DIRECTORS' REPORT Your Directors hereby present the 52nd Annual Report along with Audited Accounts of the Company for the 15 months financial period ended March 31, 2016. It is also pertinent to mention here that in terms of the requirement of section 2(41) of the Companies Act, 2013, the Company aligned its financial year from April - March. Hence, accounts for the 15 months started on 1st January 2015 to 31st March, 2016 are being placed. Further, subsequent financial years of the Company shall begin on 1st April and end as on 31st March. DIVIDEND In view of inadequate profits during the current financial period, your Directors are unable to recommend any dividend for the period under review. OPERATIONS 1. SUGAR DIVISION The year 2015-16 witnessed decrease in sugar production. The cane crush this season decreased by 5 lacs MT as compared to last season (2014-15) mainly due to high diversion of cane because of huge cane arrears. The cane crush this season was 21.73 lacs MT as compared to 26.77 lacs MT in the last season. Intensive cane development work done in the last 2 years has resulted improvement in recovery by 1.24% as compared to last season. Higher recovery and increased sugar prices have generated the cash profits after so many years and the same shall help in liquidating the cane arrears to some extent. MSL is continuing its cane development program including distribution of cane seeds of new varieties, fertilizers and insecticides etc. These will help in long term improvements in cane quality and yield. Less crush has resulted reduction in power export. 2. CHLOR ALKALI DIVISION During the 15 months period Jan'15 - Mar'16, overall the business performed well with volatility in prices. The plant capacity utilization was matched as per the market requirements. During quarters Q1 to Q4, the prices of Caustic and Chlorine remained low because of supplies exceeding demand. Profitability was further affected due to increase in power cost. With improvement in Caustic Soda and Chlorine prices due to lower imports, production was restored to normal levels in Quarter Q5. The products and their quality were well accepted in the market during the entire period of 15 months. Power contributes towards major portion of the input cost. The electricity requirement for the plant was met through Punjab State Power Corporation Limited and through Indian Energy Exchange under Open Access. MATERIAL CHANGES AND COMMITMENTS No material changes or commitments have occurred between the end of the financial period to which the financial statements relate and the date of this report, affecting the financial position of the company. STATUS OF SICKNESS UNDER BIFR The Company has filed a reference in Form 'A' under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 with Hon'ble BIFR on 1.8.2013 and the same has been registered as Case No.63/2013 as communicated by BIFR vide its letter No.3(M-5)/BC/2013 dated 10.9.2013. The matter considering of Mawana Sugars Limited as 'Sick Company' under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 is pending by BIFR. DEBT RESTRUCTURING PROGRAMME The Board of Directors of the Company in its meeting held on 21.3.2016 approved a process of restructuring its principal debt liabilities to lenders/ARC and has started a debt restructuring program with M/s. Edelweiss Asset Reconstruction Company Limited which had taken over the debts of the company owed to State Bank of India and State Bank of Travancore. Under this program, the total settlement amount shall be payable over a period of eight years. SUBSIDIARY COMPANIES The Company has three subsidiary companies viz. Siel Financial Services Limited, Siel Industrial Estate Limited and Siel Infrastructure & Estate Developers Pvt. Ltd. Siel Financial Services Limited, a Listed Company is not doing any business since last 15 years. Siel Infrastructure & Estate Developers Private Limited is a Dormant Company and not carrying on any operations presently. Pursuant to provisions of Section 129 and other applicable provisions of the Act read with Rules made thereunder, the performance and financial position of each of the subsidiary companies are annexed in Form AOC-I to the Annual Financial Statements. There has been no change in relationship of any subsidiary company during the financial period. CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements of the Company for the financial period 2015-2016 (15 months), are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards and SEBI (LODR) Regulations, 2015. DIRECTORS Mr. Piar Chand Jaswal, Director is liable to retire by rotation and being eligible, offers himself for re-appointment. Mr. Dharam Pal Sharma has been appointed as a Whole Time Director of the Company for a period of 5 years w.e.f. 13.08.2015 to 12.08.2020 and payment of the remuneration for a period of 3 years w.e.f. 13.08.2015 to 12.08.2018 by the Board of Directors of the Company in its meeting held on 13.8.2015. Accordingly, a resolution is included in the Notice of the