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KM Sugar Mills Ltd.

BSE: 532673 | NSE: KMSUGAR |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE157H01023 | SECTOR: Sugar

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Annual Report

For Year :
2018 2016 2015 2013 2012 2011 2010 2009 2008

Director’s Report

DIRECTORS'' REPORT

To,

The Members,

The Directors have pleasure in placing the 45th Directors'' Report along with the Audited Statement of Accounts for the year ended on 31st March, 2018.

Financial Performance

The Financial performance of the Company during the year ended 31st March 2018 as under :

Performance of Divisions:-Sugar Division

Crushing season till 31st March, 2018 consisted of sugar seasons of 2017. The company has crushed 103.26 Lacs qtls. of cane and the season was for 138 days. Sugar sale was Rs. 39204.87 lacs during the year under review as against Rs.28182.49 lacs during the previous financial year. The other details are as under :

Year

31-03-2018

Year

31-03-2017

Gross Working days

138

121

Total Cane Crushed (qtls .)

10326624

8832402

White sugar Produced (qtls)

994395

859577

Average Recovery

9.72%

9.76%

For the year ended as at

For year ended as at

31st March, 2018

3 1st March, 2017

(Rs. in Lacs)

(Rs. in Lacs)

Profit before interest, depreciation & tax

5349

5754

Less: Interest

-1072

-851

Depreciation

-1345

-974

Profit before tax

2932

3929

Provision for taxation

0

-115

Provision for taxation (deferred)

-1045

-102

Net Profit before extraordinary Items

1887

3712

Add: Extra-ordinary item

0

-21

Net Profit

1887

3691

Earnings Per Share of Rs 2/- each

2.05

4.03

Overall Performance

For the year ended on 31st March, 2018, sales stood at Rs. 46978.32 Lacs (net of excise duty) against the Rs. 335302.87 Lacs (net of excise duty) of previous financial year ended as at 31-03-2017). During the financial year under review, the company had no trading of sugar, whereas during the preceding financial year sugar trading was Rs. 1127.57 lacs). Profit after interest and depreciation stood at Rs.

2932.00 Lacs as against the profit of Rs. 3929.00 Lacs in the previous year. Profit after tax for the year ended March 31, 2018 was Rs.1886.68 Lacs compared to profit of Rs. 3690.87 Lacs in the previous year.

Dividend

Your directors have not recommended any dividend for the financial year ended 31st March 2018.

Transfer to reserves :

The entire surplus of Rs. 1886.68 lacs has been transferred to Other Equity.

Finance and Accounts

As mandated by the Ministry of Corporate Affairs, the financial Statement for the year ended on March 31, 2018 has been prepared in accordance with the Indian Accounting Standard (IND AS) notified under Section 133 of the Companies Act, 2013 reads with Companies (Accounts) Rules, 2014. The estimates and judgment relating to the Financial Statement are made on a prudence basics, so as to reflect a true and fair manner, the form and substance of transaction and reasonably present the Company''s state of Affairs, profits and cash flow for the year ended March 31, 2018. Accordingly, the figures for the previous year have been recanted as and where required to make these comparable.

Distillery :

During the year ended as at 31-03-2018, Company Produced 105.11 Lacs BL of Rectified Spirit with a recovery of 22.63 % , which is better in comparison of preceding year production of 103.45 Lacs BL. with a recovery of 22.41%. Sale of RS was Rs.4211 Lacs as against Rs. 4125 Lacs.

Co-Generation:

During the crushing season under report, the company produced 7,90,97,890 KWH power and exported 4,76,63,795 KWH to UPPCL. Power sale was Rs. 2183 lacs as against Rs. 1749 lacs.

