Gwalior Sugar Company Ltd

THE GWALIOR SUGAR COMPANY LIMITED ANNUAL REPORT 2003-2004 DIRECTOR'S REPORT The Board of Directors of your Company is submitting their 64th Annual Report and the Audited Accounts for the year ended 31st March, 2004. FINANCIAL RESULTS: 2003-2004 (Rs. in lacs) Sale and other Income 1064.17 Profit before interest & depredation 270.58 From which to be deducted Interest 159.41 Depreciation 48.98 Leaving a Net Profit 62.19 SUGARCANE CRUSHING Your Directors regret to report that due to major repairs on the Boilers caused a delay to start the operations and hence this led to a sharp decrease in the availability of sugarcane due to illegal Cane diversion, for the crushing season 2003-2004. The diversion was caused due to illegal purchase of sugarcane by Co-operative Sugar Factory which had commenced crushing a month earlier. The availability of sugarcane to your factory for crushing was further effected due to Gur making and illegal Power Crushers/ Khandsad, who were operating in the command area of the factory. Even though the Company made efforts to close these crushers, the administration could not fully contain them. Your Directors have to report that the cane crushing operations for the season 2003-2004 commenced on 3rd January, 2004 and closed on 17th March,2004. The total quantity of Sugarcane crushed during the season 2003- 2004 was 11,11,080 Qtls. in a duration of 74 days as against 8.37 Lac Qtls. in a duration of 88 days in the previous season. The overall Recovery was slightly THE GWALIOR SUGAR COMPANY LIMITED Higher at 9.36% as against 8.80% in the previous year. The cane quality supplied to your company was of poor quality and drought affected which had a bearing on the sugar recovery. The total Sugar Production during the season 2003-2004 was 1,06,575 Qtls. as against 76,155 Qtls. in the last season. ILLEGAL DIVERSION OF CANE Your Directors have to report that due to non-reservation of cane area of your factory by the State Government the sugarcane to be supplied to your factory, was diverted to the Co-operative Sugar Factory and illegal Power Crushers in the area. The Company had taken all the legal /administrative steps to stop the cane diversion but due to the late start was not able to recover the time frame and hence lost a substantial amount of cane. However, inspite of all the above. hindrances the Company was able to crush more than, 11 Lac Qtls. of cane in 2003-2004 crushing season. SUGARCANE PRICE The Statutory price of sugarcane linked to a basic recovery of 8.5% for the Season 2003-2004 crushing season, had been notified by the Central Govt. The M.F State has after the close of the season announced the recommended cane prices for the, season 2003-2004. The M.P. State Government had earlier been announcing the sugarcane prices over and above the cane prices fixed by the Central Government without any Statutory Authority which were been quashed by the M.P. High Court. Furthermore during the last two years the State Government did not reserve the cane area for the factory and also there was no Bonding (Contract) with the farmer, nor is there any system of Cooperative Society for purchase of Cane, and hence the Company was thus paying an fair open market price after negotiating this with the farmers directly. Your Company was paying sugar cane prices at fair levels which had been acceptable to the cane cultivators supplying sugarcane to the factory. SUGAR SALES Although the Central Govt. had continued with the dual policy of partial decontrol of sugar for the season 20032004 and maintained the ratio to 10:90 for Levy and Free sale sugar respectively. The Free sale sugar market showed an upward trend due to an All India decline in the annual production. The overall sugar production of the Country for the season 2003-2004 had been estimated downwards at 135 Lac M.T as compared to last seasons 200 Lac M.T Hence the reduction of the large carry forward stocks and with a steady increase in the consumption drove the Sugar Prices upwards. The Central Govt. had notified the Levy Price for the season 2003-2004. The Levy Price was Rs.1423.97 which was much higher than the open market price prevailing on Free Sale Sugar upto March,2004. Due to this factor the quota of Levy Sugar was not lifted by the State Govt. Authorities. However due to market improvement in the prices subsequently improved both lifting and cash flows. MOLASSES Molasses production was also affected due to lack of cane crushed. However your Company was able to obtain substantially better and higher rates than other States due to shortage of Molasses. MODERNISATION AND EXPANSION PROGRAMME Your Directors have to report that Modernisation and Expansion Programme, under-taken to achieve a crushing capacity of 2500 TCD could not be fully completed due to lower availability of cane and other financial constraints. However, the Directors are to glad to report that the Sugar Technology Mission(STM) had adopted your factory in the