The Shareholders SBEC Sugar Limited
Your Directors take pleasure in presenting the 23rd Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2017.
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 2017.
(Rs. in Lacs)
| ||STANDALONE ||CONSOLIDATED |
|Financial Parameters ||Period ended 31.03.2017 ||Period ended 31.03.2016 ||Period ended 31.03.2017 ||Period ended 31.03.2016 |
|Sales and other income ||28301.24 ||39478.31 ||29291.49 ||40465.59 |
|Profit/(Loss) Before Interest Depreciation & Tax ||1285.19 ||1356.66 ||1520.92 ||1647.61 |
|Interest and Finance Charges ||774.15 ||526.94 ||1499.10 ||1034.37 |
|Depreciation and Amortisation ||279.56 ||311.14 ||324.15 ||353.93 |
|Prior period expenses (net) ||20.58 ||2.44 ||23.24 ||20.97 |
|Profit/(Loss) before Extra-Ordinary Expenses & || || || || |
|Provision for Taxation ||210.90 ||516.14 ||(325.57) ||238.34 |
|Exceptional Items ||(2499.66) ||- ||(2499.66) ||- |
|Profit/(Loss) before Tax ||(2288.76) ||516.14 ||(2825.23) ||238.34 |
|Provision for Taxation ||- ||- ||- ||12.97 |
|Deferred Tax Charge/ (Credit) ||- ||- ||(51.04) ||(65.26) |
|Taxes for earlier years || || || || |
|MAT credit written back ||- ||- ||- ||- |
|Profit/(Loss) After Tax ||(2288.76) ||516.14 ||(2774.19) ||290.63 |
|Transfer to Minority Interest ||- ||- ||(218.13) ||(82.54) |
|Transfer to Molasses Storage Fund ||1.84 ||3.34 ||1.84 ||3.34 |
|Profit/(Loss) for the period after appropriation ||(2290.60) ||512.80 ||(2294.16) ||369.83 |
|Earning Per Share (in Rs.) ||(4.80) ||1.08 ||(5.36) ||0.78 |
PERFORMANCE DURING THE YEAR
For the Financial Year 2016-17 there is a Loss of Rs. 2288.76 lacs as against theProfit of Rs. 516.14 lacs in the previous year. The Sugar Industry in India went throughan unprecedented crisis due to all time low sugar selling prices caused by sixth straightyear of surplus production as well as a drop in global prices. In fact it went below thecost of production for a substantial portion of the year.
DIVIDEND & RESERVES
As the Company has incurred losses during the year under review your Directors havenot recommended any dividend for the financial year ended March 31 2017.
The Company has not transferred any amount to the reserves for the financial year endedMarch 31 2017.
The paid up equity capital as on March 31 2017 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 2016-17 started on 04.12.2016 i.e.14 days later as comparedto previous season 2015-16 and ended on 02.05.2017 i.e. 22 days later as compared toprevious season 2015-16. During the season the plant crushed 90.53 lac quintals ofsugarcane in 128 days as against 107.20 lac quintals in 159 days in the previous season.The crushing was increased by 16.67 lac quintals during this season due to increase periodof crushing .The sugar recovery overall was increase at 10.83% as against 9.55% in theprevious season. The Company continued to focus on cane development activities comprisingclean cane varietal change and modern agriculture practices that is expected to improverecovery in the coming years.
MATERIAL CHANGES AND COMMITMENTS
No material changes or commitments have occurred between the end of the financialperiod to which thefinancialstatements and the date of this report affecting thefinancial position of the Company.
STATUS OF SICKNESS UNDER BIFR
As the members are aware the Company had reported the erosion in the net worth of theCompany by more than 50% of the peak net worth as required under Section 23 of the SickIndustrial Companies (Special Provisions) Act 1985 to BIFR and the BIFR has declared theCompany as sick and appointed IDBI as operating agency u/s 17(3) of the Act in its hearingheld on dated 04th February 2014 & the Draft Rehabilitation Scheme is UnderCompilation. However vide notification dated 25th November 2016 the Sick IndustrialCompanies (Special Provisions) Act 1985 (SICA) was repealed with effect from 1stDecember 2016 by Sick Industrial Companies (Special Provisions) Repeal Act 2003. Interms of Section 4(b) of the Repeal Act all pending proceedings under the previous Act(SICA) stands abated.
As on March 31st 2017 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 Company and all its subsidiary companies which is forming partof the Annual Report. A statement containing salient features of the financial statementsof the subsidiary companies is also included in theAnnual Report in "Annexure-A".
In accordance with third proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and the consolidatedfinancial statements has been placed on the website of the Company www.sbecsugar.com.Further as per fourth proviso of the said section audited annual accounts of each of thesubsidiary companies have also been placed on the website of the Companywww.sbecsugar.com. Shareholders interested in obtaining a copy of the audited annualaccounts of the subsidiary companies may write to the Company Secretary at the Company'sregistered office.
