Page 132 - BCML AR 2019-20

STATUTORY SECTION

During the year 2019-20, no personnel has been denied access available on the website of the Company at the following web-
to the Audit Committee. link:
iv) All mandatory requirements relating to corporate governance http://chini.com/wp-content/uploads/2019/05/Risk-
under the Listing Regulations have been appropriately Management-Policy_BCML_Revised_Applicable_April-2018.
complied with and the status of non-mandatory (discretionary) pdf
requirements is given below:
Further, the Company has adequate internal control systems
1. The Company doesn’t bear any expenses of the Non- to identify risks at appropriate time and to ensure that the
Executive Chairman’s Office. executive management controls the risk through properly
defined framework.
2. The Company’s financial statements for the year ended
31st March, 2020 do not contain any modified audit Company’s products are in the nature of commodity and
opinion. hence commodity price risk is the prime risk for the Company.
3. The Internal Auditors of the Company report directly to Information required under clause 9(n) of Part C of Schedule V
the Audit Committee. to the Listing Regulations and SEBI Circular no. SEBI/HO/CFD/
CMD1/CIR/P/2018/0000000141 dated November 15, 2018 are
v) The Company doesn’t have any subsidiary company and
therefore corresponding disclosures including framing of given hereunder:
policy on material subsidiary has not been made. Sugar, Ethanol and Power together constitute for more than
99% of the Company’s revenues.
vi) In terms of the Listing Regulations, the Management Discussion
and Analysis Report forms part of the Annual Report. Details of The major segment in which the Company operates in, which
significant changes in key financial ratios, along with detailed accounts for around 80% of the Company’s revenues, is Sugar
explanations thereof (including details of any change in Return and as such Company is exposed to commodity price risk.
on Net Worth as compared to the immediately previous Normally Company does not physically export sugar unless
financial year along with a detailed explanation thereof) have it is mandated by the Government and duly supported by
been adequately covered under the Management Discussion export subsidy. In that case Company has a policy in place to
and Analysis Report. hedge the export underlying exposure. For domestic sales,
under the current regime, sales quotas are announced by the
vii) The CEO & CFO Certification for the year 2019-20 forms part of Government on monthly basis. Further there are not many
the Annual Report.
active platforms in India which allow hedging of domestic
viii) The financial statements have been prepared under Indian sugar sales. In addition to above, the Government of India had
Accounting Standards (“Ind AS”) as prescribed under Section announced Minimum Sale Price (MSP) for sale of sugar in the
133 of the Act read with Rule 3 of the Companies (Indian open market by every sugar mill. Such MSP, currently at H31/-
Accounting Standards) Rules, 2015 (as amended) under per kg acts as a minimum floor price for the sale of sugar by
historical cost convention on an accrual basis, except certain the sugar mills in India. The Ethanol price is fixed by the Central
financial instruments and biological assets which are measured Government every year depending on the cost of production
in terms of relevant Ind AS at fair value/cost, and other relevant of ethanol, cost of production of sugar, the prices at which the
provisions of the Act. sugar is being sold in the market and the overall position of the
sugar industry in terms of its ability to pay the cane price as
All “Ind AS” issued and notified till the financial statements
are approved for issue by the Board of Directors have been announced by the Govt. Further ethanol prices are not linked
considered in preparing these financial statements. with the crude prices. Thus, there is no price risk in case of
ethanol and accordingly it does not require any hedging.
ix) The Company has laid down Risk Assessment and Minimisation
procedures and the same are periodically reviewed by the Similarly for supply of power to the State Electricity Grid, which
Board. The Company has a defined Risk Management Policy are governed under long term Power Purchase Agreement(s)
approved by the Board of Directors of the Company. The said with the State Electricity Board, the prices are fixed for a term of
policy was reviewed and revised by the Board of Directors at its five years. Further, there is lot of restrictions on the Company to
meeting held on 8th February, 2018 and the same was made come out of PPA and explore sale of power to other distribution
applicable w.e.f. 1st April, 2018. The Risk Management Policy is companies or on the exchange. Accordingly, the details

130 | Balrampur Chini Mills Limited