Rana Sugars Ltd Directors Report.

To the Members,

Your Directors have pleasure in submitting their 27th Annual Report of the Company together with the Audited Statements of Accounts for the year ended March 31, 2019.

1. FINANCIAL RESULTS

The Companys financial performance for the year under review alongwith previous years figures are given hereunder:

(Rs. In lakhs)

Particulars Current Year ended 31.03.2019 Previous Year ended 31.03.2018
Revenue from Business Operations 109165.65 98,767.04
Other Income 1691.63 704.46
Total Income 110857.28 99,471.51
Less Interest 9407.80 9,893.83
Profit/(Loss) before Depreciation & Amortization Exp. (3666.73) (5574.66)
Less Depreciation & Amortization Exp. 3258.95 3,139.42
Profit/ (Loss) after depreciation and interest (6925.68) (8,714.09)
Less Current Income Tax -- --
Less Previous year adjustment of Income Tax -- --
Less Deferred Tax 567.24 (64.45)
Profit/(Loss) after Tax (7492.92) (8,649.64)
Dividend (including interim if any and final) -- --
Other Comprehensive income not to be reclassified to profit or loss in subsequent periods:
-Re-measurement gains/ (losses) on defined benefit plans 40.66 (9.90)
-Income tax effect (12.56) 3.06
Other comprehensive income/(loss) for the year, net of tax 28.10 (6.84)
Total comprehensive income for the year, net of tax attributable to: (7464.82) (8,656.48)
Earning per share (Basic) (4.88) (5.63)
Earning per Share (Diluted) (4.88) (5.63)

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).

2. DIVIDEND

In view of losses suffered during the current financial year, your Directors are unable to recommend any dividend for the year under review.

3. REVIEW OF BUSINESS OPERATIONS AND FUTURE PROSPECTS

Your Directors wish to present the details of Business operations done during the year under review:

a. Production and Profitability

The world sugar production in the year 2018-19 is expected to be around 186 million MT against last year3s production of 194 million MT. The consumption of sugar is expected to be 185 million MT as compared to consumption of 175 million MT of previous year. Your Company has crushed 2,31,47,561 qtls. of sugarcane and 23,13,031 qtls. of sugar beets and has produced 24,90,457 qtls. of sugar during the year under review. The Company has also produced 11,58,960 qtls. of molasses and 30,24,87,590 units of electricity, 30,64,852 BL of Extra Natural Alcohol, 2,11,75,695 BL of ethanol and 8,51,842 cases of liquor.

b. Sales

The turnover of the Company has gone up to Rs.1,09,165.65 Lakhs as against Rs.98,767.04 Lakhs in the last year and the Company has suffered loss of Rs.7464.82 lakhs during the year. The main reason for the loss is due to downward spiral of sugar price as compared to the cost of production.

c. Marketing and Market environment

The Government of India has continued with the decontrol mechanism. The Government has come with some incentives and supportive policies. It has fixed minimum selling price of sugar of Rs.31/kg.. The Govt. has given some incentives to sugar mills for producing ethanol from molasses or sugarcane juice. It has issued a notification to sell 10% of ethanol blended petrol.

d. Future Prospects

With the Govt. incentives policies and measures there is some relief to the sugar industry. The quota system for sale which ensure the price didn3t go below the MSP level resulting in the better performance of the Company in the coming years.

The Company is now trying to find new varieties of cane which give high recovery, besides encouraging sowing of sugar beet in our area.

4. MATERIAL CHANGES AND COMMITMENTS

No material changes or commitments have occurred between the end of the financial year to which the financial statements relate and on the date of this report, affecting the financial position of the company.

5. DIRECTORS

Shri Asdev Singh Sodhi and Mrs. Rani Mondal resigned from the directorship of the Company w.e.f. 08.05.2018 and 30.05.2018 respectively and the nomination of Shri Balour Singh and Shri Maninder Pal Singh was withdrawn from the directorship of the Company w.e.f. 22.11.2018 by Punjab Energy Development Agency during the year.

