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Magadh Sugar & Energy Ltd.

BSE: 540650 Sector: Agri and agri inputs
NSE: MAGADSUGAR ISIN Code: INE347W01011
BSE 00:00 | 23 Apr 113.00 0.25
(0.22%)
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115.60

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115.60

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NSE 00:00 | 23 Apr 113.70 1.70
(1.52%)
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OPEN 115.60
PREVIOUS CLOSE 112.75
VOLUME 51
52-Week high 168.00
52-Week low 63.10
P/E 6.56
Mkt Cap.(Rs cr) 114
Buy Price 102.15
Buy Qty 100.00
Sell Price 113.70
Sell Qty 50.00
OPEN 115.60
CLOSE 112.75
VOLUME 51
52-Week high 168.00
52-Week low 63.10
P/E 6.56
Mkt Cap.(Rs cr) 114
Buy Price 102.15
Buy Qty 100.00
Sell Price 113.70
Sell Qty 50.00

Magadh Sugar & Energy Ltd. (MAGADSUGAR) - Director Report

Company director report

Dear Members

Your Directors present herewith the 4th Annual Report on the business & operationsof the Company along with the Audited Statement of Accounts for the financial year ended31st March 2018.

2. Financial Results

('in lakhs)

Particulars

Year ended 31st March 2018

Year ended 31st March 2017
Revenue from Operations (Gross) 72590.24 71863.37
Profit before Finance Costs Tax Depreciation and Amortization 6604.71 16219.12
Less: Depreciation & Amortization Expenses 1868.31 1986.46
Finance Costs 4333.97 7202.28 4069.42 6055.88
Profit/(Loss) Before Tax 1016.00 10163.24
Less: Provision for Tax 242.00 1880.00
Income tax for earlier years 0.91 -
Deferred Tax Charge (1718.05) (1475.14) 2498.82 4378.82
Profit/(Loss) After Tax 2491.14 5784.42

3. Operating Performance

During the year under review your Company continued to register top line growth inspiteof depressed market sentiments in second half of the fiscal and a fall in sugar pricesprima-facie due to over production and aggressive sales. A detailed analysis of theCompany's operations future expectations and business environment has been given in theManagement Discussion & Analysis Report which is made an integral part of this Reportand marked as Annexure “A.".

4. Financial Performance 2017-18

The Company recorded Total Revenue of ' 72875.44 lacs (including other incomeaggregating to ' 285.20 lakhs) during the financial year ended 31st March 2018. TheRevenue from Operations (Gross) of the Company for the year 2017-18 stood at ' 72590.24lakhs. The Profit before Finance Costs Tax Depreciation and Amortization for the yearunder review stood at ' 6604.71 lakhs representing 9.06% of the total revenue.

There is no change in the nature of business of the Company. There were no significantor material orders passed by regulators courts or tribunals impacting the Company'soperation in future.

There were no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year i.e. 31st March 2018 anddate of this report.

5. Dividend

Your Company had adopted a dividend distribution policy that balances the dualobjectives of appropriately rewarding Members through dividends and retaining capital inorder to maintain a healthy capital adequacy ratio to support long term growth of yourCompany. Consistent with this policy your Board has recommended a dividend of ' 1/- onEquity Shares (10%) for the financial year 2017-18 to the Members of your Company. Theproposal is subject to the approval of the Members at the 4th Annual General Meeting (AGM)of your Company scheduled to be held on 25th September 2018. The dividend together withthe dividend distribution tax will entail a cash outflow of ' 121.35 lakhs (previous year' 685 lacs).

6. Public Deposits

The Company has not accepted any deposits from the public and as such there are nooutstanding fixed deposits in terms of Companies (Acceptance of Deposit Rules) 2014.

7. Share Capital

The Authorized Share Capital of the Company at the beginning of the year was '301000000/-(Rupees Thirty Crore and Ten lakhs) divided into 15100000 (One CroreFifty One Lakh) Equity Shares of ' 10/- (Rupees ten) each and 1500000 (Fifteen Lac)Preference Shares of ' 100/- each. During the year under review the Company increased itsAuthorised Share Capital to ' 401000000/- (Rupees Forty Crores and Ten Lakhs) dividedinto 25100000 (Two Crore Fifty One Lakhs) Equity Shares of ' 10/- (Rupees ten) each and

15.00. 000 (Fifteen Lakh) Equity Shares of ' 100/- (Rupees Hundred) each.

