Rajshree Sugars & Chemicals Ltd

Your Directors have pleasure in presenting the 38^th Annual Report on the business and operations of the company and the audited financial statements for the year ended 31^st March 2024.

' in lakhs

2) Dividend

Considering financial strain, your Directors have not recommended dividend for the year 2023-24. Also no amount has been transferred to reserves.

3) Financial Performance

Your Company earned an income of '77,638.28 lakhs in the year 2023-24 as against '77,395.17 lakhs during the previous year. The Company has earned a net profit before tax of '2,106.05 lakhs compared to the net profit before tax of '2,073.27 lakhs earned during the previous year. The net profit after tax has been '1,375.77 lakhs compared to the net loss of '896.87 lakhs in the previous year.

4) Operational Performance

The operational highlights of our sugar, cogeneration, and distillery divisions for the year 2023-24 are as follows:

a) Sugar Division

Reduced sugar production in 2023-24 compared to 2022-23 despite increased sugarcane crushed attributed to adverse weather conditions in our command area affecting sugar content, impacting recovery rates.

b) Cogeneration Division

In the fiscal year being assessed, the Cogeneration Division produced a total of 2,233 lakh units of power, up from 2,042 lakh units in the preceding year. The company exported 1,414 lakh units during the year, compared to 1,253 lakh units exported in the previous year.

c) Distillery Division

In the year under review, the Distillery Division produced 240 lakh litres of alcohol, marking an increase from the 223 lakh litres produced in the preceding year. The sales totaled 231 lakh litres, up from 220 lakh litres sold in the previous year.

5) Restructuring of Sugar Development Fund (SDF) Loan.

The Company has been in default of loans received from the SDF, Government of India, since the Financial Year 2016 with an Ethanol loan of '32.45 crore and Co-generation loan of '21.10 crore availed by the Company. On 2^nd August 2023, the Company received a letter from SDF stating the closure of the restructuring of the aforementioned loans due to the expiration of the Administrative Approval's validity and a shortfall in the Fixed Assets Coverage Ratio. It may be noted that SDF issued Revised Operational Guidelines for Restructuring of SDF loans under SDF Rule 26 on 28^th February 2024 which provide reliefs similar to the operational guidelines dated 3^rd January 2022 except for amendment in clause 4(e), wherein, the provision for an "upfront payment of Principal & Interest" has been amended as "One Time Settlement (OTS) Scheme". The Company has proposed to apply for One Time Settlement and is in the process of arranging funding options.

6) Future Outlook

The management believes that no material uncertainty exists about the company's ability to continue as a going concern and accordingly the management has prepared these financial statements on a going concern basis.

Though the rainfall in the command area of our Company is lesser in comparison to the previous year, the recharged ground water is still supportive of the planting and factory operations for next two years. However, emergence of Competitive crops with remunerative prices would pose a threat to Sugarcane Cultivation. The company is taking special measures like providing subsidy, extending services viz., arranging service providers for cultivation operations (entrepreneur model), regular seed supply, arranging mechanical harvesters, promoting wider row planting, promoting drip irrigation, implementing trash shredding, trash mulching, organic manure application and research and recommendation for high yielding varieties.

With the production in Maharashtra and north Karnataka lower than estimated numbers, situation looks positive on the domestic prices.

In the sugar season 2022-23 (October to September), India has exported about 6.2 million tons of sugar at a reasonable price. The Government has not allowed export in sugar season 2023-24 due to lower sugar production. However, the stock position as on 30.09.2024 is expected to be higher than the original estimate and hence the Government is looking at allowing export to the extent of 0.7 million tons of the likely surplus.

The ambitious ethanol program of the Central Government continues to be supportive to the sugar industry.

Further, the Government policy on sugar would continue to have a significant bearing on the prospects of the industry in the coming years.

7) Fixed Deposits

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 ('the Act) and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

8) Auditors

Statutory Auditors: M/s.S. Krishnamoorthy & Co., Chartered Accountants, Coimbatore (Firm Registration No. 001496S), will serve as Auditors until the 40^th Annual General Meeting (AGM) for the financial year ending 31^st March 2026.

