To the members of Simbhaoli Sugars Limited
Your directors have pleasure in presenting the 11th Board's Reporttogether with management discussion and analysis report for the financial year ended onMarch 312022.
MANAGEMENT DISCUSSION AND ANALYSIS
Global Sugar Industry Overview
As per the recent estimates the global sugar output is slightly up to181.2 million tons in 2021-22 and it's likely to increase to 182.9 million tons in2022-23. The good crop in India due to favorable weather higher yields and along withincreased production area in Pakistan are the main reasons behind the hike in sugarsurplus.
Brazil's sugar output is expected to increase to 36.4 million tonsfrom 35.3 million tons compared with last season as higher sugarcane yields fromfavorable weather are expected to result in additional sugarcane available for crushing.Harvested area is lowered as marginal sugarcane areas switch to soybeans and corn.
Thailand's Sugar output is expected to achieve slight rise to 10.5million tons compared to 10.2 million tons in the season 2021- 22. Thailand exports fellto third in 2020/21 due to drought reduced production and shipping delays caused bycontainer shortages.
European Union's production is forecast down 0.25 million tons to16.3 million tons as farmers reduce sugarbeet plantings in favor of more profitable cropslike corn. Consumption and exports are unchanged.
China's year 2022-23 total sugar production is forecast at 10.0million tons slightly up from the previous year's estimate. This projected increasein sugar production assumes favorable weather and that beet mill incentive are successfulat keeping farmers planting sugarbeets.
India's sugar output is expected to decrease by 3% to 35.8 milliontons during the sugar season (October-September) 2022- 23 as less sugarcane is processedfor sugar. The Government has issued a notification curbing exports of sugar to checkdomestic inflation and to channel more sugarcane into ethanol production.
Domestic Sugar Industry Overview
Sugar mills across the country have produced 34.88 million tons ofsugar during this season so far according to the latest reports by Indian Sugar MillsAssociation (ISMA) which is about 4.41 million tons higher than 30.48 million tonsproduced at the same time last year.
Uttar Pradesh state sugar mills have produced 10.15 million tons ofsugar as per recent calculations which is 0.72 million tons lower than the production of10.87million tons produced by them last year on the corresponding date. Most of thecurrently operating factories in the State were closed by the end of May month however afew are continuing to operate in June 2022.
Karnataka and Tamil Nadu have a special season also which commences inJune/July and runs upto September. Last year both these states collectively produced 0.45million tons of sugar in the special season.
Sales in the current year upto April 2022 is 0.75 million tons higherwhich is about 5% higher than the last year corresponding period. The ex-mill sugar priceshave been in the range of '32 - 35 per kilogram for last several months. To maintainliquidity of funds mills are under pressure to sell sugar at such low prices not enoughto be able to generate adequate funds to be able to pay the full FRP to the cane farmers.The farmers and sugar mills are hopeful of the much-awaited announcement by the Governmentregarding increase in MSP of sugar as a measure to improve revenue realization of millsand payment to farmers. Under the current circumstances the increase in MSP of sugar fromcurrent level of '31 per kilo which was last fixed in February 2019 seems to be the onlyrealistic way to ensure that mills improve their cash flows and are able to effectivelyreduce the cane price arrears of farmers faster. (Source ISMA)
Domestic -Sugar Output
(All fig. in Million MT)
|Particulars ||2019-20 (A) ||2020-21 (P) ||2021-22(E) ||% Change |
|Opening stock as on 1st Oct. ||10.6 ||8.8 ||8.3 ||-5.68% |
|Production during the season ||30.2 ||30.0 ||35.5 ||18.33% |
|Imports ||- ||- ||- || |
|Total Availability ||40.8 ||38.8 ||43.7 ||12.63% |
|Offtake || || || || |
|i) Consumption ||26.0 ||24.5 ||27.2 ||11.02% |
|ii) Exports ||6.0 ||4.0 ||9.0 ||125% |
|Total Off-take ||^32.0 ||28.5 ||36.2 ||27.02% |
|Closing Stock as on 30th Sept. ||8.8 ||8.3 ||7.5 ||-9.64% |
|Stock as % of Consumption ||34% ||34% ||21% || |
ISMA estimated sugar production in 2021-22 at around 33 million tonsafter adjusting impact of diversion of B-heavy molasses and sugarcane juice for ethanolmanufacture. According to recent estimates the actual production in the country crossesthe figure as estimated by ISMA and 116 sugar mills were running their operation till theend of May 2022.
With all the estimates the production in the country is expected to be17% higher in Sugar Year 2021-22 so far as compared to last year. Production in UP fall byaround 7% in SY 2021-22 as compared to SY 2020-21.While production in Maharashtra andKarnataka have increased by 28% (approx.) and 38% (approx.) respectively in SY 2021-22 ascompared to SY 2020-21.
The average Price realization for complete FY 2020-21 was '3426/Qtlwhereas this FY 2021-22 the average price realization increased to ' 3644 /Qtl.
The Industry urged the Centre to hike the MSP from '31 per Kg to '34.50 per Kg. The FRP a benchmark rate below which mills are not allowed to buy cane hasalready been hiked by '5 Per quintal this year. There is a need to quickly decide onincreasing the MSP of Sugar to ensure that sugar mills are able to pay farmers on time.
The improvement in international sugar prices on sequential basis inmost of the months April 2020 onwards did not translate into higher domestic sugar prices.The average wholesale sugar prices in India have almost stagnated and have been hovering
in the range of '34-38 per kg for almost 2 years now since April 2020.The prime reasons that have been restricting any major growth in domestic prices are thehigher sugar inventories in India due to bumper sugar production.
The uncertainty in Brazil over cane diversion towards sugar productionis expected to continue as the prospects for fuel demand (ethanol) will guide theproduction of ethanol and thus sugar. Also the pace of sugar exports from India willinfluence the movement in international sugar prices to an extent.
The Government of India has issued export policy for SY 2020-21 out ofwhich 52400 MT quantity allotted to Simbhaoli group. The Fair & Remunerative Price(FRP) of sugarcane was approved by the government at ' 290/qtl. for season 2021-22 whileSAP for 2021-22 was approved at 340/qtl. by state govt. Overall Export MAEQ quota for theCountry is 9 million tons announced for 2021-22. The Ministry of Consumer Affairs Foodand Public distribution has reduced the subsidy on sugar exports to ' 4000/ MT from'6000/MT due to increased international sugar prices and current market scenario which isviable for sugar exports.
Domestic ethanol Industry Overview
The Indian ethanol market is slated to grow and the Government of Indiahas planned to enhance ethanol production to 9.88 billion litres from 4.37 billion litresin order to achieve the blending rate of 20% by 2025. The Government has given approvalsto around 350 new plants in sugar mills for adding 5.5 billion litres of capacityentailing an investment of ' 18000 Crore for that purpose.
Uttar Pradesh state government has given a go-ahead to an innovativescheme for production of ethanol from sugarcane juice this scheme will be empowering forfarmers as well as sugarcane mills in the state.
Indian Sugar mills have contracted to supply 400 crore litres ofethanol to oil marketing companies (OMCs) this season. This is 32% more than the 302.3crore litres of ethanol supplied by the mills in the last season. It will help the sugarmills to reduce sugar production by 34 lakh tonnes after diverting sugarcane juice andB-heavy molasses for ethanol production for the ongoing season.
