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Kesar Enterprises Ltd.

BSE: 507180 Sector: Agri and agri inputs
NSE: KESARENT ISIN Code: INE133B01019
BSE 14:58 | 19 Feb 33.00 0.30
(0.92%)
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33.90

HIGH

33.90

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31.50

NSE 05:30 | 01 Jan Kesar Enterprises Ltd
OPEN 33.90
PREVIOUS CLOSE 32.70
VOLUME 1205
52-Week high 62.50
52-Week low 26.10
P/E
Mkt Cap.(Rs cr) 33
Buy Price 32.00
Buy Qty 100.00
Sell Price 33.00
Sell Qty 17.00
OPEN 33.90
CLOSE 32.70
VOLUME 1205
52-Week high 62.50
52-Week low 26.10
P/E
Mkt Cap.(Rs cr) 33
Buy Price 32.00
Buy Qty 100.00
Sell Price 33.00
Sell Qty 17.00

Kesar Enterprises Ltd. (KESARENT) - Director Report

Company director report

Dear Members

Your Directors present to you the 84th Annual Report and audited financial statementsfor the financial year ended 31st March 2019.

FINANCIAL RESULTS:

(Rs. In Lakh)

2018-19 2017-18
Profit / (Loss) before interest depreciation & taxation 2369.26 1464.13
Less: Interest and Finance Charges 4478.19 4316.66
Profit / (Loss) before Depreciation & taxation (Cash Loss) (2108.93) (2852.53)
Less: Depreciation 1913.45 1819.14
Less: Taxation (Deferred Tax) - -
Profit / (Loss) (4022.38) (4671.67)
Other Comprehensive Income
Item that will not be reclassified to profit or loss:
(i) Actual loss on defined benefit obligation (41.38) (19.91)
(ii) Effect of measuring investment at fair value (673.40) (668.13)
Net Profit or Loss for the year (4737.16) (5359.71)

For the Financial Year 2018-19 there is a loss of Rs.4737.16 lakh as against the lossof Rs.5359.71 lakh in the previous year.

During the year under review the Company has incurred huge cash loss due to mismatchbetween high Sugarcane Prices and low Sugar Sales realisation. Over the last few yearsthe Sugar Industry had faced severe difficulties on account of high sugar cane prices setby the State Government lower sugar prices and consequential inadequate recovery of costof production. These factors have adversely affected the Company's operations andfinancial performance. Hence the entire net worth of the Company is eroded and itscurrent liabilities are in excess of current assets.

In view of the above your Directors have not recommended any dividend for thefinancial year 2018-19.

WORKING OF THE DIVISIONS

Sugar Division

The crushing for the Season 2018-19 started on 02.11.2018 i.e. 1 day earlier ascompared to 03.11.2017 in the previous season and ended on 4.05.2019 as against 30.04.2018i.e. 4 days later than the previous season.

During the season the plant crushed 109.86 lakh quintals of sugarcane in 184 days asagainst 105.99 lakh quintals in 179 days in the previous season. Crushing was higher by3.87 lakh quintals during this season due to additional cane area allotted to us by theState Government better cane yield and more supply of sugarcane by the farmers on accountof the trust they had developed with us due to timely cane price payment during theprevious year. The overall sugar recovery has been the highest at 10.91% as against 10.63%in the previous season. This was due to our cane development programme of changing thevarieties into early maturing high sugar canes. This Sugar Season the Sugar production isthe highest in the history of the Company at 12.03 lakh quintals as against 11.27 lakhquintals in the previous season.

For the Season 2018-19 the Central Government had announced a Fair & RemunerativePrice [FRP] of sugarcane at Rs.275/- a quintal at a base recovery of 10%. The UPGovernment had retained the State Advised Price (SAP) of Sugarcane at Rs.315/- (normalvariety) a quintal.

During the last few years the cost of production in UP was the highest in the countrywhich rendered the UP Sugar Industry unviable cash-starved and uncompetitive. There is anurgent need to rationalize the cane pricing policy in

UP and adopt a 'linkage formula' as recommended by the Rangarajan Committee linkingsugar cane price to sugar realisation. The U P Government had announced the formation of ahigh level Committee to determine a fair Sugarcane Pricing Policy. This is the only longterm solution for stability & viability of the Sugar industry. The report of the HighLevel Committee is yet to be announced.

During the Season 2018-19 Molasses produced was 4.78 lakh quintals as against 4.62lakh quintals the previous season.

The UP Government had announced the Molasses Policy for 2018-19 (November-October)wherein the molasses reservation ratio forthe country liquor manufacturers had beenretained at 12.50%.

During the year under review there has been decrease in sugar prices from the levelsprevailing in the previous year. This has resulted in the Company making losses for thefinancial year 31.03.2019. The industry outlook is negative in the short term.