Cost Auditors: As per Section 148 of the Act and the Companies (Cost Records and Audits) Rules, 2014, the company's products Sugar, Industrial Alcohol, and Cogeneration of Power, are subject to mandatory cost audits. The company has maintained these records as prescribed by the Central Government. Upon the Audit Committee's recommendation, the Board of Directors has re-appointed M/s.S. Mahadevan & Co., Cost Accountants, (Firm Registration No. 000007) to conduct the cost audit for the financial year ending 31^st March 2025. Their remuneration has been fixed, and the resolution for its ratification under Section 148(3) of the Act, will be presented at the upcoming AGM.

Secretarial Auditor: Upon the Audit Committee's recommendation, the Board of Directors has re-appointed Mr. G. Soundarrajan, Practicing Company Secretary, (Membership No. 13993) as the Secretarial Auditor. He will conduct the Secretarial Audit for the financial year ending 31^st March 2025, in accordance with Section 204 of the Act and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).

9) Conservation of energy, technology absorption, foreign exchange earnings and outgo

Annexed to this Report as Annexure 1.

10) Corporate Governance Report (CGR)

The Company is committed to maintaining the highest standards of corporate governance and adherence to the corporate governance requirements prescribed by SEBI. The Company also follows several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under LODR forms an integral part of this Report as Annexure 2. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is also attached to the report on Corporate Governance.

11) Corporate Social Responsibility (CSR)

The Company has not earned net profit during the Financial Year ended 31^st March 2024, computed as per section 198 of the Act, and hence, provisions relating to CSR as specified under Section 135 of the Act will not be applicable to the Company.

The details regarding CSR Committee and Policy are furnished in CGR.

12) Details of Directors or Key Managerial Personnel Appointed / Resigned

Details of re-appointment and cessation of a Director / Key Managerial Personnel during the year are furnished below:

Reappointment of Independent Directors

Mr. K. Ilango, aged 59, and Mr. S. Vasudevan, aged 70, were initially appointed as Independent Directors of the Company for a five-year term, spanning from 30th September 2019 to 29th September 2024.

In compliance with the Act, and LODR an Independent Director is permitted to serve for up to five consecutive years on the Company's Board. Upon completion of this tenure, reappointment is possible for another term of upto five consecutive years, subject to the passing of a Special Resolution by the Company and disclosure of such appointment in the Board Report.

At the meetings held on 22^nd May 2024, both the Nomination and Remuneration Committee and the Board of Directors have recommended the reappointment of said Directors as Independent Directors for a second consecutive term of five consecutive years, extending from 30^th September 2024 to 29^th September 2029. This recommendation is based on their exemplary performance appraisals during their initial term. The requisite resolutions for this reappointment will be presented at the upcoming Annual General Meeting, seeking approval of the members through a special resolution.

The Board of the Company acknowledges the importance of integrity, expertise, and experience in the appointment of independent directors. The proposed appointments of the said Directors were made following a rigorous selection process, which included an assessment of their proficiency. Both Directors had submitted copies of the certificates, issued by Indian Institute of Corporate Affairs, which grant exemption from passing the online proficiency self assessment test.

The Board is of the opinion that both directors bring valuable insights and diverse perspectives to the Board discussions. Their appointments further enhance the independence and governance standards of the Company, ensuring robust decision-making and effective oversight of company affairs.

13) A Statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual Director

The NRC, under the guidance of its Chairman, drafted and distributed para-materialized feedback forms for assessing the performance of the Board, Independent Directors, various Committees, and the Chairperson.

The parameters for evaluating the Board encompass its advisory role on critical Company issues, strategic vision and planning, oversight on compliance management procedures, operations and performance, as well as Corporate Governance and ethics.

For committees, evaluation focuses on their adherence to duties and responsibilities outlined by the Board and laws, member awareness of expectations, independence from the Board, and effectiveness in advising and guiding on referred matters.

Individual Directors' evaluation criteria include awareness of the general and business environment, sector-specific knowledge, active contribution to discussions, understanding of roles and responsibilities, and strategic input for future growth. In addition to the evaluation criteria for individual directors, Independent Directors (IDs) and the Chairperson have supplementary parameters for assessment. For Independent Directors, these include evaluating their independence from the entity and other directors, ensuring no conflict of interest, and assessing their ability to exercise independent judgment and voice opinions freely. Regarding the Chairperson, additional criteria involve evaluating their breadth of vision and strategic leadership for organizational growth, their role in facilitating focused discussions within the Board, their ability to build consensus among members, and their commitment to prioritizing shareholder interests.