Surplus sugar production has depressed sugar prices thereby impactingsugar industry's capacity to pay sugar cane farmers. The ex-distillery price of ethanolderived from cane juice is '62.65 per litre while that from C-heavy molasses is '46.66 perlitre for the ethanol supply year beginning December 2021. Higher remunerative price forethanol produced from cane juice will help in reduction of cane farmer' arrears.
Simbhaoli group was started as a partnership firm in 1933 by SardarRaghbir Singh Sandhanwalia and in 1936 it was incorporated as a private limited company.In 1989 it went public and has been listed on Indian Stock Exchange for the past 32years. In 1992 it acquired a distillery (owned by the family as an independent company)and thereby converted the Simbhaoli sugar plant into an integrated sugar complex. Atpresent Simbhaoli is part-owned by the third and fourth generations of this familyrepresented by Mr Gurmit Singh Mann Chairman of the Company.
The group has three sugar complexes located at Simbhaoli (Western UttarPradesh) Chilwaria (Eastern Uttar Pradesh) and Brijnathpur (Western Uttar Pradesh)having an aggregate sugarcane crushing capacity of 19500 tons crushed per day (TCD)including asugar refining capacity of 1200 tons per day (TPD) for raw sugar processinginterchangeable with cane crushing capacities while the sugarcane is not available duringoff-season.
|Facilities ||Cane Sugar (tcd) ||Alcohol/ ethanol (kld) ||Power (mwh) ||Sugar refining (tpd) |
|Simbhaoli (Western UP) ||9500 ||90 ||62$ ||800 |
|Brijnathpur (Western UP) ||4000 ||60 ||8 ||400 |
|Chilwaria (Eastern UP) ||6000 ||60 ||38$ ||- |
|Total ||19500 ||210 ||108 ||1200 |
$Simbhaoli Power Private Limited subsidiary company
The sugar business is integrated with alcohol distillation and powergeneration. The power co-generation units of its subsidiary Simbhaoli Power PrivateLimited located within the Simbhaoli and Chilwaria complexes are capable to generatebio-mass based power aggregating 100 mwh for supplying the power for the captiveconsumption of the sugar plants and sale of surplus power to the UP-State grid under thepower purchase agreements.
Joint Venture Companies
The Company has a joint venture arrangement with Sindicatum BagasseIndia Pte. Ltd. a private limited Company incorporated and registered under the laws ofSingapore which is an affiliate of Sindicatum Captive Energy Singapore (SCES)in the nameof Simbhaoli Power Private Limited (SPPL) engaged in the cogeneration of power frombagasse and other bio fuels.
The Hon'ble National Company Law Tribunal (NCLT) Allahabad Bench videits order dated March 17 2021 approved the Resolution Plan of Uniworld Sugars PrivateLimited (USPL) set up under a joint venture between the Company and ED & F ManHolding BV. The Hon'ble National Company Law Appellate Tribunal (NCLAT) Delhi vide itsorder dated 12.04.2022 set aside the Resolution Plan and directed NCLT to review theResolution Plan. Now the matter is pending with Hon'ble National Company Law Tribunal(NCLT) Allahabad Bench.
Impact of Industry Scenario on Business of the Company
For the year ended March 31 2022 and in earlier years the Company hasincurred losses due to high sugarcane costs fixed by the state government andcomparatively lower prices of finished sugar due to higher production which are determinedby the market forces based on demand-supply situation and other market dynamics. Due toabove-stated external factors the Company had incurred huge losses in past resulting incomplete erosion of its net worth. This has resulted in delay in meeting the paymentobligations to the lenders and sugarcane farmers in terms of their respective agreementsand understanding. Although the operations of the Company remained intact at sub-optimumlevels over the years and it has been continuously striving for improvement in operationefficiency in form of improvement in sugar recovery reduction in overheads and othercosts etc. The Company has successfully completed crushing for Sugar season 2021-22 in allof its three sugar mills with better operational performance.
Recognizing the status of the sugar industry the state and centralgovernments have taken a number of measures to improve the financial health support forliquidation of cane arrears fixing minimum obligation for exports to manage the sugarinventory and providing subsidy to compensate export expenses fixing minimum supportprice of sugar and mandatory blending of ethanol with petrol with long term tendering andproviding remunerative price of ethanol etc. All these measures have resulted in revivalof the sugar industry and the financial performance of the Company has also improvedduring the year. Further pursuant to an order of Hon'ble High Court of Uttar Pradesh theUttar Pradesh sugar industry as well as the Company is confident to receive accruedbenefits from the state government under the erstwhile New Sugar Industrial PromotionPolicy (NSIPP 2004-09).
Impact of Covid-19 and Nation-wide Lockdown on the Operations of theCompany
The ongoing Covid-19 pandemic is expected to put pressure on the sugarconsumption patterns as there are curbs on social gatherings and outings. The industry isalso facing reduced off-take from beverage and other FMCG companies amid the lockdown.This has even led to fall in domestic & international sugar prices recently.
The Company has considered the potential impact of spread ofCoronavirus Disease (COVID-19) throughout the country in preparation of financialstatements for the year ended March 31 2022 based on the information available to it upto the date of approval of these financials. However the impact of COVID-19 as well asnegative outlook of sugar sector on the carrying amount of its property plant andequipment's and consequential impairment could not be ascertained and provided for due tonon- availability of requisite information on account of lockdown restrictions.
The impact of COVID-19 may differ from what has been assessed by theManagement as at the date of approval of these financial statements. The Company willcontinue to closely monitor any material change in future economic conditions and takeappropriate action as may be required.
Legal proceedings of investigation in the matter related to complaintfiled by Oriental Bank of Commerce (OBC).
During the year 2017-18 the Oriental Bank of Commerce (OBC) now mergedwith Punjab National Bank one of the lenders arbitrarily initiated recovery actionsagainst the Company in respect of its restructured corporate loan and also filed acriminal complaint in an arbitrary and wrongful manner in respect of original creditfacilities without the consent of the other lenders and without affording any opportunityto the Company to present its case a gross violation of law of natural justice. TheCompany and its management have refuted the charges on their part and provided adequatedocuments while fully cooperating with the investigation. The Company has always beenrequesting documents/ information basis which OBC had taken such step. Information/documents so requested are still awaited despite repeated reminders. The Company hasreiterated its commitment for repayment to all the lenders on the basis of future cashflows. Steps initiated by OBC have delayed the ongoing debt resolution process of theCompany and adversely affected its business. Based on legal advice the Company has beentaking appropriate actions at the relevant forums including but not limited to seekingappropriate counter claims.
Sugar Operations: The Company's units located at Simbhaoli Brijnathpurand Chilwaria zwere running on B-heavy molasses for a particular period of the season.Sugar recovery has been gradually falling in UP. While in 2018-19 it had hit a record11.46% it decreased to 11.30% in 2019-20 while in 2021-22 the recovery was at 10.76%.
Distillery Operations: Due to current situation of pandemic throughoutthe country consumption of fuel (Petrol / Diesel) has gone down resulting in slow lifting/ non lifting by OMC depots against tendered quantity. It has adversely impacted theEthanol business. The capacity utilization of Simbhaoli and Chilwaria Divisions hasreduced from last year by 13% &10% respectively. Total group production till April 30last year was 295 Lac BL whereas it was 259 Lac BL this year which is showing a declineby12.2%.
