The Shareholders SBEC Sugar Limited Dear Members
Your Directors have pleasure in presenting the 24th Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2018.
The summarised financial results of SBEC Sugar Ltd. as well as Consolidated with itssubsidiaries i.e. SBEC Bioenergy Limited and SBEC Stockholding and Investment Limited forthe financial year ended 31st March 2018.
| || || || ||(Rs. in Lacs) |
| || ||STANDALONE || ||CONSOLIDATED |
|Financial Parameters ||Period ended 31.03.2018 ||Period ended 31.03.2017 ||Period ended 31.03.2018 ||Period ended 31.03.2017 |
|Profit before interest Depreciation exceptional items and tax ||(11044.14) ||(6356.12) ||(12140.76) ||(8017.36) |
|Interest ||806.43 ||789.45 ||1618.68 ||1541.91 |
|Depreciation ||1789.16 ||1791.35 ||1999.72 ||1987.21 |
|Exceptional Items - Income || || || || |
|Profit before tax ||(8448.55) ||(3775.31) ||(8522.36) ||(4488.23) |
|Provision for taxation || || ||10.23 ||(51.04) |
|Profit after ||(8448.55) ||(3775.31) ||(8532.60) ||(4437.19) |
|Other Comprehensive Income ||8.72 ||(26.88) ||11.09 ||(26.69) |
|Total Comprehensive Income ||(8439.84) ||(3802.19) ||(8521.50) ||(4463.89) |
# The aforesaid financialhighlights are based on the Companys first IndianAccounting Standards (Ind AS) Audited Standalone and consolidate financialstatements for the year ended 31st March 2018 prepared in accordance with the AccountingStandards as notified under Section 133 of the Companies Act 2013.
DIVIDEND & RESERVES
As the Company has incurred loss during the year under review your Directors have notrecommended any dividend for the financial year ended March 31 2018.
The paid up Equity capital as on March 31 2018 was Rs.4765.38 Lacs. During the yearunder review the Company has not issued shares with differential voting rights norgranted stock options nor sweat equity.
The crushing for the season 2017-18 started on 24th October 2017 and cane crushedduring season 2017-18 was 146.27 Lac Qtls as compared to 106.52 Lac Qtls in the lastseason.
|Particulars ||Unit || ||Sugar Season || |
| || ||2015-16 ||2016-17 ||2017-18 |
|Cane Crush ||Lac Qtl ||94.84 ||106.52 ||146.27 |
|Recovery ||% ||9.56 ||9.37 ||9.73 |
|Sugar Production ||Lac Qtl ||9.08 ||10 ||14.24 |
Intensive cane development work done in the last years the Company achieved higher canecrush by 39.75 lakh Qtls and higher recovery by 0.36% over the previous year.With gradualacceptance of sugarcane variety Co-0238 by the farmers of the area the cane productionthroughout the State gradually increased resulted in excess sugar production leading to asteep decline in current sugar prices as compared to last year. The State Governmentdecided sugarcane prices in a manner that is not linked to sugar prices. Unviablesugarcane prices impact the profitability of the Company. The Company continued to focuson cane development activities comprising clean cane varietal change and modernagriculture practices that is expected to improve recovery in the coming years.
MATERIAL CHANGES AND COMMITMENTS
No material changes or commitments have occurred between the end of the financialperiod to which the financial date of this report affecting the financial position of theCompany.
As on March 31st 2018 the Company has one Wholly Owned Subsidiary i.e. SBECStockholding & Investments Limited and one Subsidiary i.e. SBEC Bioenergy Limited.There are no associates companies within the meaning of Section 2(6) of the Companies Act2013 ("Act"). There has been no material change in the nature of the business ofthe subsidiaries.
In accordance with Section 129(3) of the Companies Act 2013 the Company has prepareda consolidated financial statement of the Company and all its subsidiary companies whichis forming part of the Annual Report. A statement containing salient features of thefinancial statements of the subsidiary companies are annexed in Form AOC-1 and marked as "Annexure-A"to the Annual Financial Statements.
In accordance with the provisions of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing standalone and consolidated financial statementshas been placed on the website of the Companywww.sbecsugar.com. Further theaudited accounts of the Subsidiary Companies and the related detailed information havealso been placed on the website of the Company www.sbecsugar.com. A copy of annualaccounts of subsidiaries will be made available to shareholders seeking such informationat any point of time.
