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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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OPEN 4.70
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VOLUME 525
52-Week high 5.67
52-Week low 2.62
P/E
Mkt Cap.(Rs cr) 7
Buy Price 4.55
Buy Qty 45.00
Sell Price 4.59
Sell Qty 100.00

Riga Sugar Company Ltd. (RIGASUGARCO) - Director Report

Company director report

To

THESHAREHOLDERS

Your Directors have pleasure in presenting their Report and audited Accounts of theCompany for the financial year ended 31st March 2019.

FINANCIAL&OPERATIONALRESULTS (Rs. in Lacs)
Financial Year 31stMarch 2019 Financial Year 31stMarch 2018
FINANCIALRESULTS
(a) GrossTurnover 15487.31 9799.04
(b) Operating Profit Before Finance Cost & Depreciation (2189.13) 155.75
(c) Finance Cost 1963.44 1765.35
(d) Cash Accruals (4152.57) (1609.60)
(e) Depreciation &Amortization 490.55 471.74
(f) Profit (Loss) before extraordinary items (4643.12) (2081.34)
(g) Extraordinary Item of Exp./Income --
(h) Profit (Loss) Before Tax (4643.12) (2081.34)
(i) Provision forTax
- DeferredTax --
- Income Tax of earlier year -- 4.23
(j) Profit (Loss) After Tax (4643.12) (2085.57)
(k) Other comprehensive Income (net of tax) (1.66) (53.11)
(l) Total Comprehensive Income for the year (4644.78) (2138.68)

DIVIDEND:

In view of losses company is unable to pay Dividend.

OPERATIONALRESULTS

Sugar Unit

Thecomparativefiguresinregardtodurationofseasoncanecrushsugarrecoveryandproductionfortheyearended31stMarch2019 vis -a-vis previous financial year ended 31st March 2018 in respect of the SugarFactory of your Company are given below:-

Financial Year 31stMarch 2019 Financial Year 31stMarch 2018
1. Duration of crushing (gross days) 110 114
2. Cane crushed (Lac Qtls.) 35.28 44.72
3. Recovery(%) 8.78 8.79
4. Production (Lac Qtls.) - 3.10 3.93

The sales of sugar unit increased by 54% from Rs.82.56 Cr. to Rs. 127.52 Cr.

The crushing season for 2018-19 Startedon 20th December 2018 and was extended till 16thMay 2019 against 4thApril last year. Due to the extreme hot weather in the months ofApril and May the recovery of sugar was abysmally low & at 8%. During the monthsofApril and May 2019 the recovery falls below 5%.The labour problems and strike duringseason period also contributed to adverse working and loss of recovery of sugar and thusresulting higher cost of production.

The state government had promised to compensate for the loss due to the extendedrunning period of sugar factory during the scorching summer heat and the company has alsomade a claim against the same. However company is awaiting the release of compensationfrom state government.Sugar sale price remained subdued during the year much below costof production of sugar.

The sale price of sugar was lower than cost of production. The central government fixedminimum floor price of sugar at Rs. 29 per kg which was subsequently increased to Rs.31per kg. However the cost of production of sugar on all India basis was much higher andindustry demanded floor price of Rs. 35-36 per kg which was not accepted by thegovernment which resulted in a loss on realizations. The parity between cane price andsugar price is yet to be established.

ContinuingLosses

During last 8 years company has incurred Loss of Rs. 102 Cr. but still made repaymentof Term Loan of Rs. 79 Cr. and interest of Rs. 127 Cr. whereas fixed assets investmentwere Rs. 48 Cr as enumerated below:-

Rs. in Lacs

2011-12 2012- 13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total
NetProfit(Loss) (524) (350) (272) (1442) (506) (409) (2081) (4643) (10227)
Term Loan Repayment 1432 492 477 1066 786 1205 1410 1039 7907
PaymentofInterest 1571 1559 1318 1607 1435 1502 1765 1963 12720
FixedAssetsInvestment 702 209 546 412 195 1325 1114 342 4845

Due to continuous losses for last 8 years there are cane price arrears to farmers.However the company has totally repaid the sugar cane price till last season 2017-18.

Since last few years your company is facing natural calamities one after another. ThePhalin cyclone in October 2013 the Hudhud in October 2014 stranded the growth ofsugarcane as well as reduced the sugar recovery considerably. Again company faceddevastating earthquake inApril 2015 and May 2015 and lost crores of rupees.TheStateGovernment had given assurance to help and visited the area but no compensation wasgranted. In August 2017 heavy flood also caused huge damage to our plant and sugarcane.

