To
The Members of
E.I.D.-Parry (India) Limited
Dear Shareholders,
Your Directors have pleasure in presenting the forty-eighth Annual Report together with
the audited financial statements for the year ended March 31, 2023.
|
|
|
|
Rs Crore |
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Revenue from Operations |
2,894.92 |
2,489.43 |
35,243.80 |
23,521.06 |
Gross Revenue |
3,152.95 |
2,772.22 |
35,283.02 |
23,743.78 |
Profit Before Interest and Depreciation (EBITDA) |
526.50 |
491.82 |
3,194.72 |
2,628.74 |
Depreciation |
135.05 |
120.11 |
376.47 |
333.99 |
Earnings Before Interest and Tax (EBIT) |
391.45 |
371.71 |
2,818.25 |
2,294.75 |
Finance Charges |
36.03 |
46.09 |
298.20 |
151.91 |
Exceptional Gains/(Losses) |
(110.91) |
(13.73) |
44.20 |
(13.73) |
Net Profit Before Tax |
244.51 |
311.89 |
2,564.25 |
2,129.11 |
Tax Expenses |
47.69 |
28.39 |
736.51 |
555.41 |
Net Profit After Tax Before Minority Interest |
196.82 |
283.50 |
1,827.74 |
1,573.70 |
Non - Controlling Interests |
NA |
NA |
880.26 |
666.87 |
Net Profit After Tax and Minority Interest |
196.82 |
283.50 |
947.48 |
906.83 |
RESERVES
Your Company has not transferred any amount to the reserves for the year ended March
31, 2023.
SHARE CAPITAL
The paid-up Equity Share Capital of your Company as on March 31, 2023 was Rs
17,75,17,591 consisting of 17,75,17,591 equity shares of Rs 1 each.
During the year, your Company allotted 1,31,066 equity shares of Rs 1 each under the
Employee Stock Option Plan 2016.
CONSOLIDATED OPERATIONS
Consolidated Revenue from operations for the year was Rs 35,244 Crore, as against Rs
23,521 Crore in the previous year. Overall expenses for the year was Rs 32,725 Crore as
against 21,615 Crore (including exceptional items) in the previous year. Operating Profit
(EBITDA including exceptional items) was Rs 3,239 Crore as against Rs 2,615 Crore in the
previous year. Profit after Tax and minority interest for the year was Rs 947 Crore, as
against Rs 907 Crore in the previous year.
STANDALONE OPERATIONS
Standalone Revenue from your Company's operations for the year under review was Rs
2,895 Crore as against Rs 2,489 Crore in the previous year. Operating Profit (EBITDA) was
Rs 527 Crore, as against Rs 492 Crore in the previous year. Profit after Tax for the year
was at Rs 197 Crore as against Rs 284 Crore in the previous year.
During the year under review, your Company delivered a creditable performance: sugar
division profits surged on account of higher realizations from Sugar, Co-generation and
Distillery segments and enhanced process efficiencies along with better recoveries lead to
cost optimization. Higher sales volume in the Retail and Institutional segments
contributed to increased realisations of sugar. Your Company has been able to deliver this
despite an increase in FRP and premature end to the cane season in the State of Karnataka.
This has been due to the ability of your company to leverage its strengths and its ability
to stay agile and resilient in driving profitable growth. The strategic positioning of
your Company's sugar assets and large-scale expansion of ethanol production capacity has
been instrumental in delivering superior results which has been gaining momentum over the
past few years. Focus on execution excellence, repurposing brands and portfolio innovation
has enabled your Company to deepen its competitive strength.
Our reported turnover growth stood at 16%, EBITDA margin at 14% remained healthy, while
our Profit after Tax was Rs 197 Crore and cashflow from operations (after taxes) was Rs
367 Crore. Your Directors were pleased to declare a first Interim Dividend of Rs 5.50 per
equity share and second Interim Dividend of Rs 4.00 per share on a face value of Rs 1 for
the year ended March 31, 2023. The total Dividend for the financial year ended March 31,
2023 amounted to Rs 9.50 per share of face value of Rs 1 each.
We believe that years of industry exposure and long-term farmer relationships have
enriched our ability to grow our business during periods of economic and sectoral
volatility. Our success depends on the ability to innovate, remain competitive and enhance
the consumer relevance of our products. We see a growing trend for consumers preferring
brands that stand for trust and address functional needs and social purpose. We have been
in a commodity space, and we lead the change from the front in terms of shifting the
commodity of sugar into a hygienically packaged food with potential for various value
additions for the end consumer. We enjoy long-standing trust-based relationships with
various categories of consumers. Our endeavor is to ensure that our brands are available
wherever consumers choose to shop. India's retail landscape is rapidly evolving as
technology continues to influence consumer behaviour. The fast-evolving consumers of today
move seamlessly between online and offine channels, seeking convenience, we continue to
augment and enhance our capabilities towards the same.
The Fast-Moving Consumer Goods (FMCG) industry continues to be one of India's biggest
long-term sustainable opportunities. Despite being one of the fastest growing markets
globally for FMCG products, India's per capita FMCG consumption is still amongst the
lowest. Rising afluence, large working population, nuclear family structures, urbanization
and rapidly increasing adoption of technology could catalyse growth of the FMCG industry.
Your Company seeks to enter these high growth specific food segments and capitalize
opportunities by offering customers a range of food products. With a wide range of
products and competent brand management, your Company intends to create a unique
positioning across the geographies of its presence.
Your Company's brand is its strategic asset; our brand connect is not only rational but
also emotional, resulting in superior consumer experience. In line with the aspiration of
establishing itself in food, nutrition and bio energy space, your Company is on an
ambitious journey to tap into the high potential food and sweetener space, with a range of
segment-specific, consumer-driven innovative products.
In a rapidly evolving environment, the ability to attract, develop and retain a
diversely skilled talent will be increasingly critical. Our people are key assets who
deliver around our strategy and enable us to realize our mission. In line with this, we
are equipping employees with requisite skills to adapt to a digitally accelerating and
transforming world. Skill development, capability building and culture embedding
programmes are part of the strategic imperatives that we focused on to build an agile and
empowered people force.
Our governance approach promotes transparency, accountability, and fairness, while
deepening competitiveness to generate long-term shareholder value and foster stakeholder
interests. Our corporate governance practices have helped to us create a well-placed
decision-making system that enables us to incorporate stakeholder expectations and
mitigate risks for e_cacious management and supervision of your Company's business.
The effects of climate change and nature loss are becoming increasingly apparent. Our
stakeholders recognize that responsible business practices are critical to enhancing
long-term value. Your Company is committed to operate and grow the business in a
responsible way. Your Company's farmer-centric approach and promotion of regenerative
agriculture possesses the opportunity to leverage its ESG credentials for benefit of
consumer perception. Your Company's strong governance mechanism consists of cross-
functional steering committees to action ESG commitments. Your Company is driving advocacy
around sustainability and getting broader industry participation to lead the change.
Sustainability is one of our core beliefs and our vision is to generate no adverse impact
on the environment through our operations. To live up to this purpose of creating a
greener future, your company set ambitious milestones towards sustainability.
ECONOMY & INDUSTRY SCENARIO
Global economy
As per the International Monetary Fund's World Economic Outlook, the global economy is
poised for a gradual recovery from the pandemic and Russia's unprovoked war on Ukraine.
China is rebounding strongly following the reopening of its economy. Supply-chain
disruptions are unwinding, while the dislocations to energy and food markets caused by the
war are receding. Simultaneously, the massive and synchronous tightening of monetary
policy by most central banks should start to bear fruit, with inflation declining towards
its target. Fall in the gilt market in the United Kingdom and the recent banking
turbulence in the United States with the collapse of a few regional banks illustrate that
significant vulnerabilities exist among banks and non-bank financial institutions.
IMF forecasted global growth to bottom out at 2.8 percent in 2023 before rising
modestly to 3.0 percent in 2024. Global inflation will decline, although more slowly than
initially anticipated - from 8.7 percent in 2022 to 7.0 percent this year and a projected
4.9 percent in 2024. Notably, emerging market and developing economies are powering ahead,
with growth rates rising from 2.8 percent in 2022 to 4.5 percent this year. The slowdown
is concentrated in advanced economies, especially the Euro area and United Kingdom, where
growth is expected to fall to 0.7 percent and 0.4 percent respectively this year
before rebounding to a projected 1.8 and 2.0 percent in 2024.
IMF expects India to grow 5.9% in FY 2023-24 and by an average 6.1% across five years.
Indian economy
The Ministry of Statistics and Programme Implementation (MoSPI) in its second advance
estimates pegged India's GDP for FY 2022-23 at 7%. The Asian Development Bank (ADB)
projected Indian economy to expand 7% while the International Monetary Fund (IMF) pegged
India's growth at 6.8 percent in FY 2022-23.
As per the Reserve Bank of India, India is expected to record GDP growth of 7.0% for
2022-23, above IMF projections, due to aggregate demand conditions remaining resilient,
supported by a rebound in contact-intensive services. Expectations of a bumper rabi
harvest, fiscal thrust on infrastructure, and revival in corporate investment in select
sectors augur well. In response to monetary policy actions and supply side measures,
headline CPI inflation declined from a peak of 7.8 per cent in April 2022 to 5.7 per cent
in March 2023 and is projected to ease to 5.2 per cent in Q4, 2023-24.
The IMF recognizes that India is shifting towards greater renewable energy generation
while striving to improve energy access, a_ordability, and security. India is also poised
to emerge as one of the fastest growing economies, which could enhance energy demand.
Whether India meets those needs with fossil fuels or green alternatives could influence
the trajectory of greenhouse gas emissions. India made significant progress in meeting
emissions reduction targets under the Paris Agreement, but with current policies total GHG
emissions could increase more than 40 percent by 2030. While a modest increase in
short-term emissions could be necessary to meet poverty reduction and energy security
goals, a more rapid scaling of current policies could help lower emissions considerably
over the medium-term and graduate India closer to net zero by 2070.
While betting on consumption-driven growth, it is obvious that given India's large,
young and rising share of the upper middle-income population (with a high propensity to
spend), investment will play an important role across two years. Investments provide India
with necessary momentum to capitalise on sustained domestic demand-led growth for decades.
The overall outlook for the Indian economy remains positive with investments expected
to see a turnaround and thrust the economy into sustainable growth. India is likely to
grow at a moderate 6.0%6.5% in FY 2023-24 as the global economy continues to
struggle. Growth in the next year could pick up as investments kickstart the virtuous
circle of job creation, income, productivity, demand and exports, supported by favorable
demographics across the medium-term.
Global sugar
Global sugar production in 2022-23 crop year is expected to be 182 MMT, up 1.7 million
tons from the previous year. Global sugar production is heading towards small surplus in
2022-23 and a larger surplus of just over 5 Mn Tonne in 2023-24 as per Czarnikov-Czapp.
Between 2007-08 and 2023-24, there has been consumption growth every year except for 2020,
when the pandemic shut much of the world. Consumption is growing at about 1.5% per year,
slightly faster than population growth, driven by growth from developing countries in
Africa and Asia. India and Brazil, the two largest producers, are contributing to
increased production.
More than 110 countries produce sugar and the size of their contributions is affected
by local politics and economic policy. For example, the war in Ukraine is expected to
reduce that country's sugar beet production by 23% in 2022-2023. Fall in the Indian crop
could impact supply to the global market. So far, the Indian government permitted exports
for 6 million tonnes of sugar, and if the crop does not perform as expected, it is likely
it could halt exports past 6 million tonnes.
Sugar production in Brazil is expected to be around 40.3 million tonnes in the new
sugar season that began in April 2022, the second highest output on record. Mills are
likely to focus on sugar production, lowering ethanol output as the price for the
sweetener SBc1 hovers around the highest in more than six years. It has been projected
that mills could allocate 46.7% of sugarcane to sugar production as against 45.5% in the
preceding season. Sugar production in the Centre-South and the North/Northeast region
could increase by 3.15 million tonnes from the previous crop. Ethanol production in Brazil
is likely to be lower by 1.8 billion litres to a total 33.5 billion litres in 2023/24.
China's sugar production is estimated to fall to 9 million tonnes in 2022-23 season
(October-September), the lowest in seven years. The sugar production is expected to be
less than half a million tonnes compared to the same period last year. As per Czarnikow,
the main reason for the fall in sugar production is the dry weather in the sugarcane
producing province of Guangxi. Their local supply deficit could rise to 6.5 million
tonnes, the second highest due to a poor crop. Sugar consumption increased after the end
of COVID-19 pandemic-related restrictions and it must increase imports of raw and liquid
sugar to meet domestic needs. Czarnikow estimates that China could import 5.4 million
tonnes of sugar in 2022/23. Prices of sugar reached the highest in more than six years in
that country.
Indian sugar market
Next to Brazil, India is the largest global producer of sugar. In India, sugarcane is
produced majorly in nine states, viz. Uttar Pradesh, Maharashtra, Karnataka, Punjab,
Andhra Pradesh, Bihar, Gujarat, Haryana, and Tamil Nadu. It is one of the important
agro-based industries that impacts the rural livelihood of many. Demand for cane and sugar
is increasing in India because of their extensive use in applications like food and
beverages, bakery, confectionery, and others.
