Your Directors present herewith the 6th Annual Report on the business& operations of the Company along with the Audited Statement of Accounts for thefinancial year ended 31st March 2020.
1. Financial Results
(Rs. in lakhs)
|Particulars || |
Year ended 31st March 2020
Year ended 31st March 2019
|Revenue from Operations (Gross) || ||91615.85 || ||73915.65 |
|Profit before Finance Costs Tax Depreciation and Amortization || ||15804.34 || ||10653.85 |
|Less: Depreciation & Amortization Expenses ||1801.60 || ||1773.29 || |
|: Finance Costs ||4832.72 ||- ||3541.28 ||5339.28 |
|Profit/(Loss) Before Tax || ||9170.02 || ||5386.83 |
|Less: Provision for Tax: || || || || |
|Current Tax ||1887.43 || ||1145.26 || |
|Income Tax for earlier years ||0.05 || ||(3.09) || |
|Deferred Tax Charge ||572.95 || ||823.12 || |
|Profit/(Loss) After Tax || ||8303.91 || ||3421.54 |
2. Operating Performance
During the year under review your Company continued to register topline growth despite depressed market sentiments in first half of the fiscal and a fall insugar prices even after putting in place the quota sales system as well as MSP (minimumsale price) concept by the Govt. prima-facie due to over production and aggressive sales.A detailed analysis of the Company's operations future expectations and businessenvironment has been given in the Management Discussion & Analysis Report which ismade an integral part of this Report and marked as Annexure "A".
3. Financial Performance 2019-20
The Company recorded Total Revenue of Rs. 91941.27 lakhs (includingother income aggregating to Rs 325.42 Lakhs) during the financial year ended 31st March2020. The Revenue from Operations (Gross) of the Company for the year 2019-20 stood at Rs.91615.85 lakhs. The Profit before Finance Costs Tax Depreciation and Amortisation forthe year under review stood at Rs. 15804.34 lakhs representing 17.19 % of the totalrevenue.
There is no change in the nature of business of the Company. There wereno significant or material orders passed by regulators courts or tribunals impacting theCompany's operation in future.
There were no material changes and commitments affecting the financialposition of the Company which have occurred between the end of the financial year i.e.31st March 2020 and date of this report.
Your Company had adopted a dividend distribution policy that balancesthe dual objectives of appropriately rewarding Members through dividends and retainingcapital in order to maintain a healthy capital adequacy ratio to support long term growthof your Company. There has been no change in this policy during the year under review. hispolicy is also available on the website of the Company and can be accessed at the weblink-
The Company does not intend to carry any amount to Reserves.
Consistent with this policy your Board has recommended a dividend ofRs. 4/- on Equity Shares (40%) for the financial year 2019-20 to the Members of yourCompany. The proposal is subject to the approval of the Members at the 6th Annual GeneralMeeting (AGM) of your Company scheduled to be held on September 22 2020. The dividendtogether with the dividend distribution tax will entail a cash outflow of Rs. 563.67 lakhs(previous year Rs. 242.69 lakhs).
5. Public Deposits
During the year the Company has not accepted any deposits from thepublic under Chapter V of the Companies Act 2013. There was no public deposit outstandingas at the beginning and end of the financial year 2019-20.
6. Share Capital
The Authorized Share Capital of the Company stood atRs.401000000/-(Rupees Forty crore and ten lakhs) divided into 25100000 (Two crorefifty one lakhs) Equity Shares of Rs. 10/- (Rupees ten) each and 1500000 (Fifteen crore)Preference Shares of Rs.10/- and there is no change in the authorised capital.
7. Issue of Bonus Shares
4026180 Equity Shares of Rs.10/- each fully paid-up were issued andallotted as Bonus Shares in the proportion of 4 (Four) Bonus Share of Rs.10/- each forevery existing 10 (Ten) fully paid-up Equity Shares of Rs.10/- each held on 30th June2019 being the Record Date determined by the Board for the purpose. The Bonus Shares wereallotted on 2nd July 2019.
