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Davangere Sugar Company Ltd			Industry : Sugar


BSE Code:	543267	NSE Symbol:	DAVANGERE	P/E(TTM):	54.48

ISIN Demat:	INE179G01011	Div & Yield %:	0	EPS(TTM):	1.73

Book Value(Rs):	33.3848603	Market Cap ( Cr.):	886.75	Face Value(Rs):	10

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Dear Members

Your Directors present the 52nd Annual Report of the Company highlighting the business and operations of the Company and the Audited Financial Statements for the Financial Year ended 31st March, 2023.

Results of our operations and State of Affairs

The highlights of the standalone financial results are as under:

(In Lacs)

Particulars	FY 2022-23	FY2021-22
Total Income	28058.43	1,2446.79
Profit/(loss)before financial expenses, depreciation and	5637.03	3463.15
Exceptional items
Financial expenses	2712.54	1908.92
Depreciation	1156.49	887.61
Profit/(loss)before provision for tax and exceptional items	1768.00	666.62
Exceptional Items Income
Provision for taxation:
-Current Tax	330.68	111.27
-Deferred Tax/(Income)	115.78	(12.66)
Net Profit/(Loss)	1321.55	568.01

Operating Highlights

The Company's financial performance for the year ended March 31, 2023 is summarized below:

The Company achieved total income of INR 28058.43 Lacs for the year ended 31st March 2023 as against INR 1,2446.79 Lacs for the previous year. The EBITDA for the year under review stood at INR 5637.03Lacs as compared to INR 3463.15 Lacs for the previous year, while the Net Profit stood at INR 1321.55Lacs as compared to INR 568.01 Lacs for the previous year. Analysis of operating performance is covered under Management Discussion and Analysis which forms part of this Report.

Change in Business of the Company

There were no changes in the nature of business of the Company during the year under review. However, in order to expand the business and monetize the subsidies laid down by Government of India for Sugar Industry, the Management commenced commissioning of Molasses based Ethanol unit from April 2021 at a total cost of Rs. 99.31 Crores. The commissioning of the plant is completed and the commercial production is started from 01^st June, 2022.

Dividend & Dividend Distribution Policy

To retain the profits for future growth of the Company, Your Directors do not recommend any divided for the year ending on 31st March 2023. The Company has complied with the requirement of formulation of the Dividend Distribution Policy of the Company which may be accessed on the Company's website at https://davangeresugar.com/policies-and-codes/.

Transfer to Reserves

During the year under review, for the Financial Year 2022-23, your Company does not propose to transfer any amount to General Reserve. An amount of INR 1321.54 Lacs is proposed to be retained as surplus in the Profit and Loss Account.

Share Capital

A) AUTHORISED SHARE CAPITAL:

During the year under review, there was no change in the Authorised Share Capital of the Company. The Authorised Share Capital stands at INR 10,000 Lacs divided into 10 Crores Equity Shares of Rs. 10/- each.

B) ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL:

However, during the year under review, the Paid-up Share Capital was increased from INR 5568.45 Lacs to INR 9408.45 Lacs by allotment of 3,84,00,000 Equity Shares of Rs. 10/- at a premium of Rs. 2.50/- per Equity Share on Right issue basis.

C) ISSUE OF BONUS SHARES:

During the year under review 2022-23, there was no Bonus issue of equity shares.

D) BUY BACK OF SECURITIES:

The Company has not bought back any of its securities during the year under review.

E) ISSUE OF SHARES WITH DIFFERENTIAL VOTING RIGHTS, SWEAT EQUITY SHARES AND EMPLOYEES STOCK OPTIONS:

During the financial year under review the company has not issued any shares with differential voting rights nor granted stock option, nor Sweat Equity.

F) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES: N.A.

G) RIGHT ISSUE OF SHARES

The Board of Directors in their meeting held on 23rd day of July, 2022 alloted 3,84,00,000 Equity Shares of Rs. 10/- at a premium of Rs. 2.50/- per share on rights basis by the Letter of Offer dated May 26, 2022 and in pursuance of Basis of Allotment approved by BSE Limited, the designated Stock Exchange on July 22, 2022. Such right issue of shares shall rank pari passu with the existing Equity Shares of the Company,

Significant and Material Orders passed by the Regulators or Courts or Tribunals

There are no significant, material orders passed by the regulators or Courts or Tribunals, which would impact the going concern status of the company and its future operations.

Subsidiaries, Joint Ventures or Associate Companies

The company does not have any subsidiaries, joint ventures or Associate Company.

