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You are here: ET Home » Markets » Stocks » Stock Quotes » KCP Sugar & Industries Corporation Ltd. » Directors report * Summary * Prices * Financials * Reports * Company Info * News * Competitors * ET Buzz Tracker New
Directors ReportChairman's SpeechFinished Products
KCP Sugar & Industries Corporation Ltd.
BSE: 533192NSE: KCPSUGINDEQ58888: kcpsi
IND: SugarISIN code: INE790B01024SECT: Sugar
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You can view full text of the Director's Report for KCP Sugar & Industries Corporation Ltd.
Director Report Mar2011 Mar 2012
Dear Members, The Directors present their 17th Annual Report and the audited statement of accounts for the year ended 31st March 2012. The fi nancial statements have been presented in the new format in accordance with the changes brought about by the Revised Schedule VI tothe Companies Act, 1956.
I. FINANCIAL RESULTS:
For the For the Year ended Year ended 31.03.2012 31.03.2011
Physical Performance
Cane crushed - in Tonnes 11,16,558 10,49,613
Sugar bagged - In Quintals 10,63,267 10,34,579
Financial Performance - Rs. Crores
Turnover 410.60 269.76
Other Income 8.61 8.30
Profit Before Tax 31.75 13.28
Profit After Tax 26.42 11.83
Surplus from Previous Year 56.89 52.22
Amount available for appropriation 83.31 64.05
Appropriations
Transfer to General Reserve 2.70 1.27
Proposed Dividend 7.94 5.10
Tax on proposed Dividend 1.28 0.79
Carried forward 71.39 56.89
II. PERFORMANCE:
During the financial year under review your Company recorded a Turnover of Rs. 410.60 crores (Prev.Year: Rs.269.76 cr.) including Excise Duty of Rs. 11.05 crores (Prev.Year: Rs.7.12 cr.) and Inter-divisional transfers of Rs. 71.60 crores (Prev year: Rs.56.97 cr). The Profit before fi nance cost and depreciation is Rs. 48.92 crores. Profit before tax is Rs. 31.75 crores and after adjustments relating to refund / payment of Income Tax pertaining to earlier years, provision for current tax and Deferred Tax, the Profit after tax is Rs. 26.42 crores.
The increase in Profit is due to higher quantum of sale of sugar and Rectifi ed Spirit coupled with improved realisations.
III. DIVIDEND:
The Board of Directors recommends a dividend of Re.0.70 per equity share of face value of Re.1/- each on the Paid-up Equity Capital for the year ended 31.03.2012 as against Re.0.45 per equity share, approved for the previous year ended 31.03.2011. The dividend recommended by your Directors, if approved at the ensuing Annual General Meeting by the Shareholders would be paid within the stipulated time.
IV. SHARE CAPITAL AND RESERVES:
The Share Capital of the Company is Rs.11.33 crores. The General Reserve as at 01.04.2011 was Rs.106.30 crores and after transferring from Net Profits a sum of Rs.2.70 crores to the General Reserve for the year ended 31.03.2012 the General Reserve stood at Rs. 109.00 crores as on 31.03.2012. The total Reserves and Surplus has increased to Rs.182.40 crores as on 31.03.2012 as against Rs. 165.19 crores as on 31.03.2011.
VI. FUTURE PLANS:
- To identify new technologies wherever it is possible and makes use of the same for improved results.
- Complete mechanisation of sugarcane cultivation and harvesting in order to reduce the excessive dependence on manpower and reduce cost.
- In-depth study is in progress in Distillery division to adopt new technologies for improving the yield and reduce the discharge of spent wash.
- Identifying value-added products from the by-products and to promote renewable energy from industrial waste.
VII. PERSONNEL AND INDUSTRIAL RELATIONS:
The Employee relations scenario continued to be harmonious and congenial. Acknowledging this, your Company has been awarded for outstanding efforts in maintaining cordial Industrial Relations and Labour Welfare by Government of Andhra Pradesh.
