BOARD OF DIRECTORS Mr. M.P.Purushothaman Chairman & Managing Director Mr. Sheeju Purushothaman Joint Managing Director Mr. K.Jayachandran Joint Managing Director Ms. Nisha Purushothaman Mr. M.K.Mohan Lt. Gen. R.S.Nagra (Retd.) (upto 31.12.2008) Mr. M.P.Mehrotra Mr. T.S.Raghavan Mr. Shankar Menon (Additional Director w.e.f. 29.6.2009) VICE PRESIDENT - FINANCE & ACCOUNTS G.V.Ramana COMPANY SECRETARY S.S.K.Swarup AUDITORS Mr. R.Rajagopalan, Chartered Accountant 15, Station Road, West Mambalam, Chennai- 600 033. BANKERS Indian Bank Union Bank of India Bank of Maharashtra The Federal Bank Ltd Indian Overseas Bank Bank of India Punjab National Bank Oriental Bank of Commerce Andhra Bank REGISTERED OFFICE Ayyapareddipalem Naidupet – 524 126 Nellore District, Andhra Pradesh FACTORY 1. Naidupet, Nellore District, A.P 2. Integrated sugar Complex (under construction) at Ambasamudram, Tirunelveli Dist- T.N ADMINISTRATIVE OFFICE ‘Empee Tower’, 59, Harris Road, Pudupet, Chennai – 600 002
Transcript
BOARD OF DIRECTORS Mr.M.P.Purushothaman Chairman&ManagingDirector
Consolidated Balance Sheet and Profit & Loss Account 42-43
Schedules to the Consolidated Accounts 44-54
Consolidated Cash Flow Statement 55
EMPEE SuGARS AND CHEMICALS LIMITED
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NOTICE TO SHARE HOLDERS
NOTICEisherebygiventhattheNineteenthAnnualGeneralMeetingofEmpeeSugarsandChemicalsLimited will be held on Wednesday, the 30thSeptember, 2009 at 11.30 am at the RegisteredOfficeoftheCompanyatAyyapareddipalemVillage,NaidupetMandal,NelloreDistrict,Pincode-524126,AndhraPradeshtotransactthefollowingbusiness:
ORDINARY BuSINESS:
1. To consider, approve and adopt the Profit &LossAccountfortheyearended31stMarch,2009, theBalanceSheetason thatdate, thereportoftheBoardofDirectorsandthereportoftheAuditors.
3. To appoint a Director in place of Ms.NishaPurushothaman, who retires by rotationand being eligible, offers herself forreappointment.
4. To appoint Auditors of the Company till theconclusionofthenextAnnualGeneralMeetingandtofixtheirremuneration.
SPECIAL BuSINESS:5. To consider and if thought fit to pass with or
withoutmodificationthefollowing
ResolutionasanOrdinaryresolution:
“RESOLVED THAT Mr.Shankar Menon, whowas appointed as an Additional Directorpursuant to the Provisions of Section 260 ofthe Companies Act, 1956, be and is herebyappointedasaDirectoroftheCompanyliabletoretirebyrotation.”
1. A member entitled to attend and vote at theAnnualGeneralMeetingisentitledtoappointaproxytoattendandvoteonapollonhisbehalfand the proxy need not be a member. Theproxyformdulycompletedandstampedmustreachtheregisteredofficeofthecompanynotless than 48 hours before commencement oftheMeeting.
2. The Registrar of members and sharetransfer booksof the companywill be closedfrom 23/09/2009 to 30/09/2009 (Both daysinclusive).
4. Members are requested to intimate changesif any, in their address to the Registrars andshare transferAgentsof theCompanyat thefollowingaddress:
M/s. Cameo Corporate Services Limited,“Subramanian Building”, V Floor, 1, ClubHouseRoad,Chennai-600002.
5. The Company’s equity shares are listed ontheBombayStockExchange,andtheMadrasStockExchangeLtd.
6. AnExplanatoryStatementpursuanttosection173(2)oftheCompaniesAct,1956relatingtothe Special Business to be transacted at theMeetingisannexedhereto.
7. The information/details pertaining to Mr.M.P.Mehrotra, Ms.Nisha Purushothaman andMr.Shankar Menon are provided in terms ofclause 49 of the Listing Agreement with theStockExchangesasannexure.
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ANNEXuRE TO THE NOTICE:Explanatory statement under Section 173(2) of the Companies Act, 1956Item No 5:Mr.ShankarMenonwasappointedasanIndependentDirectorontheBoardoftheCompanyasanadditionalDirectorpursuanttoSection260oftheCompaniesAct, 1956 who will retire at this Annual Generalmeetingwhoiseligibleforre-appointment.IntermsofthesaidSection,Mr.ShankarMenonholdsofficeuptothedateofthisAnnualGeneralMeetingTheCompany has received a notice in writing from amemberalongwithadepositofRs.500/-proposingthecandidatureofMr.ShankarMenonfortheOfficeofDirectoroftheCompany,undertheprovisionsofSection257oftheCompaniesAct,1956.Mr.ShankarMenonholdsaDegreeBSCfromMadrasUniversity, MBA from Indiana University USA,MastersdegreeinHotel&RestaurantAdministrationfromCornellUniversityandHiltonSchoolofHotelManagementatUniversityofHouston.Hehadover35yearsofexperienceinnationalandinternationalHotels. The Board of Directors recommends hisappointment as an independent Director to makeuseofhisvaluableservicestotheCompany.Accordingly,OrdinaryResolutionsetoutunderItem5oftheNoticeissubmittedtotheMeeting.None of the Directors except Mr.Shankar Menonis deemed to be concerned or interested in theresolution.I. GENERAL INFORMATION:1. NatureofIndustry: The Company is engaged in the business of
manufactureofSugarsandIndustrialAlcohol.2. Date or expected date of commencement of
Ms.NishaPurushothamanholdsadegreeinMastersin Business Administration from London BusinessSchool.Shehasaround15yearsofexperienceinLiquorandSugarIndustryinthefieldofadministrationandhumanresourcemanagement
Directorship in Membership inother Companies Committees
1. EmpeeDistilleriesLimited AuditCommittee
2. EmpeeInternationalHotels&ResortsLtd Nil
3. EmpeeHoldingsLimited Nil
4. EmpeePowerCompany(India)Ltd Nil
5. EmpeeHotelsLimited Nil
6. ArunaConstructions(India)Ltd Nil
7. EmpeeAgroFarmProductsPvtLtd Nil
8. UniversalSpiritsLimited Nil
9. AppolloDistilleriesPvtLtd. Nil
Sheisholding28300sharesintheCompany.
Mr. Shankar Menon : (69)
Mr.ShankarMenonholdsaDegreeBSCfromMadrasUniversity, MBA from Indiana University USA,MastersdegreeinHotel&RestaurantAdministrationfromCornellUniversityandHiltonSchoolofHotelManagementatUniversityofHouston.Hehadover35yearsofexperienceinnationalandinternationalHotels. The Board of Directors recommends hisappointment as an independent Director to makeuseofhisvaluableservicestotheCompany.
HeholdsthefollowingDirectorshipandMembershipinCommitteesofotherCompaniesasfollows:Directorship in Membership inother Companies Committees
2. Steps taken or proposed to be takenforimprovement.
Newandexistingcanegrowersareencouragedtoplantsugarcane.Loans are being arranged to the farmers through tie up with theNationalisedBanks.Furtherthepriceofsugar isnot inthecontroloftheCompany,stepsarebeingtakentoachievemaximumprofitabilitybyincreasingtheproductionimprovingtherecoveryofthesugarandoptimization of IAP Production and bring out new products in IAPdivisioni.e.EthanolandbottlingofCarbondioxide.
