Rajshree Sugars Director Discussions


Your Directors have pleasure in presenting the 37 Annual Report on the business and operations of the company and the audited financial statements for the year ended 31 March 2023.

2022-23 2021-22
Financial Highlights
Total Income 77,395.17 47,936.90
Profit before Finance Costs, Depreciation
and exceptional items 5,912.90 4,369.09
Less: Finance Costs 1,418.76 2,218.36
Depreciation 2,420.87 2,410.77
Profit / (loss) from ordinary activities before Tax 2,073.27 (260.04)
Tax Expenses 2,970.13 57.58
Profit / (loss) after Tax (896.87) (317.62)
Other comprehensive income /(loss), net of income tax (75.60) 23,378.46
Total comprehensive income /(loss) for the period (972.47) 23,060.84
Basic / Diluted earnings /(loss) per share of 10/- each,
before / after extraordinary items (2.71) (0.96)

2) Dividend

In view of the stressed financial position, your Directors have not recommended payment of dividend for the year 2022-23. Also no amount has been transferred to reserves.

3) Financial Performance

Your Company earned an income of Rs 77,395.17 lakhs in the year 2022-23 as against Rs 47,936.90 lakhs during the previous year. The Company has earned a net profit before tax of Rs 2073.27 lakhs as against net loss before tax of

Rs 260.04 lakhs incurred during the previous year. The net loss after tax has been Rs 896.87 lakhs as against the net loss of 317.62 lakhs in the previous year. This is due to the Company has opted for payment of income tax under Section 115BAA of the Income Tax Act, 1961 at the time of filing the return on income for the Assessment year 2022- 23 on 27 September 2022. Consequent thereof, excess provision for Deferred Tax Asset and Minimum Alternate Tax Credit not available for setoff is reversed.

4) Operational Performance

a) Sugar Division

The key operational data of our sugar division for the year 2022-23 are as follows:

Particulars 2022-23 2021-22
Sugarcane crushed (Tons) 17,81,221 12,78,164
Recovery % 8.87 9.01
Sugar Produced (Tons) 1,58,042 1,15,109
Sugar Sold (Tons) - Domestic 1,67,203 95,595

The sugarcane crushing has increased by 39% due to better availability of cane on account of the good monsoon in the command area.

b) Cogeneration Division

During the year under review, the total power generated by the Cogeneration Division was 2,042 lakh units as against 1,535 lakh units in the previous year. The company exported 1,253 lakh units during the year as against 974 lakh units in the previous year.

c) Distillery Division

The Distillery Division produced 223.35 Lakh litres of Alcohol during the year as against 160.03 lakh litres in the

previous year and sold 219.65 lakh litres as against 183.06 lakh litres in the previous year.

5) Restructuring of Sugar Development Fund (SDF) Loan.

The Company was in default of loans received from Sugar Development Fund (SDF), Government of India, since the Financial Year 2016. The Company has received the Administrative Approval (AA) dated 20 May 2022 vide letter reference no.File No.8-4/2010-SDF from the SDF, Ministry of Consumer Affairs, Food & Public Distribution, Department of Food & Public Distribution, for restructuring of SDF Ethanol loan of Rs 32.45 crore and Co-generation loan of Rs 21.10 crore availed by the Company. The Company has completed execution of Tripartite Agreement (TPA) with SDF and their nodal agency, for restructuring of the SDF loans, within the stipulated time.

The pending compliance of the terms of Tripartite Agreement is the perfection and modification of the existing security. The company has requested the appropriate authority of SDF for an amendment in the existing guidelines on security cover for the restructured debt in line with Statutory provisions of Indian Accounting Standards. Pending amendment, the Company has also requested that the validity of AA be extended for a period of four months from the date of such amendment to the security guidelines to enable the Company to register the modified security and file the necessary charge with Registrar of Companies.

6) Future Outlook

The management believes that no material uncertainty exists about the companys ability to continue as a going concern and accordingly the management has prepared these financial statements on a going concern basis.

Though the rainfall in the command area of our Company is lesser in comparison to the previous year, the recharged ground water is still supportive of the planting and factory operations for next two years.

With the production in Maharashtra and north Karnataka down from the estimated numbers and the stock position at the end of the season is likely to be low, situation looks positive on the domestic prices. The international sugar prices are also moving up sharply which should support the domestic prices (as the export values of the latest exports are high).