Branding and specialty Sugar segment: In our initiatives to enhanceonline sales and provide easy and early availability of our products to the doorstep ofthe customers the Company is effectively providing e-commerce functionality on a widerange of its products through its Direct-to-consumer e-commerce website for its FMCGofferings.
The Company has been consistent in developing its sugar brandTrust'. The sales and marketing infrastructure development exercises fordistribution through modern retail and wholesale trade channels have been furtherstrengthened during the year. Trust branded sugar sachets have created vast acceptabilityand leadership in the hospitality industry.
The Trade Marks i.e Trust the healthier sugar; Classic sulphurlesssugar; SIPP for non-alcoholic beverages and Trust neem multi surface disinfectant wereregistered with the appropriate authorities.
During Lockdown the Company has launched three new whisky brands withthe name and style of Seven Knight Premium Whisky Brown Eagle Golden Whisky& Brown Eagle Royal Pack Whisky which has received a good response from thedomestic market.
The Company actively participated in the export campaign in the yearunder the Government MAEQ scheme. The Company has continued export trade with markets likeHong Kong Chuuk Nepal Canada etc. During the year the Company has exported 585 MT ofwhite sugar and 18492 MT of raw sugar under MAEQ/ OGL Scheme.
The Company believes in cordial employer-employees relationship. Timeto time training sessions which inter-alia includes electrical safety SAP chemicalhandling quality behavioural training motivational trainings etc.are conducted in orderto enhance work life balance of employees as well as to optimise the efficiency of all theunits and employees. Special drives for COVID-19 precautionary measures were conducted inall units. All support provided to our manpower in term of Covid Testing treatment andvaccination. Keeping the philosophy of continuous training and job improvements theCompany has imparted 504 man-days (previous year 543 man-days) of training apart from theregular participation in physical trainings and external webinars to its employees.
The Company has always been vigil against the sexual harassment atworkplace and a system is in place under which the employees can make their complaints inthis regard. No such complaint has been received during the year.
The areas of operations of the Company are well diversified with multiproducts and services spanning over a number of geographical locations. Each of thebusiness segments has its own strengths and weaknesses and at the same time is subject toa variety of opportunities and threats. The management is consistently strategizing andimplementing the restructuring exercises and cost optimisation for the businesssustainability. The group has the following SWOT attributes:
a. Over 9 decades of experience of Sugar Industry.
b. Our Manufacturing units are located in the sugarcane- rich state ofUttar Pradesh North India.
c. Diversified Product Range including pharmaceutical- grade andspecialty sugars to cater different categories of customers.
d. Enhanced it reach though various e-Commerce platforms.
e. Introduced its own dedicated E-commerce portal.
f. Well irrigated sugarcane area which is not much dependent onweather pattern.
g. Integrated facilities to produce white sugar using sugarcane as wellas refining of raw sugar.
h. Premium range of quality products attracting a mark-up in domesticand global markets.
i. Presence in branded and packaged segment which has further growthpotential.
j. Diversification into Sanitizers and Disinfectant Manufacturing.
a. Highly leveraged with high finance costs.
b. Cyclical nature of the industry which is subject to climate andeconomic cycles.
c. Low capacity utilisation in distillation segments.
d. Lack of parity between cost of production and sale values of sugarresulting in un-paid sugarcane price position.
e. Existing and anticipated litigation arising out of weak financialposition of the Company.
f. Delay in financial restructuring and debt resolution pending overpast three years resulting in financial limitations.
a. To produce and gain out of non-sugar base revenues includingethanol being the focus area for the Company and also being encouraged by governmentpolicies.
b. To be flexible in the refining of raw sugar for improving capacityutilisation throughout the year.
c. To be a regular trader in the commodities with quality brands andproduct mix whenever there is a viability.
d. Presence in branded and packaged segment which has further growthpotential.
e. Enhancement of Alcohol capacity for manufacture of disinfectants.
a. Worldwide Covid-19 emergency and impact thereof in India.
b. Increase in production and distribution cost due to Lockdownscenario.
c. Recovery steps initiated by the lenders for overdue outstanding.
d. The vendors and creditors related uncertainties on account ofpayment defaults.
e. Significant higher production of sugar in the country may lead todownward trends in sugar prices.
f. Volatile commodity markets have a bearing on international anddomestic operations.
g. Regulated environment may pose adversities for business decisions.
h. Un-hedged positions in sugar and currency markets.
i. Coercive actions by the State administration particularly for canepayment.
Quality management system: The sugar units of the Company arecompliant with internationally recognized quality environment and food safety standardsand are ISO 9001 ISO 14001 and FSSC 22000 certified. Management systems are applied todevelop a systematic work culture that emphasizes process ownership across all levels ofthe organization.
RISK ASSESSMENT AND MITIGATION
The sugar industry faces challenges from the evolving marketplacecontinuously that impacts important issues in risk management and threatens profitmargins. The business of the Company is exposed to several kinds of risks from time totime which include the following:
Strategic Risks: These risks are relating to the flux and movementof money and capital in the Company. This will include cash flow management investmentevaluation and credit default. These risks emanate out of the decisions the Company takesin the markets resources and delivery of services.
Operational Risks: Most common and often combatable in allsituations these risks related to business operations such as those relating todetermination identification and procurement of vendors services delivery to vendorssecurity and surveillance labour issues blocking of funds and business activitydisruptions.
Resource Risks: The Company may at times become susceptible tovarious risks associated with the procurement of talent capital and infrastructure asmay be specific to the industry.
Technological Risk: The business of the Company particularlypotable alcohol and speciality sugar is subject to frequent and revolutionary technologychanges as new products are being developed in this segment. This also leads to risk ofobsolescence of machinery as well as inventory.
Industry and Competition Risks: The risks relating to the sugar andalcohol industry including competition in the industry technical landscape risksarising out of volatilities of the manufacturing lines and those relating to brands ofthe Company.
Risk of Clash and Breakage: The risk of clash and breakage ismainly referred to the risks associated with the manufacturing output caused due toquiver bump squeezing lacquer desquamation nick and so on in transit. Fragmentationis mainly referred to fragile substances and includes loss including breaching and smashin transit due to careless loading and unloading and bumping of conveyance and may alsooccur during warehousing.
Risk of Theft Pilferage and Non-Delivery: The risks relating totheft or pilferage when the goods manufactured are failed to be delivered to the buyerthe risk of non-delivery concerns a situation where the whole cargo is not delivered tothe consignee.
Currency Risks: The Company on account of international tradingactivities deals in various foreign currencies and is exposed to fluctuations in thecurrency markets from time to time.
Risks relating to regulatory and compliance framework: The risksdue to inadequate compliance of regulations contractual obligations and intellectualproperty violations leading to litigations and related costs and effect on brand value andimage.
Business existence risk: The risk relating to management disruptiondue to change in ownership as a result of ongoing restructuring.
The key objective of the risks analysis is to ensure sustainablebusiness operations and to promote an approach in risk management process by eliminatingrisks. In order to achieve this key objective the Company has implemented such policieswhich provides pro-active approach to manage various types of risks associated with day today affairs of the Company and minimize adverse impact on its business objectives.