TheoperatingprofitbeforeinterestandDepreciationfortheyearisRs.858.55lakhswhichis18.49%ofsalesasagainstRs.845.30lakhswhichis14.18%ofSalesinthepreviousyear.Thisincreaseof4.31%inoperatingprofit ismainlydue to increase in thefreesalepriceofsugar.
The period ending 31st March, 2009 ( 9 Months)have witnessed severe shortage of sugar caneavailability, accordingly the crushing of cane hascomedowndrasticallyandtheseasoncametoanend inFebruary,2009asagainstMayeveryyear.The shortage of sugar cane is mainly due to theconscious switchover by the farmer community toothercompetingcrops thatnow fetchhimamuchhigherrealization.Furtherthereisalsoshortageofefficientharvestinglabourforcuttingthesugarcane.Priceparitybeingthebedrockofmarketeconomics,sugarcanepricemustmatchwithandmeasureuptoothercompetingcropstoreignitefarmers’interestincane.
Dividend:
Inviewofthepastaccumulatedlossesandtosourcethe expansion plans to achieve growth orientedstabilityinfuturefinancialperformancetheDirectorsareunabletorecommendanyDividendfortheyearunderreview.
Subsidiary:
20MWMulti fuelbasedcogenpowerplantat thefactorysiteatNaidupet is ready tocommence itsoperations and is awaiting final clearances fromGovernmentofAndhraPradeshandtrailrunsaretakenandtheplantwillbereadytocommissionandsynchronizingwiththegridon31stJuly,2009.
Future Outlook:
The progress of the Company’s prestigiousgreenfield integrated sugar complex at IdaikkalVillage, Ambasamudram Taluk, Tirunelveli District,Tamilnadu consisting of 5000 TCD Sugar plantexpandableto8000TCD,50MWco-generationplantand100KL/dayDistilleryplantisunderprogress.
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The expected date of commissioning of cogenpower plant, sugar plant and distillery are 15thDecember,2009,15thJanuary,2010and15thApril,2010respectively.Requiredstatutoryclearancesforestablishmentoftheprojectareobtainedandordersfor the machinery/equipment were placed and theplant&machineryandothernecessaryequipmentare started reaching the project site and erectionworksunderprogress in full swing.With regard tofinancialtie-up,sevennationalizedbankshavetiedupforfinancialclosure.
Withthepresent trendof increase insugarprices,the steps taken by the company to increase theareaofsugarcanecultivationintheallottedlands,continuous efforts to increase efficiency andproductivity in existing operations, contributionexpected from cogen power plant and expansionplans envisaged by the company into integratedsugar complex, barring unforeseen circumstancesyourDirectorsareexpecting that thecompanywillgenerategoodrevenuesandpostbetterperformanceintheyearstocome.
Directors:
Mr. M.P.Mehrotra, Director and Ms.NishaPurushothaman, are retiring by rotation at theensuringannualgeneralmeetingandbeingeligibleoffersthemselvesforre-appointment.
Lt. Gen. R.S.Nagra (Retd), Director has resignedfrom the Board and his resignation was effectivefrom 1/1/2009, the Board places on record itsappreciation of his contribution as Director duringhistenure.
Mr. Shankar Menon has been appointed asadditionaldirectorof thecompanyduring theyearwill be retiring at the conclusion of the annualgeneral meeting. Company has received noticeundersection257oftheCompaniesAct,1956frommembers proposing his candidature for the officeoftheDirector.Accordinglyresolutionisproposedinthenoticefortheannualgeneralmeetingforhisappointment.
Auditors:
Mr. R.Rajagopalan, the Auditor of the Companywill retire at the conclusion of the ensuing annualgeneral meeting and being eligible offer himselffor reappointment. The company has received acertificatefromtheAuditortotheeffectthathisre-appointment, ifmadewouldbeinaccordancewithSection224(1B)oftheCompaniesAct,1956.TheBoardrecommendshisre-appointment.Fixed Deposits:yourCompanyhasnotacceptedanyfixeddepositsfromthepublicduringtheyear.Employees:TheParticularsofemployeesdrawingremunerationwithin the provision of Section 217 (2A) of theCompanies Act, 1956 read with Companies(ParticularsofEmployees)Rules1975 isannexedtothisReport.(Annexure.1)Directors’ Responsibility Statement:PursuanttoSection217(2AA)oftheCompaniesAct,1956, theDirectors to thebestof their knowledgeandbeliefconfirmthat:a) Inthepreparationoftheprofitandlossaccount
fortheperiodended31.3.2009andthebalancesheetasat thatdate(“FinancialStatements”)applicable accounting standards have beenfollowed;
b) Appropriate accounting policies have beenselected and applied consistently and suchjudgmentsandestimates thatare reasonableandprudenthavebeenmadesoastogiveatrueandfairviewof thestateofaffairsof theCompanyasattheendoftheperiodandoftheprofitofthecompanyforthatperiod.
c) Proper and sufficient care has been takenfor the maintenance of adequate accountingrecords in accordance with the provisions ofthe Companies Act, 1956, for safeguardingtheassetsoftheCompanyandforpreventingand detecting fraud and other irregularities,to ensure this, the company has establishedinternal control systems, consistent with its
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sizeandnatureofoperations.Inweighingtheassurance provided by any such system ofinternalcontrols its inherent limitationsshouldberecognized.Thesesystemsarereviewedandupdatedonanongoingbasis.Periodicinternalaudits are conducted to provide reasonableassuranceofcompliancewith thesesystems.Theauditcommitteemeetsatregularintervalstoreviewtheinternalauditfunction.
d) The financialstatementshavebeenpreparedonagoingconcernbasis.
e) The financial statements have been auditedbyMr.R.Rajagopalan,statutoryauditorandhisreportisappendedthereto.
Conservation of Energy, Technology Absorption and Foreign Exchange outgo:
Information regarding conservation of energy,technology absorption and foreign exchangeearningsandoutgoinaccordancewiththeprovisionsofSection217(1)(e)of theCompaniesAct,1956read with Companies (Disclosure of particulars intheReportofDirectors)Rules,1988isannexedtothisReport.(Annexure2)
Corporate Governance:
The Management discussion and analysisand the compliance of recommendations on
corporate governance are annexed to this report.(Annexure.3)
Cost Auditors:
Messrs. Vivekanandan Unni & Associates, havebeenappointedascostauditorsforthesugarunitofthecompanyforthefinancialyear2008-09.
Financial Year:
Thecompanyhasclosedthebooksofaccountfor9monthsending31/03/2009 tochange the financialyearofthecompanyfrom1stAprilto31stMarchofeveryyear.
Acknowledgement:
yourDirectorsthankfor thecontinuousassistanceandsupportextendedbytheBanks,canegrowers,customersandgovernmentauthoritiesandalso totheshareholdersfortheirforbearanceandtheirfaithin the management. Further, your Directors alsoplace on record their deep sense of appreciationforthecontributionsmadebyemployeesatvariouslevelstothegrowthandsuccessoftheCompany.
ForandonbehalfoftheBoardofDirectors
Sd/-
Chennai M.P.Purushothaman31/07/2009 Chairman&ManagingDirector
ANNEXuRE 1 TO DIRECTORS’ REPORT
Statement under Sub Section 2 (A) of Section 217 of the Companies Act, 1956 S.
InformationpursuanttotheCompanies(Disclosureof Particulars in theReportofBoardofDirectors)Rules,1988andformingpartoftheDirectorsreportfortheperiodended31stMarch,2009.
