Simbhaoli Sugars Ltd Directors Report.

To the members of Simbhaoli Sugars Limited

Your directors have pleasure in presenting the Ninth Boards Report together with management discussion and analysis report for the financial year ended on March 31,2020.

MANAGEMENT DISCUSSION AND ANALYSIS

Global Sugar Industry Overview

The global production of sugar for season 2020-21 is fore cast up 22 million metric tons (mmt) to188 mmt (raw value) due to higher production in Brazil, India, and Thailand. The consumption is expected to rise to a new record due to growth in markets such as India and is projected to continue to draw lower stocks despite are bound in output. The exports are forecast up sharply with rising supplies. The global production forecast is given below:

Brazils production is forecast to rebound 9.6 mmt to 39.5 mmt raw value as initial concerns about the August-October dry spell in 2019 were off set by steady January-March, 2020 rainfall that improved the sugarcane harvest. The gasoline prices are expected to drastically change the dynamics for the Brazilian sugar/ethanol industry, negatively affecting the ethanol industry and significantly increasing sugar production.

Thailands production is forecast to recover 4.7 to 12.9 mmt raw value on favourable cane yields and sugar extraction rates. The consumption is expected to continue increasing due to demand for direct sugar consumption and food-processing. With favourable supplies and global demand, exports are forecast at a record 11.0 mmt raw value and stocks are expected to be the lowest level in 8 years.

Chinas production is forecast to recover from the previous years drought, up 0.5 mmt to 10.7 mmt raw value, primarily due to a rebound in cane sugar production in southern China. The consumption remain unchanged, imports are up slightly, and stocks are expected to fall for a sixth consecutive year as government policies continue to discourage stockholding.

Indias production is forecast to rebound 17 percent to 33.7 mmt as above average water reservoir levels are expected to boost yields and to incentivize growers to harvest additional acreage. The consumption is forecast at a record due to a growing economy.

The production forecast is presented by way of below graph:

The global sugar prices were hovering around 14.5 cents per pound since mid-January 2020. However, with the recent impact of fall in crude oil prices, expectation of Brazil increasing sugar production & due to spread of the coronavirus diseases (COVID-19) pandemic, there has been a decline in the global prices as well. The raw sugar prices in the international market were down by 20% to 11.8 cent per pound in March 2020 from 14.8 cents per pound in February 2020.

Domestic Sugar Industry Overview

Sugar Output

(All fig. in Million MT)

Particulars 2018-19 (A) 2019-20 (P) 2020-21 (E) % Change
Opening stock as on 1st Oct. 10.6 14.5 11.5 -20%
Production during the season 33.6 27.2 30.5 12%
Imports - -
Total Availability 44.2 41.7 42.0 1%
Offtake
i) Consumption 26.0 25.0 25.0 0%
ii) Exports 3.7 5.2 6.0
Total Off-take 29.7 30.2 31.0 3%
Closing Stock as on 30th Sept. 14.5 11.5 11.0 -4%
Stock as % of Consumption 56% 46% 44%

*The domestic sugar production is likely to increase to 30.5 Mmt in 2020-21, after adjusting impact of diversion of B-heavy molasses and sugarcane juice for ethanol manufacture.Source - ISMA and trade estimates

With an opening balance of 14.5 mmt in October 2019, sugar production of 27.2 mmt, expected domestic sales of 25 mmt and exports of 5.2 mmt during the current season, the opening stocks in October 2020 has been estimated at 11.5 mmt. With the forecast of a bountiful monsoon, domestic sugar production is estimated at 30.5 mmt in the 2020-21 crushing season, with an increase by 12% than the production of 27.2 mmt this season, assuming normal rainfall and other optimum conditions. The pan India cane acreage has been pegged at 5.23 million hectares (MH) in 2020-21, 8 per cent higher than this seasons cropped area of 4.84 MH.Due to higher cane availability and surplus sugar production, it is estimated that a larger quantity of cane juice and B-heavy molasses will get diverted for ethanol production.

In coming months, as and when the lockdown is lifted across States, sugar consumption is expected to pick up. Sugar is an essential commodity and with the continuation of packaged commodities in the Fast Moving Consumer Goods (FMCG) and reopening of restaurants, cafe, sweet shops, bakeries and other eatable outlets, the demand cant remain low for a long period of time.

As of May 31, 2020, the production in the north Indian state of Uttar Pradesh was down at 12.6 mmt. The western state of Maharashtra produced 6.1 mmt over the same period, reflecting the worst impact of the dry season in 2019. Karnataka produced 4.30 mmt until May 2020.

In the north and south, the sugar cane is still available for crushing while cane stocks for processing have already been exhausted in Maharashtra. Hence, the mills in northern and southern India are still producing sugar, while mills in the western region have stopped crushing cane during April 2020.

Price Trend

The ex-mill domestic sugar price for financial year 2019-20 is ranging between Rs 31,500 to Rs 34,200 per MT as compared with the previous year ranging between Rs 26,500 to Rs 33,000 per MT, due to the measures taken by the Government of India to safeguard the domestic sugar industry. Reduced inventory, higher exports and the minimum support price (MSP) on sugar, which will protect margins, are, in fact, positives for sugar mills.

Also, despite lower prices globally, Indian sugar mills have been receiving a premium for their sugar from Indonesia and Iran. Therefore, the current sugar season ending September 2020 is likely to finish with a lower closing stock than in the previous year.

Sugarcane

The Government of India has been considering the minimum selling price of sugar with an increase of Rs 2 per kg from existing Rs 31 per kg in order to help millers to clear cane dues of about Rs 22,000 Crore to farmers, while the Commission for Agricultural Costs and Prices has recommended raising the fair and remunerative price (FRP) of sugarcane by Rs 10 a quintal to Rs 285 for 2020-21. Other measures also being taken to ensure early clearance of substantial cane arrears to farmers. Of the Rs 1 22,000 Crore arrears, about Rs 17,683 Crore is based on the FRP rate, while the rest is based on SAP rates.

Domestic ethanol Industry

The Indian ethanol market is slated to grow and the Government has planned to enhance ethanol production to 9 billion litres from 3.55 billion litres in order to achieve the blending rate of 10% by 2022.The Government has given approvals to around 350 new plants in sugar mills for adding 5.5 billion litres of capacity entailing an investment of Rs 18,000 Crore, for that purpose.

Ethanol can be produced directly from cane juice as well as from B-grade and C-grade molasses. The price of ethanol from sugarcane juice has been fixed at Rs 59.48 per litre while ethanol extracted from B-grade molasses is priced at Rs 54.27 per litre and the price of ethanol extracted from C-grade molasses has been fixed at Rs 43.75 per litre. India is required to have a minimum of 4.25 billion litres of ethanol to meet the 10% blending target.

In the previous year, an aggregate of 1.91 billion litres of ethanol was blended with petrol, which resulted in 5.5% blending rate, as against 175 billion litres in 2019-20, which may result 4.5% blending in this year. The government plans to divert 8 lakh tonnes of surplus sugar in each of the next two years (2021- 2022) for ethanol production with the objective of maximizing profitability earned by Indian sugar companies.