The incentive claimas declared by the State Government and other receivable from stategovernment is pending for long time which the Government is not releasing. The same amountcould have been used for payment of cane price arrears for the season 2018-19.

Since the entire bank loans of the company had became an NPA in the previous year thebankers allowed holding on operation which is still going on.

Due to continuous losses the Net worth of the company is fully eroded which may havean effect on the entity's ability to continue asagoingconcern.Howeverthe Management isstill hopeful that with financial restructuring by the banks and financial assistance fromthe state and central government the company can still revive.

The state government has announced cane price subsidy of Rs. 12.50 per qtl. ofsugarcane for the season 2018-19.

The company has made request for the following support from the Central and the Stategovernment. If provided the company can be revived and it can come out of NPA:-

CENTRALGOVERNMENT

(a) Soft Loan from Bank as per the Central Government scheme for companies which havebecome an NPA by waiving the prerequisite of State Guarantee.

(b) The central government to delink prior export obligation with cane price subsidyrelease and pay to the farmer the subsidy amount of Rs.13.88 per qtl. directly.

(c) As a help to the weak and NPAsugar factories and also sugar factories whoserecovery is lower than 9.5% a higher allocation of Buffer Stock shall be assured.

(d) SDF Loan Restructuring - The company became a totally weak and Sick SugarUndertaking and has become an NPA from 30th September 2018. As per SDF Rules our companyis eligible for restructuring of the Loan by way of :-

(a) extension of repayment period;

(b) waiving of all penal and additional interest;

(c) providing loan for clearance of cane price arrears to farmers; (d) loan for plantrejuvenation and balancing ; (e) for cane development loan; and (f) loan for Ethanol andPower Plant (e) Ethanol Loan as per Central government scheme.

STATEGOVERNMENTOFBIHAR

(a) Soft Loan of Rs.40 Cr. at 4% rate for 10 years for payment of Cane price arrears

(b) For the purpose of getting Soft Loan from Bank of Rs.11 Cr. as per the CentralGovernment Scheme the company requires Guarantee from the State Government as we are anNPA Account.

(c) Help farmers directly for procurement of High Yield Variety of cane seed of CO 238for 2 years.

(d) Compensation towards running sugar plant in scorching heat ofApril and May 2019 asper direction of the state government in the interest of farmers in season 2018-19 andconsequent loss by way of extremely lower recovery.

Central Government action during the year FRP: The FRP for 2018-19 was fixed at Rs. 275per quintal against last year Rs. 255 per qtl. linked to a basic recovery of 10% subjectto a premium of Rs. 2.75 per quintal for every 0.1 percentage point increase above thatlevel.

In Bihar the cane Price for the season 2018-19 remained at same at Rs.290 per qtl. fornormal varieties Rs. 265 per qtl. for lower varieties and Rs.310 for premium variety.Transport rebate on out center cane is at Rs.20 per qtl.

MIEQ Scheme: The Central government with a view to facilitate export of sugar duringthe season 2018-19 thereby improving the liquidity position of thesugarmillstoenablingthemtoclearcanepricearrears of farmers for sugarseas on2018-19announced a mill-wise Minimum Indicative Export Quotas (MIEQ) totaling 50 Lacstonnes for the sugar season 2018-19.

Financialassistance:InordertohelpsugarmillsclearfarmercaneduestheGovernmentdecidedtoprovidefinancialassistance@ Rs.13.88 per quintal of cane crushed in sugar season 2018-19 to sugar mills to offsettheir cost of cane. The assistance shall be paid directly to farmers on behalf of themills and be adjusted against the cane price payable due to farmers against a Fair andRemunerative Price (FRP) including arrears relating to the previous years if any.However the pre-condition of export of minimum quantity of sugar is working as deterrentbecause on export of sugar loss has to be beared by the mill because international priceis much below than domestic price. Many sugar companies are not able to bear such lossupfront including our company.

FloorPriceofSugar:The Government set floor price of sugar at Rs. 29 per kg below whichsugar factory cannot sell sugar which has been increased to Rs. 31 per kg. However thecost of production of sugar is between Rs. 3600 to Rs.3900 per qtl.

