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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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VOLUME 51
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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 31 st March 2020.

FINANCIAL & OPERATIONAL RESULTS

(Rs. in Lacs)

Financial Year 31st March 2020 Financial Year 31st March 2019
FINANCIAL RESULTS
(a) Gross Turnover 15313.22 15487.31
(b) Operating Profit Before Finance Cost & Depreciation (407.77) (2189.13)
(c) Finance Cost 1481.02 1963.44
(d) Cash Accruals (1888.79) (4152.57)
(e) Depreciation & Amortization 521.18 490.55
(f) Profit (Loss) before extraordinary items (2409.97) (4643.12)
(g) Extraordinary Item of Exp./Income --- --
(h) Profit (Loss) Before Tax (2409.97) (4643.12)
(i) Provision for Tax
- Deferred Tax -- --
- Income Tax of earlier year -- --
(j) Profit (Loss) After Tax (2409.97) (4643.12)
(k) Other comprehensive Income (net of tax) (59.24) (1.66)
(l) Total Comprehensive Income for the year (2469.20) (4644.78)

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 31 st March 2020 vis -a-vis previous financial year ended31 st March 2019 in respect of the Sugar Factory of your Company are given below:-

Financial Year Financial Year
31st March 2020 31st March 2019
1. Duration of crushing (gross days) 120 110
2. Cane crushed (Lac Qtls.) 33.17 35.28
3. Recovery (%) 8.10 8.78
4. Production (Lac Qtls.) - 2.69 3.10

The sales of sugar unit increased by 6% from Rs.127.52 Cr. to Rs. 135.02 Cr.

The crushing season 2019-20 started from 18th December 2019 and concluded on 29thFebruary 2020. Due to labour problems and strike during season period the recovery ofsugar affected resulting higher cost of production.

The crushing season for 2018-19 was extended till 16th May 2019. Due to the extremehot weather in the months of April and May the recovery of sugar was abysmally low &at 8%. During the months of April and May 2019 the recovery falls below 5%. The labourproblems and strike during season period also contributed to adverse working and loss ofrecovery of sugar and thus resulting 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 the claim of the company of Rs. 7.45 Cr was nothonoured by the state government. The company filed writ petition in High Court and as perdirection of High Court directed The Principle Secretary for hearing. However PrincipleSecretary rejected the valid claim of the company and thus company again went to HighCourt for relief.

Sugar sale price remained subdued during the year much below cost of production ofsugar.

The sale price of sugar was lower than cost of production. The central government fixedminimum floor price of sugar at Rs. 31 per kg which was announced to revise Rs.33 per kgfrom 1 st October 2020. However the cost of production of sugar on all India basis wasmuch higher and industry demanded floor price of Rs. 35-36 per kg which was not acceptedby the government thus resulted in a loss on realizations. The parity between cane priceand sugar price is yet to be established.

For season 2019-20 the sugar factory run only for 74 days and crushed only 21 Lac qtlof sugarcane at average capacity utilization of 28378 qtl per day against installedcapacity of 50000 qtl per days and annual capacity of 150-160 days running and cane crushof 50-60 Lac qtl. The recovery is abysmally low at 8.86% against Bihar average of 10.8%and thus there was huge loss due to lower recovery and cane availability for season2019-20.

The Recovery of sugar during last 3 years has been abysmally low:--

Narkatiaganj Sidhwalia Hasanpur Harinagar Riga Majhaulia Gopalganj Bagaha
2017-18 10.25 9.24 10.47 10.16 8.78 9.00 9.45 9.19
2018-19 11.31 10.33 11.23 10.71 8.01 10.00 10.36 10.35
2019-20 11.54 10.92 11.00 11.42 8.86 9.91 10.18 11.24

Due to lower recovery during last 3 years company has incurred huge loss.

Continuing Losses

During last 9 years company has incurred Loss of Rs. 127 Cr. but still made repaymentof Term Loan of Rs. 79 Cr. and interest of Rs. 142 Cr. whereas fixed assets investmentwere Rs. 50 Cr as enumerated below:-

Rs. in Lacs

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Total
Net Profit (Loss) (524) (350) (272) (1442) (506) (409) (2081) (4643) (2410) (12637)
Term Loan Repayment 1432 492 477 1066 786 1205 1410 1039 21 7928
Payment of Interest 1571 1559 1318 1607 1435 1502 1765 1963 1481 14201
Fixed Assets Investment 702 209 546 412 195 1325 1114 342 155 5000

Due to continuous losses for last 9 years there are cane price arrears to farmers.However the company has totally repaid the sugar cane price till last season 2017-18.

