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Sukhjit Starch & Chemicals Ltd.

BSE: 524542 Sector: Others
NSE: N.A. ISIN Code: INE450E01011
BSE 00:00 | 14 May 219.45 -4.10






NSE 05:30 | 01 Jan Sukhjit Starch & Chemicals Ltd
OPEN 237.00
52-Week high 245.00
52-Week low 142.60
P/E 18.58
Mkt Cap.(Rs cr) 324
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 237.00
CLOSE 223.55
52-Week high 245.00
52-Week low 142.60
P/E 18.58
Mkt Cap.(Rs cr) 324
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sukhjit Starch & Chemicals Ltd. (SUKHJITSTARCH) - Director Report

Company director report

Dear Share Holders :

Your Directors are pleased to present before you the 76th Annual Report and the AuditedStatement of Accounts for the year ended 31st March 2020 :-

1. FINANCIAL RESULTS 2019-20 2018-19
(? in Crores) (? in Crores)
Sales & Other income 805.24 743.15
Earning before Interest tax and Depreciation 64.55 95.00
- Less Interest 18.16 16.28
- Depreciation 13.35 12.74
Profit before tax 33.04 65.98
- Provision for taxes 8.93 21.40
-- Deferred Tax/(Deferred Tax written back) (9.40) 2.90
Profit After Tax 33.51 41.68
Surplus brought forward from previous year 25.62 21.39
Dividend for the F.Y. 17-18 -- 5.78
(including Dividend Distribution Tax)
Interim Dividend for F.Y. 18-19 -- 6.67
(including Dividend Distribution Tax)
Transfer to General Reserves 25.00 25.00
Surplus carried forward 34.13 25.62


Sales and other income of the Company for the year ended 31.03.2020 have increased byabout 8% to ?805.24 Cr from ? 743.15 Cr in the previous year. However profits of theCompany have been adversely affected mainly due to high cost of basic raw material i.e.Maize. Late rains in the months of October and November last year had seriously impairedthe quality of Kharif Crop in most of the Maize growing areas of Madhya PradeshMaharashtra and Karnataka. The prices and availability remained very volatile thereafterincreasing the cost of basic raw material considerably. The outbreak of COVID-19 in thelast quarter of F.Y. 2019-20 further aggravated the position as COVID-19 has not onlyshattered the demand for some of the finished goods but also affected their pricesnegatively. The Earnings Before Interest Tax and depreciation have come down to ? 64.53Cr. (? 95.0 Cr.) which after interest of ? 18.16 Cr. (? 16.28 Cr.) and depreciation of ?13.35 Cr. (? 12.74 Cr.) resulted in a net profit before tax of ? 33.04 Cr. (? 65.97 Cr.).The net profit after tax has come down from ? 41.67 Cr. to ? 33.50 Cr. this year.

3. COVID -19

The national lockdown in March 2020 and imposition of Curfew in some states due tooutbreak of COVID-19 Pandemic has changed the overall economic activity resulting inserious disruption of business operations. The Company has taken necessary steps from timeto time to contain the impact of pandemic following the

statutory guidelines/advisories issued by the Central / State Governments. Owing to theuncertainty in the economic activity post lifting the lockdown the Company has carriedout due assessment of the possible impact on its business results and its overallliquidity position. The Management has exercised due care in valuation of its inventoriesreceivables or other assets keeping in mind the risk involved in their recoverable in theforeseeable future. Since the situation is evolving continuously the impact in future maybe different from the estimates made on the date of approval of these results. TheManagement will continue monitoring the material changes due to the said Pandemic and takenecessary measures accordingly to address the situation.


With the prediction of normal monsoons during the running year it is expected thathigh production of agriculture produce will improve the availability of basic raw materialat an optimum cost. This will also ensure continuous supply of raw material at all plantlocations of the Company. However the economic disruption amid Covid-19 may impact thebusiness operations during the running year. The Company is trying to optimize thecapacity utilization at the existing units and commencement of Production by its new unit(coming up in the state of Punjab and is expected to be operational in Q2 F.Y. 21).


