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Kashipur Sugar Mills Ltd.

BSE: 502512 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE735A01013
BSE 05:30 | 01 Jan Kashipur Sugar Mills Ltd
NSE 05:30 | 01 Jan Kashipur Sugar Mills Ltd

Kashipur Sugar Mills Ltd. (KASHIPURSUGAR) - Director Report

Company director report


The Members,

Your Directors are pleased to present the 39th Annual Report of the Company togetherwith the Audited Accounts for the year ended on 30th September 2011.

Performance of the Company

Financial Results

(Rupees in Lacs)

Particulars 2010 - 2011 2009 - 2010
Sales (Net of Returns) 8724.17 4269.64
Profit (Loss) before Depreciation
Interest and Tax 380.76 (343.37)
Interest and Finance Charge 235.13 224.24
Less : Provision for Depreciation 279.33 298.39
Profit (Loss) Before Tax (133.70) (862.00)
Profit (Loss) After Tax (133.70) (862.00)
Profit/(Loss) B/F from earlier years (6292.62) (5430.62)
(Loss) carried to Balance Sheet (6426.32) (6292.62)

Management Discussions & Analysis


The overall total sales turnover of your company for the period under review stood atRs 8724.17 Lacs as compared to previous year Rs 4269.64 Lacs recorded an increase inturnover by more than 100 %. The production for the year was 2.15 Lac bags as against 1.78Lac bags in earlier year. As shown in the chart given below the mill crushed 23.99 Lacqntls. of sugar cane during the year as against 20.72 Lac qntls crushed in previous yearwith a paltry increase in recovery by 0.36%. The performance was better as compared toprevious year due to lower cost of cane and slightly better realization than last year.

Operational Performance


Sugar Season

2010 – 2011 2009 – 2010
Commencement of the crushing season 03.12.2010 05.12.2009
Closing of Crushing Season 14.03.2011 10.03.2010
Cane Crushed (Lac Qntls.) 23.99 20.72
Recovery (percent) 8.98 8.54
Sugar Production (Lac Qntsl.) 2.15 1.78


In view of the loss incurred during the current year and brought forward losses, yourdirectors do not recommend any dividend for the current year.

Rehabilitation Scheme

The Company is a sick industrial company within the meaning of section 3 (1) (o) of theSick Industrial Companies (Special Provisions) Act, 1985.

Hon’ble Board for Industrial and Financial Reconstruction (BIFR) had approvedRehabilitation Scheme vide their order dated 1st February, 2008 effective from08.01.2008.

The reliefs and concessions as envisaged under the scheme interalia pertaining toavailability of adequate cane have not been implemented by the state of U.P. The mater hasbeen under litigation since 2005 at various forums including BIFR State Govt., appellateauthority, High Court. Finally the dispute came before the Hon’ble Supreme Court inSLP No. 13912 of 2005 and 27653 of 2009. However a divisional bench of two judges referredthe mater to a larger bench of three judges. The matter is still pending. At the same timethe Uttarakhand Govt. did not cancel the license granted to a RAB plant of India GlycolsLtd. However India Glycols Limited have not run their RAB plant in the season 2010-11 andhave also not run in the season 2011–12. The other reliefs are partially implementedbut they are not significant so as to make the plant viable under the rehabilitationscheme, State Govt. loan of Rs. 7.87 Crores was to be converted into subsidy. But theState Govt. has not implemented the same.


Due to inadequate availability the cane the Sugar unit of the Company has been workingat a capacity utilization of around 30%. It is most unlikely that the Company shall getadequate Sugar Cane. At the same time with excessive higher cane price being fixed by theState Govt. and lower sugar realisation the Company’s financial condition is notlikely to improve.

The company has also taken a decision to deposit Central Excise duty on Sugar andmolasses under protest pending decision by the appropriate court.

The Company has not accepted any deposit from the public.

Industry Outlook

During the year, pricing of sugar cane continues to be vexatious issue. Despite themoderate increase in the SAP for the year. 2010-11, cane cost per MT of sugar in the stateis higher than the current realization in the domestic market.

There had been uncertainity about availability of Sugar Cane from theerstwhile-reserved area in Uttar Pradesh. Therefore bringing value additions throughco-generation of power and manufacturing of Ethanol was not possible.