Pursuant to the applicability of Regulation 17(1A) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 as amended, pertaining to the appointment/ continuation of the Non- Executive Director(s) above the age of 75 years, effective from April 1, 2019 unless a Special Resolution is passed to that effect by the members. The members of the Company in an Extraordinary General Meeting held on 28.01.2019 accorded their approval by way of special resolutions for continuation of the existing terms of Shri Shivavtar Singh Bajwa (84 years) and Shri Baljit Singh (78 years) as Non-Executive Independent Directors of the Company till the end of their existing terms.

Shri Shivavtar Singh Bajwa and Shri Baljit Singh who were appointed as Independent Directors in the 22nd Annual General Meeting for a term of 5 years and hold the said office till 29.09.2019 and being eligible are being reappointed as Independent Directors for a further period of five year.

Mrs. Navpreet Kaur was appointed as Additional Director on 09.11.2018 and hold the said office till the date of the ensuing Annual General Meeting. Notice has been received from member proposing her candidature for her reappointment.

Rana Ranjit Singh and Rana Veer Pratap Singh, Directors are liable to retire by rotation and being eligible, offers themselves for reappointment.

Particulars of Directors seeking appointment/reappointment have been given in the Corporate Governance annexed to the Directors3 Report.

6. DIRECTORS RESPONSIBILITY STATEMENT

In Accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board hereby submit its responsibility Statement:

a) in the preparation of the annual accounts, the applicable accounting standards had 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/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;

e) the directors had laid down internal financial controls 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.

7. KEY MANAGERIAL PERSONNEL (KMP)

During the financial period ended 31.03.2019, following persons are Whole Time Key Managerial Personnel (KMP) of the Company in terms of provisions of Section 203 of the Companies Act, 2013:

Sl. No. Name Designation
1. Rana Inder Pratap Singh Managing Director
2. Mr. Manmohan K Raina Company Secretary
3. Mr. Manoj Gupta Chief Financial Officer

8. MEETINGS OF THE BOARD

During the financial year ended 31.03.2019, six Board Meetings were held. The details of the Board Meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

9. DECLARATION FROM INDEPENDENT DIRECTORS

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (LODR), Regulations, 2015.

10. INTERNAL FINANCIAL CONTROLS

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

11. STATUTORY AUDITORS

The Auditors M/s. Ashwani K. Gupta & Associates, Chartered Accountants (Firm Registration No. 003803N), Panchkula, who were appointed to fill the casual vacancy in the office of Statutory Auditors, hold office till the conclusion of this Annual General Meeting. As provided under section 139 of the Companies Act, 2013, the company proposes to appoint them for a period of Five years till the financial year ending March 31, 2024 as statutory Auditors of the Company. They have confirmed their eligibility under Section 141 of the Act, and the Rules framed thereunder, for their appointment as Auditors of the Company.

In reply to the observations in the Auditors Report, it is submitted that loans and advances were given to the Companies/ entities covered under Section 186 of the Companies Act, 2013. However, the said amounts were given to procure material required for production and the same were recovered due to non receipt of requisite approval.

12. COST AUDITORS

M/s Khushwinder Kumar & Co., Cost Accountants (Firm Registration No 100123) were re-appointed as Cost Auditors of the Company for conducting the audit of the cost records maintained by the Company for the financial year 2019-20 subject to the approval of the Members on the remuneration to be paid to the Cost Auditors. A certificate from them has been received to the effect that their appointment as Cost Auditors of the Company, if made, would be in accordance with the limits specified under Section 141 of the Companies Act, 2013 and rules framed there under.

13. COMPLIANCE WITH THE SECRETARIAL STANDARDS

The company has duly complied with the applicable Secretarial Standards during the financial year 2018-19.

14. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/s. A. Arora & Co., a firm of Company Secretaries (C.P.No.993) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report in prescribed format MR-3 given by aforesaid Secretarial Auditors is annexed to this Board Report as Annexure ‘F and forms an integral part.