Environmental Compliances: During the period under review theCompany has remained compliant with all environmental laws in the country. TheCompany's Effluents plants were periodically inspected by State and Central PollutionControl Boards and other agencies to check that Company is maintaining prescribed effluentstandards.
Internal Control System
The Company has been following-up the systems and control to safeguardthe assets and interest of stakeholders against loss from any unwarranted action. Allbusiness transactions are authorized recorded and reported accordingly. Under the systemcertain Standard Operating Procedures/Policies with reference to the delegation ofauthorities material procurement and management accounting processes and systemspayment authorization capex monitoring insurance and employee welfare etc. have beenadopted. Review systems have been established and implemented to ensure the adequacy ofcontrol systems and their monitoring.
The Company has established and implemented internal financial controlsbased on the formal system of internal financial controls under the Companies Act 2013read with relevant Ind AS considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls with reference toconsolidated financial statements issued by the ICAI. The system includes procedurespolicies the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the orderly and efficient conduct ofits business including adherence to Company's polices the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.
An independent internal audit process has been established withreference to the business operations of the Company. The internal audit reports along-withmanagement comments are regularly being placed before the audit committee of the Board.
The legal matters with the former director/senior executive employeesdue to irregularities/misappropriation of inventory of the Company are going on before theappropriate authorities. The management is confident that these cases shall be concludedwithout material financial implications on the Company.
Materiality of Related Party Transactions: The Board of Directorsof the Company has on the recommendation of the Audit Committee adopted a policy toregulate transactions between the Company and its related parties in compliance with theapplicable provisions of the Companies Act 2013 the rules made there under and thelisting regulations. The Policy has been reframed in order to make it aligned with recentupdates in Companies Act 2013 as well as SEBI Listing Regulations.
During the Financial Year 2021-22 all transactions with relatedparties were at arm's length basis and were in the ordinary course of business. Therewas no materially significant related party transaction with the Company's PromotersDirectors Key Managerial Persons (KMP) Management or their relatives which could havehad a potential conflict with the interests of the Company. Transactions with relatedparties entered by the Company in the normal course of business are periodically placedbefore the Audit Committee for its approval. The particulars of contracts entered duringthe year are enclosed herewith as Annexure-2 as per prescribed Form AOC-2.
Corporate Social Responsibility (CSR): Pursuant to the provisionsof Section 135 of the Companies Act 2013 read with Companies (Corporate SocialResponsibility) Rules 2014 the Board of Directors of the Company has formed a CSRCommittee headed by an independent director to inter alia carry out the followingfunctions:
> to formulate and recommend to the Board a CSR Policy indicatingactivities to be undertaken as specified in prescribed Schedule VII of the said Act;
> to recommend the amount of expenditure to be incurred on CSRactivities; and
> to monitor the Corporate Social Responsibility Policy and spendfrom time to time.
The Company has been regular in CSR activities for the developmentupliftment and advancement of the conditions of the people living in the villages in thevicinity of mills. The Company is not mandatorily required to spend any amount for CSR interms of criteria prescribed under Companies Act 2013 for the financial year 2021-22 yetit has its own CSR policy indicating the guidelines for social welfare activities and asits responsibility it's contributing from time to time for the welfare of theSociety.
A Charitable trust named Simbhaoli India Foundation (SIF) has alsobeen working to ensure social obligations of the Company.
As the whole country is facing huge challenge to fight the second waveof Covid-19 the Company set up a medical oxygen plant in Sihkeda (Dist.- Hapur) nearSimbhaoli village which costs around ' 32lacs. The fully automatic Oxygen generation planthas a capacity to produce 20 MT/ hr oxygen with 96% purity.
Information Technology - During nationwide lock-down due toCoVID-19 pandemic the IT division of your Company has provided tremendous support toenable employees smoothly work from home as well as to get them connected over virtualmeetings. The information technology system of the Company is operating on SAP basedenterprise resource planning (ERP) environment optimizing the performance of itsbusinesses as well as the business network.
OPERATIONS OF SUBSIDIARY/ASSOCIATE COMPANIES
Simbhaoli Power Private Limited(SPPL): SPPL is a 51% subsidiarywith a joint venture with Sindicatum Bagasse India Pte Limited. SPPL is generating thepower using the sugar mill bagasse and third-party biomass at the Simbhaoli and ChilwariaSugar complexes of the Company and selling the surplus power to State utilities under thelong-term power purchase agreements.
In the consolidated financial statements of the Company for the quarterand year ended March 312022 the financial statements of SPPL a material subsidiary hasnot been consolidated as the year ended financial statements of SPPL have not been yetfinalized and approved till date.
The transactions entered into between the Company and SPPL for the yearended March 312022 which have not been eliminated in the consolidated financialstatements have resulted in increase in the total revenue by ' 2979.38 lacs and totalexpenses by '1200.25 lacs. Further increase in the balances of subsidiary of ' 2049.39lacs have been included in the consolidated balance sheet in the respective assets heads.
Uniworld Sugars Private Limited(USPL): The Hon'ble NCLTAllahabad Bench has passed an order dated March 17 2021 for the approval of theresolution plan of USPL. The Hon'ble National Company Law Appellate Tribunal (NCLAT)Delhi vide its order dated 12.04.2022 set aside the Resolution Plan and directed NCLT toreview the Resolution Plan. Now the matter is pending with Hon'ble National CompanyLaw Tribunal (NCLT) Allahabad Bench.
Integrated Casetech Consultants Private Limited (ICCPL):
Integrated Casetech Consultants Private Limited (ICCPL) is an 85%subsidiary company and the technology vertical of SSL. It has been providing theoperations and maintenance services to various sugar companies in India and abroad. Due toCoVID scenario ICCPL's operations are affected adversely due to slow down of workingof all Industries globally.
During the year ended March 2022 ICCPL has achieved total revenue of '1622.70 lacs only in comparison to revenue of ' 613.49 lacs earned in previous yearreflecting a substantial increase of 164.50%. Due to substantial increase in revenueICCPL has suffered loss of ' 7.85 lacs in comparison to loss of ' 92.02 lacs last year.
Simbhaoli Global Commodities DMCC: The Company has made anapplication for de-registration and termination of the license with the Dubai MultiCommodities Centre Authority.
Simbhaoli Specialty Sugars Private Limited (SSSPL): SimbhaoliSpecialty Sugars Private Limited is the wholly owned subsidiary of Simbhaoli SugarsLimited. No major business activities have been carried out by this Company during theyear. Company has earned income from other source of ' 4.41 lacs (Previous years '4.78lacs) during Financial year 2021-22.