Internal Control System and their Adequacy

The company has proper and effective internal control system commensurate with size andscale of business to ensure that all controls, procedures and policies of are adhered to.

Risks and Concerns

1. The Sugar industry is cyclical industry and its’ performance is subject toclimatic conditions like timely rainfall. The industry has been affected by drought andirregular rain on various occasions

2. The Central Government/State Government fixes the raw material cost of cane withoutreferring it to prevailing sugar prices.

3. The sugar industry has to supply 10% of its production to Central Government as levyQuota at the predetermined prices.

4. Central Government may allow import of white/raw sugar of concessional rates ofimport duties, which will affect the sugar realization in domestic market.


In accordance with the provisions of the Companies Act, 1956 and Articles andAssociation of the Company Sri Om Narayan, Dr S.L. Keswani and Sri Sharad Sharma retiresby rotation at ensuing Annual General Meeting of the Company and being eligible offerthemselves for reappointment.

Brief resumes of the directors being reappointed at the ensuing AGM is given in termsof clause 49 of the listing agreement.

Name Sri Om Narayan
Date of Appointment 22.09.1989
Age 67 yrs.
Nature of expertise in specific areas Extensive experience in managing Sugar Mills.
Qualification IIT Graduate, Chemical Engineer
List of other Directorships held excluding alternate 1. Dhampur Sugar Distillery P. Ltd.
2. Dhampur Engineering Limited
Directorship and Private Companies
Chairman/Member of the 1. Audit Committee of the Board
Committee of the Board of 2. Share Transfer /
Directors of the Company Investor Grievance Committee
3. Remuneration Committee
Chairman/Member of the Committee of the Board of Directors of other companies in which he is a director None
Name Sri S L Keswani
Date of Appointment 10.01.1973
Age 79 yrs
Nature of expertise in specific areas Extensive experience in managing corporate bodies and Consultants of paper Mills and other Mills
Qualification Phd in Paper Technology
List of other Directorships held excluding alternate Directorship and Private Companies Chem-Projects Consultants (P) Ltd.
Perfect Pac (P) Ltd.
Prakash Industries Limited, Khatima
Paper & Board Mills Ltd. Chemcon
Fabricatos (Delhi) Pvt. Ltd. Cheema
Papers Ltd.
Fuel Corp (India) Ltd.
Fuel co-corp (India) Ltd Fuelco
Ispat (India) Ltd. Fuelco Washeries
(India) Ltd. Fuelco Power &
Mining Ltd.
Chairman/Member of the Committee of the Board of Directors of the Company Member Audit Committee of the Board
Chairman/Member of the Committee of the Board of Directors of other Companies in which he is a director. None
Name Sri Sharad Sharma
Age 59 yrs
Date of Appointment 29.11.2010
Nature of expertise in specific areas Extensive experience in Corporate affairs.
Qualification Graduate
List of other Directorships held excluding alternate Directorship and Private Companies Ujjal Rural Services Limited
Chairman/Member of the Committee of the Board of Directors of the Company None
Chairman/Member of the Committee of the Board of Directors of other companies in which he is a director None

Statutory Information

The Particulars of Employees’ remuneration under section 217(2A) of the CompaniesAct. 1956

The Company’s does not have any employee drawing remuneration warrantingdisclosure under Companies (Particulars of Employees) Rules, 1975.

The information as required under section 217(1) (e) of the Companies Act. 1956 readwith the Companies (Disclosure of Particulars in the report of the Board of Directors)Rules, 1988 is given in the annexure forming part of this report.

Listing of Equity Shares

The Company’s securities are listed at the Stock Exchange, Mumbai (BSE), The DelhiStock Exchange Association Ltd., Delhi and the U.P. Stock Exchange Association Ltd.Kanpur.

Report on Corporate Governance

A separate report on corporate governance pursuant to clause 49 of listing agreementwith Stock Exchange is separately given as part of Board Report.

Directors Responsibility Statement

Pursuant to the Provisions of Section 217(2AA) of the Companies Act, 1956 (here inafter referred as Act) your directors based on the representation from the operatingmanagement confirm that

(i) In preparation of the Annual Accounts the applicable Accounting Standards have beenfollowed along with proper explanation relating to material departure.

