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Riga Sugar Company Ltd.

BSE: 507508 Sector: Agri and agri inputs
NSE: N.A. ISIN Code: INE909C01010
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NSE 05:30 | 01 Jan Riga Sugar Company Ltd
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VOLUME 1481
52-Week high 9.69
52-Week low 3.50
P/E
Mkt Cap.(Rs cr) 6
Buy Price 4.60
Buy Qty 3719.00
Sell Price 4.39
Sell Qty 281.00
OPEN 4.39
CLOSE 4.39
VOLUME 1481
52-Week high 9.69
52-Week low 3.50
P/E
Mkt Cap.(Rs cr) 6
Buy Price 4.60
Buy Qty 3719.00
Sell Price 4.39
Sell Qty 281.00

Riga Sugar Company Ltd. (RIGASUGAR) - Director Report

Company director report

To

THE SHAREHOLDERS

Your Directors have pleasure in presenting their Report and audited Accounts of theCompany for the financial year ended 31st March 2017.

FINANCIAL & OPERATIONAL RESULTS

(Rs. in Lacs)

Financial Year 31st March 2017 Financial Year 31st March 2016
FINANCIAL RESULTS
(a) Gross Turnover 19321.05 18536.84
(b) Operating Profit Before Finance Cost & Depreciation 1515.14 1337.09
(c) Finance Cost 1502.23 1435.34
(d) Cash Accruals 12.91 (98.25)
(e) Depreciation & Amortization 432.28 408.27
(f) Profit (Loss) before extraordinary items (419.37) (506.52)
(g) Extraordinary Item of Exp./Income -- --
(h) Profit (Loss) Before Tax (419.37) (506.52)
(i) Provision for Tax
- Deferred Tax 64.39 (278.63)
- Income Tax of earlier year -- 0.82
(j) Profit (Loss) After Tax (483.76) (228.71)
(k) Balance Brought Forward from last year (2165.91) (1937.20)
(L) Profit (Loss) Carried Forward to Balance Sheet (2649.67) (2165.91)

DIVIDEND:

In view of losses company is unable to pay Dividend.

OPERATIONAL RESULTS

Sugar Unit

The comparative figures in regard to duration of season cane crush sugar recovery andproduction for the year ended 31st March 2017 vis -a-vis previous financial year ended31st March 2016 in respect of the Sugar Factory of your Company are given below:-

Financial Year 31st March 2017 Financial Year 31st March 2016
1. Duration of crushing (gross days) 92 96
2. Cane crushed (Lac Qtls.) 32.70 36.45
3. Recovery (%) 8.72 9.38
4. Production (Lac Qtls.) - 2.85 3.42

The net sales of sugar unit increased by 10% from Rs.136.63 Cr. to Rs 150.71 Cr.

Due to adverse Agro-climatic conditions the yield and quality of sugarcane affectedseverally resulting into lower cane availability for crushing and marked fall ofrecovery. These factors increased the cost of production of sugar substantially. .

After five years of continuous surplus production and stock which led to free fall ofsugar price the downtrend in sugar price halted in financial year 2016-17 and prices ofsugar improved to a level of break-even for sugar industry.

The FRP for the season 2016-17 remained unchanged by Central Government at Rs.230 perqtl. linked with basic recovery of 9.5%. In Bihar the cane Price for the season 2016-17were increased to Rs. 280 per qtl. for normal varieties (last year Rs. 260 ) Rs. 260 perqtl. for lower varieties (last year Rs. 250 ) and Rs. 300 for premium variety (last yearRs. 270). Transport rebate on out center cane remains at Rs.15 per qtl.

Cane Price in Bihar for the season 2016-17 were increased by an average Rs.25 per qtl.taking into consideration the estimated recovery of 9.6% against which actual recoverywas only 9.18% for Bihar and 8.72% for your factory. Our Association requested for givingthe subsidy as recovery was much lower than that of state government taken intoconsideration while fixing cane price.

Efforts and Agitation by Company's CMD to draw government attention toward sugarindustry problem brought fruitful result

Mr. O.P. Dhanuka CMD of the company through many representation to the government inprevious 2-3 years have highlighted the plight of sugar industry with whom 5 croresugarcane farmers are associated and also suggested various possible measures for revivalof sugar industry. When the sugar industry were becoming bad to worse and worse to worstand were on the brink of collapse and when no light were visible at the end of tunnel Mr.Dhanuka decided to intensify his effort to draw the attention of the government on thefree fall of sugar industry and farmers fortune.