A. CONSERVATION OF ENERGY
The Company has installed necessary energyconserving machinery as per the standardspecificationlistprescribedbytheGovernmentofIndiaforthefactoryofitssize.
Withtheaboveeffortsahigheryieldofdiseasefreecane will be available to the company, resultingin a higher return to the company and the canegrowers.
The expenditure incurred in research anddevelopmentcannotbesegregatedbecauseof itsnature of expenses. Such expenses are clubbedunder the head of expenses “Cane developmentexpenses”.
(D) FOREIGN EXCHANGE EARNINGS Nil
FOREIGN EXCHANGE OuT Rs.239.15lakhs
(to import Cane Harvesting machine from JapanandtoimportTransformerfromChina.)
Report on Corporate Governance in terms of Clause 49 of the Listing Agreement
1. Company’s philosophy on corporate governance
The company firmly believes that goodcorporate governance is the foundation ofcorporate excellence. A sound governanceprocessconsistsofacombinationofbusinesspractices which result in enhancement ofshareholdervalueandenablethecompanytofulfill itsobligations tocustomers,employees,financiers and to the society in general. Thecompany aims to increase and sustain itscorporatevaluethroughgrowthandinnovation.your Company has been observing the keyprinciplesofthecodeandiscommittedtotakeadequate measures towards achieving fullcomplianceoftheCorporateGovernancecode.The areas where the Company is observingthe recommendation of SEBI code are givenbelow:
2. Board of Directors
BoardofDirectorsofthecompanyconsistsofthreeexecutiveDirectorandfivenon-executivedirectors. Four non-executive directors areindependent and they have no pecuniaryrelationshipwiththeCompanyintheircapacityasDirector.Duringtheyear2008-09(9months),theBoardmet three timesand themaximumgapbetweentwomeetingswasthreemonths.TheabovecompositionoftheBoardmeetstherecommendation of SEBI code of corporategovernance.
During the year 3 Board Meetings were held on24-09-2008,23-10-2008and31-01-2009.
3. Audit Committee
The Audit Committee of the Company comprisesof Mr. M.P.Mehrotra, Chairman of the committee.Mr. M.P.Purushothaman, Lt. Gen. R.S.Nagra(Retd.) (up to 31/12/2008), Mr.M.P.Mehrotra isa senior practicing Chartered Accountant andMr.T.S.Raghavan holder of Degree in Master ofArts from Madras University and is a certificateholderfromCertifiedAssociatefromIndianInstituteof Bankers (CAIIB). He started his professionalcareerasanOfficerinIndianOverseasBankintheyear1964andwasanExecutiveDirectorofVijayaBankfromJanuary,1996toApril,1997:Chairmanand Managing Director of Bank of MaharashtraduringMay1997toNovember1998andChairmanand Managing Director of Indian Bank fromDecember,1998to2000.Twooutofthreememberscomprisingthecommitteei.e.Mr.M.P.MehrotraandMr.T.S.Raghavan are independent directors. Allthese directors possess knowledge of corporatefinance,accountsandcompanylaw.Theroleandterms of reference of the audit committee coverthemattersspecifiedunderClause49ofthelistingagreementandSection292AoftheCompaniesAct,1956,besidesothertermsasmaybereferredbytheBoardofDirectors.Thecompanysecretaryactsas
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thesecretarytotheCommittee.Thechiefexecutiveofficer, the statutory and Internal Auditors of thecompanyattendthemeetingsbyinvitation.Duringtheyearthreeauditcommitteemeetingswereheldon24-09-2008,23-10-2008and31-01-2009.
Meetingandtheattendanceduringtheyear
Sl.No.
Name of member No. of meetings
held
No. of meetingsPresent
1. Mr.M.P.Mehrotra 3 3
2. Mr.M.P.Purushothaman 3 3
3. Lt.Gen.R.S.Nagra(Retd.) 1 1
4. Mr.T.S.Raghavan 3 3
4. Remuneration Committee
TheRemunerationcommittee,comprisingofLt.Gen.R.S.Nagra(Retd.),Mr.M.P.Mehortra,Mr.M.K.Mohan,andMr.Raghavanhasbeenconstitutedunderthechairmanship of Mr.T.S.Raghavan, to determinethequantumandcomponentsof the remunerationtobepaidtothewholetimedirectors.Nomeetingofremunerationcommitteewasheldduringtheyearunderreviewsincenorevisionofremunerationwasproposed.
Details of the remuneration of executive directorsandnon-executivedirectorsfortheyearended31stMarch,2009areasfollows:
Executive Directors / Whole Time Directors
Name Designation Remuneration for the
period ended 31.3.2009
Mr.M.P.Purushothaman Chairman&ManagingDirector
Rs.35.28Lakhs
Mr.K.Jayachandran JointManagingDirector
Rs.27.50Lakhs
Mr.SheejuPurushothaman JointManagingDirector
Rs.25.20Lakhs
Non-Executive Directors
Name of the Director Sitting Fee Rs.
1.Ms.NishaPurushothaman 30000
2.Mr.T.S.Raghavan 40000
3.Mr.M.K.Mohan 30000
4.Lt.Gen.R.S.Nagra(Retd.) 15000
5.Mr.M.P.Mehrotra 45000
5. Share Transfer cum Shareholders’ / Investors’ Grievance CommitteeThe share transfer cum shareholders’/Investors’GrievanceCommitteeconsistofthefollowing:
i) Mr.M.K.Mohan Chairman
ii) Ms.NishaPurushothaman Member
iii) Lt.Gen.R.S.Nagra(Retd.)
(upto31/12/2008)
Member
iv) Mr.T.S.Raghavan
(from31/1/2009)
Member
TheCommittee,interalia,approvessharetransfers,transmissionsandalsorequestsforissueofduplicatecertificates, split/consolidation of shares etc andoversees all matters connected with securitiestransfers and other processes and meetings areheld frequently. The Committee also looks intoredressal of shareholders’ complaints related tosharetransfers,nonreceiptofbalancesheets,non-receiptofdividendetc.Thecommitteeoverseestheperformance of the registrars and transfer agentsandrecommendsoverallimprovementofthequalityof investor services. During the year 2008-09, sixcomplaintswerereceivedandwereredressedtothesatisfactionofthecomplaininginvestors.Noinvestorcomplaintwaspendingason31.3.2009.
The Board has appointed Mr. S.S.K.Swarup,Company Secretary as the Compliance Officer,pursuant toClause47(a)of theListingAgreementwithStockExchanges.
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6. General Body Meetings
The last threeannualgeneralmeetingswereheldasunder:
In consonance with the requirements of theamended Clause 49 of the listing agreement,BoardofDirectorshaslaiddownacodeofconductfor the Board members and senior managementof the Company. The said code of conduct hasalsobeenpostedon theWebsiteof thecompany,www.empeegroup.co.in. The directors and seniormanagementarecommitted tostrictadherenceofthecodeandtoconductthebusinessinanethicalandtransparentmanner.
9. Risk Management
Thecompanyhas laiddownprocedures to informboard members about the risk assessment andminimization procedures. The Board periodically
The company has framed a code of conduct forpreventionofInsiderTradingbasedonSEBI(InsiderTrading)Regulations,1992.Thiscodeisapplicableto all directors/officers/designatedemployees. Thecodeensuresthepreventionofdealingincompany’sshares by persons having access to unpublishedpricesensitiveinformation.
11. Disclosures
The company does not have any related partytransactions, which may have potential conflictwith the interestsof the companyat large.Duringthe last threeyears, therehavebeennopenaltiesor strictures imposed on the Company by StockExchange, SEBI or any statutory authority on anymatterrelatedtocapitalmarkets.