GOVERNMENT MEASURES AND POLICIES

The Government of India has implemented various measures/ initiatives are enumerated below:

March 2019: The GOI has notified new schemes for extending financial assistance to sugar mills for enhancement and augmentation of ethanol molasses production capacity.

July 2019:The GOI, with a view to improve liquidity of the sugar industry; enabling them to clear cane price arrears of farmers and to stabilize domestic sugar price, notified the Scheme for Creation and Maintenance of Buffer Stock of 40 Lakh MT of sugar by the sugar mills for one year with effect from August 1,2019. The funds to be provided to the sugar mills as reimbursement of the carrying cost towards maintenance of the buffer stock are to be used firstly for payment of cane price dues of farmers for the current sugar season 2018-19 and 2019-20 as also for arrears of previous sugar seasons.

Sept 2019: Pursuant to the Scheme for providing assistance to sugar mills for sugar season 2019-20, the Maximum Admissible Export Quantity (MAEQ) in respect of each sugar mill has been allocated.

Nov 2019: The GOI has allowed those sugar mills which had partially exported their Minimum Indicative Export Quota (MIEQ) of 2018-19 sugar season till 30.09.2019 to export the balance quantity of their MIEQ of 2018-19 sugar season by 31.12.2019, over and above MAEQ allocated for 2019-20 sugar season.

March 2020: The Distilleries were given permission by the State Administration to make hand sanitizers to meet the requirement arising out of the spread of Coronavirus diseases (COVID-19) Pandemic. With this sufficient quantity of hand sanitizers manufacturing capacities has been created in the country using ethanol as the key raw material.

BUSINESS OVERVIEW

Business Description: Operating Capacities

Simbhaoli group was started as a partnership firm in 1933 by Sardar Raghbir Singh Sandhanwalia and, in 1936, it was incorporated as a private limited company. In 1989, it went public and has been listed on Indian Stock Exchange for the past 30 years. In 1992, it acquired a distillery (owned by the family as an independent company) and thereby converted the Simbhaoli sugar plant into an integrated sugar complex. At present, Simbhaoli is part-owned by the third and fourth generations of this family, represented by Mr Gurmit Singh Mann, Chairman of the Company.

The group has three sugar complexes located at Simbhaoli (Western Uttar Pradesh), Chilwaria (Eastern Uttar Pradesh) and Brijnathpur (Western Uttar Pradesh), having an aggregate sugarcane crushing capacity of 19,500 tons crushed per day (TCD) including asugar refining capacity of 1200 tonsper day (TPD) forraw sugar processing, interchangeable with cane crushing capacities while the sugarcane is not available during off-season.

Facilities Cane Sugar (tcd) Alcohol/ ethanol (kld) Power (mwh) Sugar refining (tpd)
Simbhaoli (Western UP) 9,500 90 62$ 800
Brijnathpur (Western UP) 4,000 60 8 400
Chilwaria (Eastern UP) 6,000 60 38$ -
Total 19,500 210 108 1200

$Simbhaoli Power Private Limited, subsidiary company

The sugar business is integrated with alcohol distillation and power generation. The power co-generation units of its subsidiary, Simbhaoli Power Private Limited located within the Simbhaoli and Chilwaria complexes are capable to generate bio-mass based power aggregating 100 mwh for supplying the power for the captive consumption of the sugar plants and sale of surplus power to the UP-State grid under the power purchase agreements.

Joint Venture Companies

The Company has a joint venture arrangement with Sindicatum Captive Energy Singapore, (SCES) a clean energy fund in respect of its subsidiary Simbhaoli Power Private Limited (SPPL) engaged in the cogeneration of power from bagasse and other bio fuels. During the year, SCES has transferred all its shareholding, rights and obligations in the share capital of SPPL to Sindicatum Bagasse India Private Limited, a private limited Company incorporated and registered under the laws of Singapore, which is an affiliate of SCES.

SSL also has a joint venture with ED&F Man Holdings BV, and Volcafe Pte Ltd, in respect of Uniworld Sugars Private Limited (USPL). During the year 2017, due to continuous losses, the USPL business, having a 1000 TPD (300,000 mt per annum) capacity sugar refinery near Kandla Port, Gujarat was discontinued, the details mentioned elsewhere in this report.

Impact of Industry Scenario on Business of the Company

Indian sugar industry has been facing difficulties on account of high sugar production in the country since Financial Year 2016-17 resulting in surplus sugar. For the year ended March 31, 2020, and previous years, the Company has incurred losses due to high sugarcane costs fixed by the Governments and comparatively lower prices of finished goods which are also being regulated and controlled and other external factors. The operations of the Company though remained intact, however due to continuing losses, its net worth has been eroded resulting in its failure in meeting its payment obligations to lenders and sugarcane farmers in terms of respective agreements and understanding.

Meanwhile, recognizing the industry requirements, the Government has implemented a number of measures to improve the financial health of the sugar industry, including support for liquidation of cane arrears, fixing minimum obligation for export to manage the sugar inventory, fixation of Minimum Support Price (MSP) of sugar, providing cash subsidies on production and export of sugar with allocation of MIEQ/MAEQ, and mandatory blending of ethanol with petrol at certain level with remunerative price of ethanol. In addition, pursuant to an order of Honble High Court of Uttar Pradesh, pronounced in favour of sugar industry, the sugar industry as well as the Company is confident to receive much awaited amounts being accrued benefits due to it from state government under the erstwhile New Sugar Industrial Promotion Policy 2004-08. All these measures are expected to reflect in revival of the sugar industry on sustainable basis.

Based on these positive steps, along with other internal measures, the management believes that operations at its manufacturing facilities will remain continued in the near foreseeable future on regular basis.

On account of delays in servicing of loans, the lenders to the Company have initiated recovery proceeding at various forums, including filing of application before Honble National Company Law Tribunal under Section 7 of the Insolvency and Bankruptcy Code, 2016 by two of the lenders and approaching Debt Recovery Tribunal (DRT) for recovery of their dues. One of the lenders had declared the Company and Guarantors to the credit facility, as Willful defaulters, which has been set-aside by the Honble Chandigarh High Court. Against a criminal complaint filed by one of the lenders with the investigating agencies, the enforcement directorate had passed an attachment order against certain assets of the Company to the extent of Rs 109.80 Crore, against which the Company has preferred an appeal with the appropriate authority.

The Company has submitted a comprehensive debt resolution proposal with all the commercial banks and realignment of dues with other lenders, commensuration with its future cash flows. The majority of commercial lenders have shown their inclination to accept the debt resolution proposal of the Company.

Impact of Covid-19 and Nation-wide Lockdown on the Operations of the Company

The spread of Coronavirus diseases (Covid-19) pandemic and nationwide lockdown has caused disruption of supply chain across businesses and industries in India. Since the Company is engaged in the manufacturing of essential commodities, timely steps taken by the government have ensured regular operations of the sugar mills in UP. However, Covid-19 crisis, has adversely impacted domestic demand of sugar and of ethanol during complete lockdown periods. Under the directives of Ministry of Home affairs and State Government, the Company has started manufacturing of hand sanitizers in its distillery divisions. The demand for the Companys products is expected to recuperate with the gradual lifting of nation wide lockdown by the Government.

