Dalmia Bharat Sugar & Industries Ltd Directors Report.

Your Directors have pleasure in presenting their sixty seventh report alongwith the audited Financial Statements of the Company for the financial year ended March 31, 2019.

Financial Highlights
(Rs crore)
Particulars 2018-19 2017-18
Net Sales Turnover 2018.51 2274.88
EBIDTA 352.61 271.13
Less:- Interest & Financial Charges 68.61 69.47
PBDT 284.00 201.67
Less:- Depreciation & Impairment 80.20 53.79
PBT 203.80 147.87
Less:- Tax
Current Tax 43.63 31.52
Deffered Tax (27.21) (17.75)
PAT 187.38 134.10
Add:- Surplus brought forward 1,117.39 1,021.78
Balance available for appropriation 1,304.77 1,155.88
Appropriations
Debenture Redemption Reserve (net)
Transferred to General Reserve - 19.00
Dividend - 16.19
Dividend Distribution Tax - 3.30
Balance carried Forward 1,304.77 1,117.39

Operations and Business Performance

The Company has achieved the highest ever operational volumes in all segments of the business, with distillery segment being the major growth driver. It has also recorded the highest ever sugar recovery in this year. Consequently despite the challenging business environment, the Company has reported excellent results during the financial year 2018-19.

Management Discussion and Analysis for the year under review, as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations"), giving detailed analysis of the performance of the Company during the financial year 2018-19 is presented in a separate section forming part of this Report. Further, the working results for key businesses are attached and marked as Annexure - 1 and forms part of this Report.

The Company continues to be engaged in the same business during the financial year 2018-19. There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

Dividend

Your Directors are pleased to recommend a dividend of R 1.60 per equity share of face value of R 2/- (@80%) for the financial year 2018-19 amounting to R 15.62 Crore (inclusive of dividend distribution tax of R 2.66 Crore), payable to those shareholders whose names appear in the Register of Members as on the Book Closure / Record Date.

The Register of Members and Share Transfer books will remain closed from August 22, 2019 to August 29, 2019 (both days inclusive) for the purpose of payment of the dividend for the financial year ended on March 31, 2019 and the Annual General Meeting. The Annual General Meeting is scheduled to be held on August 29, 2019.

Transfer to General Reserves

Your Directors do not propose to transfer any amount to the General Reserves for the year under review.

Investor Education and Protection Fund

During the financial year under review, the Company has transferred unpaid/unclaimed dividend of R 4,15,110/- to the Investor Education & Protection Fund. Further, 56,465 Equity Shares, on which dividend had not been claimed for seven consecutive years, have also been transferred to the Demat account of Investor Education & Protection Fund Authority.

Credit rating

During the financial year 2018-19, ICRA has, on November 30, 2018, reaffirmed the rating for long term and short term facilities of the Company at AA- and A1+, respectively. Instruments with the said rating are considered to have high degree of safety regarding timely servicing of financial obligations.

Consolidated Financial Statements

In accordance with the provisions of the Companies Act, 2013 read with the Indian Accounting Standards (Ind AS), the Consolidated Financial Statements of the Company and its subsidiary(ies) for the financial year 2018-19 have been prepared in accordance with applicable accounting standards and form part of the Annual Report.

Subsidiaries

The Company has one wholly owned subsidiary as on March 31, 2019, i.e., Himshikhar Investment Limited. There is no material unlisted subsidiary of the Company in terms of SEBI LODR Regulations as amended from time to time and the Companys Policy for determining Material Subsidiary. The said Policy may be accessed at the Companys website at www.dalmiasugar.com/upload/policies/DBSIL-Material-Subsidiary-Policy-Board. pdf.

During the financial year 2018-19, Dalmia Bharat Sugar Venture Limited and Dalmia Solar Power Limited have ceased to be the subsidiaries of the Company with effect from May 31, 2018. The Company has no Associates or Joint Ventures.

A statement containing the salient features of the Financial Statements of the Companys subsidiary for the financial year ended on March 31, 2019 in Form AOC 1 is attached and marked as Annexure - 2 and forms part of this Report.

The Financial Statements including Consolidated Financial Statements of the Company including all other documents required to be attached thereto, are placed on the Companys website at www.dalmiasugar.com. These documents will also be available for inspection till the date of the Annual General Meeting on all working days, during business hours, at the registered office of the Company and any member desirous of obtaining a copy of the same may write to the Company Secretary in terms of Section 136 of the Companies Act, 2013.

