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Sakthi Sugars Ltd.

BSE: 507315 Sector: Agri and agri inputs
NSE: SAKHTISUG ISIN Code: INE623A01011
BSE 00:00 | 02 Dec 23.10 1.50
(6.94%)
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21.20

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23.75

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21.20

NSE 00:00 | 02 Dec 23.15 1.55
(7.18%)
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21.40

HIGH

23.75

LOW

21.40

OPEN 21.20
PREVIOUS CLOSE 21.60
VOLUME 154582
52-Week high 28.40
52-Week low 13.40
P/E
Mkt Cap.(Rs cr) 275
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 21.20
CLOSE 21.60
VOLUME 154582
52-Week high 28.40
52-Week low 13.40
P/E
Mkt Cap.(Rs cr) 275
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sakthi Sugars Ltd. (SAKHTISUG) - Director Report

Company director report

To the Members

The Board of Directors of the Company presents its Annual Reporttogether with the Audited Financial Statements of the Company for the year ended 31stMarch 2022.

(Rs in lakhs)

FINANCIAL HIGHLIGHTS
Particulars 2021-22 2020-21
Revenue
Sugar Division 41758.39 33911.11
Distillery Division 10957.07 9489.02
Cogeneration Division 1661.78 867.41
Soya Division 24425.11 19070.79
Total Revenue 78802.35 63338.33
Other Income 1730.79 1018.74
Total Income 80533.14 64357.07
Profit/(Loss) before Finance Cost and Depreciation & Amortisation Expense and Exceptional Items 7011.61 1987.11
Finance Cost 23414.81 19639.65
Provision for Depreciation & Amortisation 5500.41 3885.39
Net Profit before Exceptional Item and Tax (21903.61) (21537.93)
Exceptional Items Gain / (Loss) 6891.23 11186.77
Net Profit before Tax (15012.38) (10351.16)
Provision for Tax 4.11 1275.34
Net Profit after Tax (15016.49) (11626.50)
Comprehensive Income (15.98) (94.42)
Total comprehensive Income (15032.47) (11720.92)

REVIEW OF OPERATION

The overall operational performance of the Company for the financialyear under review was better than that of the previous financial year with higher quantumof sugarcane crushing. While crushing operation in Sivaganga Unit commenced only in thelatter part of the financial year there was no crushing operation in Modakurichi Unitduring the financial year. The available sugarcane in this unit was taken to Sakthinagarunit for crushing. The recovery percentage was also slightly high. In Dhenkanal Sugar unitin Orissa State also there was a marginal increase in the quantum of cane crushed and inthe recovery percentage as compared to the previous financial year. There has beenimprovement in the operations of other Divisions like distillery and power. With theexception of industrial alcohol in the selling price of sugar power and soya productsthere was upward trend during the financial year. The operational performance of Soya Unitis satisfactory. There is no change in the nature of business during the financial yearand until the date of this report.

SUGAR DIVISION

The quantum of sugarcane crushed at various units of the Company duringthe year 2021-22 is as under:

Name of the unit Cane crushed (in MT)
Sakthinagar : 846682
Sivaganga : 50666
Dhenkanal : 272344

During the year under review 1.08 lakh MT of sugar was produced by theCompany as compared to 0.87 lakh MT in the previous year. The quantum of sugar sales andthe sale value have also gone up as compared to the previous year.

DISTILLERY DIVISION

During the year under review 114.00 lakh litres (previous year 97.26lakh litres) of industrial alcohol was produced at Sakthinagar Distillery unit and 56.13lakh litres (previous year 70.21 lakh litres) at Dhenkanal Distillery unit. Both volumeand value of sales of this Division have improved during the year as compared to theprevious financial year.

SOYA DIVISION

29241 tonnes (previous year 29082 tonnes) of soya bean was crushed inthe Soya Plant during the year under review. While there was slight reduction in thequantum of soya products sold the sale value has gone up over the previous year onaccount of increase in the average realisation.

CO-GENERATION DIVISION

The total power generated in the co-generation plants during thefinancial year was 881.11 lakh units (previous year 663.08 lakh units) out of which 422.26lakh units (previous year 301.86 lakh units) of power was exported. The Company is sellingthe power through Indian Energy Exchange (IEX) and also directly to third parties.

IMPACT OF COVID-19 ON OPERATION

There was no material impact on account of Covid-19 pandemic on theoperations of the Company during the financial year 2021-22.

CURRENT FINANCIAL YEAR 2022-23

There has been improvement in the level of operations of the Companyduring the financial year under review as compared with the previous year. It is expectedthat the trend would continue with good monsoon and the Company looks forward to a highervolume of cane crush during the financial year 2022-23. The Company's Modakurichi Unit hasalso commenced its operation during the current year.

DEPOSITS

The Company has not accepted any deposit during the financial yearunder review. At the end of the financial year there was no unclaimed deposit.

