Dalmia Bharat Sugar & Industries Ltd Management Discussions.

Global economic review

The global economy grew slower by 70 bps at around 2.9% in 2019 compared to 2018. Global trade also grew a mere 0.9% in 2019 due to trade tensions and slower economic growth. The pandemic COVID-19 is projected to shrink global growth significantly in the foreseeable future. As a result of the novel corona virus pandemic, the global economy is expected to de-grow significantly in the current financial year.

(Source: World Economic Outlook, April 2020, CNN, Economic Times, trading economics, Statista, CNBC)

Indian economic review

Indian economy slowed to 4.2% in FY2019-20, compared to 6.1% in FY2018-19. In FY2019-20, GDP growth slowed, which contributed to an increase in fiscal deficit mainly on account of lower aggregate demand, lower fiscal revenue, lower economic activity and higher fiscal expenditure on account of the measures to address the economic slowdown. India emerged as the fifth-largest world economy in 2019. India jumped 14 places to 63 in the 2020 World Banks Ease of Doing Business ranking. The country climbed 79 positions in five years and was among the top 10 performers for the third year running.

The nominal exchange rate (the Indian rupee or INR vis--vis the US dollar) exhibited sizable two-way movements during October-December 2019. The INR came under intensified and sustained depreciation pressures beginning mid-January, reflecting a generalised weakening of emerging market currencies amidst flights to safety. Accordingly, the baseline assumes an average of Rs 75 per US dollar.

The nominal per capita net national income was estimated to be Rs 1,34,226 in FY2019-20, up 6.1% from Rs 1,26,521 in FY2018-19. Retail inflation climbed to a six-year high of 7.59% in January, breaching the RBIs upper band of 6% while settling at 5.91% in March 2020. Growth in nominal rural wages, both for agricultural and non-agricultural labourers, remained subdued averaging around 3.4% and 3.3%, respectively during FY2019-20 so far (until January 2020), reflecting a continued slowdown in the construction sector. The outbreak of COVID-19 and the subsequent lockdown enforced in the country are expected to moderate demand. Intensification of social distancing is expected to lead to supply side as well as demand side shocks. Supply chain disruptions could hurt domestic production in sectors which are dependent on imported inputs such as pharmaceuticals, autos, chemicals, power, etc.

Growth of Indias GDP in FY2019-20
Q1, FY20 Q2, FY20 Q3, FY20 Q4,FY20
Real GDP growth (%) 5.2 4.4 4.1 3.1

(Source: Economic Times, CSO, Economic Survey, IMF, RBI, Franklin Templeton, PIB)

Key government initiatives

National infrastructure pipeline

To achieve a GDP of US$ 5 trillion by 2025, the government announced National Infrastructure Policy with an investment plan worth Rs 102 trillion in five years. It laid down the vision of the government in terms of job creation: about 50 million people are expected to leave farming from 2012 to 2030, the transition being underway.

Corporate tax relief

Indian companies were unable to compete globally, with the cost of capital and corporate income tax (CIT) being significantly higher than overseas competitors. In view of this, the government reduced corporate tax rate to 22% from 30%; it announced a new tax rate of 15% for new domestic manufacturing companies, strengthening the Make-in-India initiative. The new effective CIT would be 25.17%, inclusive of a new lower surcharge of 10% and cess of 4%. Indias CIT is now closer to the global average statutory CIT of 23.03%.

Global sugar sector overview

Sugarcane accounts for nearly 80% of global sugar production. Global sugar production for FY2019-20 is estimated at 167 million tonnes compared to 175 million tonnes in FY2018-19 sugar season. Global trade flow for the same period is estimated to be 55 million tonnes; same as last year. Global consumption for sugar season FY2019-20 is estimated at 176 million tonnes compared to 174 million tonnes in sugar season FY2018-19. However, while taking the consumption number, assessment of the COVID-19 impact on consumption was not been considered and actual consumption numbers could be lower than assumed. (Source: ISO)

Ten largest sugar producing countries

(Source: ISO)

Brazil India China Thailand United States of America Russia Mexico Pakistan France Germany

Ten largest sugar consuming countries

(Source: USDA)

India European Union China United States Brazil Indonesia Russia Pakistan Mexico Egypt

Overview of key sugar manufacturing geographies

Sugar production in Thailand for FY2019-20 is estimated at 8.3 million tonnes, registering a decline of 6.1 million tonnes due to lower sugarcane crush, which was a result of draught across the country, with the central and north-east regions particularly hard hit. Chinas sugar production during FY2019-20 is estimated to be 10.4 million tonnes on the back of slightly reduced cane and increased beet production area. China is expected to produce around 9 million tonnes of sugar from sugarcane and 1.4 million tonnes from beet. Chinas annual consumption for FY2019-20 is estimated at 16.5 million tonnes. Brazils sugar production for FY2020-21 is estimated at 33.6 million tonnes, registering a growth due to increasing quantities of sugarcane being diverted towards sugar production. 45% of the total sugarcane output is expected to be used for sugar as opposed to 35% in last year. Sugar production in the United States of America for 2019-20 is finalised at to 8.04 million tonnes owing to poor harvest conditions for both sugarcane and beet. (Source: USDA)

Global sugar price trends

Sugar prices in the international markets surged to a two-and-a-half-year high of 15 cents per pound for raw sugar and around US$ 410 per tonne for which, sugar during March 2020 saw a sharp fall owing to COVID-19 uncertainties. According to the

International Sugar Organisation (ISO), the ISO white sugar price index is expected to stand at US$ 356 (approximately Rs 27,000) per tonne at the end of May 2020. The turmoil in financial markets during the last quarter also resulted in non-commercial participants reconsidering market views and financial commitments. While sugar fundamentals have changed marginally, relative to the commercial reality of the COVID-19 shutdown, traders nonetheless abandoned long positions within sugar.