A summary of the physical operations of all the business units of theCompany for the year 2021-22 is stated as under:
|Manufacturing Facilities ||Unit || |
|Particulars ||Sugar Year ||2021-22 ||2020-21 ||2021-21 ||2020-21 ||2021-22 ||2020-21 ||2021-22 |
|Sugarcane crushed ||Lacs mt ||14.41 ||14.42 ||3.13 ||3.28 ||5.73 ||6.38 ||23.27 |
|Sugar recovery ||% ||10.84 ||11.12 ||9.45 ||9.1 ||10.14 ||10.26 ||10.48 |
|Raw/ below grade sugar refined ||000'mt ||28.63 ||32.91 ||0.36 ||0.36 ||0.63 ||10.97 ||29.62 |
|Net Sugar produced# ||000' mt ||156.17 ||162.13 ||29.6 ||30.15 ||57.4 ||65.12 ||243.17 |
|Gross season for sugar plant ||Days ||178 ||175 ||91 ||92 ||160 ||180 || |
|Date of start of the Sugar plant || ||08.11.2021 ||28.10.2020 ||28.11.2021 ||27.11.2020 ||10.11.2021 ||28.10.2020 || |
|Date of closure of Sugar plants || ||04.05.2022 ||20.04.2021 ||27.02.2022 ||26.02.2021 ||18.04.2022 ||25.04.2021 || |
|Days of operations of distillery ** ||Days ||259 ||270 ||218 ||214 ||178 ||164 || |
|Alcohol/ Ethanol produced ** ||B.L (Lacs) ||117.12 ||132 ||98.24 ||120 ||93.83 ||88 ||309.19 |
#including conversion of Raw and below grades white sugar into refinedsugar.
**As per Financial Year
A summary of the standalone financial results of the Company for theyear ended March 312022 is stated as under:
(' in Crore)
|Particulars ||Financial Year 2021-22 ||Financial Year 2020-21 |
|Gross Sales/Income from operations ||1371.12 ||1456.91 |
|Other Income ||27.53 ||16.81 |
|Profit/(Loss) before Interest depreciation and exceptional items ||51.85 ||61.71 |
|Interest expense ||28.79 ||30.66 |
|Depreciation ||32.29 ||35.48 |
|Profit/(Loss) before tax & exceptional items ||(9.22) ||(4.43) |
|Exceptional (Gains)/Loss ||(0.97) ||- |
|Net Profit/ (Loss) after Tax before Other Comprehensive Income ||(10.20) ||(4.43) |
|Other Comprehensive Income/(Loss) ||0.84 ||0.11 |
|Net Profit/ (Loss) ||(9.36) ||(4.32) |
During the Financial Year 2021-22 Gross Sales/Income from operationshave decreased from ' 1456.91 Crore to ' 1371.12 Crore and Net sales have decreased from' 1262.78 Crore to ' 1134.78 Crore. EBIDTA has been at '52.13 Crore as against theprevious year of ' 61.71 Crore. Net loss for the year is ' 9.36 Crore as against Net Lossof '4.32 Crore in previous year.
Dividend: During the year the business of the Company has beenaffected adversely on account of the lower realization from sugar sales less capacityutilisation of distilleries high finance cost and other industry related issues. Therebeing no profits during the year your directors do not recommend any dividend.
Unpaid/unclaimed Dividend: There is no unpaid/unclaimed dividend inthe Company. Hence provisions of Section 125/126 of the Companies Act 2013 are notapplicable.
Share Capital: The paid-up capital of the Company is '412790200divided into 41279020 equity shares of '10 each. No fresh share capital was issuedduring the year.
Long term borrowings: Long term borrowings are at ' 305.70 Lacs(previous year '313.19 Lacs) as during the year loans were repaid to related parties.
Short term borrowings: There are no Short Term Borrowings in theCompany.
Investments: The Company has the following investments as on March312022:
|S. No. Particulars ||Opening balance as on April 12021 ||Additions/ (Deductions) during the year ||Balance as on March 31 2022 |
|1 200800 equity shares of '10 each in Integrated Casetech Consultants Private Limited ||383.73 || ||383.73 |
|2 5538734 equity shares of '10 each in Simbhaoli Power Private Limited ||5493.59 ||- ||5493.59 |
|3 4892941 debentures of '100 each of Simbhaoli Powers Private Limited ||4999.90 ||(52.05) ||4947.85 |
|4 19000 equity shares of '10 each of Simbhaoli Speciality Sugars Private Limited ||190.00 || ||190.00 |
|5 Invest in Government Securities (NSC- Post Office) ||2.61 ||2.01 ||4.62 |
|6 Investments -Subsidiary (at Cost) ||45.00 ||- ||45.00 |
|7 Investments at the end of the year ||11114.83 ||- ||11064.79 |
The Company has made appropriate provisions with respect to theInvestments held in the share capital of Uniworld Sugars Private Limited and SimbhaoliGlobal Commodities DMCC.
Status of shares under pledge: Out of the promoters' shareholding11.96% in the total share capital is pledged with the financial institutions as securityagainst various credit facilities availed by the Company.
Inventories: Inventory amounting to ' 46505.91 lacs (previous year' 46475.72 lacs) include finished goods raw material process stocks and store items.The sugar stock at the end of the year is valued of ' 3377.25 per qtl (previous year '3157 per qtl).
Sundry debtors: Sundry debtors (net) amounting to ' 3506.40 lacs(previous year ' 4493.69lacs) are considered good and realisable. Provisions aregenerally made for all debtors outstanding for over 360 days' subject to their scopeof realization industry trend and management's perception.
Cash and Cash Equivalents: Cash and Cash Equivalents are at'2761.40 lacs (previous year ' 3585.46 lacs).
Bank Balances other than cash & Cash equivalents: Bank balanceof ' 2005.51 lacs (previous year ' 2166.96 lacs) comprise of EMD paid to Banks for OTSof ' 1678.50 lacs (Previous Year ' 1521.20 lacs) and fixed deposits for an amount of '327.01 lacs (previous year ' 645.76 lacs) as pledged with banks for securing certainloans letters of credit guarantees and other short- term facilities.
Other Financial Assets (Non-Current): Other financial assets of'1282.62 lacs (previous year ' 1226.18 lacs) comprises of interest accrued on fixeddeposits ' 9.96 lacs (previous year '4.12 lacs) and security deposit of ' 11.27 lacs(previous year '9.27 lacs). Further fixed deposits for an amount of ' 161.39 lacs(previous year ' 112.79 lacs) are pledged with banks for securing certain loans lettersof credit guarantees and other long term facilities and Retention money from SPPL of '1100.00 lacs (Previous Year ' 1100.00 lacs).
Other Financial Assets (Current): Other financial assets of'5719.77 lacs (previous year ' 4652.64 lacs) comprises interest accrued on debentures '5164.35 lacs (Previous year ' 4182.78 lacs) and others '274.98 lacs (previous year '288.15 lacs) receivable from Simbhaoli Power Private Limited.
Other Current Assets: Other current assets of ' 1242.81 lacs(previous year ' 9499.48 lacs) comprise a receivable of ' 444.44 lacs (previous year '723.70 lacs) are considered good and realisable. Provisions are generally made for allreceivables outstanding for over 360 days subject to their scope of realization industrytrend and management's perception.
Government grant of ' Nil (previous year ' 7991.96 lacs) claimreceivables of ' 271.00 lacs (previous year ' 251.30 lacs) Balance with authorities '102.16 lacs (previous year ' 187.37 lacs) and prepaid expenses ' 299.92 lacs (previousyear '221.52 lacs).
During the initial establishment of Simbhaoli sugar mill in year 1938the erstwhile Simbhaoli Sugars Limited (ESSL) had acquired land on lease hold basis fromthe provincial Government according to the provisions of land acquisition laws ofprevalent time for requirement of land for lagoon for storage of the waste water having anarea of 28 bigha and 2 biswa (appx. 17 Acres) situated at Buxer and Bhovapur Mastan Nagarvillage (Adjoining to Simbhaoli Village). An agreement was executed on 26.7.1938 andregistered before Sub Registrar Meerut and land was recorded in the name of ESSL by orderdated 30.07.1940 issued by the Collector Meerut.