In an unprecedented move Mr. Dhanuka organized Satyagrah at Jantar-Mantar on 24th and25th June 2015 followed by Shanti Andolan at Jantar-Mantar on 4th August 2015.Thereafter he organized Marathon Walk on 2nd October 2015 from Vijay GhattoJantar-Mantar. These were unprecedented move that an industrialist was doing DharnaAndolan and Satyagrah for the sake of Industry and millions of farmers.

Although belated the government could realize the enormity of the situations and tookcertain bold decisions. For last one year the sugar prices have improved from earlierbottom out price but are still lower than the cost of production.

Withdrawal of Relief by Bihar Government

The state government of Bihar for last two years had provided relief in the form ofcash subsidy of Rs.16.75 per qtl. of sugarcane. However the same were withdrawn for theseason 2016-17 inspite of adverse condition of sugar industry in the state and increase ofcane price coupled with sharp fall of recovery in the state.

The molasses price in Bihar during the year maintained at Rs. 287.50 per qtl.

Due to adverse Agro-climatic conditions the yield and quality of sugarcane affectedseverally resulting into lower cane availability for crushing and marked fall ofrecovery. Rainfall last year in the year 2016 for the months of April & May were belowaverage and in October were in excess which adversely impacted sugar yield and recovery.These factors increased the cost of production of sugar substantially. Further around 7lac quintal of sugarcane were smuggled to Nepal through adjoining Nepal border surroundingfactory.

The state government of Bihar has also not released subsidy on various account of aboutRs. 11 crore which would have used for payment to cane growers.

Distillery Unit Financial Year 31st March 2017 Financial Year 31st March 2016
1. Production of Industrial Alcohol ( Lac BL) NIL 95.24
2. Sale of Industrial Alcohal/Transfer for Country Liquor NIL 64.04
3. Production of Ethanol from Industrial Alcohol 24.97 13.47
4. Production of Ethanol from Molasses (Lac BL) 60.60 --
5. Supply of Ethanol (Lac BL) 73.64 13.29

Ethanol

The state government of Bihar from 1st April 2016 ban the production consumption andsupply of Alcohol in all forms i.e country liquor and IMFL in the state. The Distillery ofthe company is producing and supplying Ethanol as per tender of OMC. Thus the companyapplied for full quantity of expected production in distillery as Ethanol to be suppliedto all marketing companies. The admixing of Ethanol with Petrol were increased from 5% to10% at some depot.

From December 2016 the Ethanol Procurement prices were downward revised to Rs. 39.00per BL plus taxes and duties instead of earlier fixed delivered price policy of Ethanoli.e Rs. 48.50 per BL within 100 km Rs 49.00 per BL within 100-300 km and 49.50 per BLbeyond 300 km. Moreover the Excise duty exemption on Ethanol were withdrawn by Governmentof India in August 2016 which impacted the margin severely. Our Association ISMA istaking up this issue with central government.

The Production of Ethanol in Distillery affected due to restriction of State PollutionControl Board which was subsequently removed. These factors impacted turnover andprofitability.

Due to stricture of the pollution control authority the working days of Distilleryunit of the company affected during the reporting financial year although the companyinstalled MEE during the year and is setting up new Digester for treatment of effluent ofdistillery. Company have filed case against the State Pollution Control Board againstforcefully closure of Distillery which impacted the production and sales of ethanol to OMCand loss to Distillery of approx Rs.6.00 Crore.

Country Liquor

The state government of Bihar from 1st April 2016 ban the production consumption andsupply of Alcohol in all forms i.e country liquor and IMFL. Thus the company's exclusiveLicense for manufacture and supply of Country Liquor in Pet Bottle to Bihar State BeverageCorporation Limited for a period of 5 years starting from 1st April 2014 in MuzzafarpurZone were cancelled and Manufacturing Depot of country liquor were closed and surrenderedon 31st march 2016 and was sealed by the Excise Department of Bihar. The company alsofiled compensation application in High Court toward of Rs. 15 cr. as pre-maturedtermination of License.