Indian sugar industry overview

Domestic sugar production for sugar season FY2019-20 is estimated at 27.2 million tonnes compared to 33.1 million tonnes in FY2018-19, registering a decline of 17.8% year-on-year. This is primarily due to the decline in cane availability in Maharashtra and Karnataka, following the drought, heavy rainfall and water-logging across different areas during the monsoon months (August-September 2019) coupled with the diversion of sugar towards the production of ethanol through the B and C Heavy molasses and sugarcane juice routes.

Till 31st May, 2020, sugar mills across the country had produced 26.85 million tonnes of sugar, vis a vis 32.76 million tonnes produced during the corresponding period of the previous year, recording a 18% de-growth.

The crop in the two main sugarcane growing states - Maharashtra and Karnataka, which contribute around 35-40% of countrys sugar – were adversely impacted. The total cane acreage stood at 48.31 lakh hectares, about 12% less than SS FY2018-19.

The estimated consumption of sugar for FY2019-20, taking into account impact of COVID-19, is pegged at ~25 million tonnes. However, the industry carries an all-time high carry-over stock of 14.6 million tonnes during the year under review, implying a sugar oversupply. According to ISMA, it was expected that out of 60 lakh tonnes of maximum admissible export quantity (MAEQ), sugar mills would achieve an export target of only over 50 lakh tonnes in SS FY2019-20.

During SS FY2019-20, 459 sugar mills started crushing operations, vis a vis 527 mills which operated in SS FY2018-19. Sugar mills across the country owed around Rs 16,000 crore to sugarcane farmers by end of April 2020. The minimum support price (MSP) was increased from Rs 29 per kilogram to Rs 31 per kilogram, in order to support sugar prices in the last season.

(Source: ISMA, Business Standard, Business Today, Economic Times)

Sugar stock balance (in million tonnes)

Year Opening balance Production Consumption Closing balance
2010-2011 4.98 24.4 20.8 6.00
2011-2012 5.85 26.3 22.6 6.60
2012-2013 6.60 25.1 22.8 9.3
2013-2014 9.3 24.4 24.2 7.47
2014-2015 7.47 28.3 25.6 9.08
2015-2016 9.08 25.1 24.8 7.75
2016-2017 7.75 20.3 24.5 3.88
2017-2018 3.88 32.5 25.4 10.72
2018-2019 10.72 33.1 25.5 14.6
2019-2020 (e) 14.6 27.2 25.0 11.6

(Source: ISMA)

Indian cane cost trends

The FRP is the minimum price that sugarcane farmers are legally guaranteed to get from sugar mills. The Fair and Remunerative Price was fixed at Rs 275 per quintal with the objective to achieve 10% of basic recovery. The CCEA also approved to provide a premium of Rs 2.75 per quintal for every 0.1% increase above 10% in the recovery. The cost of sugarcane production has been fixed at Rs 290 per quintal.

(Source: PIB, the Hindu Business Line)

FRP (H/Quintal)
Year FRP
2009-2010 130
2010-2011 139
2011-2012 145
2012-2013 170
2013-2014 210
2014-2015 220
2015-2016 230
2016-2017 230
2017-2018 255
2018-2019 275
2019-2020 275

(Source: Economic Times, the Hindu Business Line)

State-wise analysis

In Uttar Pradesh, 119 sugar mills were involved in the crushing of sugarcane. As on 31st May, 2020, production of sugar by sugar mills is estimated at 12.55 million tonnes compared to 11.79 million tonnes produced during the same period in the previous season. Uttar Pradesh mills sold molasses at Rs 4,000-4,500 per tonne, substantially lower/higher than 2018-19. Power dues amounted to Rs 1,580 crore by the Uttar Pradesh Power Corporation to the mills in Uttar Pradesh for supplying cogenerated power as on 22nd June 2020. Further, the Uttar Pradesh government increased the quota of molasses in distilleries from 12.5% to 18% as a result of the shortage of molasses from the estimated 5.5 million tonnes to 4.7 million tonnes. The sugarcane acreage in Indias leading sugarcane and sugar producing state, Uttar Pradesh, was lower than SS FY2018-19. However, considering the crop condition and weather conditions coupled with the diversion of sugarcane from jaggery (gur) to sugar due to lockdown and area under the high yielding cane varieties in the state, sugarcane production is higher than expected. In Maharashtra, sugar production stood at 6.01 million tonnes compared with 10.67 million tonnes produced last year, almost 4.66 million tonnes less. In case of Karnataka, 63 sugar mills produced 3.38 million tonnes of sugar compared to 4.32 million tonnes of sugar produced by 67 mills during the previous season. In Tamil Nadu, out of 26 sugar mills which operated this season, sugar production stood at 0.58 million tonnes, compared with 0.725 million tonnes produced by 32 sugar mills last year. Gujarat produced 0.93 million tonnes of sugar compared to 1.12 million tonnes of sugar produced last year. The remaining States (Andhra Pradesh, Telangana, Bihar, Uttarakhand, Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Rajasthan and Odisha had collectively produced 3.4 million tonnes till 31st May, 2020.

(Source: Indian sugar, ISMA)

Sectoral impact of COVID-19

Sugar sales/dispatches were affected due to the country-wide lockdown and consequent closure of restaurants, malls, movie halls, etc., which in turn has impacted the demand for sugar sweetened products like ice cream, beverages, juices, confectioneries and sweets, among others. Almost 65% of the sugar consumption in the country is by bulk buyers; the domestic demand of 1 to

1.5 million tonnes of sugar disappeared during the lockdown.

(Source: ISMA)

Sugarcane drivers

50 million farmers and their families are dependent on sugar

An average sugar factory employs 30,000 farmers.