Riga Sugar for last 6-7 years due to natural calamities disparity in sugar price &cane price closure of distillery on CPCB directions have faced tremendous problem.Cyclone Phailin in 2013 Cyclone Hud-Hud in 2014 Earthquake in 2015 Flood in 2017 and2019

have made great loss to company. The State Government had given assurance to help andvisited the area but no compensation was granted. In August 2017 and 2019 heavy flood alsocaused huge damage to our plant and sugarcane.

The incentive claim as 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 year 2018-19 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 as a going concern. However the Managementis still hopeful that with financial restructuring by the banks and financial assistancefrom the state and central government the company can still revive.

The company has made request for following support from central and state governmentif provided the company can be revived :- CENTRAL GOVERNMENT

1. Ethanol Loan to NPA sugar factory who has defaulted in SDF

To increase the no of days of operation of Ethanol Plant from present restricted 270days to 330 days and consequential increase in plant capacity company have to installIncineration boiler and also install Modification System.

2. Company have been deprived from Soft Loan Scheme announced by the Central Governmentto Sugar Industry.

3. MIEQ & Cane price Subsidy by the Central Government for the season 2018-19

The central government had announced cane price subsidy for the season 2018-19 at therate of Rs. 13.88 per qtl. However it was linked with compulsory export obligation knownas MIEQ. However there was loss on making export of sugar which the majority of weakcompanies like your company could not bear and thus could not pay cane price subsidy tothe farmers and thus farmers are deprived of cane price subsidy. Company has demanded thatcentral government to pay Rs.13.88 for season 2018-19 directly to farmers without linkingwith prior export obligation to weak and small sugar companies.

4. SDF Loan Restructuring & withdrawal of DRT Case

Company have become totally weak and Sick Sugar Unit and has become NPA from 30thSeptember 2018. As per SDF Rules our company is fit case for restructuring of the Loan byway of :-

(a) extension of repayment period;

(b) waiving of all penal and additional interest;

(c) Providing Loan for Clearance of Cane Price Arrears;

(d) Loan for plant rejuvenation and balancing;

(e) Loan for Ethanol and Power Plant; and

(f) withdrawal of Recovery case in DRT

Company seek aforesaid relief and assistance as the SDF Rules provides for this underChapter X of SDF Rules regarding - Loans for potentially viable sick sugar undertaking andChapter XV of SDF Rules regarding Restructuring of loans of potentially viable sick sugarundertaking.

5. Non-payment of 3rd and 4thqtr Buffer Stock Claim of 2018 Scheme and other penalties

Buffer Stock claim for 3rd and 4th quarter as per Scheme of Buffer Stock dated 15thJune 2018 has been withheld because the company have not able to export sugar in 2018-19as per MIEQ because there was upfront loss on such export which company could not bear.

For one fault of non-export which is reason beyond control the Company is penalized bymultiple ways as follow:-

i) Not given cane price subsidy of Rs. 13.88/- per quintal on cane crush of 45.25Lacsqtl. in 2018-19 i.e Rs. 6.29 Cr. which could have gone to farmers directly.

ii) Withholding of Buffer subsidy of 3rd and 4th quarter of Rs. 1.24 Cr which will goto the cane price arrears.

iii) Reduction of subsequent Buffer qty created in 2019.

iv) Non-eligibility of the company to avail subsidized soft loan to pay cane pricearrears as per scheme dated 2nd March 2019 to pay cane price arrears to farmers of2018-19.

STATEGOVERNMENT

The company has made request for the following support from the State government. Ifprovided the company can be revived and it can come out of NPA:-

(a) Provide additional cane price subsidy of Rs.40 per qtl. for the season 2017-18 andadditional cane price subsidy of Rs.30 per qtl. for the season 2018-19 over and above thesubsidy announced for all Bihar sugar mills- This will ward-off the additional lossesincurred by company on account of lower Recovery for payment of cane price to Farmers.

OR

Provide company soft term loan of Rs. 70 crores at interest rate of 4% for period of 10years with moratorium of 5 years so that we can pay cane price for last season andcurrent season. The Bank has already agreed to provide second charge on Fixed Assets ofthe company toward security of loan.