The Secretarial Auditor has made certain observations and remarks in his reports. The management reply to the observations and remarks of the Secretarial Auditor are given hereunder:

Sr. No. Observation by Secretarial Auditor Management Reply
1. The Board of Directors of the Company was constituted with Executive Directors, Non-Executive Directors and Independent Directors except that during the first three quarters the composition of the Board of Directors of the company was not in compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the vacancy in the office of woman director was not filled within the stipulated time period. The vacancies in the office of the Independent Directors and woman director could not be filled due to non-availability of any suitably qualified individual for the office. The company has filled the vacancies by the end of the financial year on 31.03.2019 as per the applicable regulations.
2. The company appointed the same individual as the Chairman of the Board and the Nomination and Remuneration Committee, which was subsequently corrected in compliance with the statutory requirements. The necessary corrective measures have been taken by reconstitution of the Nomination and Remuneration Committee. The company was ensuring due compliance as on 31.03.2019.
3. The company has granted loans and advances to the parties covered under section 185. Such loans and advances has been given in excess of the limits prescribed under Section 186(2) without seeking the approval of the members. However, as per the information provided by the Management, the advances to related parties were given to procure material required for production and the same was recovered due to non-receipt of requisite approvals. The loans and advances were given to the companies and entities covered under section 186 of the Companies Act, 2013. However, the said amounts were given to procure material required for production and the same were recovered due to non-receipt of requisite approvals.
4. There were instances of delay in reporting and publishing the unaudited financial results for the quarters ended on March 31, 2018 and June 30, 2018. The delay in reporting/publishing the said results was due to lack of clarity of formats in which the same were to be submitted and were merely procedural delays.

15. FIXED DEPOSITS

The Company does not have any deposits and has neither accepted nor renewed any deposits during the financial period ended March 31, 2019.

16. RISK MANAGEMENT POLICY

The Company has adopted a ‘Risk Management Policy which is reviewed on a periodic basis in order to recognize and reduce exposure to risks wherever possible. The Companys risk management policies are based on the philosophy of achieving substantial growth while mitigating and managing risks involved. Your Company continues to review and manage the risks emanating from such a dynamic environment at periodic intervals. The major risks faced by the industry include sugarcane availability, price realization and regulatory control by Government and financial liquidity amongst others.

17. AUDIT COMMITTEE

The Audit Committee comprises of three Directors, out of which two directors are independent Directors and one director is Non Independent Non-Executive. The details of terms of reference of the Audit Committee, number and dates of meeting held, attendance, among others are given separately in the attached Corporate Governance Report.

18. NOMINATION AND REMUNERATION COMMITTEE

Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with Rules made there under, the Board has constituted a Nomination & Remuneration Committee and the details of terms of reference, number & dates of meeting held, attendance and other details are given separately in the attached Corporate Governance Report. The Board on the recommendation of Nomination & Remuneration

Committee framed a policy i.e. Nomination and Remuneration Policy for selection and appointment of Directors, senior managerial personnel and their remuneration. The aforesaid policy can be accessed on the Companys website www.ranasugars.com

19. COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The Companys Policy relating to appointment of Directors, payment of Managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Report on Corporate Governance.

20. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Companys policy relating to Corporate Social Responsibility is furnished in the Corporate Governance Report.

21. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS

The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3) (m) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure- A and forms part of this Report.

22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The loan and advances were given to procure material required for production and the same were recovered subsequently.

23. RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year 2018-19 were in the ordinary course of the business and were on arms length basis. All such related party transactions are placed before the Audit Committee for approval wherever applicable. Prior omnibus approval for normal transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the transactions which cannot be foreseen and the same are subsequently, shared with Audit Committee on quarterly basis. The Policy on materiality of and dealing with related party transaction as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is www.ranasugars.com.