Small and marginal farmers have an average farm size pegged at 1-2 hectares.

Most of the sugar plants are located in rural areas

This directly impacts the rural economy, driving employment development of the local communities.

A lions share of 70% of the Indian population comprises the rural population.

The consumption of sugar is generally higher in Indian owing to the taste preference in the country

Sugar forms an integral part of celebrations, successes and festivals.

Growth drivers

Rising income

The nominal per-capita net national income during 2019-20 is estimated at Rs 1,34,226 compared to Rs 1,26,521 during 2018-19, registering a growth of 6.1%, driving consumption. (Source: MoSPI)

Population growth

Indias population has grown from 555.2 million in 1970 to 1.36 billion in 2019, a 146% expansion, which is driving the sugar consumption in the country. (Source: India Today)

Booming chocolate market

The Indian chocolate market stood at US$ 1,495 million in 2018 and has been driving the sugar over the years. (Source: IMARC)

Increasing confectionery sales

The total revenue generated from the

Indian confectionery industry is estimated at ~US$ 12,606 million in 2020, driving sugar consumption in the country. (Source: Statista)

Robust soft drink consumption

Indias per capita soft drink consumption is expected to increase attractively from 44 bottles in 2016. (Source: Economic Times)

Governmental initiatives

The Government created a buffer stock of 40 lakh tonnes of sugar, costing the exchequer Rs 1,674 crore.

The government provided millers an export subsidy of Rs 10,448 per tonne, which was shifted directly to the bank accounts of farmers to settle cane arrears.

The Government provided an assistance of Rs 6,268 crore to help mills export 60 lakh tonnes of sugar.

The Government cleared a soft-loan package of Rs 15,000 crore with an interest subsidy of Rs 3,355 crore to companies setting up distilleries for producing additional capacities as a part of the ethanol-blending programme. This was in addition to the Rs 1,332 crore interest subvention on soft loans by sugar mills announced in June 2018.

(Source: Business Standard, Economic Times)

SWOT analysis

Strengths Weaknesses Opportunities Threats
India is the second- largest producer of sugar after Brazil and has the capability to be self-reliant in sugar. Average production capacity is low as compared to other leading sugar producing countries. Increasing domestic demand. Drop in demand due to pandemic.
Provides direct employment including ancillary activities to millions. Bagasse from sugar cane provides scope for setting up of cogeneration plants. Many sugar factories are more than 40 years old, marked by legacy technologies. Mills mainly produce plantation white sugar, with relatively low export demand. Diversification into ethanol production. Investment in cutting- edge technology for by- product utilisation. The industrys performance is influenced by rainfall, soil, sunshine, pests, transportation costs and competing crop realisations. Negative publicity against sugar-based products.
Possesses rich arable land for cane cultivation. Empowering rural communities through a constant source of income. High dependence on rainfall and monsoon season.

Indian ethanol sector overview

The average ethanol blend rate in India was estimated at 5.8% in FY2019-20 compared to 4.1%in FY2018-19. The oil companies placed tenders for 5.11 billion litres of ethanol in FY2019-20; whereas sugar mills possessed a total installed capacity of only 3.55 billion litres. In the first tender for FY2019-20, 1.63 billion litres of ethanol was offered to oil marketing companies (OMC), 13.29% less than SS FY2018-19 owing to lower sugarcane output coupled with portable alcohol manufactures offering better prices.

The Government plans to create an enabling environment that more than doubles ethanol production and increases blending of ethanol with petrol to reduce oil imports. The government expects that ethanol production capacity could increase from 3.55 billion litres to 9 billion litres by 2022. Ethanol is produced directly from cane juice, B-grade and C-grade molasses. The price of ethanol from sugarcane juice has been fixed at Rs 59.48 per litre while ethanol extracted from C-grade molasses fetches Rs 43.75 per litre and that from B-grade molasses fetches Rs 54.27 per litre. The government targets to

divert around 8,00,000 tonnes of surplus sugar per annum across the next two years towards ethanol production to maximise sectorial profitability.

In Uttar Pradesh, 25 sugar mills commenced ethanol production from B Heavy molasses, providing precious liquidity to the state sugar sector during a glut. It is expected that by FY2021-22, about 60 sugar mills in UP would be producing ethanol from the B Heavy molasses route.

(Source: Economic Times, Business Standard)

Impact of COVID-19 on ethanol

In past few quarters sugar mills invested attractively in ethanol manufacture. However, the virus outbreak resulted in country-wide lockdowns due to which the demand for vehicular fuel dropped drastically. Owing to this, several OMC depots started witnessing slower petrol offtake, which created a supply glut in the face of no demand. Further, a shortage of storage and mixing spaces in the hands of OMCs and ethanol plants affected sectoral viability. Since the ethanol requisition was contracted by the OMC targeting a 10% fuel mixing ratio, a reduction in fuel demand impacted ethanol requirements. Various ethanol manufacturers began manufacturing sanitisers during the period to address growing demand amidst the pandemic.

(Source: ISMA)

Indian co-generation sector overview

Indias total installed capacity of captive power plants set up by commercial and industrial consumers amounted to 9200 megawatts in 2019-20. The Government incentivised the sector through the following incentives: Capital subsidy of Rs 18 lakh X (C MW)^0.646 could be availed by private sugar mills for bagasse cogeneration power projects.

Cooperative/public sector sugar mills with steam pressure 40 bar and above could avail a capital subsidy of Rs 40 lakh per MW of surplus power fed to the grid subject to a maximum support of Rs 8 crore per project.

Cooperative/public sector sugar mills with steam pressure 60 bar and above could avail a capital subsidy of Rs 50 lakh per MW of surplus power.