Stock holding limit on Sugar Mills: The government continued monthly stock holdinglimits on sugar mills to control sugar availability in domestic market so as to improvethe realization. This ensures that market is not to be flooded with sugar and act asstabilizing factor.

Package for Ethanol Production: The Government announced Package of Rs.8500 Cr. whichincludes providing subsidized loans for ethanol production capacity. It will encouragesetting up of more distilleries in the country over the next 3 years and will help indiverting some of the surplus sugarcane into ethanol and reduce surplus sugar in the longrun.

Buffer Stock creation: The government created buffer stock of 30 lac MT from 1st July2018 for a period of one year.

Transport Rebate on MIEQ: To facilitate the export of sugar in the 2018-19 seasonimproving the liquidity of sugar mills to help clearcanepriceduesthe government notifiedaschemefordefrayingtheexpenditure towards internal transportfreighthandling and othercharges.

Ethanol from B-heavy molasses and direct cane juice: For the first time the governmentpermitted ethanol to be produced from B-heavy molasses and direct sugarcane juice.

GST: The government reduced GST on ethanol from 18% to 5%

In spite of all the measures cane arrears on all India basis stood at Rs. 17000crore.

Sugar Scenario

Sugar production for the season 2018-19 surpassed all previous record. The marketanticipated the higher production well inadvanceandpricebegantodeclinefrombeginningofseason2018-19 and continued unabated followingevery upwardproduction revision. The sugar industry is in such precarious condition wherethe sugar realization is not even covering cost of sugarcane itself. This has brought asituation where the country's sugar industry is facing serious and unprecedented cash flowmismatch resulting in mammoth cane price arrears.

TheAll India sugar price and sugarcane price announced by Central Government as perFRPfor last 9 years are depicted below:-

Year Sugar Price Sugarcane Price (FRP)
2009-10 2951 129.84
2010-11 2727 139.39
2011-12 2951 145.00
2012-13 3148 170.00
2013-14 2917 210.00
2014-15 2492 220.00
2015-16 3121 230.00
2016-17 3620 230.00
2017-18 3136 255.00
2018-19 3050 275.00

The sugar price during last 9 years increased by 4% whereas the sugarcane priceincreased by 113%.

DistilleryUnit Financial Year 31stMarch 2019 Financial Year 31stMarch 2018
1. Production of Ethanol from Molasses (Lac BL) 71.70 47.46
2. Supply of Ethanol (Lac BL) 81.35 49.90

Ethanol

The Distillery of the company run for higher nos. of days of 157 days against 99 dayslast year as against stipulated 270 daysworking.Duringtheyear38daysremainedclosedduetoarbitrarynon-renewalofDistilleryLicensebyStateDistrictAdministrationand also 56 days closure due to illegal closure by CPCB on the pretext of non-installationof CPU although company have full proof proven and certified system of Zero discharge.

With better margin coupled with improved sale price of ethanol and also lower cost ofmolasses procurement from other sugar factories the working of distillery was better thanlast year. With installation of CPU its working is expected to improve further.

Co-Gen of Power

TheCompanyissupplyingsurpluspowerupto3MWfromitsco-generationplant.Thisforwardintegrationcontributetothebottom-lineof the company .

Bio-CompostFertiliser

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.

SEGMENT-WISEPERFORMANCE:

During the reporting period sugar segment contributed 79 percent of net sales of thecompany whereas Distillery accounted for 21percent.The company identifiedtwobusinesssegmentsinline with the Accounting Standardon Segment ReportingSegment-wiseRevenue Results and Capital Employed as stated in Note No.25 (5) of financial statementenclosed with theAnnual Report.

INDUSTRYSTRUCTURE&POLICY

StructureSugarIndustryisseasonalinnatureanddirectlydependentonmonsoonforavailabilityof adequatesugarcane.Indiais the largest consumer and second largest producer of sugar in the worldcontributing over 15 percent of the world's sugar production through over 600 sugarfactories situated in different parts of the country. The sugar Industry is the largestagro based industry in India. This industry also provides valuable by-products likebagasse molasses and press mud. The availability of these by-products had led to settingup ofAlcohol/Ethanol/co-generation of Power and Organic Manure plants. Over 5 Crorefarmers large number of agricultural labourer are involved in sugarcane cultivation andits harvesting operations. The growth of sugar industry has a powerful impact on the ruraleconomy. Integrated Sugar Industry (comprising sugar molasses alcohol power andbio-fertilizer) enjoys annual turnover of over Rs.100000 Crore and contribute aboutRs.5000 crore to the Central Government Exchequer by way of GST beside state taxes onsugarcane and hefty taxes collected by state as excise and VAT on sale of spirit in thestate whichrunanestimatedRs.10000croresannually.The Income tax also contributes to thegovernment coffer.Industryaccelerates rural development through farm employment as well asbusiness opportunities 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 onAgricultural Costs & Prices. However many stategovernment fixes higher cane price for the sugar factories in their state. CACP givesrecommendation of cane price but government do not implement due to politicalconsideration.