The present Authorized Share Capital of the Company is ' 401000000/- (Rupees FortyCrores and Ten Lakhs) divided into

2.51.00. 000 (Two Crore Fifty One Lakhs) Equity Shares of ' 10/- (Rupees ten) each and1500000 ( Fifteen Lakh) Equity Shares of ' 100/- (Rupees Hundred) each.

8. Redemption of Preference Shares

During the year under review your Company redeemed 1150000 (Nil) Non-convertibleCumulative Redeemable Preference Shares (NCCRPS) of ' 100/- each (NCCRPS) to thePreference Shareholders on 17th November 2017. Accordingly the paid up share capitalpost redemption of NCCRPS stands at ' 100654500/-.

9. Subsidiary Companies

The Company does not have any subsidiary. However the Company has formulated a policyfor determining material subsidiaries in line with the requirement of SEBI (LODR)Regulations 2015. The said Policy is being disclosed on the Company's website at http://birla-sugar.com/Assets/Magadh/Magadh-Sugar-Policy-for-Determining-Material-Subsidiaries.pdf

10. Credit Rating

CARE Ratings Limited - a Credit Rating Agency vide its letter dated 16 August 2017has assigned the Credit Rating of the Company "A-” with respect to long-termbank facilities whereas short-term bank facilities rating was assigned at "A2+”

11. Human Resources

The Company continues to create a productive learning and caring environment byimplementing robust and comprehensive HR processes fair and transparent performanceevaluation and takes new initiatives to further align its Human Resource policies to meetthe growing needs of its business.

12. Directors

The Board of Directors comprises of six Non-Executive Directors having experience invaried fields and a Whole time Director. Out of six Non-Executive Directors five of themare Independent Directors and one Promoter Director. Mr Chandra Shekhar Nopany is theChairperson of the Company.

Mr. Chandra Shekhar Nopany shall retire by rotation at the ensuing Annual GeneralMeeting and being eligible has offered himself for re-appointment as Director of theCompany.

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 that they meet the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.

Other information on the Director including required particulars of Director retiringby rotation is provided in the Notice convening the Annual General Meeting.

In pursuance of the provisions of the Companies Act 2013 and according to Regulation25(3) of the Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 the Performance Evaluation Criteria has been laid downfor effective evaluation of performance of the Board of Directors the Committees thereofand individual Directors including the Chairperson of the Company. After detaileddiscussion at Board level as well as taking input from each Director Nomination andRemuneration Committee finalized the format / questionnaires containing various parametersto evaluate the performance of Board and its committee(s) Individual Directors

and Chairperson of the Company. The performance evaluation parameters are based ontheir 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 and Chairman of theCompany was carried out for the Financial Year 2017-18. Nomination and RemunerationCommittee evaluated the performance of the individual Director

The Independent Directors in their separate meeting held on 5th February 2018 carriedout the evaluation of the Board of Directors as a whole Chairperson of the Company andNon-Independent Directors. The evaluation of Independent Directors was carried out withoutthe presence of concerned Director.

The Chairman of Nomination and Remuneration Committee has submitted report of therespective evaluations to the Chairperson of the Company. Based on the questionnairesreceived from the Directors and considering the reports of Chairman of Nomination andRemuneration Committee the Board evaluated its own performance and that of its committeesand individual directors including independent directors.

13. Key Managerial Personnel

Pursuant to the provisions of Section 2(51) and 203 of the Companies Act 2013 readwith the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Mr.Chandra Mohan Whole time Director Mr. Sunil Choraria Chief Financial Officer and Mr.Subramanian Sathyamurthy Company Secretary are Key Managerial Personnel of the Company.During the year under review there was no change in the Key Managerial Personnel.

All Directors Key Managerial Personnel and Senior Management of the Company haveconfirmed compliance with the Code of Conduct & Ethics 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. All Directorshave confirmed compliance with the provisions of Section 164 of the Companies Act 2013.The Code is available on the Company's website at http://www.birla-sugar.com/Magadh-Shareholders-Info/Magadh---Code-Of- Conduct.

14. Familiarisation Programme

Periodic presentations are made at the Board Meetings on business performance updates& business strategy of the Company.

15. Remuneration Policy

The Board has framed a policy for selection and appointment

of Directors Senior Management and their remuneration. The Remuneration Policy asadopted by the Board of Directors is attached as Annexure - “E" to thisReport. The Committee has also framed criteria for performance evaluation of everyDirector and accordingly has carried out the performance evaluation.

16. Corporate Social Responsibility Policy

The Company continues to spend to support local initiatives to improve infrastructureas well as support in other corporate social responsibilities. The CSR Policy as approvedby the Board is available on Company's website at http://birla-sugar.com/Assets/Magadh/Magadh-Sugar-CSR-Policy.pdf The Annual Report on CSR activities is appended as Annexure- “J".