In 2019, 130 biomass power projects generating 999 MW and 158 bagasse cogeneration (simultaneous production of electricity and thermal energy in sugar mills) projects generating 1666 MW of surplus energy to feed the grid were installed. (Source: Indian Infrastructure Research, Business Wire, Economic Times)

State-wise review

Our operations in Uttar Pradesh

3 2,500 24,000
Number of facilities Total crushing capacity of sugar at inception (tonnes per day) Total crushing capacity of sugar today (tonnes per day)

Overview

Dalmia Bharat Sugar embarked on the sugar business front with its first unit in Uttar Pradesh in 1994. Following this, the Company expanded its presence to three locations in Ramgarh, Jawaharpur and Nigohi, emerging as one of the major players in sugar industry in India. In the year under review, the state saw a sustained growth in sugar production, on the back of which, the Companys sugar production in the geography grew as well.

Cane management

Dalmia Bharat Sugar focuses on cane development in order to improve cane cultivation, educate farmers, reduce losses and varietal rejections. The Company has in place kisan sewa kendras near its sugar mills, in order to distribute fertilisers, pesticides and farm equipment to the farmers at subsidised rates. Further, the Company also focuses on cultivation of high-yield cane varieties, in order to increase the yield of farmers.

Strengths

The Nigohi plant is the Companys only plant producing sulphur-less sugar.

The Nigohi distillery plant also has an incineration boiler place, ensuring plant run of 330 days and ensuring zero liquid discharge from the distillery process.

Almost 70% of the cane at Ramgarh is procured from gate selling, wherein the farmers transport their canes to the plant and sell them at the gate of the plant.

Challenges

One of the major challenges the Company faced in its Uttar Pradesh operations is the decrease in power tariff from Rs 5/unit to Rs 3/unit in the year under review. In order to mitigate this challenge, the Company stopped running its co-gen plants in the off-season and instead sold the bagasse to paper manufacturers, which helped the Company sustain margins.

Highlights, FY2019-20

Installed an incineration boiler in Jawaharpur in the year under review, which helps in burning the spent wash owing to its calorific value and derives energy out of this. This helped the Company reduce its bagasse requirements for the process by a whopping 70%.

Focused extensively on increasing the recovery rate of sugar on the back of early varietal cane and efficient processes.

Produced ethanol through the B-Heavy route for the first time ever.

Our operations in Maharashtra

2 2,500 11,500
Number of facilities Total Crushing capacity of sugar at inception (tonnes per day) Total crushing capacity of sugar today (tonnes per day)

Overview

The Company established its first sugar manufacturing unit in Maharashtra in 2013 at Kolhapur. Currently, the Company is operating at two locations in Maharashtra, namely Kolhapur and Ninaidevi. Over the years, the Companys Maharashtra operations expanded beyond sugar manufacture to ethanol production and cogeneration. FY2019-20 saw >40% decline in its sugar output y-o-y, owing to droughts and floods. Against the backdrop of a disappointing performance, the Company recorded the maximum cane crushing and recovery rate in its history of operations in Maharashtra.

Strengths

The quality of cane sourced from the nearby areas of Kolhapur and Ninaidevi are of impeccable quality.

The Kolhapur plant is strategically located near a port, which, in turn, strengthens our export operations.

The Kolhapur plant is fully integrated and has enough capacity to distil molasses from the Ninaidevi plant as well.

Challenges

The year saw huge headwinds in terms of the states cane output. The Company crushed the maximum cane owing to successfully leveraging its longstanding relationship with farmers, who reached out to Dalmia Bharat Sugar to sell their cane. The Company has been able to establish this relationship on the back of better payment policies and extensive farmer engagement.

Highlights, FY2019-20

Focused extensively on increasing the recovery of sugar on the back of early varietal cane and efficient processes.

Produced ethanol through the B-heavy route for the first time ever.

Divisional analysis

01 Our Sugar business

2018-19 2019-20 Increase/decrease
Sales volumes (lakh tonnes) 5.32 4.85 (8.83%)
Recovery rate (in %) 12.19 12.38 19 bps
Contribution to revenues (%) 77.95 77.24 (71 bps)
Contribution to EBITDA margin (%) 13.79 40.53 2674 bps

Overview

This business segment accounted for the lions share of revenues, pegged at 77.24%. This business was responsible for the Companys brand, visibility and sustainability. The industry is marked by a supply glut and saw lower production in some geographies due to flood and droughts. Against this backdrop, Dalmia Bharat Sugar saw a profitable year with lower breakdowns and higher recovery efficiency, outperforming the industry.

Strengths

The Company leveraged its Group strengths to emerge as a prominent sugar producer in the country.

The Company retained its position as the only sugar producing Company from Uttar Pradesh to manufacture in Maharashtra.

The Company focused on increasing its efficiency, validated by its sugar recovery rate (an average recovery above 12%).

The Company has a 95% composition of early varietal cane in its cane mix, thus ensuring better quality and recovery efficiency.

Challenges

The industry is marked by the challenge of supply glut, making it difficult to retain margins and sustain the business in the long run. The Company mitigated this challenge by diversifying the business and diverting 10% of its molasses to produce ethanol through the B Heavy route for the first time.

Highlights, FY2019-20

The Company increased the early varietal cane (238) in its cane mix from 80% (5 years ago) to 95% in the year under review.

The Company increased its sugar recovery from 10% (5 years ago) to >12% across all its 5 plants in the year under review owing to the increasing use of early maturing cane, improved farmer engagement and education on increasing yields.

Outlook, FY2020-21

Increase plant efficiencies further to improve recovery and margins.

Reduce dependence on the CO 0238 variety and build a strong pipeline of 20-25 early maturing varieties, ensuring de-risking.