VIII. DIRECTORS:
As per Article 119 and Article 120 of the Articles of Association read with Section 255 and 256 of the Companies Act, 1956, Shri. Ranvir R. Shah, Director, and Shri. Vinod R. Sethi, Director, retire by rotation and being eligible, offer themselves for re-appointment. A brief resume, expertise and details of other Directorship are provided in the Notice of the ensuing Annual General Meeting. Your Directors recommend their reappointment as Directors of your Company.
IX. STATUTORY COMPLIANCES:
i. Information as per Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 is annexed to and forms part of this Report.
ii. No employee of the Company was in receipt of remuneration in excess of sum prescribed under Section 217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975, during the financial year 2011-12.
iii. As required by the Listing Agreements and Accounting Standards of the Institute of Chartered Accountants of India, the additional disclosures in respect of related party transactions have been made.
X. DIRECTOR''S RESPONSIBILITY STATEMENT:
As required by Section 217 (2AA) of the Companies Act, 1956, your Directors certify as follows:
i. that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and that there were no material departures therefrom;
ii. that 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 ended 31st March 2012 and of the Profit of the Company for that year;
iii. that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv that the Directors had prepared the annual accounts on a going concern basis.
XI. CREDIT RATING
The Credit Rating of A- (Single A minus) for Fund-based facilities and A2 (A Two Plus) for Non-Fund based facilities assigned to your Company in the earlier year by Credit Analysis& Research Ltd (CARE), has been reaffi rmed by them for the current year also. Measured through industry yardstick these ratings are considered to be better ratings for a sugar mill.
XII. ISO CERTIFICATION
Your Company has been certifi ed consecutively for the past four years under BS EN ISO 14001:2004, BS EN ISO 9001:2000, and OHSAS 18001:2007 for Manufacture of sugar, associated products and site activities, and Occupational Health and Safety Management system by Lloyd''s Registry Quality Assurance Limited.
XIII. RISK MANAGEMENT:
The Company has an effective risk management under which all probable risks are periodically identifi ed, assessed and acted upon to minimize and mitigate their impact. These processes are subject to periodical review by the Management. Some of the risks identifi ed are enumerated below:
i. Raw Material Risk:
Sugarcane being the main raw material for sugar, any disturbance in its timely availability will have a substantial impact on the operational cost. This in turn has a signifi cant adverse effect since the market value does not factor the variable cost determined by the climatic conditions and the cane economics.
Mitigation Measure:
The Company always maintains healthy relationship with its farmers. It is one among very few companies in sugar industry paying its farmers within the stipulated time. The risk of raw material short supply is mitigated to a large extent by the goodwill and reputation for ethical dealings earned by the Company since inception. The experiments in farm mechanisation, drip irrigation improved cane varieties, carefully monitored scheduling of cane planting and harvesting boost the confi dence of the Company in mitigation of the risk.
ii. Policy Risk:
Central and State governments regulate the cane policies and they have a larger control on this industry by determining the raw material price and also infl uence the sugar selling price. The controls exercised by the Union and State governments include sugar pricing (levy and release orders), command area demarcation from time to time. Molasses movement control.
Mitigation Measure:
The Company is a member of South Indian Sugar Mills Association (SISMA) and works closely with it towards developing appropriate policy recommendations to represent the industry needs to the government. Formulation of policy on Ethanol doping, review of cogeneration policy, decontrol of sugar and review of sugar weightage in WPI are some of the issues addressed in close liaison with SISMA.
iii. Cyclicality / Commodity Risk:
The sugar price is determined by the cyclicality of the sugar business and hence it affects the Profitability. Sugar being a commodity traded across the world, its price is infl uenced by the various factors including the normal supply and demand.
Mitigation Measure:
The Company takes the following measures, which enable the Company to insulate itself against price risk.
- More focus on value-added downstream products
- Integration of sugar with cogeneration power and alcohol.
XIII. CORPORATE GOVERNANCE:
The Management Discussion and Analysis and the Report on Corporate Governance are included as a part of the Director''s Report. A certifi cate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is attached to this Report.