Consequently the Issued and Subscribed Share Capital of your Companyas on 31st March 2020 stands increased to Rs. 140916300/- divided into 14091630Equity Shares of Rs.10/- each. The Equity Shares issued during the year rank pari passuwith the existing Equity Shares of your Company.
8. Subsidiary Associate and Joint Venture
The Company does not have any subsidiary company or any associatecompany or any joint venture with any person. However the Company has in place a policyfor determining material subsidiaries in line with the requirement of SEBI (LODR)Regulations 2015 as amended from time to time. The said Policy is being disclosed on theCompany's website at the weblink http://birla-sugar.com/Assets/Magadh/Magadh-Sugar-Policy-for-Determining-Material-Subsidiaries.pdf.
9. Credit Rating
CARE Ratings Limited - a Credit Rating Agency vide its letter dated 30March 2020 has revised the Credit Rating of the Company to " CARE BBB+" withrespect to long-term bank facilities whereas short-term bank facilities rating was revisedat "CARE A2"
10. Human Resources
The Company continued to create a productive learning and caringenvironment by implementing robust and comprehensive HR processes fair transparentperformance evaluation and taking new initiatives to further align its Human Resourcepolicies to meet the growing needs of its business.
The Board of Directors comprises of six Non-Executive Directors havingexperience in varied fields and a Whole time Director. Out of six Non-Executive Directorsfive of them are Independent Directors and one Promoter Director. Mr Chandra ShekharNopany is the Promoter Chairperson of the Company.
Mr. Chandra Shekhar Nopany will retire by rotation at the ensuingAnnual General Meeting and being eligible has offered herself for reappointment asDirector of the Company.
The Board of Directors at its meeting held on February 6 2020 hadre-appointed Mr. Chandra Mohan (DIN 07760264) as Wholetime Director of the Company for aperiod of 3 years with effect from March 9 2020 and the Board commends the re-appointmentof Mr. Chandra Mohan for approval of the shareholders.
The Company has received necessary declaration from each independentdirector under Section 149(7) of the Companies Act 2013 that they meets the criteria ofindependence laid down in Section 149(6) of the Companies Act 2013 read with Regulation25 of SEBI (LODR) Regulations 2015.
Other information on the Directors including required particulars ofDirector retiring by rotation is provided in the Notice convening the Annual GeneralMeeting.
In pursuance of the provisions of the Companies Act 2013 and accordingto Regulation 25(3) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 the Performance Evaluation Criteria has beenlaid down for effective evaluation of performance of the Board of Directors theCommittees thereof and individual Directors including the Chairperson of the Company.After detailed discussion at Board level as well as taking input from each DirectorNomination and Remuneration Committee finalized the format / questionnaires containingvarious parameters to evaluate the performance of Board and its committee(s) IndividualDirectors and Chairperson of the Company. The performance evaluation parameters are basedon their roles and responsibilities contribution to the Company's goals decision makingprocess flow of information and various other aspects.The evaluation of performance ofthe Board as a whole Committees of the Board Individual Directors including theChairperson of the Company was carried out for the Financial Year 2019-20. Nomination andRemuneration Committee evaluated the performance of the individual Director.
The Independent Directors in their separate meeting held on 6th March2020 carried out the evaluation of the Board of Directors as a whole Chairperson of theCompany and Non-Independent Directors. The evaluation of Independent Directors was carriedout without the presence of concerned Director.
The Chairperson of Nomination and Remuneration Committee has submittedreport of the respective evaluations to the Chairperson of the Company. Based on thequestionnaires received from the Directors and considering the reports of Chairperson ofNomination and Remuneration Committee the Board has evaluated its own performance andthat of its committees and individual directors including independent directors.
12. Key Managerial Personnel
In pursuance of the provisions of Section 2(51) and 203 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the following persons are the Key Managerial Personnel of theCompany
a. Mr. Chandra Mohan Whole time Director
b. Mr. Sunil Choraria Chief Financial Officer
c. Mr. S Subramanian Company Secretary
During the year under review there was no change in the Key ManagerialPersonnel.
