To The Members
1. The Directors wish to present the 79th Annual Report together withAudited Accounts of the Company for the year ended 31st March 2014.
2. OPERATIONAL RESULTS :
The operational results for the year under review are as follows:
| ||FY 2013-14 ||FY 2012-13 ||% Change |
|I PRODUCTION (Qty.in MT) || || || |
|Writing & Printing Paper ||38052 ||40960 ||-7.10 |
|Newsprint ||38902 ||45450 ||-14.41 |
|TOTAL ||76954 ||86410 ||-10.94 |
|Sugar ||24675 ||17179 ||43.63 |
|II SALES (Qty. in MT) || || || |
|Writing & Printing Paper ||35515 ||45927 ||-22.67 |
|Newsprint ||35316 ||47208 ||-25.19 |
|TOTAL ||70831 ||93135 ||-23.95 |
|Sugar ||24354 ||17797 ||36.84 |
|III TURNOVER (Rs. in Lakhs) || || || |
|Writing & Printing Paper ||18581 ||20772 ||-10.55 |
|Newsprint ||12990 ||15468 ||-16.02 |
|TOTAL ||31571 ||36240 ||-12.88 |
|Sugar ||7306 ||5105 ||43.11 |
|Molasses ||828 ||353 ||134.56 |
|TOTAL TURNOVER ||39705 ||41698 ||-4.78 |
|IV OPERATING PROFIT /(LOSS) || || || |
|(Rs. in lakhs) (profit before interest and depreciation) ||(3516) ||(3770) || |
|V CASH PROFIT/LOSS || || || |
|(Rs.in lakhs) (profit after interest & before depreciation ) ||(6768) ||(6635) || |
|V NET PROFIT (Rs. in Lakhs) ||(7816) ||(7689) || |
It may be noticed from the above that the production of WPP has decreased by 7.10% fromthe level 40960 MT to 38052 MT i.e. down by 2908 MT. The quantity wise sale of WPP hasalso been decreased by 22.67 % from the level 45927 MT to 35515 MT i.e. down by 10412 MT.The production of NP has been decreased by 14.41 % from the level 45450 MT to 38902 MTi.e. up by 6548 MT. The quantity wise sale of NP has also been decreased by 25.19% fromthe level 47208 MT to 35316 MT i.e. down by 11892 MT. The production of paper wasdecreased by 10.94% from the level of 86410 MT in FY 2013 to 76954 MT in FY 2014 i.e.down by 9456 MT. Reduction in sale of paper in quantity from the level of 93135 MT to70831 MT down by 23.95% i.e less by 22304 MT and the turnover from Rs 36240 lacs to Rs31571 lacs less by Rs.4669 lacs.
The production of sugar has gone up by 43.63% due to increase in cane crushing activityfrom the level of 182414.67 MT (recovery of 9.28 %) in FY 2013 to 253854.34 MT (recoveryof 9.28 %) in FY 2014. There is an increase in sale of sugar by 36.84 %. The increase inturnover by 49% due to increase in quantity wise sales and there is a decrease in netsales realisation of sugar from Rs 29214/MT to Rs.29034 /MT i.e. down by Rs.180/MT. Theturnover from Sugar Division was Rs.81.34 Crore compared to Rs. 54.58 Crore in theprevious year i.e. up by 49 %. The total turnover of 2013-14 has been decreased by Rs19.93 Crores from the level Rs 416.98 crores to Rs 397.05 crores i.e. down by 4.78 %.
The Company has incurred operating loss Cash loss and Net loss of Rs. 35.16 CroresRs.67.68 Crores and Rs.78.16 Crores compared to previous year losses of Rs. 37.70 CroresRs.66.35 Crores and Rs.76.89 Crores respectively.