(ii) They have in selection of the accounting policies consulted the Statutory Auditorsand applied them consistently and made judgments and estimates that are reasonable andprudent so far as to give true and fair view of the state of affairs of the Company at theend of Financial Year and of the loss of the company for the period.

(iii) They have taken proper and sufficient care to the best of their knowledge andability for the maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities.

(iv) They have prepared the Annual Accounts on a ‘going concern basis’.

The required information in accordance with section 217(1)(e) of the Companies Act,1956 read with Companies (Disclosure of particulars in respect of Board of Directors)Rules 1988 is given in the annexure.


Your directors sincerely appreciates the cordial and harmonious relations with thestaff , workers and other employees through out the year.

Audit Committee

The Audit Committee of the Board of Directors as required U/S 292A of the CompaniesAct, 1956 consisting of the following Non–Executive and Independent Directors

• Dr. S.L. Keswani

• Sri Om Narayan Chairman

• Sri Amit Khandelwal


M/s Mittal Gupta & Company, Chartered Accountants, Statutory Auditors of thecompany will retire at the forth coming Annual General Meeting and being eligible offersthemselves for reappointment & proposed to be re-appointed.


We take this opportunity to place on record our appreciation for the continuedco-operation and help extended to us by the various Financial Institutions and Banks. TheBoard also appreciates the commitments and valuable contribution of all the employees inensuring the smooth operation of the company.

For and on behalf of the Board of Directors
R.K. Agrawal Om Narayan
Whole Time Director Director
Place : New Delhi
Dated : 29.11.2011

Addendum to the Director’s Report

Pursuant to Section 217(3) of the Companies Act, 1956 following explanations are givenon remarks contained in the Auditors Report :

Observations of Auditors in their report read with the relevant notes to account areself-explanatory and therefore do not require further explanation.


(A) Conservation of Energy

Energy conservation measures taken.

I. Instrumentation of Boilers and other machineries to save energy.

II. Steps are taken for further reduction of consumption of energy.

III. Total energy consumption per unit of Production is given as per FORM A enclosed.

(B) Technology Absorption

Efforts made in technology absorption are given as per FORM B enclosed.

(C) Foreign exchange earning and outgo.

The company has not earned any foreign exchange during the year under report.

The foreign exchange outgoings are outlined in note No.11 (b) in Schedule No.17.


Power and Fuel Consumption

Current Year Previous Year
1. Electricity
(a) Purchased units 251102 609602
Total Amount (Rs.) 966557.00 2462636
Rate/Unit (Rs.) 3.77 4.04
(This is Factory Load only)
(b) Own Generators Through 30680 49400
Diesel Generators Units
Unit/Liter of HSD 2.60 2.60
Cost/Unit (Rs.) 15.77 13.74
Through Steam Turbine Units 8556124 11277825
2. Coal (Used in Boiler)
Quantity (MT)


Total Cost (Rs.)



Average Rate Ton (Rs.) NIL NIL
3. Other Internal Generation NIL NIL
4. Consumption/MT of
Production (Qtls.) 216252 177700
Electricity (Units/Qtls.)


Disclosure of particulars with respect to Technology Absorption

Research & Development

1. Specific areas in which R & D carried by the Company.

M/s Dhampur Sugar Mills Ltd., Dhampur, the promoter Company has a separate Research& Development department to develop new variety of seeds for higher sugar recovery.

2. Benefits derived as a result of above R & D :

Improvement in Product Quality, Higher yield of sugar cane and Better recovery havebeen achieved.

3. Future Plan of Action

The Company proposes to introduce certain promising variety of cane suitable for itsarea of operation.

The trial and experiment would be undertaken on continuous basis.

4. Expenditure in R & D

Expenditure made is non allocable.

Technology absorption, Adoption and innovation

(a) To Economise the operation and for energy conservation, technology available inIndia like cooling towers and process control system have been installed.

(b) Improved juice clarification for manufacture of better quality sugar (Low ICUMSA)

5. Benefits derived as a results of the above efforts :

Product quality has improved.

Improved Technology :

(a) Technology imported No technology was imported
(b) Year of import NIL
(c) Has technology been fully absorbed NA
Foreign Exchange Earnings and Outgo :
Earnings NIL
Outgo NIL
For and on behalf of the Board of Directors
R.K. Agrawal Om Narayan
Whole Time Director Director
Place : New Delhi
Dated : 29.11.2011