EID Parry (India) Ltd

BSE: 500125 | NSE: EIDPARRY | ISIN: INE126A01031 
Market Cap: [Rs.Cr.] 4,020.89 | Face Value: [Rs.] 1
Industry: Sugar

Director's Report
DIRECTORS' REPORT

Your Directors have pleasure in presenting their report together with the auditedaccounts for the financial year ended 31st March, 2014.

The performance highlights of the company for the year are summarised below:

FINANCIAL RESULTS

Rs in lakh
Particulars 2013-14 2012-13
Total Income 1,94,319 2,09,978
Profit Before Interest, Depreciation and Tax 26,237 60,562
Less : Interest 19,616 13,668
Depreciation 9,731 10,787
Profit Before Tax (3,110) 36,107
Less: Provision for Tax :
- Current - 839
- MAT Credit entitlement - (839)
- Deferred (5,763) 2,936
Profit After Tax 2,653 33,171
Add : Surplus brought forward 24,456 37,966
Amount available for Appropriation 27,019 71,137
APPROPRIATIONS
Transfer to General Reserve - 35,000
Transfer to Debenture Redemption Reserve 2,653 1,250
Dividend on Equity Capital :
Interim dividend paid - 10,431
Dividend Distribution Tax (Net) - -
Surplus carried to Balance Sheet 24,456 24,456

PERFORMANCE

During the year, the Company recorded a revenue of Rs 1,94,319 lakh as compared to Rs2,09,978 Lakh in the previous year 2012-13. The Earnings before Interest, Depreciation,Tax and Amortization for the year was Rs 26,237 Lakh representing 14% of total sales asagainst previous year's Rs 60,562 Lakh. Performance of sugar by-product division namelydistillery and power have contributed towards EBIDTA during the year.

During the year, the performance of the Company was adversely affected primarily due tothe prevailing low market price of sugar and the higher cane price that the Company had topay for procuring cane from the farmers. Further, the units in Tamil Nadu was impacted bya third consecutive year of drought severely affecting the cane availability. In Karnatakathere was a delay in commencement of the normal crushing operations due to the impassecaused by the hike in cane prices announced by the Karnataka Government and the millers'dissent on this issue. All this had a combined effect resulting in reduction of the totalcane crushing for the year as compared to that of the previous year.

Over the last three seasons from 2010-11 to 2012-13, the average sugarcane prices paidby mills has increased at around 14% CAGR whereas the increase in sugar prices has been amere 2.6%. The increase in sugar prices has not kept pace with the increase in cane pricesover the last few years. The steep rise in sugar cane procurement costs which accounts forabout 70% of total operation costs is expected to significantly impact the profitabilityof sugar mills. For the SS 2013-14, the Central Government has announced a 23.5% hike inthe minimum price payable for sugarcane through the Fair and Remunerative Price (F&RP)mechanism. However the increase in market prices of sugar has been minimal. Although thedecontrol of sugar distribution and the impetus given to blending ethanol with petrol havegiven some relief to the sugar mills, the issue of sugarcane pricing still remains largelyunresolved. Linking sugar cane prices to the prices of end-products is critical for safeguarding long-term financial health and sustenance of the industry. This will also help toreduce the extent of volatility in sugar production.

The major areas of focus for the Company are consolidation of operations, reducingcosts and conserving cash. Due to high stress on profitability, several cost reductionmeasures have been put in place by the Company to improve the bottom line. The othermeasures are to work towards improving the yield, increasing the cane cultivation in thecommand area and further improving the operating efficiency. The Company proposes to takea slew of measures in this direction, so as to face the challenge of low sugar price andthreat of continuous increase in cane price.

BUSINESS SEGMENTS SUGAR

During the year, the Company crushed 47.52 Lakh MT of sugar cane as against 65.18 LakhMT crushed in the previous year. The units in Tamilnadu & Puducherry have crushed atotal quantity of 30.72 Lakh MT vs. 53.24 Lakh MT in the previous year. This drop wasmainly on account of poor weather conditions in our key crushing areas. The recovery ofsugar from sugar cane was at 9.84% as against 9.23% in the previous year.

The company sold 4,16,947 MT of Sugar as against 4,95,218 MT

during the previous year.

POWER

The power generation during the year was lower primarily due to lower caneavailability. While most of the power generated was continued to be used captively to runthe plants, the surplus power was sold to Tamilnadu Electricity Board and other merchantpower purchasers.

Power generation was at 4,259 Lakh Units as compared to 6,534 Lakh Units in theprevious year. The company exported 2,497 Lakh Units of power during the year as against4,100 Lakh Units in the previous year.

