To the Member(s)
Your Directors take pleasure in presenting before you the Twenty Fourth Annual Reportof the Company together with the Audited Statements of Accounts for the year ended March312019.
1. FINANCIAL RESULTS :
Your Directors report the operational results of the Company for the year ended March31 2019 prepared in accordance with Ind AS the details of which are as under:
(Rupees in Lakhs)
|Particulars ||2018-2019 ||2017-2018 |
|Gross Income ||31167.93 ||25138.10 |
|Profit/(Loss) Before Interest Depreciation and Exceptional Item ||1420.38 ||4310.82 |
|Finance Charges ||2351.14 ||2007.81 |
|Gross Profit/(Loss) before Depreciation and Exceptional Item ||(930.76) ||2303.01 |
|Provision for Depreciation ||1015.90 ||1007.51 |
|Net Profit(Loss) Before Tax and Exceptional Item ||(1946.66) ||1295.50 |
|Exceptional Item(Re-measurement of Actuarial Valuation) ||162.93 ||(79.39) |
|Provision for Tax ||- ||- |
|Net Profit/(Loss) After Tax ||(1783.73) ||1216.11 |
|Balance of Profit/(Loss) brought forward ||(11588.47) ||(12804.58) |
|Balance available for appropriation ||(13372.20) ||(11588.47) |
|Proposed Dividend on Equity Shares ||- ||- |
|Tax on proposed Dividend ||- ||- |
|Transfer to General Reserve ||- ||- |
|Deficit carried to Balance Sheet ||(13372.20) ||(11588.47) |
REVIEW OF OPERATIONS:
Your Directors are pleased to report that during the year under review the Companycrushed 7.90 Lakh Tonnes of Sugar cane and 08.99 Lakh Quintals of Sugar was bagged with anaverage recovery of 11.38% and 36158 tonnes of Molasses was produced. The distillery unitproduced 85.02 Lakh litres of Ethanol Rectified Spirit and Impure Spirit.
The Company registered gross revenue of Rs. 31167.93 Lakhs for the year ended 31stMarch 2019 against Rs. 25138.10 Lakhs for the year ended 31st March 2018. For the year2018-19 the Company earned profit of Rs. 1420.38 Lakhs before Interest Depreciation andExceptional item compared to the profit of Rs. 4310.82 Lakhs for the previous year2017-18. However there was net loss of Rs. 1783.73 Lakhs compared to the net profit ofRs. 1216.11 Lakhs of previous year. The Company registered an increase of 23.98% inturnover as compared to previous years. The loss in current year is attributed to the factthat the average realisation of selling price of Sugar was lower than the actual cost ofproduction which has been higher due to increase in FRP of sugarcane.
1. PROSPECTS FOR THE FINANCIAL YEAR 2019-20:
Though it is too early to estimate the sugar production for sugar season 2019-20 butsowing reports from field indicates decline in sugarcane plantation due to inadequateunderground water availability due to drought conditions prevailed in the zone areaallotted to both factories of your company. The sugar cane harvesting for the season2019-20 is expected to be lower as compared to the previous year 2018-19 resulting inlower production of Sugar.
2. CHANGE IN THE NATURE OF BUSINESS IF ANY:
During the period under review and the date of Board's Report there was no change inthe nature of Business of the Company.
As the Company has accumulated losses as at March 31 2019 the Directors could notrecommend dividend on Preference Shares and also on Equity Shares.
4. BOARD MEETINGS:
During the Financial year 2018-19 the Board met 4 (Four) times on 18.05.2018 13.08.2018 13.11.2018 and 07.02.2019.
5. DIRECTORS AND KEY MANANGERIAL PERSONNEL:
During the year under review there was no change in the directorship of the Company.Further there is no change in the Composition of the Key Managerial Personnel. IndependentDirectors declaration:
The Company has received the necessary declaration from each Independent Director inaccordance with Section 149(7) of the Companies Act 201 3 read with Regulations 16 and25(8) of the Listing Regulations that he/she meets the criteria of independence as laidout in Section 149(6) of the Companies Act 2013 and Regulations 16(1 )(b) and 25(8) ofthe Listing Regulations.
As per provisions of the Companies Act 2013 Mr. T. V Sandeep Kumar Reddy retires byrotation at the ensuing AGM and being eligible seeks re-appointment.