On the basis of Audited Financials Accounts of the Company for the FY.17-18 the Companyhas two Material Subsidiaries Company i.e. SBEC Bioenergy Limited and SBEC Stockholding& Investment Limited. The Minutes of the Board Meetings of the subsidiary companiesare placed at the Board Meetings of the Company. Details of significant transactions andarrangements entered into by the subsidiary companies are noted by the Board. The AuditCommittee of the Company reviews the financial Statement of the subsidiary companiesincluding investments made. There has been no change in relationship of any subsidiarycompany during the financial year.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of the Company for the financial period 2017-18are prepared in compliance with applicable provisions of the Companies Act 2013 IndianAccounting Standard (Ind AS) and SEBI (LODR) Regulations 2015.
Shri. Abhishek Modi re-appointed as Whole Time Director Designated as ExecutiveDirector of the Company w.e.f. 10th July 2018 for a period of five (5) year subject tothe approval of shareholders in the forthcomingAnnual General Meeting. Shri. R.K. Sharmare-appointed as a Manager of the Company w.e.f 14th June 2018 for a period of one (1)year subject to the approval of shareholders in forthcoming Annual General Meeting.
In accordance with the provisions of Section 152 of the Companies Act 2013 andArticles of Association of the Company Smt. Kumkum Modi (DIN 00522904) Non-ExecutiveDirector of the Company retires by rotation at the ensuring Annual General Meeting andbeing eligible for reappointment.
KEY MANAGERIAL PERSONNEL (KMP)
During the financial period ended 31.03.2018 following persons are Whole Time KeyManagerial personnel (KMP) of the Company in terms of provisions of Section 203 of theCompanies Act 2013:
|SI. No. ||Name ||Designation |
|1. ||Shri. Abhishek Modi ||Whole Time Director |
|2. ||Shri. Raj Kumar Sharma ||Manager |
|3. ||Shri. L.C. Sharma* ||Chief Financial Officer |
|4. ||Shri. Anil Kumar Goel# ||Chief Financial Officer |
|5. ||Shri. Shobit Nehra ||Company Secretary |
*Mr. L.C. Sharma has resigned from the post of Chief Financial Officer of the Company
#Mr. Anil Kumar Goel was appointed as Chief Financial Officer w.e.f. 1st
The Board met Seven times during the financial year 2017-18 the details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013 and the SEBI (LODR)Regulations 2015.
FORMAL ANNUAL EVALUATION
Pursuant to the requirements of Section 134(3)(p) of the Companies Act 2013 read withRegulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) 2015 theBoard has carried out a performance evaluation of itself its Committees the Chairman andeach of the other Directors.
A structured questionnaire was prepared after taking into consideration the inputsreceived from the Directors covering various aspects of the Boards functioning suchas adequacy of the composition of the Board and its Committees Board culture executionand performance of specific duties obligation and governance. A separate exercise wascarried out to evaluate the performance of individual directors including the Chairman ofthe Board. The performance evaluation of Independent Directors was carried out by theentire Board. The performance evaluation of the Chairman and the Non Independent Directorswas carried out by the Independent Directors at their meeting held separately.
At the conclusion of the evaluation exercise the Members of the Board assessed thatthe Board as a whole together with each of its Committees was working effectively inperformance of its key functions.
SCHEME OF AMALGAMATION FOR MERGER OF SBEC BIOENERGY LIMITED WITH THE COMPANY
The Board of Directors of your Company and the Board of Directors of the SBEC BioenergyLimited (SBL) at their respective meetings held on July 28 2017 had approveda Scheme of Amalgamation of SBL with the Company subject to approval of the shareholdersof both the
Companies NCLT and other regulatory authorities. After that the Company gave severaldisclosure to the Bombay Stock Exchange and also applied before the Stock Exchange for noobjection certificate regarding the Scheme of Amalgamation under regulation 37 of SEBI(LODR) Regulations 2015. On 15th December 2017 the Company received the observationletter/ no objection certificate regarding the Scheme of Amalgamation. However subsequentto observation letter/ no objection certificate received from the Stock Exchange theUnsecured Creditors (especially Cane Societies) deny/made reservations for the NOCregarding the Scheme of Amalgamation. Considering the above factors and otherorganizational issues the Board of Directors rescind the Scheme of Amalgamation betweenthe Company and M/s. SBEC Bioenergy Limited (its Subsidiary Company).
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 134 (5) of the Companies Act 2013your Directors to the best of their knowledge and belief and according to information andexplanations obtained from the management confirm that:
a) in the preparation of the annual accounts for the financial year ended March 312018 the applicable accounting standards have been followed and there are no materialdepartures from the same;
b) the Board of Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2018 andof the profit and loss of the Company for the year ended on that date;
c) the Board of 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;
d) The Directors have prepared the Annual Accounts on a going concern basis.
e) The Directors have laid down proper internal financial controls to be followed bythe Company and such controls are adequate and operating effectively; and
f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
DECLARATION FROM INDEPENDENT DIRECTORS
All Independent Directors of the Company have given declarations that they meet thecriteria of Independence as laid down under Section 149(6) of the Companies Act 2013 andSEBI (LODR) Regulations 2015.