DISTILLERY

During the year, Industrial Alcohol/ENA production was lower at 593 Lakh Litres ascompared to 654 Lakh Litres during the previous year. The Industrial Alcohol/ENA sales wasat 598 Lakh Litres as compared to 642 Lakh Litres during the previous year.

BIO PRODUCTS

Bio Pesticides

The Bio-Pesticides Division registered revenue of Rs 9,716 lakh in 2013-14 as comparedto Rs 7,321 lakh of previous year and accounting for 5% of the Company's Revenue. The saleof Neemazal registered a growth of 43% over 2012-13. Export sale of Neemazal technicalregistered a growth of 22% over 2012-13 with US accounting for 64% of the sale followed byEurope at 34% and Asian markets at 2%. Domestic sale of Neemazal and Abda range ofproducts along with micronutrients and adjuvants registered a growth of 44% over 2012-13.PBIT for the year was higher at Rs 2,276 lakh against Rs 1,557 lakh in 2012-13. Productionof Technical Aza was 15,221 Kgs, the highest ever in a year.

Nutraceuticals

The Nutraceuticals Division's turnover was Rs 6,930 lakh for the year ended 31st March,2014 representing 4% of the Company's Revenue. About 80% of this represents exports.

Premium Organic Spirulina continues to outperform competition in its segment and salesduring the year had grown at 32% over the previous year. With the stabilized Astaxanthinproduction process, the sales of Astaxanthin in the form of Oleoresin grew by 159% over2012-13. The Company has exited from OTC / OTX product range during the year to focus onits core ingredients business.

Detailed analysis of the business segments is provided in the Management and Discussionanalysis.

ACQUISITION OF ALIMTEC S.A

In April 2014, the Company has acquired 100% stake in Alimtec S.A., Chile, part of theBayer Group. The acquisition is by way of purchase of the stake from Bayer Finance andPortfolio Management S.A., and Nunhems Chile S.A., subsidiaries of Bayer AG. With thisacquisition, the Company would ensure reliable sourcing of Astaxanthin for its subsidiary,US Nutraceuticals LLC (Valensa). With Valensa's strength in developing Astaxanthin basedformulations, this acquisition will culminate in Value Creation for the Nutraceuticalsbusiness. The entire production of Alimtec will be used by Valensa for its Astaxanthinproducts catering to USA & Europe Markets.

DIVIDEND

Due to adverse performance of the Company, the Board has not recommended any dividendfor the year ended March 31, 2014.

SCHEME OF ARRANGEMENT - MERGER OF SADASHIVA

SUGARS LIMITED WITH E.I.D.-PARRY (INDIA) LIMITED

Pursuant to the order of the High Court of Karnataka, the merger of Sadashiva SugarsLimited, a wholly owned subsdiary, with E.I.D.-Parry (India) Ltd. with appointed date of1st April, 2013 has been completed on 8th May, 2014. Sadashiva Sugars Limited is having aSugar Plant along with cogeneration in the Bagalkot District of Karnataka

EMPLOYEE STOCK OPTION SCHEME

Under the 'Employee Stock Option Scheme' ('the Scheme') of the Company and based on theapproval of the shareholders at the Annual General Meeting held on 26th July, 2007 andsubsequent amendments thereof, no options were granted during the year ended 31st March,2014. The details of the Options granted up to 31st March, 2014 and other disclosures asrequired under Clause 12 of the Securities and Exchange Board of India (Employee StockOption Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are set out in theAnnexure to this Report.

The Company's Statutory Auditors, M/s.Deloitte Haskins & Sells, have certified thatthe Scheme had been implemented in accordance with the Securities and Exchange Board ofIndia (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999and the resolutions passed by the Members in this regard.

CREDIT RATING

During the year, rating agency CRISIL has assigned Long term Debt rating of"CRISIL AA-" (Stable) and reaffirmed "CRISIL A1+" rating for its shortterm borrowing.

SOCIAL RESPONSIBILITY

The Company undertook a wide range of initiatives for the livelihood enhancement andfor health and hygiene awareness in the rural community in which it operates. The Companyalso worked towards the preservation of environment through various water and socialconservation programs.

Towards utilising the scarce water resource, the Company promoted micro irrigationsystems like Drip, Sprinklers and Group Lift Irrigation programs.

SUBSIDIARY COMPANIES Coromandel International Limited

The Company achieved a revenue of Rs 10,11,397 Lakh for the year ended 31st March, 2014and the profit after tax was Rs 36,494 Lakh. The Company's Board had recommended adividend of Rs 4.5/- per share (450%) for the year ended 31st March, 2014.

