Kesar Enterprises Ltd Directors Report

To

The Members,

Your Directors present the Annual Report of Kesar Enterprises Limited (the Company) along with the audited financial statements for the financial year ended March 31, 2024.

1. Financial Highlights

(Rs. In Lakhs)

Particulars	Financial Year 2023-24	Financial Year 2022-23
Profit / (Loss) before interest, depreciation & taxation	11570.70	225.01
Less: Finance Cost	1390.34	2731.72
Profit / (Loss) before Depreciation & Taxation	10180.36	(2506.71)
Less: Depreciation and Amortisation Expense	1821.55	1898.87
Less: Taxation / Deferred Tax	-	-
Profit / (Loss) for the year	8358.81	(4405.58)
Other Comprehensive Income
Items that will not be reclassified to profit or loss:
(i) Actual loss on defined benefit obligation	(30.06)	(70.91)
(ii) Effect of measuring investment at fair value	439.30	(7.70)
Net Profit or (Loss) for the year	8768.05	(4484.18)

For the Financial Year 2023-24, there is a profit of Rs. 8358.81 lakhs as against a loss of Rs. 4,405.58 lakhs in the previous year. After taking into account the effect of other Comprehensive Income based on Ind-AS norms, there is a profit of Rs. 8768.05 lakhs for the Financial Year 2023-24 as against a loss of Rs. 4,484.18 lakhs in the previous year.

Over the last few years, the Sugar Industry has been facing severe difficulties on account of high sugar cane prices set by the State Government, lower sugar prices, reduction of power rates and consequential inadequate recovery of cost of production. These factors have adversely affected the Companys operations and financial performance.

2. Companys Operational Performance (Financial Year 2023-24) Sugar Division

The crushing for the Season 2023-24 started on 27-10-2023 i.e. 4 days earlier, after considering the cane maturity factor etc., as compared to 31-10-2022 in the previous season, and ended on 19-03-2024 i.e. 37 days earlier, as against 26-04-2023 in the previous season, due to less availability of cane in general and also because of heavy diversion of cane. During the season, the plant has crushed 94.24 lakh quintals of sugarcane in 144 days as against 115.99 lakh quintals in 177 days in the previous season. The crushing was lower by 21.75 lakh quintals during the season, as compared to previous season. The reduction in the cane crush is mainly due to lower yield of cane per hectare as compared to previous years. This has been a common factor for all the sugar units in the State of Uttar Pradesh, especially in Central and Eastern part of the State. In our captive cane area, overall average yield per hectare has fallen to 514 quintals per hectare during SS 2023-24 as against 551 quintals per hectare of previous SS 2022-23. Also, there was a considerable reduction in the cane area due to diversion of some area to the neighboring factories by the cane authorities, which has gone down to 28,549 hectares during SS 2023-24, as against 30,983 hectares during SS 2022-23. However, overall sugar recovery has gone upto 10.81%, which was 10.49% during previous season. During the season, the sugar production was 10.18 lakh quintals, as against 12.16 lakh quintals in the previous season.

Following is a brief table explaining the changes and impact of Fair and Remunerative Price (FRP) fixed by the Central Government and the State Advisory Price (SAP) fixed by the State of Uttar Pradesh for cane price:

Category	Details	SS 2023-24	SS 2022-23
FRP Rs per quintal	Base Recovery	10.25	10.25
	Rs per quintal	315.00	305.00
	Premium per quintal of cane per increase of 0.10% recovery	3.07	3.05
	KELs Recovery	10.81	10.49
	FRP Payable / Qtl at KELs recovery	332.19	312.32
SAP Rs per quintal	Early Variety	370.00	350.00
	General Variety	360.00	340.00
	Rejected Variety	355.00	335.00
	Higher price paid over and above FRP on account of SAP	37.81	37.68

From the above table, it is apparent that, due to the system of adopting cane price payments based on SAP, in the State of UP, the Company has been compelled to pay higher price for cane as compared to the factories that are adopting the FRP based cane price.

During the last few years, the cost of production in the State of Uttar Pradesh (UP) was the highest in the country, which rendered the UP Sugar Industry unviable, cash-starved and uncompetitive. There is an urgent need to rationalize the cane pricing policy in the State of UP and adopt a ‘linkage formula as recommended by the Rangarajan Committee linking sugar cane price to sugar realisation. This is the only long-term solution for stability & viability of the Sugar industry. Indian Sugar Mills Association (ISMA) and UP Sugar Mills Association (UPSMA) have been in discussion on this issue with Central Government. However, the said issue is yet to be decided.