The Company has considered the potential impact of Covid-19 and related restrictions on the carrying amount of inventory and financial and non-financial assets and based on the information available to it up to the date of approving the financial statements written down the value of inventory to net realizable value, wherever required, and made provisions in financial and nonfinancial assets. However, the impact of Covid-19 as well as negative out look of sugar sector on the carrying amount of its property, plant and equipment and consequential impairment could not be ascertained and provided for due to non- availability of requisite information on account of lockdown restrictions.

The ongoing Covid-19 pandemic is expected to put pressure on the sugar consumption patterns as there are curbs on social gatherings and outings. The industry is also facing reduced off-take from beverage and other FMCG companies amid the lockdown. This has even led to fall in domestic & international sugar prices recently.

Manufacturing of Liquid Hand Sanitizers & Disinfectants

Companys manufacturing units located in rural areas of Uttar Pradesh have initiated production of Liquid Hand Sanitizers & Disinfectants from April 2020 to help the nation, and especially its rural districts to combat the Covid-19 Pandemic. The Company will be utilizing the existing PAN India distribution network of its FMCG Brand, Trust, to distribute the sanitizers & disinfectants to not just lakhs of farmers and the local communities in UP, but to reach people in Rural Districts across the country. The Companys goal is to ensure its Sanitizers reach at least 50% of the Rural Districts of India. For this, the Company is working on making the sanitizers extremely affordable and also tailoring the packaging formats for rural India. This will become a shining example of the power of "For Rural India, by Rural India". The Company is proud to support the efforts of the Governments of India and State of Uttar Pradesh as well as communities across the country in fighting the Covid-19 pandemic.

Legal proceedings of investigation in the matter related to complaint filed by Oriental Bank of Commerce (OBC)

During the year 2017-18, the Oriental Bank of Commerce (OBC), one of the lenders arbitrarily initiated recovery actions against the Company in respect of its restructured corporate loan and also filed a criminal complaint in an arbitrary and wrongful manner in respect of original loan facilities, without the consent of the other lenders and without affording any opportunity to the Company to present its case. The Company and its management have refuted the charges on their part, and provided adequate documents while fully cooperating with the investigation. They have reiterated its commitment for repayment to all the lenders on the basis of future cash flows. Steps initiated by OBC have delayed the ongoing debt resolution process of the Company and adversely affected its business. Based on legal advice, the Company has been taking appropriate actions at the relevant forums including but not limited to seeking appropriate counter claims.

BUSINESS SEGMENTS

Sugar Operations: Sugar production has decreased due to agro-climatic conditions. Moreover, the rainfall in sugar season 2019-20 is higher as compared to the last sugar season 2018-19, due to which the cane maturity was not up to the mark and hence resulting in lower recovery across the entire state of Uttar Pradesh. Similarly, this has impacted the Distillery operations as Bio composting was hampered due to adverse weather.

Distillery Operations: During the sugar season 2019-20, the distilleries operations have been running at lower capacities due to rain, foggy weather, restriction during festivals, and shortage of bagasse/fuel.

Branding and specialty Sugar segment: In present Covid-19 scenario where online sales in India is rapidly spreading its wings and becoming the norm for fast growing businesses, your Company is putting our best to emerge as an organization which provides easy and early availability of its products to the doorstep of the customers. The Company has introduced e-commerce functionality on a wide range of its products through its Direct- to-consumer e-commerce website that will house its FMCG offerings. www.shop.simbhaolisugars.com.

The Company has been consistent in developing its sugar brand, ‘Trust. The sales and marketing infrastructure development exercises for distribution through modern retail and wholesale trade channels have been further strengthened during the year. Trust branded sugar sachets have created vast acceptability and leadership in the hospitality industry. Your Company has emerged as one of the largest sellers of Specialty Sugar, which includes sachets, consumer packets, pharmaceutical grade sugar etc. and it commands premium over and above the bulk sugar prices. Last year, the Company has launched it diabetic friendly Sugar brand with the name and style G-Low Sugar. During the year, the Company has expanded production and distribution of its newly Launched sugar brands.

International Trading:

The Company actively participated in the export campaign in the year under the Government MIEQ & MAEQ scheme. The Company has continued export trade with markets like Madagascar, Sri Lanka, Hong Kong , Nepal, Canada, middle east nations like - Qatar and Kuwait. During the year, the Company has exported 3619 MT of white sugar and 5300 MT of raw sugar under MIEQ Scheme. The Company has also exported 9005 MT of white sugar and 41156 MT of raw sugar under MAEQ Scheme.

The Company has also exported 4325 Cases of Indian Made Foreign Liquor from its distillery units.

HUMAN RESOURCES

The Company believes in cordial employer-employees relationship. Time to time training sessions which inter-alia includes Electrical safety, SAP, Chemical Handling, quality, behavioural training, motivational training are conducted in order to enhance work life balance of employees as well as to optimise the efficiency of all the units and employees. Keeping the philosophy of continuous training and job improvements, the Company has imparted 500 man-days (previous year 419 man-days) of training apart from the regular on the job trainings to its employees.

The Company has always been vigil against the sexual harassment at workplaceand duly constituted Internal Complaint Committee for the purpose in pursuance with the provision of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Policy for prevention of Sexual Harassment is available on the website of the Company. During the year no such complaint has been received.

SWOT

The areas of operations of the Company are well diversified, with multi products and services spanning over a number of geographical locations. Each of the business segments has its own strengths and weaknesses and at the same time is subject to a variety of opportunities and threats. The management is consistently strategizing and implementing the restructuring exercises and cost optimisation for the business sustainability. The group has the following SWOT attributes:

Strengths

a. Over 9 decades of experience of Sugar Industry.

b. Our Manufacturing units are located in the sugarcane rich state of Uttar Pradesh, North India

c. Diversified Product Range including pharmaceutical- grade and specialty sugars to cater different categories of customers

d. Enhanced it reach though various e-Commerce platforms

e. Introduced its own dedicated E-commerce portal

f. Well irrigated sugarcane area, which is not much dependant on weather pattern

g. Integrated facilities to produce white sugar using sugarcane as well as refining of raw sugar

h. Premium range of quality products, attracting a mark-up in domestic and global markets

i. Presence in branded and packaged segment which has further growth potential

j. Diversification into Sanitizers and Disinfectant Manufacturing

Weaknesses

a. Highly leveraged with high finance costs

b. Cyclical nature of the industry, which is subject to climate and economic cycles

c. Low capacity utilisation in distillation segments

d. Lack of parity between cost of production and sale values of sugar resulting in un-paid sugarcane price position

e. Existing and anticipated litigation arising out of weak financial position of the Company

f. Delay in financial restructuring pending over past three years resulting in financial limitations

