018-19 at 179 million tons a decline of4 million tons compared to the previous year (Source: International Sugar Organization).Although the contribution of India's sugar production increased (even as consumptionremained relatively flat) the global sugar surplus is expected to be around 1 to 2million tons.

Raw sugar prices averaged at 12.76 cents per pound during 2018-19 a 26% declinecompared to 2014 and a 37% decline compared to 2016-17 largely on account of increasedsupply countered by flat demand.

Correspondingly the London White sugar variety that was transacted around 540 USD PMTin September 2016 declined to 346 USD PMT. This scenario could well reverse with adeficit likely to emerge in the season ahead (2019-20) marked by deficit forecasts ofbetween 4 and 6 million tons.

The Indian sugar industry review

India's sugar production of 32.5 million tons in 2017-18 was followed by an estimated33 million tons in sugar season 2018-19 on account of a number of downward and upwardoutput revisions. Maharashtra's sugar output was in excess of 10 million tons-plus for thesecond consecutive year; Uttar Pradesh which had reported an impressive output of 12.05million tons in 2017-18 was projected to produce in excess of 11.8 million tons in season2018-19 coupled with an exceptionally high (11% plus) recovery.

Barring unforeseen climatic conditions the Indian sugar production seems to havegraduated into a new sustainable production orbit of more than 30 million tons a year.There are a number of reasons for this comprising attractively remunerative cane pricespaid year-on-year which encouraged farmers to plant increasing cane quantitiesseason-after-season (over alternative crops).

In addition to increased planting farmers capitalized on higher yields assured caneoff-take and guaranteed payment graduating cane into possibly India's most remunerativecash crop. Besides the use of the early sugarcane maturing variety and improved plantefficiencies ensured higher recoveries for sugar mills. In view of these realitiesIndia's sugar industry is reconciled to an annual sugar output in excess of 30 milliontons barring unforeseen climatic aberrations.

A record sugar output on the one hand and near-stagnant national consumption isexpected to result in India carrying its highest inventory (> 14 million tons) by theend of Sugar Season 2018-19. But for the intervention of the Central Government sugarrealisations would have crashed. The Indian government responded with timely policyintroductions that improved the retail pricing sentiment strengthening sugar realisationsto C3100-plus per quintal barely adequate for most sugar mills to recover their costs.

The timely measures by a proactive Central Government comprise the following:

The Government announced a minimum selling price of C2900 per quintal forsugar to be sold ex-factory which was subsequently increased to C3100 per quintal.

The Government reintroduced the monthly release mechanism through which itsight to regulate the quantum of sugar in the marketplace

The Government created a buffer stock of 3 million tons with thenotification of a corresponding stock limit for each sugar mill and the Governmentreimbursing sugar mills the carrying cost of this buffer stock.

The Government ordered a compulsory export of 5 mill tons; a minimumindicative export quota was notified for each sugar mill

A transport subsidy of C1000 per tonne was allocated for mills located<100 kilometres from ports C2500 per tonne for mills located >100 kilometres fromports in coastal states and C3000 per tonne for mills located in landlocked states (oractual expenditure whichever was lower) to defray the transportation cost incurred bysugar mills to transport their sugar from their mill to port for export.

A production subsidy of C13.88 per quintal cane crushed during SY2018-19 wasannounced to offset the cost of cane. This subsidy was made available to sugar mills onthe fulfilment of certain conditions (compared to a subsidy of C5.50 per quintal of canecrushed for SS2017-18).

The Central Government announced a C8500-crore package for the Indian sugarindustry comprising C4440 crore in soft loans to mills to enhance ethanol manufacturingcapacity and a related interest subvention of C1332 crore.

The Central Government announced an attractive price for ethanolmanufactured from C heavy molasses B heavy molasses and directly from sugarcane juice.The government raised the procurement price of ethanol derived out of C heavy molassesfrom C40.85 per litre to C43.70 per litre. It also facilitated the provision of B heavymolasses use and direct cane juice for ethanol production which marginally reduced sugarproduction. This flexibility holds out attractive prospects as the government plans toenhance ethanol blending in automotive fuel to 20% by 2030 (currently 7%).

The Central Government promulgated a scheme under which soft loans would begiven to sugar mills on which interest subvention (@ 7% per annum) would be provided bythe Government expected to improve cash flows and moderate cane arrears payable tofarmers.

The outlook for Sugar Season 2019-20 appears mixed. While on the one hand the overhangof a large sugar inventory appears daunting and poses serious realisation challenges theunusually dry weather in Maharashtra and South India indicates that the production ofSugar Season 2019-20 will not be able to cross the threshold of 30 million tons. Howeveranother steroidal dose of compulsory sugar export can help create a balance in theseason-end stock position. An impending deficit in the global sugar production could helpthe country emerge as a bigger participant in the global sugar trade.