Power Division

During the Sugar Season 2018-19 the Plant started on 29.10.2018 as against 31.10.2017in the previous season and operated till 01.07.2019 due to higher crushing of sugarcaneand purchase of additional alternate fuel.

The Plant consumed 3.01 lakh MT of bagasse and 0.65 lakh MT of alternate fuel togenerate 1.77 lakh MW power as against 2.86 lakh MT of bagasse and 0.55 lakh MT ofalternate fuel to generate 1.65 lakh MW power in the previous Season. The total powerexported to the grid of Uttar Pradesh Power Corporation Limited (UPPCL) upto 02.07.2019was 1.28 lakh MW amounting to Rs.75.14 crore as against 1.20 lakh MW amounting to Rs.66.83crore in the total previous Season.

Spirits Division

The Spirits Division was put out of operations as the Company was required to installMultiple Effect Evaporation system [MEE] to reduce the effluent volume as well as to domodifications in the Reverse Osmosis Plant & Bio-composting which would enable theDistillery to become zero discharge compliant. As the Company did not have suchcapability the Company had voluntarily taken a shut down of its Distillery operationssince October 2015.

With a view to revive the operations due to a pollution policy by the CentralGovernment the Company has installed the necessary Multiple Effect Evaporation system andCondensate Polishing Unit [CPU] as basic pollution control equipments. This will take careof the preliminary requirements of Pollution Control Board (PCB). However to comply withthe Zero Liquid Discharge (ZLD) norms of PCB the Company will have to install anincineration boiler in due course to maintain continuity of the Distillery PlantOperations in the monsoon period.

The Distillery started production from 1st week of June 2019 and continued till30.06.2019 as the Distillery cannot be operated during monsoon by adopting tobio-composting method. During this period we have produced around 10.81 lakh BL ofRectified Spirit (RS).

SUBSEQUENT FINANCIAL YEAR 2019-20

Sugar Division

The crushing for the Season 2019-20 is expected to start in the first week of November2019.

During the Financial Year 2019-20 the sugar price is expected to be steady due togovernment intervention. This may result into the Company generating better operationalmargin gradually. The industry outlook is also positive in the short term and long termwith sugar prices expected to be stable.

The Central Government has announced FRPforthe season 2019-20 keeping it the same i.e.Rs. 275/- a quintal @ 10% in recovery as per previous year with increase in every 10% inrecovery.

Spirits Division

The Distillery is planned to start in the last week of October 2019. The Company maystart its liquor operations also subject to obtaining necessary approvals from the StateGovernment.

Power Division

The Cogen Power Plant will restart in end of October 2019.

SHARE CAPITAL

The Paid up Share Capital as on 31.3.2019 was Rs.10.08 crore. During the year underreview the Company has not issued any shares.

BOARD AND AUDIT COMMITTEE MEETINGS

During the year 6 Board Meetings and 4 Audit Committee Meetings were heId the detailsof which are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Duringthe year under review as informed in the last Directors' Report:

1. Shri Prakash Dubey had resigned as Director of the Company with effect from30.04.2018 due to personal reasons. The Board of Directors had placed on record itssincere appreciation for the valuable support and guidance given by Shri Prakash Dubey tothe Company during his tenure as Director of the Company.

2. On 30.04.2018 Shri A S Ruia was appointed as Additional Director in the category ofIndependent Director of the Company by the Board of Directors of the Company asrecommended by the Nomination & Remuneration Committee. Thereafter he was appointedas Independent Director for a second term of 5 years by the Shareholders of the Companythrough Special Resolution at the 83rd AGM.

3. Shri D J Shah had resigned as a Whole-Time Director w.e.f. 30.04.2018 and he iscontinuing as the Company Secretary with his earlier designation - "Sr. VicePresident [Legal] & Company Secretary" as one of the three Key ManagerialPersonnel as per section 203 of the Companies Act 2013.

Pursuant to Section 152 of the Companies Act 2013 as there is no otherNon-Independent Director who will retire by rotation at the ensuing AGM Shri H RKilachand Chairman & Managing Director has been proposed to retire by rotation at the84th AGM and he being eligible offers himself for reappointment. As per the SEBI (LODR)Regulations 2015 a brief profile of Shri H R Kilachand forms part of the CorporateGovernance Report.

All the Independent Directors have given declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) of the SEBI (lOdR) Regulations 2015. As per Regulation 25(8) of the ListingRegulations the Independent Director have confirmed that they are not aware of anycircumstances or situation which exits or may be reasonablly anticipated that couldimpair or impact their ability to discharge their duties.