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. Everytime the cyclicality reaches its low government have to step in to provide Fiscal supportin the form of Export subsidy Buffer Stock creation Interest Free Loans etc.

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 Rangrajan committeehas gone a step further in this proposed linkage; it has proposed a sharing percentage ata level higher than what is practiced abroad which more than secures the interest offarmers.

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 saidso.According to Rangrajan Commitee "Asugar unit without any by-products' businesswill have to pay cane price of 70% of its revenue realisation while it will have to spend30% on its functioning. On the other hand a sugar factory with by-products business willhave to pay cane price of 75% of its revenue realization from sugar. The cane price to befixed taking into account this formula."

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 MEE 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 requiredforfertilityoftheland. Thesaidbio-compostissoldtofarmerswhosupplysugarcanetocompanyandalsotootherfarmers and evenused in Tea Gardens of Assam and Darjeeling.

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.

As per revised norms of CPCB Distillery of the company is also installing CPU.

OPPORTUNITIESANDTHREATS

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

Themandatoryprovisionofethanolblendingof10%havestrongsupportforgrowthofsugarindustry.Ethanolproductionimprovesoil security and contributes to environmental protection. The Government is furtherconsidering to increase the ethanol mixing with petrol at 20% and also mixing with Diesel.The Government of India has announced package for financing of Ethanol Production Capacityincluding new Ethanol plant and expansion including financing of Pollution ControlEquipment. Thus coming years the Ethanol is going to be major driver for growth of sugarindustry 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. TheTariff policy for co-gen renewal power is also lucrativein comparison to conventional power based on fusel fuel. At present sugar industry inIndia is producing about 4000 MW of surplus power and supplying to grid. However there ispotential of 8000 MW co-gen surplus power with the sugar industry.

Bio-CompostFertiliser

The bio-compost fertilizer being produced by the company has got immense scope ofdemand in all major agriculture cultivation as it not only preserve the soil fromexcessive 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.

FUTUREPROSPECTS/OUTLOOK

As per ISMA's latest estimates production of sugar for the season 2018-19 estimated at328 Lacs MT and consumption of 260 Lac MT. With opening balance of 107 Lac MT andestimated export under MIEQ of hardly 30 Lac MT the closing balance in the current seasonis estimated to be around 145 Lac MT which is equivalent to 6.5 months of consumption andis very high in comparison to 3 months ideal norms.

The international sugar price is much lower than domestic cost of production and thusthere is loss on export.

However the by-products of Power and Ethanol support the sugar industry to some extent.The proactive policy of the central government to promote the production capacity ofEthanol will have far reaching positive impact on sugar industry.

Ethanol sector in India A steady rise in ethanol blending is not only likely tomoderate crude oil import saving precious foreign exchange reserves but also encouragethe use of additional cane juice and other raw materials efficiently while protecting theenvironment from the release of poisonous vehicular exhaust gas. Against a requirement of3300 million litres of ethanol based on 10% ethanol blending ethanol supply contractswere signed for 2477 million litres for the ethanol supply period 2018-19 which includes465 million litres produced from B-heavy molasses. If the quantity as contracted issuccessfully blended about 7.2% of petrol consumption would be substituted by theenvironment friendly bioethanol. The achievement is significant as the new NationalBiofuelPolicy 2018 has fixed a target of achieving 20% ethanolblending with petrolby 2030withthegovernmenttargeting to achieve the 10% milestone of ethanol blending with petrol by2022.

Committee of the Board

The details of composition of Audit Committee and other committees of the Board ofDirectors is provided in the Corporate GovernanceReportformingparthereof.

