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Dharani Sugars and Chemicals Directors Report, Dharani Sugars Reports by Directors
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Dharani Sugars and Chemicals

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Directors Report Year End : Mar '16    Mar 15

Dear Members,

The Directors present herein the Twenty-Ninth Annual Report on the operations of your Company and the Audited Statement of accounts for the year ended 31st March 2016.

FINANCIAL SUMMARY Rs. In Crores

Particulars

Year

Ended

31.03.2016

Year

Ended

31.03.2015

Total Revenue

369.72

381.25

Profit before Interest, Depreciation and Tax

47.44

7.15

Interest and Finance Charges

66.63

66.50

Cash Profit / (Loss)

(19.19)

(59.33)

Depreciation

20.59

21.20

Profit/(Loss) before Tax

(39.78)

(80.55)

Deferred Tax-Asset/(Liability)/ MAT Reversal

28.07

6.39

Profit/(Loss) After Tax

(11.71)

(74.16)

Dividend proposed

-

-

Dividend Tax

-

-

Transfer to General Reserve

-

-

Profits / (Loss) Brought forward from last year

(48.14)

26.02

Profit/(Loss) carried forward to Balance Sheet

(59.85)

(48.14)

PERFORMANCE

Financial Performance : During the year under review the total income was Rs. 369.72 crores as against Rs.381.25 crores in the previous year. Gross profit for the year was Rs.47.44 crores against the profit of Rs.7.15 crores in the previous year. The interest for the year was Rs.66.63 crores against Rs.66.50 crores in the previous year. After providing for interest, the operations have resulted in a Cash loss of Rs.19.19 crores as against the cash loss of Rs.59.33 crores in the previous year. The net loss after depreciation and tax has decreased to Rs.11.71 crores as against the loss of Rs 74.16 crores in the previous year.

The sugar industry has been facing glut in sugar during the last few years due to continuous excess production of sugar both in domestic and international level. The sugar realization has fallen below the cost of production. On account of this, most of the sugar mills in the country have incurred huge loss. From November 2015, the sugar price has started improving and presently hovers around Rs 3400/qtl. We expect the price to further improve in the coming months and the performance is also expected to improve substantially.

Sugar: During the year under review, the Company has crushed 10.51 lakh tonnes of cane as against 10.58 lakh tonnes of cane in the previous year. Consequently the total sugar production was 9.24 lakh qtls as against 9.67 lakh qtls in the previous year. The total sugar sold was 10.85 lakh qtls as against 9.59 Lakh qtls in the previous year. The average free sale sugar realization for the year ended was Rs. 2413/- qtl as against the average realization of Rs.2914/- qtl in the previous year.

Power: During the year under review, the total power generation was 1179 lakh units as against 947 lakh units in the previous year. The export to the TNEB grid was 783 lakh units as against 604 lakh units in the previous year. During this period, the power generation was higher mainly on account of using coal for generation of power from Unit III and exporting to the grid under short term open access contract with TANGEDCO.

Industrial Alcohol: During this period under review, the production of industrial Alcohol was 159.92 lakh liters as against 129.15 lakh liters in the previous year. The total alcohol sold was 152.98 lakh liters as against 139.87 lakh liters in the previous year. The average realization was Rs. 37.60 per liter as against Rs.42.03 per liter in the previous year.

RESERVES

No amount is proposed to be transferred to General Reserves account on account of losses.

DIVIDEND

Due to absence of profits in the current year, the Board of Directors is unable to recommend any dividend for the year 2015-16.

SHARE CAPITAL

There is no change in the Share Capital of the Company either in the Authorized Capital or in the Issued Capital. The paid up equity capital as on March 31, 2016 was Rs.29,38,98,460. The Company has not issued any shares during the period. However, the Company proposes to convert the unsecured loans brought in pursuant to CDR approvals, into equity at the appropriate time, as advised by the Lenders.

EXTRACT OF ANNUAL RETURN

Extract of the Annual Return in form MGT-9 is attached herewith. Annexure - I

BOARD MEETING

During the year 2015-16 five Board Meetings were held on 27.05.2015, 13.08.2015, 12.11.2015, 11.02.2016 and 26.03.2016.

Mrs Visalakshi Periasamy, (DIN 00064517) retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for reappointment.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors state that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The directors have prepared the annual accounts on a going concern basis.

v) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

Declaration of Independent Directors

The independent directors have submitted their declaration as per Sec.149(7) that they continue to meet the criteria of independence as provided in Sec.149 (6).

POLICY ON DIRECTOR APPOINTMENT & REMUNERATION POLICY

The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Annexure-II to this Report.

AUDITOR’S REPORT

There are no qualifications, reservations, or adverse remarks in the Auditors’ report. The observations made in the Auditors’ Report read together with relevant notes thereon are self-explanatory and do not call for any further comments under Section 134 of the Companies Act, 2013.

STATUTORY AUDITORS

M/s Srinvasan & Shankar, Chartered Accountants, Chennai (FRN 005093S), Chennai retire as Statutory Auditors on the conclusion of this Annual General Meeting. They can be continued for a further period of 1 year, though they have completed the two terms of 5 years each on 31.03.2014. They have conveyed their consent for re-appointment and have also furnished the required declaration as required in Section 139 of the Act.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr M Damodaran and Associates Company Secretaries in practice to undertake the Secretarial Audit of the Company. Their Audit report is annexed herewith as “Annexure”. There were no qualifications or observations requiring Board comments.

LOANS, GUARANTEES OR INVESTMENTS

Your Company has not given any loans or provided any guarantees or acquired securities as defined in Section 186 of the Companies Act, 2013.

