DIRECTORS’ REPORT DEAR SHAREHOLDERS, Your Directors have pleasure in presenting their 75th Annual Report together with the Audited Financial Statements for the period ended 31st March, 2015. GENERAL: All India Production of Sugar for the Season 2014-15 is expected to reach 280 Lakh tonnes, as compared to the previous year’s production of 243 Lakh tonnes. The Government of India, has continued with the decontrol mechanism. Our total sugar cane crushing at Ugar and Jewargi during the season 2014-15 was 20.07 Lakh MT, bagging 23.13 Lakh Qtls of sugar and recovery 11.61% and 10.62 % respectively. DIVIDEND: Your directors have not recommended any dividend for the current financial year 2014-15. OPERATIONS: SUGAR AT UGAR: Your Directors expect to procure about 22 Lakh MT sugarcane at Ugar and Jewargi Units during 2015-16 crushing season. ENVIRONMENTAL SAFETY: Our Company continues to pursue its environmental friendly approach towards Industrial growth. Constant improvements are being made in the process and equipments, to minimize the discharge of effluents and emissions. FIXED DEPOSITS: The Company has repaid the Fixed Deposits of Rs. 2,815.93 Lakh during the year 2014-2015 to comply with the provisions of Section 74 of the Companies Act 2013. The number of Depositors, who have not claimed their deposits after maturity as on 31st March, 2015 were 3 (Three) and the amount outstanding as on that date, was Rs.3.18 Lakh. These amounts are lying with the company as there are litigation amongst the heirs about the true ownership of the deposits. As and when court order is received, amounts will be paid. The Company has not accepted fresh deposits from public pursuant to Section 73 or 76 of the Companies Act, 2013 read with The Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: Company has not advanced any loans pursuant to Section 186 of the Companies Act, 2013. The Guarantees given are given to the financial institutions (i.e. Rs. 40 Cr. to Bank of India and Rs. 25 Cr. to ICICI Bank Ltd.). And Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements at Note No A-11. DIRECTORS & KMP: During the year under review following changes have taken place in the composition of the Board of Directors of the Company: l Shri. R. V. Shirgaokar, Chairman and Mentor of the Company has resigned as Chairman and Mentor as well as member of the board w.e.f. 31st March, 2015. The board places on record appreciation of services rendered and valuable guidance given by Shri R.V. Shirgaokar during his tenure as a Chairman and Mentor of the company. He is now designated as Chairman Emeritus. l Shri. P. V. Shirgaokar, age 76 years, was appointed on the Board on 05.08.1994. He retired as Executive Vice Chairman on 31st March, 2015 and thereafter he was appointed as Chairman of the Company w.e.f. 01st April, 2015. He is liable to retire by rotation & being eligible offers himself for reappointment. l Mrs. Shilpa Kumar, a Women Director, has been appointed as an additional Director on the Board on 31 March, 2015. A notice is received from a member proposing her candidature for appointment as Director liable to retire by rotation. l Shri. Deepak Ghaisas, an Independent Director was appointed by the Company on 23 May, 2014. l Shri. A. B. Kage resigned as a Director due to health problems on 20 May, 2015. l Shri. Shishir S. Shirgaokar is appointed as a Executive Vice Chairman, Shri. Niraj S. Shirgaokar and Shri. Chandan S. Shirgaokar has been appointed as Managing Director w.e.f. 01st April, 2015. l Shri. Shishir S. Shirgaokar, Managing Director, Shri. R V Desurkar GM Finance & CFO and Shri. B G Kulkarni GM Corp. Affairs & CS, were designated as KMP during the year. Directors Retire by Rotation: l Shri. V. Balasubramanian, (Retd. IAS), age 74 years, is on the Board of the Company as an Independent Director since 1997. He retires at this meeting and is eligible for re-appointment as an Independent Director for a period upto 2019. l Dr. M. R. Desai age 68 years is a qualified doctor, is on the Board as an Independent Director since 2000. He retires at this meeting and is eligible for re-appointment as an Independent Director for a period upto 2019. l All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The details of appointment of Independent Directors are disclosed on Companies website with following link. http://web.ugarsugar.com/ investor_Relations/Corporate_Announcements.asp?child=3&parent=7 l Board Evaluation :- Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of Audit, Nomination & Remuneration Committees. l Nomination & Remuneration Policy: The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration and includes other matter as prescribed under the provisions of