12. Subsidiary Company
Theminutesof theboardmeetingsof theunlistedsubsidiary company isplacedbefore theBoardofDirectorsoftheCompanyfortheirreview.
13. Compliance with corporate Governance Norms
The Company has complied with the mandatoryrequirementsofthecodeofcorporategovernanceasstipulatedinclause49ofthelistingagreementwiththestockexchanges.ThecertificatefromstatutoryauditorsisannexedtotheDirectors’Report.
14. Means of Communication
Thequarterlyfinancialresultsarenormallypublishedin the Business Standard in English and AndhraJyothi in Telugu. The Company has posted thequarterly/annual results in theCompany’sWebsitewww.empeegroup.co.in. The quarterly results aresent to Stock Exchanges on which the shares ofthe Company are listed in the prescribed format
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and time. The dedicated e-mail ID of [email protected] was created bythe company for immediate redressal of investorcomplaints/grievances.
15. Management Discussion and Analysis Report Industry Scenario:
Sugar industry during 2007-08 underwent anunprecedented crisis with burgeoning production,bloated inventory and battered sugar price. Whileaggressive exports buoyed up by incentives fromGovernment helped to partly remove the supplyoverhang, an early revival of fortunes still lookedelusive.Aftersuchdeep-rootedtraumaticdownturn,thedramaticturnaroundoffortunesin2008-09thatis swift in time and steep in price correction hascomeasgoodrelieftotheindustry.
Sugarproduction in2008-09season isnowset toslip to sub 150 lakh tonnes, a steep fall by 40%fromthepreviousseason,whilesugarconsumptioncontinues to grow, albeit at a slower pace, that isplacedaround225-230lakhtonnes.Suchastridentshortfall in sugar production has posed a seriousthreat to virtually eliminate the inventory on hand,promptingtheGovernmenttolookatliberalizingandincentivizingsugar imports.Sugarproduction isofcourseboundtoreboundduring2009-10butwouldstill be below our domestic requirement. As such,importsintheregionof50lakhtonneswouldseeminevitable during these two years to tide over thetransitorydeficit.
The decline in sugar production, unlike in earlieroccasions, has not been caused by drought oradverse agro climatic conditions. It is dominantlydue to the conscious switchover by the farmer toothercompetingcrops thatnow fetchhimamuchhigherrealization.Priceparitybeingthebedrockofmarketeconomics,sugarcanepricemustmatchwithandmeasureuptoothercompetingcropstoreignitefarmers’ interest in cane. This in turn warrantsremunerativesugarpricetosupportdesiredlevelofcanepriceandsimultaneouslyensureitspaymentin
timesoastoachievesustainablelevelsofdomesticsugarproduction.ItishightimeforIndiabeingthelargestconsumerofsugar toevolveaholisticandlong-term policy to temper the skewed change inyear-to-yearsugarproduction.Suchapolicymustaimatandfacilitatenotonlytoreachself-sufficiencybutalsocommandaregularandsignificantrole inexportmarket.
Sugar prices in response to the fundamental shiftindemand-supplyequilibriumrespondedfavourablyandfirmlyduring2008-09.Thisinturnhasenabledsugarmillstoofferahigherandlucrativesugarcaneprice with the singular objective to bolster caneavailability in the coming years. The buoyancy insugarpriceinthebackdropofdiminutivedomesticsupply and demonstrably hardening global pricesshouldpersistforatleastonemoreyear.
Government Measures
Concerned gravely with the relentless rise indomestic sugar price, the Central Governmentunleashed a slew of regulatory antidotes to cooloff the market. The General Elections for LokSabha further exacerbated the concerns of theGovernmentonapoliticallysensitivecommoditylikesugar, though itsrelevanceandsignificanceunderthechangedmacro-economicenvironmentismuchmuted.
TheGovernmentbroughtinmeasuressuchasweeklyquotaforfreesale,weeklyreportingmechanismtomonitorsugardispatchesandsale, liberalizedrawsugarimportunderAdvanceAuthorizationScheme[withchangeinexportobligationnormfrom‘grain-to-grain’ to ‘tonne-to-tonne’ basis] and finally thefacilitytoimportrawsugarupto9lakhstonswithoutexport obligation as well as import of white sugarupto10lakhtonnesbyGovernmentagencies,bothat zero%customsduty.All thesehave resulted inthe rollbackof sugarpricebyover10%.Howeverits efficacy over longer term would be in suspect,giventhesizeofdomesticdeficitandswirlinworldsugarprices.
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Opportunities and threats
Thedecreaseintheproductionofsugarconsequentto the reducedcaneavailability in thecountryhasresultedinincreaseofsugarpricesduetodemandandsupplyfactors.Sugarmanufacturingcompaniesaretakingadvantageofmakingeffectiveutilizationofby-productstomanufacturevalueaddedproductslikepowerandalcoholwhichoffermeansandwaysto limit the impact of price volatility due to sugarcycle and sustain the economic viability for thesugarindustry.
The industry is still controlled by the regulatorsthrough levy obligation and release mechanism.OwingtotheGovernmentregulations,thecompaniesareunabletotaketimelyeffectivestepstomeetthechallengesbeingfacedbytheindustry.
Segment wise performance
The segments for the purpose of reporting areSugar and IAP. The sugar segment achieved asales turnover of Rs.3484.40 lakhs while the IAPRs.1342.96lakhs..
The sugar division earned a profit before interestandtaxesofRs.164.21lakhsasagainstRs.757.28lakhs earned by IAP division. The net profit ratioof sugar division has been slightly increased onaccount of increase in sugar prices whereas netprofitratioofIAPismuchbetterwhencomparedtosugar division during the year under review. Theoperationalperformanceofthesegmentsisgiveninschedule19-NotesonAccounts.
Outlook
Thesugarproductionfortheseason2009-10isnowrevisedaround1.2lacQuintalswhencomparedto1.6lacQuintalsofthepreviousyear.Thesecondhalfofthecurrentfinancialyearisexpectedtoseea drop in sugar production on account of likelydecrease in plantation. Therefore the overallphysicalparameters for the financialyear2009-10areexpectedtobelessthanthatofthepreviousyear.Theanticipateddecreaseinsugarproductionwould
Sugarcane being the sole raw material for thesugar industry, its availability depends upon goodmonsoon; Competition from other crops mayaffect the supply of sugar cane for crushing. Inthe present scenario of raising sugar prices, themandatorypaymentofSMPandSAPfixedby thegovernmentsforsugarcanewillaffecttheprofitabilityof the companies. Fixation of sugarcane pricescommensurate with the sugar price realizationswill stabilize the industry. Molasses being strictlycontrolled by the State governments, hence itsusage according to market situations is severallyrestricted.ThesuccessoftheethanolblendedpetrolprogrammeoftheCentralGovernmentdependsonits consistent policy and the support for the samefromtheStateGovernments.
Thedetailsoffinancialperformanceandoperationalperformance are mentioned in the Directors’Report.
Cautionary statement
StatementsinthisReportdescribingtheCompany’sobjectives, estimates and expectations mayconstitute “forward looking statements” within themeaningofapplicablelawsandregulations.Actualresults might differ materially from those eitherexpressedorimplied.
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16. General Shareholders InformationHolding Company
M/s. Empee Distilleries Limited is the holdingCompanyofyourcompanyanditholds2,81,22,102equitysharesof theCompanyconstituting67%ofthetotalpaidupsharecapitaloftheCompany.Theinformation as per Section 212(4) have been dulyfurnished to the Board of Directors of the holdingCompany.