Later in year 1996 UP State Government started the proceedings underSection of 122 B of the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1950 andrules made thereunder against the ESSL and a writ petition was filed by ESSL beforeHon'ble High Court of judicature at Allahabad in respect of which an interim stay orderdated 9.6.2004 was passed by the Hon'ble High Court and the legal proceedings aresub-judice.
Trade payables other current liabilities and provisions:
a) Trade payables at ' 71168.49 lacs (previous year '78962.58 lacs)includes amount payable against sugarcane supply other raw materials stores and servicesb) Other current liabilities of ' 1226.64 lacs (previous year ' 1568.09 lacs) reflectamount payable against statutory dues advance received from customers other miscellaneousliabilities. c) Provisions for employee benefits stood at ' 123.64 lacs (previous year '115.19 lacs) as per actuarial valuation.
Sales and other income: The segment wise allocation of revenues forthe year 2021-22 and for preceding two accounting years is as under: (' in Lacs)
|Years/ Segment || |
|Turnover ||%age ||Turnover ||%age |
|2019-20 ||92040 ||72.31 ||35252 ||27.69 |
|2020-21 ||116275 ||74.73 ||39324 ||25.27 |
|2021 -22 ||97023 ||65.87 ||50268 ||34.13 |
Other income of '2753.17 lacs (previous year ' 1681.19 lacs)comprises interest and rent received from subsidiary companies liabilities/provisionswhich are no longer required and written back and other miscellaneous earnings.
Raw Material Consumption: ' 81677.44 lacs (previous year'87181.04 lacs) include sugarcane and molasses as the principal raw materials consumed bythe Company.
Employees cost: The employee cost marginally increased to '5947.96lacs (previous year ' 5877.54 lacs).
Finance cost: Finance costs decreased to ' 2878.69 lacs (previousyear ' 3066.20 lacs) on account of non-provisioning of interest cost of ' 17013.85 lacsfor the current year (previous year ' 15461.02 lacs).
Other Expenses: Other expenses increased to ' 13367.64 lacs(previous year ' 12961.11 lacs).
Power and Fuel: Power and Fuel expenses increased to '3047.47 lacsfrom ' 2911.48 lacs due to increase in production of Alcohol in current year.
The analysis of the Company's financial statement for the yearunder review is given below:
|Particulars ||Units ||March 31 2022 ||March 31 2021 ||% change from March 31 2021 to March 31 2022 |
|Current Ratio ||Times ||0.31 ||0.34 ||-8.39% |
|Debt-Equity Ratio ||Times ||(39.82) ||(62.82) ||-37% |
|Inventory Turnover ratio ||Times ||2.90 ||2.76 ||5% |
|Trade Receivable Turnover Ratio ||Times ||26.23 ||30.23 ||-13.2% |
|Trade Payable Turnover Ratio ||Times ||1.12 ||1.06 ||5.88% |
|*Net Profit ratio ||%age ||-0.73% ||-0.30% ||142.49% |
|Return on Capital Employed ||%age ||1.97% ||2.59% ||-23.76% |
|**Return on Investment ||%age ||-0.5% ||-0.21% ||141.96% |
|Debt Service Coverage Ratio ||Times ||1.80 ||2.01 ||-11% |
|Operating Profit Margin Ratio ||%age ||1.68% ||2.05% ||-18% |
|Return on Net Worth ||Times ||(45.47) ||(77.95) ||-42% |
*The change in ratio has been positive due to losses in Alcohol segmentin current year as against profit in previous year.
**The change in ratio has been positive due to due to losses in Alcoholsegment in current year as against profit in previous year.
The Company's Board of Directors accepts the responsibility forthe preparation and presentation of financial statements that give a true and fair view ofthe financial position financial performance cash flows and statement of changes inequity of the Group in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (IND AS) prescribed under section 133 ofthe Companies Act 2013. The Board also accepts the responsibility for the integrity andobjectivity of these financial statements as well as for various estimates/ judgmentsused in preparation of these statements. The estimates and/or judgments have been made ona consistent reasonable and prudent basis to reflect true and fair view of the state ofthe affairs of the Company.
These financial statements have been prepared on going concern basisusing the significant accounting policies and measurement bases. Accounting Policies havebeen consistently applied except where a newly issued accounting standard is initiallyadopted or a revision to an existing accounting standard requires a change in accountingpolicy hitherto in use. In those cases the new accounting policy is adopted in accordancewith the transitional provisions stipulated in that Ind AS and in absence of such specifictransitional provision the same is adopted retrospectively for all the periods presentedin these financial statements.
During the Year the Company has booked expenditure incurred onacquisition of certain land not registered in the name of the Company the details havebeen provided elsewhere in the report.
Loans Guarantees and Investments under Section 186 of the CompaniesAct 2013
The particulars of loans guarantees or investments made under Section186 of the Companies Act 2013 and rules made there under are disclosed in respectiveheads and on Note 28 in the Notes to accounts forming part of the Standalone financialstatements.
Particulars of Contracts or Arrangements made with Related Parties
The particulars of contracts or arrangements made with related partiesmade pursuant to Section 188 of the Companies Act 2013 SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Indian Accounting Standards 24 issued bythe Institute of Chartered Accountants of India are furnished in Note 11 in the Notes toaccounts forming part of the Standalone financial statements.
Debt Servicing and Public Deposits
During the year pending completion of the debt resolution the Companyhas not been able to meet its obligations towards the lenders for repayment of bothprincipal and interest. The Company has approached its lenders to implement debtresolution plan of its outstanding debts in accordance with its available future cashflows sustainability of the business and nature of the business of industry. In theprevious years there has been delays in submission of the plan and its consideration onaccount of continuous changes in regulatory frameworks particularly withdrawal of thearrangement of corporate debt restructuring and joint lenders forum. Subsequent to theintervention by the Hon'ble Supreme Court on such matters the revised plans havebeen submitted to all the lenders for suitable resolution. The specific requests have beenmade to take a collective approach with regard to possible resolution instead of takingmultiple recovery/coercive measures. The proposal includes waiver of un-paid interest onoverdue loan accounts till implementation of the proposed restructuring/ realignment ofcredit facilities. '
Accordingly the Company has approached its commercial lenders toimplement debt resolution plan of its outstanding debts including One Time SettlementProposal (OTS) wherein resolution of entire outstanding debts of commercial banks areproposed to be settled through payment of One Time Agreed amount. In addition the Companyhas also proposed certain percentage of shares in the equity share capital in directproportion to commercial lenders' outstanding principal amount. OTS proposalsubmitted by the Company is under consideration by commercial lenders while debtre-alignment proposal submitted with lenders other than commercial lenders is also beingunder consideration.
With delays in repayment of the credit assistance availed by theCompany loans and the cane price arrears the Company's credit rating has continuedto remain below investment grade.
