Your Directors are pleased to present their 29th (Twenty
Ninth) Annual Report along with the Audited Financial Statements for the year ended on
March 31, 2023.
FINANCIAL RESULTS
(H in Lakhs)
Particulars |
Year Ended 31.03.2023 |
Year Ended 31.03.2022 |
Gross profit before depreciation, interest & tax |
22,856.96 |
29,396.17 |
Less: Depreciation |
5,021.64 |
4,362.92 |
Finance Costs |
2,584.74 |
3,165.77 |
Profit / (Loss) before tax and exceptional items |
15,250.58 |
21,867.48 |
Profit / (Loss) before tax |
15,250.58 |
21,867.48 |
Tax expenses |
4,769.52 |
6,345.93 |
Profit /(Loss) after tax |
10,481.06 |
15,521.55 |
Total comprehensive income / (loss) |
10,416.71 |
15,557.41 |
YEAR IN RETROSPECT
Operations: Distinguishing features of the crushing operations in your
Company are given in the following paragraphs: Metrics of sugarcane crushed, sugar
produced and recovery achieved during the year is given hereunder: Sugarcane crushed and
sugar produced across three units (FY 2022-23)
Particulars |
1 2022-23 1 |
2021-22 |
Change |
Crushing (lakh quintals) |
382.13 |
373.92 |
2.20% |
Recovery % (Gross - adjusted) |
11.83 |
12.09 |
-2.15% |
Recovery % (Net) |
8.63 |
10.59 |
-18.51% |
Production (lakh quintals) |
32.98 |
39.60 |
-16.72% |
Sugarcane crushed and sugar produced during season (FY 2022-23)
Particulars |
1 2022-23 1 |
2021-22 |
Crushing (lakh quintals) |
302.71 |
298.77 |
Recovery % (Gross - adjusted) |
11.62 |
11.85 |
Recovery % (Net) |
8.00 |
10.31 |
Production (lakh quintals) |
24.02 |
30.58 |
For ongoing crushing season 2021-22 (up to 31st March, 2023)
vis-a-vis up to same date in SS 2021-22.
HIGHLIGHTS FY 2022-23
- Sugarcane crushing increased marginally by 2.20% y-o-y.
- Net Recovery stood at 8.63% vis-a-vis net recovery of 10.59% during
FY 2021-22. The same is lower by 18.51%. During SS 202223 sugarcane juice was for the
first time directly used for making ethanol at both DN & DD Distillery units. 60.69
lakh quintals out of total cane crushed was thus diverted for making ethanol. The net
recovery was achieved after taking into account the diversion of sugarcane juice / syrup
at DN & DD plants and also on account of generation of B heavy molasses at all plants.
Gross - adjusted recovery is 11.83% as compared to 12.09% in FY 2021-22.
- Sugar production is also lower on account of aforesaid diversion of
sugarcane juice and on account of generation of B heavy molasses across all units. Lower
sugar production is also attributable to lower gross - adjusted recovery. During FY
2022-23
sugar production of 12.23 lakh quintals was sacrificed on account of
diversion of sugarcane juice for ethanol and on account of generation of B heavy molasses.
This was as against sugar sacrifice of 5.61 lakh quintals on account of generation of B
heavy molasses during FY 2021-22.
- Lower gross - adjusted recovery is on account of inclement weather
conditions, excessive late rainfall in the month of October, 2022 resulting in water
logging in cane fields over prolonged period and devastation caused by red rot in the
command area of Dwarikesh Dham unit. Unfavorable weather conditions persisted throughout
the duration of the season hindering optimal recovery.
- Notwithstanding the fall in recovery during FY 2022-23, recovery
clocked by your Company was yet among the highest in North India.
- Diversion of sugarcane juice for ethanol and generation of B heavy
molasses will result in broad-basing & transformation of the production metrics with
increased focus on production of ethanol and moderation of sugar production. B heavy
molasses generated at DN & DD unit is being stored for use in their respective
distilleries during off-season, whereas B heavy molasses generated at DP unit will cater
to the requirements of B heavy molasses at the distilleries of DN & DD units after
fulfilling obligation to supply B heavy molasses for country liquor purposes.
Performance of cogeneration division: Metrics of power sold:
Unit |
FY 2022-23 |
FY 2021-22 |
|
Power sold in lakhs Units |
Amount (H in Lakhs) |
Power sold in lakhs Units |
Amount (H in Lakhs) |
DN |
258.94 |
844 |
284.19 |
892 |
DP |
578.60 |
1,918 |
585.16 |
1,864 |
DD |
632.50 |
2,099 |
725.62 |
2,301 |
Total |
1,470.04 |
4,861 |
1,594.97 |
5,057 |
Performance of distillery: During the financial year, 849.61 lakh
liters of industrial alcohol (previous FY 553.71 lakh liters) was produced and 841.75 lakh
liters (previous year 557.28 lakh liters) of industrial alcohol was sold. A revenue of
H533.50 crores (previous year H326.21 crores) was generated which included revenue of
H2.17 crores (previous year H1.62 crores) from sale of byproducts.