Other Group Companies
Disclosure as per Regulation 3(1) (e) of SEBI(Substantial Acquisition of shares and Takeovers)Regulations1997:
The list of Companies falling within the GroupCompanyasdefined in theMRTPAct,1969 isasfollows:
As indicated in thenotice to theshareholders, theAnnualGeneralMeetingwillbeheldonWednesday,the 30th September, 2009 at 11.30 a.m. at theRegisteredOfficeandFactoryatAyyapareddipalemVillage, Naidupet Mandal, Nellore District, AndhraPradesh.
Book Closure
TheRegisterofMembersandsharetransferbooksof the Company will remain closed from 23rdSeptember, 2009 to 30th September, 2009 (bothdays inclusive) for thepurposeofAnnualGeneralMeeting.
Depositories
Company’s equity shares are registered with boththeDepositoriesi.e.NationalSecuritiesDepositoryLimited(NSDL)andCentralDepositoryServices(I)Limited(CDSL)undertheISIN:INE928B01012.
If the shareholder wishes to dematerialize theshares and sends the Dematerialization RequestForm (DRF) through his Depository Participant(DP), within 15 days, the RTA will confirm dematto the DP and the share(s) will be credited to theShareholder’saccountwiththeDP.
ListingonStockExchanges:
a)MadrasStockExchangeLtd.
b)BombayStockExchangeLtd.
DistributionofShareholdingasonMarch31,2009:
No. of equity shares held
No. of share holders
% of shareholders
No. of shares held
% of shareholding
upto500 27074 90.83 4052451 9.65
501–1000 1497 5.02 1312541 3.13
1001–2000 643 2.15 1036001 2.47
2001–3000 187 0.63 497764 1.19
3001–4000 96 0.32 349898 0.83
4001–5000 108 0.36 513630 1.22
5001–10000 114 0.38 856943 2.05
10001andabove
92 0.31 33353672 79.46
Total 29811 100.00 41972900 100.00
EMPEE SuGARS AND CHEMICALS LIMITED
16
Share Holding Pattern as on March 31, 2009
Category Number of share holders No. of Shares held % of Share holdingPromoters 8 29607314 70.54OtherBodiesCorporate 206 1887708 4.50NRI/OCB 31 13324 0.03Public 29556 10464554 24.93TOTAL 29811 41972900 100Stock Market Data Bombay Stock Exchange Ltd (BSE); Scrip Code: 500132 (Face value of Rs.10/-each)
Month High Price (Rs.) Low Price (Rs.)Month’s Volume(No. of shares)
NoshareshavebeentradedinMadrasStockExchangeLtdduringtheyear.Performance in comparison to broad based indices such as BSE Sensex, CRISIL Index etc.
ESCL BSE SENSEX
EMPEE SuGARS Vs BSE Sensex
EMPEE SuGARS AND CHEMICALS LIMITED
17
Registrar and Share Transfer Agents
The Registrar & Transfer Agents (RTA) of theCompany(bothPhysicalandDemat)fortheequitysharesareM/s.CameoCorporateServicesLimitedThe address of the RTA is M/s.Cameo CorporateServicesLimited,“SubramanianBuilding”,VFloor,1,ClubHouseRoad,Chennai-600002.
Share Transfer System
Share transfersare registeredand returnedwithina period of 30 days from the date of receipt, ifthe documents are clear in all respects, by theCommitteewhichmeetseveryweek.
Dematerialisation of Shares
TheCompanyhasarrangementswithbothNationalSecurities Depository Limited (NSDL) and CentralDepository Services Limited (CDSL) for dematfacility.Nearly92.98%ofthetotalEquityCapitalisheldindematerialisedformason31stMarch2009.
Investors’ correspondence
M/s. Cameo Corporate Services Limited,”Subramanian Building”, V Floor,1, Club HouseRoad, Chennai-600 002; The CompanySecretary, Empee Sugars and Chemicals Limited,Empee Tower, No.59, Harris Road, Pudupet,Chennai600002.
Plant Locations :
1. Ayyapareddipalem 2. Idaikkal Village Naidupet-524126 AmbasamudramTalukNelloreDist. TirunelveliDistrictAndhraPradesh Tamilnadu
Chief Executive Officer and Chief Financial Officer CertificateThe Chief Executive Officer and Chief FinancialOfficer have submitted to the Board of Directorthe certification as per clause 49 (v) of the listingagreement.Non-mandatory requirementsa) NonExecutiveChairman: TheCompanyhasanExecutiveChairmanand
The compliance of conditions of Corporate Governance is the responsibility of the management. OurexaminationwaslimitedtoproceduresandimplementationthereofadoptedbytheCompanyforensuringthecomplianceoftheconditionsoftheCorporateGovernance.ItisneitheranauditnoranexpressionofopiniononthefinancialstatementsoftheCompany.
Inmyopinionandto thebestofour informationandaccordingto theexplanationsgiventome, Icertifythat theCompanyhascompliedwith theconditionsofCorporateGovernanceasstipulated in theabovementionedListingAgreement.
1. I have audited the attached Balance Sheet ofM/s.EMPEESUGARSANDCHEMICALSLIMITEDasat31stMarch,2009andtheannexedProfitandLossAccountandtheCashFlowStatementfortheyearendedonthatdate,allofwhichIhavesignedunder reference to this report. These financialstatementsaretheresponsibilityofthemanagementoftheCompany.Myresponsibilityistoexpressanopiniononthesefinancialstatementsbasedontheaudit.
2. I have conducted the audit in accordance withauditing standards generally accepted in India.Those Standards require that I plan and performthe audit to obtain reasonable assurance aboutwhetherthefinancialstatementsarefreeofmaterialmisstatement. An audit includes examining, on atest basis, evidence supporting the amounts anddisclosuresinthefinancialstatements.Anauditalsoincludesassessing the accountingprinciplesusedand significant estimates made by management,aswellasevaluatingtheoverallfinancialstatementpresentation. I believe that the audit provides areasonablebasisformyopinion.
3.AsrequiredbytheCompanies(Auditor’sReport)Order, 2003 issued by the Government of Indiain terms of section 227(4A) of ‘The CompaniesAct,1956’ ((the ‘Act’) and on the basis of suchchecksas I consideredappropriateandaccordingto the informationandexplanationsgiven tome, IsetoutintheAnnexureastatementonthemattersspecifiedinparagraphs4and5ofthesaidOrder.
4.FurthertoourcommentsintheAnnexurereferredto in paragraph 3 above, I report that: (a) I haveobtained all the information and explanationswhichtothebestofourknowledgeandbeliefwere
necessary for thepurposesofmyaudit; (b) Inmyopinion, proper books of account as required bylaw have been kept by the Company so far asappears from our examination of those books;(c)TheBalanceSheetandProfitandLossAccountdealtwithby this reportare inagreementwith thebooks of account; (d) In my opinion, the BalanceSheet and the Profit and Loss Account dealt withby this report have been prepared in compliancewiththeapplicableaccountingstandardsreferredtoinSection211(3C)of theAct; (e)On thebasisofwrittenrepresentationsreceivedfromthedirectors,ason31stMarch,2009,andtakenonrecordbytheBoard of Directors of the Company, none of thedirectorsisdisqualifiedason31stMarch,2009frombeing appointed as a director in terms of clause(g) of sub-section(1) of section 274 of the Act; (f)In my opinion and to the best of my informationandaccordingtotheexplanationsgiventome,theBalance Sheet, the Profit and Loss Account andthe Cash Flow Statement together with the Notesthereonandattachedthereto,giveintheprescribedmannertheinformationrequiredbytheActandgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia;
i) inthecaseoftheBalanceSheet,ofthestateof affairs of the Company as at 31st March,2009,
ii) in the case of the Profit & Loss Account, ofthePROFITfortheperiodendedonthatdate,and
i) a) TheCompanyhasmaintainedproperrecordsshowingfullparticularsincludingquantitativedetailsandsituationofitsfixedassets.