Section 178 of Companies Act and Clause-49 of the Listing Agreement. The Nomination & Remuneration Policy is available on the website of the Company on the following link. http://web.ugarsugar.com/Investor_Relations/Corporate_Announcements.asp?child=3&parent=7 l Meetings: During the year, Five Board Meetings and Five Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DIRECTORS’ RESPONSIBILITY STATEMENT: Pursuant to the provisions of section 134(5) of the Companies Act, 2013, we confirm that i] That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures, ii] The directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period, iii] The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, iv] The directors had prepared the annual accounts on a going concern basis, v] 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 vi] The director had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. CORPORATE GOVERNANCE: Our Company has been following good Corporate Governance since its inception. The shares of our Company are listed on Bombay Stock Exchange Ltd., and National Stock Exchange of India Ltd., We are regularly and timely complying with the requirements as per the Listing Agreement. Company has paid the Annual Listing Fees for the Financial Year 2015-16. As required by SEBI Guidelines, a Corporate Governance Report is annexed. CO-GENERATION AT UGAR & JEWARGI: During this year electricity generated was 1,446.13 Lakh KW of which we have exported 847.42 Lakh KW through Tata Power Trading Company by consuming 5.10 Lakh MT of Bagasse. During the Financial Year 2014-15, the electricity export rates received till March, 2015 were Rs. 4.93 per unit at Ugar and Jewargi as against Rs.5.08 per unit received during previous year. DISTILLERY: The production of Rectified Spirit was 129.62 Lakh BL as compared to 84.44 Lakh BL during the previous year. During the year under review, the supply of ethanol has restarted and we have supplied 37.13 Lakh BL to the Oil Companies. The production at distillery has gone up by 45.18 lakh bulk litres during the year. INDIAN MADE LIQUOR (IML) AT UGAR: The Company has manufactured 10.73 Lakh cases at Ugar during this year as against 10.84 Lakh cases during the previous year. The sales have slightly come down. Company has continued bottling its products at M/s. K. S. Distilleries M/s. SDF Industries and M/s. Polsons Distilleries. DEMATERIALIZATION OF SHARES: Our Company has provided connectivity with NSDL & CDSL for dematerialization of its shares for trading in electronic form under ISIN-No.INE071E01023. So far 89546232 eq. shares have been dematerialised by the shareholders, i.e.79.60% of total shareholding as on 31st March, 2015. The annual fees of depositories for the FY 2014-15 have been paid by the Company. CONSERVATION OF ENERGY AND PARTICULARS OF EMPLOYEES: Particulars pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo have been given under Annexure I. The disclosures as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule, 8 of The Companies (Accounts) Rules, 2014 has been given under Annexure II. Both the annexure form part of this report. ASSOCIATE COMPANIES: UGAR CONSULTANCY LTD. Ugar Consultancy was incorporated on 10-11-1987, with an intention to provide consultancy services for power generation projects, including its implementation. The company was also providing services for erection of sugar manufacturing plants, electrical maintenance and ancillary services. Since the consultancy for power projects has reduced substantially, the company has stopped its activities and is under voluntary winding up process. UGAR THEATRE PVT. LTD. Ugar Theatre Pvt. Ltd was incorporated on 29-11-1977, with an intention to exhibit films for the Ugar people, with increased media facilities, the film exhibition has become un-remunerative, hence the activity of film exhibition was stopped w. e. f. 30th January, 2004 and the machinery was sold. The Company is presently engaged in providing warehousing facility to others. UGAR QUALITY PACKAGING PVT. LTD. Ugar Quality Packaging Pvt. Ltd was incorporated on 21-06-2006 as a 100% Export Oriented Unit (EOU) to cater the entire printing/packaging needs of Ugar's Sugar Ship EOU project. This plant was set up at Ratnagiri, Maharashtra and commercial production was started from October 2007. However, with the reduced orders from Sugar Ship Unit, the Ugar Quality Packaging Pvt. Ltd. went in loss and the activities were stopped from April, 2013. QUALIFYING REMARKS IN AUDITORS’ REPORT: There are no qualifying remarks in the Statutory Auditors Report and Secretarial Audit Report. AUDITORS: Statutory Auditors The Company’s Auditors, M/s. P. G. Bhagwat, Chartered Accountants, having FRN - 101118W retire at the ensuing Annual General Meeting of the Company are eligible for reappointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for reappointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. You are requested to appoint auditors for the ensuing year and to authorise the Board to fix their remuneration. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its the Cost Audit of Sugar and Electrical Energy. Your Directors have appointed Shri. V. V. Deodhar, Cost Auditor, Mumbai (Membership No. 3813) on the recommendation of the Audit Committee, to audit the cost accounts of the Company for the financial year 2015-16 on a remuneration of Rs. 1.70 Lakh, subject to the ratification of General Body. You are requested to ratify the remuneration payable to him. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed CS Abhay Gulavani, Company Secretary in Practice, Miraj (Membership No A28983) to undertake the Secretarial Audit of the Company who had consented to the same. The Report of the Secretarial Auditor is annexed herewith as “Annexure III”. Management response for the observations stated in the report are as below- 1) NSE Fine - Due care will be taken to avoid the delays in future. 2) Issue relating to Cane Price - Company has filed the petition int High Court, of Karnataka through its association. CORPORATE SOCIAL RESPONSIBILITY In view of the loss during previous years and expected loss during this year, the company has not spent any specific amount towards corporate social responsibility. The Report of the CSR is annexed herewith as “Annexure IV”. INTERNAL FINANCIAL CONTROL: The Company has adequate Internal Financial Controls with proper checks and balances to ensure that transactions are properly authorized, recorded and reported apart from safeguarding its assets. These systems are reviewed and improved on a regular basis. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. The transactions entered into by the Company during the year were within the limits of the Powers of the Board as prescribed in Section 188 read with Companies (Meetings of Board & its Powers) Rules, 2014. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel, other designated persons or other related parties which may have a potential conflict with the interest of the Company at large. All Related Party Transactions were placed before the Audit Committee and the Board for their approval. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. Form No. AOC-2: (Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014) is attached in Annexure V. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as “Annexure VI”. DETAILS OF REMUNERATION AS REQUIRED UNDER SECTION 197 (12): Details of Remuneration as required under 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 given as “Annexure VII.” WHISTLE BLOWER POLICY / VIGIL MECHANISM: Pursuant to the provisions of Section 177 of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Company has adopted a Whistle Blower Policy / Vigil Mechanism that encourages and supports its Directors & employees to report instances of unethical behaviour, actual or suspected frauds or violation of Company’s Code of Conduct. It also provides adequate safeguards against victimisation of persons who use this mechanism and direct access to the Chairman of Audit Committee in exceptional cases. The Whistle Blower Policy / Vigil Mechanism policy has been posted on web site of company on the link http://web.ugarsugar.com/Investor_Relations/ Corporate_Announcements.asp?child=3&parent=7 PREVENTION, PROHIBITION & REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORK PLACE: The company has in place a policy on prevention, prohibition & redressal of sexual harrassment of women at work place and an internal complaints committee has been constituted. No complaints are received during the year. ACKNOWLEDGMENT: Your Directors wish to place on record their sincere appreciation for the continued support received from Managements of Central Bank of India, Bank of Baroda, Union Bank of India and Bank of India for providing working capital finance and Central Bank of India, Bank of Baroda, Sugar Development Fund, for providing long term finance for capital Investments, Tata Power Trading Co. Ltd., and HESCOM, for transmission of energy. Your Directors thank the Government of India, Government of Karnataka, Government of Maharashtra, Government Authorities, Shareholders, Cane suppliers, Workers and Staff for their co-operation and contribution to the overall progress of the Company. By order of the Board of Directors For The Ugar Sugar Works Limited P. V. Shirgaokar Chairman DIN - 00151114 Place: Pune Date: 29-05-2015 |