INTERNAL FINANCIAL CONTROLS
Your company has in place an adequate internal control system in order to ensure thatall transactions are authorized recorded and reported correctly and that all assets areprotected against the perils of unauthorized use or disposition. Towards enhancing theefficiency of internal controls services of consultants are hired wherever necessary andtheir suggestions are reviewed and implemented. Your Company has in place an InternalAudit system whereby an independent professionals firm of Internal Auditors conductsregular audit across the Company and their scope and findings are reviewed by theManagement and Audit Committee on a regular basis.
The Audit Committee of the board also meets periodically to review the internalcontrols internal audit findings action taken reports and to advise the management oncorrective policies if any.
AUDITORS AND AUDITORS REPORT Statutory Auditors
M/s. K. K. Jain & Co. Chartered Accountants (FRN.02465N) were appointed asStatutory Auditors of the Company by the shareholders at the
23rd Annual General Meeting held on August 29 2017 to hold office upto the conclusionof the 28th
STATUTORY AUDITORS REPORT
The Auditors Report contains qualifications and the Company has given its comments onAuditor Qualified Opinion for the Financial Year 2017-18. The details are mentioned hereunder:
Response to Qualified Opinion (i)
The Indian sugar industry particularly in the state of Uttar Pradesh had faceddifficulties on account of increasing sugarcane prices lower sugarcane recoveries andlower sugar prices resulting in under recovery of cost of production. A Public InterestLitigation PIL (c) No. 21444 of 2017 filed before the Hon'ble High Court (Lucknow Bench)against the Company where the Hon'ble Court on 18.01.2018 directed that the Company willnot utilize any part of the sale proceeds of the sugar received for the year 2017-18except for making payment of cane growers for the year 2017-18 and 2016-17. The Companyhas therefore not provided the interest in the books for the season 2017-18 2016-17 andhas decided to account for the same on actual payment basis.
Response to Qualified Opinion (ii)
Due to the financial distress in SBEC Bioenergy Limited (SBL) and its inability toliquidate the liability of Rs. 8300 lacs it had offered to the Company to take back theassignment of MIL Debt which was agreed by the Company. Therefore management is of theopinion that no provision is required.
As per the requirement of the Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time your Companys cost records are subject to Cost Audit.
The Board of Directors on the recommendation of the Audit Committee have appointedM/s. M.K. Singhal & Co. Cost Accountants as the
Cost Auditors to audit the cost accounting records maintained by the Company for thefinancial year 2018-19 on a remuneration of Rs.60000/- plus taxes as applicable andreimbursement of out of pocket expenses. As required under the Companies Act 2013 aresolution seeking members approval of the remuneration payable to the Cost Auditorforms part of the notice convening the Annual General Meeting.
The Board appointed M/s R.K. Singhal & Associates Practicing Company Secretariesas the Secretarial Auditor to undertake the Secretarial Audit of the Company for FinancialYear 2017-18. The Report of the Secretarial Audit is given in "Annexure-B"to this Report. The observation in secretarial audit report are self-explanatory andtherefore not call for any further explanation.
During the financial year Company has not accepted any deposit from public within themeaning of section 73 of the Companies Act 2013 read with Companies (Acceptance ofDeposit) Rules 2014.
RISK MANAGEMENT POLICY
As per Section 134(3) (n) of the Companies Act 2013 the Company has adopted a RiskManagement Policy which is reviewed on a periodic basis in order to recognize and reduceexposure to risks wherever possible. The Companys risk management policies are basedon the philosophy of achieving substantial growth while mitigating and managing risksinvolved. Major risks identifiedare discussed at the meetings of the Audit Committee andthe Board of Directors of the Company.
The Audit Committee comprises of four Independent Directors viz. Shri. R.K. Agarwalas Chairman Shri. J.C. Chawla Shri. Vijay Kumar Modi and Shri. Shyam Babu Vyas asMembers. The details of terms of reference of the Audit Committee number and dates ofmeeting held attendance among others are given separately in the attached CorporateGovernance Report.
NOMINATION AND REMUNERATION COMMITTEE
Pursuant to the provisions of Section 178 of the Companies Act 2013 read with Rulesmade there under the Board has constituted a Nomination & Remuneration Committee andthe details of terms of reference number & dates of meeting held attendance andother details are given separately in the attached Corporate Governance Report. The Boardon the recommendation of Nomination & Remuneration Committee framed a policy i.e.Nomination and Remuneration Policy for selection and appointment of Directors seniormanagerial personnel and their remuneration.