On the basis of Audited Financials Accounts of the Company for the FY.16-17 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. Detailsofsignificanttransactions 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 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and SEBI (LODR) Regulations 2015.
Shri. O.P. Modi expired on 03.06.2016. The Board of Directors placed on record itssincere appreciation for the valuable support and guidance given by Shri. O.P. Modi to theCompany during their tenure as Director of the Company.
Shri. R.K. Sharma appointed as Non-executive Director on the Board of the Companyw.e.f. 23rd February 2017 and subsequently appointed as a Manager designated"General Manager- Personnel & Administration" of the Company w.e.f 14thJune 2017 subject to the approval of shareholders in forthcoming Annual General Meeting.
Shri N.P. Bansal appointed as Independent Director with effect from 23rd February 2017subject 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 Shri. Jayesh Modi (DIN 02849637) Non-ExecutiveDirector of the Company retires by rotation at the ensuing Annual General Meeting andbeing eligible offer himself for re-appointment.
KEY MANAGERIAL PERSONNEL (KMP)
During the financial period ended 31.03.2017 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. L.C. Sharma ||Chief Financial Officer |
|3. ||Shri. Shobit Nehra ||Company Secretary |
The Board met Four times during the financial year 2016-17 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 Board's functioning such asadequacy of the composition of the Board and its Committees Board culture execution andperformance of specific duties obligation and governance.
A separate exercise was carried out to evaluate the performance of individual directorsincluding the Chairman of the Board. The performance evaluation of Independent Directorswas carried out by the entire Board. The performance evaluation of the Chairman and theNon Independent Directors was carried out by the Independent Directors at their meetingheld 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.
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 belief and according to information andexplanations obtained from the management confirm that:
a) in the preparation of the annual accounts for the financialyear ended March 312017 the applicable accounting standards have been followed and there are no materialdepartures from the same;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2017 and of the profitand loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
d) The Directors have prepared the Annual Accounts on a going concern basis. controlsto be followed by the Company and such controls are adequate
e) The Director shave laid down proper internal financial 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.
As per provisions of Section 139(2) Companies Act 2013 ("the Act") read withrules made there under no listed Company shall reappoint the existing auditor's firm whohas completed two terms of five consecutive years as auditor in the same company. Atransition period of three years from the commencement of the Act is provided to appoint anew auditor.
Accordingly as per the said requirements of the Act M/s. K.K. Jain & Co.Chartered Accountants are proposed to be appointed as Statutory Auditors of the Company inplace of the existing Statutory Auditors Doogar & Associates whose terms ofappointment exceeds the limits prescribed above to hold Office from the conclusion of theensuing Annual General Meeting till the conclusion of the Twenty Eight Annual GeneralMeeting subject to ratification by members every year as may be applicable.
As required under the provisions of Section 139 of the Companies Act 2013 the Companyhas received a written consent from the auditors to their appointment and certificate tothe effect that their appointment if made would be in accordance with the CompaniesAct 2013 and the rules framed there under and that they have satisfied the criteriaprovided in Section 141 of the Companies Act 2013.
STATUTORY AUDITOR'S REPORT
The Auditors Report contains qualifications and the response of your Director's withrespect to it Audit qualification are as follows
Response to Qualified Opinion (i)
Based on expert committee report the State Government of Uttar Pradesh had waivedinterest on the delayed payment of cane price for the sugar seasons 2012-13 2013-14 and2014-15. The waiver was challenged by the Rashtriya Kisan Mazdoor Sangathan before theHon'ble High Court Allahabad. The said Court order has set aside the waiver and remandedback the matter to reconsider it after hearing all Stakeholders. The aforesaid judgementis being challenged before the Hon'ble Supreme Court by the industry. The waiver ofinterest for the sugar season 2015-16 is under consideration. However notice for paymentof interest on delayed payment of cane price for the sugar season 2016-17 has been issuedagainst which the industry has made representative for waiver. Based on the past practicethe management is confidentthat no interest liability will arise for these period. Hencethe management is of the opinion that no provision is required.
Response to Qualified Opinion (ii)
In view of current cash flow of the Subsidiary Company (i.e. SBEC Bioenergy Limited)the management on request has agreed to extend the time period of deed of assingement fora further period of five years after the expiry of initial period of five years . Furtherthe management is confident to receive balance of Rs. 8300 lacs and is of the opinionthat no provision is required.
The Statutory Auditors have not reported any incident of fraud to the Audit Committeeof the Company during the year under review.