In the sugar season 2021-22 (October to September), India has exported about 11 million tons of sugar at a reasonable price. The Government of India, for sugar season 2022-23, has allowed sugar export of 6.2 million tons. Allowing of further export is not in visibility due to lower sugar production.

The ambitious ethanol program of the Central Government continues to be supportive to the sugar industry. In the year under review, the Union Cabinet approved the increase in price of Ethanol as follows:

C-Heavy Molasses - from Rs 46.66 to Rs 49.40 per Litre.

B-Heavy Molasses - from Rs 59.08 to Rs 60.73 per Litre.

Cane Juice - from Rs 63.45 to Rs 65.60 per Litre.

Transportation charges will also be compensated by OMCs

The price of potable alcohol Extra Neutral Alcohol (ENA) has also been stable.

Further, the Government policy on sugar would continue to have a significant bearing on the prospects of the industry in the coming years.

7) Fixed Deposits

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 (the Act) and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

8) Auditors

Statutory Auditors: M/s.S.Krishnamoorthy & Co., Chartered Accountants, Coimbatore (Firm Registration No. 001496S), hold office as Auditors upto the conclusion of the 40 Annual General Meeting (AGM) to be held for the financial year ending 31 March 2026.

Cost Auditors: In terms of Section 148 of the Act, read with Companies (Cost Records and Audits) Rules, 2014, the products manufactured by the company viz. Sugar, Industrial Alcohol and Cogeneration of Power are covered under the ambit of mandatory cost audits. Accordingly, the Company has made and maintained the accounts and cost records as specified by the Central Government under sub-section (1) of section 148 of the Act. Based on the recommendation of the Audit Committee, the Board of Directors have re-appointed M/s.S.Mahadevan & Co., Cost Accountants, as the Cost Auditor of the Company, to carry out the cost audit for the financial year 2023-24 and fixed their remuneration with increase by Rs 50,000/-. The resolution for ratification of remuneration in terms of Section 148(3) of the Companies Act, 2013 is being placed before the ensuing AGM.

Secretarial Auditor: Based on the recommendation of the Audit Committee, the Board of Directors have re-appointed Mr.G.Soundarrajan, Practicing Company Secretary, as the Secretarial Auditor, to conduct Secretarial Audit as per Section 204 of the Act, and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR),for the financial year ending 31 March 2024.

9) Conservation of energy, technology absorption, foreign exchange earnings and outgo

Annexed to this Report as Annexure 1.

10) Corporate Governance

The Company is committed to maintaining the highest standards of corporate governance and adherence to the corporate governance requirements prescribed by SEBI. The Company also follows several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the LODR forms an integral part of this Report as Annexure 2. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is also attached to the report on Corporate Governance.

11) Corporate Social Responsibility (CSR)

The Company has earned a net profit of 1681.07 lakhs during the Financial Year ended 31 March 2023, computed as per section 198 of the Act. Hence, provisions relating to Corporate Social responsibility as specified under section 135 of the Act will be applicable to the Company from the Financial Year 2023-24. The Company has already constituted its CSR

Committee in accordance with Section 135 of the Act read with Companies (CSR Policy) Rules, 2014 and the amendments thereto and formulated a CSR Policy which is available on the website of the Company at https://www.rajshreesugars.com/policies/

The Companys average net loss, as per the said Section for last three financial years (2022-23, 2021-22 & 2020-21) is

Rs 235.74 lakhs. Hence, the company is not required to spent any amount on CSR during the financial year 2023-24.

12) Details of Directors or Key Managerial Personnel Appointed / Resigned

Details of re-appointment and cessation of a Director / Key Managerial Personnel during the year are furnished below:

Name Designation Appointment / Reappointment / Resignation Effective from
Mr. Sheilendra Bhansali Independent Director Re-appointment 10 July 2022
Mr. R. Varadarajan Whole-time Director Re-appointment on retirement by rotation at the 36th Annual General Meeting 28 September 2022
Mr. S. Krishnaswami Independent Director Non-Executive Re-appointment 30 September 2022
Dr.P.Surulinarayanasami Non-Independent Director Vacation of office under section 167(1)(a) 31 October 2022

On the recommendation of the Nomination and Remuneration Committee (NRC), the Board of Directors has reappointed Mr. R.Varadarajan (DIN 00001738) as Wholetime Director of the company whose tenure of appointment expired on 4 June 2023, for a further term of three consecutive years from 5 June 2023 and fixed his remunuration, subject to approval of the members.