The aforesaid amount can be paid directly to the farmers.

(b) Release of Bihar Soft Loan Interest subvention for the FY 2016-17 2017-18 and2018-19 and 2019-20 -Rs. 447 Lacs.

(c) Reimbursement of Co-gen subsidy of Rs.156 lacs pending since last 2 years.

(d) Help farmers directly for procurement of High Yield variety of cane seed of CO 238for 2 year of Rs. 10 Cr.

(e) Compensation towards running sugar plant in scorching heat of April and May 2019as per direction of the state government in the interest of farmers in season 2018-19 andconsequent loss by way of extremely lower recovery estimated at Rs. 7.45 Cr.

CENTRAL GOVERNMENT ACTION DURING THE YEAR

FRP: The FRP for 2019-20 remained at same at Rs. 275 per quintal against last year Rs.255 per qtl. linked to a basic recovery of 10% subject to a premium of Rs. 2.75 perquintal for every 0.1 percentage point increase above that level.

In Bihar the cane Price for the season 2019-20 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.

MAEQ Scheme: The Central government with a view to facilitates export of sugar duringthe season 2019-20 thereby improving the liquidity position of the sugar mills to enablingthem to clear cane price arrears of farmers for sugar season 2019-20 announced amill-wise Minimum Admissible Export Quantity (MAEQ) totaling 60 Lacs tonnes for the sugarseason 2019-20 with compliant WTO subsidy.

Floor Price of Sugar: The Government set floor price of sugar at Rs. 31 per kg belowwhich sugar factory cannot sell sugar which has been increased to Rs. 33 per kg from 1 stOctober 2020. However the cost of production of sugar is between Rs. 3700 to Rs.4000per qtl.

Pricing of Ethanol: The pricing methodology for ethanol also remained unchanged.Ethanol prices are announced annually by the Central Government based on a formula whichconsiders the price of sugar and FRP of sugarcane to calculate the ethanol procurementprices. The ethanol prices are delinked with the crude or petrol prices. Prices forethanol for the supply period December 2019 to November 2020 were increased to Rs. 43.75Rs. 54.27 and Rs. 59.48 per BL for Ethanol produced from C- heavy molasses B-heavymolasses and Direct Cane Juice/Sugar syrup respectively as compared to Rs. 43.46 Rs.52.43 and Rs. 59.13 per BL in the previous year.

Loan for Ethanol Production: Soft loans through banks for setting up of new distillerycapacities as well as augmentation of existing capacities which could facilitate higherproduction of ethanol on one hand and reduce production of surplus sugar through diversionof B-heavy molasses and Direct Cane Juice/Sugar Syrup away from sugar into ethanol.

Custom Duty on Sugar: Higher custom duty on import of sugar and Zero custom duty onexport of sugar.

Buffer Stock creation: The government created buffer stock of 40 lac MT from 1 stAugust 2019 for a period of one year.

SUGAR SCENARIO

Sugar production for the season 2019-20 is estimated at 272 Lac MT against previousyear 332 Lac MT.

In spite of plethora of steps taken by the Government the sugar industry is stillpassing through a difficult phase in view of very high sugar inventory and higher expectedproduction of around 310 Lac MT of sugar in the next season.

As an immediate solution following steps are required to be taken:-

• Increase the Minimum Selling Price to Rs.3600/- per Qtl to cover the all Indiaaverage cost of production of sugar.

• Announce buffer stock and subsidy for next year too.

For long-term solution further proactive steps are required to be taken again onpriority basis in order to protect the interest of various stakeholders:

• Most of the sugar producing countries in the world including some of the largestviz. Brazil Thailand Australia and USA follow the Revenue Sharing Formula (RSF) to paycane price to farmers. India should also follow the same so as to achieve itscompetitiveness on the global front.

• Dr. Rangarajan committee as well as Niti Ayog have recommended the concept ofjoint implementation of FRP RSF and PSF (Price Stabilization Fund) as a permanent longterm solution for the sector; otherwise the sector would continue to require Governmentsupport. Once the above formula is in place miller's liability for cane price to belimited to the amount arrived at as per RSF farmers will continue to get FRP and thedifference between the FRP and the RSF to be paid from PSF. PSF has to be on aself-financing mechanism. State Advised Price (SAP) to be done away with. Cane price to beallowed to be paid in instalments across the country so as to ease the pressure on theworking capital requirements of the sugar mills which will also support the sugar prices.