CORPORATE INFORMATION

As mentioned in the last Board's Report the steps taken by the Companyfor reduction of the secured liabilities are expected to materialise soon. The Board ofDirectors has approved sale of Dhenkanal Sugar and Distillery units in Orissa State andthe Soya Unit at Marchinaickenpalayam Pollachi besides the third floor of the corporateoffice building at Coimbatore subject to the approval of the Members of the Company.

Sri C.R.Sankar Chief Financial Officer retired from the services ofthe Company on 31st March 2022. Dr.S.Veluswamy has been appointed as President-Finance andOperations with effect from 25th May 2022 and he is the Chief Financial Officer of theCompany.

DIRECTORS

Dr. M. Manickam (DIN 00102233) retires by rotation at the ensuingAnnual General Meeting and being eligible has offered himself for re-appointment.

During the financial year under review Sri M.Balasubramaniam and SriM.Srinivaasan have been appointed as Managing Director and Joint Managing Directorrespectively for a period of five years from 27th August 2021 without remuneration.

Asset Reconstruction Company (India) Limited (ARCIL) has withdrawn itsNominee Director Sri Abhishek Kumar from the Board of Directors of the Company with effectfrom the close of the business hours on 16th February 2022. The Board places on record itsappreciation of the services rendered by Sri Abhishek Kumar during his tenure as NomineeDirector of the Company.

DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of Section 134(5) of the Companies Act 2013 theDirectors hereby confirm that:

(a) in the preparation of the annual accounts the applicableaccounting standards had been followed along with proper explanation relating to materialdepartures if any;

(b) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at the end of thefinancial year and of the loss of the Company for that financial year;

(c) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(d) the Directors had prepared the annual accounts on a going concernbasis;

(e) the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively; and

(f) the Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

MEETINGS OF BOARD OF DIRECTORS

The Board met seven times during the financial year ended 31st March2022. The details of the Board Meetings and the attendance of the Directors are given inthe Corporate Governance Report.

COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of the following Directors as itsmembers:

1. Sri C.Rangamani Chairman

2. Sri N.K.vijayan

3. Sri K.v.Ramachandran

4. Smt. Priya Bhansali

Details regarding meetings of the Audit Committee and the attendance ofthe members are given in the Corporate governance Report.

BOARD EVALUATION

Pursuant to the provisions contained in the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 a formal annualevaluation of the performance of the Board its committees and of individual Directors hasbeen made. The manner in which the evaluation was carried out and the process adopted aregiven in the Corporate governance Report.

DETAILS OF REMUNERATION TO DIRECTORS

Details of ratio of remuneration to each Director to the medianemployee's remuneration and other disclosures required under Section 197(12) of theCompanies Act 2013 and Rule 5(1) and 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are given in Annexure-A.

RISK MANAGEMENT POLICY

The Company has constituted a Risk Management Committee and the detailsof the Committee are set out in the Corporate governance Report. Pursuant to Regulation17(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theBoard has laid down risk management policy to identify evaluate and mitigate risks. Itseeks to ensure transparency and to minimise adverse impact on the business operations ofthe Company.

The Company does not have any exposure to commodity risk except to theextent of its own production of sugar the main product of manufacture of the Company theselling price of which is subject to market fluctuations.

INTERNAL CONTROL

The Company has internal control system commensurate with the size ofthe Company. Adequate procedures are set out for detecting and preventing frauds and forprotecting the Company's assets. The head of Internal Audit Team reports to the Chairmanof the Audit Committee for the purpose of maintaining independence and Internal AuditReports are placed before the Audit Committee together with statement of significant auditobservation and the suggested corrective action followed by a report on action takenthereon. Further the Company has adequate internal financial control with respect to thefinancial statements.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a whistle blower policy and a vigil mechanism fordirectors and employees to report genuine concerns in the prescribed manner. The vigilmechanism provides adequate safeguards against victimisation and for direct access to theChairman of the Audit Committee in appropriate or exceptional cases. The details of thewhistle blower policy are posted on the website of the Company. No complaint has beenreceived under this mechanism during the year under review.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with Auditors Certificate withrespect to its compliance forms part of this Report.

A detailed Management Discussion and Analysis Report also forms part ofthis Report.

OTHER DISCLOSURES UNDER THE COMPANIES ACT 2013

i. Annual Return

A copy of the Annual Return for the financial year 2020-21 is placed onthe website of the Company www.sakthisugars.com.

ii. Changes in Share Capital

There is no change in the share capital during the financial year underreview.

iii. Policy on Directors Appointment and Remuneration

The Company's policy for selection and appointment of directors seniormanagement personnel and fixation of their remuneration including criteria fordetermining qualifications positive attributes independence of a director are availablein the Company's website www.sakthisugars.com and the salient features of the Policy aregiven in Annexure-B.

iv. Related Party Transactions

All the related party transactions were on arm's length basis. Priorapproval of the Audit Committee and/or Board as the case may be has been obtained forthe transactions with related parties. A statement of all related party transactions isplaced before the Audit Committee on quarterly basis. There has been no contract orarrangement with related parties attracting the provisions of Section 188(1) of theCompanies Act 2013 during the financial year under review except the one relating to saleof third floor of the corporate office building to related parties.