The (NRC) and the Board of Directors have recommended the said reappointment. Necessary resolution for the approval of the members by way of Special Resolution will be placed at the ensuing AGM.

13) Board Evaluation

Pursuant to the provisions of the Act and LODR the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its committees.

The NRC has carried out annual evaluation of the Directors individually. The Independent Directors at their separate meeting has also carried out annual performance evaluation of the non-independent Directors (including Chairperson of the Company) and Board as a whole.

The performance evaluation has been carried out as per the criteria laid down by NRC.

14) Number of Board meetings

During the year, 4(Four) Board Meetings were convened and held, the details of which, including attendance of directors, are given in the Corporate Governance Report.

15) Declaration given by Independent Directors

The Independent Directors of the Company have furnished declarations as required under Section 149(6) of the Act and LODR.

16) Whistle Blower Policy (Vigil Mechanism)

The Board has established a Vigil Mechanism, as required under the LODR, for directors and employees to report concerns about unethical behaviour, actual or suspected fraud and violation of the companys code of conduct or ethics policy.

This mechanism also provides for adequate safeguard against victimization of director(s) / employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee.

The said Policy is available on the website of the Company www.rajshreesugars.com/policies/

17) Particulars of Loans, Guarantees or Investments under Section 186

The Company has not given/ made any loan, guarantee or investment in terms of Section 186 of the Act, during the year under review.

18) Anti-Sexual Harassment Policy

The company has a policy on prohibition, prevention and redressal of Sexual Harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as contained under "The Sexual Harassment of women at workplace (Prohibition, Prevention and Redressal) Act, 2013".

During the calendar year ended 31 December 2022, no complaint was received under the act. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the said act.

19) Related Party Transactions

All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of business. There were no material contracts / arrangements / transactions with related parties during the year.

20) Material Changes & Commitments between end of financial year and this Report

There were no material changes that took place between the end of the financial year and this report.

21) Managerial Remuneration

The details of disclosures relating to Managerial Remuneration as required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed (Annexure 3).

22) Remuneration Policy

The Board has, on the recommendation of NRC framed a policy for selection and appointment of Directors, Key Managerial Personnel (KMP), Senior Management and to fix/ revise their remuneration.

The salient features of the policy are furnished hereunder:

The Nomination & Remuneration Policy (NR Policy) was framed in terms of the provisions of the Act and LODR for appointment and remuneration of Directors, KMP and Senior Management. The objective and purpose of this policy are to ensure that (1) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully (2) relationship of remuneration to performance is clear and meets appropriate performance benchmarks and (3) remuneration to directors, KMP and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

The policy empowers and regulates the NRC by providing detailed roles. The policy also provides detailed regulation for appointment and remuneration of Wholetime / Managing Director, KMP, and Senior Management Personnel.

The said policy is available in the Companys website www.rajshreesugars.com/policies/

23) Industrial Relations

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

24) Internal control systems and their adequacy

The Company has internal control systems which is commensurate with its size, nature and volume of operations.

25) Rajshree Sugars & Chemicals Limited (RSCL) Employees Stock Option Plan 2012

A detailed report as required under SEBI(Share based Employee Benefits & Sweat Equity) Regulations, 2021 on the "RSCL Employees Stock Option Plan 2012" forms part of this report, as Annexure 4.

26) Secretarial Audit

The Board has appointed Mr.G.Soundarrajan (Membership No.13993; Peer Review Certificate No.; 2101/2022; CP No.4993), a Company Secretary in Practice to undertake the Secretarial Audit of the Company as required under Section 204 of the Act. The Secretarial Audit report is annexed herewith as Annexure 5. The report does not contain any qualification, reservation or adverse remarks, except stated in this report below.

27) Annual Return

In terms of Section 92(3) of the Act, read with Companies (Management and Administration) Rules, 2014, the Annual Return of the Company in Form MGT-7 filed for the financial year ended 31 March 2022 has been placed on the website of the Company under link https://www.rajshreesugars.com/annual-return-mgt-7.

28) Transfer of Amounts to Investor Education and Protection Fund (IEPF)

No dividend is pending to be transferred to IEPF pursuant to the provisions of Section 124(5) of the Act, except unpaid dividend of Rs 39,729/- for the financial year 2009-10, which are kept pending transfer due to prohibition as per court orders.

