To the Member(s)
Your Directors have pleasure in presenting before you the Twenty Third Annual Report ofthe Company together with the Audited Statements of Accounts for the year ended March 312018.
1. FINANCIAL RESULTS :
Your Directors report the operational results of the Company for the year ended March31 2018 prepared in accordance with Ind AS the details of which are as under:
(Rupees in Lakhs)
|Particulars ||2017-18 ||2016-17 |
|Gross Income ||25138.10 ||24777.79 |
|Profit/(Loss) Before Interest Depreciation and Exceptional Item ||4310.82 ||3983.33 |
|Finance Charges ||2007.81 ||2059.75 |
|Gross Profit/(Loss) before Depreciation and Exceptional Item ||2303.01 ||1923.58 |
|Provision for Depreciation ||1007.51 ||993.66 |
|Net Profit(Loss) Before Tax and Exceptional Item ||1295.50 ||910.53 |
|Exceptional Item(Re-measurement of Actuarial Valuation) ||(79.39) ||150.47 |
|Provision for Tax || || |
|Net Profit/(Loss) After Tax ||1216.11 ||1080.39 |
|Balance of Profit/(Loss) brought forward ||(12804.58) ||(13884.97) |
|Balance available for appropriation ||(11588.47) ||(12804.58) |
|Proposed Dividend on Equity Shares || || |
|Tax on proposed Dividend || || |
|Transfer to General Reserve || || |
|Deficit carried to Balance Sheet ||(11588.47) ||(12804.58) |
REVIEW OF OPERATIONS:
Performance during the financial year 2017-18:
Your Directors are pleased to report that during the year under review the Companycrushed 7.00 Lakh Tonnes of Sugar cane 7.99 Lakh Quintals of Sugar was bagged with anaverage recovery of 11.41% and 32127 tonnes of Molasses was produced. The distillery unitproduced 68.09 Lakh litres of Ethanol Rectified Spirit and Impure Spirit.
The Company registered a gross revenue of Rs 25138.10 Lakhs for the year ended 31stMarch 2018 against Rs 24777.79 Lakhs for the year ended 31st March2017. For the year 2017-18 the Company earned profit of Rs 4310.82 Lakhs beforeInterest Depreciation and Exceptional item compared to the profit of Rs. 3983.33 Lakhsfor the previous year 2016-17 and earned net profit of Rs1216.11 Lakhs compared to the netprofit of Rs1080.39 Lakhs of previous year.
Prospects for the financial year 2018-19:
It is too early to estimate the sugar production for 2018-19 sugar season but goodsowing reports and good water availability are indicating good sugar production for2018-19 season compared to the 2017-18.
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 2018 the Directors could notrecommend dividend on Preference Shares and also on Equity Shares.
4. BOARD MEETINGS:
During the Financial year 2017-18 the Board met 5 (Five) times on 29.05.201714.08.2017 10.11.2017 27.12.2017 and 02.02.2018.
5. DIRECTORS AND KEY MANANGERIAL PERSONNEL:
During the year under review there was no change in the directorship of the Company.
However there was change in the composition of Key Managerial Personnel. Miss. MunmunBaid resigned as Company Secretary and Compliance Officer of the Company with effectNovember 30 2017. In order to fill the vacancy the Board appointed Mr. Chetan KumarSharma as Company Secretary at its meeting held on February 02 2018. Earlier on December19 2017 he was appointed as Compliance Officer of the Company.
The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 that the Independent Directors ofthe Company meet with the criteria of their Independence laid down in Section 149(6).
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 Committees and Corporate Social ResponsibilityCommittee. The details of Composition and terms of reference of these committees arementioned in the Corporate Governance Report.
7. POLICY LAID DOWN BY THE NOMINATION AND REMUNERATION COMMITTEE FOR REMUNERATION OFDIRECTORS KMP & OTHER EMPLOYEES:
The Remuneration policy of the Company is performance driven and is structured tomotivate Employees recognize their merits and achievements and promote excellence intheir performance. The Nomination Remuneration and Evaluation Policy of the Company isenclosed at Annexure-I of this report.
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 2013 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 is 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 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 on02.02.2018.
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 Managing Director Mrs. T.Sarita Reddy for a period of three years w.e.f May 01 2019.
(b) Separate Meeting of Independent Directors: The Independent directors of the Companyat its meeting held on 02.02.2018 (a) reviewed the performance of the Non-Independentdirectors and Board (b) reviewed the performance of the Chairperson of the Company and(c) assessed the quality quantity and timeliness of flow of information between theCompany management and the Board. All the Independent Directors attended the meeting.