The Related Party Transactions Policy as approved by the Board isavailable on the Company's website www.sakthisugars. com. The details of the transactionswith Related Parties are provided in the accompanying financial statements.

v. Statement of declarations given by Independent Directors

The Independent Directors have given their declarations to the Board tothe effect that they meet with the criteria of independence as provided in Section 149(6)of the Companies Act 2013 and the relevant rules. They have also given a declarationconfirming compliance with Rule 6(1) and (2) of the Companies (Appointment andQualification of Directors) Rules 2014 regarding inclusion of their names in the databankmaintained by Indian Institute of Corporate Affairs. All the Independent Directors areexempt from the requirement of the written test under Rule 6(4) of the said Rules.

vi. Significant material orders passed by court or authorities

There are no significant orders passed by Court or regulatoryauthorities which would impact the status of the Company and its future operations.

vii. Particulars of loans guarantees or investments

The Company has not given any loan or guarantee or has acquired anysecurity during the financial year 2021-22 under Section 186 of the Companies Act 2013.

viii. Energy Conservation Technology Absorption and Foreign ExchangeEarnings and Outgo

The information on conservation of energy technology absorption andforeign exchange earnings and out go as required under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-C.

ix. There are no material changes affecting the financial position ofthe Company which have occurred between the end of the financial year and the date of thisreport except approval by the Board for sale of Sugar and Distillery Units at DhenkanalOrissa State and Soya unit at Marchinaickenpalayam Pollachi Tamilnadu. Sale of theseunits has not taken place till the date of this Report.

x. The Company has complied with the Secretarial Standards as may beapplicable to the Company.

STATUTORY AUDITORS

M/s. PK. Nagarajan & Co. Chartered Accountants (Firm RegistrationNumber 016676S) were appointed by the members as Statutory Auditors of the Company for aperiod of five consecutive years from the conclusion of the 55th Annual General Meetingheld on 27th September 2017 till the conclusion of the 60th Annual General Meeting. Asthey have not opted for re-appointment based on the recommendation of the AuditCommittee the Board of Directors has recommended appointment of M/s.PN.Raghavendra Rao& Co. Chartered Accountants as Statutory Auditors for a term of office of fiveconsecutive years from the conclusion of the 60th Annual general Meeting to be held on24th August 2022 till the conclusion of the 65th Annual general Meeting of the Company.The said Audit Firm has confirmed that they are not disqualified for appointment asStatutory Auditors of the Company and that they satisfy the required criteria forappointment.

SECRETARIAL AUDIT

Pursuant to Section 204 of the Companies Act 2013 and Regulation 24A ofSEBI (LODR) Regulations 2015 the Board of Directors of the Company has appointedM/s.S.Krishnamurthy & Co. Company Secretaries Chennai as Secretarial Auditors toundertake the secretarial audit of the Company for the year ended 31st March 2022.Secretarial Audit Report of M/s. S.Krishnamurthy & Co. Company Secretaries Chennaifor the year ended 31st March 2022 is annexed as Annexure-D. As the Company does not haveany subsidiary the question of appointment of Secretarial Auditor for material subsidiarydoes not arise.

COST AUDIT

The Company is required to maintain cost records as specified by theCentral Government under Section 148(1) of the Companies Act 2013 and accordingly suchaccounts and records are made and maintained by the Company. M/s. STR & AssociatesCost & Management Accountants Tiruchirapalli are the Cost Auditors appointed forauditing the cost accounting records relating to Sugar Distillery Power and SoyaDivisions of the Company for the year ended 31st March 2022.

The said Firm has been appointed for the financial year ending 31stMarch 2023 and necessary resolution for ratification of their remuneration is included inthe Notice of the ensuing Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has constituted a CSR Committee and has adopted a CSRPolicy and the same is available in the Company's website www.sakthisugars.com. Thecomposition of the CSR Committee is given in the Corporate governance Report. As theCompany has incurred loss for the three preceding financial years the requirement ofincurring expenditure towards fulfilment of its corporate social responsibility does notarise during the financial year under review.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. The Company has in place anAnti-Sexual Harassment Policy in line with the requirements of the said Act. An InternalComplaints Committee (ICC) has been set up at every work place of business to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. No sexual harassment complaint hasbeen received during the financial year 2021-22.