Pursuant to the provisions of Regulation 25 of the SEBI (LODR) Regulations 2015 theCompany has formulated a programme for familiarising the Independent Directors with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model of the Company etc through various initiatives.The details of the aforementioned programme are available at the Company's websitewww.kesarindia.com/ investors/corporate governance/policies.

BOARD EVALUATION / APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS AND SENIORMANAGEMENT

Pursuant to the provisions of the Companies Act 2013 the Board carried out an AnnualPerformance Evaluation of its own performance the Directors individually as well as theevaluation of the working of its Audit Committee and Nomination & RemunerationCommittee.

During the year under review the Company has revised the Nomination & Remunerationpolicy as per Section 178 of the Companies Act 2013. The Board has on the recommendationof the Nomination & Remuneration Committee framed a policy for selection andappointment of Directors Senior Management and their remuneration. The RemunerationPolicy is stated in the Corporate Governance Report. The details of the Nomination &Remuneration Policy are available on the website of the Companywww.kesarindia.com/investors/corporate governance/policies.

KEY MANAGERIAL PERSONNEL

Shri H R Kilachand Chairman & Managing Director Shri D J Shah Sr. Vice President(Legal) & Company Secretary and Shri Rohit Balu Chief Financial Officer are the KeyManagerial Personnel of the Company as per Section 203 of the Companies Act 2013.

MATERIAL CHANGES & COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN END OF THEFINANCIAL YEAR & DATE OF THIS REPORT:

Ms. Bhumika Batra (DIN: 03502004) Non- Executive Independent Director of the Companyhas vide her letter dated 22.07.2019 tendered her resignation as an Independent Directorof the Company with effect from 22.07.2019 due to personal reasons and certain otherpre-occupations. There are no other material changes & commitments affecting thefinancial position of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(3)(c) of the Companies Act 2013 the Boardof Directors to the best of their knowledge hereby state that:

i) in preparation of the annual accounts for the financial year ended on 31st March2019 the applicable accounting standards had been followed along with proper explanationrelating to material departures;

ii) 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 loss for that period;

iii) 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;

iv) the Directors had prepared the Annual Accounts for the financial year ended on 31stMarch 2019 on a going concern basis.

v) the Directors had laid down proper internal financial controls in place and thatsuch internal financial controls are adequate and were operating effectively.

vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

RELATED PARTY TRANSACTIONS

There are no contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 and hence Form AOC-2 is not annexed. The Members mayrefer Note 40 to the Notes to Accounts for further details of routine transactions enteredinto with the Related Parties.

All Related Party Transactions were placed before the Audit Committee/Board asapplicable for their approval. Omnibus approval has been taken for the transactions whichare repetative in nature. A quarterly statements of all such transactions were placebefore the Audit Committee for review specifying the nature value and terms andconditions of the transactions.

A policy of Related Party Transactions as approved by the Audit Committee and the Boardof Directors is uploaded on the website of the Companywww.kesarindia.com/investors/corporate governance/policies.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to Accounts. The credit facilitieshave been classified as Non-Performing Assets (NPA) by Banks. The Company is makingefforts to settle with the Banks.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material Orders passed by the Regulators or Courts.

MANAGEMENT DISCUSSION & ANALYSIS REPORT AND CORPORATE GOVERNANCE REPORT

The Management Discussion & Analysis Report is annexed and forms part of thisAnnual Report. The Company has complied with the Corporate Governance requirements asstipulated under Regulation 34 of the SEBI (LODR) Regulations 2015. A separate section onCorporate Governance along with Certificates from the Secretarial Auditors confirmingthecompliances are also annexed andform partofthe Annual Report.

CERTIFICATE FROM CMD AND CFO

As prescribed in Part B of Schedule II of the Listing Regulations a Certificate hasbeen obtained from Shri H R Kilachand Chairman & Managing Director (CMD) and ShriRohit Balu Chief Financial Officer (CFO) of the Company for the Financial Year 2018-19with regard to the financial statement and other Matters whcih forms Part of the CorporateGovernance Report.

INSIDER TRADING

In compliance with the SEBI regulation on prevention of Insider Trading your Companyhas framed a comprehensive code which lays down guidelines and advises the Directors andemployees of the Company on procedures to be followed and disclosures to be made whiledealing in securities of the Company. During the year under review the Company adoptedCode of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation and the Code of Conduct for Prohibition of Insider Trading in accordance withSEBI (Prohibition of Insider Trading) Regulations 2015 as amended vide its Notificationdated 31.12.2018 which is effective from 01.04.2019. The necessary changes are made inthe Company's existing Code of Conductfor the Prohibition of InsiderTrading.

SEXUAL HARASSMENT POLICY

The Company has constituted an Internal Complaint Committee (ICC) for prevention andredressal of complaints / grievances on the sexual harassment of women at work places.During the year under review no incident had taken place.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars with respect to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 aregiven in the Annexure "A" forming part of this Report. During the year underreview there were no foreign Exchange Earnings and Outgo.