Sugar exports and imports
As per Department of Food and Public Distribution (DFPD), during 2022-23 (as on
21.03.2023) India had exported 33.89 Lakh MT of white sugar and 19.22 lakh MT of raw sugar
aggregating 53.11 Lakh MT of sugar. To prevent the uncontrolled export of sugar and ensure
sufficient availability for domestic consumption at a reasonable price, Directorate
General of Foreign Trade (DGFT), Ministry of Commerce vide notification No. 10/2015-20
dated 24.05.2022 amended the export policy with respect to sugar and covered it under the
restricted category w.e.f. 01.06.2022 for 2021-22 sugar season. The Government also
decided to allow the export of sugar up to a reasonable limit w.e.f. 01.11.2022 till
31.10.2023 for the current sugar season. Further, DFPD allocated an export quota of 60 LMT
to sugar mills for sugar season 2022-23 w.e.f. 01.11.2022 along with the guidelines for
the export of sugar.
The import of raw sugar by refineries for refining the imported raw sugar and
re-exporting the same was under Advance Authorization Scheme (AAS). Such import was not
meant for domestic consumption.
Sugar production
Indian Sugar Mills Association (ISMA) in its report revised the estimated sugar
production to 328 Lakh Tonnes of sugar (after diversion for ethanol) between October, 2022
and May, 2023 during the current sugar season as against 358 Lakh tonnes in the same
period last sugar season. This was about 30 Lakh MT lower than previous year's production.
Uttar Pradesh, the Country's largest sugar producer recorded a production of 107 Lakh
MT of sugar during 2022-23 season, after diversion of 14 Lakh MT for Ethanol. The second
largest producer of sugar, Maharashtra, achieved a production of 105 Lakh MT of sugar
after diverting 13 Lakh MT of sugar. Karnataka, the third largest producer of sugar, was
estimated to have produced 57 Lakh MT after a diversion of 10 Lakh MT of sugar to ethanol.
Lower cane yields owing to higher ratoon crop share and uneven distribution of rainfall
caused a lower production in Maharashtra. However, cane yield in Uttar Pradesh bettered
this year.
Considering an opening stock of about 7 Mn Tonnes as on 1st October, 2022
domestic consumption of 27.5 Mn Tonnes, sugar exports of over 6.1 Mn Tonnes and the
estimated sugar production of 32.8 Mn T, the closing stock as on 30th Sep 2023
is expected to be around 6.2 Mn Tonnes. The sugar sales by end of March 2023 is estimated
to be 13.5 Mn Tonnes as against 13.6 Mn Tonnes in the corresponding period last year,
which is higher by 0.75%.
Sugar consumption
The overall estimated domestic sugar consumption was 27.5 MMT in India 2022-23.
Since 2019-20, the sugar consumption volume is gradually increasing. The primary reasons
for increase in demand comprise a growing population and improving economic conditions.
The major consumers of sugar produced directly by mills are bakeries, local sweets and
candy manufacturers and together with soft drink manufacturers, they comprise almost 60%
of consumers. The primary consumers of khandsari are locally operating sweet
establishments, while gur is used in the rural areas, in its standard form, both as a
sweetener and as feed. Manufacturers of biscuits and food products, pharmaceutical
companies, hotels and restaurants also consume a fair quantity of sugar.
The future of the sugar industry appears encouraging; nevertheless, certain concerns
need urgent attention. The Government has always been proactive and supportive of the
industry, keeping in mind the size of the sugar industry and the number of livelihoods
associated with it. However, the focus equally needs to be on addressing problems
connected to Fair and Remunerative Price (FRP) or increase in Minimum Selling Price (MSP)
and cane arrears. In June 2018, the Indian government fixed the MSP of sugar for the first
time at Rs 29 per kg when the FRP of sugarcane was Rs 2,550 per ton. Subsequently, MSP
increased to Rs 31/Kg. However, the FRP has been steadily increasing, while the MSP of
sugar has remained unchanged since February 2019.
The industry has been requesting the Government to increase the MSP for sugar from Rs
31/kg. As per Niti Ayog, Rs 31/kg does not cover the cost of manufacture, given the FRP,
which is at a reasonably high floor. One way of improving mill liquidity is to raise the
MSP of sugar, which could help sugar mills cover the cost of production, including
interest, maintenance costs etc. Keeping in view the emerging developments, the MSP for
sugar needs to be reviewed urgently. To prevent the problem of arrears for sugarcane
farmers and to keep the sugar industry in sound financial health, sugarcane prices must be
linked to the sugar price. The Revenue Share Formula advocated by Dr. Rangarajan Committee
needs to be introduced strictly with a Price Stabilization Fund (PSF) to protect farmers
from receiving prices below the FRP.
Surplus production compels the regular export of sugar. High cane prices make Indian
sugar manufacturers uncompetitive and dependent on government subsidies for exports. With
the probability of export subsidy being phased out after 2023 (as per WTO), Indian sugar
mills need to deal with a formidable problem of diversion of surplus sugar into ethanol to
improve liquidity and check a decline in sugar price.
Government of India - Policies relating to Sugar Industry
1. Fixation of Fair and Remunerative Price (FRP)
Vide Notification No. 3(1)/2021-SP-I dated 17.08.2022, the Fair and Remunerative
Price' of sugarcane that was determined as payable by sugar factories for sugar season
2022-23 was as under: a) Rs 305 per quintal for a basic recovery rate of 10.25%; b) Rs
3.05 premium per quintal for every 0.1 percentage point increase in recovery above 10.25%;
c) proportionate reduction in FRP @ Rs 3.05 per quintal for every 0.1 percentage point
decrease in recovery where the recovery is below 10.25% but above 9.5%. However, FRP is
fixed @ Rs 282.125 per quintal in respect of factories having recovery of 9.5% or less.
2. Green energy
The Ministry of Power (MOP) issued Electricity (Promoting Renewable Energy Through
Green Energy Open Access) Rules, 2022 vide Notification No. GSR 418(E) dated 6th
June, 2022 whereby the consumers will be eligible for green energy open access if they
have contract demand or sanctioned load of 100 kW or more and for captive consumers, there
will be no load limitation. The rules will be applicable for the generation, purchase and
consumption of green energy including the energy from the waste-to-energy projects.
Further, as per the regulations from the date of commencement of these rules, there will
be a uniform renewable purchase obligation on all obligated entities in the area of a
distribution licensee.
3. Use of Jute Packaging material
The Jute Packaging Materials (Compulsory use in Packing Commodities) Act, 1987
specifies the percentage of commodities to be packed mandatorily in the jute packaging
material. As per Notification No. INSP.F-1(3)/2007/VOL.I dated 24th April,
2023, the Central Government prescribed that 20% of the total production of sugar to be
mandatorily packed in the Jute packaging material. However, certain category of sugar is
excluded from the purview of the said reservation viz., (a) sugar fortified with vitamins,
(b) packaging for export of commodities (c) small consumer packs of 25 Kgs and below for
sugar (d) bulk packing of more than 100 Kgs. and (e) sugar packed for export.
4. Production of ethanol
The Department of Revenue Central Excise has issued Notification No. 12/2022 -
GSR 510(E) dated 04.07.2022 with a view to allocate nil duty to a blend of 12% ethanol and
88% petrol as also for the blend consisting of 15% ethanol and 85% petrol. Further, in
supersession of earlier guidelines, the Ministry of Consumer Affairs, Food and Public
Distribution, New Delhi vide notification No.F No.4/1/2018-(BP & E) (Part) dated
11.11.2022 devised detailed mechanism for production of ethanol from B-Heavy, C-Heavy
molasses, sugarcane juice, sugar & sugar syrup and food grains and also to identify
the quantity of ethanol produced from feed stocks.
The Cabinet Committee on Economic Affairs on 02.11.2022 approved higher prices for
ethanol derived from different sugarcane based raw materials under the Ethanol Blending
Programme for the sugar season 2022-23 commencing from 1st December, 2022 to 31st
October, 2023.
5. Scheme for extending financial assistance to set up distilleries
The Central Government with a view to increase production of ethanol and its supply
under Ethanol Blending Programme have been extending financial assistance to sugar mills
& molasses based standalone distilleries for enhancement and augmentation of ethanol
production capacity. During the year, vide Notification No.1 (10)/2018-SP-I dated
22.04.2022 the Government opened a window for six months w.e.f. 22nd April,
2022 under modified scheme dated 14.01.2021 for inviting fresh applications from project
proponents who have acquired land for ethanol project and obtained Environmental Clearance
(EC) for enhancement of their existing ethanol distillation capacity or to set up new
distillery for producing 1st Generation (1G) ethanol from feed stocks such as
cereals (rice, wheat, barley, corn & sorghum), sugarcane (including sugar, sugar
syrup, sugarcane juice, B-heavy molasses, C-heavy molasses), sugar beet etc.
6. Sugar exports
Vide Notification No.10/2015-20 dated 24.05.2022 of the Director General of Foreign
Trade (DGFT), export of sugar (raw, refined and white sugar) was placed under
restricted' category from 1st June 2022 onwards (except fixed quantity of
sugar being exported under CXL and Tari_ Rate Quota (TRQ) to EU and USA). Pursuant to the
aforesaid notification of DGFT, the Department of Food & Public Distribution, New
Delhi in Notification No.1-1/(2022)-SP-I dated 24.05.2022, in order to maintain the
domestic availability and price stability of sugar, commenced monitoring and regulating
export of sugar for a maximum quantity of 100 Lakh MT during sugar season i.e., 2021-22.
Consequently, the Central Government set up Export Release Order mechanism to sugar mills
through National Single Window System (NSWS) Portal.
Further, with a view to prevent uncontrolled export of sugar thereby ensuring
sufficient availability of sugar for domestic consumption at reasonable price, the Central
Government allowed export of all grades of sugar i.e., raw, white & refined sugar upto
60 LMT pro-rated to all sugar mills @ 18.23% of their last 3 years average sugar
production vide DFPD notification No. F. No. 1(1)/2022-Trade dated 05.11.2022 read with
DGFT Notification No. 40/2015-20 dated 28.10.2022.
7. Approval of Amendments to the National Policy on Biofuels - 2018
Due to advancements in the field of Biofuels, various decisions taken in the National
Biofuel Coordination Committee (NBCC) meetings to increase biofuel production,
recommendation of the Standing Committee and the decision to advance to introduction of
Ethanol Blended Petrol with up to 20% ethanol throughout the country from 01.04.2023, the
following amendments were made to the National Policy on Biofuels: a) To allow more
feedstocks for production of biofuels; b) To advance the target of 20% blending of ethanol
with petrol to Ethanol Supply Year ("ESY") 2025 from 2030; c) To promote the
production of biofuels in the country, under the "Make in India" program, by
units located in Special Economic Zones (SEZ)/ Export Oriented Units (EoUs); d) To add new
members to the NBCC; e) To grant permission for export of biofuels in specific cases; and
f ) To delete/amend certain phrases in the Policy in line with decisions taken during the
meetings of NBCC
8. Plastic waste management rules
In view of the phasing out of certain single-use plastic products from July 1, 2022 and
the mandate to increase the thickness of plastic carry bags to over 120 microns from
December 31, 2022 the Union environment ministry vide Notification No 459 dated August 12,
2021 has issued Plastic Waste Management (Second Amendment) Rules, 2022. The rules specify
what are biodegradable plastics and provide a statutory framework for their use as an
alternative material. They provide for levying of penalties or environmental compensation
under the polluter pays' principle on those who do not comply with the rules.
Biodegradable plastics mean plastics other than compostable plastics, which undergo
degradation by biological processes under ambient environment (terrestrial or in water)
conditions.
Sugar industry - Adjacencies
Ethanol
Molasses is a viscous by-product obtained from raw sugar during the manufacturing
process. Cane-based ethanol can be produced in three different ways directly from
cane juice, and from B-heavy and C molasses. The end products (cane sugar and the
molasses) could be used to produce ethanol. The difference lies in the quantity of ethanol
produced. One tonne of cane can produce 10.8 litres of ethanol if it is produced from
molasses. On the other hand, the same cane can produce 84 litres of ethanol, if used
directly as an input. The Government of India (GOI) launched the Ethanol Blending
Programme (EBP) on a pilot basis, which was subsequently extended to the notified 21
States and 4 Union Territories to promote the use of alternative and environment-friendly
fuels. The programme is a part of the long-term strategy to reduce India's dependence on
crude imports and insulate the nation from global oil price volatility as well as give the
domestic sugar sector a boost by diverting excess sugar stocks towards ethanol
manufacture. This high-value product has gained a reputation for being a cleaner fuel;
hence, it is also called a biofuel. All countries. including Brazil, divert cane sugar
towards ethanol production. Brazil launched its first ethanol policy way back in 1975.
Indian gains however rely on Brazil's decision to opt for ethanol or sugar in a particular
season, depending on which is more profitable. When Brazil increases ethanol production,
Indian exporters gain; otherwise, the surplus supply to the global market pulls down sugar
prices, adversely affecting Indian exporters and millers. Brazil has attained this freedom
because of the huge investment in ethanol equipment and storage facilities made by
millers, unlike India, which still lags without such facilities. Brazil diverts 55% of its
sugar cane to biofuel, whereas there is nothing fixed in India.