Parrys Sugar Industries Limited

The Company recorded revenues of Rs 17,253 Lakh for the 12 months period ended 31stMarch, 2014. After providing for Depreciation, Interest and Tax, the loss after tax was Rs3,604 Lakh.

Silkroad Sugar Private Limited

The revenue for the year was Rs 1,715 Lakh. During the year ended 31st March, 2014 thecompany made a loss before tax of Rs 6,011 Lakh.

Parry Infrastructure Company Private Limited

During the year under review, the company earned an income of Rs 2,209 Lakh with Profitbefore Tax of Rs 320 Lakh. After providing for tax provision, the Profit after Tax was Rs217 Lakh.

Parry America Inc.

Parry America Inc, a 100% subsidiary based in US, reported an income of US$ 7,671thousand for the year ended 31st March, 2014. The Profit after Tax was US$ 342 thousand.

Parry Phytoremedies Private Limited

The revenue for the year was Rs 1,272 Lakh. During the year ended 31st March, 2014 thecompany made a loss before tax of Rs 574 Lakh.

Parrys Sugar Limited

During the year ended 31st March 2014, the Company earned an income of Rs 14 lakh withprofit after tax of Rs 14 lakh.

Parrys Investments Limited

During the year ended 31st March, 2014, the Company earned an income of Rs 5 Lakh andthe Profit after Tax was Rs 4 Lakh.

US Nutraceuticals LLC

This overseas Subsidiary, during the year ended 31st March, 2014 earned an income ofUS$ 20,770 thousand and the Profit after Tax was Rs 820 thousand.

SUBSIDIARY ACCOUNTS

In terms of the direction under Section 212(8) of the Companies Act, 1956 vide GeneralCircular No.2/2011, bearing No.51/12/2007-CL-III dated 8-2-2011 issued by Government ofIndia, Ministry of Corporate Affairs, the Board of Directors have passed a Resolutionaccording consent to the Company for not attaching the financial statements in respect ofall the Subsidiary Companies for the year ended 31st March, 2014.

The annual accounts of the subsidiary companies and the related detailed informationwill be made available to shareholders seeking such information at any point of time. Theannual accounts of the subsidiary companies will also be available for inspection by anyshareholder in the Head Office of the Holding company and of the subsidiary companiesconcerned during working hours upto the date of the Annual General Meeting. A hard copy ofdetails of accounts of subsidiaries will be furnished to any shareholder on demand.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by the Company in accordancewith the applicable Accounting Standards (AS-21 and AS- 27) issued by the Institute ofChartered Accountants of India and the same together with Auditors' Report thereon formpart of the Annual Report.

DIRECTORS

Mr.Anand Narain Bhatia Mr.M.B.N. Rao, Directors are liable to retire by rotation andthe ensuing Annual General Meeting. The Board of Directors at their meeting held on 30thJanuary, 2014 had appointed Mrs.Shyamala Gopinath as an Additional Director of theCompany. She will hold office up to the ensuing Annual General Meeting, pursuant toSection 161 of the Companies Act, 2013

During the year, the Board of Directors at their meeting held on 30thJanuary, 2014 have appointed Mr.V.Ramesh as an additional Director and also the ManagingDirector of the Company for a period of 3 Years w.e.f 30th January, 2014. TheShareholders vide their resolution dated 24th March 2014 passed through postalballot have approved the appointment of Mr.V.Ramesh as the Managing Director of theCompany.

In accordance with the provisions of Section 149 of the Companies Act, 2013, theCompany proposes to appoint Mr.Anand Narain Bhatia, Mr.M.B.N.Rao, Mrs.Shyamala Gopinathand Mr.V.Manickam as Independent Directors at the ensuing

Annual General Meeting. As required under clause 49 of the Listing Agreement a briefresume, expertise and details of other directorships of Mr.Anand Narain Bhatia,Mr.V.Manickam, Mr.M.B.N.Rao and Mrs.Shyamala Gopinath are provided in the CorporateGovernance Report.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a ManagementDiscussion and Analysis Report, Corporate Governance Report and Auditors' Certificateregarding compliance of conditions of Corporate Governance are made a part of the AnnualReport.

CEO/CFO CERTIFICATION

The Managing Director and the Chief Financial Officer have given a certificate to theBoard as required under Clause 49 of the Listing Agreement.

TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND

In terms of Section 205C of the Companies Act, 1956 an amount of Rs 48.94 lakh beingunclaimed dividend of 2005-06 and Rs 27.00 Lakh being unclaimed dividend of 2006-07(Interim) were transferred during the year to the Investor Education and Protection Fundestablished by the Central Government.

