Your Directors have pleasure in presenting the 22nd Annual Report and theaudited financial statements for the year ended 31st March 2017.
|1. FINANCIAL RESULTS: ||For the Year ended ||For the Year ended |
| ||31.03.2017 ||31.03.2016 |
|Physical Performance || || |
|Cane crushed in Tonnes ||740826 ||1126691 |
|Sugar bagged In Quintals ||683988 ||1056839 |
|Financial Performance Rs. Crores || || |
|Turnover ||519.29 ||510.27 |
|Other Income ||7.94 ||9.02 |
|Profit Before Tax ||46.73 ||8.78 |
|Surplus from Previous Year ||94.08 ||88.74 |
|Amount available for appropriation ||125.82 ||97.50 |
|Appropriations || || |
|Transfer to General Reserve ||4.00 ||-- |
|Proposed Dividend ||10.20 ||2.83 |
|Tax on proposed Dividend ||2.08 ||0.58 |
|Carried forward ||109.54 ||94.09 |
During the financial year under review your Company recorded a Turnover of Rs. 519.29crores (Prev.
Year: Rs. 510.27 cr.) including Excise Duty of Rs. 22.33 crores (Prev.Year: Rs.17.69cr.) and Inter-divisional transfers of Rs. 90.27 crores (Prev. year: Rs.120.12 cr.). Theprofit before finance cost and depreciation is Rs. 64.39 crores. Profit before tax is Rs.46.73 crores and after adjustments relating to payment of Income Tax pertaining to earlieryears and Deferred Tax the Profit after tax is Rs. 31.74 crores.
The Board of Directors recommends a dividend of Re. 0.90 per equity share of face valueof Re.1/- each on the Paid-up Equity Capital for the year ended 31.03.2017 as againstRe.0.25 per equity share approved for the previous year ended 31.03.2016. The dividendrecommended by your Directors if approved at the ensuing Annual General Meeting by theShareholders would be paid within the stipulated time.
4. SHARE CAPITAL AND RESERVES:
The share capital of the Company is Rs.11.33 crores. The General Reserve as at01.04.2016 was Rs.112.09 crores and after transferring from Net Profits a sum of Rs.4.00crores to the General Reserve for the year ended 31.03.2017 the General Reserve stood atRs.116.09 crores as on 31.03.2017. The total Reserves and Surplus has increased toRs.227.64 crores as on 31.03.2017 as against Rs.208.18 crores as on 31.03.2016.
5. SUBSIDIARY COMPANIES:
Your Company has two wholly-owned Subsidiaries viz The Eimco-K.C.P. Limited and KCPSugars Agricultural Research Farms Limited. Both the wholly-owned subsidiaries areunlisted companies and do not fall under the category Material Subsidiary interms of Regulations 16 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. There are no Associated Companies within the meaning of section 2(6) ofthe Companies Act 2013 and there has been no material change in the nature of business ofthe subsidiaries. A statement containing salient features of the financial statement ofsubsidiaries in Form AOC-1 forms part of the Boards Report.
6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
A comprehensive discussion and analysis report on the industrys structure as wellas on the financial and operational performance of the Company is contained in theManagement Discussion and Analysis Report which forms an integral part of theBoards Report (Annexure I).
7. CORPORATE GOVERNANCE REPORT:
Pursuant to Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 Corporate Governance Report together with the Certificate from theCompanys Statutory Auditors confirming the compliance of conditions on CorporateGovernance is given in Annexure II to Boards Report.
8. EXTRACT OF ANNUAL RETURN:
In pursuance of section 134(3) of the Companies Act 2013 the extract of the AnnualReturn as provided under section 92(3) of the Companies Act 2016 is given in AnnexureIII.
9. DIRECTORS RESPONSIBILITY STATEMENT:
As required by Section 134 of the Companies Act 2013 your Directors certify asfollows: i. that in the preparation of the annual accounts the applicable AccountingStandards have been followed and that there were no material departures there-from; ii.that the Directors have 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 ended31st March 2017 and of the Profit of the Company for that year; iii. that the Directorshave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities; iv. thatthe Directors have prepared the annual accounts on a going concern basis. v. That thedirectors have laid down internal financial controls to be followed by the Company andthat such financial controls are adequate and are operating effectively. vi. That thedirectors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
10. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013:
There is no loan / guarantee / investment covered under section 186 of the CompaniesAct 2013 during the financial year 2016-17. During the financial year under review theCompany has provided a loan to one of its wholly-owned subsidiary company and the amounthas been fully recovered during the financial year itself. In pursuance of Rule 11 ofCompanies (Meetings of Board and its powers) Rules 2014 the requirement of section186(3) is not applicable.
11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The Company has entered into Rental Lease Agreements with related parties in theordinary course of business and on arms length basis. The value of such transactions iswell within the threshold limit prescribed under Rule 15 of Companies (Meetings of Board& its powers) Rules 2014 and hence outside the ambit of section 188 of the CompaniesAct 2013. Disclosure of particulars of contracts / arrangements entered into by theCompany with the related parties in pursuance of section 188(1) of the Companies Act inForm AOC-2 forms part of the Boards Report. (Annexure IX)
12. MATERIAL CHANGES AND COMMITMENT:
There is no change in the nature of business of the Company during the financial yearunder review. There are no material changes or commitments affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany and the date of Boards Report.
13. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE INFLOW AND OUTGO:
Information relating to Conservation of Energy Technology absorption Foreign Exchangeinflow and outgo as required under section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of Companies (Accounts) Rules 2014 is furnished in Annexure IV.
14. CORPORATE SOCIAL RESPONSIBILITY (CSR):
The CSR policy of the Company and the details about the measures taken by the Companyon CSR activities during the financial year as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 have been disclosed in Annexure V in pursuance ofsection 135 of the Companies Act 2013.
15. PARTICULARS OF EMPLOYEES:
Statement required under Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is not attached to this Report as none of the employeeswas in receipt of remuneration as prescribed under this Section and Rules. The informationrequired pursuant to section 197 of the Companies Act 2013 read with Rule 5 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is furnished inAnnexure VI.
16. PERSONNEL AND INDUSTRIAL RELATIONS:
The Employee relations scenario continued to be harmonious and congenial. Acknowledgingthis your Company has been awarded for outstanding efforts in maintaining cordialIndustrial Relations and Labour Welfare by Government of Andhra Pradesh.
Director retiring by rotation:
Smt.Irmgard Velagapudi M.Rao Director who retires by rotation at this AGM andeligible for reappointment is proposed to be reappointed as Director at this AGM. TheBoard recommends her reappointment and accordingly resolution seeking approval of membersfor her reappointment has been included in the Notice for the forthcoming Annual GeneralMeeting along with her brief profile.
Appointment of Shri.K.R.Adivarahan as an Independent Director:
Shri.K.R.Adivarahan was coopted as an Additional Director at the Board Meeting held on21.09.2016 to hold office upto the date of the ensuing Annual General Meeting. TheCompany has received notice in writing from a Member along with a deposit of Rs.100000/-proposing the candidature of Shri.K.R.Adivarahan for the office of Director at the 22ndAnnual General Meeting under the provisions of Section 149 and 152 of the Companies Act2013. A written consent to act as Director and also a Declaration that the criteria ofindependence as provided in section 149(6) of the Companies Act 2013 are met andcompliance with Regulation 25 of SEBI (LODR) Regulations 2015 have been obtained fromShri. K.R.Adivarahan. None of the directors other than Shri.K.R.Adivarahan / keymanagerial personnel of the Company and their relatives are concerned or interestedfinancially or otherwise in his appointment as Independent Director. The Board recommendsthe appointment of Shri.K.R.Adivarahan as an Independent Director.
Reappointment of Smt.V.Kiran Rao as Executive Director:
The term of office of Smt.V.Kiran Rao as Executive Director ends on 28.07.2017 and herreappointment for a period of five years from 29.07.2017 not liable to retire byrotation was considered at the Board Meeting based on the recommendations of theNomination & Remuneration Committee held on 29.05.2017 and was decided to recommendher reappointment to the members at the ensuing 22nd Annual General Meeting.
M/s. B.Purushottam & Co. Chartered Accountants were first appointed as StatutoryAuditors of the Company at the 11th Annual General Meeting held on 12.10.2006. In terms oftheir appointment made at the 21st AGM held on 21.09.2016 they are holding office ofStatutory Auditors of the Company upto the conclusion of the 22nd Annual General Meetingand hence would retire at the conclusion of the ensuing 22nd AGM.
As per second proviso to section 139(2) of the Companies Act 2013 a transition periodof 3 years from the commencement of the Companies Act 2013 is provided to appoint a newAuditor when the existing Auditors firm has completed tenure of eight years as onthe date of commencement of the Companies Act 2013. M/s. Suri & Siva CharteredAccountants (FRN 004284S) have consented to the said appointment as statutory auditors ofthe Company and confirmed that the appointment if made would be within the limitsspecified under section 141(3)(g) of the Companies Act 2013. They have further confirmedthat they are not disqualified to be appointed as statutory auditors of the Company interms of the provisions of the proviso to section 139(1) section 141(2) and section143(3) of the Companies Act 2013 read with the provisions of the Companies (Audit &Auditors) Rules 2014.
None of the directors / key managerial personnel of the Company and their relatives areconcerned or interested financially or otherwise in the resolution set out at item No..(4)of the Notice.
The Board recommends the resolution set forth item No.4 of the Notice for approval ofthe Members.
19. COST AUDIT:
Mr. V. Srinivasan had been appointed by the Board of Directors of the Company as CostAuditor to conduct the Cost Audit in respect of Sugar Industrial Alcohol ElectricityFertilizer Calcium Lactate and CO2 for the financial year 2016-17 and his remunerationwas ratified by the members at the 21st Annual General Meeting held on 21.09.2016. TheCost Audit reports for 2015-16 were e-filed with the Ministry of Corporate Affairs NewDelhi vide SRN G-10010262 dt. 26.08.2016. The Cost Audit Reports for 2016-17 are due forsubmission on or before 27.09.2017.