Accounts, Auditors and Audit Report Statutory Auditor

M/s. DGMS & Co., Chartered Accountants (Firm Registration No. 0112187W) were appointed as Statutory Auditors of the Company at the 50th Annual General Meeting (AGM) held on 29th September 2021, for a term of 5 years to hold office from the conclusion of the 50thAGM till the conclusion of 55thAGM.

Accounts:

The Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. There are no qualifications or observations made by the Statutory Auditor in the said report. .During, FY 2022-23, the Statutory Auditors had not reported any matter under Section 143(12) of the Act and therefore, no detail is required to be disclosed under Section 134(3) of the Act.

Auditors' Report:

The Audit Reports dated May 30, 2023 issued by M/s. DGMS & Co, Chartered Accountants, and Statutory Auditors on the company's standalone financial statements for the financial year ended 2022-23 is a part of Annual Report.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act, the Board had appointed M/s. M/s. Amit R. Dadheech & Associates, Practicing Company Secretaries, (Membership No. ACS 22889, COP No. 8952), to conduct Secretarial Audit for the financial year 2023-24. The Secretarial Audit Report for the financial year ended 31st March 2023 is annexed herewith at Annexure I to this Report. There are no qualifications or observations made by the Secretarial Auditor in the said report. During FY 2022-23, the Secretarial Auditors had not reported any matter under Section 143(12) of the Act.

Cost Auditors

Pursuant to the provisions of Section 148 of Companies Act, 2013 and rules made thereunder, The Board of Directors, on the recommendation of the Audit Committee, has appointed Mr. Krishna Murthy, Bangalore Cost Accountants (Firm Regn No. FCMA7658) as the Cost Auditor to audit the cost records for the financial year ending 31st March 2024. Remuneration payable to the Cost Auditor is subject to approval by the members of the Company. Accordingly, a resolution seeking members' approval for the remuneration payable to Mr. Krishna Murthy, Bangalore Cost Accountants, forms part of Notice convening 52^nd AGM of the Company, along with relevant details of the proposed remuneration. The Cost Accountants have confirmed that their appointment is within the limits of Section 141(3)(g) of the Act and free from any disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Companies Act, 2013. In terms of Section 148 of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014, it is stated that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Act. Disclosure as per the Companies (Accounts) Amendment Rules, 2018: Company has made and maintained its Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014.

Internal Auditors

Company has appointed M/S B Gangadhara and Co., Chartered Accountant, Davangere,(Membership no.024094) as Internal Auditor of the Company, to conduct internal audit and to issue report thereon from financial year 2022-23 to the financial year 2024-25 and to review internal controls and operating systems and procedures as per the scope of the audit. The Internal Audit Reports of the company are reviewed by the Audit Committee on monthly basis. The Internal Auditors send the quarterly audit observation to the company and the same were presented to the Audit Committee.

Details of Directors and Key Managerial Personnel

Pursuant to the provisions of Section 152 of the Act, Mr. Abhijith Ganesh Shamanur (DIN: 03451918), Director of the Company, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment at the forthcoming Annual General Meeting. Brief Resume of Mr. Abhijith Ganesh Shamanur (DIN: 03451918) is circulated to the members as part of this Annual report. During the year 2022-23, there is no change in the composition of the Board of Directors of the Company except change in KMP (Company Secretary and Compliance Officer). The Board of directors and KMP consists of:

Sl. No.	Name of Directors	Designation	Relationship
1	Sri Shamanur Shivashankarappa Ganesh	Chairman cum Managing Director	-
2	Sri Abhijith Ganesh Shamanur	Executive Director	Son of M.D.
3	Smt. Rekha Ganesh	Director	Wife of M.D.
4	Sri TumbegereRudrappa	Independent Director	-
5	Sri Thappagondanahally	Independent Director	-
	Rajashekarappa
6	Sri Veena Umapathy	Independent Director		-

Details of KMPs:

Sl.No.	Name of the KMPs	Number of Board Meetings attended Designation
1	Sri Shamanur Shivashankarappa Ganesh	Managing Director
2	Mr. Ganeshrao Virupakshappa	Chief Financial Officer (CFO)
3	Miss Nidhi Vaswani	Company Secretary and Compliance Officer (CO) appointed w.e.f 13^th January, 2023.

Mrs. Pooja, MM, Company Secretary and Compliance Officer (CO) Resigned w.e.f 14.11.2022

Deposits

During the year under review, your Company has not accepted any deposits from public within the meaning of Sections 73 and 74 of the Companies Act, 2013 (the “Act”) and the Companies (Acceptance of Deposits) Rules, 2014.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Information as per the Companies Act, 2013 and the rules framed there under relating to conservation of energy, technology absorption, foreign exchange earnings and outgo forms part of this Report and is annexed hereto as Annexure II.