CONTRACTS, ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

All transactions entered into by the Company with Related Parties were in the Ordinary Course of Business and at arm’s Length pricing basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors. There were no materially significant transactions with Related Parties during the financial year 2015-16 which were in conflict with the interest of the Company or which requires the approval of shareholders. Suitable disclosures as required under AS-18 have been made in Note 24.4.11 of the Notes to the financial statements. Details of the transactions are provided in Form AOC-2 which is attached as Annexure-III to this Report.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of the report. The Company has issued 1540154 equity shares of Rs.10/- each with a premium of Rs.12/- per share, in the share allotment committee meeting held on 14.5.2016 on a preferential basis by converting a part of the unsecured loans with the approval of the shareholders as advised by the Lenders thro the CDR Scheme and this will reduce the Company’s liability towards payment of interest on the unsecured loans. Consequent to this allotment, the paid up share capital has gone up to Rs. 3093.00 lakhs.

Audit Committee

The Audit committee consists of the following Directors.

1. Mr P S Gopalakrishnan

Independent Director

2. Mr T Pitchandi

Independent Director

3. Dr S Muthu

Independent Director

4. Dr K C Reddy

Nominee Director (IREDA)

5. MrA Sennimalai

Non Executive Director

The Committee met 5 times on 27.05.2015, 13.08.2015, 13.11.2015, 11.02.2016 and 26.03.2016.

There were no instances where the board has not accepted the recommendations of the Audit Committee.

FOREIGN EXCHANGE EARNINGS AND OUT-GO, CONSERVATION OF ENERGY & TECHNOLOGY ABOSORPTION

The details of measures taken for conservation of energy, technology absorption, foreign exchange earnings and outgo are given in the Annexure.

SUBSIDIARY COMPANIES

The Company does not have any subsidiary or any associate Company. Hence no report on subsidiary, associate, joint venture Company is included.

RISK MANAGEMENT POLICY

The Company has developed a risk management policy. Pursuant to Section 134 (3) (n) of the Companies Act, 2013 details of the Policy are disclosed in the Company’s Website.

At present the Company has not identified any element of risk which may threaten the existence of the Company.

SIGNIFICANT AND MATERIAL ORDERS

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal financial Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by the Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairman of the Company.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal financial control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the financial controls. Significant audit observations, if any, and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

FIXED DEPOSITS

During the year 2015-16 no amount was collected as deposits as defined in Section 73 and 74 of chapter V of the new Companies Act 2013. Your Company has complied with the provisions of Sec.73 & 74 and the rules prescribed there under. Your Company has no unpaid deposits which were due or repayable as on 31st March 2016. Your Company has not defaulted in repayment of the deposits on the due dates. As on the date of this report, there are no unclaimed deposits.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As per section 135 of the Companies Act, a Corporate Social Responsibility (CSR) Committee has been formed. CSR policy has been framed and is available on the Website. Members of the Committee are:

(1) Mr. P. S. Gopalakrishnan (2) Mr. A. Sennimalai (3) Mr. M. Ramalingam

However, as the average of the net profits for the last 3 years is negative, no expenditure has been earmarked on this account.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees as also the Independent Directors. The manner in which the evaluation has been carried out is attached in the Annexure -IV.

VIGIL MECHANISM FOR DIRECTORS & EMPLOYEES

Pursuant to Section 177(9) and 177(10) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the Listing Obligation and Disclosure Requirement Regulations 2015, the Board of Directors had approved a Policy on Vigil Mechanism/ Whistle Blower and the same is hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director/ employee have been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

CORPORATE GOVERNANCE

Your Company is in compliance with the Corporate Governance regulations as laid out in SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015. A report on Corporate Governance in line with SEBI prescribed format incorporated in the Listing Obligations and Requirement Regulations, is attached herewith. A certificate from the Statutory Auditors on compliance of conditions of Corporate Governance has been obtained and copy enclosed to this report.

CODEOFCONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company.

The Code has been posted on the Company’s website www.dharanisugars.in

The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.

All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management Staff were given appropriate training in this regard.

PREVENTION OF SEXUAL HARASSMENT

The Company has in place an Anti Sexual harassment policy in line with the requirements of the Section 4 of the Sexual harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received about sexual harassment. All employees are covered under this policy. Details have been displayed prominently in the work place and also in the Company’s Website.

No complaints were received during the year 2015-16.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Annexure attached in the Board’s Report

PROHIBITION OF INSIDER TRADING

The Company has adopted a Code of disclosures & a Code of Conduct for Prohibition of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company’s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.

Directors of the Board and the designated employees have confirmed compliance with the Code.

ACKNOWLEDGEMENTS

The Board of Directors places on record its appreciation of the support, assistance and co-operation received from the Central Government, Government of Tamil Nadu, various governmental agencies, ICICI Bank Limited, IREDA, the Company’s bankers, Indian Bank, State Bank of India, The South Indian Bank Limited, Bank of India, Central Bank of India, The Federal Bank Limited, Union Bank of India, IDBI Bank Ltd and Indian Overseas Bank.

The Board of Directors also wishes to place on record its appreciation for the cane growers, without whose help and support it could not have achieved the progress that has been made so far. With our encouragement and their initiative, we hope for improved cane availability for the ensuing years.

Your Directors are thankful to the employees of the Company for their wholehearted co-operation and unstinted dedication to duty leading to cordial industrial relations during the year under review.

The Board is thankful and grateful for the continuing cooperation to the management from the shareholders family since inception and is confident that this partnership will sustain forever.

for and on behalf of the Board of Directors

DR PALANI G PERIASAMY

Executive Chairman

Place: Chennai Dated: 26th May 2016

Source : Dion Global Solutions Limited
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