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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 '18    Mar 16

Dear Members,

The Board of Directors are pleased to present the 31st Annual Report on the operations of the Company and the Audited Statement of accounts for the year ended 31st March 2018.

FINANCIAL SUMMARY Rs. In Crores

Particulars

Year Ended 31.03.2018

Year Ended 31.03.2017

Total Revenue

505.34

540.22

Profit before Interest, Depreciation and Tax

14.16

80.16

Interest and Finance Charges

76.28

72.83

Cash Profit / (Loss)

(62.12)

7.33

Depreciation

22.57

22.88

Profit/(Loss) before Tax

(84.69)

(15.55)

Deferred Tax-Asset/(Liability)/

(0.69)

(1.87)

Profit/(Loss) After Tax

(85.38)

(17.42)

Other comprehensive income

0.75

-

Total Loss for the period

(84.63)

(17.42)

Profit/(Loss) Brought forward from last year

141.18

158.60

Profit/(Loss) carried forward to Balance Sheet

56.55

141.18

Your Company has adopted the new Indian Accounting standard w.e.f.01.04.2016 in accordance with Companies (Indian Accounting Standards) Rules 2015, as amended by Indian Accounting Standards-Amendment Rules 2016. The financial statements have been prepared to be in compliance with these new standards. As per instructions, the comparative figures for the previous year also have been recast to be in accordance with the new standards. Complete and detailed explanation has been given for the changes that have become necessary in the presentation of the figures. The new accounting standards enable the Company to presents its state of affairs, finances, net worth etc., in a more realistic manner.

PERFORMANCE

Financial Performance: During the year under review the total Gross income was Rs. 505.34 crores as against Rs.540.22 crores in the previous year. The Gross operating profit was Rs. 14.16 crores as against Rs 80.16 crores in the previous year. After providing interest, the cash loss works out to Rs.62.12 crores as against the cash profit of Rs.7.33 crores in the previous year. The net loss after depreciation and tax workout Rs.84.63 crores as against the loss of Rs 17.42 crores in the previous year. The loss was mainly due to lower volume of cane crushing and substantial fall in the sugar realisation during the last quarter of this year.

Sugar : During the year under review, the Company has crushed 7.20 lakh tonnes of cane as against 13.49 lakh tonnes of cane crushed in the previous year. The total sugar production including from raw sugar was 8.89 lakh quintals as against 11.66 lakh quintals in the previous year. The total sugar sold was 10.73 lakh quintals as against 11.88 Lakh quintals in the previous year. The average sugar sales realization for the year 2017-18 was Rs.3607/- per quintal as against the average realization of Rs.3444/- per quintal in the previous year.

Power : During the year the Company had not used Coal for Generation of Power at Unit III. Therefore the total power generation has decreased to 589.01 lakh units from 1086.24 lakh units in the previous year. The export of the power to the TNEB grid has also decreased to 293.11 lakh units from 600.68 lakh units in the previous year.

Industrial Alcohol : During the year under review, the production of Industrial Alcohol was 164.89 lakh liters as against 162.98 lakh liters in the previous year. The total Alcohol sold was 167.82 lakh liters as against 164.78 lakh liters in the previous year. The average realization has improved to Rs. 50.59 per liter as against Rs.44.06 per liter in the previous year.

RESERVES

No amount is proposed to be transferred to General Reserves account on account of loss during the year.

DIVIDEND

Due to absence of profits in the current year, the Board of Directors is unable to recommend any dividend for the year 2017-18.

EXTRACT OF ANNUAL RETURN

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

BOARD MEETINGS

During the year 2017-18, six Board Meetings were held on 27.04.2017, 29.05.2017, 12.08.2017, 25.09.2017, 13.11.2017 and 13.02.2018. Details of Attendance of each director furnished in the report on Corporate Governance in page No.32

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mrs Visalakshi Periasamy, Director (DIN 00064517) retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for reappointment. Her name has been proposed 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 systems to ensure compliance with the provisions of all applicable laws and that such systems 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 Nomination & Remuneration Committee constituted as per Section 178 of the Companies Act, 2013 has formulated the policy for appointment of Directors, Senior Management etc., and this has been approved by the Board and posted on the Company’s Website. 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 are given below.