Opportunities

a. To produce and gain out of non-sugar base revenues including ethanol, being the focus area for the Company and also being encouraged by government policies

b. To be flexible in the refining of raw sugar for improving capacity utilisation throughout the year

c. To be a regular trader in the commodities with quality, brands and product mix whenever there is a viability

d. Presence in branded and packaged segment which has further growth potential

e. Enhancement of Alcohol capacity for manufacture of disinfectants

Threats

a. Worldwide Covid-19 emergency and impact there of in India

b. Increase in production and distribution cost due to Lockdown scenario

c. Recovery steps initiated by the lenders for over due outstanding.

d. The vendors and creditors related uncertainties on account of payment defaults

e. Significant higher production of sugar in the country may lead to downward trends in sugar prices

f. Volatile commodity markets have a bearing on international and domestic operations

g. Regulated environment may pose adversities for business decisions

h. Un-hedged positions in sugar and currency markets

i. Coercive actions by the State administration particularly for cane payment

Quality management system: The sugar units of the Company are compliant with internationally recognized quality, environment and food safety standards and are ISO 9001, ISO 14001 and FSSC 22000 certified. Management systems are applied to develop a systematic work culture that emphasizes process ownership across all levels of the organization.

RISK ASSESSMENT AND MITIGATION

The sugar industry faces challenges from the evolving marketplace continuously that impacts important issues in risk management and threatens profit margins. The business of the Company is exposed to several kinds of risks from time to time, which include the following:

Strategic Risks: These risks are relating to the flux and movement of money and capital in the Company. This will include cash flow management, investment evaluation and credit default. These risks emanate out of the decisions, the Company takes in the markets, resources and delivery of services.

Operational Risks: Most common, and often combatable in all situations, these risks related to business operations such as those relating to determination, identification and procurement of vendors, services delivery to vendors, security and surveillance, labour issues, blocking of funds and business activity disruptions.

Resource Risks: The Company may at times, become susceptible to various risks associated with the procurement of talent, capital and infrastructure, as may be specific to the industry.

Technological Risk: The business of the Company, particularly potable alcohol and speciality sugar, is subject to frequent and revolutionary technology changes as new products are being developed in this segment. This also leads to risk of obsolescence of machinery as well as inventory.

Industry and Competition Risks: The risks relating to the sugar and alcohol industry, including competition in the industry, technical landscape, risks arising out of volatilities of the manufacturing lines, and those relating to brands of the Company.

Risk of Clash and Breakage: The risk of clash and breakage is mainly referred to the risks associated with the manufacturing output caused due to quiver, bump, squeezing, lacquer desquamation, nick and so on, in transit. Fragmentation is mainly referred to fragile substances and includes loss including breaching and smash in transit due to careless loading and unloading and bumping of conveyance and may also occur during warehousing.

Risk of Theft, Pilferage and Non-Delivery: The risks relating to theft or pilferage, when the goods manufactured are failed to be delivered to the buyer the risk of non-delivery concerns a situation where the whole cargo is not delivered to the consignee.

Currency Risks: The Company, on account of international trading activities, deals in various foreign currencies and is exposed to fluctuations in the currency markets from time to time.

Risks relating to regulatory and compliance framework: The risks due to inadequate compliance of regulations, contractual obligations and intellectual property violations leading to litigations and related costs and effect on brand value and image.

Business existence risk: The risk relating to management disruption due to change in ownership as a result of ongoing restructuring.

The key objective of the risks analysis is to ensure sustainable business operations, and to promote an approach in risk management process by eliminating risks. In order to achieve this key objective, the Company has implemented such policies, which provides pro-active approach to manage various types of risks associated with day to day affairs of the Company and minimize adverse impact on its business objectives.

Environmental Compliances: The Company considers its prime responsibility towards protection of hygienic and pollution free environment. The Company has remained is in compliance of all environmental laws of the country. Companys effluent treatment plants were periodically inspected by State and Central Pollution Control Boards and other agencies.

Internal Control System - Implementation of Internal Financial Controls and Internal Audit Processes.

The Company has established and implemented internal financial controls based on the formal system of internal financial controls under the Companies Act, 2013 read with relevant Indian Accounting Standards (AS), considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls with reference to consolidated financial statements issued by the Institute of Chartered Accountants of India (‘ICAI). The system includes procedures, policies, the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys polices, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information , as required under the Companies Act, 2013 (‘the Act). The Company has been following-up the systems and control to safeguard the assets and interest of stakeholders against loss from any unwarranted action. All business transactions are authorized, recorded and reported accordingly. Under the system, certain Standard Operating Procedures/Policies with reference to the delegation of authorities, material procurement and management, accounting processes and systems, payment authorization, capex monitoring, insurance, and employee welfare etc. have been adopted. Review systems have been established and implemented to ensure the adequacy of control systems and their monitoring.

An independent internal audit process has been established with reference to the business operations of the Company. The internal audit reports along-with management comments are regularly being placed before the audit committee of the Board.

The legal matters with the former director/senior executive employees due to irregularities/misappropriation of inventory of the Company are going on before the appropriate authorities. The management is confident that these cases shall be concluded without material financial implications on the Company.

Materiality of Related Party Transactions: The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its related parties, in compliance with the applicable provisions of the Companies Act 2013, the rules made there under and the listing regulations. The Policy has been reviewing in order to make it align with recent updates in Companies Act, 2013 as well as SEBI Listing Regulations.

During the Financial Year 2019-20, all transactions with related parties were at arms length basis and were in the ordinary course of business. There was no materially significant related party transaction with the Companys Promoters, Directors, Key Managerial Persons (KMP), Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its approval. The particulars of contracts entered during the year are enclosed herewith as Annexure 2 as per prescribed Form AOC-2.

Corporate Social Responsibility (CSR): Pursuant to the provisions of Section 135 of the Companies Act, 2013 (hereinafter referred to as ‘the Act), read with Companies (Corporate Social Responsibility) Rules, 2014, the Board of Directors of the Company has formed a Corporate Social Responsibility Committee (hereinafter referred to as the ‘CSR Committee) headed by an independent director, to inter alia, carry out the following functions:

> to formulate and recommend to the Board, a Corporate Social Responsibility Policy indicating activities to be undertaken as specified in prescribed Schedule VII of the said Act;

> to recommend the amount of expenditure to be incurred on CSR activities; and

> to monitor the Corporate Social Responsibility Policy from time to time.

The Composition of Corporate Social Responsibility

Committee is mentioned elsewhere forming part of this Annual Report.

Company is not mandatorily required to spend any amount for Corporate Social Responsibility in terms of criteria prescribed under the provisions of Section 135 of the Companies Act, 2013, yet Company has its own CSR policy indicating the guidelines for social welfare activities to be undertaken and implementing programs in the fields of education, healthcare, clean water, social welfare, village infrastructure development in reserved areas of its sugar mills. The Company has been accepting its social responsibility obligations and encouraging cleaner surroundings, improving village level infrastructure, unclogged drains and spreading the awareness and providing necessary training and learning process for the value of good hygiene and sanitation. A Charitable trust named Simbhaoli India Foundation (SIF), has also been working to ensure social obligations of the Company.