The All India sugar price and sugarcane price announced by Central Government as perFRP for last 9 years are depicted below:-

Year Sugar Price Sugarcane Price (FRP)
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
2019-20 3250 275.00

The sugar price during last 9 years increased by 10% whereas the sugarcane priceincreased by 90%.

Distillery Unit Financial Year 31st March 2020 Financial Year 31st March 2019
1. Production of Ethanol from Molasses (Lac BL) 77.80 71.70
2. Supply of Ethanol (Lac BL) 58.73 81.35

Ethanol

The Distillery of the company run for higher nos. of days of 158 days against 157 dayslast year.

Co-Gen of Power

The Company is supplying surplus power upto 3 MW from its co-generation plant. Thisforward integration contribute to the bottomline 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.

SEGMENT-WISE PERFORMANCE:

During the reporting period sugar segment contributed 74 percent of net sales of thecompany whereas Distillery accounted for 16 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.25 (5) of financial statement enclosedwith the Annual Report.

Significant changes in key financial ratio:

i) Debtor Turnover ratio increased from 20 to 26 due to lower outstanding in Distillerysales.

ii) Inventory Turnover improved from 1.06 to 1.50 due to higher sales in sugar andlower inventory level of sugar.

iii) Interest Coverage Ratio improved from (1.11) to (0.28) this is due to loweroperating loss and interest cost.

iv) Current Ratio deteriorated from 0.45 to 0.33 due to further in loss during the yearand consequent depletion in Current Asset.

v) Debt Equ ity Ratio The total Debt of the company vis-a-vis shareholder point arenegative both years and are (2.95) in 201920 and (4.01) in 2018-19 respectively.

vi) The Operating Profit Margin Percentage was negative both year which was (5.91) in2019-20 and (16.76) in 2018-19. The improvement was due to higher realization of Sugarsales and Distillery.

vii) Net Profit Margin was negative in both year (15.34%) in 2019-20 and (29.04%) in2018-19 and the improvement was due to better operating margin and lower interestexpenses.

viii) Return on Net Worth - There was losses in current year as well as previous year.There is negative Net Worth. 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 over Rs.100000 Crore and contribute about Rs.5000 crore to the Central Government Exchequer byway of GST beside state taxes on sugarcane and hefty taxes collected by state as exciseand VAT on sale of spirit in the state which run an estimated Rs. 10000 crores annually.The Income tax also contributes to the government coffer. Industry accelerates ruraldevelopment through farm employment as well as business opportunities in transport andcommunication.

Sugar has been declared as an 'essential commodity' under the Essential CommoditiesAct 1955. Under Sugarcane (Control) Order 1966 the Government of I ndia fixes caneprice called 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. CACP givesrecommendation of cane price but government do not implement due to politicalconsideration. Since last few year Central government is also fixing floor price of sugarbelow which no sugar factory sale sugar. This is to check the free fall of sugar price.However floor price is still lower than cost of production.

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.

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."

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 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.

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 installed CPU. Now toincrease no of permitted days of Distillery

operation from present 270 days to 330 days CPCB has prescribed installation ofIncineration. Due to financial constraints company has not been able to install the same.However the Central government has notified scheme for interest subvention Loan from theBank for financing of Incineration. The company is applying for in-principle approval ofthe same from Ministry.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

Sugar

India is largest consumer and second largest producer of sugar in the world. Majorconsumers are manufacturer of cold drink Biscuits Confectioneries and Halwais whichconstitute 70% of total consumption and rest 30% by ordinary consumer. There are hugescope for further increase in demand as India is still lagging behind from many advancedcountries in respect of per capita consumption of sugar. Thus there are opportunity inproduction and consumption of higher quantity of sugar in coming period.

Distillery

The mandatory provision of ethanol blending of 10% have strong support for growth ofsugar industry. Ethanol production improves oil security and contributes to environmentalprotection. The Government has announced its policy decision and set aim to increase theethanol mixing with petrol at 20% by the year 2030 and also mixing with Diesel. TheGovernment 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. The Tariff policy for co-gen renewal power is alsolucrative in comparison to conventional power based on fossil 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 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 high cane price in comparison to sugar selling price.

• The sugar sector is exposed to political intervention and cyclical downtrend.

• Natural Calamity.