While the short-term problem of stock overhang can be addressed with policy initiativesto encourage exports a long-term solution lies in increasing the ethanol blendingprogram. If this blending program accelerates and if the country follows the Brazilianexample where the sugar production is sacrificed in favour of ethanol it will ensure thatIndia's sugar industry embarks on a journey of sustained multi-year growth benefiting allstakeholders. A combination of multipronged ethanol exports to address the overhang ofstock and a larger sacrifice of sugar in favour of ethanol can prove to be the sectoralgame-changer.

The Uttar Pradesh sugar industry report card

The SAP for Sugar Season 2018-19 announced by the government remainedunchanged whereas SAP for the general variety was C315 per quintal the early variety wasC325 per quintal and the rejected variety was C310 per quintal. The Society commission waspegged at 2% of FRP (or C5.50 per quintal) a marginal increase of C0.40 per quintal.

Even as SAP for Sugar Season 2018-19 remained unchanged it proveddisproportionate high.. As it turned out the cost of sugarcane constituted more than 90%of the amount realized on the sale of sugar for a usual sugar mill leaving barely anymargin to absorb other production costs and expenses. Higher SAP announced in the earlieryears continued to affect the viability of the sugar industry.

Though unseasonal rains and pest infection impacted ratoon crop yield theyield from the plain cane crop proved satisfactory. During the Sugar Season 2018-19 theState reported a recovery of 11%-plus for the first ever time due to improved canemanagement and increased use of the early cane variety (around ~70% of the sown area). SS2018-19 is expected to be yet another season of bumper production with projected Stateproduction a shade less than 12 million tons.

During the year under review the State government announced and paid asubsidy of C4.50 per quintal of cane crushed during the SS 2017-18; it also announced anddisbursed a soft loan (at ROI of 5% per annum and repayable over sixty monthly instalmentscommencing from July 2019) to sugar mills to help them clear sugarcane dues of SS 2017-18

However unviable operations continue to debilitate the sugar industry. TheState witnessed cane price arrears rising to alarming levels in spite of measures byCentral Government and State Governments to improve mill cash flows. Presently the sugarmills have arrears payable to farmers in excess of C10000 crores

in respect of sugarcane supplied during Sugar Season 2018-19. However cane pricearrears and viability of sugar mills is now proving to be a pan-India challenge (its rootsand probable remedies already discussed in the preceding paragraphs).

Molasses which was sold virtually free in 2017-18 reported a realizationof C80-100 per quintal on the back of increased ethanol consuming capacities providingsome relief to sugar producers. The solution does not lie in an improvement of molassesrealisations but in sugar mills integrating their plants to the point that they consumeall the molasses within leaving them with nothing for sale.

Your Company is better equipped to capitalize on its strengths. Your Company has beenrecording impressive recovery; its consistent process enhancement and cane developmenthave made it one of the most efficient sugar producers in India. The Company's quest tointegrate operations would be complete with the addition of a 100 KLPD distillery plantmaximizing byproduct optimization and facilitating substantial value-addition.

Your Company also completed accelerated debt prepayment. The new debts are under asubvention scheme and one of them is to be used for funding its distillery expansionproject. Your Company endeavors to judiciously manage its funds to minimize its interestoutflow.

Dwarikesh - Financial Scorecard:

Particular 2018-19 2017-18
CLakhs % C Lakhs %
Gross revenue 108412 145828
less: Excise duty 2833
Net revenue (from operations) 108412 100.00 142995 100.00
EBIDTA 16515 15.23 15997 11.19
EBDTA 14389 13.27 13466 9.42
EBT 11094 10.23 10216 7.14
EAT 9511 8.77 10145 7.09
Total comprehensive income 9778 9.02 10247 7.17

There is substantial decline in the revenue from operations during the yearunder review. The same is attributable to the operation of monthly release mechanismadministered by the Central Government which resulted in lesser quantity of sugar soldand also on account lesser average realization on sale of sugar

EBIDTA during FY 2018-19 both in absolute numbers and in % terms is betteras compared to the EBIDTA during previous period. Margin of EBIDTA is 15.23% vis- -vismargin of 11.19% in the previous year. In absolute numbers the EBIDTA amount is C16515lakhs (15.23%) as compared to EBIDTA amount of 15997 lakhs (11.19%) in the previous FY.While power & distillery segments have clocked better EBIDTA the sugar segment hasreported lesser EBIDTA mainly on account of lesser average realization on sale of sugar ascompared to the average realization during FY 2017-18.