Board Meetings

The Board of Directors of the Company met four times during the financial year 2018-19, i.e., on May 28, 2018, August 06, 2018, November 13, 2018 and February 14, 2019 in due compliance with and following the procedures prescribed in the Companies Act, 2013, SEBI LODR Regulations and applicable Secretarial Standards. Detailed information on the meetings of the Board of Directors is included in the report on Corporate Governance which forms part of this Report.

Directors and Key Managerial Personnel

Shri Jai Hari Dalmia, Vice Chairman and Managing Director, Shri Gautam Dalmia, Managing Director and Chief Executive Director and Shri Anil Kataria, Chief Financial Officer continue to hold their respective offices during the financial year 2018-19.

Shri Bharat Bhushan Mehta, who was a Non Executive Director, has been appointed as the Whole Time Director of the Company with effect from April 01, 2019.

Smt. Isha Kalra has resigned as the Company Secretary of the Company due to personal reasons with effect from October 11, 2018 and Smt. Sneha Sharma has been appointed as Company Secretary of the Company with effect from November 13, 2018.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, the office of Shri Bharat Bhushan Mehta as Director is liable to determine by retirement by rotation at the forthcoming Annual General Meeting. He being eligible has offered himself for reappointment and has furnished the requisite declaration to the effect that he is qualified to be appointed as a Director of the Company.

Shri J.S. Baijal, Shri M. Raghupathy and Shri P. Kannan, being the Independent Directors, have given their declaration of meeting the criteria of independence laid down in the Companies Act, 2013 and SEBI LODR Regulations. The term of five years of the Independent Directors would be completed at the forthcoming Annual General Meeting. Shri J. S. Baijal and Shri M. Raghupathy have shown their unwillingness for re-appointment as Director in view of the old age. Ms. Himmi Gupta has given resignation from the Board of Directors with effect from July 30, 2019 due to personal reasons. The Board places on record its appreciation for the valuable services rendered by Shri J. S. Baijal, Shri M. Raghupathy and Ms. Himmi Gupta.

Ms. Amita Misra has given consent to act as Director and declaration of meeting the criteria of independence and is proposed to be appointed as an Independent Director at the forthcoming Annual General Meeting of the Company. Her resume and other details required as per SEBI LODR Regulations are provided in the explanatory statement in the notice of Annual General Meeting.

Committees of the Board

In terms of the Companies Act, 2013 and SEBI LODR Regulations, the Company has following Committees of the Board:

• Audit Committee

• Stakeholders Relationship Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

The details with respect to the compositions, powers, terms of reference, etc. of the Committees are given in detail in the Corporate Governance Report which forms part of this Report. The Board has accepted the recommendations made by the Committees during the financial year 2018-19.

Nomination and Remuneration Policy

The Nomination and Remuneration Policy of the Company lays down the constitution and role of the Nomination and Remuneration Committee. The Policy has been framed with the objective –

(a) to ensure that appointment of directors, key managerial personnel and senior managerial personnel and their removals are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI LODR Regulations;

(b) to set out criteria for the evaluation of performance and remuneration of directors, key managerial personnel and senior managerial personnel;

(c) to recommend to the Board, the remuneration payable to senior management;

(d) to adopt best practices to attract and retain talent by the Company; and

(e) to ensure diversity of the Board of the Company.

The Policy specifies the manner of effective evaluation of performance of Board, its Committees and individual Directors to be carried out either by the Board, by the Nomination and Remuneration Committee or by an independent external agency and review its implementation and compliance. The Nomination and Remuneration Policy of the Company can be accessed at www.dalmiasugar.com

Performance Evaluation

The annual evaluation of the performance of the Board, its Committees and individual Directors was carried out by the Board, the Nomination and Remuneration Committee and Independent Directors in compliance with the Companies Act, 2013 and SEBI LODR Regulations during financial year 2018-19.

An indicative criteria was circulated to the Directors to facilitate such evaluation. Based on the feedback of the Directors and on due deliberations of the views and counter views, the evaluation was carried out in terms of the Nomination and Remuneration Policy and such indicative criterion.

It was observed that the Board was well composed in as much as there was a mix of youth and maturity, competencies and experience in the business of the Company as well as other areas like finance, compliance, policy making, etc. and that there was adequate gender and other diversity in the Board. The Board had met the high standards in relation to Corporate Governance as envisaged by the Companies Act, 2013 as well as those provided in the SEBI LODR Regulations and/or the other requirements of the SEBI. The Board functioned as a cohesive team and the decision making was based on due deliberations where views and counter views were encouraged.