India opted for a National Policy on Biofuels in 2018, which targets 20% blending of
ethanol in petrol by 2030. In order to boost country's ethanol production, the Government
approved 362 projects with an investment of Rs 18,600 Crore for enhancing additional
ethanol production capacity of 400 Crore litres in the next two years. This will take
total ethanol production capacity to 755 Crore litres, which will help the country achieve
20 percent ethanol blending with petrol by 2030. All these moves are aimed at diverting
sugar to ethanol production. This industry can be expected to become more profitable in
the near future, as economies return to normalcy and demand for crude oil surges.
Ethanol is an attractive option for three reasons. First, its demand cuts across
several industries. It is used as an additive in automotive gasoline, a solvent in organic
chemicals, it is finding space in the chemical industry and is used as an intoxicating
agent in beer, wine, and other alcoholic beverages. Now, ethanol is mixed with petrol as
well.
Secondly, it will relieve the Government from the compulsion of subsidizing exports.
That amount can be allotted to some other productive sector and the sugar industry can
become less dependence on Government Support.
Thirdly, this will save India from allegations at the WTO that its subsidy program is
trade distorting a claim made by countries like Brazil, Australia, and Guatemala in
WTO regarding New Delhi's sugar subsidies in 2019.
With increase in blend levels and higher use of ethanol, there is a need to increase
ethanol storage capacities at depots of oil marketing companies (OMCs) across the country.
The Indian railway network must build the necessary infrastructure and pipeline while OMCs
need to make relevant changes at retail pumps /stations for dispensing higher ethanol
blended petrol as well as pure ethanol.
Cogeneration
Bagasse is the _brous matter that remains after sugarcane stalks are crushed to extract
their juice and is a by-product generated in the process of manufacture of sugar. It can
either be sold or be captively consumed for generation of steam. It is currently used as a
biofuel and in the manufacturing of pulp and paper products and building materials. The
bagasse produced in a sugar factory is however used for generation of steam which in turn
is used as a fuel source and the surplus generation is exported to the power grids. For
every 10 tonnes of sugarcane crushed, a sugar factory produces nearly 3 tonnes of wet
bagasse. Since bagasse is a by-product of sugarcane, the quantity of bagasse production in
the country is in proportion to the quantity of sugarcane produced.
The power produced through cogeneration substitutes the conventional thermal
alternative and reduces greenhouse gas emissions. In India, interest in high-e_ciency
bagasse-based cogeneration started in the 1980s when electricity supply started falling
short of demand. High-e_ciency bagasse cogeneration was perceived as an attractive
technology both in terms of its potential to produce carbon-neutral electricity as well as
its economic benefits to the sugar sector. In the present scenario, where fossil fuel
prices are skyrocketing and there is a shortage, co-generation appears to be a promising
development. The thrust on distributed generation and increasing awareness for cutting
greenhouse gas emissions increases the need for cogeneration.
The electricity production through cogeneration in sugar mills in India is an important
avenue for supplying low-cost, non-conventional power. However, several financial,
regulatory and technical challenges are required to be overcome for realizing this
potential.
BUSINESS OVERVIEW
Sugar
The success of the sugar business depends on the sugarcane availability and sugar cane
quality. During the year, the sugarcane availability in Tamil Nadu (TN) units was better
compared to the previous year. The thrust on cane development activities initiated by your
Company, including encouraging the farmers in various ways in all command areas, helped to
increase the sugarcane availability. In TN, there was an improvement in cane crushed at
22.60 LMT as against 18.06 LMT in the previous year due to increased cane availability.
The average recovery recorded was at 9.33% as against 9.42% in the previous year.
During the year, the units in Karnataka reported lower crushing at 24.57 LMT compared
to 27.39 LMT in the previous year due to delay in start at Haliyal because of farmer
agitation and early closure of the crushing season. The average recovery was at 11.89% as
against 11.52% in the previous year. The centralized Harvesting and Transportation
(H&T) planning and execution for all the three units of KN facilitated smooth
inter-unit movement and reduced yard balance, vehicle waiting hours and ensured continuous
cane supply, all of which have resulted in higher recovery.
With respect to the Andhra Pradesh (AP) unit, the cane crushed was 4.63 LMT as compared
to 4.77 LMT in the previous year. The average recovery was at 10.19% as compared to 10.03%
in the previous year. The recovery improved due to the increased percentage of raw sugar
production, reduced process losses by consistent crush rate and also due to HSV varieties
as well as supply of quality seeds through clean seed program. Added to this, the
favorable agro-climatic condition during the year facilitated the increase in recovery.
Your Company's core objective has always been farmer prosperity. It is deeply involved
in cane development, examining cane varieties, and identifying the ones that will result
in maximum yield and recovery. Our deep-rooted relationships with farmers, which we
continued to actively nurture through strategic interventions and investments, will be a
major factor in boosting our crushing volume, and resultantly our production.
Over the years, several initiatives have been taken by your Company including,
incentivizing farmers for cane planting, supply of clean seed, providing clean seedlings
through entrepreneurs and resources for drip and micro irrigation, and facilitating the
various agronomy services through agencies and Agri service providers. Your Company
provides technical know-how to help in increasing the yield per acre, through the right
application of fertilizers and other nutrients to the soil. To interact with farmers
throughout the life cycle of cane crops, the Farmer Connect App has been effectively
utilized and a large number of farmers have been registered by using the app. The
initiative of Call Centre for Cane operations has been established to reach farmers, and
through this app, the cane and extension teams are in constant touch with the farmers
during the entire life cycle of the crop and assist the farmers immediately as and when
the need arises. Your Company's prompt cane payment before the statutory deadline of 14
days has helped your Company procure cane till the end of the season across all units and
instil confidence in farmers.
Your Company has built a remarkable relationship with all the farmers in its command
area and is attractively positioned to maximize farmer value. The Company remunerates
farmers around a standard payment cycle, strengthening the farmer's trust and income.
Manufacturing operations
Your Company's sugar units strictly adhere to best-in-class manufacturing processes and
quality benchmarks. The state-of-the-art six manufacturing units, equipped with
best-in-class equipment and streamlined processes, are located strategically in the
sugarcane-rich belt areas. The units are equipped with latest technological equipment and
analytical labs to ensure the highest levels of product quality in a safe, healthy and
clean environment as the Company supplies sugar to major multinational soft drink
companies, leading confectionery manufacturers and pharmaceutical companies. The Company
continues its journey towards achieving manufacturing excellence by a focused thrust on
TPM deployment, optimising process efficiencies and enhancing operational safety,
environment and quality standards. An accelerated drive across the value chain to improve
operational efficiencies, reduce cost and eliminate wastage has been adopted across
functions and processes to raise execution excellence metrics.
Our manufacturing facilities are eco-friendly and meet emission and discharge norms and
water and energy conservation efforts have been taken to continually improve performance.
Our plants have safety and environment management systems and periodic performance
assessments take place to ensure sustenance. Proactively, some factories have obtained ISO
14001 Environment system certification and are equipped with state-of-the-art pollution
control measures such as an incineration facility to manage spent wash as stipulated by
regulatory authorities.
The Company continued to pursue its strategies to optimise efficiencies, reduce costs,
eliminate wastage and achieve stretch targets for growth. Even as your Company continues
to focus on capacity and efficiency enhancement, it aims to ramp the diversification of
the sugar portfolio. Some initiatives undertaken during the year, were as follows:
Sankili
Replacement of water panels in Co-gen boilers.
120 KLPD new distillery was commissioned with syrup.
DS3 Nucane analyser was commissioned. 2000 Mts of Nucane sugar was produced as per
the marketing requirement.
Conversion from quintuple to sixtiple evaporation with suitable vapour _ashing
system for steam reduction and diverting more than 50% of syrup to ethanol production.
Pugalur
E_ciency parameters
Achieved sugar recovery of 9.73%
Cane crushing of 9.27 LMT after 2012-2013 (11.75 LMT)
Crushing operation days achieved 263 days after 2012-2013 (296 days)
Sugar quality
Insoluble matter (ISM) achieved 45 ppm, the best-ever by installation of Clear
Juice _lter.
Zero iron particles were achieved in sugar through the installation of 6-layer
Eriez magnets in the FG line.
Certifications
The following certificates were obtained first time for Pugalur:
FSSC 22000 V5.1 certificate
MUI Halal certificate
KOSHER audit completed
Sivaganga
Sivaganga unit received ISO 45001:2018 certification from TUV SUD certification
body, the first certification for the Sivagangai unit.
Ramdurg
750kW motor for _berizer was replaced with 1000kW motor for better preparation of
cane and achieved crush rate up to 5000 MT per day consistently.
Haliyal
Installed 1800cum/hr of condensate polishing unit and completed the erection works.
This will be commissioned in FY 23-24
18.5MW turbine commissioned successfully and generated the rated capacity
100TPH boiler and 18.5MW turbine achieved MCR.
27996KL of rainwater harvested and used for plant operations.
Bagalkot
Amrit sugar (20TPD) project completed and successfully commissioned All the units
of the Company have received the ISO 45001:2018 Certification from TUV SUD.
Sales and marketing
The consumer goods landscape is changing rapidly with new technologies bringing
opportunities for brands and consumers alike. Consumers are shopping through varied
channels; smaller local brands as well as digital-first brands are increasingly entering
the market. In these times, your Company needs to continue remaining agile to enhanced
brand propositions and marketing investments to increase adoption in underpenetrated
categories. The company is a market leader in packaged sugar segment in South India,
marketing its products under its iconic brand Parrys'. The Company is poised to
significantly scale its retail business with a pervasive distribution network, increasing
the volume proportion sold in the institutional and retail segments.
The Company continued its strong performance in the Retail and Institution segment with
stringent quality systems, global certifications, high standards of hygiene and process
and robust ability to customize products for the customers. The Company continues to hold
the leadership share in many customer segments and today supplies to industries operating
in various categories like beverages, foods, confectionery, dairy, bakery, and
pharmaceuticals. The Company's premium brand Parry instils confidence and trust among
consumers and continues to drive volumes. Trademarks and brands are considered to have an
indefinite life, given the strength and durability for which there is no foreseeable
limit. The Company proposes to seize this opportunity. Going forward, the Company proposes
to maximize growth by prioritizing the focus areas and ramping up availability of products
and brand presence across categories and population strata.
The trend towards healthy eating was accentuated in the last few years as the pandemic
enveloped the country. In response to this, the Company focused on providing healthy
eating options through its Low GI sugar called Sweet Care'. With the power of seven
herbal extracts, Sweet Care is a clinically tested Low GI Sugar (Glycemic Index < 55)
that supports a healthier diet. The Company also signed a commercial partnership agreement
with food technology company, Nutrition Innovation Singapore Pte Ltd ("Nutrition
Innovation") to create innovative sugar solutions like Nucane Low GI Sugar.
This low GI raw sugar utilises natural occurring polyphenols in cane sugar that have been
scientifically proven and independently tested to consistently lower the glycemic response
of sucrose. The partnership with Nutrition Innovation provides the Company unique access
to Nucane Low GI Sugar technology to produce a new specification of naturally low glycemic
raw sugar which complements and extends the existing range of products and supports the
growing global trend for less processed, less refined, brown sugars.
The Company has been conscientiously working on evolving several approaches to meet the
changing aspirations of the consumers and customers, which will ultimately lead to
increasing the volumes sold in institution/retail segments, de-risking from the
cyclicality of the sugar business. The Company's focus in strengthening its presence in
the retail market in branded sugar is going to pay dividend in terms of benefit from
higher and more stable pricing with healthy long-term prospects and a more stable
realization for its sugar.
Quality
During the year, the Pugalur unit was for the first time accredited with certification
for food safety management systems consisting of ISO 22000:2018, ISO/TS 22002-1:2009 and
additional FSSC 22000 requirements (Version 5.1). Bagalkot and Pugalur for the first time
undergone external audits and Certified for MUI Halal and Kosher standards.
Nellikuppam, Bagalkot and Sankili undergone recertification audits and were accredited
with FSSC 22000 version 5.1 from the DNV Certification Body. Nellikuppam unit was also
recertified for ISO 9001:2018 Quality Management System by the said certifying body.
Nellikuppam and Haliyal Unit's, Kosher certifications, SMETA 6.0 (Sedex Members Ethical
Trade Audit) were recertified.
The Nellikuppam Refinery Unit continues to manufacture in compliance with Government
excipient guidelines as prescribed for drug manufacturing customers, including
accreditations of Indian, European, United States, Japanese and British Pharmacopeia; it
renewed its cGMP license.
During the year, the quality function facilitated the production of NUCANE, a Low GI
Brown sugar from Sankili Unit and was instrumental in starting third party units at Hosur,
Gummudipundy and in Thindivanam. In order to improve, implement Food Safety Culture and
systems, 17 Leaders were trained on the standards of food safety management systems
consisting of ISO 22000:2018, ISO/ TS 22002-1:2009 and additional FSSC 22000 requirements
(Version 5.1) with the help of external certification body DNV.
Integrated Management System Certifications, which include Quality Management System
ISO 9001:2015, was recertified for the Sankili unit.
Your Company's focus was on the retail and institutional customers. It strengthened
monitoring and reviews of quality system in alignment with its focus.