The accumulated losses at the end of 31.03.2014 stood at Rs.425.94 Crores with thatentire net worth of Rs 287.09. crores (including GOK loan of Rs 101.02 crores converted into equity in 2011-12 and infusion fresh equity of Rs 5.00 Crores in 2011-12 Rs.20 croresin 2012-13 & Rs.40 crores in 2013-14 and Conversion of Guarantee Commission payableupto 31.03.2013 amounting to Rs.2.18 Crores in 2012-13) has been eroded. The company hasbeen registered as sick company as case no 601/2012 with BIFR the revival scheme has beensubmitted by M/s Deloitte and same with Board views sent to Government for its perusal andadvice.
STATUS OF BIFR:
The company has been registered as sick company as case No. 601/2012 with BIFR. Thedraft revival scheme prepared by M/s. Deloitte Touche Tohmatsu India Pvt. Limited havebeen submitted to Government of Karnataka being the promoter of the Company for theirreview and comments. The same has also been submitted to the State Bank of MysoreAmbedkar Veedhi Branch Bengaluru the Operating Agency appointed by BIFR for their reviewand comments.
3. MANAGEMENT DISCUSSION & ANALYSIS:
Segmentwise analysis and operational performance of each of the business segments havebeen comprehensively covered in the Management Discussion & Analysis which forms partof this Directors Report.
4. CASH FLOW ANALYSIS:
In conformity with the provisions of the Listing Agreement the cash flow statement forthe year ended 31st March 2014 is included in the annual accounts.
5. CAPTIVE FORESTRY:
The Forest Wing has supplied 201195 M.T. of pulpwood by harvesting about 2486 hectaresof captive plantations during 2013-14.
The lease of forest land will be expiring in the year 2020-21 wherein the plantationcrop to be raised in 2014-15 would be the last rotation of crop and till then themanagement plan has been approved by the Ministry of Environment and Forests Governmentof India. The Management plan for a period from 2015-16 to 2020-21 need to be submitted toGovt. of India for approval.
The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2009-10 are settledwith the Government and from 2010-11 to 2013-14 the lease rent is yet to be paid which iscalculated as Rs.786 lakhs.
Totally 3700.30 ha. of harvested plantation areas were regenerated byreplanting/coppicing with species like Acacia hybrid (1199.95 ha.) Eucalyptus pellita(257.65 ha.) and Eucalyptus camaldulensis (2242.70 ha.)
The Farm Forestry programme is continued by selling about 7.00 lakhs seedlings and byentering in to a buy-back agreement with farmers on a plain paper wherever they haveavailed seedlings in the programme. The Gate purchase of pulpwood is being continued andtotally 2209.540 MT was procured @ Rs.3683/- per MT.
The programme of raising large scale clonal plants of Eucalyptus species in dry-zonenurseries has been continued which will double the present yield from average 30 MT/ha. toover 60 MT/ ha. Where about 1/3 of the captive plantations are located in dry-zone. Theachievement with clonal plantations of Acacia hybrid in wet zone is already with anaverage yield on 100 M.T. /Ha.
The average weighted cost of Acacia and Eucalyptus pulpwood obtained from captiveplantations works out to Rs.2127/- per tonne as against Rs.5288/- per tonne paid to M/sKFDC and M/s KSFIC. Thus Rs.6359.78 lakhs plus tax were saved by obtaining 201195 M.T.pulpwood from captive plantations and also which has minimized the consumption ofchemicals and maximized the yield of pulp to fabricate the paper. During 2013-14 105472M.T. of Acacia wood was supplied from captive plantations which has helped in minimizingthe consumption of chemicals worth over Rs.62.55 lakhs. Hence captive forestry wasresponsible for saving a total sum of Rs.6422.33 lakhs during 2013-14.
6. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO:
Information under Section 134 of the Companies Act 2013 read with Rule 2 of theCompanies (Disclosure of particulars in the report of Board of Directors) Rules 1988 arefurnished at ANNEXURE - I which form part of this report.