17. Meetings

A calendar of Meeting is prepared and circulated in advance to the Directors. The Boardevaluates all the decisions on a collective consensus basis amongst the Directors. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013. During the financial year ended 31st March 2018 6 (six) Meetings of the Boardof Directors of the Company were held. The details of the Board Meetings held during thefinancial year 2017-18 have been furnished in the Corporate Governance Report forming apart of this Annual Report.

18. Audit Committee

The Audit Committee constitutes of Mr. Raj Kumar Bagri Mr Yashwant Kumar Daga Mr.Ishwari Prosad Singh Roy and Mrs Shashi Sharma. The Company Secretary acts as theSecretary to the Committee and the Chief Financial Officer is a permanent invitee to themeetings. During the year there were no instances where Board has not accepted therecommendation of Audit Committee.

The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report.

19. Stakeholders' Relationship Committee

The Stakeholders' Relationship Committee constitutes of Mr. Raj Kumar Bagri MrYashwant Kumar Daga and Mr Padam Kumar Khaitan. The Company Secretary acts as theSecretary to the Committee.

The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report.

20. Nomination and Remuneration Committee

The Nomination and Remuneration Committee constitutes of

Mr. Yashwant Kumar Daga Mr Padam Kumar Khaitan Mr Ishwari Prosad Singh Roy and Mr RajKumar Bagri. The Company Secretary acts as the Secretary to the Committee.

The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report.

21. Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee constitutes of Mr Chandra Shekhar NopanyMr. Padam Kumar Khaitan and Mr Chandra Mohan. The Company Secretary acts as the Secretaryto the Committee.

The details of the terms of reference number and dates of meetings held attendance ofthe Directors and remuneration paid to them are separately provided in the CorporateGovernance Report.

22. Finance & Corporate Affairs Committee

The Finance & Corporate Affairs Committee constitutes of Mr Chandra Shekhar NopanyMr Yashwant Kumar Daga Mr Ishwari Prosad Singh Roy and Mr Chandra Mohan. The details ofthe terms of reference number and dates of meetings held attendance of the Directors andremuneration paid to them are separately provided in the Corporate Governance Report.

23. Internal Complaints Committee

An Internal Complaints Committee has been constituted by the Company in terms of SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. TheAct aims at protecting women's right to gender equality life and liberty at workplace toencourage women participation at work. The Committee meets all the criteria including itscomposition mentioned in the Act and relevant Rules. No complaint has been received by theCommittee during the year under review.

24. Loans Guarantee and Investments

It is the Company's policy not to give any loans directly or indirectly to any person(other than to employees under contractual obligations) or to other body corporate orperson. In compliance with Section 186 of the Companies Act 2013 loans to employees bearapplicable interest rates. During the year under review the Company has not made anyinvestment in securities of other body corporate. The details of Investments Loans andGuarantees covered under the provisions of Section 186 of the Companies Act 2013 aregiven in the notes to the Financial Statements.

25. Related Party Contracts / Arrangements

There have been no materially-significant related party

transactions made by the Company with the Promoters the Directors or the KeyManagerial Personnel which may be in conflict with the interests of the Company at large.The Policy on Related Party Transactions as approved by the Board can be accessed on theCompany's website at http://www.birla-sugar.com/Assets/Magadh/Magadh-Sugar-Related-Party-Transaction-Policy-.pdf The details of related partytransactions are set out in the notes to the financial statements.

26. Risk Management

In line with the new regulatory requirements the Company has formally framed a RiskManagement Policy to identify and assess the key risk areas monitor and report thecompliance and effectiveness of the same. A Risk Management Committee though notmandatory has been constituted comprising of Mr. Chandra Mohan Whole time Director Mr.Chand Bihari Patodia Group President Mrs. Shashi Sharma Independent Director and Mr.Sunil Choraria Chief Financial Officer to oversee the risk management process in theCompany with an objective to review the major risks which affect the Company from both theexternal and the internal environment perspective. Appropriate actions have been initiatedto mitigate partially mitigate transfer or accept the risk (if need be) and monitor therisks on a regular basis.

