Jeypore Sugar Company Ltd Management Discussions

COMPANY’S PERFORMANCE

The performance of the company during the year under review was greatly affected by the continued inadequate supply of cane. This has resulted in a substantial reduction in the operation of the sugar unit and the company was able to crush 3,97,231 tonnes of cane only against 5,43,840 tonnes in the previous year. The recovery also registered a downward trend. Further the market for the sugar also was volatile with the prices ruling uncertain and the realisation was also seriously affected. The reduced operations of the sugar unit affected the Distillery units and the Co-generation unit also. These units consequently reported lower turnover. This had a telling effect on the revenue and financial performance of the company during the year.

INDUSTRY OUTLOOK

The performance of Sugar Industry all over the world was good during the sugar season, however the performance in India was bad which was mainly due to excess production. During the year under review, the industry registered record output of sugar which has resulted in the sugar prices tumbling down. It is expected that this trend will continue in the coming season also, ie: 2015-16. Unless some good remunerative prices for sugar is ensured, the sugar mills may not be able to sustain their operations in a reasonable way and to carry on the business. The Government should come up with more sops and corrective measures to ensure the proper working of the sugar mills, e.g by creating a buffer stock to meet any eventuality of reduced production as done in previous years.

8. Change in the nature of business, if any

During the year under review, there is no change in the nature of business.

9. Material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report

No significant material changes have happened subsequent to the Balance Sheet date.

10. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operation in future

No significant and material orders passed by the regulators impacting the going concern status and company’s operation in future.

11. Details in respect of adequacy of internal financial controls with reference to the Financial Statements

The company has got an inbuilt arrangement which ensures proper financial controls in the activities of purchase, sales and accounting transactions. The purchase and sales are monitored by systematic enquiries, proper pricing and secured by regular purchase or sale orders covering all aspects of purchase and sale. The financial transactions are done under proper documentation, authentication and approved by management. All the key departments have been equipped with personnel having experience and knowledge to handle the affairs. The company has in place adequate system of internal controls which covers financial propriety, statutory compliances and safeguarding the assets of the company. During the year these controls were tested and no material weakness in the design were observed.

12. Details of Subsidiary/Joint Ventures/Associate Companies

The company does not have any subsidiary, Joint Venture or Associate Companies.

13. Performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement

The financial statements of the company are on stand alone basis as there are no subsidiaries or associate or Joint Venture Companies.

14. Deposits

a) Deposits accepted during the year from Directors	- Rs 4,11,00,000
From Inter corporates	- Rs 10,00,000

b) There are no deposits unpaid or unclaimed during the year.

c) There is no default in repayment of deposits or payment of interest during the year.

15. Statutory Auditors

The existing auditors of the company M/s.Brahmayya & Co, Chartered Accountants, Vijayawada retire at the conclusion of the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment.

16.Cost Auditors

M/s. Aruna Prasad & C0, Cost Accountants in Chennai have been appointed as Cost Auditors of the Company

17.Secretarial Audit

In terms of Section 204 of the Companies Act, 2013 and the Rules there under, the Company appointed Mr. M.Damodaran, Company Secretary in Practice, for conducting Secretarial Audit of the Company. The Secretarial Audit Report given by Mr.M.Damodaran in Form MR-3 prescribed under the Companies Act, 2013 is annexed as part of this Board’s Report (Annexure I). There is no qualification, observation or remark in the Secretarial Audit Report requiring explanation by the Board of Directors.

18.Auditors’ Report

The Directors offer the following explanations with reference to the observation made by the auditors in their report.

With regard to the valuation of assets at Pothavaram unit, the Management is in the process of demerging this unit into a separate company after obtaining the necessary approvals from the concerned authorities, the valuation of the assets and the necessary adjustments will be made in the accounts.

In respect of outstanding amount of Rs.1966.94 lakhs due to banks as overdue, the company has made arrangements to settle the same immediately.

19. Share Capital

A) Issue of equity shares with differential rights

During the year the company has not issued any kind of rights equity shares.

B) Issue of sweat equity shares

The company has not issued any sweat equity shares during the year.

C) Issue of employee stock options

There is no scheme of Employee Stock option plan

D) Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees

There is no arrangement in the company to buy back its shares by its employees or trustees.

20.Extract of the Annual Return

MGT 9 is enclosed to this report. (Annexure II)

21.Conservation of Energy, technology absorption and foreign exchange earnings and outgo

A) Conservation of Energy

Form A enclosed (Annexure III)

B) Technology absorption

Form B enclosed (Annexure IV)

C) Foreign exchange earnings and outgo

During this year company had no transactions involving earnings and outgo in foreign exchange.

22. Corporate Social Responsibility (CSR)

The provisions of Corporate Social Responsibility are not applicable to the company this year.

23. Directors

A) Changes in Directors and key Managerial Personnel Directors :

Smt.Rajeswary Ramakrishnan, Chairman and Managing Director is not seeking reappointment as Managing Director when her term of office expires on 2nd Sep 2015. She will continue as Non Executive Chairman of the company and will be the Chairman of the Board. Smt. Anita Prabhu, Executive Director has been proposed as Managing Director of the company for a period of 3 years from 3rd Sep, 2015 as decided by the Board on the recommendations of the nomination and remuneration committee on the terms and conditions set out in the notice.

