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Kothari Sugars & Chemicals Ltd.

BSE: 507190 Sector: Agri and agri inputs
NSE: KOTARISUG ISIN Code: INE419A01022
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Kothari Sugars & Chemicals Ltd. (KOTARISUG) - Director Report

Company director report

To the Members

Your Directors present the 61st Annual Report of the Company together with the AuditedFinancial Statements for the year ended March 31 2022.

Financial Summary & Highlights of the Company (Rs in Lakhs)

Financial Performance 2021 - 2022 2020 - 2021
Net Revenue 43028 42421
Profit/(Loss) before Interest Depreciation 5646 3737
Interest 410 510
Depreciation 1410 1379
Exceptional items (Debit) / Credit 110 497
Profit/(Loss) Before Tax 3936 2345
Tax Adjustments including Deferred Tax 533 443
Profit / (Loss) after Tax before comprehensive Income 3403 1902
Other Comprehensive Income Net of Tax (27) 75
Total Comprehensive Income 3376 1977

Sugar Industry Overview World Sugar:

The world sugar production during the year 2021 - 2022 is expected to be around 183million metric tons as against previous year's 182.7 million metric tons. The sugarconsumption during 2021 - 2022 is expected to be 185.6 million metric tons as against185.2 million metric tons in the previous year. The sugar production in the forthcomingsugar year 2022 - 2023 is expected to be 188.98 million metric tons to end up with amarginal surplus.

India's sugar production for the Sugar Year 2021 - 22 is expected to be around 35million metric tons against previous year's 31.2 million metric tons. This increase inproduction is because of good rainfall increase in cane yield per hectare besidesincreased cane cultivation in Maharashtra. In 2021 - 22 the sugar consumption is expectedto be around 27.2 million metric tons almost same as that of last year.

Tamilnadu's sugar production for the sugar year 2021 - 22 is expected to be around1.09 million metric tons against previous year's 0.90 million metric tons. Last year'srainfall was normal the sugarcane cultivation area is expected to increase by 20% fromthe previous season's level.

The Company's command area has received normal rainfall in most of the command areaswhich will help in getting more area under sugarcane cultivation. On account of this theoverall cane planting area is likely to increase by 20%.

Performance of Business Segment Sugar

Your Company has crushed 874135 tons of cane and produced 844380 quintals of sugaras against crushing of 770823 tons and sugar production of 711130 quintals in theprevious year. In financial year 2021 - 2022 the average Sugar recovery was 9.70% asagainst 9.33% of the previous year. The increase in cane crushing was possible on accountof increase in sugarcane planting area and yield.

Alcohol

Your Company produced 171.96 lakh liters of alcohol during the financial year 2021 -2022 against 140.26 lakhs liters in the previous year. Your Company has supplied 8 lakhliters of Ethanol to Oil Marketing Companies during the ethanol marketing year 2020 -2021. For the marketing year 2021 - 2022 against the order of 10.20 lakhs liters 5.60lakh liters was supplied so far and the balance quantity will be supplied before October'2022.

Co-generation of Power

During financial year 2021 - 2022 the total power generation was 71.66 million unitsagainst 64.427 million units for the corresponding period of 2020 - 2021. The increase inpower production is due to the increase in cane crushing volume. Long term PPA withTANGEDCO continues for Sathamangalam unit with a tariff of Rs. 4.669/Kw-hr. From Katturunit surplus power is being sold to the open access consumers through bilateralagreements / IEX.

Dividend

The Board of Directors met on 24th May 2022 to take account of the full yearperformance various growth opportunities and the ongoing pandemic. After reviewing thisthe Board of Directors has decided not to recommend any dividend for the year 2021 - 2022given the projects that have been lined up and the forward expansion plans.

Conservation of Energy / Technology Absorption / Foreign Exchange Earning and Outgo

(a) Conservation of Energy

Kattur unit Total Power Saving per day
(i) Replacement of 562 KW DC drive and motor with new 560 Kw high efficiency VFD drive and AC VFD motor 1450 Kwh
(ii) Replacement of 3 Nos. Mingler 5.5 Kw motor and 2 Nos. of 7.5 KW motors with new 3.7 Kw high efficiency planetary drive 330 Kwh
(iii) Replacement of 6 nos. of Magma pump drives (6nos of 11.2Kw) with new 7.5 Kw planetary drives 542 Kwh
Sathamangalam unit Total Power Saving per day
(i) Installation of 55 KW - VFD drive for Sugar unit Cooling Tower Fan No.1 288 Kwh
(ii) Installation of 30 KW - VFD drive for Sugar Wooden Cooling Tower Fan 336 Kwh
(iii) Installation of 55 KW 2Nos. - VFD drive for Cogen Cooling Tower Fan No. 1 & 3 576 Kwh
(iv) Installation of 100 KW - VFD drive for Boiler Secondary Air Fan No.1 360 Kwh
(v) Installation of 3.7 KW - Planetary drive for A-Pug mill 120 Kwh
(vi) Installation of PHE for A - Super Heated Wash Water System 420 Kwh

