Sakthi Sugars Ltd

To the Members

The Board of Directors of the Company presents its Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March 2024.

*Figures are reclassified to make them comparable with current year's figures REVIEW OF OPERATION

The overall operational performance of the Company for the financial year under review was better than that of the previous financial year with higher quantum of sugarcane crushing. However, the recovery percentage has come down slightly. There has been improvement in the operations of other Divisions like distillery and power. In the selling prices of sugar and industrial alcohol also, there were improvement during the financial year. Average realisation on power was lower than the previous year. The operation of Soya unit upto the date of sale has been treated as discontinued operation. There is no change in the nature of business during the financial year and until the date of this report.

The quantum of sugarcane crushed at various units of the Company during the financial year 2023-24 is as under:

During the year under review, 1.95 lakh MT of sugar was produced by the Company as compared to 1.99 lakh MT in the previous year. Although there is improvement in the selling price of sugar, the revenue of sugar division has come down during the year under review as compared to the previous financial year.

During the year under review, 296.54 lakh litres (previous year 246.97 lakh litres) of industrial alcohol was produced at Sakthinagar Distillery Unit. Both volume and value of sales of this Division have improved during the year as compared to the previous financial year.

The total power generated in the co-generation plants during the financial year was 2470.85 lakh units (previous year 2287.48 lakh units) out of which 1511.36 lakh units (previous year 1353.60 lakh units) of power was exported. The Company is selling the power through Indian Energy Exchange (IEX) as well as directly to third parties.

The members of the Company at the Extraordinary General Meeting held on 27th May 2022 and on 14th December 2023 approved, inter alia, sale of the Soya unit at Pollachi, Tamilnadu. A Slump Sale Agreement for sale of Soya unit as a going concern on slump sale basis for a consideration of Rs.124.50 Crores to ABT Limited was executed on 29th March 2024. Out of the sale consideration, an amount of Rs.92.00 Crores has been received from ABT Limited and the balance amount is yet to be received.

There was no material impact on account of Covid-19 pandemic on the operations of the Company during the financial year 2023-24.

There has been improvement in the level of operations of the Company during the financial year under review as compared with the previous year, except slight reduction in the sugar recovery percentage and in sugar production. Due to insufficient rainfall, availability of sugarcane for crushing during the financial year 2024-25 would be less than the financial year under review. This will get reflected in the operations of other Divisions also.

The Company has not accepted any deposit during the financial year under review. At the end of the financial year, there was no unclaimed deposit.

The loans taken over by Phoenix ARC Private Limited and restructured by it at the request of the Company and certain other loans have been fully repaid.

During the financial year a fresh term loan of Rs.110 crores has been availed from Kotak Mahindra Bank Limited for the purpose of meeting financial requirement of the Company.

Sri. S. Baskar, President and Company Secretary, has retired from the services of the Company on 31st March 2024 and Sri. S. venkatesh has been appointed as Company Secretary with effect from 1st April 2024.

Sri M.Balasubramaniam (DIN 00377053) retires by rotation at the ensuing Annual general Meeting and, being eligible, has offered himself for re-appointment.

The term of office of the following Independent Directors, viz. Sri P.K.Chandran, Sri S.S.Muthuvelappan, Sri N.K.Vijayan, Sri C.Rangamani, Sri K.v.Ramachandran, Sri. S.Chandrasekhar and Sri S.Balasubramanian, will expire on 29th September 2024 on completion of the second term of their appointment for five consecutive years from 30th September 2019. These Independent Directors are not eligible for reappointment as Independent Directors in view of the restrictions contained in Section 149(11) of the Companies Act, 2013.

The Board at its meeting held on 14th August 2024 has appointed Sri R.vidhya Shankar, Dr. A. Selvakumar and Sri S. Shivram as Additional Directors and as Independent Directors, subject to the approval of the members at the ensuing Annual general meeting of the Company. However, Sri R. vidhya Shankar has resigned his directorship in the Company on 22nd August 2024 as there would be conflict of interest as a Director of the Company while serving as an Independent Director of a banking company. The Board at its meeting held on 24th August 2024 took note of the resignation of Sri R. vidhya Shankar and recommended for Members approval appointment of Sri v.K.Swaminathan, a Non-Executive Non-Independent Director of the Company, as NonExecutive Independent Director for a term of five consecutive years from 20th September 2024 to 19th September 2029 at the ensuing Annual general Meeting.