The Company has been regular in CSR activities for the development, upliftment and advancement of the conditions of the people living in the villages in the vicinity of mills, however, during the year under review, separate accounts on the expenditure incurred, have not been maintained for this purpose.

Information Technology - During nation wide lock-down due to CoVID-19 pandemic the IT division of your Company has provided tremendous support to enable employees smoothly work from Home as well as to get them connected over virtual meetings. The information technology system of the Company is operating on SAP based enterprise resource planning (ERP) environment, optimizing the performance of its businesses as well as the business network.

OPERATIONS OF SUBSIDIARY/ASSOCIATE COMPANIES

Simbhaoli Power Private Limited(SPPL): SPPL is a 51% subsidiary, with a joint venture with Sindicatum Captive Energy Singapore Pte Limited. SPPL is generating the power using the sugar mill bagasse and third-party biomass at the Simbhaoli and Chilwaria Sugar complexes of the Company and selling the surplus power to State utilities under the long-term power purchase agreements. During the year, SPPL has generated 2.27 lacs MWh of power (Previous year 3.43 lacs MWh) and exported 1.36 lacs MWh (Previous year 2.38 lacs MWh).

Recently, Uttar Pradesh Electricity Regulatory Commission (UPERC) has notified the updated UPERC (Captive and Renewable Energy Generating Plants) Regulations, 2019 to supersede the earlier Regulations of 2014. Under the new regulations, the tariff of bagasse-based power generation and supply to UPPCL has been reduced by nearly Rs 2 per Kwh (unit) which has affected the financials of SPPL substantially.

Financial Statements of SPPL have not yet been considered and approved by their Management. Therefore, the results of SPPL for the financial year 2019-20 ended on March 31, 2020 are not available. For non-consolidation of accounts of SPPL detailed notes are forming part of Financial Statements.

Uniworld Sugars Private Limited(USPL): UniWorld Sugars Private Limited (USPL), a 50:50 joint venture company of Simbhaoli Sugars Limited, discontinued its operations in June 2017 due to non-availability of the raw sugar. During the financial year 2018-19, Corporate Insolvency Resolution Process (CIRP) was initiated against USPL by the Honble National Company Law Tribunal, Allahabad Bench (NCLT) vide its order dated May 29, 2018, on an application of one of the vendors of the USPL. The 270 days of the CIRP period are completed on February 23, 2019, and in the absence of any resolution plan, the liquidation application was filed by the Resolution Professional with the Honble NCLT on February 25, 2019. The Honble NCLT has granted additional time to find suitable Resolution Plan for the Company, on which the Resolution Professional is working with the lenders of the USPL.

Integrated Casetech Consultants Private Limited (ICCPL):

Integrated Casetech Consultants Private Limited (ICCPL), is an 85% subsidiary company and the technology vertical of SSL. It has been providing the operations and maintenance services to various sugar companies in India and abroad.

Due to lack of working capital and Covid-19 the Company is facing problems regarding the completion of the projects undertaken by it. During the year, the Company has achieved total revenue of Rs 2401.07 Lacs (previous Year Rs 1,633.09 lacs) reflecting a substantial increase in revenue in the current year. Company has earned a profit of 28.68 Lacs in comparison to profit of 18.87 lacs in previous year.

Simbhaoli Global Commodities DMCC: Simbhaoli Global Commodities DMCC, a wholly owned subsidiary company of Simbhaoli Sugars Limited was incorporated for trading in sugar, molasses, ethyl alcohol, fuel alcohol and other agro based commodities in the overseas market. The operations of the Company depend upon various national and international factors.Sugar is the main part of the business, upon which other businesses can derive the resultant benefits based on excess/ shortage of sugar in international market. The government regulations in India for export/import of these commodities adversely affected the running of its business through Dubai. Thus, due to heavily regulated imports and exports by the Government and the recessionary conditions in the global market, the Company has not been able to do its business and therefore not able to operate in the coming years as well. The Company has made an application for de-registration and termination of the license with the Dubai Multi Commodities Centre Authority. The approval is awaited.

Simbhaoli Specialty Sugars Private Limited (SSSPL):Simbhaoli

Specialty Sugars Private Limited is the wholly owned subsidiary of Simbhaoli Sugars Limited. No major business activities have been carried out by this Company during the year. Company has earned income from other source of Rs 6.48 Lacs during Financial year 2019-20.

OPERATIONS

A summary of the physical operations of all the business units of the Company for the year 2019-20 is stated as under:

Manufacturing Facilities Unit

Simbhaoli

Chilwaria

Brijnathpur

Total
Particulars Sugar Year 2019-20 2018-19 2019-20 2018-19 2019-20 2018-19 2019-20
Sugarcane crushed Lacs mt 14.46 15.18 4.44 5.10 5.31 4.74 24.21
Sugar recovery % 11.51 11.19 9.90 10.60 10.31 9.40 10.95
Raw/ below grade sugar refined 000mt 36.04 30.38 0.67 0.60 17.62 4.87 54.33
Net Sugar produced# 000 mt 166.42 169.83 43.96 54.06 54.69 44.55 265.07
Gross season for sugar plant Days 187 188 114 133 180 171 NA
Date of start of the Sugar plant 04.11.2019 31.10.2018 27.1 1.2019 27.11.201 8 04.11.2019 09.1 1.2018 NA
Date of closure of Sugar plants 08.05.2020 07.05.2019 19.03.2020 09.04.2019 01.05.2020 29.04.201 9 NA
Days of operations of distillery ** Days 253 206 157 107 213 140 NA
Alcohol/ Ethanol produced ** B.L (Lacs) 104 91 72 54 109 66 285

including conversion of Raw and below grades white sugar into refined sugar.

**As per Financial Year

FINANCIAL ANALYSIS

A summary of the standalone financial results of the Company for the year ended March 31, 2020 is stated as under:

(Rs in lacs)

Particulars Financial Year 2019-20 Financial Year 2018-19
Gross Sales/Income from operations 120831.90 111109.11
Other Income 2574.42 1585.35
Profit/(Loss) before Interest, depreciation and exceptional items 4598.76 2360.13
Interest expense 3163.07 3419.83
Depreciation 3600.60 3670.22
Profit/(Loss) before tax & exceptional items (2164.91) (4,729.92)
Exceptional (Gains)/Loss - 184.59
Net Profit/ (Loss) after Tax before Other Comprehensive Income (2164.91) (4914.51)
Other Comprehensive Income/(Loss) (272.14) (2261.27)
Net Profit/ (Loss) (2437.05) (7175.78)

During the Financial Year 2019-20, Gross Sales have increased from 1111.09 Crore to 1208.32 Crore and Net sales have increased from 952.13 Crore to 1009.44 Crore. EBIDTA has been at 45.99 Crore as against the previous year of Rs 23.60 Crore. Net loss for the year is 24.37 Crore as against Net Loss of 71.76 Crore in previous year.

Dividend: During the year, the business of the Company has been affected adversely on account of the lower realization from sugar sales, less capacity utilisation of distilleries, high finance cost, and other industry related issues. There being no profits during the year, your directors do not recommend any dividend.