The grading scale established by the NRC ranges from 1, representing Average, to 3, denoting Excellent, with 2 indicating Good.

Online evaluation forms (Google Forms) containing evaluation parameters and a grading scale were sent to the E-mail IDs of the Board members. These forms were completed and submitted by the directors. Subsequently, the results were collated, and the Chairperson announced them during the meeting.

14) Number of Board meetings

During the year, 5(Five) Board Meetings were convened and held, the details of which, including attendance of directors, are given in the CGR.

15) Declaration given by Independent Directors

The Independent Directors of the Company have furnished declarations as required under Section 149(6) of the Act & Regulation 16 of LODR.

16) Whistle Blower Policy ('Vigil Mechanism')

The Board has established a Vigil Mechanism, as required under LODR, for directors and employees to report concerns about unethical behaviour, actual or suspected fraud and violation of the company's code of conduct or ethics policy.

This mechanism also provides for adequate safeguard against victimization of director(s) / employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee.

The said Policy is available on the website of the Company www.rajshreesugars.com/policies/

17) Particulars of Loans, Guarantees or Investments under Section 186

The Company has not given/ made any loan, guarantee or investment in terms of Section 186 of the Act during the year under review.

18) Anti-Sexual Harassment Policy

The company maintains a policy regarding the prohibition, prevention, and resolution of sexual harassment against women in the workplace, encompassing all relevant aspects outlined in "The Sexual Harassment of Women at Workplace (Prohibition, Prevention, and Redressal) Act, 2013."

For the calendar year ending on 31^st December 2023, no complaints were lodged under the Act. The company has duly adhered to the requirements concerning the formation of an Internal Complaints Committee as stipulated by the aforementioned Act.

19) Related Party Transactions

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of business. There were no material contracts / arrangements / transactions with related parties during the year.

20) Material Changes & Commitments between end of financial year and this Report

There were no material changes that took place between the end of the financial year and this report.

21) Managerial Remuneration

The details of disclosures relating to Managerial Remuneration as required pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed (Annexure 3).

22) Remuneration Policy

The Company's NRC, in alignment with the Board of Directors, has developed a comprehensive policy concerning human resources, emphasizing equitable remuneration for Directors, Key Managerial Personnel (KMP), Senior Management Personnel (SMP), and all employees. This policy, crafted in accordance with the Act, and LODR Regulations, 2015, aims to harmonize human resource aspirations with the Company's objectives. It underscores the importance of reasonable and motivating remuneration to attract and retain high-quality directors essential for the Company's success. Moreover, it emphasizes the clarity of the remuneration-performance relationship and the necessity of balancing fixed and incentive pay to align with short and long-term performance goals.

The document provides clear definitions of key terms and specifies its applicability to Directors, KMP and SMP, ensuring compliance with existing laws and regulations. The Committee's role encompasses various tasks, including identifying qualified director candidates, formulating evaluation criteria, recommending remuneration policies, and ensuring compliance. It also outlines procedures for appointment, removal, and retirement of personnel, along with guidelines for remuneration structures for different roles, subject to shareholders approval wherever necessary. Additionally, the policy mandates annual performance evaluations for Directors, KMP and SMP, emphasizing continual improvement and accountability. Finally, the Committee is authorized to issue implementation guidelines and delegate powers to ensure effective execution of the policy's provisions.

The said policy is available in the Company's website www.rajshreesugars.com/policies.

23) Industrial Relations

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

24) Internal control systems and their adequacy

The Company has internal control systems which is commensurate with its size, nature and volume of operations.

25) Rajshree Sugars & Chemicals Limited (RSCL) Employees Stock Option Plan 2012

A detailed report as required under SEBI (Share based Employee Benefits and Sweat Equity) Regulations, 2021 on the "RSCL Employees Stock Option Plan 2012" forms part of this report, as Annexure 4.