Appointment of the aforesaid Independent Directors will fulfil the requirements of Regulation 17(1) of SEBI (LODR) Regulations 2015 with respect to proper constitution of the Board of Directors of the Company even after vacation of the aforesaid seven Independent Directors on 29th September 2024.

In pursuance of Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that:

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

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that financial year;

(c) the Directors had 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;

(d) the Directors had prepared the annual accounts on a going concern basis;

(e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Board met seven times during the financial year ended 31st March 2024. The details of the Board Meetings and the attendance of the Directors are given in the Corporate Governance Report.

The Audit Committee comprises of the following Directors as its members:

1. Sri C.Rangamani, Chairman

2. Sri N.K.vijayan

3. Sri K.v.Ramachandran

4. Smt. Priya Bhansali

Details regarding meetings of the Audit Committee and the attendance of the members are given in the Corporate governance Report.

Pursuant to the provisions contained in the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a formal annual evaluation of the performance of the Board, its committees and of individual Directors has been made. The manner in which the evaluation was carried out and the process adopted are given in the Corporate governance Report.

Details of ratio of remuneration to each Director to the median employee's remuneration and other disclosures required under Section 197(12) of the Companies Act, 2013 and Rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure-A.

The Company has constituted a Risk Management Committee and the details of the Committee are set out in the Corporate governance Report. Pursuant to Regulation 17(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has laid down risk management policy to identify, evaluate and mitigate risks. It seeks to ensure transparency and to minimise adverse impact on the business operations of the Company.

The Company does not have any exposure to commodity risk except to the extent of its own production of sugar, the main product of manufacture of the Company, the selling price of which is subject to market fluctuations.

The Company has internal control system commensurate with the size of the Company. Adequate procedures are set out for detecting and preventing frauds and for protecting the Company's assets. The head of Internal Audit Team reports to the Chairman of the Audit Committee for the purpose of maintaining independence and Internal Audit Reports are placed before the Audit Committee together with statement of significant audit observation and the suggested corrective action followed by a report on action taken thereon. Further the Company has adequate internal financial controls with respect to the financial statements.

The Company has a whistle blower policy and a vigil mechanism for Directors and employees to report genuine concerns in the prescribed manner. The vigil mechanism provides adequate safeguards against victimisation and for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases. The details of the whistle blower policy are posted on the website of the Company. No complaint has been received under this mechanism during the year under review.

A Report on Corporate Governance along with Auditors Certificate with respect to its compliance forms part of this Report.

A detailed Management Discussion and Analysis Report also forms part of this Report OTHER DISCLOSURES UNDER THE COMPANIES ACT 2013

i. Annual Return

A copy of the Annual Return for the financial year 2022-23 is placed on the website of the Company www.sakthisugars.com.

ii. Changes in Share Capital

There is no change in the share capital during the financial year under review.

iii. Policy on Directors Appointment and Remuneration

The Company's policy for selection and appointment of directors, senior management personnel and fixation of their remuneration, including criteria for determining qualifications, positive attributes, independence of a director, are available in the Company's website www.sakthisugars.com and the salient features of the Policy are given in Annexure-B.

iv. All the related party transactions were on arm's length basis. Prior approval of the Audit Committee and/or the Board, as the case may be, has been obtained for the transactions with related parties. A statement of all related party transactions is placed before the Audit Committee on quarterly basis.

The related party transaction with respect to sale of Soya unit of the Company to ABT Limited has been approved by the Members as required under Section 188(1) of the Companies Act, 2013 at the Extraordinary General Meeting held on 27.05.2022 and Slump Sale Agreement has been executed on 29th March 2024. Particulars of the material contract / arrangement in Form AOC - 2 as required under Selection 134(3)(h) of the companies Act 2013 are given in Annexure - C.