02 Our Distillery business

Ramgarh plant
2018-19 2019-20 Increase/decrease
Sales volumes (Kilolitres) 50110 63607 26.94%
Recovery rate (in %) 22.35 24.96 261 bps
Contribution to revenues (%) 11 15 400 bps
Contribution to EBITDA margin (%) 34 29 (500 bps)

Overview

The Company forayed into this business in FY2016-17 with the commencement of the distillery operations at Maharashtra. The Company has leveraged the increasing focus of the Government on ethanol blending to strengthen its distillery business. Further, the sourcing of molasses from its sugar manufacturing unit helped the Company moderate procurement costs and de-risk from material non-availability. This business segment has come to the integrated sugar manufacturers as an opportunity, which is driven by the Ethanol Blending Program (EBP) of the Government. The Company saw an opportunity in the B-Heavy ethanol production in the year under review, owing to its superior realisations and started production of ethanol through the B-Heavy route.

Strengths

Dalmia Bharat Sugar possesses the ability to service customers with a diversified distillery portfolio (ethanol, rectified spirit and extra neutral alcohol).

The Company commenced the manufacture of sanitisers, a profitable niche.

The availability of good quality molasses, which ensures superior ethanol recovery rate.

The distilleries ran at a capacity utilisation of more than 100%.

Challenges

During the rainy season handling the spent wash from the distilleries posed a challenge. To mitigate this challenge, the Company installed an incineration boiler at Jawaharpur, which helped the Company run the distilleries effectively even during the monsoons.

Highlights, FY2019-20

Installed the incineration boiler in its Jawaharpur plant to ensure year-long operations at the distillery.

In the year under review, the Company forayed into B-Heavy ethanol production for the first time and produced 6 crore litres of ethanol through the B-Heavy route, almost 75% of the total ethanol production.

Increased the proportion of revenues accounted by ethanol segment from 10% in FY2017-18 to 15% in FY2019-20.

Outlook, FY2020-21

Scale capacities to distil more B-Heavy ethanol.

Increase B-Heavy production, which fetches better realisations.

03 Our Cogeneration business

2018-19 2019-20 Increase/decrease
Revenue from power exports, (Rs crore) 214 152 (28.97%)
Contribution to revenues (%) 10 8 (200 bps)
Contribution to EBITDA margin (%), 54 29 (2500 bps)

Overview

The Company forayed into the cogeneration business in 2007-08 when Dalmia Bharat Sugar commissioned its co-generation plant with a capacity of 79 megawatts in Uttar Pradesh to efficiently utilise bagasse (byproduct of sugar). Today, Dalmia Bharat Sugar stands tall with a cogeneration capacity pegged at 102 megawatts spanning 4 units. Of this capacity, ~28.71% of the total power was insourced by the sugar business and consumed captively in FY2019-20 before exporting the rest to the state electricity grid.

Strengths

Dalmia Bharat Sugar insources its entire power requirement from its co-generation plant.

The Company equipped its Kolhapur plant with cutting-edge technology to increase power generation per tonne of cane, translating into better efficiency and superior offtake.

Challenges

The year saw a drop in power tariffs from Rs 5 per unit to Rs 3 per unit in Uttar Pradesh. This would have resulted in a huge loss. Hence, the Company decided to not run the co-gen plant in the off-season and focused on selling bagasse to paper manufacturers, which helped the Company sustain profits.

Highlights, FY2019-20

The year was not good for the Companys co-gen business, owing to a fall in power tariffs and lower power consumption.

Despite these headwinds, the Company was not affected due to its minor revenue share in the business segment.

Outlook, FY2020-21

The Company expects to leverage better power tariffs in Maharashtra to sustain the business.

Finance review

Key performance metrics

Parameters FY2018-19 FY2019-20
Total revenue (Rs crore) 2,105 2,172
EBITDA (Rs crore) 353 398
PBT (Rs crore) 204 252
PAT (Rs crore) 187 198
Earnings per share (H) 23.15 24.46

Analysis of the profit and loss statement

Revenues

The revenues from operation of the Company stood at Rs 2,035 crore as against Rs 2,019 crore in the preceding year. The other income of the Company reported 58% growth, largely driven by Government Grant and Cane Incentive. Other income accounted for only 6.3% of the Company, reflecting the Companys dependence on core business operations.

Expenses

Total expenses of the Company increased from Rs 1,902 crore in FY2018-19 to Rs 1,920 crore in FY2019-20, largely on account of employee cost. Raw material cost, comprising 75% of the Companys revenues in FY2019-20 (82% in FY2018-19), decreased 7% from Rs 1,736 crore in FY2018-19 to Rs 1,631 crore in FY2019-20.

Employees expenses, comprising 6.1% of the total revenues, increased 0.5% from Rs 118.66 crore in FY2018-19 to Rs 133.64 crore in FY2019-20, owing to increased operations base as well as increasing employee welfare expenses.

Analysis of the Balance Sheet

Sources of funds

The net worth of the Company increased 3.79% from Rs 1,549.75 crore as on 31st March 2019 to Rs 1,608.49 crore as on 31st March 2020. The Companys equity share capital comprising 8.09 crore equity shares of Rs 2 each, remained unchanged during the year under review.

Long-term debt: Long-term debt of the Company decreased 2.10% from Rs 519.88 crore as on 31st March 2019 to Rs 508.98 crore as at 31st March 2020 due to repayment. Long-term debt-equity ratio of the Company stood at 0.32 in FY2019-20 compared to 0.35 in FY2018-19.

Finance cost: Finance cost of the Company increased 28.82% from Rs 68.61 crore in FY2018-19 to Rs 88.38 crore in FY2019-20. The Companys interest cover stood at a comfortable 4.50 times in FY2019-20 (5.14 times in FY2018-19), reflecting comfort in servicing interest.