Audit Committee

The composition of the audit committee meeting are as follow:-

Name of Members Status Date of joining during the year Date of leaving during the year
Mr. S. K. Goenka (Chairman) Independent&Non-Executive - 06.04.2018
Mr. Sarad Jha (Chairman) -do- 06.04.2018 -
Mr. Suyash Borar -do- - 28.03.2019
Mr.N.K.Parasramka NonIndependent
& Non Executive 06.04.2018 -

Mr. Sarad Jha left on 11.04.2019 and Mr.P.J.Bhide and Mrs. Sulekha Dutta joined asChairman and Member respectively on 12.04.2019.

Four meetings of Audit Committee held during the year on 08.06.2018 14.08.201814.11.2018 and 14.02.2019.

Information pursuant to Section 134 of the Companies Act 2013

a. Extract of the annual return as provided under Section 92(3) of Companies Act 2013is enclosed -Annexure I

b. Six meetings of the Board of Directors of the Company were held during the year on06.04.2018 08.06.2018 14.08.2018 22.10.2018 14.11.2018 and 14.02.2019.

c. All the Independent Directors of the company have furnished declarations that theysatisfy the requirement of Section 149 (6) of the Companies Act 2013.

d. Relevant extracts of the Company's policy on directors appointment and remunerationincluding criteria for determining qualifications positive attributes independence of adirector and other matters provided in section 178(3) of CompaniesAct 2013isenclosed-AnnexureII.We affirm that the remuneration paid to the Directors is as per terms laid outin the Nomination and Remuneration Policy of the company.

e. There is no qualification in the auditors report. The explanation of the Board onreservation adverse remark and disclaimer made by the auditor in his report and byCompany Secretary in practice in the secretarial audit report are explained.

f. There has been no materially-significant related party transactions made by thecompany with the promoters the directors theKeyManagerial Personnel which maybeinconflictwiththeinterestofthe 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 theAudit Committee has also received approval from theBoard.Your Directors draw attention of the members the Note No. 25 (9) to the financialstatement which set out Related Party Disclosures.

g. Details of conservation of energy technology absorption foreign exchange earningsand outgo as prescribed vide Rule 8(3) of Companies (Accounts) Rules 2014 is enclosed -Annexure III

h. The company has laid down policy on risk assessment and minimization procedures andthe same is periodically reviewed by the Board. The Policy facilitates in identificationof risk at appropriate time and ensure necessary steps to be taken to mitigate the risk.Brief details of risks and concerns are given in this Board Report.

i. The corporate Social Responsibility Committee has formulated and recommended to theBoard a Corporate Social Responsibility Policy (CSR Policy) indicating the activities ofthe company. The Annual Report on CSR activities is not annexed herewith due to non-applicability of relevant provisions to the company due to losses.

j. In compliance with the CompaniesAct 2013 and Regulation 17 of the ListingRegulations during the year the Board adopted a mechanism for evaluating its performanceas well as that of its Committee and Individual directors including the Chairman of theBoard.

The evaluation of Independent Director was carried out by the entire Board and that ofthe chairman 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.

RISKANDCONCERN

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 product is influenced by climatic vagaries.

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

DISTILLERY

Since the movement and price of Ethanol is controlled by the Government it has risk ofadverse Government Policy if any.

INTERNALCONTROLSYSTEMSANDTHEIRADEQUACY:

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.

CREDITRATING

On being default CARE decreased credit rating of the company's Long-term Bankfacilities to CARE D and Short Term Bank facilities from to CARE D due to delay inrepayment of Loan. The Loans of the Company from Banks become NPA from 30th September2019.

FIXEDDEPOSITS:

The company has neither accepted nor renewed any deposit from public within the meaningof section 73 of the CompaniesAct 2013 read with Companies (Acceptance of Deposit) Rules2014 during the year under the review.

AUDITORS

(a) StatutoryAuditors

Pursuant to the applicable provisions of the Act the members of the Company at theirAGM held on 18th September 2017 appointed M/s. Co M/s. Salarpuria & Partners.Chartered Accountants (ICAI Registration No. 302113E) Kolkata as the Statutory Auditorsof the Company to hold office from the conclusion of the 36th AGM until the conclusion ofthe 41st AGM. The reports given by the Auditors M/s. Salarpuria & Partners.Chartered Accountants on the standalone financial statements of the Company for the yearended 31st March 2019 form part of thisAnnual Report and there is no qualification butthere is reservation adverse remark or disclaimer given by theAuditors in their Reportswhich are explained in the Notes. The Auditors of the Company have not reported any fraudin terms of the second proviso to Section 143(12) of the Act.