7. INDUSTRIAL RELATIONS:
The overall industrial relations were cordial during the year under review.
8. DIRECTORS :
Sri S Parameswarappa IFS(Retd.) Director retires by rotation. The said vacancy willbe filled up soon as per the Companies Act 2013.
Sri. M Lakshminarayana IAS Director retires by rotation. The said vacancy will befilled up soon as per the Companies Act 2013.
9. Apart from the above the following changes amongst Directors have also takenplace during the year under review :
Smt. K Ratna Prabha IAS: Pursuant to the powers conferred under the Articles ofAssociation of the Company the Government of Karnataka nominated Smt. K Ratna PrabhaIAS Additional Chief Secretary to GOK Commerce & Industries Department GoK asDirector in place of Sri M. N Vidyashankar IAS & subsequently Chairperson in place ofSri. Umesh vide Govt. Notification No.CI 49 CMI 2014(8) dated 22.03.2014 &CI-61-CMI-2014 dated 10.06.2014 respectively.
Sri. Naveen Raj Singh IAS : Sri. Naveen Raj Singh IAS was nominated as ManagingDirector of the Company by the Government of Karnataka in exercise of the powers conferredunder Articles of Association of the Company in place of Sri. M Maheshwar Rao IAS videGovt. Notification No.DPAR 749 sas 2014 dated 3.9.2014. He assumed charge on 08thSeptember 2014 as Managing Director.
10. DIRECTORS RESPONSIBILITY STATEMENT : Pursuant to the requirement underSection-134 of the Companies Act 2013 with respect to Directors ResponsibilityStatement it is hereby confirmed that :
The applicable accounting standards have been followed scrupulously along with properexplanation relating to material departures if any;
a) The selected accounting policies were applied consistently and judgements andestimates that are reasonable and prudent were made so as to give a true and fair view ofthe state of financial affairs of the Company at the end of the financial year;
b) The Directors have taken proper and sufficient care 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; c) The annual accounts were prepared for the financial year ended 31stMarch 2014 on a going concern basis.
11. AUDITORS :
a) As per Section 140 of the Companies Act 2013 the Government of India Ministry ofCorporate Affairs appointed M/s. M N S & Co. Chartered Accountants Bengaluru asStatutory Auditors of the Company for the year ended 31.03.2014.
b) M/s. K.P.R. & Associates Cost Accountants Bengaluru were appointed as CostAuditors of the Company for the year 2013-14 by the Board and the approval to this effecthas also been received from the Government of India.
12. PARTICULARS OF EMPLOYEES :
None of the employees of the Company have drawn salary of Rs.24 lakhs or more perannum/Rs.2 lakhs or more per month during the year. Therefore the particulars ofemployees as required under Section 134 of the Companies Act 2013 are not furnished.
13. CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange a report onCorporate Governance together with Management Discussion & Analysis Report is enclosedherewith which forms part of the Directors Report. A Certificate from the Auditorregarding compliance of Corporate Governance as stipulated by clause 49 of the ListingAgreement is attached to this report.
14. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA :
The comments by the Comptroller and Auditor General of India on the Accounts for theyear ended 31.03.2014 are attached to the report as ANNEXURE - II.
15. ACKNOWLEDGEMENT :
Your Directors are pleased to acknowledge the dedicated efforts of all the employeesand place on record their appreciation of the valuable contribution made by them duringthe year 2013-2014. Your Directors also thank the sugarcane growers for the supply ofsugarcane. Your Directors place on record their appreciation for the assistance supportand guidance extended to the Company by the Government of Karnataka through theDepartments of Commerce and Industries Finance Forest Environment & Ecology KPTCLMESCOM Directorate of Sugar and by the Statutory Bodies and Financial InstitutionsKarnataka State Pollution Control board & IFCI and Banks. Your Directors also thankthe Government of India Ministry of Corporate Affairs and its various departmentsStatutory Auditors Comptroller of Accounts & Audit Registrar for NewspapersMinistry of Railways Department of Coal etc. for their continued support to theCompany.