As per Section 148 of the Companies Act 2013 read with Rule 4 of the Companies (CostRecords and Audit) Rules 2014 the cost records maintained by the Company in respect ofits Sugar and Cogeneration activity are required to be audited by a Cost Auditor. TheBoard of Directors based on the recommendation of the Audit Committee appointed M/s.M.K. Singhal & Co. Cost Accountants as the Cost Auditors for auditing the costaccounting records maintained by the Company for the financial year 2017-18 on aremuneration of Rs.60000/- plus service tax as applicable and reimbursement of out ofpocket expenses. As required under the Companies Act 2013 a resolution seeking member'sapproval of the remuneration payable to the Cost Auditor forms part of the noticeconvening the Annual General Meeting.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s R.K. Singhal & Associates Practicing Company Secretaries inpractice as the Secretarial Auditor to undertake the Secretarial Audit of the Company. TheReport of the Secretarial Audit is given in "Annexure-B" to this Report.
The observation in secretarial audit report are self-explanatory and therefore not callfor any further explanation.
During the financial year The Company has not accepted any deposit from public withinthe meaning 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 Company's risk management policies are based onthe philosophy of achieving substantial growth while mitigating and managing risksinvolved. Major risks identified discussed at the meetings of the Audit Committee and theBoard 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 Company's website www.sbecsugar.com.
CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES.
Pursuant to the provisions of the Section 135 of the Companies Act 2013 (the Act) theCompany has constituted a CSR Committee of the Board of Directors to monitor the CSRactivities of the Company. The details relating to the CSR Committee are described in theCorporate Governance Report forming part of this Annual Report. CSR Committee formulatedand recommended to the Board the CSR Policy of the Company and it has been approved bythe Board of Directors of the Company. The aforesaid policy can be accessed on theCompany's website www.sbecsugar.com.
It is to be noted that during the three preceding Financial Years i.e. 2015-16 2014-15and 2013-14 The Company had earned accumulated losses therefore the Company shall notrequired to spend any amount of expenditure on CSR activity in Financial Year 2016-17.
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
The information required pursuant to Section 197(12) read with Rule 5 (1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 relating toratio of the remuneration of each Director to the median employee's remuneration and otherdetails shall be provided on request in accordance with the provisions of Section 136 ofthe Act the Report and Accounts are being sent to the Members and others entitledthereto excluding the information on employees particulars which is available forinspection by the Members at the Registered Office of the Company during business hours onworking days of the Company up to the date of the ensuing Annual General Meeting. If anyMember is interested in obtaining a copy thereof such Member may write to the CompanySecretary in this regard.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 none of the employee is drawing remuneration in excess of thelimits set out in the said Rules.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the financial year 2016-17 the company has neither made any investment norgiven any loans or guarantees covered the provisions of section 186 of the Companies Act2013.
RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into during the financial year with therelated parties were on arm's length basis and were in the ordinary course of business.Section 188(1) of the Companies Act 2013 exempts related party transactions that are inthe ordinary course of business and are on arm's length basis. However as per Regulation23 of SEBI (LODR) Regulations 2015 all material Related Party Transactions requiresapproval of the shareholders through Postal Ballot by way of special resolution on dated23.05.2015. Accordingly the Company has obtained the approval of the shareholders by wayof special resolution for the material related party transactions. The Board of Directorsand the Audit Committee have also approved the said related party transactions.
There are no materially significant related party transactions with the PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
The particulars of the material contract and arrangements entered into by the Companywith related parties referred to in sub-section (1) of section 188 of the Companies Act2013 read with Regulation 23 of SEBI (LODR) Regulations 2015 is disclosed separately inForm No. AOC -2 as "Annexure D" and forms part of this report.
The Board has framed a Policy on related party transactions and placed the same on theCompany's website at www.sbecsugar.com. Your director draw attention of members to Note.37 of the financial statement which sets out related party disclosures.
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 Company's code ofconduct. The aforesaid policy has also been uploaded on the Company's website atwww.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 Rule 12 of Companies (Management andAdministration) Rules 2014 is annexed herewith and marked as "Annexure-E"to this Report.
LISTING OF SECURITIES
The equity shares of your Company are listed on the Bombay Stock Exchange Limited andThe Calcutta Stock Exchange Association Limited. The Company's application for delistingof 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 governance reportthat 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.
R.K. Singhal & Associates a firm of Company Secretaries in practice confirmingcompliance by the Company A certificate with the conditions of Corporate Governance asstipulated under part E of schedule V of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 is attached to this report.
The Whole Time Director and the Chief Financial Officer have submitted certificate tothe Board regarding the financial statements and other matters as required under 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.
| || ||For & behalf of the Board |
| || ||SBEC Sugar Limited |
| ||Sd/- ||Sd/- |
| ||Abhishek Modi ||R.K. Agarwal |
|Place: New Delhi ||(Whole Time Director) ||(Director) |
|Date: 28th July 2017 ||(DIN: 00002798) ||(DIN: 00298252) |