SEGMENT-WISE PERFORMANCE:

During the reporting period sugar segment contributed 83 percent of net sales of thecompany whereas Distillery accounted for 17 percent. The company identified two businesssegments in line with the Accounting Standard on Segment Reporting Segment-wise RevenueResults and Capital Employed as stated in Note No.32 of financial statement enclosed withthe Annual Report.

INDUSTRY STRUCTURE & POLICY

Structure

Sugar Industry is seasonal in nature and directly dependent on monsoon foravailability of adequate sugar cane. India is the largest consumer and second largestproducer of sugar in the world contributing over 15 percent of the world's sugarproduction through over 600 sugar factories situated in different parts of the country.The sugar Industry is the largest agro based industry in India. This industry alsoprovides valuable by-products like bagasse molasses and press mud. The availability ofthese by-products had led to setting up of Alcohol/Ethanol/co-generation of Power andOrganic Manure plants. Over 5 Crore farmers large number of agricultural labourer areinvolved in sugarcane cultivation and its harvesting operations. The growth of sugarindustry has a powerful impact on the rural economy. Integrated Sugar Industry (comprisingsugar molasses alcohol power and bio-fertilizer) enjoys annual turnover of overRs.100000 Crore and contribute about Rs.6000 crore to the Central Government Exchequerby way of central excise duty every year beside state taxes on sugarcane and hefty taxescollected by state as excise and VAT on sale of spirit in the state which run an estimatedRs.10000 crores annually. The Income tax also contributes to the government coffer.Industry accelerates rural development through farm employment as well as businessopportunities in transport and communication.

Sugar has been declared as an 'essential commodity' under the Essential CommoditiesAct 1955. Under Sugarcane (Control) Order 1966 the Government of India fixes cane pricecalled Fair and Remunerative Price (FRP) for sugarcane every year based on therecommendations of the Commission on Agricultural Costs & Prices. However many stategovernment fixes higher cane price for the sugar factories in their state.

Sugar Cycle

The Indian sugar industry is characterized by cycle of high and low sugar production.This cycle of 3-4 years is broadly of two types viz. Natural comprising climaticvariation water availability and pest attacks. The other is induced cyclicality whichhave sequence like -- higher sugar production and accumulation of stock -- decline insugar prices & profitability -- higher sugarcane arrears -- decline in area undercultivation & Lower cane production -- lower sugar production -- lower sugaravailability and stock and thus increase in sugar prices --- improved profitability &low cane arrears -- higher cane production --higher sugar production and so on. Every timethe cyclicality reaches its low government have to step in to provide Fiscal support inthe form of Export subsidy Buffer Stock creation Interest Free Loans etc. This cycle wasbroken till 2015-16 and India was having higher production of sugar for previous fiveconsecutive years and thus downtrend continued for five year which was halted in thecurrent season 2016-17 by way of lower production than previous 5 years.

The fundamental problem of the Indian Sugar Industry is that there is no parity betweenthe price of raw material i.e. sugarcane and its finished goods of sugar i.e. Illogicalintervention of state government cause wide economical distortation in sugar industry. Inalmost all major sugar producing countries of the world the price of cane paid to thefarmers depends on realization from sugar. Untimely decision of government of import andexport of sugar hampers the domestic sugar market sentiments. Timely decision of importand export of sugar based on fixed parameter is utmost necessary.

Rangrajan Committee Report-Linkage of Raw Material Costs and Sugar Realization

The main recommendation of Rangrajan Committee report of the year 2012 regardinglinkage of cane price with sugar price and its by products has not been implemented sofar. The committee has suggested for revenue sharing model under which 70% of sugar valueand each of its major three by-products would be paid to farmers. Rangrajan Committee hasindicated a derived cane price formula. It indicates that cane price will not be anabsolute but linked to another variable. Cane price will be linked to the price of sugarin the market place. The higher the sugar realizations the greater will be the caneprice. This is an internationally tested model. This ensures that any increase in sectorsprofitability is equitably shared between its manufactures and growers. The cane growerwill not be treated outsider but as partner of entire value chain. The Rangrajancommittee has gone a step further in this proposed linkage; it has proposed a sharingpercentage at a level higher than what is practiced abroad which more than secures theinterest of farmers.

Fixation of cane price at high level than the market price of sugar should be madeillegal. Various committees and high-level committee like Rangarajan have said so.According to Rangrajan Commitee "A sugar unit without any by-products' business willhave to pay cane price of 70% of its revenue realisation while it will have to spend 30%on its functioning. On the other hand a sugar factory with by-products business will haveto pay cane price of 75% of its revenue realization from sugar. The cane price to be fixedtaking into account this formula."