b) Asexplainedtome,theCompanyhasaprogrammeofphysicallyverifyingallofitsfixedassetsonce in a period of three years, and in accordance therewith, major portion of fixed assetswerephysicallyverifiedby themanagementduring theperiod. Inmyopinion, the frequencyofverificationisreasonablehavingregardtothesizeoftheCompanyandnatureofitsassets.Thediscrepanciesnoticedonsuchverificationwerenotmaterialandhavebeenproperlydealtwithinthebooksofaccount.
c) Duringtheperiod,theCompanyhasnotdisposedofsubstantialpartoffixedassets.
ii) a) Theinventorieshavebeenphysicallyverifiedduringtheyearbythemanagementatreasonableintervalsexceptstocklyingwithoutsidepartiesforwhichconfirmationhasbeenobtained.
b) In my opinion and according to the information and explanations given to me, the procedureofphysicalverificationofstocks followedby themanagementarereasonableandadequate inrelationtothesizeoftheCompanyandnatureofitsbusiness.
c) On the basis of my examination, I am of the opinion that the Company is maintaining properrecordsofinventory.Nomaterialdiscrepancieswerenoticedonverificationbetweenthephysicalstocksandthebookrecords.
Advances recoverable in cash or kind for value to be receiveda.UnsecuredbutconsideredgoodLoans & AdvancesAdvancestosuppliers-Nayudupet 352.23 364.37Advancestosuppliers-Ambasamudram 8,322.02 -
Financial statements are prepared andpresentedunderthehistoricalcostconventionand in accordance with the applicableaccountingstandardstotheextentpossible.
2. Revenue Recognition
Income from Operations is recognized in theProfit & Loss Account on accrual basis asstatedhereinexcept in respectofsuch itemsasarespecificallymentionedhereunderandinthenotes.
a. Sales income is accounted inclusiveof excise duty and sales tax whereverapplicablebutnetoftradediscounts.
b. Insurance claims are accounted as andwhentheclaimsaresettled.
c. Interest due from growers for seedsuppliedisaccountedasandwhencaneisreceivedfromgrowers.
d. Excise Duty payable on finished goodsheldinstockattheendoftheaccountingyear (except Molasses stored in pit forwhichdutyispaidasandwhenmolassesareletintothepit)willbeaccountedforatthetimeofclearanceofthesegoods.Theaccountingtreatmentwillhavenoimpactonprofit/losses
3. Fixed Assets and Depreciation/Amortization
3.1. Fixed Assets:- These assets are stated attheir original cost of acquisition (includingexpenditure for the acquisition and/orinstallation)lessaccumulateddepreciation.
3.2. DepreciationonFixedassetshasbeenprovidedon straight-line method at rates prescribedunder Schedule XIV to the Companies Act,1956 as amended by notification dated15.12.93 issuedhereunderand isprovided in
theaccountsorshownasanote.Depreciationon addition to fixed assets during the year isreckonedonaproratabasiswithreferencetothemonthinwhichthefixedassetsareputtouseorcommissioned.
Schedules to theBalanceSheetandProfit&LossAccountfortheyearended31.03.2009
4 Impairment of Fixed Assets
Wherevereventsofchangesincircumstancesindicatethatthecarryingvalueoffixedassetsmaybeimpaired,theCompanysubjectssuchassets to a test of recoverability, based ondiscounted cash flows expected from use ordisposalthereof.Iftheassetsareimpaired,theCompanyrecognizesasimpairmentlossasthedifferencebetweenthecarryingvalueandfairvaluelesscoststosell.NoneoftheCompany’sfixedassetsareconsideredimpairedasontheBalanceSheetdate.
5 Capital Work in Progress
Capital work in progress is stated at costand includes advance on account of CapitalEquipmentpaidtothesuppliers.
6. Foreign Currency Transaction
Foreign exchange transactions are recordedattheexchangeratesprevailingatthetimeoftransaction.Assetsandliabilitiesexpressedinforeign currencies (to the extent not coveredagainst exchange fluctuations) are translatedinto Indian Rupees at the exchange rateprevailingat theBalanceSheetdateandanylossorgainarisingtherefromhasbeenincludedin Finance Charges as per the provision ofAccountingStandard16and11issuedbyTheInstituteofCharteredAccountantsofIndia.
7. Prior Period and Extra Ordinary Items
PriorPeriodandExtraOrdinary Itemshavingmaterial impact on the financial affairs of theCompanyaredisclosed.
EMPEE SuGARS AND CHEMICALS LIMITED
31
8. Retirement and Other Benefits
8.1. The company accounts gratuity liabilityaccountedasandwhengratuityispaidtotheemployees.
8.2. Contribution to Provident Fund is made asper provisions of Employees Provident fundand Miscellaneous Provisions Act, 1952and charges to Profit and Loss Account anddisclosedseparately.
8.3. Liability for leave encashment is provided asandwhentheleaveencashmentispaidtotheemployees.
9. Income Tax
The Income Tax liability is provided inaccordancewith theprovisionsof the IncometaxAct1961.
Deferred tax is recognized, subject toconsiderationofprudence,ontimingdifferences,beingthedifferencebetweentaxableincomesand accounting income that originate in oneperiod and are capable of reversal in one ormoresubsequentperiods.
10. Segment Reporting
A. Business Segments:
Based on the guiding principles given inAccounting Standard AS-17 “SegmentReporting”issuedbytheInstituteofCharteredAccountantsofIndia,theCompany’sbusinesssegmentsincludeSugarandIndustrialAlcoholPlant(IAP).
Common revenue and expenses ofsegments are allocated amongst them
onareasonablebasis.Allothersegmentrevenue and expenses are directlyattributabletothesegments.
b) Segment assets and liabilities:
Segmentassetsincludealloperatingassetsusedbyasegmentandconsistprincipallyof operating cash, debtors, inventoriesand fixed assets, net of allowances andprovisions, which are reported as directoffsets in the balance sheet. Segmentliabilities include all operating liabilitiesand consist principally of creditors andaccrued liabilities. Segment assets andliabilitiesdonot includedeferred incometaxes,ShareCapital,Loans,Investments,MiscellaneousExpenditureandProfitandLoss Appropriate Account. While mostof the assets / liabilities can be directlyattributed to the individual segments,the carrying amount of certain assets /liabilitiespertainingtobothsegmentsareallocatedtothesegmentsonareasonablebasis.
11. Earning Per Share
TheCompanyreportsbasicanddilutedearningsperequityshareinaccordancewithAccountingStandard–20EarningsperShare, issuedbytheInstituteofCharteredAccountantsofIndia.Earningsperequitysharehavebeencomputedby dividing net profit after tax attributable toequityshareholdersbytheweightedaveragenumberofequityshareoutstandingduringtheyear.Dilutedearningsduringtheyearadjustedforeffectsofalldilutivepotentialequitysharesperequityshareiscomputedusingtheweightedaverage number of equity share and dilutivepotentialequitysharesoutstandingduringtheyear.
12. Miscellaneous Expenditure
MiscellaneousExpenditurerepresentsdiscounton issue of shares made during the year2000-2001.
4. National Saving Certificates VIII issue ofRs.0.13 lakhs shown under investment areunderlientoSalesTaxauthorities&AgriculturalDepartmenttowardssecuritydeposits.