The Related Party Transactions Policy as approved by the Board is available on the Company's website www.sakthisugars. com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

v. An amount of Rs.5.00 Crores has been received during the year from Sri M. Balasubramaniam, Managing Director, in accordance with the provision contained in Rule 2(c)(viii) of the Company (Acceptance of Deposits) Rules 2014.

vi. Statement of declarations given by Independent Directors

The Independent Directors have given their declarations to the Board to the effect that they meet with the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and the relevant rules. They have also given a declaration confirming compliance with Rule 6(1) and (2) of the Companies (Appointment and Qualification of Directors) Rules 2014 regarding inclusion of their names in the databank maintained by Indian Institute of Corporate Affairs. All the Independent Directors are exempt from the requirement of the written test under Rule 6(4) of the said Rules.

vii. Significant material orders passed by court or authorities

There are no significant orders passed by Court or regulatory authorities which would impact the status of the Company and its future operations.

viii. Particulars of loans, guarantees or investments

During the financial year 2023-24, the Company has given a corporate guarantee and security by way of equitable mortgage of the immovable property of the Company at St.Mary's Road, Chennai 600 018 in favour of Kotak Mahindra Bank Limited to secure the term loan of Rs.90 crores availed by ABT Limited, a related party in which some of the directors are interested.

The Company has also given a corporate guarantee and security by way of pledge of equity shares held by the Company in the share capital of Sakthi Auto Component Limited in favour of Zoho Corporation Private Limited to secure the term loan of Rs.100 crores availed by ABT Transport Private Limited.

The Company has not given any loan or made any investment during the said financial year.

ix. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and out go as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in Annexure-D.

x. There are no material changes affecting the financial position of the Company which have occurred between the end of the financial year and the date of this report.

xi. The Company has complied with the Secretarial Standards as may be applicable to the Company.

The members have appointed M/s.P.N.Raghavendra Rao & Co., Chartered Accountants, as Statutory Auditors for a term of office of five consecutive years from the conclusion of the 60th Annual General Meeting held on 24th August, 2022 till the conclusion of the 65th Annual General Meeting of the Company. The said Audit Firm has confirmed that they are not disqualified for continuing as Statutory Auditors of the Company for the financial year 2024-25.

Pursuant to Section 204 of the Companies Act 2013 and Regulation 24A of SEBI (LODR) Regulations 2015, the Board of Directors of the Company has appointed M/s.S.Krishnamurthy & Co., Company Secretaries, Chennai as Secretarial Auditors to undertake the secretarial audit of the Company for the year ended 31st March 2024. Secretarial Audit Report of M/s. S.Krishnamurthy & Co., Company Secretaries, Chennai for the year ended 31st March 2024 is annexed as Annexure-E. As the Company does not have any subsidiary, the question of appointment of Secretarial Auditor for material subsidiary does not arise.

The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained by the Company. M/s. STR & Associates, Cost & Management Accountants, Tiruchirapalli, are the Cost Auditors appointed for auditing the cost accounting records relating to Sugar, Distillery, Power and Soya Divisions of the Company for the year ended 31st March 2024.

The said Firm has been appointed for the financial year ending 31st March 2025 and necessary resolution for ratification of their remuneration is included in the Notice for the ensuing Annual General Meeting.

The Company has constituted a CSR Committee and has adopted a CSR Policy and the same is available in the Company's website www.sakthisugars.com. The composition of the CSR Committee is given in the Corporate governance Report. As the Company has incurred loss for the three immediately preceding financial years, the requirement of incurring expenditure towards fulfilment of its corporate social responsibility does not arise during the financial year under review.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the said Act. An Internal Complaints Committee (ICC) has been set up at every work place of business to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No sexual harassment complaint has been received during the financial year 2023-24.

With reference to the Statutory Auditors' remark, your Directors wish to state that the Company is confident of obtaining favourable award and considers the full amount as recoverable. The Statement of impact on Audit Qualification is attached as Annexure-F.

Your Directors wish to place on record their appreciation of the valuable assistance and co-operation extended by the shareholders, cane growers, banks, financial institutions and Government authorities. They also wish to appreciate the dedicated services rendered by officers, staff and workers of the Company.