Disclosures/Reporting:

Annual Return

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules 2014, the Annual Return of the Company for FY 2022-23 is available on the website of the Company at https://davangeresugar.com/financials/.

Number of Meetings of Board

During the Financial Year 2022-23, Eight (8) Board Meetings were conducted on 23rd May, 2022, 27th May, 2022 , 23rd July 2022, 12th August, 2022, 02nd September, 2022 , 14th November, 2022, 13th January,2023 and 13th February, 2023.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Act:

(a) that in the preparation of the annual accounts, the applicable accounting standards have been followed along with no material departures;

(b) that the Directors 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 31^st March 2023 and of the profit of the Company for the year ended on that date;

(c) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) that the Directors have prepared the annual accounts on a ‘going concern' basis;

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

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

Committees of the Board

The Board has currently four Committees namely - Audit Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Nomination and Remuneration Committee. The terms of reference of the Board Committees are in compliance with the provisions of the Companies Act, 2013, SEBI LODR Regulations and are also reviewed by the Board from time to time. The role and composition of these Committees including the number of meetings held during the financial year and the related attendance are provided in the subsequent paragraphs.

Particulars of Loans, Guarantees or Investments

Particulars of loans, guarantees given, securities provided and investments made are provided in the notes to the financial statements. During the year under review, there were no loans, guarantee or investment requiring the Compliance of Section 186(3) of the Companies Act, 2013.

Performance Evaluation

Pursuant to the provisions of the Act and Listing Regulations, the Board of Directors has undertaken an evaluation of its own performance, the performance of its Committees and of all the individual Directors based on various parameters relating to roles, responsibilities and obligations of the Board, effectiveness of its functioning, contribution of Directors at meetings and the functioning of its Committees. The performance evaluation of the Chairman and Non-Independent Director was carried out by the Independent Directors in their separate meeting. The Board of Directors expressed their satisfaction with the evaluation process.

The meeting of Independent Directors of the Company was held on 13^thFebruary, 2023, to discuss matters as per the provisions of Companies Act, 2013 and the Listing Regulations. The Board hereby confirms that the Company has received necessary declaration from each independent directors under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing Regulations.

The company has devised a policy naming (Nomination & Remuneration Policy) for performance evaluation of Independent Directors, Board, Committees and other individual directors which includes the criteria and process for the performance evaluation of the Executive/ Non-executive directors and Committees and board as a whole. The policy is uploaded on the website of the company under Investor section at https://davangeresugar.com/policies-and-codes/

Policy on Appointment and Remuneration of Directors, Key Managerial Personnel and Senior Management of the Company

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a Nomination and Remuneration policy namely “Nomination & Remuneration Policy” in line with the requirement of Section 178 of the Companies Act, 2013 The policy inter alia provides the procedure for selection, appointment and remuneration of Directors and Key Managerial Personnel, including criteria for determining qualifications, positive attributes, and independence of Directors.

Board Evaluation

Pursuant to the provisions of section 134(3)(p) the Companies Act, 2013, the Board of directors of the company is committed to get its performance evaluated in order to identify its strength and areas in which it may improve its functioning. In this regard, the Nomination and Remuneration Committee has established the process for evaluation of the performance of Directors, including the Independent Directors.

During the year under review as per the policy for the performance evaluation, formal annual evaluation of the performance of the Directors, including independent directors, the board and its committees was made by the Nomination & Remuneration Committee in their respective meetings.

Contracts and Arrangements with Related Parties

All Contracts/arrangements entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis referred in form AOC-2 annexed hereto as Annexure III. The details of transactions with related parties are given in notes to the financial statements. Details showing the disclosure of transactions with related parties as required under IND AS-24 and 2A of Schedule V of SEBI Listing Regulations are set out in the financial statements.

The Company's Policy on Related Party Transactions may be accessed on the Company's website at https://davangeresugar.com/corporate-governance/

Risk Management Policy

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage.

The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

Particulars of Employees

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended as Annexure IV to this Report.

Risk Management & Internal Financial Controls

The Company has adopted a Risk Management Policy which is reviewed on a periodic basis in order to recognize, assess and reduce exposure to risks wherever possible, identify steps to mitigate risks and to identify risk owners for all types of risks. The Company's Risk Management Policy is based on the philosophy of achieving substantial growth while mitigating and managing risks involved.

The Company's internal control systems with reference to the financial statements are adequate and commensurate with the nature of its business and the size and complexity of its operations. Periodic audits and checks are conducted and the controls to prevent, detect and correct any irregularities in the operations have been laid down by the Company.

Application made or any proceeding pending under the insolvency and bankruptcy code:

As on the date of the Report no application is pending against the Company under Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under IBC during the F.Y. 2022-23.