INSURANCE

The Company has taken adequate insurance for all its properties.

DEPOSITS

As per the Companies Act 2013 the Company is not eligible to raise Deposits in termsof Section 73 of the Act the Company has not accepted / renewed any Deposits.

AUDITORS

As per Section 139 of the Companies Act 2013 as amended ratification of appointment ofM/s. Haribhakti & Co. LLP Chartered Accountants is not required to be placed at theAGM. Their appointment is valid upto the conclusion of the 85th AGM.

No frauds have been reported by the Auditors during the Financial Year 2018-19.

AUDITORS' REPORT

There is no qualification reservation or adverse remark in the Auditors' Report.

INTERNAL CONTROL SYSTEM & INTERNAL AUDITORS

The Company has an adequate Internal Control System. All transactions are properlyauthorized recorded and reported to the Management. The Company has Independent AuditorsM/s. Ashok Jayesh & Co. Chartered Accountants to review critical areas of operations.The Audit Reports are reviewed periodically by the Management and the Audit Committee ofthe Board and appropriate measures are taken to improve the process.

COST AUDITOR

Pursuant to Sections 148 read with Rule 14 of the Companies (Audit and Auditors) Rules2014 and all other applicable provisions of the Companies Act 2013 the Board hadappointed Rishi Mohan Bansal Cost Accountant as Cost Auditor of the Company to conductCost Audit for the products 'Sugar & Alcohol' and 'Electricity Generation' for theyear ended 31.3.2019. The Cost Audit Report for the same will be submitted to the CentralGovernment before 30.09.2019. Similarly as recommended by the Audit Committee andapproved by the Board of Directors of the Company the appointment and payment ofremuneration to Rishi Mohan Bansal Cost Accountant Kanpur as Cost Auditor has beenplaced before the Shareholders at the 84th AGM for their ratification to conduct theaudit of the Cost records of the Company relating to Sugar & Industrial Alcohol andGeneration of Power for the year ending 31st March 2020.

ANNUAL RETURN

As required under Section 134(3)(a) of the Act the Annual Return is put up on theCompany's website and can be accessed athttp://www.kesarindia.com/investors/communications .

SECRETARIAL AUDITOR

Pursuant to Section 204 of the Companies Act 2013 read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s. Ragini Chokshi & Co. Practicing Company Secretary as SecretarialAuditor of the Company to undertake the Secretarial Audit and provide Secretarial AuditReport in Form MR3. The Report of the Secretarial Audit Report is annexed herewith asAnnexure- "B". The said report contain the following remarks:

(i) The credit facilities have been classified as Non-Performing Assets (NPA) by theBanks.

(ii) The audited financial results for the quarter and year ended March 312018pursuant to the Regulation 33 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 were filed by the Company withBSE Ltd. and National Stock Exchange of India Ltd. (NSE) on June 13 2018 as against thedue date of May 30 2018 and the Company had paid the fine of Rs. 82600/- to NSE in thisregard;

The reply to the above remarks are as under:

(i) The Company is making efforts to settle with the Banks.

(ii) The Audited Financial Results for the Quartered and Financial Year ended31.03.2018 could not be prepared and filed with Stock Exchanges within the stipulatedtimelines due to first time implimentation of IND AS.

CORPORATE SOCIAL RESPONSIBILITY

As required under Section 135 of the Companies Act 2013 the Company has constituted aCorporate Social Responsibility Committee. However the Company is not required to spendany amount duringthe subsequent financial year as per the applicable provisions of theAct.

EMPLOYEES

Relation with the employees remained cordial throughout the year. Your Directors placeon record their sincere appreciation for the devoted services of the employees of theCompany. The information required pursuant to Section 197(12) of the Companies Act 2013read with Rule 5(1) of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees on the payroll of the Company in India isprovided as Annexure-"C" which forms part of this report.

The information required pursuant to Section 197 read with Rule 5(2)&(3) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company will be provided upon request. In terms of Section 136 of theAct the Report and Accounts are being sent to the Members and others entitled theretoexcluding the information on employees' particulars which is available for inspection bythe Members at the Registered Office of the Company during business hours on working daysof the Company up to the date of the ensuing Annual General Meeting. Any member interestedin obtaining such particulars may write to the Company Secretary at the registered officeof the Company.

ACKNOWLEDGEMENT

Your Directors would like to place on record their grateful appreciation for theassistance and cooperation extended by the Banks Financial Institutions and thewholehearted support extended by the Shareholders during the year under review.

By Order of the Board of Directors
H R KILACHAND
14th August 2019 Chairman & Managing Director
DIN:00294835