(b) CostAuditors

Pursuant to Section 148 of the CompaniesAct 2013 read withThe Companies (Cost RecordsandAudit)Amendment Rules 2014 the cost audit records maintained by the Company inrespect 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 2019-20. 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 2018-19. Their report is annexed to this report as Annexure-IV.

DIRECTORS:

The Board of the Company has an appropriate mix of Executive and Indipendent Directorsto maintain the independence of the Board and separate its functions of governance andManagement. As on 31st March 2019 the Board consists of 5 membersoneofwhomwasexecutivedirectoronenonexecutivenonindependentdirectorandthreewereindependentdirectorsconsistingof one lady director.

The Board periodically evaluates the need for change in its composition and size.

Mr. S.K.Goenka Mr. N.C.Majumdar Mr. Suyash Borar and Mr. Sarad Jha left the Board on06.04.2018 14.08.201828.03.2019 and 11.04.2019 respectively. The Board expressed thereappreciation for valuable advices given by the outgoing Director during their tenure.

Mr.Purushottam Jagannath Bhide was appointed as Independent Director (AdditionalDirector) of the Company with effect from 12.04.2019 subject to approval of Shareholdersby passing special resolution.

On recommendation of Nomination and Remuneration Committee the Board of Directors in their meeting held on 12.07.2019 re appointed Mr. O.P.Dhanuka as Managing Director ofthe Company for a period of 3 years with effect from 13.08.2019 subject to approval ofthe Shareholders of the Company by passing special resolution.

Mr.Nirmal Kumar Parasramka Director who retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer himself for re - appointment.The Board recommendshis re-appointment.

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.

For disclosure as per SEBI (LODR) Regulations 2015 brief details includingqualification and expertise of directors to be appointed / re - appointed has beenmentioned in the Notice of the thirty eighth Annual General Meeting of the company.

DIRECTORS'REPONSIBILITYSTATEMENT:

Your Directors state that:-

(i) in preparation of the annual accounts for the year ended 31st March 2019 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 2019;

(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance withtheprovisionsoftheCompaniesAct2013forsafeguardingtheassets of theCompanyandforpreventinganddetectingfraud and other irregularities;

(iv) the Directors have prepared the annual accounts on 'going concern' basis;

(v) the Directors have laid down internal financial controls to be followed by thecompany and such internal financial controls are adequate and are operating effectively;and

(vi) directors have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating 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) ofthe Companies (Appointmentand Remuneration ofManagerial Personnel) Rules 2014 are given as separateannexure attached hereto and formspart of this report as Annexure- V.

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

CORPORATEGOVERNANCE:

The Corporate Governance form an integral part of this Report and are set outasAnnexure- VI 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.

KEYMANAGERIALPERSONNELS

In compliance of provisions of section 203 of the CompaniesAct 2013 the followingpersons were the key managerial personnel of the company during the year:

(i) Mr. O.P.Dhanuka Chairman & Managing Director

(ii) Mr. S.Prasad Company Secretary . Mr. S. Prasad resigned with effect from01.04.2019.

(iii) Mr. R.N. Sharma CFO Mr. R.N.Sharma resigned with effect from 20.01.2019.

(iv) Mr. B. K. Bhartia was appointed as Company Secretary with effect from 12th July2019.

(v) Mr. S. R. Mullick was appointed as CFO of the Company with effect from 20th June2019.

The other details pertaining to KMP of the company their appointment/cessation duringthe year under review and their remuneration have been provided in the Extract of AnnualReturn 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 orTribunals 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 SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

The Company has in place anAnti Sexual Harassment Policy in line with the requirementsofThe 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 2018-19.

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 2019

Due to record production the Sugar price continue to show southward trend duringcurrent financial year so far.

Subsidiaries Joint Ventures or Associate Companies

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

LISTINGOFEQUITYSHARES:

The Shares of the Company are listed on The Calcutta Stock Exchange Ltd. and BSE Ltd.The Company has paid Listing Fees to Stock Exchanges.

ANNEXURES FORMING PART OF THIS REPORT OF THE DIRECTORS

TheAnnexure 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 & Remuneration of Directors Key Managerial Personnel and other employees and on BoardDiversity
III Particulars of Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo
IV Secretarial Audit Report
V Particulars of Employees
VI CorporateGovernanceReport

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 : 12th July 2019 (DIN: 00049947)
Chairman & Managing Director