The Board recommended a Dividend of ? 2/- (Rupees Two only) per equity share of theface value of ?10/- each i.e. 20% (Twenty Percent) on paid up equity share capital of theCompany for the financial year ended 31st March 2020 which comes to 40% on the Pre BonusCapital which was increased by issue of Bonus shares allotted in the ratio of 1:1 lastyear. The Company had paid interim dividend of ? 7.5/- (Seven Rupees Fifty Paisa only) perequity share of the face value of ? 10/- each i.e. 75% on the pre bonus capital in themonth of March 2019.


The Credit Analysis & Research Limited (CARE) has maintained the rating CARE A+ forthe long term borrowings of the Company and CARE A1 for the short term borrowing of theCompany. The Current Assets stood at ? 254.25 crores as compared to ? 211.27 crores on31.03.2019 including Inventories at ? 152.10 crores on 31.03.2020 against ? 53.24 croresin previous year. The level of inventories was higher on 31.03.2020 due to lower sales inthe month of March 2020 owing to the outbreak of COVID-19 and total lockdown from22.03.2020. The Non Current Assets have increased to ? 455.31 Crores (Net) on 31.03.2020against ? 321.55 crores on 31.03.2019 due to planned cap-ex for the new maize processingfacility of maize grind capacity of 600 TPD commissioned in the state of Punjab.

The Management believes that the Company has enough liquid resources at hand to meetany additional working capital requirements.


As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015Management's discussion and analysis report is annexed herewith marked as 'Annexure A' andforms a part of this report.


Your company is fully committed to the philosophy of transparency and believes inconducting its business with due compliance of all the applicable laws rules andregulations. In compliance with the requirements of

SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended todate the report on the Corporate Governance is annexed to this report marked as 'AnnexureB'.


There is no change Equity Share Capital during the F.Y. 2019-20.


The Company has transferred ? 25 crores (PY ? 25 crores) to the general reserve.


Pursuant to Section 134 (3c) of the Companies Act 2013 the Directors state that:

(a) in the preparation of the Annual Accounts for the financial year ended 31st March2020 the applicable Indian Accounting Standards have been followed and there are nomaterial departures;

(b) appropriate accounting policies have been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the company for the year so ended;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) the Annual Accounts for the year ended 31.03.2020 have been prepared on a 'goingconcern' basis;

(e) the internal financial controls have been laid down to be followed by the companyand that such internal financial controls are adequate and are operating effectively; and

(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.


The Vijoy Steel & General Mills Company Ltd. Phagwara: The Company held 96.17% ofshares in the capital of the Vijoy Steel & the General Mills Co. Ltd. The Companycontinues providing good engineering support to the manufacturing operations of theCompany and has shown turn around during the year under reference. The Company hasachieved higher turnover during the year i.e. ? 1.95 crores against ? 0.71 crores P.Y. bysupplying some of the equipment to the new expansion project of the Company.

Scott Industries Ltd. Phagwara: The Company held 99.97% of shares in the capital ofthe Scott Industries Ltd. The Company has shut down its operations. Most of its assetshave been already disposed off and efforts are on to realize the dues from its oldcustomers.

Sukhjit Mega Food Park & Infra Ltd. Phagwara: The Company held 100% of shares inthe capital of its subsidiary Sukhjit Mega Food Park & Infra Ltd. The Company hasalready spent over ? 120 crores on the Project. The project is almost ready forcommissioning and is expected to commence its operations in Q2 F.Y. 2021.

There has been no material change in the nature of business of the Subsidiaries. Asrequired under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended to date The Consolidated Financial Statements of the Company and itssubsidiaries are attached which have been prepared in accordance with the relevant IndianAccounting Standard(s) as prescribed under the Companies Act 2013.

In pursuance to the general circular issued by the Ministry of Corporate Affairs theBalance Sheet Profit & Loss Account and other documents of the subsidiary companiesare not being annexed with the Balance Sheet of the Company. A statement containing therequisite financial details of the company's subsidiaries for the financial year ended31st March 2020 is annexed to the consolidated results in the Annual Report. The annualaccounts of these subsidiaries and the related detailed information will be made availableto any shareholder of the Company who may be interested in seeking such information andare also available for inspection by any shareholder of the Company at the registeredoffice of the Company. The Company shall place the annual accounts of subsidiaries on itswebsite and shall provide the requisite information to any shareholder on demand.