SUGAR INDUSTRY OVERVIEW
Global sugar industry scenario
- According to the March, 23 report of S&P Global Commodity
insights', the projected surplus for SS 2022-23 was expected to moderate at less than
one million tons, considerably lower than the erstwhile forecast of 3.77 million tons;
This decline was largely due to cuts in sugar production from Asian countries. According
to their latest report production estimate is further trimmed and S&P now estimates a
virtually balanced position.
- In case of India & Thailand, decline in the crushing rate has
been faster than usual. Drop in the output expectations from India & Thailand creates
prospective uncertainties. There is also 50% probability of El-Nino event in the second
half of 2023 which increases the chances of drier weather in Asia and wetter weather in
Brazil. However, Season 2023-24 is expected to be a season of bumper sugar production for
Central South Brazil.
- In CS Brazil, despite large crop expected for SS 202324 sugar
supplies remains muted across the short term. In case of North - Northeast Brazil downside
production
risks linger. In Thailand cane estimates for SS 2022-23 and SS 2023-24
are on lower side. In EU production cut on account of lower planted area is forecast.
While China could continue to be a dominant sugar importer, its imports could prove
unpredictable.
- Global raw sugar prices have been at an all-time high in the last 6
years. Tightened supplies from Brazil attributable to logistic & port related problems
and frequent downward revision in production estimates form India have accentuated the
price rise. The uncertainty of Government of India allowing further exports has also
propelled the price rise. India has emerged as key sugar exporting geography as it played
a pivotal role in the export trade in the world. India is seen as a big influencer of
Global sugar price. India exported a record of 11.2 million tons of sugar in SS 2021-22.
Indian sugar has been largely exported to Indonesia, Bangladesh, Malaysia, Middle east,
China among other countries.
- Global sugar prices have been on upward spiral for large parts of the
year. Presently NY May' 23 future price for raw sugar is quoted in excess of 23 cents
per pound. Higher energy prices have also lent support to international sugar prices.
- The ongoing war between Russia & Ukraine has also created
opportunities for export of white sugar from India. White sugar prices have also moved in
tandem with raw sugar prices and are at their 6 years highest. Indian sugar industry and
ports have risen to the occasion and have completed their export obligations with
consummate ease.
The Indian sugar industry - Consolidation
- Production figure of SS 2021-22 is 35.8 million tones after
accounting for sugar sacrifice in favor of ethanol of 3.2 million tons: when factored back
India produced nearly 39 million tons. Highest ever sugar exports - During the previous
sugar season, India reported its highest sugar exports of 11.2 million tons, reinforcing
the country's position as a dominant global player. This export achievement was
remarkable considering that they were not supported through subsidies / financial
assistance by the Central Government. All logistic challenges at the ports were overcome
seamlessly.
- As per the first estimate drawn by ISMA, it was expected that during
SS 2022-23, India will produce 36.5 million tons of sugar after considering sugar
sacrifice of 4.5 million tons, taking the gross sugar production to nearly 41 million
tons. However, as the season has advanced, with news coming in of declining yield &
recovery from the States of Maharashtra & Karnataka, ISMA revised its production
estimate to 34 million tons of sugar while maintaining the sugar sacrifice number at 4.5
million tons.
- However, Trade bodies and Government of India have further announced
a downward revision in production estimate and have now estimated the production at 33.6
million tons of sugar. Some independent trade houses believe that the production may in
fact settle at less than 33 million tons. As per the latest update, ISMA trims sugar
production estimate to 32.8 million tons from earlier 34 million tons.
- With the sharp reduction in tail end crush in Maharashtra &
Karnataka, production estimate in Maharashtra is lowered to less than 11 million tons and
in Karnataka lowered to less than 5.6 million tons. Crushing operations of many mills in
Maharashtra & Karnataka have concluded even before 31st March, 2023. Lower
yields owing to unseasonal rainfall has resulted in lesser availability of sugarcane in
these two states. Sugar recoveries in Uttar Pradesh proved lower, offsetting the gains in
cane crush.
- The Government announced first tranche of export of 6 million tons
under MAEQ mechanism. Nearly 5 million tons of sugar has already been exported. Most of
the sugar mills in UP have traded deals with mills in Maharashtra, swapping their export
quotas with domestic quotas.