During the Season 2023-24, Molasses produced was 4.20 lakh quintals as against 5.28 lakh quintals in the previous season. The UP Government had announced the Molasses Policy for 2023-24 (November-October), wherein the molasses reservation ratio for the country liquor manufacturers had been increased to 26.18% as against revised order of 22.00% for the previous season.

During the year under review, there is a increase in the sugar selling price, as compared to the previous year. However, the increase in the sugar realisation is not in line with the increase of SAP announced by the UP State Government. Although the Government had approved an increase in Minimum Selling Price (MSP) for sugar 5 years ago, it did not introduce it.

Power Division

During the Sugar Season 2023-24, the Plant started on 19-10-2023 as against 20-10-2022 in the previous season and operated till 03-04-2024 as against 30-04-2023 in the previous season. This season also, the Company has stopped the power plant immediately after the closure of sugar plant operations and did not run the power plant during off-season on account of reduced, unviable power tariffs.

The Plant consumed 2.44 Lakh MT of bagasse and 0.16 Lakh MT of alternate fuel to generate 1.17 Lakh MW power as against 2.82 lakh MT of bagasse and 0.39 lakh MT of alternate fuel to generate 1.39 Lakh MW power in the previous Season. The total power exported to Uttar Pradesh Power Corporation Limited (UPPCL) was 0.76 lakh MW amounting to Rs. 26.50 Crores as against 0.94 lakh MW amounting to Rs. 30.70 Crores in the previous Season.

The Uttar Pradesh Electricity Regulatory Commission vide notification dated 25.07.2019 reduced the power purchase rates of bagasse-based power plants with effect from 01.04.2019 from Rs. 5.86 per unit to 3.76 per unit. As per this notification, power purchase rate with effect from 01.04.2022 has become Rs. 3.33 per unit. The sugar industry has filed a writ petition to challenge such reduction in power rates before the Honble High Court, which has been admitted, as at present rates running of power plant is an unviable proposition.

Spirits Division

During the year, Distillery plant was operated at its full capacity of 45 KLPD, as per the guidelines of Pollution Control Board (PCB).

Below given are the comparative figures of two seasons:

		Season (November to October)
Product	UoM	2023-24	2022-23 (Till end of Season 30-06-2023)
Molasses Consumed	Lakh Qtl	1.81	4.02
Rectified Spirit (RS)	Lakh BL	43.12	93.09
Ethanol	Lakh BL	0.00	0.00
DS / SDS	Lakh BL	43.00	92.99

With a view to capitalise change in the market scenario, the Company has not offered any quantity of Ethanol to Oil Marketing Companies (OMCs) and has decided to supply RS / SDS directly in the open market. However, even the RS / SDS market has not picked up in terms of the rates offered by major players who were our customers all these years. The maximum price that they could offer is only 45 per BL of SDS as against our previous years average realisation of Rs. 52.90 per BL. After evaluating the profitability scenario of distillery operations, and in view of cost of producing RS / SDS vis-?-vis sales realisation, it has been decided to discontinue production of RS / SDS also from the month of Feb 2024 and have stopped the distillery plant operations from 22nd Feb 2024, after producing around 43 Lakh BL of RS during this SS 2023-24. It was also decided to sell the balance of 1.20 Lakh quintals of free sale C molasses in the market directly, which will relatively increase the profitability for the company as a whole.

3. Expectations from Financial Year 2024-25 Sugar Division

The crushing for Season 2024-25 is expected to start in the last week of October 2024 / 1st week of November 2024 depending upon the cane maturity status and other relevant factors.

During the Financial Year 2024-25, the sugar price is expected to be steady due to expected low level of opening stock of sugar, as well as possibility of reduced availability of cane. This may result in the Company generating better operational margins gradually. The industry outlook is positive in the short term and long term with sugar prices expected to be encouraging and stable.

Spirits Division

With the completion of installation of the incineration boiler during the Financial Year 2021-22, the focus will now be on Distillery expansion project of installing a new 80 KLPD MPR plant. Although the original plan was to complete this 80 KLPD plant by September 2022, it got deferred due to certain factors, but it is expected to be executed soon. Once the 80 KLPD plant gets commissioned, the Company will start running the Distillery at its new capacity of 80 KLPD, which can go upto 96 KLPD with B Heavy molasses. With the higher sales revenue /margin from B Hy molasses, the Company is hopeful of a better performance of its Spirit division, with commissioning of the 80 KLPD plant during next season. Till such time, the Company will continue to run its Distillery at 45 KLPD capacity. However, all these decisions will be based on the required availability of funds for expansion as also the market scenario which is unpredictable.