The credit facilities availed by the Company have been classified asnon-performing assets (NPA) by all the lenders and interest thereon is not being chargedto the loan accounts by commercial lenders as per RBI's circular. The Company hassubmitted comprehensive debt resolution proposals with all the lenders to commensuratewith its future cash flows including infusion by strategic investor promoters andinternal accruals which contemplates the total waiver of interest. The majority ofcommercial lenders have shown their inclination to accept the debt resolution proposal(OTS Proposal) of the Company and accepted the offered Earnest Money Deposit offeredthereof. Accordingly the Interest expenses on credit facilities pertaining to commerciallenders for the year ended March 31 2022 amounting to ' 17013.85 lacs (previous yearended March 31 2021 amounting to ' 15461.02 lacs) has not been recognized in profit andloss account. An accumulated amount of ' 69929.48 lacs towards accrued interest has notbeen provided for in the books of accounts as on March 312022.
Certain lenders to the Company have resorted to initiate recoveryproceedings at Debt Recovery Tribunals for which replies are being submitted based uponthe legal advices.
On account of delays in servicing of loans certain lenders to theCompany have initiated recovery proceedings at various forums including filing ofapplications before the Hon'ble National Company Law Tribunal (NCLT) under Section 7 ofthe Insolvency and Bankruptcy Code 2016 in addition to approaching Debt RecoveryTribunals in Delhi and Uttar Pradesh as well. One of the lenders had declared the Companyand Guarantors to the credit facility as Willful Defaulters such impugned order has beenSet Aside by Hon'ble Punjab and Haryana High court at Chandigarh. Against a criminalcomplaint filed by one of the lenders the Enforcement Directorate had passed anAttachment Order on certain assets of the Company to the extent of ' 109.80 Crore againstwhich the Company has preferred an appeal with the appropriate authority and the matter issub-judice. Enforcement Directorate had proceeded to take the constructive possession ofthe Attached Property on which an interim stay has been granted by the Hon'ble AppellateTribunal.
The Company is continuing to pursue a comprehensive debt resolutionproposal with all the lenders. The majority of commercial lenders have shown theirinclination to accept the debt resolution proposal and accepted the Earnest Money offeredthereof while Debt realignment proposal was submitted to other lenders against which SSLhad initiated the repayments pending approval of respective lenders. Revised and improveddebt resolution proposal given to commercial lenders on bilateral basis is underconsideration while application filed with Hon'ble NCLT Bench Allahabad is being heard.
The Company has not accepted any public deposits and no deposits areunpaid for any previous year.
Material Changes and Commitments affecting the financial position ofthe Company which have Occurred Between the end of the Financial Year and the Date ofReport
During the year the Company has faced recovery proceedings on accountof defaults in repayments of loans and delay in proposed debt resolution. The detail hasbeen reported elsewhere in this annual report.
Further in the audited financial statements of Simbhaoli Power PrivateLimited (SPPL') for the year ended March 312021 the statutory auditor of the SPPLhas drawn Emphasis of Matter in respect of following "During the year ended March312021 Uttar Pradesh Electricity Regulatory Commission (UPERC') has notified UPERC(Captive and Renewable Energy Generating Plants) Regulations 2019 (CRE Regulations2019') which has inter alia reduced the tariff applicable to bagasse-based generationplants operating in the state of Uttar Pradesh w.e.f. April 12019.
SPPL along with bagasse-based co-generators operating in the Statehave filed a writ petition with Hon'ble High Court of Allahabad Lucknow Benchchallenging CRE Regulations 2019 which have been accepted by the Court.
Based on the writ petition filed and legal opinion obtained SPPL hasrecorded revenue from operations for the period from April 2019 to September 2019 at preCRE Regulations 2019 tariff instead at the reduced tariff as per CRE Regulations 2019.
W.e.f. October 12019 SPPL has accounted for sale of power to UttarPradesh Power Corporation Ltd. (UPPCL) the customer at reduced tariff rate under protestand subject to outcome of Hon'ble High Court decision on writ petition.
SPPL's computation shows that revenue from operations for year endedMarch 312020 would have been lower by ' 683 lacs if accounted for at or basis reducedtariff as per CRE Regulations 2019. The statutory auditors have also reported that theabove condition indicate the existence of Material certainty in relation to tariff underCRE Regulation 2019 and its consequential impact on the Ind AS financial statementsincluding impairment of PPE if any.
The statutory auditors have also reported that due to reduction intariff the SPPL is incurring losses and considering it and other factors materialuncertainty exists that may cast significant doubt about the SPPL's ability to continuegoing concern.
In standalone financial statements the outstanding balance of theCompany with its subsidiary company Simbhaoli Power Private Limited (SPPL) as reported instandalone financial statements is subject to reconciliation on account of difference ininterpretation of certain long term commercial agreements. Pending reaching to finalsettlement with SPPL no adjustment has been made in the books of accounts amounting to '577.41 lacs for the year ended March 31 2022 (previous year ended March 312021 amountingto ' 716.74 lacs) being the difference in the value of bagasse sold and certain otherclaims made by SPPL. Total difference as on March 31 2022 with SPPL is amounting to '1547.15 lacs.
Application for Reclassification of Promoters of the Company
Company's application seeking reclassification of certain members ofPromoter group of the Company to Public category in terms of provisions of erstwhileregulation 31A (7) of SEBI (LODR) Regulations 2015 is still pending with SEBI.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
At the ensuing 11th Annual General Meeting (AGM) of the members of theCompany Mr. Gurpal Singh shall be retiring by rotation in terms of the provisions ofSection 152 of the Companies Act 2013. He has offered himself for re-appointment. TheBoard considered and approved the re-appointment subject to the approval at the AGM.
During the year Mr. Sanjay Tapriya a Director resigned from hisposition in the Company w.e.f. November 01 2021. During his tenure he has guided theCompany through his immense knowledge and experience.
During the Year there was no change in the KMP's of the Company.
Declaration of Independent Directors
The Independent Directors of the Company have given declaration statingthat they continue to confirm the criteria set out for Independent Directors under Section149(6) of the Companies Act 2013 and Regulation 16 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
Company's Policy on Director's Appointment and Remuneration
The Company's policy relating to appointment of directors payment ofmanagerial remuneration directors' qualifications positive attributes independence ofdirectors and other related matters as provided under Section 178(3) of the Companies Act2013 has been disseminated at the Company's website at thelink-https://www.simbhaolisugars.com/ company_policies.asp.
Number of Board Meetings conducted during the Year
During the year 5 meetings of Board of Directors have been conducted.Details of meetings have been disclosed in Corporate Governance Report forming part of theAnnual Report.
In compliance with the requirement of Section 134(3)(p) and Schedule IVof the Companies Act 2013 and Rules framed thereunder and Regulation 17(10) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors of the Company evaluated and assessed the performance of the Company'sChairman Individual Directors Board as a whole and its Committees on the basis ofparameters set by the Nomination and Remuneration Committee. Independent Directors of yourCompany have also conducted an evaluation of performance of Non- Independent DirectorsChairman of the Board and Committee(s) of the Board.
All the independent directors possess the requisite qualifications andexperience in the respective areas. They have been discharging their duties diligently asdefined in schedule IV to the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and are contributing towards improvement in thegovernance standards of the Company.