All Directors Key Managerial Personnel and Senior Management of theCompany have confirmed compliance with the Code of Conduct applicable to Directors &employees of the Company and a declaration to the said effect by the Whole-time Directoris made part of Corporate Governance Report which forms part of this report. There hasbeen no change in this policy during the year under review. The Code is available on theCompany's website at the weblink http://birla-sugar.com/Assets/Magadh/Magadh-Sugar-Code-of-Conduct.pdfAll Directors have confirmed compliance with the provisions of Section 164 of theCompanies Act 2013.
13. Familiarisation Programme
Periodic presentations are made at the Board Meetings businessperformance updates & business strategy of the Company. The details of thefamiliarisation programme (other than through meeting of Board and its Committees)imparted to Independent Director are uploaded on the website of the Company and availableat the weblink http://www.birla-sugar.com/Assets/Magadh/MSEL-Famiiarisation-Programme.pdf
14. Remuneration Policy
In pursuance of the provisions of Section 178 of the Companies Act2013 and Listing Regulations the Company has formulated a Remuneration Policy. There hasbeen no change in this policy during the year under review and a copy of the said Policyis available at the website of the Company at the weblink http://www.birla-sugar.com/Assets/Magadh/MSEL-Nomination-and-Remuneration-Policy.pdf
The Remuneration Policy inter-alia includes the appointment criterion& qualification requirements process for appointment & removal retirement policyand remuneration structure & components etc. of the Directors Key ManagerialPersonnel (KMP) and other senior management personnel of the Company. As per theRemuneration Policy a person proposed to be appointed as Director KMP or other seniormanagement personnel should be a person of integrity with high level of ethical standards.In case of appointment as an independent director the person should fulfil the criteriaof independence prescribed under the Companies Act 2013 rules framed thereunder and theListing Regulations. The Remuneration Policy also contains provisions about the payment offixed & variable components of remuneration to the Whole-time Director and payment ofsitting fee & commission to the non-executive directors.
15. Corporate Social Responsibility Policy
Your Company believes in long term strategy to contribute to thewell-being and development of the society especially the rural population around itsplants at Narkatiaganj Sidhwalia and Hasanpur . As part of its CSR initiatives theCompany is working mainly in the areas of imparting School Education Technical &Vocational Education Rural Development Community Healthcare etc. This multi-pronged CSRapproach is showing notable improvement in the quality of life of rural population. TheCompany continues to spend to support local initiatives to improve infrastructure as wellas support in other corporate social responsibilities. The CSR Policy as approved by theBoard
is available on Company's weblink http://birla-sugar.com/Assets/Magadh/Magadh-Sugar-CSR-Policy.pdfThere has been no change in this policy during the year under review.
The composition and terms of reference of Corporate SocialResponsibility Committee are given in the Corporate Governance Report. The Annual Reporton CSR activities (including the details of the development and implementation of theCorporate Social Responsibility Policy) as prescribed under Section 135 of the CompaniesAct 2013 and the Companies (Corporate Social Responsibility Policy) Rules 2014 isattached as "Annexure J" to this Report.
For the purpose of Section 135 of the Companies Act 2013 the amountequivalent to 2% of the average net profits of the Company made during the immediatelypreceding three financial years works out to Rs.113.88 lakhs. As against this the Companyhad spent Rs. 116.83 lakhs on CSR projects / programs during the Financial Year 2019-20.
16. Board Meetings
A calendar of Meeting is prepared and circulated in advance to theDirectors. The Board evaluates all the decisions on a collective consensus basis amongstthe Directors. During the financial year ended 31st March 2020 5 (five) Meetings of theBoard of Directors of the Company were held. The details of the Board Meetings held duringthe year under review are given in the Corporate Governance Report forming a part of thisAnnual Report. The intervening gap between the Meetings was within the period prescribedunder the Companies Act 2013 and the Listing Regulations.
The Company has complied with the applicable Secretarial Standardsprescribed under Section 118(10) of the Companies Act 2013 of the Companies Act 2013.