Distillery & Ethanol

In Bihar since ban has been imposed on production consumption and sale of potable from1st April 2016 and distilleries only produces Ethanol and supply the same to oil marketingcompanies in any State of India. However the movement and price of Molasses is controlledby State Government.

Co-Gen of Power

The Company is supplying surplus power upto 3 MW from its co-generation Plant. Thisforward integration contribute to the bottom-line of the company .

Bio-Compost Fertiliser

The company is using distillery effluent and press mud from sugar and otheragricultural waste to produce bio-compost which is very cost efficient. Thus the companyapart from treatment of effluent and zero discharge adding value. The company gotRegistration of Bio-compost under Fertiliser Control Order 1985 with Ministry ofAgriculture as per requirement of CPCB.

Pollution Control- Zero Discharge Company

The Sugar and Distillery factories of the company are Zero Discharge Plants as pernorms of Central Pollution Control Board and Ministry of Forest and Environment. Thecompany treat the entire solid waste generated from Sugar factory which is generated inthe form of Press-mud and liquid generated from Distillery in the form of spent wash forproduction of Bio-Compost. For this the company has set-up Digesters RO Lagoon andBio-compost facilities on more than 17 Acres of Land. The Digesters is capable ofgenerating bio-gas which is replacement of fossil fuel. The Bio-compost produced is richin all organic nutrients required for fertility of the land. The said bio-compost is soldto farmers who supply sugarcane to company and also to other farmers and even used in TeaGardens of Assam and Darjeeling.

During last year a complaint was filed with National Green Tribunal (NGT) by oneindividual person against distillery of the company. After through submission of facts andfigures by the company the Hon'ble NGT directed for inspection by CPCB. CPCB afterdetailed inspection found that company is following Zero discharge norms and thus thematter was disposed off.

The company is not only zero discharge company but is also generating economic valuefrom such waste products and rejuvenating the farm land through use of organic fertilizer.The company has been awarded ISO 14000: 2004 in recognition of the organization'sEnvironmental Management System.

As per new norms of CPCB Distillery of the company during the year has installed MultiEffect Evaporator (MEE) which reduces effluent generation substantially and thus theachieving of Zero Discharge as per new norms of CPCB has been strengthen. The Distilleryduring the year is also installing new Digester so as to achieve better treatment ofeffluent and generation of Gas. The total project cost of MEE and Digester is Rs. 12 Cr.Thus the company is totally committed toward achievement of zero discharge and complianceof Pollution Control norms.

The Distillery during the year remained closed for total 218 days for host of reasonsviz. due to direction from BSPCB Non-renewal of License from Excise Dept. 90 days rainyseason CPCB protocol of closure of Distillery. The company has complied with all thedirections of regulatory bodies from time to time and has incurred huge capital investmentand recurring expenses regaularly. However the intermittent closure of Distilleryseverally impacted the profitability.

OPPORTUNITIES AND THREATS OPPORTUNITIES

Sugar

India is largest consumer and second largest producer of sugar in the world. Theconsumption of sugar is on increasing trend with the increase in consumption of colddrink Biscuits Confectioneries and Halwais which constitute 70% of total consumption andrest 30% by ordinary consumer. There are huge scope for further increase in demand asIndia is still lagging behind from many advanced countries in respect of per capitaconsumption of sugar. Thus there are opportunity in production and consumption of higherquantity of sugar in coming period.

Distillery

The mandatory provision of ethanol doping of 10% will have strong support for growth ofsugar industry. Ethanol production improves oil security and contributes to environmentalprotection. The Government is further considering to increase the ethanol mixing withpetrol at 20% and also mixing with Diesel. Thus coming years the Ethanol is going to bemajor driver for growth of sugar industry in the country.

Power

Sugar Industry offer immense scope for renewal energy project on co-generation basiswhich provide clean energy. Due to this the increased demand of surplus bagasse has addedimputes to revenue generation. The Tariff policy for co-gen renewal power is alsolucrative in comparison to conventional power based on fusel fuel. At present sugarindustry in India is producing about 4000 MW of surplus power and supplying to grid.However there is potential of 8000 MW co-gen surplus power with the sugar industry.