DEPOSITS

Other than the deposits that were transferred to the Investor Education and ProtectionFund, there were no other deposits due for repayment on 31st March, 2014. The Company haddiscontinued acceptance of deposits since July 2003.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956 the Directors confirm that, tothe best of their knowledge and belief :

In the preparation of the Profit & Loss Account for the financial year ended 31stMarch, 2014 and the Balance Sheet as at that date ("financial statements"),applicable Accounting Standards have been followed;

Appropriate accounting policies have been selected and applied consistently and suchjudgements and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the Company as at the end of the financialyear and of the profit of the Company for that period;

Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. Toensure this, the Company has established internal control systems, consistent with itssize and nature of operations. In weighing the assurance provided by any such system ofinternal controls its inherent limitations should be recognised. These systems arereviewed and updated on an ongoing basis. Periodic internal audits are conducted toprovide reasonable assurance of compliance with these systems. The Audit Committee meetsat regular intervals to review the internal audit function;

Proper systems are in place to ensure compliance of all laws applicable to the Company;

The financial statements have been prepared on a going concern basis.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai, the Company'sAuditors, retire at the conclusion of the forthcoming Annual General Meeting and areeligible for re-appointment.

The Board, on the recommendation of the Audit Committee, has proposed that M/s.Deloitte Haskins & Sells, Chartered Accountants, Chennai be appointed as the StatutoryAuditors of the Company for a period of three years at the Annual General Meeting of theCompany. The Auditors have confirmed their willingness for reappointment as Auditors ofthe Company and has provided the necessary certificates in compliance of Section 139 ofthe Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.

COST AUDITOR

M/s Geeyes & Co, Cost Accountants, who were appointed as Cost Auditors for the yearended 31st March, 2013 have filed the cost audit reports pertaining to Sugar,Co-generation, Industrial

Alcohol and neem based pesticide with the Central Government. The Company has alsofiled the necessary Compliance Report with Ministry of Corporate Affairs in Form A as perThe Companies (Cost Accounting Records Rules), 2011. The Company received the approval ofthe Central Government for the appointment of M/s. Geeyes & Co., Cost Accountants asCost Auditors for the Financial Year 2013-14.

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 217 (2A) of the Companies Act, 1956 readwith Companies (Particulars of Employees) Rules, 1975 as amended, the names and otherparticulars of employees are set out in the Annexure to the Directors' Report.

ACKNOWLEDGEMENT

The Directors thank the customers, suppliers, farmers, financial institutions, banksand shareholders for their continued support and also recognize the contribution made bythe employees to the Company's progress during the year under review.

On behalf of the Board
Chennai A. VELLAYAN
May 15, 2014 Chairman

ANNEXURE TO THE DIRECTORS' REPORT

Statement as at 31st March, 2014 pursuant to Clause 12 (Disclosure in the Directors'Report) of the Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999.