The Company has not entered into any material related party transactions during the financial year.

24. WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism. This has provided a mechanism for directors and employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behavior, actual or suspected fraud or violation of the Companys code of conduct. The aforesaid policy has also been uploaded on the Companys website: www.ranasugars.com.

25. EXTRACT OF ANNUAL RETURN

The extracts of the Annual Return (MGT-9) as per the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is annexed herewith and marked as Annexure – E to this Report.

26. CORPORATE GOVERNANCE

In accordance with SEBI (LODR), Regulations, 2015, Corporate Governance Report along with Auditors certificate thereon and Management Discussion and Analysis Report form part of this report are enclosed as Annexure- B, C & D respectively.

27. SHARE CAPITAL

During the financial period ended 31.03.2019, the Company has not issued any share capital with different voting rights, sweat equity or ESOP nor provided any money to the employees or trusts for purchase of its own shares.

28. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Board has carried out the Annual Performance Evaluation of the Board, its Committee 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 performance of specific duties, obligation and governance.

The performance evaluation of the Directors (without participation of the relevant directors) was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process.

29. 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) Rule, 2014 are provided in the Annual report.

PARTICULARS PURSUANT TO SECTION 197(12) AND RELEVANT RULES:

a. Since no Director of the Company is in receipt of remuneration for the financial year, and no increase of remuneration of employees has been done during the financial year. As such no ratio can be given.

b. The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year : NIL

c. There has been no increase reported in the remuneration of the employee during the financial year.

d. The number of permanent employees on the role of the Company as on 31.03.2019 are 1026.

e. There is no increase in the salary of employees other than managerial personnel during the last financial year and its comparison with the increase of managerial personnel cannot be given.

f. We affirm that remuneration paid during the period under review is as per the remuneration policy of the Company.

30. ACKNOWLEDGEMENTS

The Directors place on record their sincere thanks to bankers, business associates, consultants, Agents, Dealers, various Government Authorities and shareholders for their continued cooperation and support extended to your companys activities during the year under review. The Directors also wish to place on record their appreciation for the all-round co-operation and contribution made by the employees at all levels.

For & on behalf of the Board of Directors
Rana Inder Pratap Singh Rana Veer Pratap Singh
Place: Chandigarh Managing Director Director
Dated: 13.08.2019 DIN: 00075107 DIN: 00076808

Information as per Section 197(12) of the Companies Act, 2014 & Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors report for the year ended March 31, 2019

S. N. Name Desigation Qualification Gross Remuneration (INR In Lakhs) Nature of Employment (Contractual or otherwise) Date of Commencement of Employment Age (In years) Experience Last or previous Employment No. of Equity Shares held Relative of Director or Manager
1 Mr. Bhupinder Singh Business Head B.Sc. 27.60 Lakhs Permanent 05-04-16 48 26 - Nil No
2 Mr. Arvind Kumar Singh Vice President (Technical) Dip. in Mechanical Eng. 26.40 Lakhs Permanent 26-11-18 52 28 IPL Sugar, Behraich (UP) Nil No
3 Mr. Ajay Inder Majithia Vice President MBA 26.40 Lakhs Permanent 01-04-2007 54 28 - Nil No
4 Mr. Sandeep Bhatia Business Head B.Com 24.00 Lakhs Permanent 01-11-17 49 27 Gagan Wine Trade & Financier Ltd. Nil No
5 Mr. Sudhir Kumar Vice President Diploma Mech., ANSI Engg. 24.00 Lakhs Permanent 01-07-10 52 30 Balrampur Chini Mill Rozagaon (UP) Nil No
6 Mr. Manoj Gupta Chief Financial Officer FCA & FCS 21.91 Lakhs Permanent 01-07-15 50 30 - Nil No
7 Mr. Arun Kumar Group GM (HR) PDDBM (FIN. & HR) 20.20 Lakhs Permanent 03-10-18 39 16 NSL Sugars Ltd. Nil No
8. Mr. M. K. Raina Company Secretary M.A., LL.B, FCS, DPM & LW, DLL 20.09 Lakhs Permanent 12-09-92 68 44 Punjab Agro Industries Corporation Ltd. Nil No
9. Mr. Dhan Singh Vice President Bsc (Ag.) 18.00 Lakhs Permanent 03-10-15 65 35 D.S.M., Rajpura Nil No
10. Mr. Pritam Singh Sr. G.M. (Production) Msc., ANSI Sugar 17.50 Lakhs Permanent 20-08-09 67 41 Saraya Sugar Mill Sardarnagar, (UP) Nil No