i. For Executive Directors: The remuneration of the Whole Time/Executive Directors shall comprise of fixed component and a performance linked pay, as may be fixed by the Nomination and Remuneration Committee (NRC) and subsequently approved by the Board of Directors and Members. Performance Linked Pay shall be payable based on the performance of the individual of the Company during the year. Remuneration trend in the industry and in the region, academic background, qualifications, experience and contribution of the individual are to be considered in fixing the remuneration. These Directors are not eligible to receive sitting fees for attending the meetings of the Board and Committees.

ii. For Non-Executive Directors: The Non-Executive Directors will be paid sitting fees for attending the Board and Committee Meetings as per the stipulations in the Act, and the Articles of Association of the Company and as recommended by the Nomination and Remuneration Committee. Different scales of sitting fee may be fixed for each category of the directors and type of meeting. However, the fees payable to the Independent Directors and Woman Directors shall not be lower than the fee payable to other categories of directors. In addition to this, the travel and other expenses incurred for attending the meetings are to be met by the Company. The Company shall have no other pecuniary relationship or transactions with any Non- Executive Directors.

AUDITOR’S REPORT

There are no qualifications, reservations or adverse remarks in the Auditors’ Report except pointing out brief delay in transferring the unpaid dividend to Investors Education & Protection Fund. This delay was on account of delay in reconciliation and confirmation at the Banks level. Advance action has been taken to avoid such delays in the current year. No frauds were reported by the Auditors.

STATUTORY AUDITORS

M/s CNGSN Associates & LLP Chartered Accountants, Chennai (FRN No.027501), appointed as Statutory Auditors of the Company in the Annual General Meeting held in 25th September 2017 for a period of 5 years

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 Secretarial Audit report as of 31st March 2018 is annexed herewith as “Annexure”.-II. The following are the qualifications mentioned.

Observations

Reasons

a. The Company has not transferred shares to IEPF account as per section 124(6) of the Companies Act, 2013 read with Rule 6(5) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

Indian Bank has not furnished the detailed list of shareholders whose dividend has not been paid.

Matter is being pursued with the Bank. We hope to comply with this requirement very shortly.

b. The Company has not filed form IEPF-4 under rule 6(5) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

c. There was delay in filing form IEPF-6 as per Rule 8 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2015.

Delay was due to Bank’s delay.

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 2017-18 which were in conflict with the interest of the Company or which requires the approval of shareholders. Suitable disclosures as required under IND AS-24 have been made in Note 40 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. .

AUDIT COMMITTEE

The Audit committee consists of the following Directors.

1. Mr P S Gopalakrishnan

Chairman & Independent Director

2. Dr K C Reddy

Nominee Director (IREDA)

3. Mr A Sennimalai

Director

4. Dr S Muthu

Independent Director

5. Mr R K Viswanathan

Independent Director

6. Mr P Selvam

Independent Director

The Committee meet 4 times on 29.05.2017, 12.08.2017, 13.11.2017 and 13.02.2018.

Details of Attendance of each director is furnished in the report on Corporate Governance in page No.33

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.

GST RATES

The GST Council on 18th and 19th May 2017 approved the GST rates and the impact for the sugar industry is as under.

- GST rates on Sugar, Bagasse and other waste products -5%

- GST rate on Molasses -28%. Alcohol Products-18%.

- GST exemption available for wide range of services provided in relation to sugarcane cultivation, harvest transportation and host of related services.

- Services of Good Transport Agency (GTA) under reverse charge mechanism - GST rate 5% with no ITC.

- General rate of service - 18% with ITC benefit.

- Overall impact on industry may not be material.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by this 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 auditor company 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.

DEPOSITS

During the year 2017-18 the Company has not accepted deposits as defined in Section 73 and 74 of chapter V of the Companies Act, 2013. Your Company has complied with the provisions of Section 73 & 74 and the rules prescribed there under. Your Company has no unpaid deposits which were due or repayable as on 31st March 2018. Your Company has not defaulted in repayment of the deposits on the due dates. As on the date of this report, there are no deposits and 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:

S No

Name of the Directors

Category of Directors

1

Mr P S GopalaKrishnan

Non Executive

Independent Director

2

Mr A Sennimalai

Non Executive Director

3

Mr M Ramalingam

Executive Director

However, as the average of the net profits for the last 3 years is negative, no CSR 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.

Criteria for evaluation of the performance of the Independent Directors:

The criteria for evaluation of the performance of Independent Directors include their qualification, experience, competency, knowledge, understanding of respective roles (as Independent Director and as a member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc.

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 2017-18.

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

Place: Chennai - 34 Executive Chairman

Date : 28th May 2018 (DIN No: 00081002)

Source : Dion Global Solutions Limited
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