kothari sugars & chemicals ltd share price Directors report


to the members

Your Directors present the 62nd Annual Report of the Company together with the Audited Financial Statements for the year ended March 31, 2023.

Financial summary & highlights of the company

Financial Performance 2022 - 2023 2021 - 2022
Total Income 61,850 43,028
Profit/(Loss) before Interest, Depreciation 6,916 5,646
Interest 389 410
Depreciation 1,404 1,410
Exceptional items (Debit) / Credit 362 110
Profit/(Loss) Before Tax 5,485 3,936
Tax Adjustments including Deferred Tax 1,292 533
Profit / (Loss) after Tax before comprehensive Income 4,192 3,403
Other Comprehensive Income Net of Tax (23) (27)
Total Comprehensive Income 4,170 3,376

Financial highlights

The Companys Profit before Tax for the year ended 31 st March 2023 has increased by 1,549 lakhs to 5,485 lakhs as compared to 3,936 lakhs in the previous year. The total income from operations for the year ended 31st March 2023 is 60,997 lakhs as against 42,349 lakhs in the previous year. The increase in revenue is mainly due to higher sales volume of Sugar, Power and Bagasse. sugar industry overview world sugar:

The world sugar production during 2022 - 23 Sugar Year (SS) is expected to be around 180.4 million metric tons as against previous years 172.5 million metric tons. The sugar consumption during 2022 - 23 SS is expected to be 176.2 million metric tons as against 174.7million metric tons in the previous year. The sugar production in the forthcoming year 2023 - 24 SS is expected to be 182 million metric tons, to end up with a surplus. indias sugar production for the year 2022 - 23 SS is expected to be around 32.8 million metric tons against previous years 35.8 million metric tons. This decrease in production is mainly because of the reduction of cane yield in Maharashtra. The sugar consumption in the year 2022-23 SS is expected to be around 27.5 million metric tons. tamilnadus sugar production for the year 2022 - 23 SS is expected to be around 1.6 million metric tons against previous years 1.26 million metric tons. The rainfall was normal in about 60 to 70% of the States area. However, about 2 districts in central Tamilnadu which are important cane growing areas recorded less rainfall. In addition, due to the higher cost of cane harvesting (manual) and the higher revenue reported in other competitive crops like Paddy, Banana, Cotton etc., the sugarcane planting got affected in most of the factories command area. Its expected that there will be a reduction of fresh sugarcane planting area by around 40% compared to previous year. The Companys command area received about 26% less rainfall than the decade average rainfall. The fresh cane planting is expected to be around 70% of previous years achievement as the crop failure due to pest and disease incidence in the wet land areas has created fear among farming community. Confidencebuilding measures are being taken up involving Senior Scientists from the Sugarcane Breeding Institute, Coimbatore and Senior officials from the Department of Agriculture, Tamilnadu.

Performance of Business segment sugar

Your Company has crushed 10,87,693 tons of cane and produced 10,38,540 quintals of sugar as against crushing of 8,74,135 tons of cane and sugar production of 8,44,380 quintals in the previous year. In financial year 2022 - 23, the average Sugar recovery was 9.57% as against 9.70% in the previous year. The increase in cane crushing was possible on account of the increased area under sugarcane cultivation and yield.

Alcohol

Your Company has produced 178.22 lakhs litres of alcohol during the financial year 2022 - 23 against 171.96 lakhs litres in the previous year. Your Company has supplied 8.93 lakh litres of Ethanol to Oil Marketing Companies during the ethanol marketing year 2021 - 22. For the marketing year 2022 - 23, against the order of 9.07 lakhs litres, 80,000 litres were supplied till March23, and the balance quantity will be supplied before October 2023.

CO-GENERATION OF POWER

During financial year 2022 - 23, the total power generation was 88.25 million units against 71.66 million units for the corresponding period of 2021 - 22. The increase in power production was due to the increase in cane crushing volume. Long term PPA with TANGEDCO continues for Sathamangalam unit with a tariff of 4.669/Kw-hr. The surplus power from the Kattur unit is being sold to the open access consumers through bilateral agreements / IEX.

Dividend

The Board of Directors met on 30th May 2023 to take account of the full year performance, various growth opportunities, and also took note of the interim dividend of 0.50 paise per equity share of 10/- each declared during the year and the same was paid to the shareholders within the stipulated time. After reviewing this, the Board of Directors has decided to recommend a final

5% i.e., 0.50 paise per equity share of 10/- each for the financial year ended 31st March 2023. If the dividend is approved by the Members at the ensuing Annual General Meeting to be held on 10th August 2023, it will be paid on or before 07th September 2023 to those Members whose names appear in the Companys Register of Members as at the close of business hours on Thursday, 03rd August, 2023.This together with interim dividend of 0.50 paise per share (5%) already paid, would aggregate to a total dividend of 10% i.e., 1.00 (Rupees one only) per equity share for the year 2022 - 23.

CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION / FOREIGN EXCHANGE EARNING AND OUTGO (A) CONSERVATION OF ENERGY SATHAMANGALAM UNIT

Actual energy savings
Sl. No. Description Per day (in units) Annual cost ( in lakhs) capex. ( in lakhs)
1 55 KW VFD for Sugar Cooling tower fan No.2 480 3.29 2.27
2 110 KW VFD for Injection Pump Motor-1 360 2.47 3.39
3 3.7 KW of Planetary Drive for C-After Pug Mill 120 0.82 2.66
4 3.7 KW of Planetary Drive for B-Seed Mingular 120 0.82 2.66
total 1080 7.40 10.98

(b) technology absorption

(i) To reduce the dependency on labour and to reduce the cost of cultivation of sugar cane, your company has facilitated development of mechanical cane planters to suit the soil and other field conditions prevailing in the command area. These planter machines can do six operations simultaneously thereby reducing the time consumed for planting besides reducing the cost by over 60%. As of now there are 5 planters in operation in both the units area.

(ii) Harvesting of sugar cane is the major labour intensive and expensive activity of sugarcane cultivation. To reduce the cost and to reduce the dependency of labour, your Company has deployed about 32 sugarcane harvesters through entrepreneurs. We hope in the coming years mechanized sugarcane cultivation will play a major role.

(c) Foreign exchange earnings and outgo

sl. no. Particulars 2022 - 2023 2021 - 2022
(i) Total Foreign Exchange inflow - -
(ii) Total Foreign Exchange outflow 199.20 66.18

Awards And Recognition Sathamangalam

(i) National Energy Conservation Award: In appreciation of achievements in energy conservation, the Ministry of Power, Govt.of India, has awarded "National Energy Conservation Award - II prize (2019-21) in Sugar Sector to your Companys Sathamangalam unit. The award was given by the Honourable Minster for Power, Government of India on 14th Dec. 2022.

(ii) Overall Best Performance award - under Category of Private Sugar Mills inTamil Nadu Region was received from the Government of Tamilnadu in May 2022.

(iii) Best Technical Efficiency (2021-22) - Silver award in Tamil Nadu Region was received from the SISSTA on 27.08.2022.

Kattur unit has received Best Distillery-Platinum Award-Tamilnadu Region from the SISSTA in Aug 2022.

Research & development:

Your Company has started a Research and Development (R & D) unit for the development of value added products from Sugar and molasses. A new R & D facility was built near Sriperumpudur at the cost of 10 Crores.The unit started functioning from April23.

Board meetings

During the year 04 Board Meetings and 04 Audit Committee Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between any two meetings was within the period as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and MCA circulars thereon.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Arjun B Kothari, (DIN 07117816) Director is liable to retirement by rotation at the ensuing 62nd Annual General Meeting and being eligible offers himself for re-appointment. Mr. Arjun B Kothari, Managing Director, Mr. M. Silvester Goldwin, Whole Time Director, Mr. R. Krishnan, Chief

Financial Officer and Mr. R. Prakash, Company Secretary are the Key Managerial Personnel of the Company as per section 203 of the Companies Act, 2013.

Mr. C.V. Krishnan, (DIN: 01606522) was re-appointed as the Independent Director of the Company for a second term of fiveconsecutive years with effect from 28 th May 2023 as approved by the shareholders at the 61st AGM. The Board is of the opinion that Mr. C.V. Krishnan is a person of integrity and possess relevant expertise and experience (including the proficiency) of the Independent Director who was appointed during the year.

Declaration From Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16 of the SEBI (LODR) Regulations, 2015 that the Independent Directors of the Company continues to meet the criteria of their Independence laid down in Section 149(6) including the confirmations that their names have been included in the

Data Bank maintained by the Indian Institute of Corporate Affairs and all the Independent Directors were exempted from undergoing the online proficiency test for the Independent Directors pursuant to Rule 6(4) of

Companies (Appointment and Qualification of Directors)

Rules, 2014.

During the year under review, the Independent Directors met on February 08, 2023 without the presence of Non - Independent Directors and members of the Management.

Composition Of Audit Committee

The details of the composition of Audit Committee are provided in the Corporate Governance Report of this Annual Report. The Board has not rejected any proposal / recommendations of Audit Committee during the year.

REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The salient features of the Remuneration Policy are stated in the Corporate Governance Report. The Remuneration Policy approved by the Board of Directors is posted on the website of the Company www.hckotharigroup.com/kscl

Vigil mechanism / whistle Blower Policy

The Company has a vigil mechanism named "Whistle Blower Policy" to deal with genuine concerns, if any, raised by the Directors / Employees. The details of Vigil Mechanism / the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the Companys website www.hckotharigroup.com/kscl

Prevention of insider trading

The Company has adopted a Code of Prevention of Insider Trading with a view to regulating trading in securities by the Promoters, Directors and Designated Persons of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Companys shares by the Promoters, Directors and the designated persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed.

Directors Responsibility Statement

In terms of Section 134(5) of the Companies Act, 2013, the Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

(b) 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 and loss of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in acco rdance with the provisions of this 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;

(e) the directors had laid down internal financialcontrols to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (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.

Material Changes And Commitments

There is no change in the nature of business of the company during the year. There is no material change or commitment affecting the financial position of the company that has occurred since 31st March 2023 to the date of this report.

Share Capital

The paid-up equity share capital of the Company as on March 31, 2023 was 8,288.86 Lakhs. The Company has neither issued any shares with differential voting rights nor granted stock options or sweat equity.

Annual Return

As required under Section 92(3), copy of Annual Return is placed on the Companys website.The web link to access the annual return is http://hckotharigroup.com/ kscl/?q=node/20 auditors

a) Statutory Auditors

T h e S t a t u t o r y A u d i t o r s o f t h e C o m p a n y M/s. P. Chandrasekar LLP, Chartered Accountants (Registration No.: 000580S/S200066) has been re- appointed for the second term by the Shareholders at the 61st AGM held on 3rd August 2022 to hold office till the conclusion of the 66th Annual General Meeting of the Company.

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the

Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. There are no qualifications or observations, or any adverse remarks made by the Auditors in their Report on the Financial Statements for the year 2022-23 and no fraud was reported by auditors under Section 143(12) of the Companies Act, 2013.

b) cost auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Cost Audit Records for maintained by the Company in respect of its Sugar, Co-gen and Distillery Unit are required to be audited. Your Directors, on the recommendation of the Audit Committee, appointed Mr. K. Suryanarayanan, Cost Accountant in Practice for conducting the audit of cost records of the Company and the remuneration payable to the Cost Auditor is required to be ratified by the Members in a general meeting. Accordingly, a Resolution seeking Members ratificationfor the remuneration payable to Mr. K. Suryanarayanan, Cost Accountant, is included at Item No. 04 of the Notice convening this 62nd Annual General Meeting.

c) secretarial auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M. Alagar, of M/s. M. Alagar and Associates, Chennai, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is forming part of this Annual Report. The Secretarial Report does not contain any qualifications or observations.

deposits

The Company has not accepted deposits either from the members or public falling within the ambit of Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year, hence, there were no outstanding deposits during and at the end of the financial year 2022 - 2023.

holding company

The holding Company, Parvathi Trading and Finance Company Private Limited which held 70.20% in Kothari Sugars and Chemicals Limited (KSCL) got amalgamated with NBK Real Estates Private Limited pursuant to the Scheme of Amalgamation for the Group Companies restructuring as approved by the Honble National Company Law Tribunal, Chennai. Hence, NBK Real Estates Private Limited is the holding company of KSCL holding 70.20% with effect from 15.05.2023. However, the ultimate control of the Company remains with the same individuals, as before.

significant and material orders Passed by the regulators

There are no significant and material

Regulators / Courts which would impact the going concern status of the Company and its future operations

internal Financial control systems and their adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Audit function is carried out by an independent firm of Chartered Accountants. The scope and authority of the Internal Audit function is defined by the Audit

Committee. The Internal Audit Reports are placed before the Audit Committee on a quarterly basis for its scrutiny and suggestions, if any. The Internal Auditor attends the Audit Committee meetings.

The Internal Auditors monitor and evaluate the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the Report of the Internal Auditors, the Company undertakes corrective action in the respective areas and strengthens controls.

