DIRECTORSThe Board of Directors is pleased to present the Fifteenth Annual Report of yourCompany together with the audited financial statements for the year ended September 30,2010.
The Members of
Shree Renuka Sugars Ltd
The Board of Directors is pleased to present the Fifteenth Annual Report of yourCompany together with the audited financial statements for the year ended September 30,2010.
FINANCIAL RESULTS
| | (Rs. in Million) |
| Particulars | 2009-10 | 2008-09 |
| Revenues | 55,979 | 22,398 |
| Profit before financial expenses and depreciation | 7,246 | 3,685 |
| Financial expenses | 825 | 884 |
| Depreciation and amortisation | 815 | 625 |
| Profit before provision for tax | 5,606 | 2,176 |
| Provision for taxation : | | |
| - Current | 943 | 341 |
| - Deferred tax | 560 | 400 |
| - Wealth Tax | 1 | - |
| Less: Prior period adjustments | 1 | - |
| Net Profit | 4,101 | 1,435 |
| Less: Brought forward loss on amalgamation of subsidiaries | 39 | - |
| Profit brought forward from the previous year | 1,129 | 685 |
| Profit available for appropriation | 5,191 | 2,120 |
| Transfer to General Reserves | 1,000 | 500 |
| Transfer to Debenture Redemption Reserve | 120 | 120 |
| Dividend on equity shares | 671 | 317 |
| Dividend tax | 111 | 54 |
| Retained in the Profit & Loss Account | 3,289 | 1,129 |
OPERATING HIGHLIGHTS
The Company achieved turnover of Rs. 55,979 Million for the year ended September 30,2010 as against Rs. 22,398 Million of the previous year, registering a growth of 150%.EBITDA for the year under review stood at Rs. 7,246 Million compared to Rs. 3,685 Millionof the previous year, a strong growth of 97%. Net profit increased substantially by 186%to Rs. 4,101 Million from Rs. 1,435 Million of the previous year. Analysis of operatingperformance is covered under "Management Discussion and Analysis" which formspart of this Report.
AMALGAMATION
During the year under review two wholly owned subsidiaries of the Company viz. GodavariBiofuel Pvt Ltd and Ratnaprabha Sugars Ltd have been amalgamated with the Company (ShreeRenuka Sugars Ltd). In terms of the above Scheme all assets, liabilities, rights,licences, permissions etc. of Godavari Biofuel Pvt Ltd and Ratnaprabha Sugars Ltd standstransferred to and vested in Shree Renuka Sugars Ltd from April 1, 2009 being theappointed date. As from December 10, 2010 being the effective date of the Scheme, GodavariBiofuel Pvt Ltd and Ratnaprabha Sugars Ltd stands dissolved without winding up.
DIVIDEND
The Board of Directors at its meeting held on September 28, 2010 declared 100% interimdividend i.e. Rs. 1/- per equity share having face value of Rs. 1/- each. The totaldividend pay-out for the financial year 2009-10 (including dividend distribution tax) wasRs. 781,724,070/-. The said dividend was paid on October 11, 2010.
Your Directors have taken a decision to treat the interim dividend as final dividendfor the financial year 2009-10.
TRANSFER TO RESERVES
The Company has transferred Rs. 1,000 Million to the General Reserves and an amount ofRs. 120 Million to the Debenture Redemption Reserve out of the amount available forappropriation. An amount of Rs. 3,289 Million is proposed to be retained in the Profit& Loss Account.
FIXED DEPOSITS
The Company has not accepted any deposits from the public within the meaning ofprovisions of Section 58A and 58AA of the Companies Act, 1956 ("the Act").
FURTHER ISSUE OF CAPITAL
During the year the Company had issued and allotted 18,000,000 fully paid-up equityshares of Rs. 1/- each at a price of Rs. 114.37, aggregating to Rs. 2,058.66 Million toPromoters, in accordance with SEBI guidelines, on preferential basis, consequent to theexercise of warrants issued to them.
BONUS ISSUE
The members at the last Annual General Meeting of the Company approved issue of Bonusshares in the ratio of 1:1. Accordingly, the Company issued and credited 334,900,000equity shares to all those members whose names appeared as on March 17, 2010, being theRecord Date fixed for ascertaining entitlement for Bonus Issue.
STRATEGIC ACQUISITIONS AND DEVELOPMENTS
In March 2010, the Company completed acquisition of Renuka Vale Do Iva S/A (VDI)formerly Vale Do Iva S/A Acar E lcool, a Brazilian sugar and ethanol productioncompany located in Parana state of Brazil. Pursuant to the above acquisition, VDI hasbecome a wholly owned subsidiary of the Company. The acquisition includes two sugar andethanol production facilities located in the Southern State of Parana with a combinedcrushing capacity of 3.1 Million tons per annum.