- The Government has in the meantime recalibrated its opening stock
number for SS 2022-23 at 7 million tons. As per Government of India, sugar availability
for domestic consumption & exports is thus estimated at 40.6 million tons. Considering
sugar consumption of 27.5 million tons & export of 6 million tons, the closing sugar
inventory is now being estimated at more than 7 million tons, which translates to more
than 3 months of domestic consumption.
- There is thus clearly scope for announcing at least one more million
ton of sugar export. However, with the production estimates being in a state of flux, the
Government may wait for clarity before announcing next tranche of exports.
However, the delay in announcement of export will limit the ability of
Indian sugar mills to produce & export raw sugar.
- During ESY 2021-22 India creditably achieved ethanol blending of 10%.
During ESY 2022-23, 12% blending is targeted. Already blending up to 20% is approved by
the Government. The proportion of ethanol derived directly from sugarcane juice is
expected to increase in ESY 202223. India is on course to achieve 20% blending by 1 st
April 2025. Improved blending will result in moderating of sugar production, improvement
in the ability of sugar mills to remunerate farmers on time, rationalizing the import
tableau & widening the carbon footprint.
- Increased blending of ethanol is possible if more & more sugar
companies ramp up their distillery capacities and start using cane juice / syrup as
feedstock for making ethanol. Ethanol quantity presently offered using cane juice / syrup
as feedstock is lesser than quantity of ethanol offered wherein B heavy molasses is used
as feedstock.
- In order to encourage sugar mills to use cane juice / syrup as
feedstock the rates presently announced by the Government needs to improved. More
sacrifice of sugar will happen if and only if more sugar mills use cane juice / syrup as
feedstock. Industry has been appealing for higher prices for ethanol made from cane juice
/ syrup directly and it is expected that Government will take an early call on the same.
- An area of concern has been the lower sugar prices in the domestic
market. It is intriguing that the sugar prices have remained flattish throughout FY
2022-23 and have been range bound between H3,400 and H3,500 per quintal. This is in spite
of projected lower closing inventory. Higher international prices have also not found
resonance in domestic prices.
- However, there is a possibility that the premature closure of
Maharashtra and Karnataka mills could revive domestic realisations (as could an El Nino
likelihood in some global pockets in the second half of 2023).
- Under the ethanol blending program in the country, against
requirement 600 crore liters OMC have till 31st March, 2023 issued LOIs of 502
crore liters and contracts for 499 crore liters have been inked for ESY 2022-23 (December
- October). Blending of more than 11.56% has been achieved. State of Uttar Pradesh has
been in the forefront in signing ethanol contracts. However, out of 502 crore liters,
ethanol produced from sugarcane juice/syrup as feedstock was only 142 crore liters or 28%
of the total LOIs issued. There is a growing recognition that for the EBP program to be
resoundingly successful, more procurement contracts will need be signed for cane juice /
syrup-based ethanol.
- There are no two opinions about the success of the Ethanol Blending
Program (EBP). Cash flows of sugar companies have improved. In the sugar season of
2021-22, the quantum of sugar production sacrificed' in favor of ethanol was
3.2 million tons while in SS 2022-23 this is expected to rise to more than 4 million tons.
In SS 2023-24, a sugar sacrifice' of more than 6 million tons could reduce the
gap between sugar production and consumption; the surplus sugar then available could be
remuneratively exported.
- The government plans to introduce flex fuel vehicles, which can
accommodate a higher percentage of ethanol and can even be operated completely on ethanol,
a step towards helping the country achieve the 20% blending target.
- The EBP has showcased the Indian government's foresight in
addressing longstanding sugar industry challenges. A cash-starved sector that suffered
cane arrear delays now has healthy cash flows, making it possible to remunerate farmers
punctually and invest in additional distillery capacity. A growing sugar
sacrifice' is expected to moderate sugar inventory and strengthen realizations,
strengthening a virtuous cycle of additional cane planting and mill capacity utilization.
The confidence instilled by the ethanol blending program is noteworthy. Sugar inventory
across the country stands tapered at reasonable levels. Though there are problems such as
lower sugar prices among others, sugar industry doesn't now face insurmountable
challenges. However, sickness in the industry is not completely eradicated. Some States do
face problems of inadequate cane availability and there are still number of sugar mills
operating at sub-optimal capacity.
- Sugar industry across the Globe is regulated and India is no
exception. Central Government continues to regulate the industry.
Central Government continues to administer minimum selling price of
sugar which is fixed at H3,100 per quintal though the industry has been seeking upward
revision.
Central Government also operates the monthly release mechanism so as to
ensure adequate & affordable sugar availability in the open market.