(b) Technology absorption

(i) To reduce the dependency of labour and to reduce cost of cultivation of sugar caneyour company has facilitated development of mechanical cane planters to suit the soil andother field conditions prevailing in the command area. These planter machines can do sixoperations simultaneously thereby reducing the time consumed for planting besides reducingthe cost by over 60%. During 2020 - 2021 season four such machines were deployed throughprogressive entrepreneurs and during 2021-22 season three more machines were added.

(ii) Harvesting of sugar cane is the major labour intensive and expensive activity ofsugarcane cultivation. To reduce the cost and to reduce the dependency of labour yourCompany has deployed about 30 sugarcane harvesters through entrepreneurs. We hope in thecoming years mechanised sugarcane cultivation will play a major role.

(c) Foreign exchange earnings and Outgo

(Rs in Lakhs)

Sl" Particulars No. 2021 - 2022 2020 - 2021
(i) Total Foreign () Exchange earned - -
Total Foreign ( ) Exchange outflow 66.18 2.10

Awards and Recognition

Sathamangalam unit secured first place and the ‘Overall Best Performance Award'in the 52nd Sugarcane Research & Development Workshop of Tamilnadu and Puducherry forthe involvement and inspiration shown by the team of officials and employees during theCrushing Season 2020 -2021.

Research & Development

Your Company has started a Research and Development (R & D) unit for thedevelopment of value added products from Sugar and molasses. A new R& D facility isbeing built near Sriperumpudur at the cost of around Rs.10 Cores. This is expected to beoperational from December 2022.

Board Meetings

During the year 04 Board Meetings and 04 Audit Committee Meetings were held thedetails of which are given in the Corporate Governance Report. The intervening gap betweentwo meetings was within the period as prescribed under the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and MCA circularsthereon.

Directors and Key Managerial Personnel

Mrs. Nina B Kothari (DIN 00020119) Director is liable to retirement by rotation at theensuing Annual General Meeting and being eligible offers herself for re-appointment. Mr.Arjun B Kothari (DIN 07117816) was reappointed as Managing Director with effect from 01stSeptember 2019 for

a period of three years and the Board proposes to reappoint him for another period ofthree years with effect from 01st September 2022 subject to approval of shareholders inthis Annual General Meeting.

Mr. C. V. Krishnan (DIN 01606522) was appointed as Independent Director w.e.f.28.05.2018 for a term of five years and based on the evaluation of his performance and therecommendation of the Nomination and Remuneration Committee the Board proposes toreappoint him for a second term of 5 years as Independent Directors w.e.f. 28.05.2023subject to approval of shareholders in this Annual General Meeting by passing a SpecialResolution in accordance with Section 149 (10) read with Schedule IV of the Act.

Mr. Arjun B Kothari Managing Director Mr. M. Silvester Goldwin Whole Time DirectorMr. R. Krishnan Chief Financial Officer and Mr. R. Prakash Company Secretary are the KeyManagerial Personnel of the Company as per section 203 of the Companies Act 2013.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 and Regulation 16 of the SEBI(LODR) Regulations 2015 that the Independent Directors of the Company meet the criteriaof their Independence laid down in Section 149(6) including the confirmations that theirnames inclusion in the Data Bank and all the Independent Directors were exempted fromundergoing the online proficiency self-assessment test for the Independent Directorspursuant to Rule 6(4) of Companies (Appointment and Qualification of Directors) Rules2014.

During the year under review the Independent Directors met on March 21 2022 withoutthe presence of Non - Independent Directors and members of the Management.

Composition of Audit Committee

The details of composition of Audit Committee are provided in Corporate GovernanceReport of this Annual Report. The Board has not rejected any proposal / recommendations ofAudit Committee during the year.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration. The salient features of the Remuneration Policyare stated in the Corporate Governance Report. The Remuneration Policy approved by theBoard of Directors is posted on the website of the Company www.hckotharigroup.com/kscl

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named "Whistle Blower Policy" to deal withgenuine concerns if any raised by the Directors / Employees. The details of VigilMechanism / the Whistle Blower Policy are explained in the Corporate Governance Report andalso posted on the Company's website www.hckotharigroup.com/kscl

Prevention of Insider Trading

The Company has adopted a Code of Prevention of Insider Trading with a view to regulatetrading in securities by the Promoters Directors and Designated Persons of the Company.The Code requires pre-clearance for dealing in the Company's shares and prohibits thepurchase or sale of Company shares by the Promoters Directors and the designated personswhile in possession of unpublished price sensitive information in relation to the Companyand during the period when the Trading Window is closed.