In July 2010, the Company completed its second Brazilian acquisition by acquiring acontrolling stake of 50.34% in Equipav S.A. Acar e lcool ("Equipav AA")which has been renamed as "Renuka do Brasil S/A (RdB)". RdB consists of two verylarge and modern sugar/ethanol mills with integrated co-generation facilities in Sao Paulostate in Southeast Brazil having a combined cane crushing capacity of 10.5 Million tons ofcane per annum (44,400 TCD). In addition, RdB has a co-generation capacity of 203 MW. Canesupply comes from the cultivation of about 115,000 Ha of land of which nearly 2/3rd iscultivated by the RdB with very high level of mechanisation for both planting andharvesting. The mills have easy access to the main ports of Santos and Paranagua, whichprovides logistic benefits to RdB.
Above acquisition in Brazil has transformed your Company from a local player to aglobal player in sugar and ethanol sectors, having a substantial presence in the largestethanol and sugar markets of the world and making it one of the largest sugar company inthe world.
FROM LOCAL TO GLOBAL
• The acquisitions in Brazil have transformed SRSL from a local player to a globalplayer in sugar and ethanol sectors, having a substantial presence in the largest ethanoland sugar markets of the world and making it one of the largest sugar Company in theWorld.
During the year, the Company has received Letters of Intent for supply of 118 Millionlitres of Ethanol to the Oil Marketing Companies (Indian Oil Corporation, HindustanPetroleum Corporation Ltd, Bharat Petroleum Corporation Ltd) for states of Karnataka,Andhra Pradesh, Kerala, Goa and Maharashtra for a period of one year
MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)
The Management Discussion and Analysis Report on the business and operations of theCompany is attached to this report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standards 21 and 23 issued by the Institute ofChartered Accountants of India on Consolidated Financial Statements, attached are theConsolidated Financial Statements, which form part of this Annual Report. TheseConsolidated Financial Statements provide financial information about your Company and itssubsidiaries after elimination of minority interest, as a single entity.
The Company has been granted exemption under Section 212(8) of the Act for the yearended September 30, 2010 by the Ministry of Corporate Affairs from attaching to its AnnualReport, copies of the Balance Sheet, Profit & Loss Account, Report of the Board ofDirectors and the Auditors and other documents required to be attached under Section212(1) of the Act, of all its subsidiary companies. Accordingly, the said documents arenot attached with the Balance Sheet of the Company. A statement containing brief financialdetails of each of the subsidiary companies is included in the Annual Report, in terms ofthe exemption letter. The Annual Accounts of the subsidiary companies and related detailedinformation will be made available to the members at any point of time for inspection atthe registered office of the Company and at the registered office of the respectivesubsidiary companies. The Company will make available the Annual Report of thesubsidiaries upon request by any member of the Company/Subsidiaries of the Companyinterested in obtaining the same.
OTHER SIGNIFICANT DEVELOPMENTS
During the year, the Company has received Letters of Intent for supply of 118 Millionlitres of Ethanol to the Oil Marketing Companies (Indian Oil Corporation, HindustanPetroleum Corporation Ltd, Bharat Petroleum Corporation Ltd) for states of Karnataka,Andhra Pradesh, Kerala, Goa and Maharashtra for a period of one year.
A new standalone sugar refinery with refining capacity of 3,000 TPD at Kandla, WestCoast of India is under implementation and expected to be operational in April 2011.
During the year, the Company has increased its stake in National Commodity &Derivatives Exchange Ltd (NCDEX) from 5% to 12.5%.
DIRECTORS
Mrs. Vidya Murkumbi, Mr. Sidram Kaluti and Mr. Nandan Yalgi, Directors of the Companyretire by rotation and being eligible offer themselves for re-appointment at the ensuingAnnual General Meeting.
During the year Mr. Nitin Puranik, Whole-Time Director, resigned from the office ofDirector and Mr. G. K. Sood vacated the office of Director pursuant to the provisions ofSection 260 of the Act. The Board place on record its appreciation for the valuableservices and guidance rendered by them during their tenure as Directors of the Company.
Brief resume of the Directors seeking reappointment, as stipulated under Clause 49 ofthe Listing Agreement with the stock exchanges are given in the Section on CorporateGovernance, which forms part of this Annual Report.
AUDITORS AND AUDITORS’ REPORT
M/s Ashok Kumar, Prabhashankar and Co., Chartered Accountants, Bangalore, StatutoryAuditors of the Company hold office until the conclusion of the ensuing Annual GeneralMeeting and are recommended by the Board of Directors for re-appointment. Certificate fromthe said Auditors has been obtained to the effect that their re-appointment, if made,would be within the limits specified under Section 224 (1B) of the Act.