27. Internal Financial Controls

The Company has laid down internal financial control's through a combination of Entitylevel controls Process level controls and IT General controls inter-alia to ensureorderly and efficient conduct of business including adherence to the Company's policiesand procedures accuracy and completeness of accounting records and timely preparation andreporting of reliable financial statements/ information safeguarding of assetsprevention and detection of frauds and errors. The evaluations of these internal financialcontrols were done through the internal audit process and were also reviewed by theStatutory Auditors. Based on their view of these reported evaluations the directorsconfirm that for the preparation of financial statements for the financial year endedMarch 31 2018 the applicable Accounting Standards have been followed and the internalfinancial controls are generally found to be adequate and were operating effectively &that no significant deficiencies were noticed.

28. Whistle Blower / Vigil Mechanism

The Company has established a vigil mechanism and adopted whistle blower policypursuant to which whistle blowers can report concerns about unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct or ethics policy. Themechanism provides adequate safeguards against victimisation of persons who use thismechanism. The brief

detail about this mechanism may be accessed on the Company's website at http://www.birla-sugar.com/Assets/Magadh/Magadh-Sugar-Whistle-Blower-Policy.pdf.

29. Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Management Discussion & Analysis Report the Report on CorporateGovernance and Declaration of Whole-time Director on Code of Conduct and a Certificate oncompliance of conditions of Corporate Governance form integral part of this Report and areannexed to this Report as Annexure - “A' “B"“C"&“D" respectively.

30. Research & Development

During the year under review the Company has undertaken Research & Developmentinitiatives with an intention to improve the sugar recovery ratio and to educate the canegrowers to cultivate improved variety of sugarcane and to otherwise increase the sucrosecontents in their produce.

31. Auditors Audit Qualifications and Board's Explanations

Statutory Auditors

At the 3rd Annual General Meeting (AGM) of your Company held on 1st August 2017Messrs Singhi & Co. Chartered Accountants having Firm Registration No. 302049E wereappointed as Statutory Auditors of your Company to hold office for a term of 5 (five)years from the conclusion of the 3rd AGM (subject to ratification of such appointment bythe Members at every AGM) till the conclusion of the 8th AGM of your Company. Howeversince the first proviso to Sec 139(1) has been omitted by the Companies Amendment Act2017 with effect from 7th May 2018 the ratification of such appointment at every AGM isnot required. Accordingly Messrs Singhi & Co. Chartered Accountants shall continueas Statutory Auditors of your Company till the conclusion of its 8th AGM.

The remarks/observations made by the Statutory Auditors in their report are self-explanatory and does not require any further clarifications/ explanation.

Cost Auditors

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 activity is required to be audited. Your Directors have on therecommendation of the Audit Committee appointed M/s D Radhakrishnan & Co. CostAccountants as the Cost Auditor to audit the cost accounts of the Company for thefinancial year 201819. As required under the Companies Act 2013 the remuneration payableto the cost auditor is required to be placed before the Members in a general meeting fortheir ratification.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hadappointed Messrs Vinod Kothari & Co. Practising Company Secretaries to conduct theSecretarial Audit of the Company for the financial year ended 31st March 2018. TheSecretarial Audit Report is annexed herewith as Annexure - “F” and whichis self-explanatory.

32. Investor Education and Protection Fund

The provisions pertaining to Investor Education and Protection Fund (Uploading ofInformation regarding unpaid and unclaimed amounts lying with Companies) Rules 2012 arenot applicable to your Company.

33. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT - 9 is annexedherewith as Annexure - “G"

34. Energy Conservation Technology Absorption and Foreign Exchange Earnings &Outgo

The information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure -“H"

35. Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is attached as Annexure - “I" and forms an integral partof this Report.

36. Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:

a. that in the preparation of the Annual Accounts for the year ended 31st March 2018the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;

b. that such accounting policies as mentioned in Note 3 of the Notes to the FinancialStatements have been selected and applied consistently and judgement and estimates havebeen made that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 312018 and of the profit of the Company for theyear ended on that date;

c. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.

37. CEO/CFO Certification

Mr. Chandra Mohan the Whole time Director and Mr. Sunil Choraria Chief FinancialOfficer have submitted certificates to the Board as contemplated under Regulation 17(8) ofthe SEBI (LODR) Regulations 2015.

38. Acknowledgement

Your Directors take this opportunity of recording their appreciation of theshareholders financial institutions bankers suppliers and cane growers for extendingtheir support to the Company. Your Directors are also grateful to various ministries inthe Central Government and State Government of Bihar the Sugar Directorate and the SugarDevelopment Fund for their continued support to the Company. The Directors also recognisethe valuable contribution made by the employees at all levels towards Company's progress.

For and on behalf of the Board
Chandra Shekhar Nopany
Kolkata Chairperson
Dated 15th May 2018 DIN:00014587