KEY MANAGERIAL PERSONNEL

Mr. P.S.Krishnamoorthy , General Manager Finance and Company Secretary has retired from the company on 30th June 2015 and his service has been extended till 31st July 2015 and Mr. R.Ashok has been appointed as Chief Financial Officer and Company Secretary with effect from 3rd July 2015. The Board appreciated the efforts of Mr P.S.Krishnamoorthy and wished him a peaceful retired life.

B) Declaration by an Independent Director(s) and re-appointment, if any

The declarations by the Independent Directors pursuant to Sub Section 6 of Section 149 of the Companies Act, 2013 have been received by the company

C) Formal Annual Evaluation

The Board evaluates the performance of Non Executive Directors and Independent Directors every year. All the non executive and independent directors are eminent personalities having wide experience in the field of business, industry and administration. Their presence of the Board is advantageous and fruitful in taking business decisions.

24.Number of meetings of the Board of Directors

Six meetings of the Board of Directors were held on the following dates:-

1) 30-05-2014

2) 18-06-2014

3) 14-08-2014

4) 15-09-2014

5) 12-11-2014

6) 11-02-2015

25.Audit Committee

The composition of the audit committee consists of the following directors :

Sri.R.Kannan, Chairman

Sri.K.Subramanian, Member

Sri.Boppana Ramalingeswara Rao, Member

Dr.S.R.K.Prasad, Member

Executive Director attends the audit committee meeting as invitee.

26. Nomination and Remuneration Committee

Nomination and remuneration committee deals with the appointment, reappointment, withdrawal of appointment of whole time directors / Key Managerial Personnel , which include terms of appointment, remuneration package in accordance with the provisions of the Companies Act and any other statutory provisions related thereto.The composition of the Committee is as follows :-

1. Sri. Boppanna Ramalingeswara Rao, Independent Non Executive Director - Chairman of the Committee

2. Sri. Muneswara Rao - Independent Non Executive Director - Member of the Committee

3. Sri. R.Kannan - Independent Non Executive Director - Member of the Committee

27.Particulars of loans, guarantees or investments under section 186

The company has given a corporate guarantee to M/s.ICICI Bank Ltd , in connection with the crop loans granted to the company’s cane growers to the extent of Rs.60 Crores.

28.Particulars of contracts or arrangements with related parties

During the year there were no materially significant transactions that might have had potential conflict with the interest of the Company.

29.Managerial Remuneration

Remuneration to whole time directors	- Rs.80,64,000/-
Remuneration to other directors (Sitting fees)	- Rs.12,00,000/-

30. Corporate Governance Certificate

Compliance of conditions of corporate governance as stipulated in Clause 49 of the Listing agreement is annexed with the report. (Annexure V)

31. Risk Management Policy

The Company has a risk management committee which formulates the risk management policy covering all risks the company faces such as legal, regulatory, financial, credit, market, IT, property etc. This policy is constantly reviewed and complied with.

32. Business Responsibility Report

Your company conducts its business in a fair manner and strongly believes in ethics, transparency and accountability. The company promotes the well being of its employees and respects the interests and is responsive to all the shareholders. The company provides customer value and strives to improve and add value to its consumer.

33. Directors’ Responsibility Statement

The Directors Responsibility statement referred to in clause (c) of sub section (3) of section 134 of the Companies Act, 2013, shall confirm that

a) In the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures

b) The Directors had 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 and loss of the company for that period.

c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities

d) The directors had prepared the annual accounts on a going concern basis and

e) The directors, had laid down proper internal financial controls which are adequate and operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

g) There are no employees covered under Section 134 of the Companies Act, 2013.

34. Listing of Stock Exchanges

Your Company’s shares are listed on the Madras Stock Exchange Ltd., The Company has made an application to Bombay Stock Exchange Ltd. to get the shares listed since Madras Stock exchange Ltd. has moved the shares of the company to the Dissemination Board of National Stock Exchange of India Limited and have advised all companies listed under MSE to approach other stock exchanges to get their shares listed. However a reply from Bombay Stock exchange Ltd. is awaited. The listing agreement with Bombay Stock exchange is yet to be signed and hence trading of shares is suspended till a confirmation is received.The company has paid the fee to Madras Stock exchange Ltd. to place the shares in the dissemination Board of NSEIL. The DEMAT ISIN No. of the Company is INEI80E01014.

35. Acknowledgement

The Directors wish to place on record their appreciation and thank Company’s Bankers, Financial Institutions and various departments of Central and State Governments and the share holders for the valuable support received from them. The Board also places on record their appreciation for the co-operation being extended by the cane growers in Chagallu to increase the sugarcane supply to the factory which met the requirements of the expanded capacity. The Directors also wish to place on record the valuable effort put in by all the employees and the cooperation extended by them.

	(By Order of the Board)
	for THE JEYPORE SUGAR COMPANY LIMITED
	(Sd.) RAJESWARY RAMAKRISHNAN
Place: Chennai	Chairman cum Managing Director
Date : 07-06-2015	(DIN:01385665)