The Auditors’ Report to the members on the Accounts of the Company for the yearended September 30, 2010 does not contain any qualification.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 217 (2AA) of the Act, and based on therepresentations received from the management, the Directors confirm that:
A new standalone sugar refinery with refining capacity of 3,000 TPD at Kandla, WestCoast of India is under implementation
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures from the sameif any;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgment and estimates that are reasonable and prudent so as to give true andfair view of the state of affairs of the Company as at September 30, 2010 and of theProfit & Loss of the Company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a "going concern"basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information as per the Companies (Disclosures of Particulars in the Report of the Boardof Directors) Rules, 1988 relating to conservation of energy, technology absorption,foreign exchange earnings and outgo are forming part of this Report and is annexed hereto.
CORPORATE GOVERNANCE
Your Company complies with all mandatory requirements as stipulated under Clause 49 ofthe Listing Agreement of the Stock Exchanges. The Report on Corporate Governance alongwith the Auditors’ Certificate on its compliance, forms part of this Report and isannexed hereto.
PARTICULARS OF EMPLOYEES
Information as required under Section 217(2A) of the Act, read with the Companies(Particulars of Employees) Rules, 1975, as amended, are given in an Annexure forming partof this Report.
However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, theAnnual Report excluding the aforesaid information is being sent to all members of theCompany. Any member interested in obtaining such particulars may write to the CompanySecretary at the Registered Office of the Company.
HUMAN RESOURCES
The Company’s HR policies and procedures are designed to recruit and retain thebest talent to support the growth momentum of your Company to align the interest ofemployees with those of the Company and to provide them with an opportunity to share thegrowth of the Company as also to foster long-term commitments, Stock Options are grantedby the Company. The Company granted 9,523,840 options under the Company’s EmployeeStock Option Scheme - 2006 to eligible Employees/Directors. The necessary disclosures asstipulated under the SEBI Guidelines are given in Annexure to this Report. The Companyintends to implement Employee Stock Option Plan – 2011 to its eligibleEmployees/Directors as well as that of its holding and subsidiaries for which approval ofmembers is being sought at the ensuing Annual General Meeting.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their appreciation for the assistance andco-operation received from the Financial Institutions, Banks, Government Authorities,Customers, Vendors and cane growers and finally to all its members for their trust andconfidence reposed on us and look forward to their continued support at all times. YourDirectors wish to place on record their sincere appreciation for the significantcontributions made by employees at all levels for their competence, perseverance and hardwork that has enabled the Company to achieve new milestones on a continual basis.
| On Behalf of the Board of Directors | |
| Mumbai | Vidya Murkumbi |
| February 11, 2011 | Executive Chairperson |
Annexure to Directors’ Report
A. CONSERVATION OF ENERGY:
a) Energy conservation measures taken:
• Installed KVAR Capacitor Bank to improve the power factor and thereby to reducethe power loss and improve the life of equipments.
• Variable Frequency Drives (VFD) are installed to optimize the energy consumptionin Boiler ID, FD, SA Fans, Feed Water Pumps, Bagasse and Coal Feeders, Mill Drives, FeederTable, Clear Juice Pumps, Crystallizer Drives, Cane Carriers.
• Flash steam recovery system introduced in evaporators to reduce the steamconsumption.
• HP Heater introduced in the high pressure steam boiler to minimise the stationheat rate, thus reducing the fuel consumption.
• Pan condensor automation reduces the power consumption.
b) Additional investments and proposals, if any, being implemented for reduction ofconsumption of energy:
In addition to the equipments installed as mentioned under (a) above, more VFDsareproposed to be installed to improve the energy efficiency.
c) Impact of the measures taken:
Reduction in energy consumption is observed
d) Total energy consumption and energy consumption per unit of production:
As per Form A annexed hereto
B. TECHNOLOGY ABSORPTION:
As per Form B annexed hereto.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO :
a) Activities relating to exports; initiatives taken to increase exports; developmentof new export markets for products and services; and export plans;
As the Company deals with regulated commodities there is limited scope for exportpromotion.