26) Secretarial Audit

The Board has appointed Mr.G.Soundarrajan (Membership No.A13993; Peer Review Certificate No: 2101/2022; CP No.4993), a Company Secretary in Practice to undertake the Secretarial Audit of the Company as required under Section 204 of the Act. The Secretarial Audit report is annexed herewith as Annexure 5. The report does not contain any qualification, reservation or adverse remarks.

27) Annual Return

In terms of Section 92(3) of the Act, read with Companies (Management and Administration) Rules, 2014, the Annual Return of the Company in Form MGT-7 filed for the Financial year ended 31^st March 2023 has been placed on the website of the Company i.e. https://www.rajshreesugars.com/annual-return-mgt-7/.

28) Transfer of Amounts to Investor Education and Protection Fund (IEPF)

No dividend is pending to be transferred to IEPF pursuant to the provisions of Section 124(5) of the Act, except unpaid dividend of '39,729/- for the financial year 2009-10, which are kept pending transfer due to prohibition as per court orders.

Pursuant to the provisions of IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 28^th August 2017 on the website of the Company (www.rajshreesugars.com), and also on the website of Ministry of Corporate Affairs.

The company has also transferred the equity shares of the shareholders who have not claimed dividend for the 7 years continuously, to the credit of IEPF in Form IEPF-4 on 6th December 2017. The shareholder may claim the said shares and dividend by following the procedures laid down in the website of IEPF Authority, viz. https://www.iepf.gov.in/IEPF/refund.html

29) Directors' Responsibility Statement

In terms of clause (c) of sub-section (3) of Section 134 of the Act, the Directors state that:

i) in the preparation of the annual accounts / financial statements, the applicable accounting standards had been followed along with the proper explanation relating to material departures; if any;

ii) accounting policies as selected have been applied consistently and the judgments made and estimates were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit / loss of the Company for the year under review.

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) the annual accounts / financial statements have been prepared on a going concern basis.

v) internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and operating effectively.

vi) a proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

30) Code of Conduct

Directors, KMP and SMP of the Company have affirmed adherence to the Code of Conduct pertinent to the Directors and employees of the Company and the declaration in this regard made by Wholetime Director, as required under LODR forms part of CGR.

The code is available in the website of the company www.rajshreesugars.com/Code-of-conduct-fair-disclosure

31) Prevention of Insider Trading

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and Designated Persons of the Company, as per SEBI (Prohibition of Insider Trading) Regulations, 2015.

The code is available in the website of the Company www.rajshreesugars.com/Code-of-conduct-fair-disclosure

32) Risk Management Policy

The Company has formulated a Risk Management Policy as required under LODR. The Company has also formulated a specific policy viz., 'Forex and Interest Rate Risk Management Policy for Currency and Interest Rate Risk Management'.

The Board perceives the risk of recurring lower sugar recovery in the State of Tamil Nadu as compared to minimum recovery for which sugar mills are to pay the Fair and Remunerative Price. Lower capacity utilization is also a concern.

The Tamil Nadu Industry has also the option of producing Ethanol. The Tamil Nadu Government has issued an Ethanol Blending Policy 2023 to attract investments in molasses/grain-based ethanol programme to make the state self-sufficient in meeting the estimated annual requirement of 130 crore litres. However, the State has the limited scope as availability of molasses is limited.

The details about the risks being faced by the Company are furnished in the 'Management Discussion & Analysis Report' (Annexure 6).

33) Significant & material orders passed by regulator or courts or tribunals impacting going concern status and companies operations in future

There have been no significant and material orders passed by any Regulator / Court / Tribunal impacting the going concern status and company's operations in future.

34) Compliance with Secretarial Standards

The company has complied with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India and approved as such by the Central Government, as per the provisions of the Act.

35) Details of any applications made or proceedings pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.

The company confirms that no such applications have been made, and there are no proceedings pending.

36) Details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

The company affirms that no one-time settlement occurred during the year.

37) Acknowledgement

Your Directors thank the Banks and Financial Institutions for their valuable and timely financial assistance and support provided by them to the Company. Your Directors also thank the cane growers, suppliers, Government Institutions and others for the cooperation extended to the Company. The Board also places on record its appreciation of the dedicated services rendered by the employees of the Company.

May Goddess Lakshmi shower her blessings for the continued prosperity of the Company.

For and on behalf of the Board