forthcoming 52nd Annual General Meeting of the Company for seeking approval of members. Mrs. Parmjit Kaur has been appointed as an Additional Director (under the category of Non-Executive Independent Woman Director) for a period of five years w.e.f. 23.10.2015, and holds office up to date of ensuing Annual General Meeting. A resolution is proposed for her appointment as director of the Company at the ensuing Annual General Meeting. With this appointment, the Company has complied with the requirement of having a Woman Director on its Board as per the Companies Act, 2013 and SEBI (LODR), Regulations, 2015. Particulars of Directors seeking appointment/re-appointment have been given in the explanatory statement annexed to the notice for the Annual General Meeting. DIRECTORS' RESPONSIBILITY STATEMENT As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial period and of the profit 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. KEY MANAGERIAL PERSONNEL (KMP) During the financial period ended 31.3.2016 (15 months), following persons are Whole Time Key Managerial Personnel (KMP) of the Company in terms of provisions of Section 203 of the Companies Act, 2013: MEETINGS OF THE BOARD During the financial period ended 31.3.2016 (15 months), seven Board Meetings were held. In addition to Board Meetings, nine Resolutions by Circulation on various dates were also passed by the Board of Directors with requisite majority. The details of the Board Meetings are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015. DECLARATION FROM INDEPENDENT DIRECTORS All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (LODR), Regulations, 2015. The Company has over the years evolved effective systems and procedures to ensure internal financial controls in all its establishments. An internal audit process is in place under the overall supervision of the Audit Committee of the Board. The services for the internal audit are outsourced. Qualified and experienced professionals are engaged to ensure effective and independent evaluation of, inter alia, the internal financial controls. The appointment of internal auditors is approved by the Board on recommendations of the Audit Committee. The Audit Committee also lays down the schedule for internal audit. Internal audit reports are placed before the Committee with management comments. Suggestions are implemented and reported to the Audit Committee. An effective communication/ reporting system operates between the Units and Corporate Office to keep various establishments abreast of regulatory changes and ensure compliances. STATUTORY AUDITORS AND THEIR REPORT M/s. A.F. Ferguson & Co., Chartered Accountants, Auditors of the Company (ICAI Registration Number 112066W) who are our Auditors, retire at the ensuing annual general meeting and are eligible for reappointment. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has received a written consent from the auditors to their re-appointment and a certificate to the effect that their re-appointment, if made, would be in accordance with the Companies Act, 2013 and the rules framed there under and that they have satisfied the criteria provided in Section 141 of the Companies Act, 2013. The Board recommends the re-appointment of M/s. A.F. Ferguson & Co., Chartered Accountants, as the statutory auditors of the Company from the conclusion of this Annual General meeting till the conclusion of the next Annual General Meeting. The observations of Auditors in their report read with the relevant notes to accounts are self-explanatory and therefore do not require further explanation. COST AUDITORS M/s Bahadur Murao & Co., Cost Accountants (Membership Number 4941) were re-appointed as Cost Auditors of the Company for conducting the audit of the cost records maintained by the Company for the products (Sugar, Caustic Soda, Industrial Alcohol, Power, SBP) for the financial year 2016-17 subject to the approval of the Members on the remuneration to be paid to the Cost Auditors. A certificate from them has been received to the effect that their appointment as Cost Auditors of the Company, if made, would be in accordance with the limits specified under Section 141 of the Companies Act, 2013 and rules framed there under. The Cost Audit Report for the financial period 2013-14 (15 months) had filed on 20/05/2015, which is within the time limit prescribed under the Companies (Cost Audit Report) Rules, 2011. SECRETARIAL AUDIT REPORT 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 Mr. Nirbhay Kumar (CP No.7887), M/s Nirbhay Kumar & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for the financial period 201516 (15 months). The Secretarial Audit Report for the financial period ended 31st March, 2016 is attached as Annexure - I of this Board's Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. FIXED DEPOSITS The Company does not have any deposits and has neither accepted any deposits during the financial period ended March 31, 2016 (15 months). RISK MANAGEMENT The Company has a Risk Management