Unpaid/unclaimed Dividend: There is no unpaid/unclaimed dividend in the Company. Hence, provisions of Section 125/126 of the Companies Act, 2013 are not applicable.

Share Capital: The paid-up capital of the Company is 41,27,90,200 divided into 4,12,79,020 equity shares of 10 each. Pursuant to exercise of option of conversion of warrants, 18,00,000 and 20,00,000 equity shares were allotted on March 29,2018 and March 29, 2019 respectively to the specified promoters.

During the year, there was lapse of 12,00,000 fully convertible warrants issued and allotted on December 22, 2017, due to non-exercise of option by the allottee(s) for the conversion within stipulated period. Pursuant to the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018, an amount of Rs 96.30 lacs, being 25% of the subscription amount lying in the books towards upfront payment has been forfeited.

Long term borrowings: Long term borrowings are at 359.03 Lacs (previous year525.22 Lacs), as during the year loans were repaid to related parties.

Short term borrowings: During the year, the short-term borrowings have been repaid resulting Nil Short term borrowings against the previous year of 137.95 lacs.

Investments: The Company has the following investments as on March 31,2020:

(Rs in Lacs)

S. No. Particulars Opening balance as on April 1, 2019 Additions/ (Deductions) during the year Balance as on March 31, 2020
2,00,800 equity shares of Rs 10 each in Integrated Casetech Consultants Private Limited 383.73 383.73
2 1,68,07,062 Equity shares of Rs 10 each in Uniworld Sugars Pvt. Ltd - - -
3 300 Equity Shares of AED 1000 each in Simbhaoli Global Commodities DMCC _ _ _
4 55,38,734 Equity shares of Rs 10 each in Simbhaoli Power Pvt Ltd 5,493.59 5,493.59
5 48,92,941 debentures of Rs 100 each of Simbhaoli Powers Pvt. Ltd. 5,108.99 (55.29) 5,053.70
6 19,000 equity shares of Rs 10 each of Simbhaoli Speciality Sugar Private Limited 190.00 190.00
7 Investments in Government Securities (NSC- Post Office) 2.11 - 2.11
8 Investment -Subsidiary (at Cost) 45.00 - 45.00
9 Investments at the end of the year 11,223.42 (55.29) 11,168.13

Status of shares under pledge: Out of the promoters shareholding, 33.14% in the total share capital is pledged with the financial institutions as security against various credit facilities availed by the Company. Out of the 29,011,770 shares held by the Company in Uniworld Sugars Private Limited, the pledge on 1,12,04,708 shares to secure the term loan of USPL, have been invoked by the IDBI Bank Limited.

Inventories: Inventory amounting to 55,088.78 lacs (previous year 48,094.92 lacs) include finished goods, raw material, process stocks, and store items. The sugar stock at the end of the year is valued of Rs 3168per qtl (previous year 3,125 per qtl).

Sundry debtors: Sundry debtors (net) amounting to 3562.19 lacs (previous year 5,668.00 lacs), are considered good and realisable. Provisions are generally made for all debtors outstanding for over 360 days subject to their scope of realization, industry trend and managements perception.

Cash and Cash Equivalents: Cash and Cash Equivalents are at 4,288.57 lacs (previous year 1,306.69 lacs).

Bank Balances other than cash & Cash equivalents: Bank balance of 1,632.74 lacs (previous year 1,022.51 lacs)comprise of EMD paid to Banks for OTS of Rs 571.60 lacs (Previous Year Nil)and fixed deposits for an amount of Rs 1061.14lacs (previous year 1022.51 lacs) as pledged with banks for securing certain loans, letters of credit, guarantees and other short- term facilities.

Other Financial Assets (Non-Current): Other financial assets of 1328.80 lacs (previous year 3256.49lacs) comprises interest accrued on debentures Nil (previous year 3046.10 lacs) reclassified to Other Financial Assets (Current), interest accrued on fixed deposits Rs 21.59 lacs (previous year 19.03 lacs). Further, fixed deposits for an amount oR197.94 lacs (previous year 127.19 lacs) are pledged with banks for securing certain loans, letters of credit, guarantees and other long term facilities. And Retention money from SPPL of 1100.00 lacs has been reclassified here from Trade Receivable.

Other Financial Assets (Current): Other financial assets of 3,557.89 lacs (previous year 492.37 lacs) comprises interest accruedon debentures 3,100.65 lacs reclassified from Other Financial Assets (Non-Current) and finance lease Nil (previous year 94.22 lacs) and royalty 274.98 lacs (previous year 274.98 lacs) receivable from Simbhaoli Power Private Limited.

Other Current Assets: Other current assets of 8879.39 lacs (previous year 5,325.48 lacs) comprise a receivable of 590.84 lacs (previous year 961.58 lacs) are considered good and realisable. Provisions are generally made for all receivables outstanding for over 360 days subject to their scope of realization, industry trend and managements perception. Government Grant of 7292.25 (previous year 3,700.72 lacs), Claim receivables of 300.26 lacs (previous year 179.62 lacs), Balance with authorities 339.28 lacs (previous year 227.73 lacs) and prepaid expenses 239.15 lacs (previous year 150.21 lacs).

Trade payables, other current liabilities, and provisions:

a) Trade payables at 90016.35 lacs (previous year 79,278.02lacs) includes amount payable against sugarcane supply, other raw materials, stores and services

b) Other current liabilities of 1,532.06 lacs (previous year 1,075.92 lacs) reflect amount payable against statutory dues, advance received from customers other miscellaneous liabilities.

c) Provisions for employee benefits stood at 107.35 lacs (previous year89.73 lacs) as per actuarial valuation.

Sales and other income: The segment wise allocation of revenues for the year 2019-20 and for preceding two accounting years is as under:

(Rs in Lacs)

Years/ Segment

Sugar

Alcohol

Turnover %age Turnover %age
2017-18 86,504 95.07 4,484 4.83
2018-19 84,470 74.43 29,015 25.57
2019-20 92,040 72.31 35,252 27.69

Other income of 2574.42 lacs (previous year 1,585.35 lacs) comprises interest and rent received from subsidiary companies, liabilities/provisions which are no longer required and written back and other miscellaneous earnings.

Raw Material Consumption: 82,201.69 lacs (previous year 87,477.74 lacs) include sugarcane and molasses as the principal raw materials consumed by the Company.

Employees cost: The employee cost at 5,696.07 lacs (previous year 5,334.48 lacs).

Finance cost: Finance costs decreased to3,163.04 lacs (previous year 3,419.83 lacs) on account of non-provisioning of interest cost of Rs 13,146.17 lacs for the current year (previous year 12,336.46).

Other Expenses: Other expenses increased to12,513.04 lacs (previous year 12.411.69 lacs).

Power and Fuel: Power and Fuel expenses increased to 2843.88 lacs from 1690.78 lacs in previous year due to higher bagasse purchased from outside during off season for running of Distilleries.