AUDITORS' REPORT

With reference to the Statutory Auditors remark in respect ofnon-provision for expected credit loss on interest receivable your Directors wish tostate that the Company is confident of obtaining favourable award and considers the fullamount as recoverable. As regards transfer of the equity shares held by the company inSakthi Auto Component Limited (SACL) to Arcil Arcil has not valued the shares andappropriated such value amongst the lenders. In view of non-appropriation of the value ofthe shares by Arcil and as per legal opinion obtained the equity shares are continued tobe shown as asset classified as held for sale. The Statement of impact on AuditQualifications is attached as Annexure-E.

acknowledgement

Your Directors wish to place on record their appreciation of thevaluable assistance and co-operation extended by the shareholders cane growers banksfinancial institutions and Government authorities. They also wish to appreciate thededicated services rendered by officers staff and workers of the Company.

On behalf of the Board of Directors
Coimbatore M Manickam
25th May 2022 Chairman and Managing Director

ANNEXURE - A TO THE BOARD?S REPORT

PARTICULARS OF REMUNERATION

The information required under Section 197 of the Companies Act 2013and the Rules made thereunder in respect of remuneration to Directors/Key ManagerialPersonnel/employees of the Company is as follows:

(a) The ratio of the remuneration of each director to the medianemployee's remuneration of the Company for the financial year ended 31st March 2022:

Name of Persons Ratio to median remuneration
I Non-Executive Directors:
Sri M.Balasubramaniam (upto 26.8.2021) 0.10
Sri M.Srinivaasan (upto 26.8.2021) 0.06
Sri C.Rangamani 0.54
Sri S.S.Muthuvelappan 0.25
Sri PK.Chandran 0.29
Sri N.K.vijayan 0.45
Sri K.v.Ramachandran 0.54
Sri S.Chandrasekhar 0.35
Sri S.Balasubramanian 0.29
Smt. Priya Bhansali 0.45
Sri Jigar Dalal (upto 5.8.2021) 0.03
Sri Abhishek Kumar (from 6.8.2021 to 16.2.2022) 0.10
II Executive Directors:
Dr. M.Manickam Chairman & Managing Director -
Sri M.Balasubramaniam Managing Director (from 27.8.2021) -
Sri M.Srinivaasan Joint Managing Director (from 27.8.2021) -

(b) The percentage of increase in remuneration of each Director ChiefFinancial Officer and Company Secretary in the financial year:

Name of Persons % increase in remuneration
I Non-Executive Directors:
Sri M.Balasubramaniam (upto 26.8.2021) -
Sri M.Srinivaasan (upto 26.8.2021) -
Sri C.Rangamani 21.43
Sri S.S.Muthuvelappan 14.29
Sri PK.Chandran 12.50
Sri N.K.vijayan 27.27
Sri K.v.Ramachandran 21.43
Sri S.Chandrasekhar 22.22
Sri S.Balasubramanian 28.57
Smt. Priya Bhansali 27.27
Sri Jigar Dalal (upto 5.8.2021) -
Sri Abhishek Kumar (from 6.8.2021 to 16.2.2022) 100.00
Name of Persons % increase in remuneration
II Executive Directors:
Dr. M.Manickam Chairman & Managing Director -
Sri M.Balasubramaniam Managing Director (from 27.8.2021) -
Sri M.Srinivaasan Joint Managing Director (from 27.8.2021) -
III Key Managerial Personnel:
Sri. S. Baskar Sr.vice President & Company Secretary 3.04
Sri C.R. Sankar Chief Financial Officer 3.24

i. The remuneration to Non-Executive Directors consists of sitting feespaid for the meetings of Board and Committees thereof attended by each Director. Thesitting fees paid per meeting attended by the Directors is the same as that of the lastyear.

ii. The appointments of Dr.M.Manickam as Chairman and Managing Directorwith effect from 12th June 2018 and Sri M.Balasubramaniam as Managing Director and SriM.Srinivaasan as Joint Managing Director with effect from 27th August 2021 are withoutremuneration.

(c) The percentage increase in the median remuneration of employees inthe financial year is 1.25.

(d) The number of permanent employees on the rolls of the Company as on31.3.2022 is 1288.

(e) The increase in the average percentile of salaries of employeesother than managerial personnel in the year 2021-22 is 0.55%. The managerial personnelhave not been paid remuneration.

(f) Affirmation that the remuneration is as per the remuneration policyof the Company:

It is affirmed that the remuneration paid during the financial yearended 31.3.2022 to Directors Key Managerial Personnel and other employees is as per theremuneration policy of the Company.

(g) The information as per Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this Report. However asper first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of theRules the Report and Financial Statements are being sent to the members of the Companyexcluding the statement of particulars of employees under Rule 5(2) of the Rules. Anymember interested in obtaining a copy of the said statement may write to the CompanySecretary.

On behalf of the Board of Directors
Coimbatore M Manickam
25th May 2022 Chairman and Managing Director

.