Applications of funds

Fixed assets (gross) of the Company increased 4% from Rs 2,144 crore as on 31st March 2019 to Rs 2,232 crore as on 31st March 2020, largely owing to capitalisation of the Nigohi distillery and Jawaharpur distillery expansion. Depreciation on assets increased 11% from Rs 51.55 crore in 2018-19 to Rs 57.23 crore in FY2019-20 owing to Ninaidevi depreciation (majorly co-gen segment).

Investments

Non-current investments of the Company increased from Rs 198.43 crore as on 31st March 2019 to Rs 252.55 crore as on 31st March 2020 on the back of optionally convertible debentures of Himshikhar Investment Ltd.

Working capital management

Current assets of the Company increased 14.88% from Rs 1,626 crore as on 31st March 2019 to Rs 1,868 crore as on 31st March 2020, owing to increase in sugar stocks. Current ratio of the Company stood at 1.40 in FY2019-20 compared to 1.56 in FY2018-19.

Inventories, including raw materials, work-in-progress and finished goods, among others, increased from Rs 1,095 crore as on 31st March 2019 to Rs 1,329 crore as on 31st March 2020, registering a rise of 21.38%.

Cash and bank balances of the Company increased from Rs 28.15 crore as on 31st March 2019 to Rs 67.03 crore as on 31st March 2020.

Loans and advances made by the Company decreased 99.41% from Rs 128.34 crore as on 31st March 2019 to H0.76 crore as on 31st March 2020.

Margins

A strong cost control helped the Company in reporting better margins during the year under review. The EBITDA margin of the Company improved from 17% in FY2018-19 to 18% in FY2019-20 while net profit margin improved as well.

Internal control systems and their adequacy

The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance code of the organisation. It is an integral part of the general organisational structure of the Company and Group and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive

Directors and management, monitoring and support committees. The control and risk committee and the head of the audit department work under the supervision of the Board-appointed Statutory Auditors.

Human resources

The Company believes that its intrinsic strength lies in its dedicated and motivated employees. As such, the Company provides competitive compensations, an amiable work environment and acknowledges employee performance through a planned reward and recognition programme. The Company aims to create a workplace where every person can achieve his or her true potential. The Company encourages individuals to go beyond the scope of their work, undertake voluntary projects that enable them to learn and devise innovative ideas. The Companys customer-centricity has helped the Company retain more than 73 employees over a span of 25 years.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.

DIRECTORS REPORT

Your Directors have pleasure in presenting their 68th report on the operations and business performance of your Company along with the audited Financial Statements for the financial year ("FY") 2019-20.

Financial Highlights
( Rs crore)
Particulars FY (2019-20) FY (2018-19)
Net Sales Turnover 2,034.67 2,018.51
EBIDTA 397.56 323.96
Less:- Interest & Financial Charges 88.38 68.61
PBDT 309.18 255.35
Less:- Depreciation 57.23 51.55
PBT 251.95 203.80
Less:- Tax
Current Tax 47.83 43.63
Deferred Tax 6.11 (27.21)
PAT 198.01 187.38
Add:- Surplus brought forward 1,304.77 1,117.39
Balance available for appropriation 1,502.78 1,304.77
Appropriations
Transferred to GR - -
Dividend 29.14 -
Dividend Distribution Tax 5.99 -
Balance carried Forward 1,467.65 1,304.77

Operations and Business Performance

In March 2020, the COVID-19 pandemic became a global crisis, forcing the Government of India to enforce a national lockdown. The permission to continue the manufacture of sugar was implemented, being an essential commodity. Your Company continued the production across all its plants of Sugar, Power and Distillery products while ensuring the health and well-being of workers and employees by implementing social distancing, hygiene practices, deep cleansing and work-from-home in accordance with Government guidelines.

As a part of its social responsibility, the Company made a contribution of Rupee One crore to the PM-Cares Fund as a part of its endeavour to assist the Governments massive campaign against COVID-19. The Company supplied free sugar of Rs 3.2 lakh to organisations feeding the needy.

Responding to the need for deep cleansing and hygiene, your Company started manufacturing hand sanitizers under the brand name "DALMIA SANJEEVANI" at its distilleries in Uttar Pradesh and Kolhapur while distributing these pro bono to Government hospitals and the police. The Company also packed hand sanitizers in 5, 10, 20-litre bottles for commercial organisations. The Company has already established market reputation for the product quality. Your Company has completed twenty-five (25) years of sugar business and has achieved highest ever profit before tax and profit after tax during the Silver Jubilee year. It has completed sugar expansion to 6600 TCD and has commissioned Incineration boiler at its Jawaharpur Unit. Your Company has achieved highest ever distillery production during the year.

Your Company has recorded a net sales turnover of Rs 2,034.67 crore during FY 2019-20 registering a growth of 0.79% as compared to the net sales turnover of Rs 2018.51 crore during FY 2018-19. Your Company has earned profit before tax of Rs 251.95 crore during FY 2019-20 registering a growth of 19.10% as compared to Rs 203.80 crore profit before tax earned during FY 2018-19. Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at Rs 397.56 crore during FY 2019-20 as compared to Rs 323.96 crore during FY 2018-19. Further, the working results for key businesses are attached and marked as Annexure - 1 and forms part of this report.

Management Discussion and Analysis Report

Management Discussion and Analysis of financial performance and results of operations of the Company for the year under review, as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), giving detailed analysis of the overall industry structure, economic developments, performance and state of affairs of your Companys business and material developments during the financial year 2019-2020 is provided in a separate section and forms part of the Annual Report.