Ratio Analysis

The analysis of the Companys financial statement for the year under review is given below:

Key Ratios 2019-20 2018-19 % Change
Debtor Turnover Times 24.79 23.38 6%
Inventory Turnover Times 2.35 2.89 -19%
‘Interest Coverage Ratio Times 1.47 0.61 *141%
Current Ratio Times 0.35 0.30 17%
#Debt Equity Ratio Times (84.89) 88.44 -196%
"Operating Profit Margin Ratio(%) % 5.69% 2.52% 126%
Net Profit Margin Ratio(%) or Sector specific equivalent Ratio % -2.09% -5.08% 59%
##Return on Net Worth (84.12) 81.67 -203%

* Lower losses on account of higher sales and better operations as compared to last year.

#Reduced due to increase in accumulated losses during the year.

**Ratio has improved due to increase in operating revenue on account higher sales and better operations during the current year ## Although Net revenues have increased during the year but due to increase in accumulated losses, ratio has further gone negative.

Accounting Policies

The Companys Board of Directors accepts the responsibility for the preparation and presentation of financial statements that give a true and fair view of the Financial position, financial performance, cash flows and statement of changes in equity of the Group in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (IND AS) prescribed under section 133 of the Companies Act, 2013. The Board also accepts the responsibility for the integrity and objectivity of these financial statements, as well as for various estimates/ judgments used in preparation of these statements. The estimates and/or judgments have been made on a consistent, reasonable and prudent basis to reflect true and fair view of the state of the affairs of the Company.

These financial statements have been prepared on going concern basis using the significant accounting policies and measurement bases. Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted ora revision to an existing accounting standard requires a change in accounting policy hitherto in use. In those cases the new accounting policy is adopted in accordance with the transitional provisions stipulated in that Ind AS and in absence of such specific transitional provision, the same is adopted retrospectively for all the periods presented in these financial statements.

Loans, Guarantees, and Investments Under Section 186

The particulars of loans, guarantees or investments made under Section 186 of the Companies Act, 2013 and rules made there under are furnished in Note 3 in the Notes to accounts forming part of the Annual Report.

Particulars of Contracts or Arrangements made with Related Parties

The particulars of contracts or arrangements made with related parties made pursuant to Section 188 of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and Indian Accounting Standards 24 issued by the Institute of Chartered Accountants of India are furnished in Note 11 in the Notes to accounts forming part of the Annual Report.

Debt Servicing and Public Deposits

During the year, pending completion of the debt resolution, the Company has not been able to meet its obligations towards the lenders for repayment of both principal and interest. The Company has approached its lenders to implement debt resolution plan of its outstanding debts in accordance with its available future cash flows, sustainability of the business and nature of the business of industry. There has been delays in submission of the plan and its consideration on account of continuous changes in regulatory frameworks, particularly, withdrawal of the arrangement of corporate debt restructuring and joint lenders forum. Subsequent to the intervention by the Honble Supreme Court on such matter, the revised plans have been submitted to all the lenders for suitable resolution, which is under consideration by them. The specific requests have been made to take a collective approach with regard to possible resolution instead of taking multiple recovery/coercive measures. The proposal includes waiver of un-paid interest on overdue loan accounts till implementation of the proposed restructuring. The Company has approached its lenders to implement debt resolution plan of its outstanding debts and accordingly submitted a One Time Settlement Proposal (OTS) to its commercial lenders wherein resolution of outstanding debts of commercial banks are proposed to be settled through payment of One Time Agreed amount.In addition, The Company has also proposed certain percentage of shares in the equity share capital in direct proportion to lenders outstanding principal amount. OTS proposal submitted by the Company is under consideration by the lenders.

With delays in repayment of the loans, and the cane price arrears, the Companys credit rating has continued to remain below investment grade.

The loans availed by the Company have been classified as NonPerforming Assets (NPA) by all the lenders and interest thereon is not being charged by them as per applicable practices. The Company is hopeful that the resolution exercise including waiver of un-paid interest on certain loan accounts shall be completed in due course of time, and accordingly, interest expenses for the year ended March 31,2019 amounting to Rs 12,336.46 lacs (previous year Rs 11,971.59 lacs), aggregating to Rs 24,308 lacs has not been recognized in the financial statements.

Certain lenders to the Company have resorted to initiate recovery proceedings at Debt Recovery Tribunals, for which replies are being submitted based upon the legal advices. The Company, under discussions with its lenders, has identified and taking all measures to satisfy the lenders and to work out a common resolution plan to their satisfaction.

During the year, one of the lenders to the Company has approached Honble National Company Law Tribunal (NCLT), Allahabad for initiating of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016. Considering the nature of industry and ongoing discussions with the lenders, the Company is hopeful that debt resolution shall be worked out with all the lenders leading to a consented settlement.

The Company has not accepted any public deposits and no deposits are unpaid for any previous year.

Material Changes and Commitments affecting the Financial position of the Company, which have Occurred Between the end of the Financial Year and the Date of Report

During the year, the Company has faced legal actions on account of defaults in repayments of loans and delay in approval of debt resolution. The detail has been reported elsewhere in this report.

Application for Reclassification of Promoters of the Company

The special resolution for reclassification of promoters was passed at 6th Annual General Meeting of the members of the Company. Thereafter, an application seeking reclassification of certain members of Promoter group of the Companyto Public category in terms of provisions of erstwhile regulation 31A (7) of SEBI (LODR) Regulations, 2015, was filed with SEBI/Stock Exchanges. The Company has submitted the documents in support of the application as per the requirement.The exchange had advised that as per erstwhile regulation no 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended vide notification dated Nov 16, 2018, it is required that the outgoing promoters shall hold less than 10% shares in the share capital of the Company.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

At the ensuing Annual General Meeting of the members of the Company, Ms. Gursimran Kaur Mann and Mr. Gurpal Singh shall be retiring by rotation in terms of the provisions of Section 152 of the Companies Act, 2013. They have offered themselvesfor re-appointment. The Board consideredand approved the reappointment subject to the approval by the members.

During the year, Mr. Atul Mahindru and Mr. Shyam Sunder were appointed as Additional Director (independent)to the Board of the Company under Section 149 and Section 160 of the Act and SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and they shall hold office for a period of 5 (five) consecutive years, subject to the approval of the members at the ensuing annual general meeting.

During the year, the Company has passed the resolutions for continuation of the appointment of Mr Gurmit Singh Mann, Mr. S K Ganguli, and Justice (Retd) C K Mahajan, who have attained the age of 75 years, in terms of the provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and they shall hold office till the unexpired period from the respective dates of their appointments.

Lt General (Retd) D S Sidhu, an Independent Director, has submitted his resignation from the directorship with effect from August 12, 2019 on account of the other pre-occupations. During his tenure, he has guided the Company through his immenseknowledge and experience. The Directors placed on record the appreciation and noted the valuable contribution of the outgoing director during his association with the Company.

During the Year, there was no change in the KMPs of the Company.

Declaration of Independent Directors

The Independent Directors of the Company have given declaration stating that they continue to confirm the criteria set out for Independent Directors under Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Companys Policy on Directors Appointment and Remuneration

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 has been disseminated at the Companys website at the link-http://www.simbhaolisugars.com/ company_policies.asp.