b) Foreign exchange earnings and outgo:
Foreign Exchange earnings: Rs. 7,309.80 Million
Foreign Exchange outgo: Rs. 33,726.00 Million
FORM A
Disclosure of Particulars with respect to Conservation of Energy
| Particulars | 2009-10 | 2008-09 |
| A. POWER AND FUEL CONSUMPTION | | |
| ELECTRICITY | | |
| Purchased units (Kwh) | 37,778,300 | 12,591,100 |
| Total Amount (Rs. ) | 264,963,851 | 63,421,811 |
| Own Generation | | |
| i) Through Diesel Generator (Units in Kwh) | 374,608 | 363,756 |
| Units per liter of diesel (Kwh/liter) | 3.51 | 3.30 |
| ii) Through steam turbine generation | 613,969,204 | 386,111,042 |
| Kg of bagasse required for one Kwh power | 3.07 | 3.00 |
| iii) Total units generated | 614,343,812 | 386,474,798 |
| Total/ cost in Rs. /Units | 3.47 | 3.75 |
| B. CONSUMPTION PER UNIT OF SUGAR PRODUCTION | | |
| Total generation of electricity Kwh | 614,343,812 | 386,474,798 |
| Less: Consumption of cogen plant Kwh | 68,920,886 | 45,147,523 |
| Less: Consumption of distillery plant Kwh | 23,483,412 | 19,054,311 |
| Less: Export to grid Kwh | 429,708,320 | 231,914,843 |
| Consumption for sugar plant Kwh | 130,009,495 | 102,897,214 |
| Electricity-Kwh/MT of Sugar | 112 | 117 |
FORM B
Disclosure of particulars with respect to absorption
Research & Development (R&D):
1. Ethanol production from beet – The Company is in the process of installing a3000 TPD beet processing plant, which will involve a diffuser to extract juice from thebeet and send it to the distillery for fermentation.
2. Spent wash incineration in cement kiln – Successfully conducted trails to burnthe spent wash (effluent from the distillery) in cement kilns.
3. Mechanized cane & plantation harvesting – The Company has introducedmechanised cane planter, while the mechanised cane harvester is being developed. Formechanized harvesting, company has adopted the wide row plantation system.
4. Reduction in dextran in sugar – The Company is developing a biological enzymesto reduce the dextran in refined sugar.
Benefits derived as a result of the above R&D—
1. Beet juice for ethanol production provides with another feedstock for ethanolproduction which will in turn support the government policy of ethanol blending withpetrol.
2. Spent wash is a difficult effluent to treat. This trial of burning the spent wash inthe cement kiln not only solves the problem of treating the effluent, but also reduces thequantity of coal used in the cement kilns.
3. Dependence on manual labour for the cane plantation and harvesting will be reducedwith the introduction of mechanized plantation and harvesting.
4. Improvement in quality of refined sugar will be possible with the reduction indextran.
Future plan of action
1. To develop sustainable system for the implementation of the above activities on alarge scale.
Expenditure Incurred
1. Capital – Rs. 458 Million
2. Recurring – Rs. 22.4 Million
3. Total – Rs. 480.4 Million
Technology absorption, adaptation & innovation
1. Installation of the melt concentrator at our refineries.
2. Installation of steam transformer in our refinery.
3. Condenser automation.
Benefits derived from the above efforts
1. Reduction in steam consumption due to melt concentration.
2. Steam transformer ensures 100% pure condensate return to the boiler, thus savingsteam required for heating make up water from 350 C to 1100 C.
3. Reduction in power consumption by adopting the condenser automation, also steadyvacuum in the pans station gives better efficiency in pan boiling.
The applicable disclosures as stipulated under the SEBI Guidelines as at September 30,2010, pertaining to ESOP are as under :
| Particulars | Scheme 1 | Scheme 2 | Scheme 3 |
| a) Options granted* | 4,238,000 | 4,000,000 | 2,829,840 |
| b) Pricing Formula | Prevelant market price as on date of grant | Prevelant market price as on date of grant | Prevelant market price as on date of grant |
| c) Options Vested | 2,119,000 | 0 | 0 |
| d) Options exercised | 582,000 | 0 | 0 |
| e) Total number of shares arisen as a result of exercise of Options | 582,000 | 0 | 0 |
| f) Options lapsed | 330,000 | 632,000 | 0 |
| g) Variation in terms of options | Nil | Nil | Nil |
| h) Money realised by exercise of option | Rs. 17,198,100 | Nil | Nil |
| i) Total number of Options in force | 3,326,000 | 3,368,000 | 2,829,840 |
| j) Employee wise detail of Options granted to : | | | |
| (i) Any employee who received a grant in any one year of Options amounting to 5% or more of options granted during that year | Nil | Nil | Nil |
| (ii) Identified employees who were granted Options, during any one year, equal to or exceeding 1% or more of the issued capital of the Company at the time of the grant. | Nil | Nil | Nil |
| k) Diluted Earnings per share (EPS) before exceptional items pursuant to issue of shares on exercise of options calculated in accordance with Accounting standard (AS) 20 ‘Earnings per share’ | 6.27 | Not Applicable | Not Applicable |
* The figures relating to Options have been adjusted for split & bonus Issue
The exercise price of the above schemes is the market price prevailing as on the dateof grant and the taxes as may be applicable is borne by the respective employees of theCompany. Hence the issuance of options does not and the consequent exercise of the optionswill not affect the Profit & Loss Account of the Company.
The Company has received a Certificate from the Auditors of the Company that the schemehas been implemented in accordance with the SEBI Guidelines and the resolution passed atthe Annual General Meeting held on December 28, 2006. The Certificate will be placed atthe Annual General Meeting for inspection of members.