The Company continued to be engaged in the same business during the financial year 2019-2020. There were no material changes and commitments, except the impact of COVID-19 as given in Management Discussion and Analysis, affecting the financial position of the Company, which occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

Dividend

Your Directors, on February 13, 2020, declared an interim dividend of Rs 2/- (100%) per equity share of face value of Rs 2/- for the FY 2019-20 and same has been paid out on February 29, 2020 to members of the Company on the register of members as on February 26, 2020, being the record date fixed for the purpose. The interim dividend was declared based on the financial and non-financial factors prevailing during the FY under review.

Your Directors considered and decided that the interim dividend be the final dividend for FY 2019-20 and accordingly no further dividend has been recommended.

Transfer to General Reserves

Your Company has not transferred any amount to the General Reserve for the year under review.

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 for the FY 2019-20 have been prepared and form part of the Annual Report.

Subsidiaries, Associates and Joint Venture Companies

The Company has one wholly owned subsidiary as on March 31, 2020, i.e., Himshikhar Investment Limited and it is not a material unlisted subsidiary of the Company in terms of the Listing Regulations as amended from time to time and the Companys Policy for determining Material Subsidiary. The said Policy may be accessed at https://www.dalmiasugar.com/upload/policies/Policy-on-Material-Subsidiaries.pdf.

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, 2020 in Form AOC 1 is attached and marked as Annexure - 2 and forms part of this report.

The Financial Statements of the Company prepared on Standalone and Consolidated basis including all other documents required to be attached thereto and the Financial Statements of the subsidiary company are placed on the Companys website at www.dalmiasugar. com. Any member desirous of obtaining a copy of these documents may write to the Company Secretary in terms of Section 136 of the Companies Act, 2013.

Board meetings

During the year under review, the Board of Directors of the Company met five times, i.e., on May 20, 2019, July 29, 2019, October 24, 2019, January 30, 2020 and February 13, 2020. The Board meetings are conducted in due compliance with; and following the procedures prescribed in the Companies Act, 2013, Listing Regulations and applicable Secretarial Standards. Detailed information on the meetings of the Board is included in the report on Corporate Governance which forms part of the Annual Report.

Directors and Key Managerial Personnel

During the year under review, Shri P. Kannan and Smt. Amita Mishra, being Independent Directors, gave declarations that they met the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

The term of five years of Shri. M. Raghupathy and Shri. J.S. Baijal, Independent Directors, was completed at the Annual General Meeting held on August 29, 2019.

Smt. Amita Mishra was appointed as a Non-Executive and Independent Director of the Company by members of the Company at the Annual General Meeting held on August 29, 2019. Smt. Amita Mishra holds a Post Graduate Degree in Economics from Rajasthan University. She joined the Indian Audit & Accounts Service in 1980 and held senior positions in the Government of India and United Nations (Vienna-based United Nations Industrial Development Organisation or UNIDO).

Smt. Himmi Gupta, a Non-Executive Director of the Company, resigned from the Directorship with effect from July 30, 2019. Smt. Sneha Sharma resigned as the Company Secretary of the Company due to personal reasons with effect from October 31, 2019 and Ms. Aashima Khanna was appointed as Company Secretary of the Company with effect from January 30, 2020.

Pursuant to the provisions of Section 152(6)(c) of the Companies Act, 2013, Shri T. Venkatesan, a Non-Executive Director (DIN: 00124050), is liable to retire by rotation and has offered himself for reappointment.

In terms of Section 203 of the Companies Act 2013, Shri J.H. Dalmia, Vice Chairman & Managing Director, Shri. Gautam Dalmia, Managing Director, Shri. Bharat Bhushan Mehta, Whole-Time Director and Shri Anil Kataria, Chief Financial Officer continue to hold their positions as Key Managerial Personnel of the Company.

Committees of the Board

The Board of Directors is supported by five Board level Committees viz, Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Finance Committee.

The details with respect to the composition and number of meetings held during the FY 2019-20 and attendance of the members, terms of reference and other related matters of the Committees are given in detail in the Corporate Governance Report, which forms a part of the Annual Report.

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 following objectives: (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 Listing 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 the Companys website www.dalmiasugar.com.

Annual Evaluation of Board Performance and Performance of its Committees and of Directors

During the year under review, the annual evaluation of performance of the Board, Committees and individual Directors was carried out by the Independent Directors, Nomination and Remuneration Committee and Board of Directors in compliance with the Companies Act, 2013 and Listing Regulations.

The Boards functioning was evaluated on various aspects, including inter-alia the structure of the Board, meetings of the Board, functions of the Board, effectiveness of Board processes, information and functioning.

The Committees of the Board were assessed inter-alia on the degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The Directors were evaluated on various aspects such as attendance and contribution at Board/Committee meetings and guidance/ support to the management outside Board/Committee meetings. The performance of Non-Independent Directors, Board as a whole and the Chairman was evaluated in a separate meeting of Independent Directors. Similar evaluation was also carried out by the Nomination and Remuneration Committee and the Board. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated. Based on due deliberations the evaluation was carried out in terms of Nomination and Remuneration Policy.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors, state that: (a) In preparation of the annual accounts for the year ended March 31, 2020, 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 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 Act 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 operating effectively;

(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 is attached and marked as Annexure – 3 and forms part of this report.

None of the Directors or Managing Director & CEO of the Company, received any remuneration or commission from the Subsidiary Company of your Company.

The details of remuneration paid to the Directors including the Managing Director & Chief Executive Officer of the Company during FY 2019-20 are given in the Extract of Annual Return in Form MGT-9 which 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 is attached and marked as Annexure - 3A and forms part of this report.

Corporate Governance Report

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

The strong corporate governance and zeal to grow has helped us 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 of the Company for the financial year 2019-20 as per the Listing Regulations is attached hereto and forms part of the Annual Report.