FUTURE PROSPECTS/OUTLOOK

As per ISMA's latest estimates production of sugar for the season 2019-20 estimated at272 Lacs MT and consumption of 255 Lac MT. With opening balance of 146 Lac MT andestimated export under MAEQ of hardly 57 Lac MT the closing balance in the current seasonis estimated to be around 106 Lac MT which is equivalent to 5 months of consumption andis very high in comparison to 3 months ideal norms.

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. The new National BiofuelPolicy 2018 has fixed a target of achieving 20% ethanol blending with petrol by 2030 withthe government targeting 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 alongwith the attendance thereof is provided in the Corporate Governance Reportforming part hereof.

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. P. J. Bhide (Chairman) Independent & Non-Executive 12.04.2019 -
Mr. Sarad Jha (Chairman) -do- - 11.04.2020
Mrs. Sulekha Dutta -do- 12.04.2019 -
Mr. Dilip Datta -do- 14.02.2020 -
Mr.N.K.Parasramka Non Independent & Non Executive - -

Five meetings of Audit Committee held during the year on 30.05.2019 12.07.201914.08.2019 14.11.2019 and 14.02.2020.

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 on12.04.2019 30.05.2019

12.07.201914.08.2019 14.11.2019 and 14.02.2020..

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 Companies Act 2013 is enclosed -Annexure 11. We affirm that the remuneration paid to the Directors is as per terms laidout in 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 the Key Managerial Personnel which may be inconflict with the interest of the company at large. The company has formulated a policy onRelated Party T ransactions and also on dealing with Related Party T ransactions. Thepolicy is 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. 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 Companies Act 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 I ndependent 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 product is influenced by climatic vagaries.

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

DISTILLERY

High cost of molasses due to greater demand is matter of concern for Ethanol BlendingProgramme.

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.

CREDIT RATING

Not applicable since from 30.09.2018 the company became NPA and continue to be NPA sofar and working under holding on operation.

EMPLOYEE STOCK OPTION SCHEME

There are no outstanding stock options and no stock options were either issued orallotted During the year.

INTER CORPORATE LOANS AND INVESTMENTS

Company has not made loans guarantees and investments covered under the provisions ofSection 186 of the Act.

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

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 u ntil the conclusion ofthe 41 st 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 2020 form part of this Annual Report and there is no qualification butthere is reservation adverse remark or disclaimer given by the Auditors in their Reports.The Auditors of the Company have not reported any fraud in terms of the second proviso toSection 143(12) of the Act.

(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 2020-21. 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 2019-20 Their report is annexed to this report as Annexure-IV. Thecontents of the said Audit Report are self explanatory and do not call for any furthercomments by the Board.

DIRECTORS:

The Board of the Company has an appropriate mix of Executive and Independent Directorsto maintain the independence of the Board and separate its functions of governance andManagement. As on 31st March 2020 the Board consists of 5 members one of whom wasexecutive director one non-executive non-independent director and three were independentdirectors consisting of one lady director.

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

On recommendation of Nomination and Remuneration Committee the Board of Directors intheir meeting held on 12.07.2019 re-appointed Mr. O. P. Dhanuka (DIN : 00049947) asManaging Director of the Company for a period of 3 years with effect from 13.08.2019which was approved by the Shareholders of the Company.

Mr.Nirmal Kumar Parasramka (DIN : 00086584) Director who retires by rotation at theensuing Annual General Meeting and being eligible offer himself for re-appointment. TheBoard recommends his re-appointment.

The Members of the Company at the 34th Annual General Meeting ('AGM') held on 29thSeptember 2015 approved the appointment of Mrs. Sulekha Dutta (DIN : 07114240) as anIndependent Director of the Company for a period of five years with effect from 31stMarch2015. Mrs. Sulekha Dutta completed her first term on 30th March2020. On therecommendation of the Nomination & Remuneration Committee the Board of Directors ofthe Company ('the Board') at the meeting held on 14th February2020 appointed Mrs SulekhaDutta as Additional Director in the Capacity of Independent Director of the company witheffect from 31 st March 2020 subject to approval of the shareholders in the ensuingAnnual General Meeting.

Consent of the Members by way of Special Resolution is required for appointment of Mrs.Sulekha Dutta in terms of Section 149 of the Act and Regulation 17 of the ListingRegulations. Notice under Section 160 of the Act proposing the re-appointment of Mrs.Sulekha Dutt has been received by the Company and consent has been filed by Mrs. SulekhaDutta pursuant to Section 152 of the Act.

