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Andhra Cements Ltd.

BSE: 532141 Sector: Industrials
NSE: ANDHRACEMT ISIN Code: INE666E01012
BSE LIVE 15:40 | 15 Dec 11.17 0.06
(0.54%)
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HIGH

11.45

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NSE 15:43 | 15 Dec 11.10 -0.05
(-0.45%)
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OPEN 11.25
PREVIOUS CLOSE 11.11
VOLUME 71837
52-Week high 15.95
52-Week low 6.00
P/E
Mkt Cap.(Rs cr) 328
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 11.25
CLOSE 11.11
VOLUME 71837
52-Week high 15.95
52-Week low 6.00
P/E
Mkt Cap.(Rs cr) 328
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Andhra Cements Ltd. (ANDHRACEMT) - Director Report

Company director report

To

The Members

The Directors of your Company are pleased to present the Seventy Eighth Annual Reporttogether with the Audited Accounts of the Company for the Year ended 31stMarch 2017.

FINANCIAL HIGHLIGHTS

Summary of the working results of the Company for the period under report are as under:

(` in lakhs)

Current Year 2016-17 Previous period 2015-16
(12 Months) (9 months)
Net Sales 40508 33847
Other Income 233 288
PBIDT 4125 3690
Finance Cost 10501 7304
Depreciation 4004 3012
Profit/(Loss) before (10331) (6730)
exceptional Items
Profit/(Loss) before Tax (10331) (6730)
Deferred Tax (52) 39
Net Profit / (Loss) (10279) (6691)

1. SHARE CAPITAL

The paid up equity share capital as at 31st March 2017 is ` 29352lacs. During the period under review your Company has not issued any shares withdifferential rights sweat equity shares and equity shares under employees stock optionscheme. Your Company has also not bought back its own shares during the period underreview.

2. DIVIDEND

In view of the absence of net profit during the period under review the Directorsregret their inability to recommend any dividend.

3. OPERATIONS

During the period under review Company's both the plants viz Durga Cement Works(DCW) and Visakha Cement Works (VCW) were (fully operational). Subsequent to the year endthe Company has commissioned its 30 MW Captive Power Plant (CPP).

During the Period under review the cost of fuel in the international market has comedown due to weak demand. The Company was able to source fuel at competitive prices andreduce the cost of fuel. Consequent to the favourable crude prices the other derivativeslike the cost of Polypropylene has come down leading to lowering of prices of HDPE Bags.During the period under review the average price of diesel has reduced. This has resultedin reduction in mining cost and transportation cost of both incoming and outgoingmaterials. Moreover the Company has opted in favour of road movements instead of railmovements in view of its cost advantage. However obligation to make contribution toDistrict Mineral Foundation and National Mineral Exploration Trust has increased thelimestone mining cost. The Government has introduced Swach Bharath Cess of 0.5% on alltaxable services. This levy being Non-Cenvatable the cost of services has increased.

4. DIRECTORATE AND KEY MANAGERIAL PERSONNEL

During the period under report the following changes took place in the Board of theCompany: 1. Shri Harish K. Vaid and Shri Vijai Kumar Jain Directors would retire byrotation at the ensuing Annual General Meeting and being eligible they offer themselvesfor re-appointment. 2. In accordance with the provisions of Section 149 of the CompaniesAct 2013 and SEBI (LODR) Regulations 2015 Shri K.N. Bhandari Shri S.D.M. Nagpal ShriR. K. Pandey and Shri Ravindra Kumar Singh are Independent Directors of the Company wouldretire on 29th September 2017 as per the terms of appointment being eligiblethey offer themselves for re-appointment. Hence they were proposed to be re-appointed asIndependent Directors for a second term of three consecutive years from 30thSeptember 2017 to 29th September 2020. The resolutions in respect ofappointment of each of such Independent Directors have been included in the noticeconvening ensuing Annual General Meeting. 3. Shri Sujit Kumar Mandal Managing Director ofthe Company will be retired on 10th August 2017 as per the terms of appointment. 4.During the year under report the Board Meet 4 times the details whereof are given inReport on Corporate Governance. The meetings of Board of Directors were held on 29thMay 2016 13th September 2016 10th December 2016 and 10th February2017. 5. All Independent Directors have given declaration that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act

2013 and Regulation 16(1)(b) and 25(1) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

6. Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out an annual performance evaluation of its own performancethe Directors individually as well as the evaluation of the Committees constituted by it.The manner in which the formal annual evaluation has been carried out has been explainedin the Report on Corporate Governance.

7. The Board has on the recommendation of the Nomination & Remuneration Committeeadopted a policy for selection and appointment of Directors Senior Management and theirremuneration. Brief features of the said Policy are:

a) Nomination and Remuneration Committee shall formulate the criteria for determiningqualifications positive attributes and independence of Director;

b) Nomination and Remuneration Committee shall identity persons who are qualified tobecome Director and persons who may be appointed in Key Managerial and Senior ManagementPosition;

c) While selecting Independent Directors the Nomination and Remuneration Committeeshall identity persons of integrity who possess relevant expertise and experience requiredfor the position;

d) Non-executive/Independent Director may receive remuneration by way of sitting feesfor attending meetings of Board or Committee thereof as amount as may be approved by theBoard of Directors within the limits prescribed under the Companies Act 2013 and therules made thereunder provided that the amount of such fees shall not exceed ` One lacper meeting of the Board or Committee or such amount as may be prescribed by the CentralGovernment from time to time. The sitting fee for Independent Directors and WomenDirectors shall not be less than the sitting fee payable to other Directors;

e) An Independent Director shall not be entitled to any stock option of the Company;

f) Other employees of the Company shall be paid remuneration as per the Company's HRpolicies. The breakup of the pay scale and quantum of perquisites including employer'scontribution to PF pension scheme medical expenses etc. shall be as per the Company'sHR Policy.