Central Government announces timely sugar export quotas to enhance
sectorial liquidity and ensure better domestic realizations. During the SS 2022-23 the
Government has announced maximum allowable export quota (MAEQ) of 6 million tons which has
been apportioned across all sugar mills in the country. This was done to ensure a healthy
domestic sugar balance between supply and demand, while addressing export needs. The
Government dispensed with the export subsidy as international sugar prices remained
attractive.
Central Government also determines the annual Fixed & Remunerative
price (F&RP). The same is the minimum price which sugar mills must pay for the
sugarcane procured by them. Some States went one step further and announce a State
Administered Price (SAP) that is higher than F&RP
Ethanol procurement price for Ethanol Season Year 202223 (December to
October) is fixed at H49.41 per liter for ethanol made from C-Heavy molasses (increase of
H2.75 per liter over the price of previous period), H60.73 per liter for ethanol made from
B-Heavy molasses (increase of H1.65 per liter over the price of previous period) and
H65.61 per liter for ethanol produced directly from sugarcane juice (increase of H2.16 per
liter over the price of previous period). The Government had during ESY 2021-22 also
announced relief price' to incentivize sugar mills to supply more ethanol
during the lean months.
The Uttar Pradesh Sugar Industry - Transformation
- During SS 2022-23 UP State is expected to produce around 10 million
tons of sugar, which is in line with the previous Sugar season.
- Gains in crush on account of higher cane area have been neutralized
by lower yield, lower recovery and higher diversion of sugarcane for producing ethanol.
- The commencement of season 2022-23 was delayed by over 10 days on
account of incessant & unseasonal rainfall during October which has resulted in
waterlogging of cane fields. Antagonistic climate conditions and the menace of red-rot,
scuttled and dented the prospect of improved yields and better recovery.
- The State Government announced no change in SAP for SS 2022-23 which
remained H350 per quintal (delivered at factory gate) for early variety, which constitutes
nearly 90% of the total supply.
- The season of 2022-23 has witnessed aggressive participation of sugar
mills in Uttar Pradesh in ethanol blending programs. Many a sugar mills are using cane
juice / syrup directly for manufacture of ethanol.
- The enhanced financial stability of sugar mills in UP enabled these
mills to moderate SS 2022-23 cane price arrears to around H7,500 crores from more than
H10,000 crores around the same time in the previous year.
- Many sugar mills have altered their cane mix from the high yielding
Co 0238 which was a win-win variety for both farmers and sugar mills. Since the said
variety has now become prone to red rot epidemic, the same is now sought to be replaced by
other equally good, early maturing & promising varieties.
- UP sugar mills have witnessed moderation of stock levels of sugar,
owing to exports in the previous season and also on account of production of ethanol using
B heavy molasses and sugarcane juice / syrup.
Dwarikesh - Financial Scorecard:
Particulars |
2022-23 |
2021 -22 |
|
(H lakh) |
(%) |
(H lakh) |
(%) |
Revenue from operations |
2,10,296 |
100.00 |
1,97,871 |
100.00 |
EBITDA |
22,857 |
10.87 |
29,396 |
14.86 |
EBDTA |
20,272 |
9.64 |
26,230 |
13.26 |
EBT |
15,251 |
7.25 |
21,867 |
11.05 |
EAT |
10,481 |
4.98 |
15,522 |
7.84 |
- Revenue from operations during FY 2022-23 is up by 6.28% as compared
to the revenue during 2021-22. Improvement in revenue growth is inferable to the increased
releases under the monthly release mechanism administered by the Central Government &
beneficial revenue mix with additional weightage of ethanol. It is worth mentioning that
the share of revenue from distillery segment to the total net revenue is 25.37% as
compared to 16.49% in the previous year. Distillery plant at DN unit worked at its rated
capacity while the distillery plant at DD unit which was commissioned in June, 2022 also
operated for a part of the year at its rated capacity.
? EBIDTA, during FY 2022-23 is H22,857 lakhs as compared to EBIDTA of
H29,396 lakhs during previous FY, is 22.25% less. Lower EBIDTA as compared to previous FY
is on account higher cost of goods sold without commensurate increase in their selling
price. Higher cost of goods sold is a reflection of higher raw material cost as well as
lower sugar recovery.
? EBDTA, during the year under review your Company earned EBDTA of
H20,272 lakhs as compared to H26,230 lakhs earned in the previous FY.
? Earning before tax is at H15,251 lakhs when viewed in conjunction
with that of the previous FY (H21,687 lakhs).
? Earnings after tax is at H10,481 lakhs, as compared to the earnings
after tax of previous FY of H15,522 lakhs. Earnings after tax for the year is 32.47% less
than earnings after tax of the previous year.
? Your Company's focus to rein in finance costs has been fruitful
and the Company was able to compress finance costs.