17. internal Complaints Committee
An Internal Complaints Committee was constituted by the Company interms of Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. The Act aims at protecting women's right to gender equality life and libertyat workplace to encourage women participation at work. The Committee meets all thecriteria including its composition mentioned in the Act and relevant Rules. No complainthas been received by the Committee during the year under review
18. Loans Guarantee and investments
It is the Company's policy not to give any loans directly orindirectly to any person (other than to employees under contractual obligations) or toother body corporate or person. In compliance with section 186 of the Companies Act 2013loans to employees bear applicable interest rates. During the year under review theCompany has not made any investment in securities of other body corporate. The details ofInvestments Loans and Guarantees covered under the provisions of Section 186 of theCompanies Act 2013 are given in the notes to the Financial Statements.
19. Related Party Contracts / Arrangements
All Related Party Transactions entered during the year were on arm'slength basis and in the ordinary course of business. There have been nomaterially-significant related party transactions made by the Company with the Promotersthe Directors or the Key Managerial Personnel which may be in conflict with the interestsof the Company at large. Accordingly disclosure of contracts or arrangements with RelatedParties as required under section 134(3)(h) of the Companies Act 2013 in Form AOC-2 isnot applicable.
The Policy on Related Party Transactions as approved by the Board canbe accessed on the Company's website at following web-link http://www.birla-sugar.com/Assets/Magadh/Magadh-Sugar-Related-Party-Transaction-Policy.pdfThePolicy on Related Part Transactions was aligned with the changes recommended by theMCA/SEBI in this regard.
The details of related party transactions are set out in the notes tothe financial statements.
20. Risk Management
In line with the regulatory requirements the Company has formallyframed Risk Management Policy to identify and assess the key risk areas monitor andreport the compliance and effectiveness of the same. A Risk Management Committee thoughnot mandatory has been constituted voluntarily comprising of an Independent DirectorWhole time Director Chief Financial Officer and the Group President to oversee the riskmanagement process in the Company with an objective to review the major risks which effectthe Company from both the external and the internal environment perspective. Appropriateactions have been initiated to either mitigate partially mitigate transfer or accept therisk (if need be) and monitor the risks on a regular basis. The details of the terms ofreference number and date of meeting attendance of director and remuneration paid tothem are separately provided in the Corporate Governance Report.
21. internal Financial Controls
The Company has laid down internal financial control's through acombination of Entity level controls Process level controls and IT General controlsinter-alia to ensure orderly and efficient conduct of business including adherence to theCompany's policies and procedures accuracy and completeness of accounting records andtimely preparation and reporting of reliable financial statements/informationsafeguarding of assets prevention and detection of frauds and errors. The evaluations ofthese internal financial controls were done through the internal audit process and werealso reviewed by the Statutory Auditors. Based on their view of these reportedevaluations the directors confirm that for the preparation of financial statements forthe financial year ended March 312020 the applicable Accounting Standards have beenfollowed and the internal financial controls are generally found to be adequate and wereoperating effectively & that no significant deficiencies were noticed.
22. Whistle Blower / Vigil Mechanism
The Company has established a vigil mechanism and adopted whistleblower policy pursuant to which whistle blowers can report concerns about unethicalbehaviour actual or suspected fraud or violation of the Company's code of conduct policy.During the year under review there has been change in this policy with respect to leak orsuspected leak of Unpublished Price Sensitive Information has been incorporated so thatwhistle blowers can report concerns. The mechanism provides adequate safeguards againstvictimisation of persons who use this mechanism. The brief detail about this mechanism maybe accessed on the Company's website at the weblink http://www.birla-sugar.com/Assets/Magadh/Magadh-Sugar-Whistle-Blower-Policy.pdf
During the year the auditors the secretarial auditors and costauditors have not reported any fraud under Section 143(12) of the Companies Act 2013 andthe Companies (Audit and Auditors) Rules 2014.
23. Corporate Governance & Annual Return
Your Directors strive to maintain highest standards of CorporateGovernance. The Corporate Governance Report for the Financial Year 2018-19 is attached as "AnnexureB" to this Report. The declaration of the Whole-time Director confirmingcompliance with the 'Code of Conduct' of the Company is enclosed as "AnnexureC" to this Report and Auditor's Certificate confirming compliance with theconditions of Corporate Governance is enclosed as "Annexure D" to thisReport. The extract of the Annual Return of the Company is attached as "AnnexureG" to this Report.