Number of Board Meetings conducted during the Year

During the year, 5 meetings of Board of Directors have been conducted. Details of meetings have been disclosed in Corporate Governance Report forming part of the Annual Report.

Board Evaluation

In compliance with the requirement of Section 134(3)(p) and Schedule IV of the Companies Act, 2013 and Rules framed there under and Regulation 17(10) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company evaluated and assessed the performance of the Companys Chairman, Individual Directors, Board as a whole and its Committees on the basis of parameters set by the Nomination and Remuneration Committee. Independent Directors of your Company have also conducted an evaluation of performance of Executive Directors, Chairman of the Board and Committee(s) of the Board.

All the independent directors possess the requisite qualifications and experience in the respective areas. They have been discharging their duties diligently as defined in schedule IV to the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are contributing towards improvement in the governance standards of the Company.

Every year, the independent directors review the performance of the non-independent directors based on the criterion such as job profile and market perception, self-declaration on the jobs handled/taken up, opinion from peer and sub-ordinates, their performance evaluations, reporting and participation in the Company meetings and they have found their performance to be satisfactory period under review.The Directors have considered the principles for review of the performance of the non-independent and also the independent directors, based on certain appropriate criterion. They find the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties to be satisfactory.

Secretarial Audit

M/s Amit Gupta & Associates, Company Secretaries, have been engaged as the Secretarial Auditors of the Company under the provisions of the Companies Act, 2013 for the financial year 2020-21. Secretarial Audit Report for the FY 2019-20 is given as Annexure-1 to this report.Secretarial Audit report of Simbhaoli Power Private Limited, material subsidiary, have also been attached as Annexure 1A.

Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Secretarial Auditors in their reports

There is no qualification in both the Secretarial Audit Report(s). However, Comments/Remarks are there in the Secretarial Audit Report(s) which are self-explanatory and explained at the appropriate sections in the Annual Report.

Cost Auditors and Cost Records

In terms of provision of Section 148(1) of the Companies Act, 2013 maintenance of Cost Records is required by the Company and accordingly such accounts and records are made and maintained.

The Board of Directors, in compliance with the provisions of the Companies Act, 2013, Rules and Notifications issued thereunder, have appointed M/s Satnam Singh Saggu, Cost Accountants, as Cost Auditors to conduct Audit of the Cost Accounts maintained by the Company for the Financial Year 2020-21.

ANNUAL RETURN

Pursuant to the provisions of Section 92 (3) of the Companies Act, 2013 a copy of the annual return of the Company has been placed on the website of the company under Investors section and furnished in Annexure-3 and attached to this Report.

SUBSIDIARY, JOINT VENTURE, AND ASSOCIATE COMPANIES

The Company has four subsidiary companies, viz. Simbhaoli Power Private Limited (SPPL), Integrated Casetech Consultants Private Limited (ICCPL), Simbhaoli Speciality Sugars Private Limited (SISPL) and Simbhaoli Global Commodities DMCC, Dubai (SGC). Uniworld Sugars Private Limited (USPL) is a joint venture company, under CIRP defined elsewhere.The consolidated financial statements presented by the Company include financial information of its subsidiary companies prepared in compliance with applicable accounting standards.

A Statement containing salient features of Financial Statements of Subsidiaries/ JV/ Associates Companies in Form AOC-1 is annexed as Annexure- 6.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

Activities relating to export; initiatives taken to increase exports; development of new export markets for products and services; exports and import plans are mentioned elsewhere in the Directors Report.

During the year, Foreign Exchange aggregating to 11.15 Crore was earned by the Company against export of Companys product and 1.43 lakh was spent on travelling. The Foreign currency exposures not hedged by derivative instruments or otherwise are given in Notes to the Financial Statements.

Material Orders Passed by Regulators, Courts Or Tribunal

There were no significant or material orders passed by the Regulators, Courts or Tribunal which impact the goingconcern status of the Company and the Companys operations in future.

EMPLOYEE STOCK OPTION SCHEME

No stock options schemes have been introduced during the year.

CORPORATE GOVERNANCE

The Report on Corporate Governance from the Practicing Company Secretary and certificate from Chief Operating Officer and Chief Financial Officer form part of this Annual Report.

VIGIL MECHANISM

The Company has established a vigil mechanism, which overseas through the Audit Committee, the genuine concerns expressed by the employees and other directors. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co-employees and the Company in order to provide adequate safeguards against victimization of all persons.

The policy on the vigil mechanism comprising of the whistle blower policy, has been disseminated at the Companys website at link- http://www.simbhaolisugars.com/company_policies.asp. During the year, no such complaint has been received by the Company.

LISTING OF SECURITIES

The equity shares of the Company are listed with the BSE Limited and National Stock Exchange of India Limited. The annual Listing fee for the financial year 2020-21 has been paid to both the stock exchanges.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION INITIATIVES, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology initiatives, Research and Development, Foreign exchange Earnings and out go as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure-4.

PARTICULARS OF EMPLOYEES

The disclosure under the provisions of Section 197 (12) of the Companies Act, 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure -5.

There was no employee of the Company, who has been paid remuneration under rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

AUDITORS

M/s Mittal Gupta & Co, Chartered Accountants, Kanpur were appointed as statutory auditors of the Company for a period of five years completed in current financial year 2019-20. Your directors have recommended their re-appointment for another term of five years viz. 2020-21,2021 -22, 2022-23, 2023-24 and 2024-25.They have, being eligible, offered themselves for the aforesaid appointment.

Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors in their reports

Explanation or comments on qualifications, reservations or adverse remarks or disclaimers made by the Statutory Auditors in their reports are self-explanatory and explained in details in notes to the accounts and at other appropriate sections in the Annual Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, read with the Rules made there under, with respect to the Directors responsibility statement, it is hereby confirmed:

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 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 2019-20 ended on March 31, 2020 and of the profit and loss of the Company for that period;

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

d. the directors had prepared the annual accounts on a going concern basis;

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.

CAUTIONARY STATEMENT

Certain statements in this report may be forward looking and represent intention of the management. Actual results may differ materially due to a number of risks or uncertainties associated with the business. Investors/stakeholders, therefore, are advised to make their own judgments before taking any investment, business decisions.

ACKNOWLEDGEMENT

The Board of Directors sincerely submit appreciation remarks the guidance provided by the Government of India, State Government of Uttar Pradesh, the lender banks and institutions and the cooperation and assistance received from all executives, staff and workmen of the Company.

They also express special thanks to the joint venture partners for their association in running the affairs of the business of the respective subsidiary/associate companies, being part of the future growth of the Company.

The Directors also wish to state the gratitude to the Indian Sugar Mills Association, farmers, suppliers, and all other concerned persons who have continued their valuable support to the Company.

For and on behalf of the Board of Directors Simbhaoli Sugars Limited

SD/-
Gurmit Singh Mann
Place : Dharamsala Chairperson
Date : July 30, 2020 (DIN - 00066653)