Company, retire by rotation u/s 152 of the Companies Act,

2013 and being eligible, offered themselves for reappointment at the ensuing Annual General Meeting. Dr. Kirti Singh, Director of the Company resigned and the Board placed its gratitude on record for his valuable guidance, advise and suggestions to the Company during his tenure. The Company appointed Dr. S.B Singh as Additional Director in the Board meeting held on 12th February 2018. The Company has received a notice from a shareholder proposing his candidature for the office of the Director of the Company under sections 149, 152 and 160 of The Companies Act, 2013 along with requisite fees of Rs.1,00,000/- through cheque no. 107 dated 03-07-2018 drawn on HDFC Bank in this regard. The Board also recommended his appointment as Independent Director of the Company u/s 160 of the Companies Act,2013 in the ensuring AGM.

Public Deposits

During the financial year ended 31-03-2018, the company has not accepted any public deposits.

Corporate Debt Restructuring-(CDR)

The Company has successfully exit from CDR vide CDR EG letter dated 26-07-2017 and remitted the full payment against RoR during the year under review.

Listing Agreement

The equity shares of the company are listed with the Bombay Stock Exchange Limited and National Stock Exchange Limited and listing fees for 2018-19 had been duly paid.

Directors'' Responsibility Statement

In pursuance of sub-section (5) of Section 134 of the Companies Act, 2013, in respect of Directors'' Responsibility Statement, the Board of Directors confirms:

(i) that in the preparation of the annual accounts for year ended on March 31, 2018 the applicable accounting standard have been followed by the Company.

(ii) that the directors of the company have selected such accounting policies, applied them consistently, made judgments and estimates that are 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 of the Company for the year ended on that date.

(iii) that the directors of the Company have taken proper and sufficient care for the maintenance of adequate accounting in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the company and for detecting fraud and other irregularities; and

(iv) that the directors of the Company have prepared the annual accounts on a going concern basis.

(v) that 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.

Auditors

M/s. Agiwal & Co, Chartered Accountants, New Delhi, Auditors of the Company retires at the conclusion of the forthcoming Annual General Meeting and being eligible, offered themselves for reappointment. They have furnished a certificate to the effect that their proposed reappointment, if made, will be in accordance within the limits specified u/s 139 of the Companies Act, 2013. Pursuant to the provisions of Section 139, 142 and other applicable provisions, of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 the existing Auditors can be re-appointed to hold office maximum up to the conclusion of 49th Annual general meeting of the Company. Accordingly the Board propose for reappointment of existing Auditors M/s. Agiwal & Co, Chartered Accountants, New Delhi to hold office up to the conclusion of 49th Annual General Meeting on such remuneration plus Goods and service tax, out-of-pocket, travelling and living expenses, etc., as may be mutually agreed between the Board of Directors of the Company and the said Auditors.

However, their appointment as Statutory Auditors of the Company shall also be required to be ratified by the Members at every Annual General Meeting.

Auditors'' Report

The comments on the statement of account referred to in the report of the auditors are self-explanatory, and explained in the appropriate Notes to the Accounts. Secretarial Auditors

Ms. Pragati Gupta, Practicing Company Secretaries were appointed as Secretarial Auditors of the Company for the year 2017-18 as required under Section 204 of the Companies Act, 2013 and Rules made there under. The Secretarial Audit report for FY 2017-18 forms part of the Annual Report (Annexure to the Directors'' Report in Form MR- 3) as annexed as Annexure-9 to this report and carries no qualifications, reservations, adverse remarks or disclaimers and hence no explanations are required.

The Board appointed Ms. Pragati Gupta, Practicing Company Secretaries (Membership no. ACS- 19302) , as Secretarial Auditor of the Company for the financial year 2018-19.

Cost Auditors

The Central Government approved the appointment of M/s. Aman Malviya & Company, Cost Auditor, Lucknow as Cost Auditors for conducting Cost Audit for Sugar and Industrial Alcohol businesses for the year 31st March 2018, report of which was placed before the Board. The Board approved their appointment for the year 2018-19 and their remuneration is subject to approval by the Company in the forthcoming Annual General Meeting.

Directors

At the ensuing Annual General Meeting Shri Sanjay Jhunjhunwala and Shri S. C. Agarwal, Directors of the prioritize, manage, monitor and report on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives.

The Company has introduced several initiatives for risk management including the introduction of audit functions and processes to identify and create awareness of risks, optimal risk mitigation and efficient management of internal control and assurance activities.