list of Units to be included for Technology up-gradation and increasing the capacity of your Plant to 2500 TCD, together with setting up a 45,000 LPD Ethanol Plant together with Co-generation. The STM had sent their technical experts to visit the factory and to draw up a comprehensive scheme. The scheme is being finalised shortly and will be financially appraised by a Financial Institution and thereafter put up for funding to the Sugar Development Fund. The Company intents to fully implement this plan within the next two years. CANE DEVELOPMENT The Company has further taken up a comprehensive Cane Development Scheme for increasing the Cane Command Area due to the commencement of the Rajghat Canal System which will bring a large portion of agriculture land under assured irrigation in your company's cane command Area. This additional area would ensure adequate future cane supplies on the expanded capacity. The Company proposes to provide agricultural inputs to the new prospective cane farmers and will be increasing its existing cane command area. DIVERSIFICATION Your Company has taken a plan to set up an Ethanol Plant of 45,000 KLPD and. also a Co-generation Plant of 12 MW which would be attached with the expanded Plant. Such diversification is essential to give a composite growth to the company in the future, and for better utilisation of its valuable by products. PROSPECTS FOR THE NEXT SEASON Your Directors are glad to report that there had been a perceptible increase in the cane area on account of highly remunerative cane prices being paid by the Company. The Company is also providing financial assistance to the cane growers of the area i.e. by providing agricultural inputs, seeds, fertilizers and plant protections etc. in order to promote the planting of early maturing varieties of sugarcane, and helping the farmer to adopt better agricultural practices for optimizations of its yields. COMPANY'S FARMS Your Directors regret to report that the farming operations of the Company suffered a set-back due to ever increasing menance of encroachments by Adivasis and Tribal People instigated by anti-social elements and politically motivated persons. The Company had been taking all possible legal action to 'protect its rights and property but not effective deterrent measures had been taken by the authorities. The Company had also been approaching the higher authorities for directions to the concerned local authorities but no favourable response had been taken by them. However, the Company is making every efforts to regain control of as much area as possible. AGRO-FORESTRY The Agro Forestry programme received a sharp setback due to large scale depredations by Adivasis and their instigators. All possible measures are being taken to control the problems but due to lack of effective support of the Administration the Company could not able to obtain any effective relief. SUBSIDIARY COMPANY Your Directors regret to report that the farming operations of subsidiary company had been adversely affected due to large scale encroachments and depredations on the farm lands of the company. In the financial year 2003- 2004, the farms of your subsidiary company have shown losses. However, it is expected that after effective control on the menance of encroachments, the farming operations of the subsidiary company may be expected to improve. LAND TRADING / REAL ESTATE Your Directors have to report that the Company proposed to start a Employees Group Housing Scheme for giving housing facilities to its employees on its surplus urban land. The Master Plan was in process of finalizing and thereafter the said land would be transferred to- the Employees Co-operative Housing Society The Company would benefit as it would be able to obtain the cost of the Land. The Company was planning to enter into a collaboration with a reputed builders who would build/ develop such homes or, behalf of the Company. The Company in the next phase also proposes to give the above facilities to its cane growers against their cane supplies. LABOUR MATTERS Your Directors are glad to report that Industrial relations had been cordial and satisfactory during the year under review. DIRECTORS Mr. Madhava Prasad and Mr. K.L. Pasricha, retire from the Board of Directors by rotation but being eligible offer themselves for re- appointment. DIRECTOR'S RESPONSIBILITY STATEMENT Pursuant to provisions of Section 217(2AA) of the Companies Act,1956, your Directors hereunder state that: (i) In the preparation of the Annual Accounts for the year ended 31st March,2004, the application accounting standards have been followed along with proper, explanation statement relating to material departures. (ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as on 31st March,2004 and of the profit of the company for the year ended on that date. (iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act-1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. (iv) The Annual Accounts for the year ended 