Committee to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. AUDIT COMMITTEE The Audit Committee comprises of three Directors, two directors are independent director and one is non-executive director, viz., Prof. Dinesh Mohan as Chairman, and Mr. Ravinder Singh Bedi and Mr. Piar Chand Jaswal as Members. The details of terms of reference of the Audit Committee, number and dates of meeting held, attendance, among others are given separately in the attached Corporate Governance Report. NOMINATION AND REMUNERATION COMMITTEE Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with Rules made there under, the Board has constituted a Nomination & Remuneration Committee and the details of terms of reference, number & dates of meeting held, attendance and other details are given separately in the attached Corporate Governance Report. The Board on the recommendation of Nomination & Remuneration Committee framed a policy i.e. Nomination and Remuneration Policy for selection and appointment of Directors, senior managerial personnel and their remuneration. The aforesaid policy can be accessed on the Company's website www.mawanasugars.com REMUNERATION POLICY The Company has adopted a Remuneration Policy for executive and non-executive directors and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration as approved by the Board of Directors on the recommendation of Nomination and Remuneration Committee. The remuneration so approved is subject to the approval by the shareholders and such other authorities as the case may be. The remuneration policy is also placed on Company's website. The Non-Executive Directors do not draw any remuneration from the Company except sitting fee paid to them for each meeting of the Board/ Committee thereof attended by them. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The Company has adopted a CSR policy. The Committee is primarily responsible for formulating and recommending to the Board of Directors from time to time the CSR activities and the amount of expenditure to be incurred on the activities pertaining to CSR and monitoring CSR Projects. The CSR Policy of the Company has been placed on the Company's website. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3) (m) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure - II and forms part of this Report. PARTICULARS OF EMPLOYEES The details required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, are given in Annexure - III of this Board's Report. During the financial period ended 31.3.2016 (15 months), there is no employee in the Company who is receiving remuneration more than Rs.5 lacs per month or Rs.60 lacs per annum. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note Nos.12 & 13 to Financial Statements. RELATED PARTY TRANSACTIONS The transactions entered with related parties during the period under review were on Arm's Length basis and in the ordinary course of business. The provisions of Section 188 of the Companies Act, 2013 are therefore, not attracted. All related party transactions were approved by the Audit Committee and the Board. The relevant information regarding related party transactions has been set out in Note no. 35 of the Financial Statements for the financial period ended 31.3.2016. Thus, disclosure in Form AOC-2 is not required. The Board has framed a Policy on related party transactions and placed the same on the Company's website. VIGIL MECHANISM The Company has formulated and implemented the Whistle Blower Policy / Vigil Mechanism. This has provided a mechanism for directors and employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit Committee; any instance of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct. The aforesaid policy has also been uploaded on the Company's website. EXTRACT OF ANNUAL RETURN The extracts of the Annual Return (MGT-9) as per the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 is annexed herewith and marked as Annexure -IV to this Report. CORPORATE GOVERNANCE In accordance with SEBI (LODR), Regulations, 2015, Corporate Governance Report along with Auditors' certificate thereon and Management Discussion and Analysis Report form part of this report are enclosed as Annexure-V and forms part of the report. SHARE CAPITAL During the financial period ended 31.3.2016 (15 months), the Company has not issued any share capital with different voting rights, sweat equity or ESOP nor provided any money to the employees or trusts for purchase of its own shares. ACKNOWLEDGEMENTS The Directors wish to thank and deeply acknowledge the cooperation, assistance and support extended by Central Government, State Governments, Banks, Financial Institutions, Dealers and Vendors of the Company. The Directors also wish to place on record their appreciation for the all-round co-operation and contribution made by the employees at all levels. For & on behalf of the Board of Directors Dharam Pal Sharma Whole Time Director DIN: 07259344 Ravinder Singh Bedi Director DIN: 01408189 Place : New Delhi Dated : 10.05.2016 |