Business Responsibility Report

The Business Responsibility Report, as per the Listing Regulations, describing the initiatives taken by the Company from environment, social and governance perspective forms part of the Annual Report.

Share Capital

During the year under review, the Issued, Subscribed and Paid up equity share capital of the Company was Rs 16.19 crore constituting of 8,09,39,303 equity shares of Rs 2/- each. There was no change in the capital structure of the Company during the year under review.

Extract of Annual Return

The Extract of Annual Return in Form MGT-9, as required under Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, is attached and marked as Annexure - 4 and forms part of this report and is also available on the Companys website www.dalmiasugar.com.

Corporate Social Responsibility (CSR)

The Company has been following the concept of giving back and sharing with under privileged sections for more than eight decades. The Corporate Social Responsibility of the Company is based on the principal of Gandhian Trusteeship. For over eight decades, we have 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 www.dalmiasugar.com. Pursuant to the said policy, the Company has spent Rs 3.90 crore towards corporate social responsibility activities during the FY 2019-20. The said amount spent was 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 Transaction Policy and Transactions

All Related Party Transactions entered during the FY under review are on arms length basis and in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and Listing Regulations.

All Related Party Transactions are placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature and in the best interests of the Company.

There were no material contracts or arrangements or transactions entered into with the related parties during the year under review. The Company has formulated a policy on materiality and on dealing with Related Party Transactions. The policy as approved by the Board may be viewed on the Companys website www.dalmiasugar.com.

Risk management

Your Company has adequate risk management processes and procedures, based on the 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 risks but to proactively address them. The Audit Committee oversees the risk management plan and ensuring its effectiveness.

Adequacy of Internal Financial Controls

Your Company has in place adequate internal financial control systems commensurate with the size of operations. The policies and procedures adopted by your Company ensures the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, adequacy and completeness of the accounting records and timely preparation of reliable financial information.

The internal auditors of the Company conduct regular internal audits as per approved plans; 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-E_ect-Action (CEA) systems and escalation matrices to ensure that all critical aspects are addressed well in time.

Whistle Blower Policy and Vigil Mechanism

In Compliance with the provisions of section 177 of the Companies Act, 2013 and Regulation 22 of Listing Regulations, 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, illegal or unethical practices, unethical behaviour, actual or suspected fraud, health, safety and environmental issues. Adequate safeguards are provided against victimization to those who use such mechanism and direct access to the Chairman of the Audit Committee in appropriate cases is provided. The policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination is made against any person for a genuinely raised concern. The Whistle Blower Policy and Vigil Mechanism may be accessed on the Companys website www.dalmiasugar.com.

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 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 Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the FY 2019-20, no complaint was received by ICC.

Loans, Guarantees, Security and Investments

Your Company has given loans and guarantees, provided security and made investments within the 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, securities provided and investments made are provided in the Standalone Financial Statements at note no. 43.

Energy Conservation, Technology Absorption and Foreign Exchange Transactions

A statement giving details of Energy Conservation, Technology Absorption and Foreign Exchange Transactions, is attached and marked as Annexure – 6 and forms part of this report.

Cost Records and Auditor

Your Company maintains the cost records with respect to its sugar and power business in terms of section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014. R.J. Goel & Co., Cost Accountants, were appointed as the Cost Auditors of the Company to conduct Cost Audit for the financial year ended March 31, 2019, and they had submitted the Cost Audit Report for the said year on July 29, 2019.

R. J. Goel & Co., Cost Accountants, New Delhi, was appointed as the Cost Auditors to conduct cost audit for the financial year ended March 31, 2020 and they will be submitting their report in due course of time.

Your Directors have re-appointed R.J. Goel & Co., Cost Accountants, New Delhi, as the Cost Auditors to conduct a cost audit for the financial year ended March 31, 2021 at remuneration to be rati_ed by the shareholders at the forthcoming Annual General Meeting.

Statutory Auditor and their report

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 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.

Secretarial Auditor and their Report

The Board had, in its meeting held on May 20, 2019, appointed M/s Harish Khurana & Associates, Practicing Company Secretary, as the Secretarial Auditor of the Company for the FY ended March 31, 2020.

As required under the Section 204 of the Companies Act, 2013 and Listing Regulations, the Secretarial Audit Report in Form MR-3 of the Company for the FY 2019-20 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.

Compliance with Secretarial Standards

The Company has complied with all the applicable Secretarial Standards (SS) issued by the Institute of Company Secretaries of India from time to time and approved by the Central Government.

Deposits

During the financial year under review, the Company had not accepted any deposits as per Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

Awards and Recognition

Your Company continued its quest for excellence in its chosen area of business to emerge as a true global brand. Several awards and rankings continue to endorse as a thought leader in the industry. The Awards / recognitions received during the FY 2019-20 include:

• The Whole Time Director of the Company, Mr. Bharat Bhushan Mehta, has received a Life Time Achievement Award by the Sugar Technologists Association of India

• Nigohi Unit of the Company has received CII Sugartech Award 2019 and First Prize for Best Stall in Mithas Mela 2019

• Jawaharpur Unit of the Company has been awarded with the Best Overall Performance Sugar Mill Award

Significant and Material Orders passed by the Regulators or Courts or Tribunals

There are no significant or material orders which were passed during the financial year 2019-20 by the Regulators or Courts or Tribunals which impact the going concern status and the Companys operations in future.

Acknowledgement & Appreciation

Your Directors express their sincere appreciation for the assistance and co-operation received from the Government authorities, financial institutions, banks, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Companys executives, staff and workers.

For and on behalf of the Board

Gautam Dalmia Bharat Bhushan Mehta
Managing Director Whole Time Director
Dated: June 19, 2020
Place: New Delhi