Corporate Social Responsibility

The Company constituted a Corporate Social Responsibility (CSR) Committee (for details please refer Corporate Governance Report) pursuant to the requirement of Section 135(1) of Companies Act, 2013. The CSR policy of the Company, interalia , list the activities that can undertake or supported by the Company for CSR, composition and meetings of CSR committee, annual allocation for CSR activities, area of CSR projects, criteria for selection of CSR, modalities of execution / implementation of CSR activities and the monitoring mechanism of CSR activities / projections. During the year under report, the Company spent Rs.32.00 lacs towards CSR as against its obligation Rs.38.02 lacs. The Board ensured that balance amount of Rs. 6.02 Lacs on CSR will be spent during the forthcoming Financial Year 2018-19. The details of CSR activities undertaken by the company are mentioned in the prescribed format in the Annexure -4 to this report. Conservation of Energy, Technology Absorption and Foreign Exchange and Outgo

Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure -1.

Research and Development

The details relating to Research and Development activities carried out by the company during the year are stated in annexure to this report.

Particulars of Employees

The disclosure as required under the provisions of Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company has been given in ''Annexure 2'' and forms part of this Report.

Corporate Governance

As required under Regulation 34 of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015 , a separate section on Corporate Governance forming part of the Directors'' Report and the certificate from Practicing Company Secretary Ms. Pragati Gupta, confirming the compliance of the conditions on Corporate Governance is attached as Annexure-3 to this report.

Management Discussion and Analysis Report The Management Discussion and Analysis Report on the business and operations of the company is attached to this report as ''Annexure-5''.

(vi) that 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.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future. Audit Committee and Vigil Mechanism Pursuant to requirement of section 177(1) of Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Regulation 18 and Regulation 22 of SEBI (LODR) Regulation 2015, your Company has already formed the Audit Committee, composition of which is covered under Corporate Governance report section of this Annual Report.

The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Regulations, includes appointment of a Whistle Officer who will look into the matter, conduct detailed investigation and take appropriate disciplinary action. The Company has formulated a vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the management their genuine concern about behavior of employees, the details of which are incorporated in the report on the corporate governance. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Whistle Blower Officer or to the Chairman of the Audit Committee. During the year under review, no employee was denied access to Whistle Blower Officer or Audit Committee and no cases under this mechanism were reported in the company and any of its subsidiary / associates.

The Policy on vigil mechanism and whistle blower policy has been uploaded on the Company''s website at the link: http://www.kmsugar.com.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith in form no. MGT-9 as Annexure -7 to this Report. Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Risk Management

The Company aims to have a formalized and systematic approach for managing risks across the Company. It encourages knowledge and experience sharing in order to increase transparency on the key risks to the Company to the extent possible. This approach increases risk awareness, and ensures proper management of risks as part of the daily management activities.

The objective of the Company''s risk management process is to support a structured and consistent approach to identify,

Requirements) Regulations,2015.

Board Evaluation

Pursuant to the requirement of the Companies Act, 2013, the performance evaluation of the independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board as explained under the Corporate Governance section of this Annual Report. In a separate meeting of Independent Directors, performance of Non Independent Directors was evaluated.

Committees of The Board

Currently, the Board has 4 committees. A detailed note on the Board and its committees is provided in the Corporate Governance Report section of this Annual Report. The composition of the committees and compliances, as per applicable provisions of the Act and Rules, are as follows:

Name of the

Composition of the

Highlights of duties,

committee

committee

responsibilities and activities

Audit committee

Mr.H.P Singhania-Chairman

0 All recommendations

Mr.R.S Shukla-Member

made by the committee

Mr.Sanjay Jhunjhunwala-

during the year were

Member

accepted by the Board.

Mr.S.K Gupta-Memb er

0 The Company has adopted the Whistle Blower Mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud.

0 The Company has formed the Related Party Transaction Policy.

Nomination and

Mr.H.P Singhania-Chairman

0 The Committee oversees

remuneration

Mr.R.S Shukla-Member

and administers executive

committee

Mr.S.K Gupta-Member

compensation.

