DIRECTORS' REPORT To The Members, 1. The Directors wish to present the 79th Annual Report together with Audited Accounts of the Company for the year ended 31st March, 2014. Production Performance: It may be noticed from the above that the production of WPP has decreased by 7.10% from the level 40960 MT to 38052 MT i.e. down by 2908 MT. The quantity wise sale of WPP has also been decreased by 22.67 % from the level 45927 MT to 35515 MT i.e. down by 10412 MT. The production of NP has been decreased by 14.41 % from the level 45450 MT to 38902 MT i.e. up by 6548 MT. The quantity wise sale of NP has also been decreased by 25.19% from the level 47208 MT to 35316 MT i.e. down by 11892 MT. The production of paper was decreased by 10.94% from the level of 86410 MT in FY 2013 to 76954 MT in FY 2014 i.e., down by 9456 MT. Reduction in sale of paper in quantity from the level of 93135 MT to 70831 MT down by 23.95% i.e less by 22304 MT and the turnover from Rs 36240 lacs to Rs 31571 lacs less by Rs.4669 lacs. The production of sugar has gone up by 43.63% due to increase in cane crushing activity from the level of 182414.67 MT (recovery of 9.28 %) in FY 2013 to 253854.34 MT (recovery of 9.28 %) in FY 2014. There is an increase in sale of sugar by 36.84 %. The increase in turnover by 49% due to increase in quantity wise sales and there is a decrease in net sales realisation of sugar from Rs 29214/MT to Rs.29034 /MT i.e. down by Rs.180/MT. The turnover from Sugar Division was Rs.81.34 Crore compared to Rs. 54.58 Crore in the previous year i.e. up by 49 %. The total turnover of 201314 has been decreased by Rs 19.93 Crores from the level Rs 416.98 crores to Rs 397.05 crores i.e. down by 4.78 %. The Company has incurred operating loss, Cash loss and Net loss of Rs. 35.16 Crores, Rs.67.68 Crores and Rs.78.16 Crores compared to previous year losses of Rs. 37.70 Crores, Rs.66.35 Crores and Rs.76.89 Crores respectively. The accumulated losses at the end of 31.03.2014 stood at Rs.425.94 Crores with that entire net worth of Rs 287.09. crores (including GOK loan of Rs 101.02 crores converted in to equity in 2011-12 and infusion fresh equity of Rs 5.00 Crores in 2011-12, Rs.20 crores in 2012-13 & Rs.40 crores in 2013-14 and Conversion of Guarantee Commission payable upto 31.03.2013 amounting to Rs.2.18 Crores in 2012-13) has been eroded. The company has been registered as sick company as case no 601/2012 with BIFR, the revival scheme has been submitted by M/s Deloitte and same with Board views sent to Government for its perusal and advice. STATUS OF BIFR: The company has been registered as sick company as case No. 601/2012 with BIFR. The draft revival scheme prepared by M/s. Deloitte Touche Tohmatsu India Pvt. Limited have been submitted to Government of Karnataka being the promoter of the Company for their review and comments. The same has also been submitted to the State Bank of Mysore, Ambedkar Veedhi Branch, Bengaluru, the Operating Agency appointed by BIFR for their review and comments. 3. MANAGEMENT DISCUSSION & ANALYSIS: Segmentwise analysis and operational performance of each of the business segments have been comprehensively covered in the Management Discussion & Analysis which forms part of this Directors' Report. 4. CASH FLOW ANALYSIS: In conformity with the provisions of the Listing Agreement, the cash flow statement for the year ended 31st March, 2014 is included in the annual accounts. 5. CAPTIVE FORESTRY: The Forest Wing has supplied 201195 M.T. of pulpwood by harvesting about 2486 hectares of captive plantations during 2013-14. The lease of forest land will be expiring in the year 2020-21 wherein the plantation crop to be raised in 2014-15 would be the last rotation of crop and till then the management plan has been approved by the Ministry of Environment and Forests, Government of India. The Management plan for a period from 2015-16 to 2020-21 need to be submitted to Govt. of India for approval. The lease rentals from 1991-92 to 2000-2001 and from 2001-02 to 2009-10 are settled with the Government and from 2010-11 to 2013-14 the lease rent is yet to be paid, which is calculated as Rs.786 lakhs. Totally 3700.30 ha. of harvested plantation areas were regenerated by replanting/coppicing with species like Acacia hybrid (1199.95 ha.), Eucalyptus pellita (257.65 ha.) and Eucalyptus camaldulensis (2242.70 ha.) The Farm Forestry programme is continued by selling about 7.00 lakhs seedlings and by entering in to a buy-back agreement with farmers on a plain paper wherever they have availed seedlings in the programme. The Gate purchase of pulpwood is being continued and totally 2209.540 MT was procured @ Rs.3,683/- per MT. The programme of raising large scale clonal plants of Eucalyptus species in dry-zone nurseries has been continued which will double the present yield from average 30 MT/ha. to over 60 MT/ ha. Where about 1/3 of the captive plantations are located in dry-zone. The achievement with clonal plantations of Acacia hybrid in wet zone is already with an average yield on 100 M.T. /Ha. The average weighted cost of Acacia and Eucalyptus pulpwood obtained from captive plantations works out to Rs.2,127/- per tonne as against Rs.5,288/- per tonne paid to M/s KFDC and M/s KSFIC. Thus Rs.6359.78 lakhs plus tax were saved by obtaining 201195 M.T. pulpwood from captive plantations and also which has minimized the consumption of chemicals and maximized the yield of pulp to fabricate the paper. During 2013-14, 105472 M.T. of Acacia wood was supplied from captive plantations which has helped in minimizing the consumption of chemicals worth over Rs.62.55 lakhs. Hence captive forestry was responsible for saving a total sum of Rs.6422.33 lakhs during 2013-14. 