Directors' Responsibility Statement

In terms of Section 134(5) of the Companies Act 2013 the Directors state that:

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no 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;

(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; and

(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.

Share Capital

The paid-up equity share capital of the Company as on March 31 2022 was ' 8288.86Lakhs. The Company has neither issued any shares with differential voting rights norgranted stock options or sweat equity.

Annual Return

As required under Section 92(3) copy of Annual Return

is placed on the Company's website.

The web link to access the annual return is

http://hckotharigroup.com/kscl/?q=node/20

Auditors

a) Statutory Auditors

M/s. P. Chandrasekar LLP Chartered Accountants (Registration No.000580S/S200066) havebeen appointed as statutory auditors of the Company till the conclusion of 61st AnnualGeneral Meeting.

At the ensuing AGM the first term of five years of M/s. P. Chandrasekar LLPChartered Accountants shall expire and they are eligible for re-appointment for anotherterm of 5 years under the provision of the Companies Act 2013. The Company has receivedtheir written consent pursuant to section 139 of the Companies Act2013 and a certificatethat they satisfy the criteria provided under section 141 of the Companies Act 2013 andthe Rules frame there under confirming their eligibility for re-appointment as Auditorsof the Company. As required under SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Auditors have confirmed that they hold a valid certificate issuedby the Peer Review Board of the Institute of Chartered Accountants of India.

Your Directors have therefore proposed to appoint M/s. P. Chandrasekar LLP CharteredAccountants as Statutory Auditors of the Company subject to the approval of theshareholders at the ensuing AGM. There are no qualifications or observations or anyadverse remarks made by the Auditors in their Report on the Financial Statements for theyear 2021 - 22.

b) Cost Auditor

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Cost Audit Records maintained by the Companyin respect of its Sugar Co-gen and Distillery Unit are required to be audited. YourDirectors on the recommendation of the Audit Committee appointed Mr. K. SuryanarayananCost Accountant in practice for conducting the audit of cost records of the Company andthe remuneration payable to the Cost Auditor is required to be ratified by the Members ina general meeting. Accordingly a Resolution seeking Member's ratification for theremuneration payable to Mr. K. Suryanarayanan Cost Accountant is included at Item No. 04of the Notice convening this Annual General Meeting.

c) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M. Alagar of M/s. M. Alagar and Associates Chennai Company Secretary inPractice to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis forming part of this Annual Report. The Secretarial Report does not contain anyqualification or observations.

Deposits

The Company has not accepted deposits either from the members or public falling withinthe ambit of Chapter V of the Companies Act 2013 and The Companies (Acceptance ofDeposits) Rules 2014 during the year hence there were no outstanding deposits duringand at the end of the financial year 2021 - 2022.

Significant and Material Orders Passed by the Regulators

There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.

Internal Financial Control Systems and their Adequacy

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Internal Audit function is carried out by an independentfirm of Chartered Accountants. The scope and authority of the Internal Audit function isdefined by the Audit Committee. The Internal Audit Reports are placed before the AuditCommittee for its scrutiny and suggestions if any. The Internal Auditor attends the AuditCommittee meetings. The Internal Auditors monitor and evaluate the efficacy and adequacyof the internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the Report ofthe Internal Auditors the Company undertakes corrective action in the respective areasand strengthens the controls.

Particulars of Loans Guarantees or Investments

The Company has not given any Loans or Guarantees covered under the provisions ofsection 186 of the Companies Act 2013. The details of the general investments made by thecompany are given in the notes to the financial statements.

Risk Management

Pursuant to the requirement of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has laid down the procedures to inform Board

Members about the risk assessment and minimization procedures. Accordingly the Companyannually submits the Risk Management Review Report to the Board for its review andsuggestions.

Corporate Social Responsibility Policy

Pursuant to the provisions of section 135 and schedule VII of the Companies Act 2013Corporate Social Responsibility (CSR) Committee was formed to recommend (a) the policy onCorporate Social Responsibility (CSR) and (b) implementation of the CSR Projects orPrograms to be undertaken by the Company as per CSR Policy for consideration and approvalby the Board of Directors. The policy on Corporate Social Responsibility as approved bythe Board is posted on the Company's website www.hckotharigroup.com/kscl

As part of its initiatives under "Corporate Social Responsibility" (CSR) thecompany has contributed funds for the promotion of health care creating healthinfrastructure including COVID care establishment of medical oxygen generation andstorage plants etc. The contributions in this regard have been made to a Registered Trustwhich is undertaking these schemes. A detailed Report on CSR activities in the prescribedformat is forming part of this Annual Report.

Related Party Transactions

All related party transactions entered during the financial year were on an arm'slength basis and in the ordinary course of business. There were no 'material' contracts orarrangements or transactions and therefore disclosure in form AOC-2 is not required.