0 All recommendations made by the committee during the year were accepted by the Board.

Stakeholders

Mr.H.P Singhania-Chairman

0 The Committee reviews

relationship

Mr.R.S Shukla-Member

and ensures redressal of

committee

Mr.Aditya Jhunjhunwala-

investor grievances.

Member

0 The committee noted that

Mr.S.K Gupta-Member

the grievances of the investors reported during the year, if any.

Corporate social

Mr.L.K Jhunjhunwala-

0 The Board as laid down

responsibility

Chairman

the Company''s policy on

committee

Mr.Sanjay Jhunjhunwala-

Corporate Social

Member

Responsibility (CSR).

Mr.S.K Gupta-Member

0 The CSR policy is uploaded on Company website, www.kmsugar.com

Particulars of Loans, Guarantee or Investments

As per the requirement of section 186(4) of Companies Act, 2013, particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the

Industrial Relation

The industrial relations have been cordial at all plants of the Company during the year.

Subsidiary Company

The Company has now no subsidiary Company as it had sold its Equity holding in M/s. K.M. Energy Private Limited during the year under review.

Number Of Meetings Of The Board

The Board met four times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the SEBI (LODR) Regu., 2015.

Policy on Directors'' Appointment And Remuneration

The Company seeks to maintain an appropriate mix of Executive and Independent Directors in order to maintain the independence of the Board and segregate the functions of governance and management. As at year end, the Board consists of 10 members, one of whom is Managing Director, three of whom are Whole-time directors, five are Independent directors and one is a Nominee director . The Company has five Independent Directors and all are qualified personnel with requisite qualifications, experience, positive attributes and satisfy all the criteria as set out under Schedule IV of Companies Act, 2013. These Independent Directors are only eligible for sitting fees for attending Board meetings and Committee meetings and other out of pocket expenses duly made for attending meetings of the Board or any committee of the Board thereof. Remuneration proposed for Whole Time Directors is in accordance with the Remuneration Policy approved by Nomination and Remuneration Committee of the Board. Your Company, in compliance with section 178 (1) of the Companies Act, 2013 read with The Companies (Meeting of Board and its Powers) Rules, 2014, has duly constituted a Nomination and Remuneration Committee. This committee is chaired by an Independent Director and formulates the criteria for determining qualifications, positive attributes, independence of a Director and other matters.

Appointment and the remuneration of Board members, key managerial personnel or one level below the Board level is fixed on the basis of the recommendation of the Nomination and Remuneration Committee made to the Board, which may ratify them, with or without modifications.

Disclosures pursuant to the requirements of section 197

(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been made in Annexure 2 of this Board Report. Declaration by Independent Directors As per the requirement of section 149(7), the Company received a declaration from every Independent Director that he or she meets the criteria of independence as laid down under section 149(6) read with rule 5 of the Companies (Appointment and Qualification of Directors) Rule, 2014 and SEBI ( Listing Obligations and Disclosure financial statements. The Company is in compliance with the limits as prescribed under Section 186 of Companies Act, 2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules, 2014.

Particulars of contracts or arrangements with Related Party

The Company''s policy on related party transactions may be accessed on the Company''s website at http://www.kmsugar.com. Particulars of contracts or arrangements with Related Parties referred in Section 188(1) of the Companies Act, 2013 is furnished in accordance with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given in Note to Accounts no. 35.17 and also in Form AOC-2 as Annexure-6.

Material Changes and Commitments Affecting Financial position between the end of the Financial Year and Date of Report.

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

Acknowledgment

Yours Directors place on record their acknowledgement and sincere appreciation of all the bankers and financial institutions for their continued assistance. They further appreciate and acknowledge with gratitude the cooperation and assistance received from all executives, staff and workmen of the Company.

For and on behalf of the Board of

K. M. Sugar Mills Ltd.

Sd/-

L. K. Jhunjhunwala Chairman

Date:07.08.2018

Place:Lucknow

Director’s Report