It was further observed that the mandate and composition of Committees was clearly defined. The Committees performed their duties diligently and contributed effectively to the decisions of the Board.

All the Directors were performing their role effectively and discharging their responsibilities and obligations efficaciously and had been meeting the high standards of professing and ensuring best practices in relation to overall governance of the Companys affairs.

Directors Responsibility Statement

Your Directors state that:

(a) in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed and there are no material departures from the same;

(b) 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 at the end of the financial year and of the profit/loss of the Company for that period;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

(d) the Directors have prepared the annual accounts on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Particulars of Remuneration of Directors, Key Managerial Personnel and Employees

The details relating to the ratio of the remuneration of each Director to the median employees remuneration and other prescribed details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached and marked as Annexure – 3 and forms part of this Report.

A statement showing the names of the top ten employees in terms of remuneration drawn and other employees drawing remuneration in excess of the limits set out in Rule 5(2) and other particulars in terms of Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are attached and marked as Annexure - 4 and forms part of this Report.

Corporate Governance Report

Your Directors are committed to achieve the highest standards of ethical and corporate governance and continue to comply with the Code of Conduct. The endeavour is to enhance the reputation of the Company as a responsible and sustainable Company in order to attract as well as retain talents, customers, suppliers, investors and to maintain fulfilling relationships with the communities.

The strong corporate governance and a zeal to grow has helped the Company to deliver the best value to the stakeholders. We have always been positively cautious about the near term and optimistic about the medium and long term in view of the improved macro indicators for the economy, significant growth in public spending and focused execution plans.

The Corporate Governance Report for the financial year 2018-19 as required under SEBI LODR Regulations of the Company is attached hereto and forms part of this Report. The certificate from the Secretarial Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the Corporate Governance Report. Further certificate from the Secretarial Auditors is also attached confirming that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as Directors of the Company by SEBI/Ministry of Corporate Affairs or any such authority.

Annual Return

In terms of the provisions of Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the the extract of the Annual return of your company of your Company is posted at the Companys website www.dalmiasugar.com.

Corporate Social Responsibility

The Company has been following the concept of giving back and sharing with the under privileged sections of the society for more than eight decades. The Corporate Social Responsibility of the Company is based on the principal of Gandhian Trusteeship. The Company has addressed the issues of health care and sanitation, education, rural development, women empowerment and other social development issues. The prime objective of our Corporate Social Responsibility Policy is to hasten social, economic and environmental progress. We remain focused on generating systematic and sustainable improvement for local communities surrounding our plants and project sites.

The Corporate Social Responsibility Policy of the Company may be accessed at the Companys website at www.dalmiasugar. com/upload/policies/DBSIL-CSR-POLICY.pdf.

Pursuant to the said Policy, the Company has made expenses aggregating to R2.92 Crore towards corporate social responsibility activities during the financial year 2018-19 which are slightly more than 2% of average net profits of the Company made during three immediately preceding financial years. The annual report on corporate social responsibility activities is attached and marked as Annexure – 5 and forms part of this Report.

Related Party Policy and Transactions

Your Company has formulated a policy on materiality of related party transactions and dealing with related party transactions duly approved by the Board of Directors and same may be accessed at the Companys website at www.dalmiasugar.com/ upload/policies/ DBSIL-RPT-Policy-Board.pdf.

Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at an arms length basis. All related party transactions are placed before the Audit Committee for review and approval.

All related party transactions entered during the financial year 2018-19 were in ordinary course of the business and on an arms length basis. During the financial year 2018-19 there were no material contracts or arrangements entered into by the Company with the related parties referred to in section 188(1) of the Companies Act, 2013.

Risk Management

Your Company has formulated the Risk Management Policy that defines the adequate risk management process and procedures, which are based upon business environment, operational controls and compliance procedures. The major risks are assessed through a systematic procedure of risk identification and classification. Risks are prioritized according to significance and likelihood. The purpose of risk management is not to eliminate the risks inherent to the business but to proactively address such risks. The Audit Committee oversees the risk management plan and ensures its effectiveness.