Bio-Compost Fertiliser

The bio-compost and vermi-compost fertilizers being produced by the company has gotimmense scope of demand in all major agriculture cultivation as it not only preserve thesoil from excessive use of chemical fertilizer but also increase its fertility.

THREATS

No linkage of Sugar Price with cane price

Unreasonable increase in cane price in comparison to sugar selling price.

The sugar sector is exposed to political intervention.

Natural Calamity.

FUTURE PROSPECTS/OUTLOOK

As per ISMA's latest estimates production of sugar for the season 2016-17 estimated at203 Lacs MT and consumption of 240 Lac MT. With a high opening balance of 77.5 Lac MT the closing balance in the current season is estimated to be around 42 Lac MT whichindicates enough availability to meet domestic demand until end of November 2017. Thereason for the lower production especially in Maharashtra Karnataka Andhra Pradesh etc.is due to the continuous drought in last few years. On the other hand cane yields aswell as sugar recovery in Uttar Pradesh have been substantially better than last year.With favourable monsoons approaching yield improvement is expected in 2017-18. There hasbeen an increase in sugar and sugarcane production of 2.63% and 2.40% CAGR respectivelyover the last 10 years.

Prices of by-products such as bagasse and molasses continue to remain remunerativedriven by healthy demand by consuming sectors such as power paper and ethanol. During theyear lower realizations for ethanol due to price change impacted the returns. Forwardintegration into distilleries power generation bio-fertilisers gives value addition. Asignificant part of profitability of the integrated sugar mills comes from by-products. Itis believed that forward integration will remain crucial for improving profitability andriding thorough the cyclicity of the sugar industry.

From a medium to long-term perspective the long term prices and profitability ofIndian sugar companies will remain highly cyclical and dependent on domestic andinternational supply-demand tendencies. The price trends in the international markets willbe one of the key determinants of future profitability. Further Government action onrational linkage between cane and sugar prices will have a critical bearing on thelong-term feasibility of sugar operations especially in the states where there isinterference of state. Players with high operating efficiencies forward integration andstrong capital structure within the sugar industry will be best placed to ride out thechallenges.

Committee of the Board

The details of composition of Audit Committee and other committees of the Board ofDirectors alongwith the attendance thereof is provided in the Corporate Governance Reportforming part hereof.

Audit Committee

The Audit Committee comprises Mr. Sarad Jha as its Chairman with Mr. Suyesh Borar andMr. S.K.Goenka as members. All recommendations of the Audit Committee were accepted by theBoard.

Information pursuant to Section 134 of the Companies Act 2013 a. Extract of the annualreturn as provided under Section 92(3) of Companies Act 2013 is enclosed -Annexure I b.Five meetings of the Board of Directors of the Company were held during the year on30.05.2016 13.08.2016 05.09.2016 10.11.2016 and 14.02.2017. c. All the IndependentDirectors of the company have furnished declarations that they satisfy the requirement ofSection 149 (6) of the Companies Act 2013. d. Relevant extracts of the Company's policyon directors appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedin section 178(3) of Companies Act 2013 is enclosed - Annexure II. We affirm that theremuneration paid to the Directors is as per terms laid out in the Nomination andRemuneration Policy of the company. e. There is no qualification reservation or adverseremark or disclaimer made by the auditor in his report and by Company Secretary inpractice in the secretarial audit report and hence no explanations or comments by theBoard are required. f. The details of Loans Guarantees and Investment covered under theprovisions of section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements and also enclosed as Annexure-III.

g. There has been no materially-significant related party transactions made by thecompany with the promoters the directors the Key Managerial Personnel which may be inconflict with the interest of the company at large. The company has formulated a policy onRelated Party Transactions and also on dealing with Related Party Transactions. The policyis disclosed on the website of the company (www.rigasugar.com). All related partytransactions as placed before the Audit Committee has also received approval from theBoard. Your Directors draw attention of the members the Note No. 33 to the financialstatement which set out Related Party Disclosures. h. Details of conservation of energytechnology absorption foreign exchange earnings and outgo as prescribed vide Rule 8(3) ofCompanies (Accounts) Rules 2014 is enclosed - Annexure IV i. The company has laid downpolicy on risk assessment and minimization procedures and the same is periodicallyreviewed by the Board. The Policy facilitates in identification of risk at appropriatetime and ensure necessary steps to be taken to mitigate the risk. Brief details of risksand concerns are given in this Board Report. j. The corporate Social ResponsibilityCommittee has formulated and recommended to the Board a Corporate Social ResponsibilityPolicy (CSR Policy) indicating the activities of the company.