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 performance evaluation ofits own performance the Directors individually (excluding the director being evaluated)as well as the evaluation of the working of its Committees. A structured questionnaire wasprepared after taking into consideration various aspects of the Board's functioning suchas adequacy of the composition of the Board and its Committees effectiveness indeveloping Corporate Governance structure to fulfill its responsibilities execution andperformance of specific duties etc. The Board decided that the performance of individualdirectors its own performance and working of the committees is 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 II.
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 292017 for a term of five consecutive years from the conclusion of 22nd AnnualGeneral Meeting [AGM] till the conclusion of 27th AGM. They have confirmed thatthey are not disqualified from continuing as Auditors of the Company.
The Auditors Report to the members of the Company on the financial statements for thefinancial Year ended March 31 2018 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 31 2018 in Form No MR-3 is annexed to the Directors Report asAnnexure - III and forms part of this Report. The Secretarial Auditors' Report to theMembers of the Company for the Financial Year ended March 31 2018 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 2013 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 there was Rs. 45 Lakhs investment on KCP make centrifugal machinecapacity of 1750 KG/CH (minimum 16 to 18 Charges per hour).
B. Technology Absorption:
i) Efforts made towards Technology Absorption:
Centrifugal machine was changed to reduce the power Consumption.
ii) The benefit derived like product improvement cost reduction product developmentor import substitution etc.
The benefit derived by changing the Centrifugal Machine will be approximately Rs 12Lakhs in the season.
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 : Rs 991241/-
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 March 312018 in the Company relating to deficiency in internal financial controls over financialreporting in respect of certain reconciliations between various accounting systems and onassessment of estimating potential liability relating to a disputed matter.
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 identified a deficiency in theinternal control over financial reporting that constitutes a material weakness inrespect of certain reconciliations between various accounting systems.
The Company uses various subsystems the output from which is being used for accountingin the financial package maintained by the Company. Consequent to certain deficiencies inIT General and Application controls in the software platforms used for financialreporting there were differences in balances between sub-systems / sub- ledgers with thegeneral ledger which have been manually reconciled by the Company. Whilst necessaryadjustment entries were passed in the books of account for the year ended 31stMarch 2018 and these material weakness did not affect on the financial statements exceptassessment of estimating the liability on a disputed matter.
However the Company has implemented new financial package (ERP) to integratereconciliation between sub-systems/sub-ledgers with effect from April 01 2018 to avoidmanual reconciliation. The management is of the view that the Electricity Duty payable onCaptive Consumption is contingent in nature and no provision is required to be made.
15. PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIESPROVIDED :
Details of loans guarantees and investments covered under the provisions of section186 of the Companies Act 2013 are given in notes to financial statements.
The Company ha complied with the applicable provisions of Companies Act 2013 and rulesframed there under in respect of section 186 of the Companies Act 2013.
16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
Management Discussion and Analysis Report is annexed which forms part of this Report asAnnexure IV.
17. RISK MANAGEMENT POLICY:
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.
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 thereunder 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 POLICY:
Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 as amended read with schedule VIII 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 VI). Since the Company is not having average net profits in the immediatelypreceding three years hence the Company need not adopt any Corporate SocialResponsibility Policy but the Company is involved in some of the social activities likeorganizing health camps providing drinking water facility and fumigation in the nearbyvillages of the factories.
21. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:
(i) Demand of Rs 13881669/- was raised by the Commissioner of Customs CentralExcise & Service Tax Hyderabad-1 Commissionarate being the amount equal to 10% or 5%of the value of Exempted goods i.e Electricity sold by the company for the period Nov-2006to Dec-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 80.09 Lakhs.
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.
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.
23. FIXED DEPOSIT:
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 2018-19 and the remuneration payable tothem for the Financial Year 2018-19 is is subject to ratification by the shareholders ofthe Company.
Further as per section 148(1) of the Companies Act 2013 read with Companies (Accounts)Amendment Rules 2018 maintenance of cost records as specified by the Central Governmentunder sub section (1) of the Companies Act 2013 is required by the Company andaccordingly 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 V 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 2018-2019 toBombay Stock Exchange 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 -VI. Certificate from the practicing Company Secretaryconfirming the compliance with the conditions of Corporate Governance as stipulated underaforesaid regulations is attached to this report.
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
| ||(T. SARITA REDDY) ||(T.V. SANDEEP KUMAR REDDY) |
| ||Managing Director ||Vice Chairman |
| ||DIN: 00017122 ||DIN: 00005573 |
|Place : Hyderabad || || |
|Date : 13.08.2018 || || |