31st March,2004, have been prepared on a going concern basis. TAX AUDIT The Company has appointed M/s V Bapna & Company, Chartered Accountants, Gwalior, for carrying out the Tax Audit for the Financial Year ended 31st March, 2004. The Audit Report of the Auditors has been filed with the Authorities. COST AUDIT In compliance of section 233-B of the Companies Act,1956, the Company has appointed Mr. P.K.Varma, as Cost Auditor with the approval of the Central Govt for the Financial Year 2003-2004. The Audit Report of the Auditors for the year ended 31st March, 2004 has been filed with the Authorities. COMPLIANCE CERTIFICATE Compliance Certificate given by M/s Adesh Tandon & Associates, Company Secretaries, Kanpur, for the year 2003-2004, is attached with the Directors Report AUDITORS M/s Vidyarthi & Sons, Chartered Accountants, Gwalior, Statutory Auditors of the Company retire and are eligible for re-appoinunent for the Financial Year 2004-2005. SECRETARIAL AUDITORS M/s Adesh Tandon &-Associates, Company Secretaries, are eligible for reappointment for the Financial Year 2004-2005 to issue the Compliance Certificate for the above Financial Year. FIXED DEPOSIT The Company has not accepted fixed deposit during the Financial Year ended 31st March, 2004. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988. The Particulars required to be given in accordance with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 viz. Conservation of Energy, Technology, Absorption etc. are given in Annexure `A' attached. PARTICULARS OF EMPLOYEES No Employee of the Company in the Financial year ended 31st March,2004 received in aggregate a remuneration of Rs.1,00,000/- (One Lac) or more per month. VIKRAM K. SRIVASTAVA Chairman For and on the Authority of Bated: 2nd December, 2004 the Board of Directors. ANNEXURE"A" TO THE DIRECTORS' REPORT (A) Conservation of Energy a) Energy Conservation measures taken Vapour Bleeding arrangement from quintuple III body for raw Juice heating is being made. b) Additional Investments and proposals, if any, being implemented for reduction of consumption of energy i) V M.F -600 Verticle Injection Pump is being installed, it will save 100 H.P at Injection Station. Estimated Cost is Rs.18.00 Lacs. ii) Replacement of obsolete design A-Centrifugals by most modern fully automatic self discharge machines. It's estimated cost is Rs.85.00 Lacs. It will save 300 H. P. Power. c) Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods i) Direct saving of Rs.30.00 Lacs/ season will be achieved by saving Bagasse. ii) Savings of Rs.20.00 Lacs / season due to good quality of sugar produced. d) Total energy consumption and energy consumption per unit of production, as per form 'A' if the Annexure in respect of Industries specified in the schedule thereof (B) Technology Absorption e) Efforts made in technology absorption as per Form-B of the Annexure ; (C) Foreign Exchange Earnings and Outgo f) Activities relating to exports, initiative taken to increase exports, development of new export markets for products and services, and export plans: No export. g) Total Foreign exchange used and earned: Nil FORM - `A' Disclosure of Particulars with respect of Conservation of Energy Current Year Prev. Year 31.03.2004 31.03.2003 (A) POWER AND FUEL CONSUMPTION : 1. Electricity (a) Purchased : Units (K.W.H.) 7,81,860 8,02,698 Total Amount (Rs.) 47,73,640 55,31,644 Rate/Unit (Rs.) 6.10 6.89 (b) Own Generation (i) Through Diesel Generator Units (K.W.H.) 57,600 85,320 Unit per Litre of "Diesel Oil 2.32 2.32 Cost/Unit (Rs.) 10.10 9.25 (ii) Through Steam Turbine/ Turbine Generator Units (K.W.H.) 23,80,800 18,16,900 Unit per Qtl. of Bagasse(K.W.H.) 7.10 7.04 Cost/Unit (Rs.) 7.69 5.50 2. Coal (Specify quantity and where used) Quantity (Tonnes) N.A. N.A. Total Cost (Rs.) N.A. N.A. Average Rate (Rs.) N.A. N.A. 3. Furnace Oil Quantity (Ltrs.) N.A. N.A. Total Amount (Rs.) N.A. N.A. Average Rate (Rs.) N.A. N.A. 4. Firewood Quantity (Qtls.) 5,562 10,621 Rate (Rs.) 118 125 Amount (Rs.) 6,56,641 13,27,625 5. H.S.D. Oil : Quantity (Ltrs.) 35,450 36,854 Rate (Rs.) 24.00 21.42 Amount (Rs.) 8,50,800 7,89,413 6. Other/Internal Generation steam used for driving prime movers and used are process Bagasse Quantity (Qtls.) 3,50,113.50 2,47,751 Rate (Rs.) 54.60 35 Amount (Rs.) 1,91,16,197 86,71,285 (B) Consumption per Unit Production Packed Sugar (Qtls.) 1,06,575 76,155 Firewood (Qtls.) 0.052 0.14 Bagasse (Qtls.) 3.29 3.25 H.S.D. Oil (Ltrs.) 0.33 0.48 Electricity (K.W.H.) 30.21 35.52 REASONS FOR VARIATION Variation in consumption per unit production is mainly higher Cane crush and Sugar Production. FORM - "B" Disclosure of particulars with respect to Absorption, Research and Development (R&D) 1. Specific areas in which R & D carried out by the Company Research and Development activities stared in the areas of raising seed nurseries, improving cultivation practices, Management of Fertilizers, improvement in the yield of rotation and plant crop through demonstration and evaluation of new promising early and mid late varieties are being followed up vigorously. 