Date of Grant No. of Options granted
(a) Total Number of Options granted: 31.08.2007 18,58,200
29.10.2007 2,32,400
24.01.2008 4,60,600
24.04.2008 1,52,200
28.07.2008 1,30,000
24.09.2008 3,87,000
29.10.2008 1,13,600
20.03.2009 47,800
28.01.2011 3,66,300
29.04.2011 75,900
27.07.2011 1,15,000
24.10.2011 95,000
40,34,000
(b) (i) Pricing Formula: The pricing formula, as approved by the shareholders of the Company, is the latest available closing price of the equity shares on the stock exchange where there is highest trading volume as on the date prior to the date of the Compensation & Nomination Committee resolution approving the grant.
(ii) Exercise Price per option 31.08.2007 29.10.2007 24.01.2008
For the Options granted from 31.08.2007 to 20.03.2009, each Option Rs 64.80 Rs 75.70 Rs 94.15
represents 1 Equity Share of Rs 2 each. 24.04.2008 28.07.2008 24.09.2008
For the Options granted from 28.01.2011 to 24.10.2011, each Option Rs 103.60 Rs 92.98 Rs 106.30
represents 1 Equity Share of Rs 1 each. 29.10.2008 20.03.2009 28.01.2011
Rs 74.95 Rs 69.13 Rs 225.15
29.04.2011 27.07.2011 24.10.2011
Rs 240.90 Rs 269.10 Rs 220.90
(c) Total number of Options vested 19,64,446
(d) Total number of Options exercised 17,19,790
(e) Total number of Shares arising as a result of exercise of Options 17,19,790
(f) Total number of Options lapsed / cancelled 19,66,114
(g) Variation of terms of Options The exercise period of the options vesting in the Second, Third and Fourth Vesting as per the vesting schedule under the ESOP Scheme-2007 has been increased from three years to six years from the date of Second, Third and Fourth Vesting, respectively.
(h) Money realized by exercise of options (during the year 2013-14) Rs 16,94,679 Lakh
(i) Total number of Options in force 3,48,096
(j) Details of Options granted to
i) Senior Managerial Personnel As provided below -
Name & Designation No. of options granted
1. Ms. G. Jalaja (Vice President - Management Audit & Company Secretary) 68,200
2. Mr.S.K.Sathyavardhan (Vice President - HR) 95,200
ii) Any other employee who received a grant in any one year of 1. Mr.D.Kumaraswamy 1,83,200
Options amounting to 5% or more of the Options granted 2. Mr.T.Kannan 19,600
during that year 3. Mr.G.Madhavan 65,000
4. Mr.Manoj Kumar Jaiswal 1,13,600
5. Mr.P.Nagarajan 65,000
6. Mr.K.E.Ranganathan 3,87,000
7. Mr.K.Raghunandan 2,58,200
8. Mr.Ravindra Raju D.S. 53,100
9. Mr.R.Raghuram 19,600
10. Mr.A.Sridhar 29,400
11. Mr.N.Senthilkumar 20,700
12. Mr.V.Ramasubramanian 20,700
13. Mr.N.Ramakrishnan 20,700
14. Ms.Swati Thomas 13,800
15. Dr.S.Balaji 23,000
16. Mr.Rajiv Yagnik 23,000
17. Mr.S.Radhakrishnan 23,000
18. Mr.Tyron Doll 23,000
19. Mr.S.Karunakar 23,000
20. Mr.M.Ramamoorthy 19,300
21. Mr.M.Balaji 24,200
22. Mr.A.V.Ramaraju 19,300
23. Mr.S.Rangaprasad 19,300
24. Mr.P.Gopalakrishnan 85,200
25. Mr.Suresh Krishnan 18,800
iii) Identified employees who were granted Options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. None
(k) Diluted Earnings Per Share (EPS) pursuant to issue of Shares on exercise of Options calculated in accordance with Accounting Standard (AS) 20 'Earnings Per Share' Rs 1.51
(l) (i) Method of calculation of employee compensation cost The employee compensation cost has been calculated using the intrinsic value method of accounting to account for Options issued under ESOP 2007. The stock-based compensation cost as per the intrinsic value method for the financial year 2013-14 is Nil.
(ii) Difference between the employee compensation cost so computed at (i) above and the employee compensation cost that shall have been recognized if it had used the fair value of the Options Rs 103 Lakh
(iii) The impact of this difference on profits and on EPS of the Company The effect on the net income and earnings per share, had the fair value method been adopted is presented below:
Particulars Rs in lakh
Net Income 2,653
As reported
Add: Intrinsic Value Nil
Compensation Cost
Less: Fair Value 103
Compensation Cost
(Black Scholes model)
Adjusted Net Income 2,550
Earnings per Share Basic (Rs) Diluted (Rs)
As reported 1.51 1.51
As adjusted 1.45 1.45
(m) Weighted average exercise prices and weighted average fair values of Options granted for Options whose exercise price either equals or exceeds or is less than the market price of the Particulars Weighted average exercise price per option Weighted average fair value per
stock (Rs) option (Rs)
(Exercise Price - EP) EP > MP -
(Market Price - MP) EP = MP 102.84 37.22
EP < MP - -
<
India Infoline Research
(n) A description of the method and significant assumptions used during the year to estimate the fair values of Options The fair value of each Option is estimated using the Black Scholes Option Pricing model after applying the following key assumptions on a weighted average basis:
(i) Risk-free interest rate : 8%
(ii) Expected life :
tranches I to III : 3 years
tranches IV to VIII : 4 years
tranche IX : 4 years
tranche X : 4 years, 2 years
tranche XI : 4 years
tranche XII : 4 years, 1 year
(iii) Expected volatility :
No Related Research Found
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

A Vellayan , Chairman

Anand Narain Bhatia , Director

M B N Rao , Director

V Ravichandran , Vice Chairman


Company Head Office / Quarters:

Dare House No 2 NSC Bose Road,
Parrys Corner,
Chennai,
Tamil Nadu-600001
Phone : Tamil Nadu-91-44-25306789 / Tamil Nadu-
Fax : Tamil Nadu-91-44-25340858 / Tamil Nadu-
E-mail : investorservices@parry.murugappa.com
Web : http://www.eidparry.com

Registrars:

Karvy Computershare Pvt Ltd
Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081

 
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