Salient features:
- According to the latest estimate, crushing will be in line with that
in the previous season with all our units expected to report a similar crushing. The
Company initiated a program to change its varietal balance in the Dwarikesh Dham unit
area. This unit encountered significant drop in the pol-in-cane during this season,
indicative of lower sucrose and higher non-sugar content. Your Company's cane
development is expected to reverse the trend.
- The Company has already exported 50,000 MTs of sugar under export
policy of SS 2022-23. The raw sugar for export was produced at DN & DD units. The
Company has swapped its balance export quota of 36,001 MTs with domestic quota releases of
sugar mills in Maharashtra. The Company will benefit from additional releases from April,
2023 onwards.
- The Company utilized sugarcane juice directly for making ethanol at
both its DN & DD distillery units. Of the total crushing capacity of 21,500 TCD,
approximately 4,500 TCD was utilized for generating juice to be used in the manufacture of
ethanol. B-Heavy molasses was generated in all three units, which will be used as ethanol
feedstock during the off-season at both distilleries. The operations at both distilleries
now stabilised; nearly 11 crore litres of ethanol is likely to be produced and sold to
OMCs annually. With substantive sugar sacrifice', the sales and revenue mix
will transform.
- Rating agency ICRA, has upgraded the long-term rating of the Company
to (ICRA)AA- (pronounced as AA minus) from [ICRA]A+ (pronounced ICRA A plus). This is a
significant achievement and is recognition of judicious fiscal management of the Company.
The outlook has been revised to Stable' from positive'. The Company
has retained the highest rating of A1 + also from ICRA for its CP program of H 300 crores.
- Your Company continued to pay for sugarcane ahead of schedule. As on
31st March, 2023, your Company had cleared payments for cane purchased up to 27th
March 2023.
- Your Company's distilleries (DN and DD units) were operating
optimally even as the new DD distillery encountered teething challenges that were
subsequently overcome. This resulted in a lower initial ethanol yield from feedstock.
- The fiscal in reckoning was a manifestation of higher cost of goods
sold (a combination of higher cane cost & lower recovery) without commensurate
increase in sugar realisations.
- Long term debt profile: Out of soft loan of H134.48 crores availed
under SEFASU 2018, funded by the State Government, balance on 31/3/2023 is H33.62 crores
and
out of distillery term loan availed of H116.88 crores for DN distillery
unit, balance on the same date is H64.28 crores. Term loan of H185.60 crores sanctioned
for 175 KLPD distillery plant at DD unit has been fully availed and no repayment during
the financial year was made as the repayment is under moratorium. All term loans availed
by the Company were mobilized at subsidized rate of interest.
- Sugar prices were inexplicably muted & subdued throughout the
year and were flattish in the range of H3,400 per quintal to H3,500 per quintal.
- Your Company is constantly exploring possibilities of revenue
optimization, cost rationalization and profit enhancement. Your Company is respected for
competent management, translating into outperformance (evident in record recoveries).
- The SS 2022-23 was marked by lower recovery at the DD unit due to a
widespread red-rot disease infestation in its command area. The DD unit comprises a vast
command area; the unit holds potential for increased crushing and recovery. The Company
intensified methodical ratoon management to moderate crop damage and sustain the healthy
growth of Co-0238; it also took initiatives to replace this with new early maturing
varieties like 15023, 14201 and 118. In command areas not marked by red rot, your Company
sustained the health of Co 0238 and will introduce new varieties in a phased manner.
CANE & SUGAR POLICY
The main policies of the government in relation to the sugar industry
during the year were:
a. The Fair & Remunerative Price (FRP) until SS 2017-18 was linked
to a recovery of 9.50%. Effective SS 2018-19, FRP has been linked to a recovery of 10%.
While the FRP for SS 2021-22 was H290 per quintal for SS 2022-23 the same stands increased
to H305 per quintal again linked to a recovery of 10.25%.
b. Chronology of SMP/FRP announced by the Central Government on the
basis of recovery is given herein under:
Season |
SMP/F&RP H/ Quintal |
2000-01(SMP) |
59.50* |
2001-02 |
62.05* |
2002-03 |
64.50* |
2002-03 (Revised) |
69.50* |
2003-04 |
73.00* |
2004-05 |
74.50* |
2005-06 |
79.50& |
2006-07 |
80.25& |
2007-08 |
81.18& |
2008-09 |
81.18& |
Season |
SMP/F&RP H/ Quintal |
2009-10 (SMP since replaced by F&RP) |
129.84@ |
2010-11 |
139.12@ |
2011-12 |
145.00@ |
2012-13 |
170.00@ |
2013-14 |
210.00@ |
2014-15 |
220.00@ |
2015-16 |
230.00@ |
2016-17 |
230.00@ |
2017-18 |
255.00@ |
2018-19 |
275.00# |
2019-20 |
275.00# |
2020-21 |
285.00# |
2021-22 |
290.00# |
2022-23 |
305.00# |
* Linked to recovery of 8.50%
& Linked to recovery of 9.00%
@ Linked to recovery of 9.50%
# Linked to recovery of 10.00%
c. All sugar mills in Uttar Pradesh are required to pay State
Administered Price (SAP). For crushing season 2021-22 the State Government of Uttar
Pradesh increased SAP by Rs. 25 per quintal across all varieties. For SS 2022-23 the
Government retained the SAP of SS 2021-22. Early variety of sugarcane, which constitutes
more than 90% of the sugarcane supplied by farmers, is now paid Rs. 350 per quintal for
delivery at factory gate.