Details of difference between valuation amount on one time settlement and valuation while availing loan from banks and financial institutions:

During the year under review there has been no one-time settlement of loans taken from Banks and Financial Institution.

Corporate Social Responsibility

Every company having net worth of Rs. 500 Crore (Rupees Five Hundred Crore) or more, or turnover of Rs. 1,000 Crore (Rupees One Thousand Crore) or more or a net profit of Rs. 5 Crore (Rupees Five Crore) or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

The Company has met this criteria for the Financial Year 2022-23 year also similarly as previous Financial Year as the net profit of the company exceeds Rs. 5 Crore (Rupees Five Crore),. Your Company is committed to Corporate Social Responsibility (CSR) by catering to the needs of the weaker sections of the society.

The CSR Policy of the Company may be accessed on the Company's website at https://davangeresugar.com/policies-and-codes/. The report on the CSR activities is appended at Annexure V to the Board's Report. The details relating to the composition, powers, roles, terms of reference etc. of CSR Committee are given in detail in the Corporate Governance Report, which forms part of this Annual Report.

Management Discussion and Analysis Report

Management discussion and Analysis Report for the year under review, as required under Regulation 34 read with Schedule V the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 (SEBI LODR 2015), is forming part of this Annual Report and the same is marked as Annexure VI.

CEO/ CFO Certification:

In terms of Regulation 17(8) of the Listing Regulations, the CFO has certified to the Board of Directors of the Company with regard to the financial statements and other matters specified in the said regulation for the financial year 2022-23. The certificate received from CFO is attached herewith and the same is marked as

Annexure VII.

Listing fees:

The Company affirms that the annual listing fees for the year 2022-23 to The Bombay Stock Exchange Limited (BSE) has been duly paid. As on date no outstanding dues.

Vigil Mechanism and Whistle Blower Mechanism

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, the company has established a vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, genuine concerns, actual or suspected fraud or violation of the company's Code of Conduct.

The mechanism provides for adequate safeguards against victimization of Directors and employees who avail the vigil mechanism. In exceptional cases, Directors and employees have direct access to the Chairman of the Audit Committee. The detailed disclosure of the Vigil Mechanism & Whistle Blower Policy is available at https://davangeresugar.com/policies-and-codes/ under Investor desk.

Company Code of Practices and Procedures For Fair Disclosure Of Unpublished Price Sensitive Information (UPSI)

The Board of Directors has code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI) in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015. Under this code the company lays down guidelines and procedures and principals to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and connected persons to maintain the highest ethical standards of dealing in Company securities.

Pursuant to amendments in the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 vide the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Company adopted the new “Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information”(“Fair Disclosure Code”) incorporating a policy for determination of “Legitimate Purposes” as per Regulation 8 and Schedule A to the said regulations w.e.f. 1st April, 2019.

The Revised Insider Trading Code or Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information (UPSI), is available on our website at https://davangeresugar.com/policies-and-codes/.

Compliance with the Code of Conduct

The Board has formulated code of Conduct for the Board Members and Senior Management of the company, which has been posted on the website of the company. It is affirmed that all the directors and senior management have complied with the code of conduct framed by the company and confirmation from all the directors, KMP and senior management has been obtained in respect of the F.Y. 31st March 2023.

Prevention of Sexual Harassment at Workplace

The Company has complied with the requirement of constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act,2013 (“the Act”) and Rules made there under. During the year, there were no complaints received by under the Act.

Corporate Governance

Your Company is committed to good corporate governance aligned with the best corporate practices. In compliance with the Regulation 34 read with Schedule V of Listing Regulations, a detailed report on Corporate Governance forms part of this Annual Report. A Certificate from the Practicing Company Secretary confirming compliance of the conditions of Corporate Governance as stipulated under the Listing Regulations is appended as Annexure IX to this Report.

Certificate of Non-Disqualification of Directors

Pursuant to Regulation 34(3) and Schedule V, Para C, Clause (10)(i) of SEBI (LODR) Regulations,2015, Certificate of non-disqualification of Directors as on 31.03.2023 has been received from Practicing Company Secretary and annexed as Annexure X of the Directors' report.

Material Changes & Events after Balance Sheet Date

There are no material changes which have occurred after the date of the Balance Sheet and the date of this Report.

Cautionary Statement:

The Board's Report and Management Discussion & Analysis may contain certain statements describing the Company's objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Company's operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.

Appreciation & Acknowledgements

The Board wishes to place on record its gratitude for the assistance and co-operation received from the financial institutions, banks, government authorities, customers, vendors and farmers, cane growers and finally to all its members for the trust and confidence reposed on the Company. The Board further wishes to record its sincere appreciation for the significant contributions made by employees at all levels for their competence, dedication and contribution towards the operations of the Company.