Power Division

The start date of Cogen Power Plant will be synchronized with the start of the Sugar plant and is most likely to start its operations from the last week of October 2024 and will be operated till the end of sugar crushing season 2024-25.

4. Dividend

Considering the financial position of the Company, your directors have not recommended any dividend for the financial year 2023-24.

5. Transfer to Reserves

No amount is proposed to be transferred to reserves during the year under review.

6. Share Capital

As on March 31, 2024, the Paid-up Share Capital of the Company was Rs. 1007.97 lakhs. During the year under review, the Company has not issued any shares. The Company has no Employee Stock Option Scheme in existence.

7. Directors Responsibility Statement

Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013 (the Act), the Board of Directors to the best of their knowledge hereby state that: i) in preparation of the annual accounts for the financial year ended on March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures; ii) the Directors had selected such accounting policies and applied them consistently and made judgments 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 for that period; iii) 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. iv) the Directors had prepared the Annual Accounts for the financial year ended on March 31, 2024 on a going concern basis. v) the Directors had laid down proper internal financial controls in place and that such internal financial controls were adequate and were operating effectively. vi) 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.

8. Number of Meetings of the Board

Six (6) meetings of the Board of Directors were held during the year under review. For details of meetings of the Board of Directors, Members may kindly refer to the Corporate Governance Report, which is a part of this report.

9. Audit Committee

As on March 31, 2024, the Audit Committee comprised of four (4) members, including three (3) Independent Directors and one (1) Executive Director. Further details of the Audit Committee are provided in the Corporate Governance Report, which forms part of this report.

During the year under review, there were no instances where recommendations of the Audit Committee were not accepted by the Board.

10. Directors & Key Managerial Personnel

As on March 31, 2024, 66.67% of the Board comprised of Independent Directors. List of Directors as on 31st March 2024 is provided in Corporate Governance Report, forming part of this Report.

Pursuant to Section 152 of the Act, Shri Devendra J Shah, Non-Executive Non-Independent Director (DIN: 03095028) shall retire by rotation at the 89th AGM and being eligible, he has offered himself for re-appointment. A resolution seeking shareholders approval for his re-appointment along with other necessary details, forms part of Notice of 89th AGM.

Mrs. Ranjana Sinha, Independent Director (DIN: 06989942) will complete 1st Term of 5 consecutive years on 19.09.2024. After due consideration based on recommendation of the Nomination and Remuneration Committee and on the basis of report of performance evaluation, the Board of Directors have recommended the re-appointment of Mrs. Ranjana Sinha as Independent Director for 2nd Term of 5 consecutive years w.e.f. 20.09.2024. A resolution seeking shareholders approval for her re-appointment along with other necessary details, forms part of Notice of 89th AGM.

Pursuant to the provisions of Section 149 of the Act, the Independent Directors have submitted declarations that each of them meets the criteria of Independence as laid down under Section 149(6) of the Act along with the rules framed thereunder and Regulation 16 (1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations). There has been no change in the circumstances affecting their status as Independent Directors of the Company.

The Independent Directors have confirmed compliance with the Code for Independent Directors prescribed in Schedule IV to the Act and also, with the Code of Conduct for Directors and Members of Senior Management formulated by the Company.

During the year under review, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees.

Pursuant to the provisions of Section 203 of the Act, following are the Key Managerial Personnel of the Company as on 31st March 2024:

Name	Designation
Shri Harsh R Kilachand	Chairman & Managing Director
Shri Sharat Mishra*	Chief Operating Officer
Shri Rohit Balu	Chief Financial Officer
Shri Gaurav Sharma	Company Secretary & Assistant Vice President (Legal & HR)

* The Board of Directors of the Company, at their meeting held on 27.03.2024, appointed and re-designated Shri Sharat Mishra as Chief Executive Officer (Key Managerial Personnel under the Act) w.e.f. 1st April 2024.

The Directors and Key Managerial Personnel have confirmed that during the year under review, none of them have entered into any agreement for himself / herself or on behalf of any other person, with any shareholder or any other third party with regard to compensation or profit sharing in connection with dealings in the shares of the Company.