CHANGE IN NATURE OF BUSINESS
There is no change in nature of business of the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY
The Company commissioned 175 KLPD distillery at its Dwarikesh Dham
Unit, Dist. Bareilly, Uttar Pradesh on 24th June 2022. The distillery uses
sugarcane juice / syrup as its principal feedstock during the cane crushing season and
turns to B Heavy molasses route during the off season for continuous manufacture of
ethanol. The implementation of project was on schedule. With the commissioning of this
plant the revenue mix of the Company will undergo paradigm shift as the sugar production
will moderate and ethanol production increase.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
No significant & material orders have been passed impacting the
going concern status & Company's operations in future.
INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial controls
commensurate with its size, scale and operations. Such controls have been assessed during
the year under review taking into consideration the essential components of internal
controls stated in the Guidance Note on Audit of Internal Financial Controls over
Financial Reporting issued by the Institute of Chartered Accountants of India. Based on
the results of such assessments carried out by the management, no reportable or
significant deficiencies, no material weakness in the design or operation of any control
was observed. Nonetheless your Company recognizes that any internal control framework, no
matter how well designed, has inherent limitations and accordingly, regular audits and
review processes ensure that such systems are re-enforced on an ongoing basis. The
internal financial controls with reference to the Financial Statements are commensurate
with the size and nature of business of the Company.
DIVIDEND
Your Directors recommended payment of an interim equity dividend of
H2/- per equity share (i.e. 200%) on face value of H 1/- per share. The cash outflow on
account of equity dividend is H37,66,02,940 /-. This interim dividend shall be considered
as final divided for the FY 2022-23.
TRANSFER TO GENERAL RESERVE
As permitted under the provisions of the Companies Act, 2013, the Board
does not propose to transfer any amount to general reserve and has decided to retain the
entire amount of profit for the Financial Year 2022-23 in the profit and loss account.
SHARE CAPITAL
The paid-up Equity Share Capital as at March 31, 2023 stood at H 18.83
crores. During the year under review, the Company has not issued shares or convertible
securities or shares with differential voting rights nor has granted any stock options or
sweat equity or warrants.
H250 crores worth of commercial paper were issued by the Company during
the preceding financial year. Out of the aforementioned sum, H150 crores have already been
redeemed during previous financial year, and the remaining balance of H100 crores have
been redeemed during the year.
COPY OF THE ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013, copy of the
Annual Returns of the Company in form MGT-7 is placed on the website of the Company and is
accessible at the web-link: https://www.dwarikesh.com
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met five (5) times during the
year on May 02, 2022; July 29, 2022; October 28, 2022; January 30, 2023 and March 20,
2023.
SUBSIDIARY COMPANY'S REPORT
The Company does not have any subsidiary in terms of provisions of
Companies Act, 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions entered during the financial year were
in the ordinary course of business and at arm's length basis. There were no
materially significant Related Party Transactions with the Company's Promoters,
Directors, 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
omnibus approval and the particulars of contracts entered during the year as required to
be provided under Section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2
as Annexure I.
The Board of Directors of the Company 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 thereunder and the Listing Regulations and placed at the below mentioned
weblink: https://www.dwarikesh.com/pdf/2018/ Related-Party-Transactions-Policy-1.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not made any loans or investments or given guarantees
or provided securities under Section 186 of the Act during the year.
PUBLIC DEPOSITS
The Company did not have any fixed deposits at the beginning of the
year nor has it accepted any deposited during the year in terms of Section 74 of the
Companies Act, 2013.
MSME RETURN
MCA vide order dated 22nd January, 2019 directed all
companies, who get supplies of goods or services from micro and small enterprises and
whose payments to micro and small enterprise suppliers exceed forty five days during the
year. The Company is not required to file MSME Return as all payments have been done
within prescribed time.