2. Benefits derived as a Result of above R & D As a result of Research and Development these had been improvement in-Plant and-Ratoon-yield and better control of pests and availability of healthy disease free seed. Early and Mid-maturing varieties have shown satisfactory performance. 3. Future Plan of action A programme is being drawn up to make available healthy seeds of new early maturing varieties to the sugarcane growers, educating farmers and extension workers for adopting new improved cultivation practice and techniques, Nutrient Management, Bio-fertilizers and integrated control by Plant Protection measures. 4. Expenditure on Research & Development (Proposed) : A. Capital (Subsidised S.D.F.) : - B. Recurring Rs.3,70,406.00 C. Total Rs.3,70,406.00 D. Total R & D expenditure as a Percentage of total turnover : 0.36 TECHNOLOGY ABSORPTION, ADOPTION OF INNOVATION 1. Efforts, in brief, made towards technology Absorption, Adoptation and Innovation The Company has made served efforts for technology absorption, adoption and innovation like demonstration Plots and holding meetings in villages to adopt latest technology for better production and quality product. 2. Benefits derived as a result of above efforts e.g. Product improvement cost reduction, product development import substitution etc. There had been a reduction in the cost of cultivation and improvement in the product and quality thereof. 3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the Financial Year) following information maybe furnished a) Technology Imported N.A. b) Year of Import N.A. c) Has Technology been fully absorbed N.A. d) If not fully absorbed, areas where this has not taken place, reasons therefore - and future plan of action. N.A. COMPLIANCE CERTIFICATE TO, THE MEMBERS, THE GWALIOR SUGAR COMPANY LTD. DABRA, DISTT. GWALIOR, MADHYA PRADESH We have examined the registers, records, books and papers of M/s. GWALIOR SUGAR COMPANY LTD., as required to be maintained under the Companies Act, (the Act) and the rules made there under and also the provisions contained in the Memorandum and Articles of Association of the company for the Financial year ended on 31st March, 2004. In our opinion and to the best of our information and according to the examinations carried out by us_ and explanations furnished to us by the company, its officers and agents, we certify that in respect of the aforesaid financial year. 1. The Company has kept and maintained all registers as stated in Annexure 'A' to this certificate, as per the provisions and the rules made thereunder and all entries therein have been duly recorded. 2. The Company has duly filed the Forms and returns as stated in Annexure'B' to this certificate with the Registrar of Companies, Regional Director, Central Government, Company Law Board or other authorities within the time prescribed under the Act and the rules made there under. 3. The Company being a public limited Company has the minimum prescribed paid up capital. 4. The Board of Directors duly met 4 times respectively on 30.6.2003, 27.9.2003, 29.11.2003 and 27.3.2004 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed including the circular resolutions passed in the Minute Book maintained for the purpose. 5. The Company has closed its Register of members from 21st December,2003 to 30th December,2003 both days inclusive and necessary compliance of Section 154 of the Act has been made. 6. The Annual General Meeting for the financial year ended on 31st March,2003 was held on 30th Dec.2003 after giving due notice to the members of the company and the resolutions passed thereat were duly recorded in the Minute Book maintained for the purpose. 7. No Extra Ordinary General Meetings) was held during the financial year. 8. The Company has not advanced any loan to its director/ firm/ person/ company referred u/s 295 of the Act. 9. The Company has not entered into any contracts falling within the purview of section 297 of the Act. 10. The Company has made necessary entries in the register maintained under section 301 of the Act, 11. As there were no instances falling within the purview of section 314 of the Act, hence the Company has not obtained any approvals from the Board of Directors, Member or Central Government, as the case may be. 12. The Company has not issued any duplicate certificates during the financial year. 13. The Company (i) Delivered all the certificates on lodgment thereof for transfer in accordance with the provisions of the Act. As there was no case of issue of securities and transmission during the financial year. (ii) Not deposited any amount in a separate Bank Account as no dividend was declared during the Financial Year. (iii) The Company was not required to post warrants to any members of the company as no dividend was declared during the financial year. (iv) No unpaid dividend, nor any application money due to for refund is lying, and