24. Research & Development
During the year under review the Company has undertaken Research &Development initiatives with an intention to improve the sugar recovery ratio and toeducate the cane growers to cultivate improved variety of sugarcane and to otherwiseincrease the sucrose contents in their produce.
25. Auditors Audit Qualifications and Board's Explanations
The shareholders of the Company at the AGM held on August 1 2017 hadappointed Messrs Singhi & Co Chartered Accountants (Firm Registration No. 302049E)as Auditors of the Company to hold office for a term of 5 (five) consecutive years fromthe conclusion of the Third AGM of the Company held on August 12017 till the conclusionof Eighth AGM of the Company.
The Notes to the Financial Statements read with the Auditor's Reportsare self-explanatory and therefore do not call for further comments or explanations.There has been no qualification reservation adverse remark or disclaimer in theAuditor's Reports.
Pursuant to Section 148 of the Companies Act 2013 read with TheCompanies (Cost Records and Audit) Amendment Rules 2014 the cost audit recordsmaintained by the Company in respect of its Sugar activity is required to be audited. YourDirectors have on the recommendation of the Audit Committee appointed M/s DRadhakrishnan & Co. Cost Accountants as the Cost Auditor to audit the cost accountsof the Company for the financial year 2020-21. As required under the Companies Act 2013the remuneration payable to the cost auditor is required to be placed before the Membersin a general meeting for their ratification.
Pursuant to the provisions of Section 204 of the Companies Act 2013and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 yourCompany had appointed Messrs Vinod Kothari & Co. Practising Company Secretaries toundertake the
Secretarial Audit of the Company for the financial year 2019-20. TheSecretarial Audit Report is annexed herewith as "Annexure F" and which isself-explanatory.
There has been no qualification reservation observation disclaimeror adverse remark in the Secretarial Audit Report.
26. investor Education and Protection Fund
The provisions pertaining to Investor Education and Protection Fund(Uploading of Information regarding unpaid and unclaimed amounts lying with Companies)Rules 2012 the Company are not applicable to your company.
27. Energy Conservation Technology Absorption and Foreign ExchangeEarnings & Outgo
The information on conservation of energy technology absorption andforeign exchange earnings and outgo as stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewithas "Annexure H"
28. Particulars of Employees
The human resource is an important asset which has played pivotal rolein the performance and growth of the Company over the years. Your Company maintains veryhealthy work environment and the employees are motivated to contribute their best in theworking of the Company. The information required to be disclosed in pursuance of Section197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as "Annexure i"to this Report and forms an integral part of this Report.
29. Directors' Responsibility Statement
To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013:
a. that in the preparation of the annual financial statements for theyear ended March 312020 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any;
b. that such accounting policies as mentioned in Note 3 of the Notes tothe Financial Statements have been selected and applied consistently and judgement andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 312020 and of the profit or lossof the Company for the year ended on that date;
c. that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
d. that the annual financial statements have been prepared on a goingconcern basis;
e. that proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of allapplicable laws were in place and were adequate and operating effectively.
30. CEO/CFO Certification
Mr. Chandra Mohan the Whole-time Director and Mr. Sunil ChorariaChief Financial Officer have submitted certificates to the Board as contemplated underRegulation 17(8) of the SEBI (LODR) Regulations 2015.
Your Directors take this opportunity of recording their appreciation ofthe shareholders financial institutions bankers suppliers and cane growers forextending their support to the Company. Your Directors are also grateful to variousministries in the Central Government and State Government of Bihar the Sugar Directorateand the Sugar Development Fund for their continued support to the Company. The Board ofDirectors also convey its sincere appreciation of the commitment and dedication of theemployees at all levels.
| ||For and on behalf of the Board |
|Kolkata ||Chandra Shekhar Nopany |
|Dated 23rd June 2020 ||Chairperson |