for and on behalf of the Board
|BENGALURU || || |
|DATE: 18.11.2014 ||(NAVEEN RAJ SINGH) ||(C. SHIVASHANKAR) |
| ||MANAGING DIRECTOR ||DIRECTOR |
ANNEXURE - I
TO DIRECTORS REPORT
ADDITIONAL INFORMATION AS REQUIRED UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THEREPORT OF BOARD OF DIRECTORS) RULES 1988
A. ENERGY CONSERVATION :
Energy Conservation Measures:
B. EXPENDITURE ON R&D DURING 2013-2014 - Rs 67.13 lakhs.
C. EXPENDITURE AS A % TO THE TOTAL TURNOVER : 0.16%
TOTAL ENERGY CONSUMPTION AND ENERGY CONSUMPTION PER UNIT OF PRODUCTION
| ||2011-12 ||2012-13 ||2013-14 |
|APOWER AND FUEL CONSUMPTION || || || |
|I ELECTRICITY || || || |
|a) Purchased Units(Lakhs.KWH) ||380.92 ||578.89 ||601.24 |
|Total Amount(Rs.Lakhs) ||2413.29 ||3527.09 ||3782.43 |
|Cost Per Unit-Rs. ||6.34 ||6.09 ||6.29 |
|b) Captive Generation (Lakhs KWH) (Net of Export) || || || |
|Through Steam Turbine (lakhs KWH) ||1335.66 ||1166.38 ||1012.19 |
|Cost per Unit-Rs. ||4.87 ||5.33 ||5.74 |
|II COAL || || || |
|Quantity in (MT) ||228531 ||216475 ||211649 |
|Total Amount-Rs. Lakhs ||8460.41 ||8338.84 ||7904.12 |
|Average rate per tonne Rs ||3702.09 ||3852.10 ||3734.54 |
|III FURNACE OIL-KL ||363.74 ||332.08 ||376.63 |
|Total Amount (Rs. Lakhs) ||162.11 ||165.39 ||189.13 |
|Average rate per KL ||44567 ||49804 ||50216 |
|IV OTHER /INTERNAL GENERATION (MT) || || || |
|(a) BagassePithBamboo/Wood dust ||6975 ||3737 ||7110 |
|(b) Black Liquor Solids ||81476 ||84977 ||76877 |
|B CONSUMPTION PER UNIT OF PRODUCTION || || || |
|Production- MT || || || |
|Paper ||84282 ||86410 ||76954 |
|Sugar ||26198 ||17179 ||24675 |
|ELECTRICITY CONSUMPTION (KWH) || || || |
|Paper ||1940 ||1948 ||1983 |
|Sugar ||307 ||348 ||354 |
|COAL CONSUMPTION(MT) || || || |
|Paper ||2.30 ||2.26 ||2.34 |
|Sugar ||1.32 ||1.24 ||1.28 |
|C FOREIGN EXCHANGE EARNINGS AND OUTGO (Rs.LAKHS) || || || |
|1 FOREIGN EXCHANGE EARNINGS-EXPORT OF PAPER ||736.23 ||0.00 ||0.00 |
|2 FOREIGN EXCHANGE OUT GO DURING THE FINANCIAL YEAR ENDING 31-03-2014 || || || |
|a ) Imports (on C.I.F. basis) || || || |
|i) Raw Material ||4376.59 ||3718.40 ||4591.17 |
|ii) ComponentsSpares parts Chemicals ||263.05 ||90.07 ||132.85 |
|iii) Capital Goods ||- ||- ||- |
|b) Other than imports || || || |
|i) Travel ||- ||- ||- |
|ii) Interest on CDC Loan ||- ||- ||- |
|iii) Loan Repayment CDC Loan ||- ||- ||- |
|iv) Services ||- ||- ||- |