During the year under review your Company earned EBDTA of C14389 lakhs ascompared to C13466 lakhs earned in the previous FY.

Earning before tax at C11094 lakhs when viewed in conjunction with that ofthe previous FY (C10216 lakhs) has also improved

Earnings after tax at C9511 lakhs as compared to the earnings after tax ofprevious FY of C10145 is lower on account of higher provisioning of taxes. In % the sameis 8.77% of the net revenue

Salient features:

Sugar prices were trending low throughout the year. But for the interventionof Central Government the price fall would have been much more steeper. The averagerealization on sale of sugar during the year under review is nearly 15% less than therealization on sale of sugar during the previous FY.

During the year under review your Company exported a part of its contractedexport obligation under the MIEQ. Balance quantity was exported during FY 2019-20.

Your Company has embarked up on project of distillery expansion thebenefits of which will start accruing from the 4th quarter of 2019-20

Your Company strives to raise the bar of efficiency continuously. Thebenchmark numbers of recoveries / process losses challenged season after season with aview to better the previous benchmarks and set the new ones. In an industry where mostfactors are beyond the realm of Company's control your Company strives to ruthlesslyattack costs and keep the same under control.

Another area of focus for your Company has been to rein in the interestcosts. Its aggressive policy of accelerated debt repayment has paid dividends and theCompany squared up all its earlier debts. The long term debts presently carried in theCompany's books are those on which interest subvention will be available to the Companyand the debt to fund the distillery project. Interest outgo would have been much lesserbut for the fact that the Company was compelled to carry higher inventory under monthlyrelease mechanism and therefore its working capital requirement was higher. The Companyhas also had the benefit of lower rate of interest on account of its improved creditrating. The long term loans of the Company are rated A+ with stable outlook and commercialpaper program (short term) has been accorded the highest rating of A1 + by ICRA.

CANE & SUGAR POLICY

The main policies of the government in relation to the sugar industry during the yearwere:

a) Hitherto applicable levy and free sale sugar ratio of 10:90 for the period up to31st March 2013 has since been abolished pursuant to adoption of recommendationscontained in the report of Dr. Rangarajan. The sugar mills are now eligible to sell theirentire production as free sale sugar.

b) The Fair & Remunerative Price (FRP) for the crushing season 2017- 18 was C255per quintal which has been increased to

C275 per quintal for 2018-19 where the season 2017-18 was linked to recovery @ 9.50%and the season 2018-19 is linked to recovery rate @10%

c) Chronology of SMP/FRP announced by the Central Government on the basis of recoveryis given herein under:

Season SMP/F&RP H/ Quintal
2000-01(SMP) 59.50*
2001-02 62.05*
2002-03 64.50*
2002-03 (Revised) 69.50*
2003-04 73.00*
2004-05 74.50*
2005-06 79.50&
2006-07 80.25&
2007-08 81.18&
2008-09 81.18&
2009-10 (SMP since replaced by F&RP) 129.84@
2010-11 139.12@
2011-12 145.00@
2012-13 170.00@
2013-14 210.00@
2014-15 220.00@
2015-16 230.00@
2016-17 230.00@
2017-18 255.00@
2018-19 275.00#

* Linked to recovery of 8.50% & Linked to recovery of 9% @ Linked to recovery of9.50% # Linked to recovery of 10% d) The Company is required to pay State AdministeredPrice (SAP) for the crushing season 2018-19 the State Government of Uttar Pradeshannounced SAP which remains unchanged as compared to previous season of 2017-18 i.eC315 per quintal for general variety of Sugarcane C10 per quintal is extra payable forearly variety & C5 per quintal is less payable for rejected variety.

CHANGE IN NATURE OF BUSINESS

There is no change in nature of business of the Company.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

During the financial year Company has undertaken to expand the Distillery capacity atits Dwarikesh Nagar Plant Bijnor by adding a new 100 Kilo Litres Per Day (KLPD) capacityplant which will help in mitigating the risk associated with sugar business.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

No significant & material orders have been passed impacting the going concernstatus & Company's operations in future.

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls commensurate with itssize scale and operations. Such controls have been assessed during the year under reviewtaking into consideration the essential components of internal controls stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India. Based on the results of such assessmentscarried out by the management no reportable or significant deficiencies no materialweakness in the design or operation of any control was observed. Nonetheless your Companyrecognizes that any internal control framework no matter how well designed has inherentlimitations and accordingly regular audits and review processes ensure that such systemsare re-enforced on an ongoing basis. The internal financial controls with reference to theFinancial Statements are commensurate with the size and nature of business of the Company.