World Quality Week is an annual campaign celebrated by the Units, which raises
awareness of the quality management across our organization. This year, from 7-11
November, our focus will be on Quality Conscience.
Quality management is not only about designing and improving the quality of products
and service, but also about the methods organisation's employ to deliver them to customers
and stakeholders across their value stream. This year's World Quality Week theme provided
an opportunity to reflect on how the corporate culture and conscience can help an
organization make decisions and do the right thing' for all stakeholders.
Research & Development (R&D) and Extension Services
R&D is making continuous efforts on looking at the potential to improve sugarcane
varieties suitable for Parry mills agroclimatic conditions, and to withstand water stress.
The research team explores the opportunities to do this through a breeding process called
introgression, which would bring in genetics from wild relatives of sugarcane. Apart from
captive breeding program, R&D centres are part of national varietal test program and
conducting trials to select varieties from Government research stations through AICRP (All
India Coordinated Research Program). Tissue culture continues to play an increasingly
significant role as a source of clean seed planting material for the Parry sugarcane mill
areas. Farmers and cane team use this technology to help boost productivity and to ensure
that farmers are using disease-free planting material. To continue sustainable sugarcane
production, R&D is collaborating with international institutions to develop crop
models, conduct trials and develop rural entrepreneurs. To predict the farm level cane
yield, the Company is leveraging crop data, meteorological data, ground truthing data and
remote sensing satellite imagery to combine and verify AI-based algorithms used in digital
technology solutions. The aim of this project is to standardize sugarcane harvesting
schedule based on crop maturity, improving sugar content recovery at all sugar mills. It
is a paradigm shift to move from manual estimation to AI & data-based analysis of
yield forecasting and sugar content prediction to plan crushing days.
To reduce irrigation water and optimize the cost of inputs to farmers, research &
cane team make good initiatives to develop entrepreneurs through suitable training to take
up seedling production and ensure the distribution by robust logistic methods. The
Company's farmers in the past two decades are producing pesticide-free sugarcane and
bio-control agents to support this sustainable model. To achieve this model, rural
entrepreneurs are producing biocontrol agents and distributing to farmers and a research
team back-up for production technologies.
Drone use in agriculture is gaining momentum and through this R&D could establish
precision spraying of agrochemicals to optimize quantity of chemicals applied, reduce the
cost of spraying and conserve water use in fields. This also encourages farmers to adopt a
safer and precise way to spray chemicals while saving time to complete the activity.
To leverage information technology, the company introduced the farmer connect app, a
multi-lingual, mobile app that provides online guidance to farmers and a Call Centre for
Cane Operations to assist farmers through the entire life cycle of sugarcane. Crop Doctor
App, a comprehensive mobile app was launched for understanding crop-related issues, status
of crop and planting, assessing cultivation requirements, explaining sustainable
agricultural practices, pest and disease management, supply of agri inputs and seeds,
addressing various grievances etc.
With generous financial contribution from the Group, R&D and the cane team
initiated Project Nanneer to save water and recharge ground water in Erode, Karur and
Cuddalore districts to support farmers and ensure water availability during summer.
Sugar division performance
Operational performance
Particulars |
2022-23 |
2021-22 |
Cane Crushed (LMT) |
51.81 |
50.21 |
Recovery % |
10.62 |
10.63 |
Sugar Produced (LMT) |
4.93 |
4.83 |
Power Generated (Lakh Units) |
5,026 |
4,112 |
Alcohol Produced (Lakh Litres) |
1,073 |
779 |
Sugar sold (LMT) |
5.19 |
4.95 |
Financial Performance Rs Crore
Particulars |
Sugar |
Cogen |
Distillery |
Total |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Revenue |
2,025 |
1,833 |
253 |
163 |
644 |
491 |
2,922 |
2,487 |
EBITDA** |
219 |
151 |
12 |
15 |
60 |
68 |
291 |
234 |
The sugar segment constituted the largest share of Company's revenues. The segment
contributed 70% of the Company's turnover during FY 2022-23, as against 74% during FY
2021-22. Revenues from sugar segment during FY 2022-23 were Rs 2,025 Crore as against Rs
1,833 Crore in FY 2021-22.
Segment-wise Performance & Operational Highlights
Sugar
The Company has six sugar plants with a combined capacity of 40300 TCD. During the
year, the total cane crushed in Tamil Nadu plants increased to 22.60 LMT as against 18.06
LMT in the previous year. The average gross recovery was at 9.33% as against 9.42% in
2021-22.
Crushing in the Company's Sankili plant at AP was 4.63 LMT as compared to 4.77 LMT in
the previous year. The average gross recovery was at 10.19% as against 10.03% in the
previous year. The total cane crushed by the units in KN was at 24.57 LMT as against 27.39
LMT in the previous year, with average gross recovery at 11.89% as against 11.52% in the
previous year.
The overall cane crushed by the Company was 51.81 LMT in 2022-23 as against 50.21 LMT
in the previous year. The weighted average gross recovery of the Company was at 10.62% as
against 10.63% in the previous year.
During 2022-23, your Company produced 4.93 LMT and sold 5.19 LMT of sugar as against
4.83 LMT and 4.95 LMT respectively in the previous year.
Power cogeneration
Your Company possesses an aggregate cogeneration capacity of 140 megawatts. Your
Company exports nearly 54% of the power generated. The cogeneration segment accounted for
6% of your Company's revenues. During the year, revenues from the segment stood at Rs 253
Crore as against Rs 163 Crore in 2021-22.
Tamil Nadu
The units in Tamil Nadu generated 2,099 Lakh units and exported 1,085 Lakh units of
power during the year as against 1,655 units and 820 Lakh units respectively in the
previous year.
Karnataka
The power generated and exported by the Karnataka plants stood at 2,485 Lakh units and
1,473 Lakh units as against 2,140 Lakh units and 1,169 Lakh units respectively in the
previous year.
Andhra Pradesh
The unit in Sankili generated 443 Lakh units and exported 198 Lakh units as against 317
Lakh units and 114 Lakh units respectively during the last year.
Distillery
At the beginning of FY 2022-23, the Company had five distilleries located at Sankili,
Haliyal, Nellikuppam, Bagalkot and Sivgangai, engaged in the production of industrial
alcohol and ethanol with a cumulative capacity of 297 kilolitres per day. During the year,
the Company completed the erection and commissioning of a new 120 KLPD green field
multi-feed distillery at Sankili, increasing alcohol production capacity to 417 KLPD.
The entire distillery capacity of the Company is dedicated towards production of
ethanol & ENA (Extra Neutral Alcohol). During the year, the Company commenced
activities for setting up a 120 KLPD distillery at Haliyal. The Plant is expected to be
commissioned and fully operational during the last quarter of the FY 2023-24. With this
the total Distillery Capacity of the Company will be increased to 537 KLPD.
The distillery segment contributed 22% of the Company's revenues as against 20% in FY
2021-22. Revenues from the distillery segment during FY 2022-23 stood at Rs 644 Crore as
against Rs 491 Crore in FY 2021-22.
The Company's alcohol production saw an increase to 1073 Lakh liters in FY 2022-23 as
against 779 Lakh liters in FY 2021-22.
Expansion of the existing distillery capacities and setting up of new capacities are
part of the Company's strategy for enhancing the ethanol stream as a revenue earner,
subject to sustained availability of molasses.
Performance Analysis, Opportunity & Threats
The Company is a large integrated sugar producer and possesses one of the largest sugar
manufacturing capacities in South India with aggregate crushing capacity of 40,300 TCD,
Co-generation plant of 140 MW and distillery at 417 KLPD at the close of the year under
review. The sugar business was the largest within the Company, generating value for
downstream segments like ethanol and co-generation. The Company operates seven
manufacturing plants in Tamilnadu, Karnataka and Andhra Pradesh, proximate enough to
generate economies of cane procurement and byproduct utilization. For the FY 2022-23, the
Company posted higher operating margins and revenue driven by overall stable performance
of its sugar segment on the back of higher sugarcane crushing volume. Additionally,
improvement in higher retail/institutional and export sales contributed to the improved
performance.
The government regulates the sale of sugar, cane pricing and trade in sugar, which is
an essential commodity. The government is empowered to fix the price paid to cane growers
annually. Cane forms over 90% of the cost of producing sugar. Sugarcane pricing is
controlled through FRP. While the cane price is driven by the government, sugar price
always remains volatile and based on open market prices (which are dependent on the
production levels) leading to volatility in Company's profitability. Besides, the
government regulates domestic demand-supply through restrictions on imports and exports,
and stock holdings. Regulatory mechanisms and dependence on monsoons have always rendered
the sugar industry cyclical.
During the ongoing season, sugar production is expected to be around 32.8 MMT driven by
healthy crushing by all major sugar producing states. The per capita sugar consumption of
India is lower than other developing countries. Industrial consumption that accounts for
65% of total sugar consumption is expected to rise steadily by 2% in SS 2023 and 2.4% in
SS 2024, led by a surge in demand from the hotels, restaurants, cafes (HORECA) and
chocolates and confectionery segments. Household consumption accounting for 35% of total
sugar consumption is expected to rise by 1% in SS 2023 as sugar is already a highly
penetrated product. Direct consumption refers to household demand and consumption under
the public distribution system. The former is determined by a fluctuation in the price of
alternative sweeteners, i.e. jaggery and khandsari and population growth. Household sugar
consumption is expected to increase at a steady rate of 1.5-2% in line with population
growth over the next five years. While industrial growth is majorly led by HORECA, there
has been a consumption pattern shift after the pandemic, where consumption of go-to food
items, especially gourmet food like chocolate and confectionary is increasing. In SS 2024
when industrial consumption will cross the highest consumption before Covid-19, HORECA
consumption will still be at a lower base. This consumption will be led by increasing the
share of bakery and confectionary.
The area under sugarcane cultivation for Sugar Season 2022 had expanded by 2% to 5.4
million hectares, which is expected to grow by an additional 4% in SS 2023. With increased
cane area, cane production is expected to rise ~5% owing to higher yields. Despite higher
cane acreage and cane production, sugar production is expected to fall due to higher
diversion of cane towards ethanol production. Almost 4 million MT worth of sugar will be
diverted towards ethanol production in SS 2023 as compared to 3.5 million MT in SS 2022.
By SS 2025, ethanol production of 6 million MT worth of sugar is expected, and so in SS
2024, the diversion of cane towards ethanol production would only increase, leading to
further controlled sugar inventory. Increased cane acreage and a rise in yields
(especially in Maharashtra) is expected to lead to a rise in sugarcane production by 5%.
With increased diversion of cane towards ethanol, sugar production is expected to fall.
The government's ambitious ethanol blending program has provided stability and revived
the sugar industry. Currently 65% of ethanol is coming from molasses whereas 35% is coming
from grain. Furthermore, the launch of E-20 materials and ethanol engine-compatible
vehicles by the government will provide demand impetus for ethanol. The 10% blending
target has been achieved and the installed capacity is 1,000 crore liters. To achieve a
20% blending target, the capacity required shall be 1,700 crore liters and hence, there is
sufficient headroom to add incremental capacities. Government subsidies consisting of
interest subvention and increase in ethanol prices, shall support the capex cycle. Sugar
used for ethanol results in a faster cash conversion cycle. Initially, sugar production
used to take 4 months and sales realization was 14 months, however, following the ethanol
programme, sales realization is 3-4 weeks, supporting healthy conversion. Increasing focus
of the government on ethanol blending as evidenced by advancement of ethanol blending rate
of 20% to 2025 (from earlier 2030) and increase in ethanol prices resulted in an
improvement in profitability of the distillery segment of sugar players. The Company's
major push to enhance its ethanol manufacturing capacities by 240 KLPD, with overall
distillery capacities increasing from 297 KLPD to 537 KLPD by end of 2024, is expected to
emerge as a major revenue and profitability driver.
After recording high exports of sugar at over 11 Million MT in SS 2022, inventories
fell to a two-month worth of consumption in SS 2022. In SS 2023, with exports coming down
by 40%, inventory is expected to increase to at least 2.5 months' worth of consumption,
which will lead to almost stable sugar prices. While the current sugar prices are
prevailing above MSP, an increase in MSP would provide stability to sugar millers against
fluctuations in market prices. The expectation of MSP at Rs 3,300-3,500 per MT shall
provide support and stability to sugar millers in terms of margins and profitability.
Optimum inventory levels shall enable stable domestic prices. Procurement shall be around
Rs 1.2 lakh crore worth of cane from farmers, and industry is expected to supply around Rs
30,000 Crore worth of ethanol hence balance Rs 90,000 Crore worth of cane dues has to be
paid from liquidation of sugar inventories. If MSP is not commensurate with cane prices,
cane arrears will increase. If MSP is revised by the government in the light of
inflationary pressures, profitability shall improve.
Global sugar prices (raw sugar) moved up to 18.4 cents/lb in July 2022 from the range
of 15~16 cents/lb in 2021. The surge in these prices was aided by a lower sugar production
in Thailand and EU. Considerable increase in crude prices increased aggressive sugarcane
diversion towards ethanol by Brazil. Sugar production in Brazil is expected to decline
moderately in SS 2022 as mills are expected to divert higher amount of cane towards
ethanol production. This will restrict the global supply of sugar in the market even
though Thailand and Brazil will enhance sugar output in SS2023. Due to remunerative
prices, total sugar exports from Indian exceeded 11 MMT in SS2022. Export in SS 2023 is
expected to moderate to 7-8 MMT with increased contribution from Thailand and Brazil in
the global export markets.