it has no deposit and interest accrued thereon, hence same is not applicable. However dividend proposed for the financial year 1995 and liability in respect of dividend of Preference Shares for the period 1991 to 1995 has been written back as financial Institution did not grant their approval. (v) Duly complied with the requirements of Section 217 of the Act. 14. The Board of Directors of the Company is duly constituted. There, was no appointment of additional directors, alternate directors and directors to fill casual vacancies during the financial year. 15. The Company has not appointed any Managing Director /Whole-time Director/Manager during the financial year. 16. The Company has not appointed any sole selling agents during the financial year. 17. The Company has obtained due approval of the Registrar of Companies to hold Annual General Meeting for the Financial Year ended on 31st March,2004 upto 31st December,2004. However the Company was not required to obtain the approval of the Central Govt., Company Law Board and such other authorities prescribed under the various Provisions of the Act except the Preference Share which have not been redeemed. 18. The Directors have disclosed their interest in other firms/companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder. 19. The Company has not issued any shares, debentures or other securities during the financial year. 20. The Company has not bought back any shares during the financial year ending 31st March, 2004. 21. The Preference Shares have not been redeemed which were due for redemption in earlier years. 22. There were no transactions necessitating the Company to keep in abeyance the right to dividends, rights, shares and bonus shares, pending registration of transfer of share. 23. The Company has not invited/accepted any deposits including any unsecured loans falling within the purview of Section 58 A during the financial year. 24. The amount borrowed by the Company from directors , members / financial institutions, banks and others during the financial year are within the borrowing limits of the company and the necessary resolution as per section 293(1)(4) of the Act has been passed in duly convened Annual General Meeting / Extra Ordinary General Meeting. 25. The Company has not made any loans / investments or advances, or given guarantees or provided securities to other bodies corporate during the financial year. 26. The company has not altered the provisions of the Memorandum with respect to situation of the Company's registered office from one state to another during the year under scrutiny. 27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny. 28. The Company has not altered the provisions of the Memorandum with respect to name of the Company during the year under scrutiny. 29. The Company has not altered the provisions of the Memorandum with respect to Share Capital of the company during the year under scrutiny. 30. The Company has not altered its Articles of Association during the financial year. 31. There was no prosecution initiated against or show cause notices received by the company and no fines or penalties or any other punishment was imposed on the company during the financial year for offences under the Act. 32. The company has not received any money as security from its employees during the financial year. 33. According to the records of the company Provident Fund dues have not been regularly deposited with the appropriate authority and Trust. The Companies is in default towards non payment of Provident Fund dues. ADESH TANDON & ASSOCIATES Company Secretaries Adesh Tandon C.P. No. 1121. Place : Kanpur Date : 2nd December, 2004. ANNEXURE - A REGISTERS AS MAINTAINED BY THE COMPANY Statutory Registers 1. Register of Members u/s 150 2. Registers and Returns u/s 163 3. Minutes Book of meetings u/s 193 4. Books of Accounts u/s 209 5. Registers u/s 301 6. Register of Director. Managing Director, Manager and Secretary u/s 303 7. Register of Director Shareholding u/s 307 8. Registers of Charges u/s 143 Other Registers 1. Register of Transfer 2. Register of Directors Attendance 3. Register of Shareholders Attendance 4. Register of Share Applications and Allotment 5. Register of Share Script 6. Register of Fixed Assets 7. Register of Common Seal Note : The other Statutory Registers are not required to be maintained as same are not applicable, as there exist no transactions to be recorded there ANNEXURE-B 1) Forms and Returns as filed by the Company with Registrar of Companies during the financial year ended on 31st March, 2004. Sl. No. Foms/Return Filed For Dated A B Under Section 1. Balance Sheet 220 31.03.2003 05.01.2001 Yes NA 2 Assest Return 159 30.12.2003 25.02.2004 Yes NA 3. Form No.23 192 30.12.2003 12.01.2004 Yes NA 4. Form No.8 125/127 15.12.2003 12.01.2004 Yes NA 5. Form No.13 125/121 15.12.2003 12.01.2004 Yes NA /135 A = Whether filed within prescribed time Yes/No B = If delay in filing whether requisite additional fee paid yes/no