The Annual Report on CSR activities is not annexed herewith due to non- applicabilityof relevant provisions to the company due to losses. k. In compliance with the CompaniesAct 2013 and Regulation 17 of the Listing Regulations during the year the Board adopteda mechanism for evaluating its performance as well as that of its Committee and Individualdirectors including the Chairman of the Board.

The evaluation of Independent was carried out by the entire Board and that of thechairman and Non-Independent directors were carried out by the Independent directors.

The Directors were satisfied with the evaluation results which reflected the overallengagement of the Board and its committee with the company.

RISK AND CONCERN SUGAR

(a) Delay in evolving a rational Sugarcane Pricing Policy having link with sugar priceis detrimental to growth of the industry. (b) The output of sugar an agro-based productis influenced by climatic vagaries.

(c) Sugar Industry being cyclic in nature the growth is hampered during downtrend.

DISTILLERY

Inconsistent policy of the government in the implementation of the Ethanol BlendingProgramme is matter of concern.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has adequate systems and internal control procedures to safeguard theassets of the company and to ensure maintenance of proper accounting records. There isalso an Internal Audit System in place which reviews the key business and controls andalso test checks on routine transactions and reports deviations. Besides an AuditCommittee periodically reviews the functioning of the entire system.

CHANGE IN SHARE CAPITAL

The company during the year allotted on 30.12.2016 and on 30.03.2017 respectively550000 equity shares and 1450000 equity shares of Rs.10/- each at a price of Rs.12/-per equity share of nominal value of Rs. 10/- and premium of Rs. 2/- each by way ofconversion of equivalent number of convertible warrants on preferential allotment basis topromoters and to others as per SEBI (ICDR) Regulations 2009. The entire amount ofRs.240.00 Lacs were used for improving the financial of the company. There is nooutstanding share warrants.

CREDIT RATING

CARE improved credit rating for the company's Long-term debts at CARE B+; Stable fromCARE B and reaffirmed short-term at CARE A4.

FIXED DEPOSITS:

The company has neither accepted nor renewed any deposit from public within the meaningof section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposit)Rules 2014 during the year under the review.

AUDITORS

(a) Statutory Auditors

The observation of Statutory Auditors in their report read with the relevant notes toaccounts are self explanatory and therefore do not require any further explanation.

M/s. K.N. Gutgutia & Co. Chartered Accountants ( ICAI Registration No. 304153E) Kolkata hold office as Auditors of the Company till the conclusion of ensuing AnnualGeneral Meeting.

The Board on the recommendation of the Audit Committee proposed that M/s. Salarpuria& Partners Chartered Accountants (Firm registration number 302113E) be appointed asthe Statutory Auditors of the Company for a period of five consecutive years from theconclusion of the ensuing Annual General Meeting of the Company subject to the approvalof the shareholders of the Company.

(b) 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. Mani & Co. Cost Accountants(Firm Registration No 000004) as the Cost Auditor to audit the cost accounts of theCompany for the financial year 2017-18. As required under the Companies Act 2013 theremuneration payable to the cost auditor is required to be placed before the Members in ageneral meeting for their ratification.

(c) Secretarial Auditor and Secretarial Audit Report

In pursuance of section 204 of the Companies Act 2013 M/s H.M. Choraria & co.Company Secretaries were appointed as secretarial Auditors to carry out Secretarial Auditfor the financial year 2016-17. Their report is annexed to this report as Annexure-V.

DIRECTORS:

Mr. Nirmal Kumar Parasramka was appointed as Additional Director of the company in thecategory of Independent Director by the Board in its meeting held on 10th November2016.He shall hold office upto the date of ensuing Annual General Meeting of the company andwill be eligible for re-appointment as Director.

Resume and other information regarding the Directors seeking appointment/reappointmentas required by Regulation 36 of the Listing Regulations has been given in the Noticeconvening the ensuing Annual General Meeting and in the statement pursuant to section 102of the Act. The Board of Directors recommends the above appointment /reappointment.