Mr.Dilip Datta (DIN: 00406151) was appointed as an Independent Directors by the membersof the Company at its 35th Annual General Meeting held on 30th September2016 for theperiod of 5 (five) i.e upto expiry of five consecutive years or the date of 40th AnnualGeneral Meeting whichever is earlier.

As Mr. Dilip Datta has attained the age of 75 years on 7th September 2020 and inrespect of whom Board of Directors in their meeting held on 26th August 2020 maderecommendation for his continuance as Independent Director till the remaining period ofhis term i.e. upto 30th September 2021 subject to approval of the shareholders by way ofspecial resolution in the ensuing Annual General Meeting.

In view of COVID-19 the prior approval of continuance of Mr. Dilip Datta beforeattaining the age of 75 years on 7.9.2020 could not be taken as Annual General Meetingcould not be hold before that date.

Further pursuant to the provisions of Section 149 of the Companies Act 2013 and Rulesmade thereunder members approval by way of Special Resolution is sought at the ensuingAnnual General Meeting for continuance of Mr. Dilip Datta as Independent Directors till40th Annual General Meeting or 30th September 2021 whichever is earlier.

The Company has received declaration in writing from Mr. Dilip Datta that he meet thecriteria of independence as provided in Section 149(6) of the Act and Regulation 16(1 )(b)of the SEBI Listing Regulations 2015.

In the opinion of the Board Mr. Datta fulfills the conditions specified in theCompanies Act 2013 and rules made thereunder and Regulation 16(1 )(b) of the SEBI ListingRegulations 2015 for his continuence as an Independent Director of the Company. TheBoard also considers that his association would be of immense benefit to the Company andit is desirable to avail his services as an Independent Director on the Board of theCompany.

Considering the skills experience knowledge Mr. Datta possess and the report ofperformance evaluation of Mr. Datta the Board recommended for the approval ofshareholders by way of special Resolution.

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 ninth Annual General Meeting of the company.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand Regulation 16 of the Listing Regulations. The Board of Directors confirm that the Independent Directors appointed during the year also meet the criteria of expertiseexperience and integrity in terms of Rule 8 of the Companies (Accounts) Rules 2014 (asamended).

Separate Meeting of Independent Directors

Details of the separate meeting of Independent Directors held in terms of Schedule IVof the Act and Regulation 25(3) of the Listing Regulations are given in the CorporateGovernance Report.

DIRECTORS' REPONSIBILITY STATEMENT:

Your Directors state that:-

(i) in preparation of the annual accounts for the year ended 31 st March 2020 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 2020;

(iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother 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) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are given as separate annexure 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.

CORPORATE GOVERNANCE:

The Corporate Governance form an integral part of this Report and are set out asAnnexure- 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.

BUSINESS RESPONSIBILITY REPORT

Regulation 34(2) of the Listing Regulations inter alia provides that the annualreports of the top 1000 listed entities based on market capitalization (calculated as onMarch 31st of every financial year) shall include a Business Responsibility Report. Thecompany do not fall under this category.

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 during the year:

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

(ii) Mr. B.K.Bhartia Company Secretary .Mr. Bhartia was appointed with effect from12.07.2019.

(iii) Mr. S.R. Mallick CFO Mr. Mallick was appointed as CFO with effect from21.06.2019 he resigned with effect from

16.08.2019. The company was searching CFO and ultimately appointed Mr. J.K. Pachisia asCFO on 19.08.2020 on recommendation of Nomination and Remuneration Committee. Suchappointment was ratified by the Board of Directors in their meeting held on 26.08.2020.

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 or Tribu nals 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 2019-20.

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 2020 Material Changes and Commitments

Except those disclosed in this Annual Report there are no material changes andcommitments affecting the financial position of the Company between the end of thefinancial year i.e. 31st March 2020 and the date of this Report. The impact of COVID 19pandemic has not been material on the financial performance of the Company. However therewas delay in compliance due to non-filing of timely return and result.

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 paid Listing Fees to BSE Ltd for 2019-20.

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 & Remuneration of Directors Key Managerial Personnel and other employees and on Board Diversity
III Particulars of Conservation of Energy Technology Absorption and Foreign Exchange earnings and outgo
IV Secretarial Audit Report
V Particulars of Employees
VI 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 : 26th August 2020 (DIN :00049947)
Chairman & Managing Director

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