Mr. T. R. Rajagopalan independent Director of the Company completes his tenure of 5(five) years as an Independent Director on September 29 2019. Based on therecommendations of the Nomination and Remuneration Committee and pursuant to theperformance evaluation of Mr. T. R. Rajagopalan as a Member of the Board the Boardproposed to re-appoint Mr. T. R. Rajagopalan as an Independent Director of the Companynot liable to retire by rotation to hold the office for the second term effective fromSeptember 30 2019 till September 29 2024.
Similarly Mr. J. N. Karamchetti independent Director of the Company completes histenure of 5 (five) years as Independent Director on September 29 2019. Based on therecommendations of the Nomination and Remuneration Committee and pursuant to theperformance evaluation of Mr. J. N. Karamchetti as a Member of the Board the Boardproposed to re-appoint Mr. J. N. Karamchetti as an Independent Director of the Companynot liable to retire by rotation to hold office for the second term effective fromSeptember 30 2019 till September 29 2024.
The resolutions for re-appointments of Mr. T. V Sandeep Kumar Reddy Mr. T. R.Rajagopalan and Mr. J. N. Karamchetti form part of the notice convening the ensuing AGMscheduled to be held on Thursday September 26 2019.
The profile and particulars of experience attributes and skills of the above Directorsis disclosed in the Notice convening the AGM to be held on Thursday September 26 2019.
6. COMMITTEES OF BOARD:
Pursuant to requirement under Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors has constitutedvarious committees of Board such as Audit Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee Risk management Committee and CorporateSocial Responsibility Committee. The details of Composition and terms of reference ofthese committees are mentioned in the Corporate Governance Report.
7. POLICY LAID DOWN BY THE NOMINATION AND REMUNERATION COMMITTEE FOR REMUNERATION OFDIRECTORS KMP & OTHER EMPLOYEES:
The Board on the recommendations of the Nomination and Remuneration Committeedetermines the characteristics skills and other attributes required for appointment andremoval of Directors. For this the Company has Nomination and Remuneration policy whichis performance driven and is structured to motivate Directors and Employees recognizetheir merits and achievements and promote excellence in their performance.
The salient features of the policy are:
(a) To guide the Board in relation to appointment and removal of Directors KeyManagerial Personnel and Senior Management.
(b) To evaluate the performance of the members of the Board and provide necessaryreport to the Board for further evaluation.
c) To recommend to the Board on Remuneration payable to the Directors Key ManagerialPersonnel and Senior Management.
d) Ensure that level and composition of remuneration is reasonable and sufficientrelationship of remuneration to performance is clear and meets appropriate performancebenchmarks.
The Policy is available on the website of the Company www.gayatrisugars.com.
Manner in Which Formal Annual Evaluation has been made by the Board of its OwnPerformance and that of its Committees and Individual Directors:
Pursuant to the provisions of the Companies Act 201 3 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out evaluation of (i) itsown performance (ii) the directors individually and (iii) working of its Committees. Themanner in which the evaluation was carried out as detailed below:
(a) Nomination & Remuneration Committee: Pursuant to the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Nomination and Remuneration Committee has formulated the criteria for evaluationof directors and evaluated every director. A structured questionnaire was prepared aftertaking into consideration of various parameters such as attendance and participation inmeetings monitoring corporate governance practices independence of judgmentsafeguarding the interests of the Company etc. and accordingly the evaluation was made.The Members of the Committee evaluated the individual directors at its meeting held on07.02.2019.
The Nomination and Remuneration Committee decided that since the performance of thedirectors has been excellent it is decided to continue with the term of the directors andalso recommends to the Board of Directors for reappointment of Mr. T. R. Rajagopalan andMr. J. N. Karamchetti as Independent Directors for a period of five years w.e.f.September 30 2019.
(b) Separate Meeting of Independent Directors: The Independent directors of theCompany at its meeting held on 07.02.2019 (a) reviewed the performance of theNon-Independent directors and Board (b) reviewed the performance of the Chairperson ofthe Company and (c) assessed the quality quantity and timeliness of flow of informationbetween the Company management and the Board. All the Independent Directors attended themeeting.
A structured questionnaire was prepared after taking into consideration variousparameters such as attendance and participation in meetings monitoring corporategovernance practices independence of judgment safeguarding the interests of the Companyetc. and accordingly the evaluation was made. The Independent directors evaluated theNon-Independent directors.