SHARE CAPITAL

The paid up Equity Share Capital as at March 31 2019 stood at C18.83 crores. Duringthe year under review the Company has not issued shares or convertible securities orshares with differential voting rights nor has granted any stock options or sweat equityor warrants. As on March 31 2019 none of the Directors of the Company hold instrumentsconvertible into Equity Shares of the Company.

During the year 12% Preference shares (Series I) were redeemed in August 2018 togetherwith accrued dividend till the date of redemption.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act 2013 an extract of the annual returnin the prescribed format is appended as Annexure I to the Board Report.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors of the Company met five (5) times during the year on May 072018; August 07 2018; November 01 2018 December 17 2018 and February 02 2019.

SUBSIDIARY COMPANY'S REPORT

The Company does not have any subsidiary in terms of provisions of Companies Act 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions entered during the financial year were in the ordinarycourse of business and at arm's length basis. There were no materially significant RelatedParty Transactions with the Company's Promoters Directors Management or their relativeswhich could have had a potential conflict with the interests of the Company. Transactionswith related parties entered by the Company in the normal course of business areperiodically placed before the Audit Committee for its omnibus approval and theparticulars of contracts entered during the year as required to be provided under Section134(3)(h) of the Companies Act 2013 are disclosed in Form AOC-2 as Annexure II.

The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the rulesthereunder and the Listing Regulations.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company has not made any loans or investments or given guarantees or providedsecurities under Section 186 of the Act during the year.

PUBLIC DEPOSITS

The Company did not have any fixed deposits at the beginning of the year nor has itaccepted any deposited during the year in terms of Section 74 of the Companies Act 2013.

PARTICULARS OF EMPLOYEES AND RELATED INFORMATION

In terms of the provision of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementcontaining the disclosures pertaining to remuneration and other details as required underthe Act and the above rules are provided in Annexure III.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Changes in Directors and Key Managerial Personnel

Shri G.R. Morarka (DIN: 00002078) who had earlier resigned from the Board on April 182018 owing to his health issue had been re-appointed as Additional Director and WholeTime Director designated as Executive Chairman of the Company with effect from January01 2019 for a period of 3 years in the Board Meeting held on December 17 2018 after therecommendation of Nomination & Remuneration Committee whose appointment is to beregularized by Members of the Company as mentioned in Item No. 5 & 6 of the Notice.

Shri Vijay S. Banka (DIN: 00963355) Director liable to retire by rotation and beingeligible offers himself for re-appointment. Detailed profile of the Directors seekingre-appointment and appointment along with other details as may be required are provided atthe end of Notice.

B. Declaration by an Independent Director(s) Re- Appointment & Meeting

PursuanttotherequirementsofSection149(7)oftheCompanies Act 2013 the Company hasreceived the declarations from all the Independent Directors confirming the fact that theyall are meeting the eligibility criteria as stated in Section 149(6) of the Companies Act2013.

All the three independent directors are appointed/reappointed in the meeting of Boardof Directors held on August 13 2014 for a period of 5 years as per the requirements ofSection 149 of the Companies Act 2013.

The Independent Directors met once i.e on February 02 2019. The Meeting wasconducted without the presence of the Chairman Executive Directors and any otherManagerial Personnel.

C. Formal Annual Evaluation

Pursuant to the requirements of Section 134(3)(p) of the Companies Act 2013 read withRegulation 17 of the Listing Regulations the Board has carried out an annual performanceevaluation of its own performance the directors individually as well as the evaluation ofits Committees.

A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc.

The performance evaluation of the Independent Directors was carried out by the entireBoard. The performance evaluation of the Chairman and the Non Independent Directors werecarried out by the Independent Directors who also reviewed the performance of theSecretarial Department. The Directors expressed their satisfaction with the evaluationprocess.

D. Policy on Directors' Appointment and Remuneration

Including Criteria for Determining Quali_cations Positive Attributes Independence ofa Director Key Managerial Personnel and Other employees

In line with the principles of transparency and consistency your Company has adoptedthe following policies which inter alia includes criteria for determining qualificationspositive attributes and independence of a Director.