ANNEXURE - A

ANNEXURE TO THE DIRECTORS REPORT

FOR THE YEAR ENDED 31ST MARCH, 2019

INFORMATION AS PER SECTION 217(1) (e) READ WITH COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31ST MARCH, 2019.

1. CONSERVATION OF ENERGY

The Company has installed most modern equipment to save and minimise energy consumption. The Company has installed three Turbo Alternators sets with power generation capacity of 87,500 KW. The entire requirement of power is met through captive generation.The Company has also made stand by arrangement of Diesel Generating Sets.

To achieve maximum conservation of energy, the Company has put up high pressure boilers and matching Turbo alternators and prime movers. The Company has also installed electrical motors of appropriate size and continuous centrifugals in place of batch type centrifugals.

A. Electricity Year ended 31.03.2019 Year ended 31.03.2018
Purchased
- Sugar
- Unit Purchased 2,379,514 2,134,595
- Total Amount (Rs.) 20,492,909 17,779,130
- Rate Per Unit (Rs.) 8.61 8.33
Own Generation
- Sugar
- Through D.G. Set (Sugar Division) Units Generated 213,395 164,039
Units Generated per litre of Diesel Oil 6.25 5.66
Cost Per Unit (Rs.) 10.49 10.38
- Through Steam Turbine (Sugar Division) Units Generated 302,487,590 263,969,514
Unit Generated per Qtl. of Fuel 39.46 36.68
Cost Per Unit Electricity (Rs.) 2.82 2.26
- Distillery
- Through D.G. Set
Units Generated 179,997 184,690
Units Generated per litre of Diesel Oil 3.19 3.44
Cost Per Unit (Rs.) 19.49 16.33
- Through Steam Turbine Units Generated 13,691,000 12,728,340
Unit Generated per Qtl. of Fuel 40.75 34.52
Cost Per Unit Electricity (Rs.) 3.20 2.71
B. Consumption Per Unit of Product
- Sugar
- Electricity (KW/MT) 326.80 288.29
- Fuel (MT/MT) 2.33 1.99
- Steam (MT/MT) 4.60 4.30
- Distillery
- Electricity (KW/KL) 581.55 544.08
- Fuel (MT/KL) 1.39 1.52
- Steam (MT/KL) 5.41 5.95
C. Technology Absorption
i) Research & Development
a) Research & Development has continuously been carried out for improvement in quality of sugarcane and to increase the area under the sugarcane crop which will ensure its greater availability resulting into more production & better quality of cane and higher yield there by directly reducing the cost of production.
b) The Company is trying to improve quality of Cane & ensure development of Cane by providing various facilities to the Cane growers.
c) Amount incurred on Research & Development (Rs. in lacs) 3.73 2.13
ii) Technology Absorption, Adoption and innovation.
a) Latest technology has been adopted in the plant to maximise production, yield and better quality along with minimum consumption of energy.
b) Technology Imported Nil Nil
D. FOREIGN EXCHANGE EARNING & OUTGO
a) Foreign Exchange Earning (Rs. in lacs) Nil 13.18
b) Foreign Exchange Outgo (Rs. in lacs) 425.73 541.60
For & on behalf of the Board
Place : Chandigarh Rana Inder Pratap Singh Rana Veer Pratap Singh
Date : 30.05.2019 Managing Director Director