The Independent Directors decided that since the performance of the Non-IndependentDirectors (including Managing Director) is excellent the term of their appointment becontinued.
The Independent Directors after review of the performance of the Chairperson decidedthat the Chairperson has good experience knowledge and understanding of the Board'sfunctioning and her performance is excellent. The Independent Directors decided that theinformation flow between the Company's Management and the Board is excellent.
(c) Evaluation by Board: The Board has carried out the annual performanceevaluation of its own performance the Directors individually (excluding the directorbeing evaluated) as well as the evaluation of the working of its Committees. A structuredquestionnaire was prepared after taking into consideration various aspects of the Board'sfunctioning such as adequacy of the composition of the Board and its Committeeseffectiveness in developing Corporate Governance structure to fulfill itsresponsibilities execution and performance of specific duties etc. The Board decided thatthe performance of individual directors its own performance and working of the committeesis excellent.
8. DIRECTOR'S RESPONSIBILITY STATEMENT:
In pursuance of section 134 (5) of the Companies Act 2013 the Directors herebyconfirm 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 and loss of the Company for that period;
(c) the directors had taken proper and sufficient 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;
(d) the directors had prepared the annual accounts on a going concern basis; and
(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 except for the material weakness/deficiency.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
9. INFORMATION ABOUT THE FINANCIAL PERFORMANCE / FINANCIAL POSITION OF THE SUBSIDIARIES/ ASSOCIATES/ JOINT VENTURES:
There are no Companies which have become or ceased to be its Subsidiaries JointVenture or Associate Companies during the year.
10. EXTRACT OF ANNUAL RETURN:
As required pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of annual return in FormMGT-9 as part of this Annual Report is enclosed as Annexure I. The extract ofAnnual Return in Form MGT-9 as per provisions of Companies Act 2013 & Rules theretois available on Company's Website at www.gayatrisugars.com.
11. STATUTORY AUDITORS AND THEIR REPORT:
M/s. MOS & Associates LLP Chartered Accountants were appointed as StatutoryAuditors of the Company at the 22nd Annual General Meeting held on June 29 2017 for aterm of five consecutive years from the conclusion of 22nd Annual General Meeting [AGM]till the conclusion of 27th AGM. They have confirmed that they are not disqualified fromcontinuing as Auditors of the Company.
The Auditors Report to the members of the Company on the financial statements for thefinancial Year ended March 312019 forming part of this report contains a qualifiedopinion on estimating the Electricity duty amounting to Rs. 283.99 Lakhs as a ContingentLiability and on Internal Financial controls over the Financial Reporting as per note No.28.16 forming part of the financial statements. In the event of an un-favourableverdict/outcome in this matter the Management based on the Supreme Court's interim ordersand considering the inherent uncertainty in predicting the final outcome of the abovelitigation estimates the impact of the potential liability to be Rs. 170 lakhs.
12. SECRETARIAL AUDIT:
As per the provisions of the Section 204(1) of the Companies Act 2013 the Company hasappointed Mr. Y. Koteswara Rao Practising Company Secretary to conduct Secretarial Auditof the records and documents of the Company. The Secretarial Audit Report for theFinancial Year ended March 312019 in Form No MR-3 is annexed to the Directors Report as Annexure- II and forms part of this Report. The Secretarial Auditors' Report to the Members ofthe Company for the Financial Year ended March 312019 does not contain anyqualification(s) or adverse observations.
13. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO:
The required information as per Sec. 134(3)(m) of the Companies Act 201 3 and Rule 8(3)of Companies (Accounts) Rules 2014 is provided hereunder:
A. Conservation of Energy:
i) The steps taken or impact on conservation of energy:
The Company has already installed the required energy conservation equipments and henceno additions were made during the year.
ii) Step taken by the Company for utilizing alternate source of energy:
The company doesn't have alternative source of Energy since the Company has Co-genpower facility.
iii) Capital investment on energy conservation equipments:
During the year no investment was made towards energy conservation equipments.
B. Technology Absorption:
i) Efforts made towards Technology Absorption:
Centrifugal machine was changed to reduce power Consumption in earlier financial year.In the current year no such requirement was there.
ii) The benefit derived like product improvement cost reduction product developmentor import substitution etc.
