Bajaj Hindusthan Sugar Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2021

Notes:



1. Considering the seasonal nature of industry, the results of any quarter may not be a true and/or proportionate reflection of the annual performance of the Company.



2. The Optionally Convertible Debentures (OCDs) aggregating to Rs. 3483.25 Crore issued by the Company to the Joint Lenders’ Forum (JLF) of the Company in accordance with the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) towards the conversion of a part of the unsustainable debt, provides the holder an option to exercise the right to convert the outstanding OCDs into the equity shares of the Company at a price in accordance with applicable laws (including the ICDR Regulations). There is a contractual obligation related to the premium payable on OCD at the time of redemption of OCD stipulates that the YTM (Yield to maturity) being the difference between weighted average interest and coupon rate payable as redemption premium at the time of redemption of OCD redeemable in 13 equal instalments commencing from the Financial Year 2024-25. The Company considers such premium to be paid is contingent on the occurrence of the event of redemption of OCDs, the YTM of Rs. 1682.96 Crore from the date of allotment of OCDs till December 31, 2021 (Including Rs. 103.41 Crore and Rs. 292.84 Crore for the quarter and nine months ended on December 31, 2021 respectively) is treated as a contingent liability and would be accounted for as finance cost at the time of redemption of respective OCDs. Auditors have drawn qualification for non-provision of YTM premium up to December 31, 2021.



3. The Company has exposure aggregating to Rs. 1680.89 Crore, in its three wholly-owned subsidiaries and Rs. 616.75 Crore in other companies, aggregating to Rs. 2297.64 Crore, by way of investments, loans, accumulated interest on these loans, and receivables. Management is of the view that sufficient efforts are being undertaken to revive the said subsidiaries in the foreseeable future so as to recover carrying value of the investments, loans, receivables, and the diminution/provisions, if any exists, is only of temporary nature. Further investments made, loans given and receivable due from other companies are also considered good and recoverable / realisable based on the future business plan of these companies, and on-going efforts towards obligation casted on the Company and its promoters to recover the outstanding loans in phased manner and accordingly no provision, other than those already accounted for, has been considered necessary. Auditors have drawn emphasis of matter in their limited review report. Further on the basis of principle of conservatism and prudence, the Company has not recognised interest income for the quarter and nine months ended on December 31, 2021, of Rs 36.70 Crore and Rs. 109.71 Crore respectively, on inter corporate loans, as and when it is recoverable, it will be recognized in the books.



4. The company is periodically reviewing the possible impact of COVID-19 on the various facets of the business, including internal and external factors, as known to the management. The influencing factors, if any, have been considered in the preparation of financial results for the quarter and nine months ended December 31, 2021. Accordingly, as on date, no material impact is estimated in the carrying values of the assets and their recoverability. The company is observant for the possible impacts of COVID 19 as the situation evolves.



5. Pursuant to RBI circular dated June 7, 2019, the lenders of the Company has signed ICA (Inter Creditors Agreement) on January 28, 2022. The company had an outstanding debt obligation of Rs 108.62 crore towards the repayment of principal amount as on December 31, 2021. Out of Rs. 108.62 crore, the company has already paid Rs 27.82 crore till February 10, 2022.



6. The company has received a sum of Rs 1000 crore, in two tranches of Rs 500 crore each on January 21, 2022 and February 03, 2022, respectively, in respective Escrow Accounts maintained exclusively for cane price payment for each of its 14 sugar units from Uttar Pradesh Power Corporation Limited. The said amount is paid to the cane growers towards the cane payment arrears for sugar season 2020-21 & 2021-22.



7. For the quarter and nine months ended December 31, 2021 and in earlier periods/years, the Company had incurred losses resulting into reduction of net worth to that extent. The losses were mainly attributable to high raw material i.e. sugarcane prices and other inputs cost, and relatively lower realisation of sugar due to higher production, sugar prices are determined by market forces based on the demand –supply situation and other market dynamics, which are external factors. The Company has outstanding cane dues payable to cane farmers. The Company is continuously striving for improvement in the operational efficiency in other parameters. The Company continue to operate at optimum levels and expects improvement in the operational efficiency in form of improvement in sugar recovery, increase in production of alcohol by using B heavy molasses, reduction of overheads, finance and other costs, monetisation of certain non-core assets etc. The debt restructuring as per RBI’s S4A Scheme has resulted into improved liquidity. The Government has taken various measures to improve the financial health of sugar industry in recent past like MIEQ, buffer stock subsidy and fixing MSP for sugar; increased the prices of ethanol. All these measures are expected to turnaround the operations of sugar industry on sustainable basis. The Company also expects to receive accrued benefits under the Sugar Industries Promotion policy 2004 for which it is entitled to. In view of the above, the management expects to generate positive cash flow from operation and accordingly, the financial results are continued to be presented on going concern basis, which contemplates realisation of assets and settlement of liabilities in the normal course of business. This matter has been referred by auditors in their limited review report.



8. The schedule III to the companies act 2013, vide notification dated 24th March 2021 issued by Ministry of Corporate Affairs (MCA) has been amended with effect from 1st April 2021 and these results have been presented giving effect to the said amendment. Accordingly, comparative figures of the previous years/periods have been regrouped/rearranged/reworked/restated wherever applicable/necessary to make them comparable with those of the current period's figures.



9. The above unaudited standalone financial results for the quarter and nine months ended December 31, 2021 were reviewed by the Audit Committee and thereafter, approved by the Board of Directors and were taken on record at their respective meetings held on February 11, 2022.