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 the names and other particulars of Directors/ KMP are set out inthe 'Annexure C' to the Directors' Report.

However in view of the provisions of Section 197(12) of the Act read with Rules 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the details of the employees who are in receipt of remuneration over ^ 1.02 croresp.a. if employed throughout the year or ? 8.5 lacs p.m. if employed for a part of the yearduring 2019-20 are given below :

(A) Persons employed through out the year and were in receipt of remunerationaggregating not less than ? 1.02 crores for the year :

Sr. No. Name Age Designation Gross Remuneration (? Lacs)
1 Shri K.K. Sardana 72 Managing Director w.e.f. 1st May 2019 106.56
Qualification Experience Date of Joining Last Employment/ Designation Held
B.A. 49 18.01.1972 The Sukhjit Starch & Chemicals Ltd. Phagwara G.M. (Commercial)

(B) Persons employed for a part of the year and were in receipt of remuneration at arate not less than ? 850000/- per month

Sr. No. Name Age Designation Gross Remuneration (? Lacs)
1 Shri I.K. Sardana 74 Managing Director upto 29th April 2019 11.96
Qualification Experience Date of Joining Last Employment/ Designation Held
B.A. 54 02.08.1967 The Sukhjit Starch & Chemicals Ltd. Phagwara Sales Manager

Note :

1. The Remuneration shown above includes salaries allowances commission contributionto provident fund and perquisites valued in accordance with the income tax rules.

2. Pursuant to the provisions of the section 197 (14) of the Companies Act 2013 thereis no holding Company and Sh. I. K. Sardana & Sh. K.K. Sardana have not received anyremuneration in form of salary commission allowances and sitting fees from any of itssubsidiaries.


(a) The Board have co-opted Sh. Vikas uppal (DIN: 00796828) as an Additional Non-Executive Independent Director on 21.01.2020. He will hold the office till the AnnualGeneral Meeting and Board has recommended his appointment as an Non-Executive IndependentDirector of the Company. He is having long experience of over three decades in themanufacturing administration management fields. Presently he is the Managing Director ofOpal Engines Pvt. Ltd.

(b) Smt. Shalini Umesh Chablani (DIN:00885883) has been co-opted as a Non- ExecutiveAdditional Director of the Company on 21.01.2020. The Board has recommended herappointment as Non- Executive Woman Director of the Company in the ensuing Annual GeneralMeeting. She is Commerce Graduate and is presently a Director of Tea-Ma Consortium Ltd.and Britania Sales and Services Pvt. Ltd. She has rich experience in the field ofmarketing trade & commerce besides having a rich industrial back ground. She bringswith her diverse experience and skills.

(c) A notice has been received from shareholders u/s 160 of the Companies Act 2013proposing the appointment of Sh. Tarsem Singh Lally (DIN:00381009) to the office of theNon- Executive Independent Director of the Company. Accordingly a resolution for hisappointment has been proposed to be passed by the shareholders in the ensuing AnnualGeneral Meeting. Sh. Tarsem Singh Lally is engineering graduate and an experiencedentrepreneur with sound business background. He has lifelong commercial/ technicalexperience of over 45 years in various fields to his credit. He is director on the Boardof various companies and brings with him decades long business experience and willstrengthen the composition of the Board.

(d) Sh. Vinod Pal Kapahi a Non Executive - Independent Director of the Company hasretired from Directorship on completing of his term as the Non Executive - IndependentDirector of the Company. The Board placed on record his valuable & rich contributionand guidance in the Board meetings for over fourteen years.

(e) The Company has received declarations from all the Independent Directors of thecompany confirming that they meet the criteria of independence and comply with all therequirements in pursuance to subsection (6) of Section 149 of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 so as to qualifythemselves to be appointed as independent directors under the provisions of the Act andrules thereunder.