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE OUTGO: Information under Section 134 of the Companies Act, 2013, read with Rule 2 of the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988 are furnished at ANNEXURE - I, which form part of this report. 7. INDUSTRIAL RELATIONS: The overall industrial relations were cordial during the year under review. 8. DIRECTORS : Sri S Parameswarappa, IFS(Retd.), Director retires by rotation. The said vacancy will be filled up soon as per the Companies Act 2013. Sri. M Lakshminarayana, IAS, Director retires by rotation. The said vacancy will be filled up soon as per the Companies Act 2013. 9. Apart from the above, the following changes amongst Directors have also taken place during the year under review : Smt. K Ratna Prabha, IAS: Pursuant to the powers conferred under the Articles of Association of the Company, the Government of Karnataka nominated Smt. K Ratna Prabha, IAS, Additional Chief Secretary to GOK, Commerce & Industries Department, GoK as Director in place of Sri M. N Vidyashankar, IAS & subsequently Chairperson in place of Sri. Umesh, vide Govt. Notification No.CI 49 CMI 2014(8) dated 22.03.2014 & CI-61-CMI-2014 dated 10.06.2014 respectively. Sri. Naveen Raj Singh, IAS : Sri. Naveen Raj Singh, IAS was nominated as Managing Director of the Company by the Government of Karnataka in exercise of the powers conferred under Articles of Association of the Company in place of Sri. M Maheshwar Rao, IAS vide Govt. Notification No.DPAR 749 sas 2014 dated 3.9.2014. He assumed charge on 08th September, 2014 as Managing Director. 10. DIRECTORS' RESPONSIBILITY STATEMENT : Pursuant to the requirement under Section-134 of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that : The applicable accounting standards have been followed scrupulously, along with proper explanation relating to material departures, if any; a) The selected accounting policies were applied consistently, and judgements and estimates that are reasonable and prudent were made, so as to give a true and fair view of the state of financial affairs of the Company at the end of the financial year; b) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company, and for preventing and detecting fraud and other irregularities; c) The annual accounts were prepared for the financial year ended 31 March, 2014 on a going concern basis. 11. AUDITORS : a) As per Section 140 of the Companies Act, 2013, the Government of India, Ministry of Corporate Affairs, appointed M/s. M N S & Co., Chartered Accountants, Bengaluru, as Statutory Auditors of the Company for the year ended 31.03.2014. b) M/s. K.P.R. & Associates, Cost Accountants, Bengaluru, were appointed as Cost Auditors of the Company for the year 2013-14 by the Board, and the approval to this effect has also been received from the Government of India. 12. PARTICULARS OF EMPLOYEES : None of the employees of the Company have drawn salary of Rs.24 lakhs or more per annum/Rs.2 lakhs or more per month during the year. Therefore, the particulars of employees as required under Section 134 of the Companies Act, 2013, are not furnished. 13. CORPORATE GOVERNANCE : Pursuant to Clause 49 of the Listing Agreement with the Stock Exchange, a report on Corporate Governance together with Management Discussion & Analysis Report is enclosed herewith, which forms part of the Directors' Report. A Certificate from the Auditor regarding compliance of Corporate Governance, as stipulated by clause 49 of the Listing Agreement, is attached to this report. 14. COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA : The comments by the Comptroller and Auditor General of India on the Accounts for the year ended 31.03.2014 are attached to the report as ANNEXURE - II. 15. ACKNOWLEDGEMENT : Your Directors are pleased to acknowledge the dedicated efforts of all the employees and place on record their appreciation of the valuable contribution made by them during the year 20132014. Your Directors also thank the sugarcane growers for the supply of sugarcane. Your Directors place on record their appreciation for the assistance, support and guidance extended to the Company by the Government of Karnataka through the Departments of Commerce and Industries, Finance, Forest, Environment & Ecology, KPTCL, MESCOM, Directorate of Sugar, and by the Statutory Bodies and Financial Institutions, Karnataka State Pollution Control board & IFCI and Banks. Your Directors also thank the Government of India,Ministry of Corporate Affairs and its various departments, Statutory Auditors, Comptroller of Accounts & Audit, Registrar for Newspapers, Ministry of Railways, Department of Coal, etc., for their continued support to the Company. For And On Behalf Of The Board (NAVEEN RAJ SINGH) MANAGING DIRECTOR (C. SHIVASHANKAR) DIRECTOR Place :BENGALURU DATE: 18.11.2014 |