The benefit derived is same as the earlier year.
iii) Details of Technology imported during the last 3 years reckoned from the beginningof the financial year:
During the period of last three years there was no import of Technology.
iv) Expenditure incurred on Research & Development:
There was no expenditure incurred on Research and Development.
C. Foreign Exchange Earnings and Out Go:
|Foreign Exchange Earnings ||: NIL |
|Foreign Exchange Outgo ||: NIL |
14. DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS:
The Company's internal control system is aimed at proper utilisation and safeguardingof the Company's resources and promoting operational efficiency. The internal auditprocess reviews the in-system checks covering significant operational areas regularly.
The Company's Audit Committee is responsible for reviewing the Audit Report submittedby the Internal Auditors. Suggestions for improvements are considered and the AuditCommittee follows up on the implementation of corrective actions. The Audit Committee alsoinvites the Statutory and Internal Auditors for regular meetings to ascertain their viewson the adequacy of internal control systems and keeps the Board of Directors informed ofits observations from time to time.
The statutory auditors had a qualified opinion on the Internal financial controls overthe financial reporting stating that material weakness has been identified as at March312019 in the Company relating to deficiency in internal financial controls overfinancial reporting in respect of management assessment of estimating potential liabilityrelating to disputed matter as per Note No. 28.16 forming part of financial statements.
The Management conducted an assessment of the effectiveness of the internal controlover financial reporting using the criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. Based on this assessment Management is of the view that based onSupreme Court's interim orders and considering the inherent uncertainty in predicting thefinal outcome of the above litigations estimates the impact of potential liability to beRs. 170 Lakhs.
15. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIESPROVIDED:
Particulars of loans guarantees given and investments made during the year underreview in accordance with section 186 of the Companies Act 2013 is annexed to thisreport. (Annexure - III).
16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report is annexed which forms part of this Report asAnnexure -IV.
17. RISK MANAGEMENT:
The Company has been addressing various risks impacting the Company and developed riskpolicy and procedures to inform Board members about the risk assessment and minimizationprocedures. Details on risk managment is given in Corporate Governance Report.
18. WHISTLE BLOWER POLICY/VIGIL MECHANISM:
Pursuant to Section 177 of the Companies Act 2013 and the Rules framed there under andpursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theCompany has established a mechanism through which all the stakeholders can report thesuspected frauds and genuine grievances to the appropriate authority. The Whistle BlowerPolicy which has been approved by the Board of Directors of the Company has been hosted onthe website of the Company at http://www.gayatrisugars.com/Investors/CorporateGovernance/Policies.
19. DISCLOSURE AS PER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013:
Pursuant to the requirements of Section 22 of Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013 read with Rules there under theCompany has not received any complaint of sexual harassment during the year under review.
Further the Company has complied with the provisions relating to the constitution ofInternal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention
Prohibition and Redressal) Act 2013.
20. CORPORATE SOCIAL RESPONSIBILTY:
Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 as amended read with schedule VII The Boardof Directors constituted Corporate Social Responsibility Committee at Board Meeting heldon August 14 2017. The details of the Committee are given in Corporate Governance Report(Annexure V). Since the Company is having average net profits in the immediately precedingthree years hence the Company has adopted Corporate Social Responsibility Policy. The CSRpolicy is available on the website of the Company www.gayatrisugars.com.
During the year under review the Company has spent Rs. 14.10 lakhs on CSR Activities.Annual Report on CSR activities in terms of Section1 35 of the Companies Act 2013 andthe Rules framed there under is annexed to this report (Annexure VI).
21. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:
Demand of Rs. 13881669/- was raised by the Commissioner of Customs Central Excise& Service Tax Hyderabad-1 Commissionarate being the amount equal to 10% or 5% of thevalue of Exempted goods i.e Electricity sold by the company for the period Nov-2006 toDec-2010 in the case of Kamareddy Unit of Rs. 58.53 lakhs and for the period Mar-2006 toMar-2012 in the case of Nizamsagar Unit of Rs. 80.29 Lakhs both put together Rs 138.82lakhs.
The Customs Excise and Service Tax Appellate Tribunal Regional Bench at Hyderabad hasset aside the impugned order for Excise Duty demand of Rs. 58.53 lakhs relating toKamareddy Unit of the Company subsequent to Audit Report.
The Customs Excise and Service Tax Appellate Tribunal Regional Bench at Hyderabad yetto hear relating to Nizamsagar Unit Demand of Rs 80.29 lakhs.
22. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The policy on dealing with Related Party Transactions is disseminated on the website ofthe company at http://www.gayatrisugars.com/Investors/ Corporate Governance/Policies.
The details of Related Party Transactions entered by the Company in the ordinary courseof Business at arm's length basis are detailed in the notes forming part of the financialstatements.
Your Company has not accepted or renewed any deposit from public during the year underreview.
24. DISCLOSURE ABOUT COST AUDIT:
As per section 148 of the Companies Act 2013 and rule 14 of the Companies (Audit andAuditors) Rules 2014 Company is required to appoint Cost Auditor. The Board of directorsand the Audit Committee of the Board has approved the appointment of M/s. Narasimha Murthy& Co. as Cost Auditor to audit the cost records of Sugar Power and Distillerydivision of the Company for the financial year 2019-20 and the remuneration payable tothem for the Financial Year 2019-20 is subject to ratification by the shareholders of theCompany. We seek your support in ratification of remuneration proposed to be paid to theCost Auditors for the FY ending March 31 2020.
Further as per section 148(1) of the Companies Act 201 3 read with Companies(Accounts) Amendment Rules 2018 maintenance of cost records as specified by the CentralGovernment under sub section (1) of the Companies Act 2013 is required by the Companyand accordingly such accounts and records are made and maintained.
25. PARTICULARS OF EMPLOYEES:
Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule 5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended forms part of thisreport. In terms of Section 136 of the Companies Act 2013 the same is open for inspectionat the Registered Office of the Company. Copies of this statement may be obtained by themembers by writing to the Company Secretary at the Registered Office of the Company.
The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014are enclosed in Annexure - VII and forms part of this Report.
26. LISTING WITH STOCK EXCHANGES:
The Company confirms that it has paid the Annual Listing Fees for the year 2019-2020 toBSE Limited where the Company's Shares are listed.
27. CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION:
Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 34 read with Schedule V of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A report on Corporate Governance is included as a part ofthis Annual Report as Annexure -V. Certificate from the practicing CompanySecretary confirming the compliance with the conditions of Corporate Governance asstipulated under aforesaid regulations is attached to Corporate Governance Report.
28. SECRETARIAL STANDARDS:
The Company has in place proper systems to ensure compliance with the provisions of theapplicable secretarial standards issued by The Institute of Company Secretaries of Indiaand such systems are adequate and operating effectively.
29. AWARDS AND ACCOLADES:
. The company received the following awards for the Crushing season 2018-19 by TheSouth Indian Sugarcane & Sugar Technologists' Association (SISSTA):
"PLATINUM AWARD for "BEST TECHNICAL EFFICIENCY 2018-19"
"PLATINUM AWARD for BEST SUGAR CANE DEVELOPMENT 2018-19"
"GOLDEN AWARD for BEST Co-GENERATION 2018-19"
The company bagged the following Awards from South India Sugar cane and SugarTechnologists Association (SISSTA) for the past years from 2012-13 onwards
|Year ||Category ||Award |
|2017-18 ||Best Cogeneration ||Platinum Award |
|2017-18 ||Best Technical Efficiency ||Golden Award |
|2015-16 ||Best Cogeneration ||Platinum Award |
|2014-15 ||Best Cogeneration ||Platinum Award |
|2014-15 ||Best Technical Efficiency ||Silver Award |
|2014-15 ||Best Sugarcane Development ||Silver Award |
|2012-13 ||Best Cogeneration ||Platinum Award |
|2012-13 ||Best Sugarcane Development ||Golden Award |
|2012-13 ||Best Technical Efficiency ||Silver Award |
Your Directors would like to acknowledge and place on record their sincere appreciationto all stakeholders clients Banks Central and State Governments the Companies' valuedinvestors and all other business partners for their continued co-operation and excellentsupport received during the year.
Yours Directors recognize and appreciate the efforts and hard work of all the employeesof the Company and their continued contribution to its progress.
| || |
For and on behalf of the Board of Directors
| ||sd/- ||sd/- |
| ||(T. SARITA REDDY) ||(T.V. SANDEEP KUMAR REDDY) |
|Place: Hyderabad ||Managing Director ||Vice Chairman |
|Date: 13.08.2019 ||DIN: 00017122 ||DIN: 00005573 |