All Independent Directors have given declaration that they meet the criteria ofIndependence as laid down under section 149 (6) of the Companies Act 2013 and Regulation16 of the Listing Regulations.

DIRECTORS' REPONSIBILITY STATEMENT:

Your Directors state that:-

(i) in preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards have been followed alongwith proper explanation relatingto material departures if any ;

(ii) the Directors have 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 and of the loss of the company as on 31stMarch 2017; (iii) the Directors have taken proper and sufficient care 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; (iv) the Directors have prepared the annual accounts on 'goingconcern' basis; (v) the Directors have laid down internal financial controls to befollowed by the company and such internal financial controls are adequate and areoperating effectively; and (vi) directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.

PERSONNEL:

The particulars of employee as required under Section 197 (12) of the Companies Act2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are given as separate annexure attached hereto and formspart of this report as Annexure- VI.

During the year under review no complaint/case was filed pursuant to Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

CORPORATE GOVERNANCE:

The Corporate Governance form an integral part of this Report and are set out asAnnexure- VII to this Report. The certificate from the Auditors of the company certifyingcompliance of condition of Corporate Governance stipulated in Regulations 34(3) of theListing Regulations is also annexed to Report on Corporate governance.

KEY MANAGERIAL PERSONNELS

In compliance of provisions of section 203 of the Companies Act 2013 the followingpersons were the key managerial personnel of the company: (i) Mr. O.P.Dhanuka Chairman& Managing Director (ii) Mr. S.Prasad Company Secretary (iii) Mr. R.N.Sharma ChiefFinancial Officer The other details pertaining to KMP of the company theirappointment/cessation during the year under review and their remuneration have beenprovided in the Extract of Annual Return annexed hereto and forming part of this report.

Code of conducts and ethics

The Board of company has adopted a Code of Conducts and ethics for the Directors andSenior Executives of the company. The code is available on the company's website atwww.rigasugar.com.

Significant & material orders passed by the regulators

During the year under review no significant and materials orders were passed by theRegulators or courts or Tribunals impacting the going concern status.

Whistleblower Policy

The company has in place a whistleblower policy to deal with unethical behaviorvictimizations fraud and other grievances or concerns if any. The Whistleblower policycan be accessed on the company's website www.rigasugar.com.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013. Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees etc.) are covered under this policy. No sexual harassment complaints werereceived during the year 2016-17.

Risk Management Policy

The Company has Risk Management committee of Directors to have a system of RiskManagement inter alia to review it periodically.

Policy for Preservation of Documents

The Policy for preservation of documents are stated in website of the companywww.rigasugar.com.

Material changes and commitments affecting the financial position of the company after31st March 2016

From 1st April 2016 the Bihar Government has banned the production and sale of Liqourin the state. Thus the exclusive license obtained by the company for manufacture andsupply of country liquor in Muzzafarpur Zone has been withdrawn. The company has beenallowed production of 100% Ethanol which hitherto were restricted to only 5%. The salerealization from Ethanol is better than the sale of Rectified Spirit and Country Liquor.Thus it has impacted positively to the company's financial.

The Sugar price continue to show upward trend during current financial year so far onthe back of lower than expected production and stock in the country. This will havepositive impact on the margin on sugar sales.

Subsidiaries Joint Ventures or Associate Companies

There is no subsidiary Joint Venture or Associate of the company under meaning ofCompanies Act 2013.

LISTING OF EQUITY SHARES:

The Shares of the Company are listed on The Calcutta Stock Exchange Ltd. and BSE LTD.The Company has been regularly paying the Listing Fees to each Stock Exchanges.

ANNEXURES FORMING PART OF THIS REPORT OF THE DIRECTORS

The Annexure referred to in this report and other information which are required to bedisclosed are annexed herewith and forms a part of this report of the Directors:-

Annexure Particulars
I Extract of the Annual Return as per form MGT-9
II Policy on selection of Directors appointment and remuneration
III Details of Loan Guarantees and Investment
IV Particulars of Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo
V Secretarial Audit Report
VI Particulars of Employees
VII Corporate Governance Report

APPRECIATION:

Your Directors express their appreciation for the support and contribution by CaneGrowers Bankers Central and Bihar State Government Suppliers Customers and thevaluable services rendered by the Employees at all levels.

For and on behalf of
the Board
Kolkata O. P. Dhanuka
Dated : 29th May 2017 Chairman & Managing Director