PARTICULARS OF EMPLOYEES AND RELATED INFORMATION
In terms of the provision of Section 197(12) of the Act read with Rule
5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a
statement containing the disclosures pertaining to remuneration and other details as
required under the Act and the above rules are provided in Annexure II.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
A. Changes in Directors and Key Managerial Personnel
During the year, Shri B. K. Agarwal (DIN: 00001085) resigned as an
Independent Director of the Company w.e.f. October 28, 2022. The Board places on record
appreciation for his valuable contribution to the growth of the Company.
B. Declaration by an Independent Director(s), ReAppointment &
Meeting
Pursuant to the requirements of Section 149(7) of the Companies Act,
2013, the Company has received the declarations from all the independent directors
confirming the fact that they all are meeting the eligibility criteria as stated in
Section 149(6) of the Companies Act, 2013.
As required under Schedule IV to the Act(Code for Independent
Directors) and Regulation 25 (3) of the hold at least 1 (one) meeting in a year, without
the presence of Non-Independent Directors.
The Independent Directors met once, i.e, on Monday, January 30, 2023.
The Meeting was conducted without the presence of the Chairman, Executive Directors and
any other Managerial Personnel.
The Independent Directors, inter alia, discussed, and reviewed
performance of Non-Independent Directors, the Board as a whole, Chairman of the Company,
and assessed the quality, quantity and timeliness of flow of information between the
Companies management and the Board that is necessary for the Board to perform its duties
effectively and reasonably.
C. Formal Annual Evaluation
Pursuant to the requirements of Section 134(3)(p) of the Companies Act,
2013 read with Regulation 17 of the SEBI Listing Regulations, the Board has carried out an
annual performance evaluation of its own performance, the directors individually as well
as the evaluation of its Committees.
A structured questionnaire was prepared after taking into consideration
inputs received from the Directors, covering various aspects of the Board's
functioning such as adequacy of the composition of the Board and its Committees, Board
culture, execution and performance of specific duties, obligations and governance.
A separate exercise was carried out to evaluate the performance of
individual Directors including the Chairman of the Board, who were evaluated on parameters
such as level of engagement and contribution, independence of judgement, safeguarding the
interest of the Company and its minority shareholders etc.
The performance evaluation of the Independent Directors was carried out
by the entire Board. The performance evaluation of the Chairman and the Non-Independent
Directors were carried out by the Independent Directors who also reviewed the performance
of the Secretarial Department. The Directors expressed their satisfaction with the
evaluation process.
D. Policy on Directors' Appointment and Remuneration including
criteria for determining qualifications, positive attributes, independence of a Director,
Key Managerial Personnel and other employees
In line with the principles of transparency and consistency, your
Company has adopted the following policies which, inter alia includes criteria for
determining qualifications, positive attributes and independence of a Director.
The policy of the Company on directors' appointment and
remuneration, as required under sub-section (3) of Section 178 of the Companies Act, 2013,
is available on Company's website at https://www.dwarikesh.com/pdf/2018/Policy-on-
Directors-Appointment-and Remuneration.pdf
E. Statement of Director's Responsibilities
Pursuant to the requirements under Section 134, subsection 3(c) and
sub-section 5 of the Companies Act, 2013, the Board of Directors, to the best of their
knowledge and ability, state and confirm that: As required under the provisions of Section
134(3)(c) of the Companies Act, 2013, your Directors confirm 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 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 and of the profit of the Company for that year;
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,
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.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 of SEBI (Listing Obligation and Disclosure
Requirement), Management Discussion and Analysis Report for the year under review is
presented in a separate segment which is forming part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
Dwarikesh has been an early adopter of CSR initiatives. The Company
works primarily through CSR trust, viz R R Morarka Charitable Trust, towards supporting
projects in eradication of hunger and malnutrition, promoting education, art and culture,
healthcare, destitute care and rehabilitation, environmental sustainability, disaster
relief and rural development projects.
Companies CSR initiatives and activities are aligned to the
requirements of Section 135 of the Act. The brief outline of the CSR policy of the Company
and the initiatives undertaken are available on our website at
https://www.dwarikesh.com/pdf/2021/ Policy-on-Corporate-Social-Responsibility.pdf .
A detailed Annual Report on CSR Activities undertaken by the Company
during the year as prescribed under the Companies (Corporate Social Responsibility)
Amendment Rules, 2021 is annexed herewith as Annexure III.
RISK MANAGEMENT POLICY
As per Regulation 21 of the SEBI Listing Regulations, the top 1000
listed entities, determined on the basis of market capitalization has to constitute a Risk
Management Committee. Risk Management Committee of the Company is responsible to review
and combat the risk on periodical basis. A detailed note on Risk Management policy,
elements of risk and its mitigation is comprised in Corporate Governance Report.
VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy, in compliance with the
provisions of Section 177 of the Act and Regulation 22 of the Listing Regulations, so as
to enable the Directors, Employees and all Stakeholders of the Company to report genuine
concerns, to provide for adequate safeguards against victimization of persons who use such
mechanism and make provisions for direct access to the Chairman of Audit Committee. The
details of the said policy is explained in the Corporate Governance Report and has been
uploaded on the website of the Company at https://
www.dwarikesh.com/pdf/2018/Whistle-Blower-Policy.pdf
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has put in place a policy on Anti Sexual harassment in line
with the requirements of The Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to
redress complaints received regarding sexual harassment. All employees (permanent,
contractual, temporary, trainees) are covered under this policy.
The Company is committed to providing a safe and conducive work
environment to all of its employees and associates.
No complaints have been received during the year under review.
CORPORATE GOVERNANCE
As per Regulation 34 of SEBI (Listing Obligation and Disclosure
Requirement) Regulations, 2015, a report on Corporate Governance together with the
Auditors Certificate regarding compliance of the conditions of corporate governance is
provided under Annexure IV.
BOARD COMMITTEE
The Company has following mandatory Committees, viz,
1. Audit Committee
2. Stakeholders' Relationship Committee
3. Nomination and Remuneration Committee
4. Corporate Social Responsibility Committee
5. Risk Management Committee
The details of the Committees along with their composition, number of
meetings and attendance at the meetings are provided in the Corporate Governance Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Pursuant to Section 134(3) (m) of the Companies Act, 2013 read with
Rule 8 of the Companies (Accounts) Rules, 2014, the particulars in respect of conservation
of energy, technology absorption and foreign exchange earnings & outgo are furnished
in Annexure V and form a part of this report.
AUDITORS
A. STATUTORY AUDITORS & AUDITOR'S REPORT M/s. Mittal Gupta
& Co., Chartered Accountants having Firm Reg. No. 01874C, Kanpur were appointed as the
Statutory Auditors of the Company at the AGM held on June 30, 2022, to hold office until
conclusion of the 33rd AGM. As required under the provisions of Section 139 of
the Companies Act, 2013, the Company has obtained written confirmation from M/s. Mittal
Gupta & Co., that their appointment is made in conformity with the limits specified in
the said Section.
The Auditors' Report for the financial year ended March, 2023 is
unmodified, i.e, it does not contain any qualification, reservation, adverse remark or
disclaimer. The Statutory Auditors have not reported any incident of fraud to the Audit
Committee of the Company during the financial year under review.
B. COST AUDITORS
Pursuant to the provisions of Section 148 of the Companies Act, 2013
and rules made thereunder, the Board on the recommendation of the Audit Committee has
re-appointed M/s. Ramanath Iyer & Co, Cost Accountants (Firm Regn No. 000019), as Cost
Auditors to conduct cost audits relating to sugar, electricity and industrial alcohol for
the year ended March 31, 2023.
The Cost Accountants have confirmed that their appointment is within
the limits of Section 141 (3) (g) of the Act and free from any disqualifications specified
under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the
Companies Act, 2013.
The Cost Audit Report for the financial year March, 2022 did not
contain any qualification, reservation, adverse remark or disclaimer. The Cost Audit
Report for the year end March, 2023 shall be made available by Cost Auditors on or before
September 30, 2023.
C. 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 had
appointed M/s. VKM & Associates, a Practicing Company Secretary (Certificate of
Practice no. 4279), Secretarial Auditor to undertake the Secretarial Audit of the Company
for the year ended March 31, 2023. The Secretarial Audit Report is appended to this Report
as Annexure VI.
The Secretarial Audit Report does not contain any qualification,
reservation or adverse remark or disclaimer.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the
top 1,000 listed companies (by market capitalization) from fiscal 2023, while disclosure
was voluntary for fiscal 2022 .
DSIL believes that we are accountable not merely to our shareholders
from a revenue and profitability perspective but also to the larger society which is also
its stakeholder. Hence, to comply with BRSR requirements in professional manner Company
has appointed an external agency viz. PricewaterhouseCoopers (PWC). The BRSR disclosures
form a part of Annual Report 2022-23. Report is annexed by way of Annexure VII.
ACKNOWLEDGEMENT
Your directors wish to place on record their sincere gratitude and
appreciation to its members, sugar cane growers, employees, bankers, financial
institutions, Central & State Government Agencies for their valuable contribution in
the growth of the organization.
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On behalf of the Board of Director |
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B J Maheshwari |
Vijay S Banka |
Place : Mumbai |
Managing Director & CS cum CCO |
Managing Director |
Date : April 27, 2023 |
(DIN: 00002075) |
(DIN: 00963355) |
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