Particulars of loans, guarantees or investments

The Company has not given any Loans or Guarantees covered under the provisions of section 186 of the Companies Act, 2013. The details of the general investments made by the company are given in the notes to the financial statements.

risk management

Pursuant to the requirement of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has laid down the procedures to inform Board Members about the risk assessment and minimization procedures. Accordingly, the Company periodically submits the Risk Management Review Report to the Board for its review and suggestions.

corporate social responsibility Policy

Pursuant to the provisions of section 135 and schedule VII of the Companies Act, 2013, Corporate Social Responsibility (CSR) Committee was formed to recommend (a) the policy on CSR and (b) implementation of the CSR Projects or Programs to be undertaken by the Company as per CSR Policy for consideration and approval by the Board of Directors. The policy on CSR as approved by the Board is posted on the Companys website www.hckotharigroup. com/kscl. A detailed Report on CSR activities in the prescribed format is forming part of this Annual Report.

related Party transactions

All related party transactions entered during the financial year were on an arms length basis and in the ordinary course of business. There were no ‘material contracts or arrangements or transactions, and therefore disclosure in form AOC-2 is not required. All related party transactions are placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are foreseen and repetitive in nature. For all the transactions entered pursuant to the omnibus approval so granted, a statement giving details of all such transactions is placed before the Audit Committee for their review on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is posted on the Companys website www. hckotharigroup.com/kscl

annual Performance evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the Annual Performance Evaluation of the Board, its Committees and of individual directors in the format (questionnaire) prescribed by the Nomination and Remuneration Committee of the Company.

The structured questionnaire covers various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performanceofspecific obligations and governance etc.The performance evaluation of the Directors (without participation of the relevant Director) was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process.

separate meeting of independent directors

The Independent Directors of the Company had met during the year on 08th Feb 2023 to review the performance of Non-Independent Directors and the Board as a whole, reviewed the performance of the Chairperson of the Company and also assessed the quality, quantity and timeliness of flow of information between the company management and the Board without the presence of the Non-Independent Directors and members of the Management.

disclosure about cost audit

Filing of cost audit report 2022-2023 2021-2022
Due Date 27.09.2023 27.09.2022
Actual Date 30.08.2023 (Tentatively) 22.08.2022
Cost Auditor Details Mr. K. Suryanarayanan, Mr. K. Suryanarayanan,
Audit Qualification in Report M.No. 24946, Chennai - M.No. 24946, Chennai Nil

listing with stock exchanges

The Company is listed in The National Stock Exchange of India Limited (NSE) and the Stock Code is KOTARISUG &

ISIN INE419A01022. The Company confirms that it has paid the Annual Listing Fees for the year 2023 - 2024 to NSE where the Companys Shares are listed.

corporate governance and shareholders information

Your Company has taken adequate steps to adhere to all the stipulations laid down in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance is included as a part of this Annual Report.

Certificate from the Practising Company Secretary confirmingthe compliance with the conditions of Corporate

Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this Report.

management discussion and analysis report

A detailed discussion on the industry structure (dealing with world sugar and Indian sugar) as well as on the financial and operational performance is contained in the ‘Management

Discussion and Analysis Report that forms an integral part of this Report.

disclosure under the sexual harassment of women at workplace (prevention, prohibition and redressal) act, 2013

The Human Resources Department created an "Internal Complaints Committee" for the prevention and redressal of sexual harassment of women at workplace as per the requirement of Sexual harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act 2013. There were no incidents of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Particulars of employees

Disclosures pertaining to remuneration and other details as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report.

Particulars pursuant to section 197(12) and the relevant rules:

a) The ratio of the remuneration of each director to the median employees remuneration for the financial year and such other details: Except Mr. Arjun B. Kothari, Managing Director and Mr. M. Silvester Goldwin, Whole Time Director of the Company, no other director was in receipt of remuneration except sitting fees.

Sl. No. Name Designation Ratio
(i) Mr. Arjun B. Kothari Managing Director 87:1
(ii) Mr. M. Silvester Goldwin Whole Time Director 26.11:1

b) T he percentage increase in remuneration of each

Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

SL. NO. NAME DESIGNATION PERCENTAGE OF INCREASE
(i) Mr. Arjun B. Kothari Managing Director As aproved by the Shareholders
(ii) Mr. M. Silvester Goldwin Whole Time Director 10%
(iii) Mr. R. Krishnan Chief Financial Officer 10%
(iv) Mr. R. Prakash Company Secretary 10%

c) 5.05% increase has been reported in the median remuneration of employees in the financial d) The number of permanent employees on the rolls of the company as on 31st Mar 2023: 521. e) Increase of remuneration for employees was in the varying range of 5% to 22% and for KMP the increase was 10% for the year. f) We affirm that the remuneration paid during the period under review is as per the Remuneration Policy of the Company.

compliance with secretarial standards

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

cautionary statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from those either expressed or implied in the statement depending on the circumstances.

acknowledgement

Your Directors thank the Banks, Customers, Farmers, Financial Institutions, Government Authorities, Suppliers and Shareholders for their continued support. Your Directors also place on record their appreciation for the services rendered by the employees of the Company.

On behalf of the Board
for Kothari sugars and chemicals limited
Place : Chennai nina B. Kothari
date : May 30, 2023 Chairperson