There has been a significant improvement in the financial risk profile of the Company,
with consolidated debt reduction of Rs 527 Crore during the last three years which led to
better than anticipated debt protection metrics. This was possible through proceeds of Rs
835 Crore received from sale of 4% stake in subsidiary, Coromandel International Ltd (CIL)
and better cash generated from operations. Overall, debt reduced to Rs 508 Crore as on
March 31, 2023, from Rs 1,035 Crore as on March 31, 2020. The debt levels have
significantly reduced despite the expansions in Bagalkot, Sankili and Haliyal plants.The
capex for distillery capacity expansion at Sankili is complete. In the near term, your
Company will continue to incur routine maintenance capex and while further expansion of
distillery capacity Haliyal is underway, debt levels are expected to be maintained at a
moderate level over the medium term. The Company derives substantial financial flexibility
from its subsidiary Coromandel International Ltd (CIL), which has a healthy dividend track
record. On a standalone basis, the Company's liquidity is adequate, with improvement in
operating cash flow, access to large unutilized bank lines, and steady dividend inflows
from the subsidiary CIL. Additionally, the company has strong refinancing ability as
demonstrated in the past by its ability to monetize non-core assets including land, which
is expected to enable it to overcome any cash flow mismatches, if any, in the future.
Accruals are expected to be sufficient to meet debt repayments, largely related to
distillery loans.
The Company's operating profitability will continue to improve due to the shutting down
of loss-making plants in Tamil Nadu and shifting of capacity to Karnataka, increased
thrust on ethanol operations and other value-added segment and, more importantly, the
integrated nature of operations. The Company believes that a better contribution from the
distillery business and higher margin from value-added segments will help offset modest
contribution from domestic sugar operations, resulting in improving cash generation. The
improvement in business performance resulting in healthy cash generation aided by
continued improvement in sugar operations and better contribution from by-products and
ethanol facilities, sustaining debt at lower level, which along with better cash
generation, will improve key credit metrics. However, any decline in sugar prices or
sizeable increase in cane prices may impact operating profitability and cash generation.
Large scale, integrated operations with the power and distillery business along with
nutraceuticals provide a moderate cushion from cyclicality in the sugar business. After a
decline in sugar crushing in Tamil Nadu in the past three to four years due to weak
monsoons, cane availability has improved in FY 2022-23 due to normal monsoons, and
increased cane area allocation. This coupled with enhanced capacity in Karnataka with
higher recovery and abundant cane availability is expected to benefit the sugar business
in the coming seasons. Though issues with cane availability and volatile sugar prices had
led to moderation in the Company's performance in the past years, the Company has
consolidated its market position in the sugar business with a large foray into retail and
institutional segments and higher distillery capacities, leveraging the strength derived
from integrated nature of operations with diversified revenue profile, financial
flexibility, and moderate though improved financial risk profile. These strengths are
partially offset by the susceptibility of its business performance to downturn in the
sugar business and regulatory changes in the sugar industry.
Company's performance and outlook
Cane cultivation in the Company's command area is expected to improve and the company
is expected to crush slightly higher levels in the next FY. The current realization of Rs
35.98/kg is expected to continue for the next financial year. Demand is expected to be
steady across the medium term. Contribution from the retail channel is expected to
increase in the next FY. Your Company is planning to reach almost 200,000 retail outlets
in South India by 2025. The company commissioned a new distillery of 120 KLPD capacity at
Sankili in Andhra Pradesh and in Q4, FY23 it started production. Your Company is
commissioning another 120 KLPD capacity at Haliyal, which is expected to start production
by Q4 FY24. This additional capacity is expected to produce 3.6 crore liters of ethanol by
FY24. Revenues are expected to remain stable in the next FY with increasing consumption in
household and commercial segments; operating profitability may improve slightly in
2023-24. Lower carryover stocks and a higher diversion of sugar for ethanol impacted
exports this FY; exports are likely to remain largely range bound in the next FY, assuming
normal production. The Company expects to register moderate growth during FY 2023-24 due
to a better realization from sugar, alcohol and power. Retail and institutional segments
are expected to register higher growth over last year with the Company foraying into
various value-added sugar products at a larger scale than the previous year. Institutional
sales, which account for 3.5% of the company's sugar volume, may show improvement with
higher demand from end-user industries due to the increase in sugar consumption across
spectrum of industries. Besides, revenues from distillery operations are also expected to
be higher due to additions of capacity and higher off-take for blending of ethanol with
petrol by oil refining companies.
Sugar prices could remain firm in the international and domestic markets with lower
sugar output in the country and diversion to ethanol and available export opportunities.
Apart from higher sugar and distillery revenues, the closure of loss-making plants in
Tamil Nadu, with the expectation that there will not be any increase in cane procurement
cost, is expected to support the operating profitability over the medium to long term.
NUTRACEUTICALS DIVISION
Industry overview
The global supplement market is forecasted to be around $200 billion for FY'23,
constituting of Functional Foods (30%), Functional Beverages (40%), and Dietary
Supplements (30%). Your Company operates in the Dietary supplement category under the
segment of Herbal and Traditional Medicines.
The US Nutraceutical market continues to hold the largest share, representing 35% of
the global consumption while China, is the second largest supplement market accounting for
nearly 15% of the global share. The Western EU market had degrowth in demand due to war
influenced inflationary trends. Accounting for 12% of the total share, European market
driven by an ageing demographics and with trends preferring supplements for healthy aging
is expected to revive the growth in future.
The dietary supplement market had phenomenal double-digit growth during COVID. However
due to recessionary trends in the North America and Western Europe, the market has slowed
down in 2022-23 and expected to rebound again in 2024. The inventory bullwhip effect
across the value chain has led to slow down for many brands in 2022-23. Brain health,
immunity, digestive health, plant-based, organic stewardship, renewable and sustainable
sources are major trends. Consumers continue to prefer natural and botanical options over
pharmaceutical and invasive procedures.
The global nutraceutical ingredients sector in the Dietary supplements, where the
Company is operating, is estimated to have remained at $12 billion in 2022. While the
micro algae segment accounts for 4% at $500 million, the plant botanical saw palmetto
extract, where the Company has a strong presence, accounts for another 1% of the market at
$120 million. Both segments are expected to revive in the next two years by returning to
healthy growth rates.
Business review
The Company overcame recessionary trends in the Nutraceutical markets and retained its
leadership position in the premium organic Spirulina market. The manufacturing
infrastructure was enhanced with technological innovations for improving productivity
along with maintaining high quality standards. The last few years of perfecting the
chlorella cultivation with superior nutritional profile has enabled us to develop a new
customer base in US market. Significant investments in science have been made in the
development and validation of benefit claims. The pioneering efforts in science validation
of micro algae could enable us to consolidate and enhance our global leadership position
as a premium organic Spirulina and Chlorella producer.
During the year, the business complied with all certifications and standard
requirements for quality, safety and environmental systems. The business complied with all
organic scope certificates. During the year; annual USP Ingredient Verification Process
and BRCGS Food safety programs were also completed.
The Company's wholly owned subsidiary, US Nutraceuticals Inc. (Valensa) maintained its
market position in Saw Palmetto-based products by increasing sales with key customers and
strengthening the supply chain operations..
Outlook
As a result of increasing awareness on health especially after the COVID impact,
dietary supplements are helping immunity and wellness, which is expected to increase
market demand. There is a significant shift in the attitude of consumers towards natural
products backed with scientific evidence in improving nutrition and wellness. There is
significant growth in plant-based ingredients like super foods and protein blends catering
to wide customer segments, including younger consumers. The products addressing specific
consumer needs like protein, digestive health, microbiome support, immunity, energy etc.
have found increasing traction. Your Company, with the portfolio of plant-based
ingredients and botanical extracts, is expected to do well in the future. To be a part of
this exciting industry growth journey, investments in sustainable manufacturing and new
product development with scientific claims are being made .
COMPANY FINANCIAL PERFORMANCE (STANDALONE)
Revenue |
|
( Rs Crore) |
BUSINESS SEGMENTS |
2022-23 |
2021-22 |
Sugar |
2,025 |
1,833 |
Cogen |
253 |
163 |
Distillery |
644 |
491 |
Sugar Total |
2,922 |
2,487 |
Nutraceuticals |
55 |
64 |
Total |
2,977 |
2,551 |
FINANCIAL OVERVIEW
Networth
The Net worth as on March 31, 2023 was Rs 2,882 Crore as against Rs 2,760 Crore as on
March 31, 2022. Capital Redemption Reserve remained unchanged during the year.
Borrowing
The total borrowings of the Company increased from Rs 104 Crore in 2021-22 to Rs 508
Crore in 2022-23. The Long-Term Debt is 0.05 times of equity as against 0.04 times of
equity in the previous year. Working capital borrowing utilized was Rs 353 Crore as on
March 31, 2023 as against Rs 4 Crore in previous year.
Fixed Assets
During the year, the company incurred Rs 153 Crore as additions to Fixed Assets as
against Rs 252 Crore during the previous year.
Investments
The total investment of the Company as at March 31, 2023 was Rs 992 Crore as against Rs
1,119 Crore in FY 2021-22. The reduction was majorly on account of provision for
impairment in value of investment in subsidiaries and joint venture to the tune of Rs 155
Crore net off investment made of Rs 9 Crore and increase in fair value of investments by
Rs 19 Crore.
Rating
The Company's longterm rating was upgraded from CRISIL AA- (Positive outlook) to CRISIL
AA (stable outlook) in 2022-23 and short term rating was maintained at A1+ (CRISIL and
CARE).
Book Value and Earnings per Share
Book Value of shares of the Company was Rs 162 per share as on March 31, 2023 as
against Rs 156 per share as on March 31, 2022. Earnings per share was Rs 11.09 per share
for the year ended March 31, 2023, as against Rs 16.00 per share for the year ended March
31, 2022.
EBIDTA
The Earnings before Interest, Depreciation, Tax and Amortization (excluding exceptional
items) for the year was Rs 527 Crore representing 18% of total revenue (excluding
exceptional revenue) as against Rs 492 Crore representing 20% of the total revenue in the
previous year.
EBIT
EBIT for the year was Rs 391 Crore (excluding exceptional items) as against Rs 372
Crore in the previous year 2021-22.
Finance Charges
Finance Charges for the year 2022-23 was at Rs 36 Crore as against Rs 46 Crore in the
previous year 2021-22.
Depreciation
Depreciation for the year 2022-23 was at Rs 135 Crore as against Rs 120 Crore during
the previous year 2021-22.
PBT
Profit Before Tax for the year was at Rs 245 Crore (including net exceptional loss of
Rs 111 Crore) as against Rs 312 Crore (including net exceptional loss of Rs 14 Crore) in
the previous year 2021-22.
PAT
Profit After Tax for the year was at Rs 197 Crore as against Rs 284 Crore in the
previous year 2021-22.
RATIOS |
|
|
Particulars |
2022-23 |
2021-22 |
Key Financial Ratios |
|
|
EBIDTA / Sales % (Operating Profit Margin) |
14.42 |
19.44 |
PAT / Sales % |
6.83 |
11.53 |
PAT / Average Equity % (ROE) |
6.98 |
10.59 |
Key Capital Structure Ratios |
|
|
Net Debt / Equity Ratio |
0.18 |
0.04 |
Outside Liabilities / Net worth |
0.38 |
0.48 |
Net Fixed Assets / Net worth |
0.47 |
0.47 |
Debt Service Coverage Ratio |
13.01 |
3.44 |
Interest Service Coverage Ratio |
11.53 |
10.37 |
Liquidity Ratios |
|
|
Current Ratio |
1.68 |
1.30 |
Inventory Turnover Ratio (times) |
1.96 |
1.89 |
Trade Receivables Turnover Ratio (times) |
16.43 |
14.38 |
Earnings and Dividend Ratios |
|
|
Dividend % |
950 |
1100 |
Earnings Per share (H) |
11.09 |
16.00 |
Book Value Per share (H) |
162.36 |
155.73 |
P / E Multiple |
42.26 |
28.28 |
In accordance with the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (Listing Regulations), the Company is required to give details of
significant changes (change of 25% and more as compared to the immediately previous
financial year) in key financial ratios.
Ratios where there has been significant change from the financial year 2021-22 to
2022-23:
Decrease in Operating Profit Margin, PAT / Sales %, Return on Equity and Earnings
per Share is mainly on account of exceptional item of impairment loss in the current year.
The increase in Current Ratio is on account of the increase in Trade Receivables
and reduction in Cane bills.
The increase in Debt Equity Ratio is on account of higher debt due to increased
short term borrowings.
The increase in Debt Service Coverage Ratio is due to lower repayments of
borrowings.
RISK MANAGEMENT
The global volatility and uncertainty in the year 2022-23 was driven by the war in
Ukraine, tensions with China, supply chain disruptions, trade tensions and risk of global
recession. Navigating the geo political conflicts, supply chain woes, hybrid work
environment, large scale lay-o_s, organizations of all sizes had to learn to be more
resilient to survive and thrive. A resilient organization also recognizes opportunities to
view risks in terms of their potential to drive performance and go beyond.