(f) Based on evaluation criteria laid down under the Nomination and Remuneration Policyof the Company framed in accordance with the provisions of section 178 of the CompaniesAct 2013 the Nomination & Remuneration Committee rates the performance of the boardand its committees which inter-alia includes evaluation of leadership abilitiescontribution to corporate objectives & plans regular monitoring effective decisionmaking ability attendance and contribution at Board and Committee meetings etc. Thecompany has in place a suitable policy for the appointment & remuneration of theDirectors/ KMPs.

The Company has devised the Board's Performance Evaluation criteria for evaluation ofBoard's/ Committee's/ Director's performance. The performance of the Committees wasevaluated by the Board

on the basis of the criteria such as the composition of committees and effectiveness ofcommittee meetings etc.

Separate Meeting of Independent Director of the Company was held on 13th November 2019and it reviewed the performance of Non- Independent Directors the Board as a whole andalso the Chairperson of the Company. The same was placed on record and discussed in theboard meeting following the meeting of the Independent Directors. The Board of Directorsexpressed their satisfaction with the evaluation process.

The Board of Directors held five meetings during the year under reference and detailsthereof appear in report on Corporate Governance of the Annual report.


Internal financial control systems of your company ensure the reliability of financialreporting timely feedback on the achievement of operational or strategic goals andcompliance with all the applicable laws & regulations. The 'Internal & External'Auditors of the Company also measure the effectiveness of internal controls throughperiodical checks and ensure that company has an effective internal control system dulycommensurate with its size and nature of business. The management reviews the systemsperiodically to systematically improve business processes in regard to their effectivenessand efficiency.


Pursuant to Section 177 of the Companies Act 2013 & rules made there under andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasestablished a vigil mechanism which also incorporates a Whistle Blower Policy forDirectors and employees of the Company to report genuine concerns of unethical behavior orviolation of code of conduct by way of direct access to the Chairman of the AuditCommittee. There are adequate safeguards against victimization of employees/ directors whoexpress their concerns. Whistle Blower Policy of the Company stands placed on theCompany's website at the link:


The company recognizes that the risk management and internal control are the keyelements of good corporate governance and has formulated the risk management policy whichdescribes the manner in which the company identifies assesses monitors and managesrisks. The details of the policy are available at company's website.


The powers role and terms of reference of the Audit Committee covers the areas ascontemplated under Section 177 of the Companies Act 2013 ('the Act') and Regulation 18 ofListing Regulations as applicable besides other matters as referred by the Board ofDirectors from time to time. The primary objective of the audit committee is to monitorand provide an effective supervision of the Management's financial reporting process toensure accurate and timely disclosures with highest levels of transparency integrity andquality of financial reporting. The committee oversees the work carried out in financialreporting process by the Management the internal auditors and the independent auditors.All possible measures are taken by the committee to ensure the objectivity andindependence of the independent auditors.

The Committee mandatorily reviews information such as internal audit reports related tointernal control weakness management discussion & analysis and operational resultsstatement of significant related party transactions and such other matters as prescribed.

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During the year under reference the Audit Committee of the Company consisted of Sh.V.P. Kapahi as Chairman and S. Ranbir Singh Seehra Smt. Ruby Agarwal and Sh. M.G. Sharmaas its members. The recommendations made by the Audit Committee were accepted by theBoard.


(i) All the deposits have been accepted/ renewed / repaid as per the provisions of theCompanies Act. The company had no unclaimed / unpaid deposits on 31/03/2020. UnsecuredLoans as on 31/03/2020 include ? 5.77 crores (P.Y. ? 3.30 crores) received from directorswhich have not been given out of funds acquired by them by borrowing or accepting loans ordeposits from others as per the declarations received from the concerned directors.

(ii) No shares have been issued during the year under reference with differentialrights as to dividend voting or otherwise.

(iii) There is no significant and material order passed by any regulator courttribunal which may impact the going concern status of the Company and Company's operationsin future.

(iv) There is no change in the nature of company's business during the year underreview.