In pursuance of Section 148 of the Companies Act 2013 your Directors on therecommendation of the Audit Committee subject to ratification of his remuneration by theshareholders at this AGM have appointed M/s. SRR & Associates Cost AccountantsChennai (FRN 000992) as the Cost Auditors to conduct the Cost Audit of Sugar IndustrialAlcohol Electricity Fertilizer Calcium Lactate and CO2 for the financial year ending31st March 2018. M/s SRR & Associates confirmed that its appointment is within thelimits of section 148 of the Companies Act 2013 and has also certified that the Firm isfree from any disqualifications specified under section 148 of the Companies Act 2013.The Audit Committee has also received a certificate from the said Firm of Cost Auditorscertifying its independence and arms length relationship with the Company.
20. SECRETARIAL AUDIT & SECRETARIAL STANDARDS:
In pursuance of section 204 of the Companies Act 2013 the Board of Directors at itsmeeting held on 09.02.2017 appointed M/s. V.Mahesh & Associates Company Secretariesin practice as Secretarial Auditor for the financial year 2016-17 and their report isannexed with the Boards Report. (refer Annex. VII). Pursuant to section 118(10) ofthe Companies Act 2013 the Company observes Secretarial Standards 1 and 2 relating toBoard Meetings and General Meetings prescribed by the Institute of Company Secretaries ofIndia.
X There are no disqualifications reservations or adverse remarks or disclaimers in theStatutory Auditors Cost Auditor and Secretarial Auditors Report.
X The Company since inception remains in the regime of unqualified financialstatements. The Company will comply with SEBI circular dt. 13.08.2012 and Regulation 33 ofSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 and submissionof Form A along with Annual Report.
21. INTERNAL AUDIT:
Pursuant to Section 138(1) of the Companies Act 2013 the Company has appointedShri.S.Manisekaran Chartered Accountant (Membership No.026400) to conduct internal auditof the Company for the financial year 2017-18. The Internal Auditor reports to the AuditCommittee and submits his reports on quarterly basis.
22. CREDIT RATING:
Credit Analysis & Research Ltd (CARE) has upgraded the Credit Rating on yourCompany as CARE A (Single A) for long term bank facilities and reaffirmedCARE A1 (A One) for short term bank facilities and for Fixed Deposit it isCARE A (FD) [Single A (Fixed Deposit] assigned to your Company for the current year. Theratings for the financial year 2017-18 are awaited on this date. Measured through industryyardstick these ratings are considered to be having adequate degree of safety for a sugarmill.
23. ISO CERTIFICATION:
Your Company has been certified consecutively for the past eight years under BS EN ISO22000:2005 BS EN ISO 9001:2000 and OHSAS 18001:2007 for Manufacture of sugar associatedproducts and site activities and Occupational Health and Safety Management system byLloyds Registry Quality Assurance Limited.
24. FIXED DEPOSITS:
As on 31.03.2017 your Company had held deposits of Rs. 50.98 crores as against Rs.40.13crores as on 31.03.2016. As at 31.03.2017 there were matured and unclaimed depositsamounting to Rs. 0.69 crores in respect of 98 deposits. As on the date of this reportamount of unclaimed deposits is Rs.0.68 crores. In compliance with the provisions ofInvestors Education and Protection Fund constituted under Section 124 of the CompaniesAct 2013 the Company has transferred 2 deposits amounting to Rs.1.98 lakhs whichremained unclaimed beyond the period of seven years from the date of maturity to theInvestor Education and Protection Fund.
25. DETAILS OF SPECIFIED BANK NOTES
Details of Specified Bank Notes (SBN) held and transacted during the period 08.11.2016to 30.12.2016 as per clause (x) in Part I Division 1 of Schedule III to the Companies Act2013 are furnished in Note No.42 to financial statements.
26. CEO/CFO CERTIFICATION
CEO/CFO Certification to the Board of Directors Regarding the Financial Statements forthe Financial Year 2016-17 is furnished in Annexure VIII of the Boards Report.
27. STATEMENT OF SUBSIDIARIES:
Statement containing the salient features of the Financial Statements of the Company'stwo wholly owned subsidiaries ( The EIMCO KCP Limited and KCP Sugars Agricultural ResearchFarms Limited) is furnished in Annexure X of the Board's report in Form AOC-I inpursuance of section 129 of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014.
Your Directors would like to take this opportunity to express their deep sense ofgratitude to the Cane growers the Shareholders Banks Institutions Central and Stategovernments Depositors Sugar Dealers Business Associates as also other regulatoryauthorities for their continued support and cooperation. Your Directors would also toplace on record their sincere appreciation for the total commitment dedication and hardwork put in by all the employees which contributed to the Companys progress duringthe year under review.
| ||For and on behalf of the Board of Directors |
|Place : Chennai ||VINOD R. SETHI |
|Date : 29.05.2017 ||EXECUTIVE CHAIRMAN |