All Related Party Transactions are placed before the Audit Committee and the Board forapproval. Prior omnibus approval of the Audit Committee is obtained for the

transactions which are foreseen and repetitive in nature. For all the transactionsentered pursuant to the omnibus approval so granted a statement giving details of allsuch transactions is placed before the Audit Committee for their approvals on a quarterlybasis.

The policy on Related Party Transactions as approved by the Board is posted on theCompany's website www.hckotharigroup.com/kscl

Annual Performance Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out the AnnualPerformance Evaluation of the Board its Committees and of individual directors in theformat (questionnaire) prescribed by the Nomination and Remuneration Committee of theCompany.

The structured questionnaire covers various aspects of the Board's functioning such asadequacy of the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance etc.

The performance evaluation of the Directors (without participation of the relevantDirector) was carried out by the entire Board. The Directors expressed their satisfactionwith the evaluation process.

Separate Meeting of Independent Directors

The Independent Directors of the Company had met during the year on 21st Mar 2022 toreview the performance of NonIndependent Directors and the Board as a whole reviewed theperformance of the Chairperson of the Company and also assessed the quality quantity andtimeliness of flow of information between the company management and the Board without thepresence of the Non-Independent Directors and members of the Management.

Disclosure about Cost Audit

Filing of Cost Audit Report 2021-2022 2020-2021
Due Date 27.09.2022 27.09.2021
Actual Date 30.08.2022 (Tentatively) 30.08.2021
Cost Auditor Details Mr. K. Suryanarayanan M.No. 24946 Chennai Mr. K. Suryanarayanan M.No. 24946 Chennai
Audit Qualification in Report - Nil

Listing with Stock Exchanges

The Company is listed in The National Stock Exchange of India Limited (NSE) and theStock Code is KOTARISUG & ISIN INE419A01022. The Company confirms that it has paid theAnnual Listing Fees for the year 2022 - 2023 to NSE where the Company's Shares are listed.

Corporate Governance and Shareholders Information

Your Company has taken adequate steps to adhere to all the stipulations laid down inthe SEBI (Listing Obligations

and Disclosure Requirements) Regulations 2015. A report on Corporate Governance isincluded as a part of this Annual Report.

Certificate from the Practising Company Secretary confirming the compliance with theconditions of Corporate Governance as stipulated under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is attached to this Report

Management Discussion and Analysis Report

A detailed discussion on the industry structure (dealing with world sugar and Indiansugar) as well as on the financial and operational performance is contained in the'Management Discussion and Analysis Report' that forms an integral part of this Report.

Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annual Report.

Particulars pursuant to Section 197(12) and the relevant Rules:

a) The ratio of the remuneration of each director to the median employee's remunerationfor the financial year and such other details: Except Mr. Arjun B. Kothari ManagingDirector and Mr. M. Silvester Goldwin Whole Time Director of the Company no otherdirector was in receipt of remuneration except sitting fees.

Sl. Name No. Designation Ratio
i. Mr. Arjun (i) B. Kothari Managing Director 18.35:1
ii. Mr. M. Silvester (ii) Goldwin Whole Time Director 24.91:1

b) The percentage increase in remuneration of each Director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:

Sl. Name No. Designation Percentage of Increase
i. Mr. Arjun (i) B. Kothari Managing Director -
ii) Mr. M. Silvester (ii) Goldwin Whole Time Director 10%
(iii) Mr. R. Krishnan Chief Financial Officer 9%
(iv) Mr. R. Prakash Company Secretary 6%

c) 5.11% increase has been reported in the median remuneration of employees in thefinancial year.

d) The number of permanent employees on the rolls of the company as on 31st Mar 2022:530.

e) Increase of remuneration for employees was in the varying range of 5% to 20% and forKMP the increase was in the varying range of 6% to 10% for the year.

f) We affirm that the remuneration paid during the period under review is as per theRemuneration Policy of the Company.

Compliance with Secretarial Standards

The Company complies with all applicable secretarial standards issued by the Instituteof Company Secretaries of India.

Cautionary Statement

Statements in this Report particularly those which relate to Management Discussion andAnalysis describing the Company's objectives projections estimates and expectations mayconstitute 'forward looking statements' within the meaning of applicable laws andregulations. Actual results may differ from those either expressed or implied in thestatement depending on the circumstances.

Acknowledgement

Your Directors thank the Banks Customers Farmers Financial Institutions GovernmentAuthorities Suppliers and Shareholders for their continued support. Your Directors alsoplace on record their appreciation for the services rendered by the employees of theCompany.

On behalf of the Board
for Kothari Sugars and Chemicals Limited
Place : Chennai Nina B. Kothari
Date : May 24 2022 Chairperson

.