(v) There was no instance of fraud during the year under reference which required theStatutory Auditors to report to the Audit Committee and / or Board under Section 143(12)of Act and Rules made thereunder.

(vi) The Board has constituted an Internal Committee for redressal of grievance /complaint (if any) under ''Sexual Harassment of Woman at workplace (PreventionProhibition and Redressal) Act 2013.'' The committee has not received any complaintduring the year under reference.


The report on Corporate Social Responsibility activities carried out during thefinancial year 2019-20 is annexed herewith marked as 'Annexure D' to this report.


The Company has not entered into any material transaction with its PromotersDirectors Key Managerial Personnel or their Relatives which could have potential conflictwith the interest of the Company. The salaries/ remuneration of the directors and KMPshave been fixed after due consideration by the Nomination and Remuneration Committee /Board / Shareholders as per applicable provisions of the Act. However the transactionswith subsidiary Companies are incurred after due appraisal approval(s) at appropriatelevels and omnibus approval by the audit committee / board which are in the ordinarycourse of business and are at arm' s length price in terms of IND AS-24 and given as perPoint No. 7 of the Notes to Accounts forming part of the Annual Report. Policy on relatedparty transactions of the company appears on the Company's website at the link: Policy_dealing.html.


Particulars of loans given and Investments made are provided in the standalonefinancial statements. The Company has given/provided some Guarantees / Securities to theGovt. / other Departments in the ordinary course of business. Corporate guarantee(s) forRs. 40 crores to Yes Bank Ltd. and Rs. 20 crores to Citi Bank N.A. have been given againstthe Term Loans for setting up the Mega Food Park by its wholly owned subsidiary M/sSukhjit Mega Food Park & Infra Ltd. and there is no third party Guarantee / securitygiven / provided by the Company.


Extract of the Annual Return of the Company is annexed herewith as 'Annexure E' to thisreport. A copy of the same has also been placed on Company's website at the link : annual return.html.


The necessary detail is annexed herewith as 'Annexure F' to this report.

25. AUDITORS AND AUDITORS' REPORT Statutory Auditors :

M/s VSAP & Associates Chartered Accountants the retiring Auditors of the Companyhave confirmed their eligibility to be re-appointed as Statutory Auditors of the Companyat the ensuing Annual General Meeting. The Board of Directors recommend the re-appointmentof M/s VSAP & Associates Chartered Accountants as auditors of the Company to holdoffice from the conclusion of this Annual General Meeting till the conclusion of the nextAnnual General Meeting. The Company has paid a sum of ? 5.90 lacs (incl. GST) to M/s VSAP& Associates Chartered Accountants as audit fees during the Financial Year ended 31stMarch 2020.

The Auditors' report does not have any qualification reservation adverse remark ordisclaimer by the statutory auditors.

Cost Auditors :

The Board of Directors recommends the re-appointment of M/s Khushwinder Kumar &Associates Cost Accountants as Cost Auditors of the Company for the financial year2020-21 subject to the approval of the Central Government. The Cost Audit Report for thefinancial year ended 31st March 2020 is due to be filed with the Ministry of Corporateaffairs on or before the September 2020 and the cost audit report for the financial yearended 31/03/2019 was duly filled on 31/10/2019.

Secretarial Auditors :

The Board has appointed M/s Dinesh Gupta & Co. Practicing Company Secretaries toconduct Secretarial Audit for the financial year 2019-20. The Secretarial Audit report forthe financial year ended March 31 2020 is annexed herewith marked as 'Annexure G' to thisreport. The Board of Directors have re-appointed M/s Dinesh Gupta & Co. PracticingCompany Secretaries as Secretarial Auditors for the financial year 2020-21. TheSecretarial Audit report does not contain any qualification reservation or adverseremark.


Your Directors would like to express their sincere appreciation for the assistance andco-operation received from the bankers govt. authorities customers members and otherbusiness associates. They place on record their deep sense of appreciation for thecommitted services of the executives staff and workers of the Company for its success.

Yours truly

For and on behalf of the Board

Sd/- Sd/-
Chairperson Managing Director
Dated : 12th June 2020