5. StockofStores,Sparesandpackingmaterialshavebeenphysically verifiedat theyearendandvaluedatcostonFIFObasis.Thevaluationofthestocksofsugarandspiritarevaluedatestimatednetrealizablevalue.Sugar,OrganicManure, Sugar and Molasses in Process arevaluedatestimatednetrealizationvalue.
6. Balanceswithbankinfixeddepositinclude: i) Rs.18.00 lacs under lien to banks for
guaranteesissuedbythem. ii) Rs.0.02 lacs under lien to sales tax
small scale industrial status from the parties,the details of names of small scale industrialundertaking to which the company owe anysumtogetherwithinterestoutstandingformorethan30dayscouldnotbeascertained.
9. Depreciation amounting to Rs.438.12 lakhsrelatedtothepreviousyearsfrom1.10.1996to31.03.1999hasnotbeenprovided.
10. The Government of Andhra Pradesh by itsOrderdated13.10.2003throughAbstractfromIndustries & Commerce (Sugar) DepartmenthaspermittedtheCompanytopaythearrearsofPurchaseTaxamountingtoRs.532.57lakhs(which includes a sum of Rs.10.40 lakhs asinterest) in three equal annual [email protected]%p.a.Thecompanyhas sent the request letter to the concernedGovernment Departments to waive off thepurchase tax and interest thereon. In theopinionof themanagement, thecompanywillgetthefavourablereplyfromtheGovernmentandaccordinglynoliabilityhasbeenprovidedinthebooks.
EMPEE SuGARS AND CHEMICALS LIMITED
33
11. Provision for Minimum Alternate Tax of Rs20.38 lacs is provided for Income Tax andFringeBenefit Tax (FBT)ofRs.0.87 lacshasbeenprovided.
Profit before taxation 197.91 43.82 Add:Director’sremuneration) 87.98 73.39 Net Profit for the year 285.89 117.21 Commission 5%oftheNetProfit 14.29 5.86 *(IncludingCommission)
In case of inadequacy of the Profit for thepayment of Managerial Remuneration, thepart IIof theScheduleXIIIof theCompaniesAct, 1956 will apply. Accordingly, theManagerial Remuneration incurred is withinthelimitprescribedunderScheduleXIIIoftheCompaniesAct,1956.
17. Thecompanyhasimported44450MTsofrawsugarresultinginanexportobligationof42330MTs.The company has exported 10000 MTs of sugar against this obligation and balance is pendingcompliance.
4. ThenetaggregateamountofProfit/(Loss)ofthesubsidiaryfor the above financial year so far as it concerns themembersoftheholdingcompany.
a) Dealt within the accounts of Empee Sugars andChemicalsLtdfortheyearended31stMarch,2009.
b) Not dealt within the accounts of Empee Sugars andChemicalsLtdfortheyearended31stMarch,2009.
Nil
Nil
5. Net aggregate amount of Profit/(Loss) for the previousFinancialyearofthesubsidiarysinceitbecameSubsidiarysofarastheyconcernedmembersofEmpeeSugarsandChemicalsLtd
a) Dealt within the accounts of Empee Sugars andChemicalsLtdfortheyearended31stMarch,2009.
b) Not dealt within the accounts of Empee Sugars andChemicalsLtdfortheyearended31stMarch,2008.
Note: TheHoldingCompany,(EmpeeSugarsandChemicalsLtd)undertakesthattherelateddetailedinformation pertaining to the Annual Accounts of the Subsidiary Company viz. Empee PowerCompany(India)Ltdwillbemadeavailabletotheinvestorsseekingsuchinformationatanypointoftime.FurthertheAnnualAccountsofthesubsidiarycompanywillalsobekeptforinspectionbyanyinvestorintheregisteredofficeoftheCompany.
EMPEE SuGARS AND CHEMICALS LIMITED
41
CONSOLIDATED AuDITOR’S REPORT
To the Board of Directors of M/s.Empee Sugars and Chemicals Limited on the Consolidated Financial Statements of Empee Sugars and Chemicals Limited and its Subsidiary.
Ireportthattheconsolidatedfinancialstatementshavebeenpreparedbythecompanyinaccordancewiththe requirements of Accounting Standard 21 and other Accounting Standards issued by the Institute ofCharteredAccountantsof Indiaandon thebasisof theseparateaudited financialstatementsofEmpeeSugars and Chemicals Limited and its subsidiary where the audited financial statements have beenconsideredandincludedintheconsolidatedfinancialstatements.
On thebasisof the informationandexplanationgiven tomeandonconsiderationof theseparateauditreportsonindividualauditedfinancialstatementofEmpeeSugarsandChemicalsLimitedanditsSubsidiary,IamoftheopinionthattheConsolidatedFinancialStatementsgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia.
i. In thecaseofConsolidatedBalanceSheet,of thestateofaffairsof theCompanyasat31stMarch2009.
ii. InthecaseofConsolidatedProfitandLossAccountofthePROFITfortheyearendedonthatdate;and
iii. InthecaseofConsolidatedCashFlowStatement,ofthecashflowsfortheyearendedonthatdate.
SCHEDuLE - 8Advances recoverable in cash or kind for value to be receiveda.UnsecuredbutconsideredgoodLoans & AdvancesAdvancestosuppliers-Nayudupet 352.23 1,819.10Advancestosuppliers-Ambasamudram 8,322.02 -Advancestosuppliers-EmpeePowerCompany 1,600.80 -OtherAdvances 50.63 157.65Taxdeductedatsource 25.23 24.95PrepaidExpenses 11.55 19.38
1. a) Basis of preparation of Financial Statements
Financial statements are prepared andpresented under the historical costconventiononagoingconcernbasisandinaccordancewiththeapplicableaccountingstandardstotheextentpossible.
b) Principles of consolidation
The consolidated financial statementsrelate to Empee Sugars and ChemicalsLimited(thecompany)andit’ssubsidiarycompany. The consolidated financialstatements have been prepared on thefollowingbasis.
The financialstatementsof thecompanyanditssubsidiaryhavebeenpreparedbasedonaline-by- line consolidation by adding togetherthebookvalueslikeitemsofassets,liabilities,income and expenses as per the respectivefinancial statements duly certified by theauditors of the respective companies. Intergroup balances and transactions have beeneliminated.
The consolidated financial statements havebeen prepared using uniform accountingpolicies for like transactionsandothereventsin similar circumstances. The presentation totheextentpossible is in thesamemannerasthecompany’sindividualstatements.
The subsidiary company considered in theconsolidatedfinancialstatementisM/sEmpeePower Company (India) Ltd the country ofincorporation is India and the percentage ofvotingpowerheldbytheholdingcompanyheldon31stMarch2009100%.
Since thesubsidiaryCompany isatan infantstageofoperationsandnocommercialactivityhasbeendoneby the company thequestion
of framing the Profit & Loss Account doesnotarise.All theexpensesarebookedinPreoperativeexpenses.
2. Basis of Accounting & Revenue Recognition
Financial statements are prepared andpresentedunderthehistoricalcostconventionon a going concern basis, with revenuerecognized and expenses accounted onaccrual concept (including provisions andadjustments) and in accordance with theapplicableaccountingstandardsreferredtoinsubsection3Cofsection211oftheCompaniesAct1956.
Income from Operations is recognized in theProfit & Loss Account on accrual basis asstatedhereinexcept in respectofsuch itemsasarespecificallymentionedhereunderandinthenotes.
a. Sales income is accounted inclusiveof excise duty and sales tax whereverapplicablebutnetoftradediscounts.
b. Insurance claims are accounted as andwhentheclaimsaresettled.
c. Interest due from growers for seedsuppliedisaccountedasandwhencaneisreceivedfromgrowers.
d. Excise Duty payable on finished goodsheldinstockattheendoftheaccountingyear (except Molasses stored in pit forwhichdutyispaidasandwhenmolassesareletintothepit)willbeaccountedforatthetimeofclearanceofthesegoods.Theaccountingtreatmentwillhavenoimpactonprofit/losses.