11. Details of Familiarisation Programmes

Pursuant to the provisions of Regulation 25 of the Listing Regulations, the Company familiarises the Independent Directors through various programmes, from time to time, with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc. The details of Familiarization Programmes imparted to Independent Directors are placed on the Companys website on https://www.kesarindia.com/corporate_governance.html .

12. Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and the individual directors pursuant to the provisions of the Act and the Listing Regulations.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as composition and structure of the Board, effectiveness of the Board processes, information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings etc.

The performance of individual directors was evaluated by the Board on the basis of criteria such as the contribution of each director to the Board and Committee Meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc.

The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.

In a separate meeting of independent directors held on 02.02.2024, performance of the Board as a whole, Board Committees and Chairman & Managing Director of the Company was evaluated.

Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.

13. Policy on directors appointment and remuneration and other details

The Companys policy on appointment of directors, key managerial personnel and senior management and their remuneration is available on the Companys website on https://www.kesarindia.com/corporate_governance.html . The policy on remuneration has also been disclosed in the Corporate Governance Report, which is a part of this report as an annexure.

14. Corporate Social Responsibility (CSR)

Although the provisions of Section 135 of the Act are not applicable to the Company at present, the Company has a Corporate Social Responsibility Committee. The Composition of the committee is provided in the Corporate Governance Report, forming part of this report.

Although the Company was not required to spend any amount during the year under review in terms of provisions of Section 135, the Company carried out various CSR activities during the year under review, including the following:

Imparting training to Girls from rural areas for sewing Cloths

Distribution of Woolen cloths during winter season, among needy people

Organizing Eye Testing and Blood Donation Camps

15. Internal Financial Control Systems and their Adequacy

The Company has adequate Internal Financial Control Systems in place. The details in respect of internal financial controls and their adequacy are included in the Management Discussion and Analysis Report, which is a part of this report.

16. Risk Management

Your Company has formulated a risk management policy to identify, evaluate and mitigate various kinds of risks. The Audit Committee has oversight in the area of financial risks and controls. A detailed statement indicating the development and implementation of the risk management policy for the Company, including identification of various elements of risk, is part of the Management Discussion and Analysis Report, forming part of this report.

17. Statutory Auditors & Secretarial Auditors

At the 85th Annual General Meeting of the Company held on 11 September 2020, M/s. V. C. Shah & Co., Chartered Accountants were appointed as statutory auditors of the Company to hold office for a term of 5 (Five) years from the conclusion of the 85th Annual General Meeting till the conclusion of 90th Annual General Meeting of the Company to be held in year 2025.

The Board of Directors had, at its meeting held on 10th August 2023, appointed M/s. Dhrumil M. Shah & Co. LLP, Practicing Company Secretaries as secretarial auditors of the Company to undertake the secretarial audit for the financial year 2023-24, in terms of the provisions of Section 204 of the Act.

18. Statutory Auditors Report and Secretarial Auditors Report

The Statutory Auditors have submitted their Report for the year ended on 31st March 2024, which has been taken on record by the Board of Directors. There is no qualification, reservation or adverse remark in the Statutory Auditors Report. No frauds have been reported by the Statutory Auditors during the financial year 2023-24. The Statutory Auditors Report forms part of this annual report.

The Secretarial Auditors have also submitted their Report for the year ended on 31st March 2024. There is no qualification, reservation or adverse remark in the Secretarial Auditors Report. No frauds have been reported by the Secretarial Auditors during the financial year 2023-24.

The Secretarial Audit Report is annexed to this report as "Annexure I". 19. Cost Audit

The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of section 148 of the Act and the same have been made and maintained in accordance with the said provision.

Pursuant to Section 148 of the Act, the Board of Directors had appointed Shri Rishi Mohan Bansal, Cost Accountant as Cost Auditor of the Company to conduct the audit of cost records maintained by the Company relating to Sugar, Industrial Alcohol and Electricity Divisions for the year ended on 31st March 2024. The Cost Audit Report when received from the Cost Auditor for year ended on 31st March 2024, shall be considered and examined by the Board and submitted to the Central Government within the stipulated time.

Based on the recommendation of the Audit Committee, the Board of Directors have, at their meeting held on 22nd May 2024, appointed Shri Rishi Mohan Bansal, Cost Accountant as Cost Auditor of the Company to conduct the audit of cost records maintained by the Company relating to Sugar, Industrial Alcohol and Electricity Divisions for the year ending on 31st March 2025. In pursuance of Section 148 (3) of the Act read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, a resolution seeking to ratify the payment of remuneration to the Cost Auditor for the financial year ending on 31st March 2025 forms part of Notice of ensuing 89th AGM.