XIV. FIXED DEPOSITS:
As on 31.03.2012 your Company had accepted deposits of Rs.37.62 crores as against Rs. 39.49 crores as on 31.03.2011. As at 31.03.2012, there were matured and unclaimed deposits amounting to Rs. 0.37 crores in respect of 45 deposits. As on the date of this report amount of unclaimed deposits remained the same.
In compliance with the provisions of Investors Education and Protection Fund constituted under Section 205C of the Companies Act, 1956, the Company has transferred NIL deposit(s) amounting to Rs .NIL which remained unclaimed beyond the period of seven years from the date of maturity to the Investor Education and Protection Fund.
XV SUBSIDIARY COMPANIES:
The income from the sale of products, services and other income of your wholly owned subsidiary "The Eimco-K.CP.Ltd" was at Rs. 34.97 crores (P.Y Rs. 30.19 crores) with an improved Profit of Rs.1.92 crores (P.Y Rs. 0.93 crores) for the year ended 31.03.2012.
The other wholly owned subsidiary, KCP Sugars Agricultural Research Farms Ltd, has reported an Income from the sale of products, services and other income of Rs. 0.27 crores for the financial year ended 31.03.2012 as against Rs. 0.13 crores for the previous year ended 31.03.2011. The Company earned a Profit of Rs. 0.16 crores as against the Profit of Rs. 0.05 crores in the previous financial year.
The Statement as required under Section 212(3) of the Companies Act, 1956 in respect of the subsidiary companies is separately annexed.
XVI. AUDITORS:
The Statutory Auditors, M/s. B.Purushottam & Co., Chartered Accountants, Chennai, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for reappointment. M/s. B.Purushottam & Co., Chartered Accountants, Chennai, have forwarded their Certificate to the Company stating that their reappointment, if made, will be within the limits specifi ed under Section 224 (1B) of the Companies Act, 1956. The Statutory Auditors of the Company have undergone the peer review process as stipulated under clause 41 of the Listing Agreement for issuance of Limited Review / Audit Report. Members are requested to consider their re-appointment for the fi nancial year ending 31st March 2013 on remuneration to be decided by the Audit Committee / Board of Directors.
XVII. COST AUDIT:
Mr. V. Srinivasan, Cost Auditor, had been appointed by the Company to conduct the Cost Audit in respect of Sugar, Industrial Alcohol, Electricity and Fertilizer for the financial year 2011-12. The Central Government''s approval has been received to this appointment. The Cost Audit reports for 2011-12 are due for submission on or before 27.09.2012.
The Cost Audit Reports for the financial year ended 31.03.2011 had been fi led with the Ministry of Corporate Affairs, New Delhi, vide, SRNs B18963322, B18964379 both dt 25.08.2011 and B19486273 dt. 02.09.2011.
In pursuance of Section 233-B(2) of the Companies Act, 1956, your Directors, on the recommendation of the Audit Committee, subject to the approval of the Central Government, have appointed Shri. V. Srinivasan, Cost Accountant, Chennai, as the Cost Auditor to conduct the Cost Audit of Sugar, Industrial Alcohol, Electricity and Fertilizer for the financial year ending 31st March 2013. Mr.V.Srinivasan has confi rmed that his appointment is within the limits of section 224(1B) of the Companies Act, 1956 and has also certifi ed that he is free from any disqualifi cations specifi ed under section 233B(5) read with section 224(3) or section 226(4) of the Companies Act, 1956. The Audit Committee has also received a Certificate from the said Cost Auditor certifying his independence and arms length relationship with the Company.
XVIII. ACKNOWLEDGEMENT:
Your Directors would like to take this opportunity to express their deep sense of gratitude to the Cane growers, the Shareholders, Banks, Institutions, Central and State governments, Depositors, Sugar Dealers, Business Associates, as also other regulatory authorities for their continued support and cooperation.
Your Directors would also to place on record their sincere appreciation for the total commitment, dedication and hard work put in by all the employees, which contributed to the Company''s progress during the year under review.
For and on behalf of the Board of Directors
Place : Chennai VINOD R. SETHI
Date : 11.05.2012 EXECUTIVE CHAIRMAN
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