Policy on Directors appointment and remuneration is available on Company's website athttp://www.dwarikesh. com/pdf/2018/Policy-on-Directors-Appointment-and-Remuneration.pdf

E. Statement of Director's Responsibilities

As required under the provisions of Section 134(3)(Rs.) of the Companies Act 2013your Directors confirm that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments 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 ofthe profit of the Company for that year;

(Rs.) 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;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively

(f) the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulations 34 of SEBI (Listing Obligation and Disclosure Requirement)Management Discussion and Analysis Report for the year under review is presented in aseparate segment which is forming part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Dwarikesh has been an early adopter of CSR initiatives. The Company works primarilythrough its CSR trust viz R R Morarka Charitable Trust towards supporting projects ineradication of hunger and malnutrition promoting education art and culture healthcaredestitute care and rehabilitation environmental sustainability disaster relief and ruraldevelopment projects.

Details of the CSR policy are available on our website at http://www.dwarikesh.com/pdf/2018/Policy-on-Corporate-Social-Responsibility.pdf and a briefoutline of the CSR Policy and the CSR initiatives undertaken by the Company during theyear as prescribed under the Companies (Corporate Social Responsibility) Rules 2014 isannexed herewith as Annexure IV.

RISK MANAGEMENT POLICY

Company has voluntarily formed a Risk Management Committee so as to review and combatthe risk on periodical basis. A detailed note on Risk Management policy elements of riskand its mitigation is comprised in Corporate Governance Report.

VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy as envisaged in the Companies Act2013 the Rules prescribed thereunder and the

SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 in the Boardmeeting held on May 9 2014 so as to enable the Directors Employees and all Stakeholdersof the Company to report genuine concerns to provide for adequate safeguards againstvictimization of persons who use such mechanism and make provisions for direct access tothe Chairman of Audit Committee. The details of the said policy is explained in theCorporate Governance Report and has been uploaded on the website of the Company athttp://www.dwarikesh.com/pdf/2018/Whistle-Blower-Policy.pdf.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has put in place a policy on Anti Sexual harassment in line with therequirements of The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. Internal Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy.

No complaints have been received during the year under review.

CORPORATE GOVERNANCE

As per Regulation 34 of SEBI (Listing Obligation and Disclosure Requirement) a reporton Corporate Governance together with the Auditors Certificate regarding compliance of theconditions of corporate governance is provided under Annexure V.

BOARD COMMITTEE

The Company has following mandatory Committees viz

1. Audit Committee

2. Stakeholders' Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the particulars in respect of conservation of energytechnology absorption and foreign exchange earnings & outgo are furnished in AnnexureVI and form a part of this report.

AUDITORS

A. STATUTORY AUDITORS & AUDITOR'S REPORT

Pursuant to the provisions of Section 139(2) of the Companies Act 2013 and rules madethereunder M/s. NSBP & Co.

Chartered Accountants New Delhi (Firm Registration No. 001075N) were appointedas Statutory Auditors of the Company for period of 5 years to hold office upto theconclusion of 28th Annual General Meeting of the Company subject to ratification of theirappointment at every subsequent Annual General Meeting.

The Auditors' Report for the financial year March 2019 is unmodified i.e it does notcontain any qualification reservation adverse remark or disclaimer. The StatutoryAuditors have not reported any incident of fraud to the Audit Committee of the Companyduring the financial year under review.

B. COST AUDITORS

Pursuant to the provisions of Section 148 of the Companies Act 2013 and rules madethereunder the Board on the recommendation of the Audit Committee has re-appointed

M/s. Ramanath Iyer & Co Cost Accountants (Firm Regn No. 000019) asCost Auditors to conduct cost audits relating to sugar electricity and industrial alcoholfor the year ended March 31 2019. The Cost Accountants have confirmed that theirappointment is within the limits of Section 141(3)(g) of the Act and free from anydisqualifications specified under Section 141(3) and proviso to Section 148(3) read withSection 141(4) of the Companies Act 2013.

The Cost Audit Report for the financial year March 2019 did not contain anyqualification reservation adverse remark or disclaimer. The Cost Audit Report for yearend March 2019 shall be made available by Cost Auditors on or before September 30 2019.

C. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. VKM & Associates a Practising Company Secretary (Certi_cateof Practice no. 4279) Secretarial Auditor to undertake the Secretarial Audit of theCompany for the year ended March 31 2019. The Secretarial Audit Report is appended tothis Report as Annexure VII.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark or disclaimer.

ACKNOWLEDGEMENT

Your directors wish to place on record their sincere gratitude and appreciation to itsmembers sugar cane growers employees bankers financial institutions Central &State Government Agencies for their valuable contribution in the growth of theorganization.

By Order of the Board
For DWARIKESH SUGAR INDUSTRIES LIMITED
B.J. Maheshwari Vijay S. Banka
Managing Director & CS cum CCO Managing Director
(DIN - 00002075) (DIN - 00963355)
Place: Mumbai
Dated: May 23 2019