Adequacy of Internal Financial Controls

Internal financial controls are an integrated part of the risk management process. Your Company has in place adequate internal control systems commensurate with the size of its operations and the policies and procedures adopted by your Company ensures the orderly and efficient conduct of business, the safeguarding of assets, the prevention and detection of frauds and errors, the adequacy and completeness of the accounting records, and the timely preparation of reliable financial information. The entire system is complemented by external auditing of selected functions such as the Secretarial functions.

The internal auditors of the Company conduct regular internal audits as per approved plan and the Audit Committee reviews periodically the adequacy and effectiveness of internal control systems and takes steps for corrective measures whenever required. There are established Cause-Effect-Action (CEA) systems and escalation matrices to ensure that all critical aspects are addressed well in time.

Whistle Blower Policy and Vigil Mechanism

The Company has in place the Whistle Blower Policy and Vigil Mechanism for Directors, employees and other stakeholders which provides a platform to them for raising their voice about any breach of code of conduct, financial irregularities, health, safety, environmental issues, adequate safeguards against victimisation of stakeholders and provide the direct access to the Chairperson of the Audit Committee in appropriate cases. The Policy can be accessed at the website of the Company at http://www.dalmiasugar.com/upload/policies/DBSIL-Whistle-Blower-Policy-Vigil-Mechanism.pdf.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company is committed to ensuring that all are treated with dignity and respect. The Human Resource and the Legal, Secretarial & Compliance department, in collaboration with other functions, ensure protection against sexual harassment of women at workplace and for the prevention and redressal of complaint in this regard.

In line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, an Anti-Sexual Harassment Policy has been put in place and Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the financial year 2018-19, no complaint has been received by ICC.

Loans, Guarantees and Investments

Your Company has given loans and guarantees and made investments within the prescribed limits with the necessary approvals and in terms and accordance with the provisions of Section 186 of the Companies Act, 2013.

The particulars of such loans and guarantees given and investments made are provided in the Standalone Financial Statements at note no. 5.

Energy Conservation, Technology Absorption and Foreign Exchange Transactions

A statement giving details of Energy Conservation, Technology Absorption and Foreign Exchange Transactions, is given in Annexure – 6 and forms part of this Report.

Auditors

Statutory Auditor

NSBP & Co, Chartered Accountants (Firm Registration No. 001075N), Statutory Auditors of the Company hold office till the conclusion of Seventieth Annual General Meeting of the Company to be held in 2022.

There is no qualification, reservation or adverse remark in their report on the Financial Statements. The notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any comments and explanation. The Auditors have not reported any matter under Section 143 (12) of the Act during the year under review.

Cost Auditor

HMVN & Associates, Cost Accountants, were appointed as the Cost Auditors of the Company to conduct Cost Audit for the year ended March 31, 2018, and they had submitted the Cost Audit Report for the said year on August 06, 2018.

R.J. Goel & co., Cost Accountants, New Delhi, was appointed as the Cost Auditors to conduct cost audit for the year ended March 31, 2019 and they will be submitting their report in due course of time.

The Board of Directors of the Company has re-appointed R.J. Goel & Co., Cost Accountants, New Delhi, as the Cost Auditors to conduct cost audit for the year ended March 31, 2020 at a remuneration to be ratified by the shareholders at the forthcoming Annual General Meeting.

Secretarial Auditor and Report thereon

The Board of Directors of the Company had appointed Harish Khurana & Associates, Practising Company Secretaries, as the Secretarial Auditor of the Company for the Financial Year 2018-19.

The Secretarial Audit Report in Form MR - 3 for financial year 2018-19 is attached and marked as Annexure – 7 and forms part of this Report. There is no qualification, reservation or adverse remark in the Secretarial Audit Report.

Your Company is in compliance with all the Secretarial Standards issued by the Institute of Company Secretaries of India and having become effective.

Public Deposits

The Company has not accepted any deposits from public during the year under review.

Orders Passed By Regulators

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Health, Safety and Environment

Safety and health of employees and clean environment is the core value of the Company. The endeavour of the Company is to continue safe and healthy environment at all its units.

Towards this end, regular training programmes are being conducted for all levels of employees. Towards greener environment, the Company and employees have made it a habit to plant more and more trees.

Industrial Relations

The industrial relations during the year under review were harmonious and cordial.

Acknowledgement

The Board of Directors would like to express their sincere appreciation for the assistance and cooperation received from the financial institutions, banks, government authorities, customers, vendors and stakeholders during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by all the Companys executives, staff and workers.

For and on behalf of the Board
(J.S. Baijal)
Place: New Delhi Chairman
Dated: July 29, 2019 DIN: 00049565