The Company has adopted a Remuneration Policy for executive and non-executive directorsand persons who may be appointed in Senior Management and Key Managerial positions and todetermine their remuneration as approved by the Board of Directors on the recommendationof Nomination and Remuneration Committee. The remuneration so approved is subject to theapproval by the shareholders and such other authorities as the case may be. TheNon-Executive Directors do not draw any remuneration from the Company except sitting feepaid to them for each meeting of the Board/ Committee thereof attended by them. Theaforesaid policy can be accessed on the Companys website www.sbecsugar.comCORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.
Pursuant to the provisions of the Section 135 of the Companies Act 2013 (the Act) theCSR provisions are not applicable as per immediately preceding year financials of theCompany. The CSR Committee constituted by the Board of Directors have been dissolvedw.e.f. 9th August
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo pursuant to Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is enclosed in "Annexure-C"and forms part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required under Section 197(12) of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Boards Report for the year ended March 31 2018 are given in "Annexure D" to this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the financial year 2017-18 the company has neither made any investment norgiven any loans or guarantees covered under the provisions of section 186 of the CompaniesAct 2013.
RELATED PARTY TRANSACTIONS
The transactions entered with related parties during the year under review were onArms Length basis and in the ordinary course of business. The provisions of Section188 of the Companies Act 2013 are therefore not attracted. All related partytransactions were approved by the Audit Committee and the Board. The relevant informationregarding related party transactions has been set out in Note No. 31 of the FinancialStatements for the financial year ended 31.03.2018.Thus disclosure in FormAOC-2 is notrequired.
The Board has framed a Policy on related party transactions and placed the same on theCompanys website at www.sbecsugar.com.
VIGIL MECHANISM & WHISTLE BLOWER POLICY
The Company has formulated and implemented the Whistle Blower Policy/ vigil mechanism.This has provided a mechanism for directors and employees of the Company and other personsdealing with the Company to report to the Chairman of the Audit Committee; any instance ofunethical behaviour actual or suspected fraud or violation of the Companys code ofconduct. The aforesaid policy has also been uploaded on the Companys website at www.sbecsugar.com.
EXTRACT OF THE ANNUAL RETURN
The details of the extract of the Annual Return in Form MGT-9 as per the provisions ofSection 92 of Companies Act 2013 read with Rule 12 of Companies (Management andAdministration) Rules 2014 is annexed herewith and marked as "Annexure-E"to this Report.
COMPLIANCE OF SECRETARIAL STANDARD
The Company has complied with the Secretarial Standards issued by The Institute ofCompany Secretaries of India and approved by the Central Government as required underSection 118(10) of the Companies Act 2013.
LISTING OF SECURITIES
The equity shares of your Company are listed on the Bombay Stock Exchange Limited andthe Calcutta Stock Exchange Association Limited. The Companys application fordelisting of shares with The Calcutta Stock Exchange Association Limited is still pending.
The Company recognizes and embraces the importance of a diverse board in its success.We believe that a truly diverse board will leverage differences in thought perspectiveknowledge skill regional and industry experience cultural and geographical backgroundage ethnicity race and gender which will help us retain our competitive advantage. TheBoard has adopted the Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors. The Board Diversity Policy is available on our website(www.sbecsugar.com). More detail on diversity is available in the corporate governancereport that forms part of this Annual Report.
In Compliance with Regulation 17 to 27 of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 a detailed Corporate Governance Report has been givenelsewhere in this report along with Management Discussion and Analysis Report which forman integral part of the Annual Report. A certificate from R.K. Singhal & Associates afirm of Company Secretaries in practice confirming compliance by the Company with theconditions of Corporate Governance as stipulated under part E of schedule V of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 is attached to thisreport. The Whole Time Director and the Chief Financial Officer have submitted acertificate to the Board regarding the financial statements and other matters as requiredunder SEBI (LODR) Regulations 2015.
Your directors hereby place on record their appreciation for the services rendered bythe executives staff and workers of the Company for their hard work dedication andcommitment. During the year under review relations between the employees and themanagement continued to remain cordial.
Your directors thank the various Central and State Government Authorities and Agenciesfor the continued help and cooperation extended by them. The Directors gratefullyacknowledge all stakeholders of the Company viz. farmers customers members dealersvendors and banks for their excellent support during the year. The Directors also place onrecord their sincere appreciation to all employees of the Company for their unstintedcommitment and continued cooperation to the Company.
| || ||SBEC Sugar Limited |
| ||Sd/- ||Sd/- |
| ||Abhishek Modi ||R.K. Agarwal |
|Place: New Delhi ||(Whole Time Director) ||(Director) |
|Date: 09th August 2018 ||(DIN: 00002798) ||(DIN: 00298252) |