A robust Risk Management Framework is in place and operating in the Company to
identify, assess, and evaluate business risks & opportunities. The Framework defines
the Risk Management approach across various levels of the organization, thus enabling the
organization to detect risks, identify & adopt mitigating strategies, and achieve
business objectives with minimum adverse impact. These are discussed with the Risk
Management Committee on a periodic basis. The Company has engaged a reputable Consulting
firm to further strengthen the existing Risk Management Framework.
Risk Category |
Risk |
Mitigation Plan |
Raw Material Availability |
Due to adverse weather conditions, non-availability of water, pests and diseases
outbreak and farmers switching to alternate crops for higher remuneration, etc.,
availability of sugarcane may be impacted thereby diminishing profitability. |
The Company connects with farmers continuously by educating them on scientific and
sustainable sugarcane cultivation methods besides providing them high yielding sugarcane
seeds / saplings that give better yield. The Company also promotes mechanized harvesting
for timely harvesting and for making sugarcane a profitable crop by yield improvement. The
Cane team is working on reducing the cost of cultivation and increasing the yield per
acre, thereby enhancing the income for the farmer. |
|
|
The Company uses the Farmers Connect' app for better interaction and speedier
support to the farmers. The Company enjoys a good brand value and trust amongst the
farming community by ensuring timely payments and through regular interaction with them
through village meetings, and personal care initiatives. The Company enjoys a preferred
partner status with the farming community for sugarcane supply. The R&D initiatives of
the Company provides control measures to mitigate and contain pests and diseases. |
Water availability and Management |
Water availability - Safe water resource management and groundwater recharge
efficiency |
Project Nanneer was launched by the company with AMM Foundation, as a CSR initiative,
to rejuvenate seven water bodies in Sivagangai and Pudukkottai, two of the most water
de_cient districts in Tamil Nadu. It provides relief to close to 2,000 farming families,
ensuring an incremental 1 billion litres of water in the local water ecosystem, up from
just 200 million litres. |
|
Non availability of water due to monsoon failure Ground water depletion Poor quality
of ground water |
|
|
|
For the Nutraceutical business, measures have been taken to treat wastewater, maintain
downstream water quality and minimize groundwater in_ltration to minimize damage to
aquatic ecosystems. Water conservation project has been taken up with the AMM Foundation.
Additional water storage facilities have been created for storing of water and rain water
harvesting at many places in the plant. |
|
Water management - Nutraceuticals - No space to divert the excess _ltrate, hence
increase in water levels of the ponds resulting in low quality and productivity. |
Lagoon desilting and bund strengthening: With this exercise in FY 2019-20 and FY
2021-22, the Company has enhanced the Oonaiyur lagoon capacity to hold 100LL of excess
water. |
|
|
In FY 2021-22, the Company constructed a pond with a holding capacity of 50LL in
Non-Uniform Sampling Method (NUSM). In addition, at NUSM, the Company has raised the
center wall height of all the 26 operating ponds from the existing 30 CM to 50 CM, which
avoids early pond closure during unprecedented rainfall. |
Raw Material Pricing |
The Central and State Governments decide sugarcane prices in a manner that is not
linked to sugar prices. Unviable sugarcane prices may impact the profitability of the
Sugar division. |
The Company works towards developing appropriate policy recommendations to
represent the industry needs to the Government through its membership in Indian Sugar Mill
Association (ISMA) and the South Indian Sugar Mills Association (SISMA). |
Sugar price |
Increase in FRP without proportionate increase in MSP increase affecting
profitability. |
Business has been increasing its sales volume in Institutional and Retail segment
where Sugar is sold at a premium over the Trade channel. This coupled with value-added
products such as Amrit and Jaggery which is sold at better realization is helping us to
improve our overall price realization despite no increase in MSP by the Government. |
|
|
The business is also expanding its distillery capacity where the segment quotes a
higher premium |
Shortage of harvesting labour |
Non-availability of migrant labour for cane harvesting. |
Deployment of local harvesting labour and self harvesting. |
|
|
Farmers are being encouraged for wider row planting and for increasing the share of
mechanised harvesting. |
Business continuity during pandemic |
Talent wellness and business continuity during Covid pandemic |
Business Continuity Manual is fully implemented across the organization by
institutionalizing the Prevention, Management & Sustenance module (PMS) for COVID
Management across the company. |
|
|
All the local notification as per the Disaster Management Act 2005 complied with. |
|
|
Organized "Swayam Suraksha Abhiyan" (SSA) across the company which has
helped to vaccinate 98.14% of employees. |
|
|
Prepared and implemented onsite COVID Emergency preparedness & response plan at
all locations |
|
|
Rapport and network with healthcare institutions and Corporate insurers to handle
COVID emergencies |
Employee Health & Safety |
Unsafe practices and work environment leading to safety risks that threatens employee
well being |
Budget for One Time Expenditure for Environment and Safety has been allocated and
resources are being mobilized by the Company. |
|
|
Capability building exercises are planned and carried out around Behaviour safety at
all levels. Road map is laid out for all locations to elevate to Established levels by
2026-27. |
Investment |
The Company has invested in Parry Sugars Refinery India |
Safety Drive through Benchmarking tool is deployed at all units to govern different
management systems like Action Tracking System (ATS), Incident & Measurements,
Inspection tool, Safety Observations & Concern reporting Periodical review mechanism
is in place to monitor |
|
Private Limited, a wholly owned subsidiary. |
the investment risk of the portfolio of assets and to oversee the strategic decision. |
|
Any non-performance of the invested entity will have a risk of sub-optimal return on
investment. |
Greater focus on other possible revenue streams to mitigate from operational
challenges. |
Cyber security |
The Company may encounter non-availability of service or failure of multiple systems
which may lead to disruption in business operations due to lack of adequate processes,
cyber security, back-up and disaster recovery systems. |
Information Systems, Backup and Disaster Recovery Policies and periodical review of
the same are in place. Robust Firewall and Security Event Information Management Systems
are in place to monitor all types of security breaches and to take corrective measures.
Further, user awareness about cyber security risks are being spread by periodical
training/information through emails, etc. |
|
Risks may be encountered in a pandemic like COVID-19 scenario due to a possibility of
remote workforce, work- from-home options (WFH), unsecure platforms, network connectivity
threats, risks due to increased VPN and mobile device usage for work, etc. |
Provided rental / own device systems with adequate software. |
|
|
Secure connection (VPN Virtual Private Network) is made mandatory for accessing
applications from remote location. |
|
|
All servers are monitored through SIEM tool (Security Information and Management
Tool). Logs are analyzed by Murugappa group information security team. |
|
|
All meetings/conferences are being conducted through licensed secured collaboration
tool (Microsoft Office 365). Blocked freeware tools like ZOOM, etc., |
|
|
Phishing emails are getting monitored by security team, if any such incidents are
identified. |
Regulatory |
The Company is required to comply with laws such as Companies Act, SEBI Regulations
and the laws pertaining to contract labour, taxation, foreign exchange, import &
export, health, safety and environment etc. Failure to comply with these regulations could
result in penalties and reputational damage. Pandemic like COVID-19 could bring about
regulatory changes which could result in operational interruptions, business restrictions. |
A comprehensive e-compliance management system has been deployed across the company to
manage the compliance of all applicable statutory regulations. Further, respective
functional teams track the changes to applicable regulations across various jurisdictions
and functional areas and update the e-compliance management system, in addition to
creating awareness of the changes across the respective functions. |
|
|
The Company is in the process of implementing a new E-Compliance tool to stay abreast
with changing legislations and improve the overall compliance governance structure. |
INTERNAL FINANCIAL CONTROLS
The Company has aligned its current system of Internal Financial Control (IFC) with the
requirements under the Companies Act, 2013 (the Act). The Company has established a robust
framework of IFC which includes entity level policies, processes, and operating level
standard operating procedures. The Company has a well-established process and clearly-
defined roles and responsibilities for people at various levels.
The Company's internal controls are adequate with its size and the nature of its
operations. These have been designed to provide reasonable assurance with recording and
providing consistent financial and operational information complying with the applicable
statutes, safeguarding assets from unauthorized use, executing transactions with proper
authorization, and ensuring compliance with policies. Processes for formulating and
reviewing annual and long-term business plans have been laid down. The Company uses a
state-of- the-art enterprise resource planning (ERP) system SAP, as a business enabler to
record data for accounting, consolidation, and management information purposes.
The Company has increased the use of technology, data analytics and electronic paper
work including the adoption of an agile Internal Audit plan. The internal audit is
conducted based on the annual audit plan which is reviewed and approved by the Audit
Committee. The Internal Audit reports are presented to the Audit Committee on a quarterly
basis for review and deliberation. The Internal Audits were carried out by the Inhouse
Management Audit team, which is ISO 9001:2015 certified. From Q4 of FY'23 onwards, the
Company has engaged a reputable consulting firm to carry out Internal Audits.
The Management has assessed the effectiveness of the Company's internal control over
financial reporting as of March 31, 2023 and found the same to be adequate and effective.
The Company carried out its internal audit with both in-house and outsourced Internal
Audit teams thus leveraging the business knowledge and process inherent within the
organization while combining it with the expertise of the outsourced auditors in
specialized areas.
SUBSIDIARY COMPANIES
There has been no change in the business of the subsidiaries during the year under
review. In accordance with Section 129(3) of the Act, the Company has prepared
consolidated financial statements of the Company and all its Subsidiary Companies, which
forms part of the Annual Report. A statement containing the salient features of the
financial statements of the subsidiary companies, joint ventures and associates are given
in Annexure-A to this Report.
In accordance with the provisions of Section 136(1) of the Act, the Annual Report of
the Company containing the standalone and consolidated financial statements has been
placed on the website of the Company, https://www.eidparry.com/ Further, the audited
accounts of the Subsidiary Companies and the related detailed information have also been
placed on the website of the Company https://www.eidparry.com/financials/ The annual
accounts of the Subsidiary Companies will also be available for inspection by any
shareholder at the registered office of the Company during working hours up to the date of
the Annual General Meeting. A copy of the annual accounts of the subsidiaries will be made
available to shareholders seeking such information at any point of time.
Parry Sugars Refinery India Private Limited (PSRIPL)
During FY 23, increasing refined sugar demand and export restrictions/low operating
rates at some key refineries led to a surge in white premium, to record levels in the
first half of the year. Announcement of Indian exports, as well Indian mills preference to
export refined and low-quality whites (LOWs) than raw sugar, led to a fall in white
premiums in second half. Refined sugar futures price remained inverted throughout the year
indicating supply tightness. PSRIPL continues to be globally renowned as an efficient
re-export refiner of sugar, offering a range of quality products for international trade
and institutions. PSRIPL managed to convert some of its institutional supply into break
bulk and recorded its highest ever sale of sugar to institutions. Sales volumes increased
to 7.18 L MT in comparison to 6.23 L MT in FY22. Consequently, turnover increased to Rs
2870.20 Crore in FY 23 from Rs 2005.62 Crore in FY 22. Sharp increase in energy prices and
interest rates increased refining costs substantially. PSRIPL was able to mitigate most of
this impact by sourcing Indian Raw/LQWs and improving operating efficiencies. Softening of
energy and material costs will help PSRIPL in keeping costs in control, whilst increasing
sugar prices and interest rates are challenging operating costs in FY 2024. Increasing
white premium will help PSRIPL counter these escalations in costs during the year FY 24.
Improvement in container availability will help in restoration of container business
volumes.
During the year, PSRIPL incurred a loss of Rs 253.58 Crore on account of delay in
clearance of shipments consequent to accidents at PSRIPL's factory and increased refining
costs. Parry International DMCC, a wholly owned subsidiary of PSRIPL based out of Dubai
recorded a trading revenue of AED 4.39 Million and a loss of AED 0.82 Million.
The Company has made a valuation of PSRIPL and accordingly has made an impairment of Rs
105.96 Crore of its investment in PSRIPL during the year 2022-23.
US Nutraceuticals Inc.
During the year, the Company's wholly owned subsidiary US Nutraceuticals Inc. achieved
sales of US$ 29 million as against US$ 33 million in the previous year. In the core Saw
Palmetto Business, the company consolidated its market position by achieving a significant
growth of 25% over the last year. The formulation business of joint health was revived and
exhibited good growth. The investments in Science and B-C marketing efforts is expected to
increase the Company's participation in the larger value pool of the US Dietary
supplements market.