Pursuant to the provisions of IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 28 August 2017 on the website of the Company (www.rajshreesugars.com), and also on the website of Ministry of Corporate Affairs.

The company has also transferred the equity shares of the shareholders who have not claimed dividend for the 7 years continuously, to the credit of IEPF in Form IEPF-4 on 6 December 2017. The shareholder may claim the said shares and dividend by following the procedures laid down in the website of IEPF Authority, viz. https://www.iepf.gov.in/IEPF/refund.html.

29) Directors Responsibility Statement

In terms of clause (c) of sub-section (3) of Section 134 of the Act, the Directors state that:

i) in the preparation of the annual accounts / financial statements, the applicable accounting standards had been followed along with the proper explanation relating to material departures; if any;

ii) accounting policies as selected have been applied consistently and the judgments made and estimates were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit / loss of the Company for the year under review.

iii) proper and sufficient care has been taken 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 annual accounts / financial statements have been prepared on a going concern basis.

v) internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and operating effectively.

vi) a proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

30) Explanation for the observation of the auditors

The Statutory Auditors and the Secretarial Auditor have made observations in their reports viz., Dr.P.Surulinarayanasami, Non-Executive Non-Independent Director of the Company is disqualified under Section 164(2)(a) of the Act from being appointed as a Director. In this regard, this is to inform that a Company Essram Holdings Private Limited (CIN:U67190TN2019PTC128787), in which Dr.Surulinarayanasami is recorded as Managing Director has not filed its Financial Statements or Annual Returns for three consecutive financial years from 2019-20 till 2021-22.

This invites the provisions of Section 164(2)(a) and Section 167(1)(a) of the Act. Under the provisions of these Sections the office of Dr.Surulinarayanasami as Director in the Company became vacant with effect from 31 October 2022, the due date on which Essram Holdings has defaulted in filing the financial statement for the financial year ended 31 March 2022.

31) Code of Conduct

Directors, KMP and Senior Management of the Company have confirmed compliance with the Code of Conduct applicable to the Directors and employees of the Company and the declaration in this regard made by Wholetime Director, as required under LODR forms part of Corporate Governance Report.

The code is available in the website of the company www.rajshreesugars.com/Code-of-conduct-fair-disclosure

32) Prevention of Insider Trading

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated persons of the Company, as per SEBI (Prohibition of Insider Trading) Regulations, 2015.

The code is available in the website of the Company www.rajshreesugars.com/Code-of-conduct-fair-disclosure

33) Risk Management Policy

The Company has formulated a Risk Management Policy as required under LODR. The Company has also formulated a specific policy viz., Forex and Interest Rate Risk Management Policy for Currency and Interest Rate Risk Management.

The Board perceives the risk of recurring lower sugar recovery as compared to minimum recovery for which the state is to pay the Fair remunerative price. Lower capacity utilization is also a concern.

The Tamil Nadu Industry has also the option of producing Ethanol. The Tamil Nadu Government has issued an Ethanol Blending Policy 2023 to attract investments in molasses/grain-based ethanol programme to make the state self-sufficient in meeting the estimated annual requirement of 130 crore litres. However, the State has the limited scope as still availability of molasses is limited.

The details about the risks being faced by the Company are furnished in the Management Discussion & Analysis Report (Annexure 6).

34) Significant & material orders passed by regulator or courts or tribunals impacting going concern status and companies operations in future

There have been no significant and material orders passed by any Regulator / Court / Tribunal impacting the going concern status and companys operations in future.

35) Compliance with Secretarial Standards

The company has complied with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India and approved as such by the Central Government, as per the provisions of the Act.

36) Acknowledgement

Your Directors thank the Banks and Financial Institutions for their valuable and timely financial assistance and support provided by them to the Company. Your Directors also thank the cane growers, suppliers, Government Institutions and others for the cooperation extended to the Company. The Board also places on record its appreciation of the dedicated services rendered by the employees of the Company.

May Goddess Lakshmi shower her blessings for the continued prosperity of the Company.

For and on behalf of the Board
R VARADARAJAN SHEILENDRA BHANSALI
Place : Coimbatore Wholetime Director Independent Director
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Date : 15 May 2023 DIN 00001738 DIN 00595312