BOARD'S REPORT

TO  

THE MEMBERS OF

SAKUMA EXPORTS LIMITED

The Directors take pleasure in presenting the Tenth Annual Report together with the audited financial statements for the year ended 31st March, 2015. The Management Discussion and Analysis has also been incorporated into this report

2. HIGHLIGHTS OF PERFORMANCE

• Total income for the year increased by 7.75 % to Rs. 1,09,313.81 Lakhs as compared to Rs. 1,01,459.24 Lakhs in Previous year

• Total net sales for the year was Rs. 1,08,085.35 Lakhs as compare to Rs. 1,01,132.15 Lakhs in Previous year, a growth of 6.88 %

• Total profit before tax for the year was Rs. 12.46 Crores as compare to Rs. 10.53 Crores in Previous year

3. OPERATIONS REVIEW AND FUTURE PROSPECTS

The year under review was yet another year full of challenges for the Company under domestic front owing to late onset of monsoon. Commencement of Sugar production got delayed resulting in loss of business opportunities during the month of October & November in Sugar business which is a prime commodity of Company's business. The year started under global recessionary conditions, though there was improvement in U.S. economy. Global scenario continued to be grim with  several economics including few European economies reeling under recession which lead to decline in the Global prices of commodities. In the circumstances Indian Agri products lost parity and business competitiveness. Weakening of major economies affected international trade adversely. The international prices of agricultural products were mostly lower than those prevailing in India. With bearish micro environment and lower returns, Overseas investors were shy and there was general exit of investment in commodities. This adversely affected Indian exports in agricultural commodities. Mismatch in prices continued throughout the year which resulted in overall fall in the export volume. Domestic prices of other Agri Commodities viz. Rice, Oilseed Extraction, Maize, Wheat etc. continued to mismatch rendering export business un-remunerative in general which adversely impacted topline of the Company. Weak demand of Raw Cotton from China & other importing countries also continued during the year. During the year China's Raw Cotton import dropped to US$ 690 Million as against US$ 1910 Million in 2013-14 registering a decline of about 65% year on year basis. Same is the case with other Raw Cotton importing countries viz. Bangladesh, Vietnam etc. as a result, the Company could not make much headway in cotton exports.

However, in the last quarter, turnover shortfall was largely compensated after announcement of export subsidy by the Govt. on Raw Sugar and the Company was able to secure large export orders. The Company achieved standalone turnover of Rs. 422 Crores only in the first 9 months (Previous year Rs. 627 Crores) in the face of tough global market conditions but the shortfall was largely compensated in the last quarter by achieving a turnover of Rs. 659 Crores (Previous year Rs. 384 Crores) on standalone basis which was the historic high turnover in any quarter so far.

During the lean period of first 10 month of the year when exports were not providing adequate business opportunities, the Company focused on domestic trade and import of edible oils to deploy it's resources gainfully to end first 9 months period of the year with marginal profits.

Since announcement of the subsidy on export of Raw Sugar, Indian Raw Sugar prices reconciled to some extent with Global markets and the Company secured large export orders which continued to be executed in the current financial year.

Despite many odds, the Company was able to show stable growth in overall turnover & margins on the back of efficiency and scale of economics. On standalone basis the Company achieved Turnover of Rs. 1081.00 Crores (previous year Rs. 1014.59 Crores) with Profit before tax at Rs. 12.46 Crores (previous year Rs. 10.53 Crores).

As reported last year the company is continuously strengthening it's marketing network, widening and diversifying it's product range & markets and planning to rope-in more & more customers and explore untapped markets to achieve higher growth in the years to come.

• Working of Subsidiaries :

The working of one subsidiary Company namely Sakuma Exim DMCC in Dubai continued to achieve stable growth. Turnover of Sakuma Exim DMCC during the financial year 2014-15 was AED 244,878,284 (previous year AED 193,266,830). An increase of 26.70% year on year basis with net profit of AED 4,926,092 (previous year AED 1,957,355). GKM General Trading LLC achieved turnover of AED 185,212,500 as against AED 202,294,280 in the previous year with net profit of AED 1,373,706 (previous year 3,05,7411). Looking to the profitability & healthy reserve position, GKM General Trading LLC declared & paid maiden dividend of AED 1,300,000 during the year under review.

Subsidiary Companies in Ghana & Tanzania could not make any significant contribution. As a measure of abundant precaution & safety of human capital, the Company's personnel were called back home due to outbreak of Ebola epidemic in many African countries. Management is considering to re-establish those offices as well as proposes to shortly re-operationalize & strengthen the subsidiary Company in Singapore. We are working to strengthen these subsidiary Companies and expect good performance in near future.

4. DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 1/- per equity share of Rs. 10 each. The total outgo for the current year amounts to Rs. 1,97,10,165, including dividend distribution tax of Rs. 32,83,546/- as against Rs. including dividend distribution tax of Rs. 27,91,589 / - in the previous year.

Note: During the relevant financial year, the company has received dividend from its foreign subsidiary, GKM General Trading LLC, of Rs. 1,75,39,246/- on which the company is liable to pay Rs. 26,30,887/- as dividend tax u/s 115BBD of the Income Tax Act. As the Dividend received from the foreign subsidiary is higher than the proposed dividend and as the tax paid or payable  on the dividend received from foreign subsidiary is eligible for set-off against liability of dividend distribution tax payable u/s 115-O of the Act, no separate provision for dividend distribution tax is made.

5. SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2015 was Rs. 16.43 Crores. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on 31st March, 2015, the Directors of the Company hold the equity shares of the Company as follows:

6. FINANCE

Cash and cash equivalent as at 31st March, 2015 was Rs. 25,49,07,830. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

6.1 DEPOSITS

The Company has not accepted deposit from the public and shareholders falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

6.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

7. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

During the financial year the Company was required to spend Rs. 17.80 lacs towards Corporate Social Responsibility Activities. The Company has not spent any amount towards CSR activities since the Company could not find suitable NGOs or other CSR activity. The Company has provided the said amount in the books of accounts of the Company. The CSR Committee is actively pursuing the matter by talking with NGOs and other institutions through whom CSR corpus can be spent.

8. BUSINESS RISK MANAGEMENT

The nature of business is export and trading in commodities. The inheritant risk to the business of the company is as follows:

a. Foreign Exchange risk

b. Commodity Price risk

c. Risk elements in business transactions

d. Physical risk to cargo

All the above risk has been discussed in the Management Discussion and Analysis Report. The nature of risk is dynamic of business and entrepreneurship. The Company is of the opinion that the formation of Risk management committee is not feasible and in the board meeting there is a formal discussion on risk to the business and how to mitigate the same.

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

The Company monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

10. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy are explained in the Corporate Governance Report.

11. SUBSIDIARY COMPANIES

11.1 GKM General Trading LLC

11.2 Sakuma Exim DMCC

11.3 Sakuma Exports Pte Limited

11.4 Sakuma Exports (Ghana) Ltd- Step Down Subsidiary

11.5 Sakuma Exports Tanzania Pvt. Ltd- Step Down Subsidiary

11.6 Audited Financial statement of the Company's Subsidiaries

12. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company prepared in accordance with relevant Accounting Standards (AS) viz. AS 21 issued by the Institute of Chartered Accountants of India form part of this Annual Report.

13. DIRECTORS:

In terms of the articles of association of the Company, Ms. Shipra Mediratta, Non-Executive Director, retires by rotation at the ensuing annual general meeting and being eligible, offers herself for re-appointment.

In terms of the articles of association of the Company, section 149 (10) of the Companies Act, 2013 and revised clause 49 of Listing Agreement dealing with Corporate Governance norms, Mr. Om Parkash Singal has completed 1 year term as Independent Director as on 31st March, 2015. The Company proposes to re-appoint him, as Independent Director for a further  period of 4 years till conclusion of the 14th Annual General Meeting of the Company in the calendar year 2019. The Company has received requisite notices in writing from members proposing Mr. Om Parkash Singal for appointment as Independent Director.

The Company has received declarations from the Independent Director of the Company confirming that they meet with the criteria of independence as prescribed both, under subsection 6 of section 149 of the Companies Act, 2013 and under clause 49 of the listing agreement with the stock exchanges.

13.1 Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholders Relationship Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

13.2 Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

13.3 Meetings

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

14. 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 Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in Note 2 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

15. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in form AOC-2 is not required. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a 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 audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

16. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

17. AUDITORS

17.1 Statutory Auditors

M/s. S. N. K. & Co., Chartered Accountants, the outgoing auditors has expressed their unwillingness to be re-appointed as auditors of the company.

It is proposed to appoint M/s M.L Sharma & Co., Chartered Accountant as Statutory Auditor of the company in place of M/s. S. N. K. & Co., Chartered Accountants. The Company has received a letter from M/s M.L Sharma & Co. Chartered Accountant to the effect that their appointment if made would be maintain be within the prescribed limit under Section 141(1)(g) of the Companies Act, 2013 and that they are willing to act as statutory auditors of the company.

17.2 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Messrs P. P. Shah & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as "Annexure B".

17.3 Qualifications in the Secretarial Report

A. Appointment of Company Secretary & Chief Financial Officer:

As per section 203(1)(ii) & (iii), the Company is required to appoint Company Secretary & Chief Financial Officer. The Company has not appointed Company Secretary & Chief Financial Officer. In this regard the management of the Company has provided the following reply:

(i) The Company has appointed Mr. Raju Pillai as Compliance Officer of the Company who looks after the compliance of Companies Act, 2013 and SEBI Act and rules made thereunder.

(ii) The Company has availed the services of Practicing Company Secretary for advising on compliance of Companies Act, 2013 and SEBI Act and rules made thereunder

(iii) The Volume and Scope of work for the Company Secretary is less and it is not a full time work and the job of Company Secretary is not attractive commensurate with the scope of work and salary.

B. Corporate Social Responsibility:

As per section 135 of the Companies Act, 2013, the CSR is applicable to the Company. The Company is required to spend approximately Rs. 17.80 lakhs. During the financial year ended 31st March, 2015, the Company has not spent the said amount on eligible CSR activities. In this regard the management of the Company has provided the following reply:

(i) The Company has made the provisions in the books of accounts and transfer the amount Rs. 17.80 lakhs to CSR and the company will spent the same in current year

 18. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

19. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report.

20. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is given below:

In pursuance of the provisions of section 143(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014, the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is given below:

A. Conservation of Energy

The operations of the Company are not energy intensive. However, wherever possible the Company strives to curtail the consumption of energy on continued basis.

B. Technology absorption, adaptation and innovation

No expenditure has been incurred by the Company on research and Development activities during the year under review

C. Foreign Exchange Earning & Outgo:

21. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure C".

22. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Compliance Officer in this regard.

23. ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

24. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board of Directors

Sd/- (Chander Mohan)  

Chairman

Sd/-  (Saurabh Malhotra)  

Managing Director

Place : Mumbai

Date: 15th May, 2015