Alimtec SA
Alimtec was formerly owned by Bayer AG and was acquired by the Company in 2014. Alimtec
grows Algae Haematococcus pluvialis, which is sold exclusively to US Nutraceuticals Inc
(Valensa) (wholly-owned subsidiary of the Company).Valensa extracts Carotenoid
Astaxanthin, a powerful antioxidant which gets formulated as a key ingredient for their
Joint health product portfolio for the US market. At the time of acquisition of Alimtec,
Astaxanthin in its earlier phase of introduction was in severe short supply and the demand
was outstripping the production capacity. Astaxanthin was then a key raw material for
Valensa for its Joint Health portfolio, and hence ensuring access to Astaxanthin through
acquisition of Alimtec became strategically important. Alimtec has a capacity to produce
algae equivalent of 300 kg Astaxanthin/annum (7.5 % of the global production capacity of 4
MT per annum at the time of acquisition). Technological changes in the Algae production
from open ponds to automated Photo Bio reactors (PBR) has changed the value proposition in
terms of productivity, quality and cost position. Increase in global capacity to
10MT/annum by players with superior manufacturing technologies has resulted in excess
supply compared to the demand requirements. Global prices have reduced from $16000/kg in
2014 to the current rate of $7000/ Kg. The new industry structure is more in favour of
high volume, technologically advanced players. Alimtec's cost of manufacturing Astaxanthin
is $7500 per Kg as compared to the prevailing market price of $ 7000 per Kg. As additional
capacities are being built for Astaxanthin with the latest PBR technologies, it is
expected that the prices to remain stable in the range of $7000 to $7500/kg for the next
few years.Valensa being one of the largest consumers for Astaxanthin, would be able to
source Astaxanthin at a competitive rate from the market which would be equal to or lesser
than the current cost that is being incurred by Alimtec. With these changes in the market
scenario, the need to have a backward integrated supply chain involving cultivation of
Algae has become less relevant for the successful growth of Valensa. As Alimtec's
operation is no longer viable, Alimtec propose to discontinue its operation w.e.f. 31st
May 2023. The Company propose to sell its entire stake in Alimtec or dissolve Alimtec as
per the procedure/Law laid down in Chile. The Company has made an impairment of its entire
investment of Rs 26.40 Crore in Alimtec during the year 2022-23.
Coromandel International Limited (CIL)
CIL delivered a robust performance during FY2022-23 registering strong growth in
turnover and profitability with its diversified portfolio of Nutrients, Crop Protection,
Bio Products and Retail business. The manufacturing plants maintained high levels of
efficiency while prioritizing the safety of their operations.
With a view to strengthening its upstream integration capabilities and operational
flexibility, the company undertook strategic investments in Nutrients and Crop Protection
businesses. The Company acquired a 45% stake in Baobab Mining and Chemicals Corporation
(BMCC), a rock phosphate mining company in Senegal. It also made technology &
sustainability led investments in three Ag-tech startups.
During the year, eight new products were launched in the domestic market to meet the
agricultural needs of farmers.
In addition, two new agrochemical technicals were commercialized during the year. The
Company continued its integrated crop management approach and worked closely with the
value chain players to ensure timely availability of agri inputs and services to the
farming community.In terms of financial performance, CIL's consolidated total income grew
by 55% to reach Rs 29,799 Crore, EBITDA grew by 34% to reach Rs 3,073 Crore, EBITDA margin
was at 10% and net profit improved by 32% to reach Rs 2,013 Crore for the year. Net
debt-equity ratio stands at zero as of 31st March 2023.
Merger of Subsidiaries
During the year, the Board of Directors of the Company's Subsidiaries Parrys
Investments Limited (PIL), Parrys Sugar Limited (PSL), Parry Agrochem Exports Limited
(PAEL) and Parry Infrastructure Company Private Limited (PICPL) at their meetings held on
September 5, 2022 approved the Scheme of amalgamation of PIL, PSL and PAEL with Parry
Infrastructure Company Private Limited (PICPL), subject to approval of the Hon'ble
National Company Law Tribunal, Chennai (NCLT) under Section 230 and 232 of the Act. All
the said subsidiaries have filed application before the NCLT for approval of the Scheme of
Amalgamation.
JOINT VENTURE COMPANY
Algavista Greentech Private Limited (AGPL)
The Company's joint venture Algavista Greentech Pvt Ltd. developed various grades of
Natural blue color (Phycocyanin) through specific
manufacturingprocesses,enablingAGPLtocatertodifferentproduct specification requirements of
the market. With these efforts, AGPL enlarged its customer base and built business
relations with major colour distributors and food manufacturing companies. In addition to
the colors segment, Phycocyanin continued to be promoted as a nutraceutical ingredient
based on its superior anti-in_ammatory properties. The development of Nutraceuctical
segment with relevant scientific claims would provide a new platform of growth for AGPL.
To improve its manufacturing capability, AGPL has been constantly working to improve
productivity with lower cost of production. AGPL's strong engagement with major global
customers is expected to turn into sustainable sales in the coming years. Over the years,
AGPL has not been performing well due to the lower market price of phycocyanin. Initially,
at the time of project initiation, AGPL had assumed a price of $250 per Kg for Phycocyanin
after benchmarking the market rate of $250 to $300 per Kg (in 2017-18). In the last couple
of years, the market dynamics has changed in terms of supply of Phycocyanin due to the
entry of Chinese players who have extended their portfolio from Spirulina to Phycocyanin
(downstream processing). As per the current market scenario, the supply of Phycocyanin is
almost double i.e. 600 MT against a demand of 300 MT annually across the globe. This huge
gap in supply and demand created a surplus of Phycocyanin and therefore the market prices
crashed from $250 per Kg to nearly about $100 per kg in the last couple of years. The
current prices offered by majority of the companies from China to Color Houses is in the
range of $90-$130 per Kg. This has adversely affected the operations of AGPL. AGPL
incurred an accumulated loss of Rs 45.55 Crore as on 31st March 2023. The
Company has made a valuation of AGPL and accordingly has made an impairment of Rs 22.75
Crore of its investment in AGPL during the year 2022-23.
HUMAN RESOURCES
Employees are the most valuable asset. At EID Parry, our people bring dynamism, energy
and ideas every day to not only deliver product and service excellence, but also play a
significant role in helping fulfil our aspirations. We focus on nurturing and developing
human talent that delivers quality products, manufacturing excellence, continued growth,
customer delight and business leadership. Parry's People vision of Building
Organizational Capability to deliver superior business performance' is delivered by a high
level of policy deployment initiatives and contemporary HR practices focusing on four key
imperatives: Talent Wellness, Capability Development, Employee Engagement and Business HR.
Talent wellness is a priority at Parry. In FY 22 - 23, a significant emphasis was laid
on improving the health cum wellness of employees and their families through annual
medical checks, screening camps, and health promotional activities. Your Company extended
above and beyond guidelines as per law. For instance, life insurance, health coverage and
accident leave benefits were provided to all employees. Canteens provided nutritious food
at all factories and corporate office.
The Company enables every employee to achieve high standards of performance and take up
challenging goals by institutionalizing Competency Development Framework. The Company
scales up capabilities across various functions by creating specialist knowledge / subject
matter experts in sugar, distillery, cogeneration and value-added products to enhance
efficiencies. Interventions were rolled out in enhancing the capabilities of executives,
especially the leadership team, through individual development plans, leadership coach
accreditation program, etc.
The Company is committed to build the Best Employer' brand for the organization
and most importantly, provide a happy, nurturing ecosystem for the employees, an
ecosystem, that is not only empowering, but also builds capabilities to help them to meet
the challenges of a fast changing, dynamic, world environment. The Company believes that a
motivated employee with a passion for innovation in a given environment of learning and
growth would engage and succeed in all initiatives.
As on March 31, 2023, the total number of permanent employees on the rolls of the
Company stand at 2230. Industrial relations remained cordial at all the Company's units
during the year under review.
Prevention of Sexual Harassment at Workplace Policy
The Company has in place a policy on the prevention of sexual harassment in line with
the requirements of the Sexual Harassment of Women at the Workplace (Prevention,
Prohibition and Redressal) Act, 2013. An Internal Complaint Committee is in place to
redress the complaints received regarding sexual harassment. All employees are covered
under this policy. During the year, One Complaint was received and acted upon.
AWARDS & ACCOLADES
During the year, the Company received the following Awards.
1. Nellikuppam Unit received the SISSTA Best Distillery Silver Award in the Tamil Nadu
region for the year 2021-22.
2. Nellikuppam Unit was awarded "ENERGY EFFICIENT UNIT" at 23rd
National Award for Excellence in Energy Management contest held at New Delhi
3. Nellikuppam Unit received award in Silver category from CII for Best commitment in
practicing the EHS
4. Sankili unit won Gold Award for Best Technical efficiency Sugar Plant, Gold award
for "Best Distillery plant", Silver award for Best Cogen plant from South India
Sugar Cane and Sugar Technologies Association (SISSTA) and Bronze award on EHS
Excellence Category from CII
5. Haliyal unit was awarded second place under the category of Best Cogen Boilers for
FY 2022-23 by Director of Factories & Boilers, Karnataka
6 The Company was honoured with "Most Iconic Organisation Award" on 11th
May 2023 at Coimbatore Leadership Awards in appreciation of the best practices followed by
the Company in HR Strategy, promoting future ready business practices, best employee
recognition programs to retain talented resources, encouraging diversity and inclusion at
workplace and for being a responsible Corporate Citizen by implementing impactful CSR
Initiatives across the manufacturing facilities.
During the year, the Company and Leaders received the following Awards:
Mr. S Suresh, Managing Director won the Best CEO - Agriculture & Allied award at
the 10th edition of the Business Today-PwC India's Best CEO Awards, BTMindrush
2023.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per the provisions of Section 152 of the Act read with the Articles of Association
of the Company, Mr. M.M. Venkatachalam, (DIN: 00152619) Director, retires by rotation at
the forthcoming Annual General Meeting and being eligible offers himself for
reappointment. The requisite details in this connection are provided in the Notice
convening the meeting and in the Corporate Governance Report. The Board of Directors at
their meeting held on June 30, 2022 on the recommendation of the Nomination and
Remuneration Committee and the shareholders at their meeting held on August 9, 2022
approved the appointment of Ms. Meghna Apparao (DIN: 09201659) as a Non-Executive,
Independent Director with effect from July 1, 2022 for a period of five years.
The Board of Directors at their meeting held on March 31, 2023 on the recommendation of
the Nomination and Remuneration Committee and the shareholders vide their resolution dated
May 7, 2023 through postal ballot approved the reappointment of Mr. Ajay B Baliga (DIN:
00030743) as a Non-Executive, Independent Director, with effect from May 9, 2023 for a
period of five years.
Mr. V. Manickam (DIN: 00179715), Non-Executive, Independent Director completed his 2nd
term as an Independent Director of the company and ceased to be a member of the Board with
effect from July 29, 2022.
The Company has received declarations from all the Independent Directors confirming
that they meet the criteria of independence as prescribed under section 149(6) of the Act
and comply with Regulations 16 & 25 of the Listing Regulations.
Mr. S. Suresh, Managing Director, Mr. A. Sridhar, Chief Financial Officer and Mr. Biswa
Mohan Rath, Company Secretary, are the Key Managerial Personnel of the Company as per
Section 203 of the Act.
Number of Meetings of the Board
Eight Meetings of the Board of Directors were held during the year, the details of
which are given in the Corporate Governance Report.
Board evaluation
The performance of Committees of the Board and also the directors individually was
evaluated in accordance with the Act and Listing Regulations. The manner in which the
evaluation was carried out and the process adopted has been given in the Corporate
Governance Report.
Policy on Directors' Appointment and Remuneration and Other Details
The Board has on the recommendation of the Nomination and Remuneration Committee (NRC),
framed a policy for the selection and appointment of directors, senior management and the
criteria for determining the qualifications, positive attributes and independence of
directors, including fixing their remuneration.
The Remuneration Policy and criteria for Board nominations are available on the
Company's website at https://www.eidparry.com/
wp-content/uploads/2023/02/Remuneration-Policy.pdf
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) and 134(5) of the Act, your Directors, to the best of their
knowledge, belief and according to information and explanations obtained from the
management, confirm that:
In the preparation of the annual accounts for the financial year ended March 31,
2023, the applicable accounting standards have been followed and there are no material
departures therefrom.
they have 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 as at March 31, 2023 and of the profit of the
Company for the year ended on that date; they have taken proper and sufficient care for
the maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities.
they have prepared the annual accounts on a going concern basis.
they have laid down proper internal financial controls to be followed by the
Company and such controls are adequate and operating effectively and they have devised
proper systems to ensure compliance with the provisions of all applicable laws and that
such systems are adequate and operating effectively.
AUDITORS AND AUDITORS' REPORT
Statutory Auditors
M/s. Price Waterhouse Chartered Accountants LLP, (FRNo.012754N/ N500016) Chennai, were
appointed as Statutory Auditors of the Company by the shareholders at the 47th
Annual General Meeting held on August 9, 2022 to hold office up to the conclusion of the
52nd Annual General Meeting.
There are no qualifications, reservations or adverse remarks or disclaimers made by the
Statutory Auditors on the financial statements in their report for the year 2022-23.
Cost Auditors
In terms of Section 148 of the Act, read with Rule 8 of the Companies (Accounts) Rules,
2014 and the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time,
cost audit is applicable to company's businesses of sugar, distillery, and cogeneration of
power. The accounts and records for the above applicable businesses are made and
maintained by the Company as specified by the Central Government under sub-section (1) of
Section 148 of the Act.
The Board of Directors, on the recommendation of the Audit Committee, have appointed
M/s Narasimha Murthy & Co, Cost Accountants, as the Cost Auditors to audit the cost
accounting records maintained by the Company for the financial year 2023-24 on a
remuneration of Rs 8,50,000 (plus out of pocket expenses and applicable taxes).
A resolution seeking members' rati_cation for the remuneration payable to the Cost
Auditor forms part of the notice convening the Annual General Meeting.