20. Vigil Mechanism

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in accordance with Section 177(9) of the Act and Regulation 22 of the Listing Regulations, to report concerns about any violation of legal or regulatory requirements, misrepresentation of any financial statement and to report actual or suspected fraud or violation of the Code of Conduct of the Company.

The Policy allows the Whistle Blowers to have direct access to the Chairman of the Audit Committee in exceptional circumstances and protects them from any kind of discrimination or harassment. This Policy is available on the Companys website on https://www.kesarindia.com/corporate_governance.html .

21. Transactions with Related Parties

None of the transactions with related parties fall under the scope of Section 188(1) of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for the financial year 2023-24 and hence, does not form part of this report.

A policy of Related Party Transactions as approved by the Audit Committee and the Board of Directors is placed on the Companys website on https://www.kesarindia.com/corporate_governance.html .

22. Particulars of Loans, Guarantees and Investments

The particulars of loans, guarantees and investments as per Section 186 of the Act by the Company, have been disclosed in the financial statements.

23. Deposits from Public

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

24. Credit Facilities

During the year under review, no credit facilities were obtained by the Company from any bank or financial institution.

25. Insurance

The Company has taken adequate insurance for all its properties.

26. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March 2024 is available on the Companys website on http://www.kesarindia.com/communications.html .

27. Prevention of Insider Trading

In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015 on prevention of Insider Trading, your Company has a comprehensive code which lays down guidelines and advises the Directors, Key Managerial Personnel and other designated persons on procedures to be followed and disclosures to be made, while dealing in securities of the Company. The Companys Code of Conduct for the Directors and Members of Senior Management, also makes it a duty on the part of the Directors and Members of Senior Management to comply with the SEBI (Prohibition of Insider Trading) Regulations, 2015, while trading in securities of the Company.

The Audit Committee of the Board of Directors periodically reviews compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015.

28. Policy for Prevention of Sexual Harassment

The Company has complied with the provisions relating to constitution of an Internal Complaint Committee (ICC) for prevention and redressal of complaints / grievances on the sexual harassment of women at workplaces under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, the Company did not receive any complaint on sexual harassment.

29. Compliance with Secretarial Standards

Your directors state that applicable provisions of Secretarial Standards i.e. SS-1 and SS-2 issued by the Institute of Company Secretaries of India, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively have been duly followed by the Company.

30. Material Changes & Commitments Affecting Financial Position between the end of the financial year & Date of this Report

In the opinion of the Board of Directors, there are no material changes & commitments affecting the financial position of the Company between the end of financial year 2023-24 and date of this report.

31. Significant and Material Orders passed by the Regulators, Courts and Tribunals

There are no significant and material orders passed by any regulator or court or tribunal impacting the going concern status and companys operations in future, as on the date of this report except that Honorable National Company Law Tribunal, Mumbai Bench, vide its order dated 28.06.2023, allowed withdrawal of application filed by UCO Bank u/s 7 of Insolvency and Bankruptcy Code, 2016, which had sought initiation of Corporate Insolvency Resolution Process of the Company.

32. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars with respect to conservation of energy and technology absorption pursuant to Section 134(3)(m) of the Act are provided in "Annexure II" forming part of this Report. During the year under review, there were no Foreign Exchange Earnings and Outgo.

33. Particulars of Employees

Information required pursuant to Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees on the payroll of the Company in India, is provided as "Annexure III" to this report.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

34. Management Discussion & Analysis Report and Corporate Governance Report

Management Discussion & Analysis Report and Corporate Governance Report prepared in accordance with Schedule V of the Listing Regulations form part of this Report as Annexure IV and Annexure V respectively.

The Company has complied with the requirements as stipulated under Regulation 34 of the Listing Regulations. A Certificate from the Secretarial Auditors regarding the compliance of conditions of corporate governance, is annexed to Corporate Governance Report.

35. Acknowledgements

The Directors thank the Companys employees, customers, vendors and members for their continuous support. The Directors also thank the Government of India, Government of Maharashtra and Government of Uttar Pradesh and concerned Government departments and agencies for their co-operation.

	On behalf of the Board of Directors
	Harsh R Kilachand
22nd May 2024	Chairman & Managing Director
	DIN: 00294835