3. Fixed Assets and Depreciation/Amortization
3.1. Fixed Assets:- These assets are stated attheir original cost of acquisition (includingexpenditure for the acquisition and/orinstallation)lessaccumulateddepreciation.
CONSOLIDATED FINANCIAL STATEMENT
EMPEE SuGARS AND CHEMICALS LIMITED
51
3.2. DepreciationonFixedassetshasbeenprovidedon straight-line method at rates prescribedunder Schedule XIV to the Companies Act,1956 as amended by notification dated15.12.93 issuedhereunderand isprovided intheaccountsorshownasanote.Depreciationon addition to fixed assets during the year isreckonedonaproratabasiswithreferencetothemonthinwhichthefixedassetsareputtouseorcommissioned.
4. Impairment of Fixed Assets
Wherevereventsofchangesincircumstancesindicatethatthecarryingvalueoffixedassetsmaybeimpaired,theCompanysubjectssuchassets to a test of recoverability, based ondiscounted cash flows expected from use ordisposalthereof.Iftheassetsareimpaired,theCompanyrecognizesasimpairmentlossasthedifferencebetweenthecarryingvalueandfairvaluelesscoststosell.NoneoftheCompany’sfixedassetsareconsideredimpairedasontheBalanceSheetdate.
5. Capital Work in Progress Capital work in progress is stated at cost
and includes advance on account of CapitalEquipmentpaidtothesuppliers.
6. Foreign Currency Transaction Foreign exchange transactions are recorded
attheexchangeratesprevailingatthetimeoftransaction.Assetsandliabilitiesexpressedinforeign currencies (to the extent not coveredagainst exchange fluctuations) are translatedinto Indian Rupees at the exchange rateprevailingat theBalanceSheetdateandanylossorgainarisingtherefromhasbeenincludedin Finance Charges as per the provision ofAccountingStandard16and11issuedbyTheInstituteofCharteredAccountantsofIndia.
7. Prior Period and Extra Ordinary Items
PriorPeriodandExtraOrdinary Itemshavingmaterial impact on the financial affairs of theCompanyaredisclosed.
8. Retirement and Other Benefits
8.1. The company accounts gratuity liabilityaccountedasandwhengratuityispaidtotheemployees.
8.2. Contribution to Provident Fund is made asper provisions of Employees Provident fundand Miscellaneous Provisions Act, 1952and charges to Profit and Loss Account anddisclosedseparately.
8.3. Liability for leave encashment is provided asandwhentheleaveencashmentispaidtotheemployees.
9. Income Tax
The Income Tax liability is provided inaccordancewith theprovisionsof the IncometaxAct1961.
Deferred tax is recognized, subject toconsiderationofprudence,ontimingdifferences,beingthedifferencebetweentaxableincomesand accounting income that originate in oneperiod and are capable of reversal in one ormoresubsequentperiods.
10. Segment Reporting
A. Business Segments:
Based on the guiding principles given inAccounting Standard AS-17 “SegmentReporting”issuedbytheInstituteofCharteredAccountantsofIndia,theCompany’sbusinesssegmentsincludeSugarandIndustrialAlcoholPlant(IAP).
Common revenue and expenses ofsegments are allocated amongst them
EMPEE SuGARS AND CHEMICALS LIMITED
52
onareasonablebasis.Allothersegmentrevenue and expenses are directlyattributabletothesegments.
ii) Segment assets and liabilities:
Segmentassetsincludealloperatingassetsusedbyasegmentandconsistprincipallyof operating cash, debtors, inventoriesand fixed assets, net of allowances andprovisions, which are reported as directoffsets in the balance sheet. Segmentliabilities include all operating liabilitiesand consist principally of creditors andaccrued liabilities. Segment assets andliabilitiesdonot includedeferred incometaxes,ShareCapital,Loans,Investments,MiscellaneousExpenditureandProfitandLoss Appropriate Account. While mostof the assets / liabilities can be directlyattributed to the individual segments,the carrying amount of certain assets /liabilitiespertainingtobothsegmentsareallocatedtothesegmentsonareasonablebasis.
11. Earning Per Share
TheCompanyreportsbasicanddilutedearningsperequityshareinaccordancewithAccountingStandard–20EarningsperShare,issuedbytheInstituteofCharteredAccountantsofIndia.Earningsperequitysharehavebeencomputedby dividing net profit after tax attributable toequityshareholdersbytheweightedaveragenumberofequityshareoutstandingduringtheyear.Dilutedearningsduringtheyearadjustedforeffectsofalldilutivepotentialequitysharesperequityshareiscomputedusingtheweightedaverage number of equity share and dilutivepotentialequitysharesoutstandingduringtheyear.
12. Miscellaneous Expenditure
MiscellaneousExpenditurerepresentsdiscounton issue of shares made during the year2000-2001.
13. Earning per Share BasicandDilutiveEarningpershare. Particulars yearEnded 31stMarch 30thJune 2009 2008 a. NetProfitaftertaxattributable toEquityshareholders 95.48 129.66
b. Weightedaverage numberofEquityShares Basic/Dilutive(Nos.) 41970127 41970127
c. Nominalvalueofequity pershare(Rs) 10/- 10/-
d. Basic/DilutiveEarning pershare(Rs.) 0.23 0.31
14. Segment wise details as required by AS 17issuedby theCharteredAccountantsof Indiaareasunder:
16. National Saving Certificates VIII issue ofRs.0.13 lakhs shown under investment areunderlientoSalesTaxauthorities&AgriculturalDepartmenttowardssecuritydeposits.
17. StockofStores,Sparesandpackingmaterialshavebeenphysically verifiedat theyearendandvaluedatcostonFIFObasis.Thevaluationofthestocksofsugarandspiritarevaluedatestimatednetrealizablevalue.Sugar,OrganicManure, Sugar and Molasses in Process arevaluedatestimatednetrealizationvalue.
18. Balances with bank in fixed deposit include:
i) Rs.18.00 lacs under lien to banks forguaranteesissuedbythem.
ii) Rs.0.02 lacs under lien to sales taxauthoritiestowardssecuritydeposits.
iii) Rs.10,00,000 with Karur Vysya Bank isunderlientothesaidbankforGuaranteeissuedbythem.
19. Intheabsenceofreceiptofinformationregardingsmallscaleindustrialstatusfromtheparties,the details of names of small scale industrialundertaking to which the company owe anysumtogetherwithinterestoutstandingformorethan30dayscouldnotbeascertained.
21. Depreciation amounting to Rs.438.12 lakhsrelatedtothepreviousyearsfrom1.10.1996to31.03.1999hasnotbeenprovided.
22. The Government of Andhra Pradesh by itsOrderdated13.10.2003throughAbstractfromIndustries & Commerce (Sugar) DepartmenthaspermittedtheCompanytopaythearrearsofPurchaseTaxamountingtoRs.532.57lakhs(which includes a sum of Rs.10.40 lakhs asinterest) in three equal annual [email protected]%p.a.Thecompanyhas sent the request letter to the concernedGovernment Departments to waive off thepurchase tax and interest thereon. In theopinionof themanagement, thecompanywillgetthefavourablereplyfromtheGovernment
27. Thecompanyhasimported44450MTsofrawsugarresultinginanexportobligationof42330MTs.The company has exported 10000 MTs of sugar against this obligation and balance is pendingcompliance.