The cost audit report for the financial year 2021-22 has been filed with the Ministry
of Corporate Affairs. The cost audit report for the financial year 2022-23 would be filed
with the Ministry of Corporate Affairs as per the provisions of the Act.
Secretarial Auditors
The Board appointed M/s. R Sridharan & Associates, Practicing Company Secretaries,
Chennai as the Secretarial Auditors to undertake the Secretarial Audit of the Company for
the year 2022-23. The Report of the Secretarial Auditors is provided in Annexure-B
to this Report.
There are no qualifications, reservations or adverse remarks or disclaimers made by the
Secretarial Auditors in their report for the year 2022-23.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's CSR initiatives primarily focus on improving the quality of life of the
communities where it operates, through socio-welfare initiatives. The various CSR
initiatives undertaken by the Company during the last financial year include the
following:
Healthcare: The Company pursues a well-managed health care programme across its
units, providing medical amenities for people living in neighbouring villages.
Hospital on Wheels', a well-equipped mobile unit with diagnostic and medical
intervention amenities makes emergency care possible for people living in remote areas
while mobile medical units attend to the needs of the elderly in the cane growing villages
around the Units. In addition to the comprehensive health and medical care programs, due
to the sudden surge of Covid in a second wave, a special focus was given to Covid
prevention initiatives across our factory locations such as providing sanitisers in the
neighbouring communities, installing oxygen plants in nearby Government Hospitals,
vaccinating Harvesting Gangs and their family members, supporting the local Public Health
Centres by providing medical equipment and infrastructure to handle the Covid-positive
patients. Medical camps were conducted offering health check-ups and free medicines for
cane growers, harvesting and transport labourers.
Education / Skill Development: As an important part of its CSR program, the Company
promotes education in the neighbouring villages near its units. Besides contributing to
infrastructure building and facility upgradation at schools, the Company provides
educational assistance to cane growers' children and participates in their developmental
needs.
Mid-day meals for Balwadi school children of labourers and women skill development
programmes are few of the ongoing initiatives.
Rural Development and Eradicating Hunger: The Company has always played a key role
in extending support to villagers. As a part of rural development and hunger eradication
initiatives, food and grocery items were provided to the needy people in the nearby
communities. Community development works were also undertaken in the villages in and
around the units. As a part of its Rural Development program, the Company improved public
roads in the nearby villages, extended support to water management projects and undertook
the desilting of ponds and canals to augment the water supply to villages and schools.
The Company constituted a CSR Committee in accordance with Section 135 of the Act. The
CSR Committee has formulated and recommended to the Board, a CSR Policy indicating the
activities to be undertaken by the Company, which has been approved by the Board. The CSR
Policy can be accessed on the Company's website at
https://www.eidparry.com/wp-content/uploads/2023/03/CSR-Policy.pdf As per the provisions
of the Act, the Company was not required to spend any amount towards CSR for the year
2022-23. However, the Company has been actively involved in various CSR initiatives and an
amount of Rs 237 Lakh was spent towards CSR activities during the year 2022-23. The Annual
Report on CSR activities is given in Annexure-C to this Report.
RELATED PARTY TRANSACTIONS
All contracts / arrangements / transactions entered into by the Company during the
financial year with the related parties were on arm's length basis and were in the
ordinary course of business. There were no materially significant related party
transactions with promoters, directors, key managerial personnel or other designated
persons, which may have a potential conflict with the interest of the Company at large.
During the year, the Company has not entered into any contracts or arrangements with
related parties as referred to in sub-section (1) of Section 188 of the Act.
Accordingly, the disclosure of related party transactions as required under Section
134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for FY 2022-23 and
hence does not form part of this report.
All Related Party Transactions are placed before the Audit Committee for approval.
Prior omnibus approval of the Audit Committee is obtained on a yearly / quarterly basis
for the transactions which are of a foreseen and repetitive nature. The transactions
entered into pursuant to the omnibus approval so granted are placed on a quarterly basis
before the Audit Committee for their review.
The policy on Related Party Transactions as approved by the Board is available at the
web link: https://www.eidparry.com/wp-content/
uploads/2023/02/Policy-on-Related-Party-Transactions.pdf
EMPLOYEE STOCK OPTION SCHEME
The Company had in the past approved an Employee Stock Option Scheme 2007 (ESOP Scheme
2007), under which employees were granted Options. The Company made grants under the said
Scheme from 2007 to 2011. There were no vested Options outstanding at the end of the
financial year, and there will be no grants issued under the ESOP Scheme 2007.
The Company has introduced Employee Stock Options Plan, 2016 (ESOP 2016) during the
year 2016-17. The ESOP 2016 was approved by the Board at its meeting held on November 7,
2016, and by the shareholders of the Company by way of a special resolution through a
Postal Ballot on January 21, 2017. The Shareholders had authorised the Board/ Nomination
and Remuneration Committee (NRC) to issue to the employees, such number of Options under
the ESOP 2016, as would be exercisable into not exceeding 35,17,000 fully paid-up equity
shares of Rs 1/ - each in the Company. NRC is empowered to formulate the detailed terms
and conditions of the ESOP 2016, administer and supervise the same. The specific employees
to whom the Options are granted and their eligibility criteria is determined by the NRC.
Further, the NRC is empowered to determine the eligible subsidiary companies, whether
existing or future, whose employees will be entitled to stock options under this Scheme.
Options granted under this ESOP 2016 would vest on or after 1 (one) year from the date of
grant but not later than 4 (four) years from the date of grant of such Options or any
other terms as decided by the NRC.
During the year 5,69,917 options were granted and the total number of options unvested,
vested and outstanding as at March 31, 2023 was 7,75,026. The details of Options granted
upto March 31, 2023, and other disclosures as required under Regulation 14 of the
Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021 is available on the Company's website at
https://www.eidparry.com/financials/ The Company has received a certificate from the
Secretarial Auditors of the Company that the above referred Scheme had been implemented in
accordance with the Securities and Exchange board of India (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021 and the resolutions passed by the Members in this
regard.
CORPORATE GOVERNANCE
The report on corporate governance along with certificate from a practicing Company
Secretary regarding compliance of conditions of Corporate Governance as stipulated under
the Listing Regulations is annexed to this Report. The report also contains details
required to be provided on the board evaluation, remuneration policy, implementation of
risk management policy, whistle-blower policy / vigil mechanism, etc.
The Managing Director and the Chief Financial Officer have submitted a certificate to
the Board regarding the financial statements and other matters as required under
Regulation 17(8) read with Schedule II of Part B of the Listing Regulations.
TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (IEPF Rules) all dividends,
which remains unpaid or unclaimed for a period of seven years are required to be
transferred by the Company to the IEPF established by the Central Government. Further,
according to the IEPF Rules, the shares in respect of which dividend has not been encashed
by the shareholders for seven consecutive years or more are also required to be
transferred to the Central Government (Demat account created by the IEPF Authority).
Accordingly, the Company has transferred the unclaimed and unpaid dividends as well as the
corresponding shares as per the requirements of the IEPF Rules, details of which are
provided on our website, at at https://www.eidparry.com/unpaid-unclaimed-dividend/ During
the year, the Company has transferred an amount of Rs 34,26,230/- being the
unclaimed dividend (Interim) for the year 2014-15 and Rs 9,47,962/- being the unclaimed
dividend for the year 2014-15 to the IEPF established by the Central Government. The
Company has also transferred 4001 Equity Shares in respect of which dividend has not been
paid or claimed for seven consecutive years or more as enunciated under Section 124 (6) of
the Companies Act, 2013.
DISCLOSURES
Audit Committee
The Audit Committee comprises of Mr. S. Durgashankar, Independent Director as the
Chairman, Dr. (Ms) RCA Godbole, Independent Director, Mr. Ajay B. Baliga, Independent
Director and Mr.M.M. Venkatachalam, Non-Executive, Non-Independent Director as members.
Corporate Social Responsibility (CSR) Committee
The CSR Committee comprises of Mr. M. M. Venkatachalam, Non-Executive, Non-Independent
Director, as the Chairman, Mr. T. Krishnakumar, Independent Director and Mr. S. Suresh,
Managing Director as members.
Stakeholders Relationship Committee
The Stakeholders Relationship Committee (SRC) comprises of Mr. M. M. Venkatachalam,
Non-Executive, Non-Independent Director as the Chairman, Mr.T.Krishnakumar, Independent
Director, Mr. S. Suresh, Managing Director and Mr. Ramesh K B Menon, Non-Executive
Non-Independent Director as members.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee (NRC) comprises of Mr. Ajay B. Baliga,
Independent Director, as the Chairman, Dr. (Ms) Rca Godbole, Independent Director and Mr.
Ramesh K B Menon, Non-Executive, Non-Independent Director as members.
Risk Management Committee
The Risk Management Committee comprises Mr. S. Durgashankar, Independent Director, as
the Chairman, Mr. S. Suresh, Managing Director, Mr. Ajay B. Baliga, Independent Director
and Mr. M. M. Venkatachalam, Non-Executive, Non-Independent Director as members.
Vigil Mechanism & Whistle Blower Policy
The Company has a Vigil Mechanism for directors and employees to report genuine
concerns and grievances and provides necessary safeguards against victimisation of
employees and directors. The Audit Committee reviews on a quarterly basis the functioning
of the Whistle Blower and vigil mechanism. The Vigil Mechanism and Whistle Blower Policy
have been posted on the Company's website at https://
www.eidparry.com/wp-content/uploads/2023/02/Whistleblower-Policy-and-Vigil-Mechanism.pdf
and the details of the same are given in the Corporate Governance Report.
Business Responsibility and Sustainability Report (BRSR)
Pursuant to Regulation 34(2)(f ) of the Listing Regulations and SEBI circular no.
SEBI/LAD-NRO/GN/2021/2 dated May 5, 2021, your Company provides the prescribed disclosures
in new reporting requirements on Environmental, Social and Governance ("ESG")
parameters called the Business Responsibility and Sustainability Report ("BRSR")
which includes performance against the nine principles of the National Guidelines on
Responsible Business Conduct and the report under each principle which is dividend into
essential and leadership indicators.
Dividend Distribution Policy
Pursuant to Regulation 43A of Listing Regulations, the top 1000 listed Companies are
required to formulate a Dividend Distribution Policy. The Company's Dividend Distribution
Policy as approved by the Board is available on the Company's website at at https://
www.eidparry.com/wp-content/uploads/2023/02/Dividend-Distribution-Policy.pdf
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars relating to conservation of energy, technology absorption, research and
development, foreign exchange earnings and outgo as required to be disclosed under Section
134 (3)(m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is
given in Annexure - D to this Report.
Loans, Guarantees and Investments
During the Financial Year, the Company has given loans, guarantees to subsidiaries
within the limits as prescribed under Section 186 of the Act. Details of Loans and
Guarantees are given in Annexure - E to this Report.
Particulars of Employees and Related Disclosures
The information relating to employees and other particulars as required under Section
197 of the Act, read with Rule 5(2) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be
provided upon request. In terms of Section 136 of the Act, the Report and Accounts are
being sent to the Members, excluding the information on employees, particulars of which
are available for inspection by the Members at the Registered Office of the Company during
the business hours on all working days of the Company upto the date of the forthcoming
Annual General Meeting. If any member is interested in obtaining a copy thereof, such
Member may write to the Company Secretary in the said regard.
The disclosure with regard to remuneration as required under Section 197 of the Act
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is attached and forms part of this Report as Annexure - F.
Insolvency and Bankruptcy Code
During the year 2021-22, an application was filed under section 9 of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) against the Company before the National Company Law
Tribunal, Chennai. The Petitioner had claimed that it had not received payment from the
farmers for the alleged supply and installation of irrigation systems to the farmers in
the Company's Command area during the year 2010-11, for which the Company stood as a
guarantor. A detailed counter was filed by the Company refuting all the allegations. The
Matter has been heard by the Tribunal from time to time. No application under IBC was
initiated by the Company as on March 31, 2023.
There was no instance of one time settlement with any Bank or financial institutions.
Annual Return
In terms of Section 92 of the Act, the Annual Return of the Company in Form MGT-7 is
placed on the website of the Company and can be accessed at
https://www.eidparry.com/shareholders-meeting/
Compliance of Secretarial Standards
The Company has complied with the Secretarial Standards issued by The Institute of
Company Secretaries of India and approved by the Central Government as required under
Section 118(10) of the Act.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under
any scheme save and except ESOP referred to in this Report.
The Managing Director of the Company does not receive any remuneration or commission
from any of Company's subsidiaries. No significant or material orders were passed by the
Regulators or Courts or Tribunals, which impact the going concern status of the Company
and its operations in future. There are no material changes and commitments, affecting the
financial position of the Company which have occurred between March 31, 2023 and the date
of this report.
ACKNOWLEDGEMENT
The Board places on record, its appreciation for the for the valuable support and
cooperation received from bankers, business associates, lenders, financial institutions,
shareholders, various departments of the Government of India, as well as the State
Governments, the farming community and all our other stakeholders. The Directors
acknowledge and would like to place on record the commitment and dedication on the part of
the employees of your Company for their continued efforts in achieving good results.
|
On behalf of the Board |
Place : Chennai |
M.M.Venkatachalam |
Date: May 30, 2023 |
Chairman |
|