Every year the independent directors review the performance of thenon-independent directors based on the criterion such as job profile and marketperception self-declaration on the jobs handled/taken up opinion from peer andsub-ordinates their performance evaluations reporting and participation in the Companymeetings and they have found their performance to be satisfactory period under review. Thedirectors have considered the principles for review of the performance of thenon-independent and also the independent directors based on certain appropriatecriterion. The directors did not find any material discrepancy in the disclosures beingmade to the Board/ shareholders of the Company. Generally important matters related tothe operations of the Company its business plans financial affairs and resultsindebtedness issues legal and corporate governance issues growth strategiesrestructuring plans appointments of senior employees etc are regularly being placedbefore the Board. However various prior observations related to accounting related issuesare still pending. Independent Directors in their meeting also noted that that during thisunprecedented lockdown due to COVID-19 the company has conducted the meetings throughvideo conferencing and the flow of information was found to be satisfactory.
M/s Amit Gupta & Associates Company Secretaries have been engagedas the Secretarial Auditors of the Company under the provisions of the Companies Act 2013for the financial year 2022-23. Secretarial Audit Report for the FY 2021-22 is given asAnnexure-1 to this report.Secretarial Audit report of Simbhaoli Power Private Limitedmaterial subsidiary have also been attached as Annexure-1A.
Explanation or comments on qualifications reservations or adverseremarks or disclaimers made by the Secretarial Auditors in their reports
There is no qualification in both the Secretarial Audit Report(s).However Comments/Remarks are there in the Secretarial Audit Report(s) which areself-explanatory and explained at the appropriate sections in the Annual Report.
Cost Auditors and Cost Records
In terms of provision of Section 148(1) of the Companies Act 2013maintenance of Cost Records is required by the Company and accordingly such accounts andrecords are made and maintained.
The Board of Directors in compliance with the provisions of theCompanies Act 2013 Rules and Notifications issued thereunder have appointed M/s SatnamSingh Saggu Cost Accountants as Cost Auditors to conduct audit of the Cost Accountsmaintained by the Company for the Financial Year 2022-23.
Pursuant to the provisions of section 92(3) of the Companies Act 2013and rule 12(1) of the Companies (Management and Administration) Rules 2014 the AnnualReturn of the Company is available on the website of the Company at the link: https://www.simbhaolisugars.com/annual-report.php
SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANIES
The Company has three subsidiary companies viz. Simbhaoli PowerPrivate Limited (SPPL) Integrated Casetech Consultants Private Limited (ICCPL) SimbhaoliSpeciality Sugars Private Limited (SSSPL).
The Hon'ble NCLT Allahabad Bench has passed an order dated March17 2021 for the approval of the resolution plan of Uniworld Sugars Private Limited whichwas a Joint Venture entity of the Company. The Hon'ble National Company Law AppellateTribunal (NCLAT) Delhi vide its order dated 12.04.2022 set aside the Resolution Plan anddirected NCLT to review the Resolution Plan. i Now the matter is pending withHon'ble National Company Law Tribunal (NCLT) Allahabad Bench.
The Company has submitted an application for de-registration ofSimbhaoli Global Commodities DMCC a 100% wholly owned foreign subsidiary company andtermination of business and surrender of trade License thereof with Dubai MultiCommodities Centre Authority.
The consolidated financial statements presented by the Company includefinancial information of its subsidiary companies prepared in compliance with applicableaccounting standards except as mentioned otherwise in the accompanying notes.
A Statement containing salient features of Financial Statements ofSubsidiaries/ JV/ Associates Companies in Form AOC-1 is annexed as Annexure- 5.
FOREIGN EXCHANGE EARNINGS AND OUTGO:
Activities relating to export; initiatives taken to increase exports;development of new export markets for products and services; exports and import plans arementioned elsewhere in the Directors Report.
During the year Foreign Exchange Earnings as well as outgo was Nil asthe exports were made through recognized trade houses in Indian currency. The Foreigncurrency exposures not hedged by derivative instruments or otherwise are given in theNotes to the Financial Statements.
Material Orders Passed by Regulators Courts or Tribunals
There were no significant or material orders passed by the RegulatorsCourts or Tribunal which impact the going concern status and the Company'soperations in future.
EMPLOYEE STOCK OPTION SCHEME
No stock options schemes have been introduced during the year.
The Report on Corporate Governance from the Practicing CompanySecretary and certificate from Chief Operating Officer and Chief Financial Officer formpart of this Annual Report.
The Company has established a vigil mechanism which overseas throughthe Audit Committee the genuine concerns expressed by the employees and other directors.The Company has also provided direct access to the Chairman of the Audit Committee onreporting issues concerning the interests of co-employees and the Company in order toprovide adequate safeguards against victimization of all persons.
The policy on the vigil mechanism comprising of the whistle blowerpolicy has been disseminated at the Company's website at link-https://www.simbhaolisugars.com/company-policies. php. During the year no such complainthas been received by the Company.
LISTING OF SECURITIES
The equity shares of the Company are listed with the BSE Limited (BSE)and the National Stock Exchange of India Limited (NSE). The annual Listing fee for thefinancial year 2022-23 has been paid to both the stock exchanges.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION INITIATIVES RESEARCH ANDDEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technologyinitiatives Research and Development Foreign exchange Earnings and outgo as requiredunder Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014 is furnished in Annexure-3.
PARTICULARS OF EMPLOYEES
The disclosure under the provisions of Section 197 (12) of theCompanies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed as Annexure -4.
There was no employee of the Company who has been paid remunerationunder rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014.
M/s Mittal Gupta & Co Chartered Accountants Kanpur werere-appointed as statutory auditors of the Company for another term of five years viz.2020-212021-22 2022-23 2023-24 and 2024-25 at the 9th Annual General Meeting of themembers of the Company held on December 212020.
Explanation or comments on qualifications reservations or adverseremarks or disclaimers made by the Statutory Auditors in their reports
Explanation or comments on qualifications reservations or adverseremarks or disclaimers made by the Statutory Auditors in their reports areself-explanatory and explained in details in notes to the accounts and at otherappropriate sections in the Annual Report. The qualifications along with managementcomments are annexed as Annexure 6. The detailed statement of Impact of AuditQualifications was submitted to the stock exchange along with the Financial Results forthe year ended March 312022 and available at the website of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act2013 read with the Rules made there under with respect to the Directors'responsibility statement it is hereby confirmed:
a. in the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year 2021-22 ended on March 31 2022 and of the profit and loss of the Companyfor that period;
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 wereoperating 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.
Certain statements in this report may be forward looking and representintention of the management. Actual results may differ materially due to a number of risksor uncertainties associated with the business. Investors/stakeholders therefore areadvised to make their own judgments before taking any investment business decisions.
The Board of Directors sincerely submit appreciation remarks theguidance provided by the Government of India State Government of Uttar Pradesh thelender banks and institutions and the cooperation and assistance received from allexecutives staff and workmen of the Company.
They also express special thanks to the joint venture partners fortheir association in running the affairs of the business of the respectivesubsidiary/associate companies being part of the future growth of the Company.
The Directors also wish to state the gratitude to the Indian SugarMills Association farmers suppliers and all other concerned persons who have continuedtheir valuable support to the Company.
|For and on behalf of the Board of Directors || |
|Simbhaoli Sugars Limited || |
| ||Gurmit Singh Mann |
|Place : Dharamsala ||Chairperson |
|Date : May 20 2022 ||(DIN - 00066653) |