The Company shall reimburse actual expenditure incurred by the Directors in theperformance of their duties as per the rules and policies of the Company.

Remuneration of other employees shall be reviewed/decided on an annual basis or earlierif deemed necessary based on performance appraisal of individual employees taking intoaccount several factors such as job profile qualifications seniority experiencecommitment including time commitment performance and their roles and duties in theorganization.

g) The age term of appointment and retirement of Managing Director/Whole-time Directorshall be determined in accordance with the provisions of Companies Act 2013 read withRules made thereunder;

h) Managing Director/Whole-time Director and Key Managerial Personnel shall be paid theremuneration within the overall limit prescribed under the Companies Act 2013 and theRules made thereunder as recommended by the Nomination and Remuneration Committee subjectto the approval of the Board;

i) The Company shall provide suitable training to Independent Directors to familiarizethem with the Company their roles rights responsibilities in the Company nature of theIndustry in which the company operates business model of the Company etc;

5. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All Related Party Transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. During the period theCompany had not entered into any contract/ arrangement/transaction with related partieswhich could be considered material in accordance with the policy of the Company onmateriality of related party transaction.

The policy on materiality of Related Party Transactions and dealing with Related PartyTransactions as approved by the Board may be accessed on the Company's website atwww.andhracemens.com.

The details of Related Party Transactions as required under Accounting Standard –18 are provided in the accompanying financial statements forming part of this AnnualReport. Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act 2013 read withRule 8(2) of the Companies (Accounts) Rules 2014 is set out as "Annexure-A"to this Report.

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

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

7. AUDITORS

7.1 Statutory Auditors

As the members are aware in accordance with the provisions of Section 139 of theCompanies Act 2013 and the Rules made there under M/s. Chaturvedi & PartnersChartered Accountants (Firm Registration No. 307068E) were appointed as StatutoryAuditors of the Company in the 75th Annual General Meeting (AGM) for aperiod of Five consecutive years till the conclusion of 80th AGM of theCompany to be held in the year 2019. The appointment of Statutory Auditors has to beratified at every AGM. The Statutory Auditors being eligible offer themselves forre-appointment. The Company has obtained a written consent and a certificate from theStatutory Auditors to the effect that their appointment if ratified would be inaccordance with the conditions as prescribed and they fulfill the criteria laid down inSection 141 of the Companies Act 2013. Based on the recommendations of the AuditCommittee the Board has recommended the ratification of appointment of M/s. Chaturvedi

& Partners Chartered Accountants as Statutory Auditors of the Company to holdoffice till the conclusion of the Eightieth Annual General Meeting to be held in the year2019 subject to ratification of their appointment in every AGM.

7.2 Cost Auditors

For the Financial Year 2017-18 the Board of Directors of the Company have on therecommendation of Audit Committee appointed M/s. J.K. Kabra & Associates CostAccountants (Firm Regn No. 00009) Cost Auditors of the Company for auditing the CostRecords relating to the product ‘Cement'. In this regard they have submitted acertificate certifying their independence and their arms length relationship with theCompany. The Resolution for ratification of their remuneration has been included in theNotice for ensuing Annual General Meeting.

7.3 Secretarial Audit

Secretarial Audit Report for the financial year ended on 31st March 2017issued by M/S. Savita Jyoti Associates Company Secretaries in form MR-3 forms part ofthis report and marked as

"Annexure-B".

The said report does not contain any qualification or observation requiring explanationor comments from Board under section 134(3)(f)(ii) of the Companies Act 2013.

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theBoard on the recommendations of the Audit Committee has appointed M/s. Savita JyotiAssociates a firm of Company Secretaries in Practice to undertake the Secretarial Auditof the Company for the financial year ended 31st March 2018. 7.4 InternalAuditor

The Board on recommendations of Audit Committee has appointed M/s Doogar &Associates Chartered Accountants as Internal Auditors of the Company for the FinancialYear 2017-18.

8. EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of section 134(3)(a) of the Companies Act2013 Extract ofthe Annual Return for the year ended 31st March 2017 made underprovisions of Section 92(3) of the Act is attached as "Annexure-C" whichforms part of this Report.

9. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

During the period under review there were no Loans Guarantees and Investmentsmade/given as per the provisions of Section 186 of the Companies Act 2013.

10. RISK MANAGEMENT

The Company has formulated a Risk Management Policy. The Risk Management Policy whichinter-alia:

a) define framework for identification assessment monitoring mitigation andreporting of risks.

b) ensures that all the current and future material risk exposures of the Company areidentified assessed quantified appropriately mitigated minimized and managed i.e toensure adequate systems for risk management.

11. CORPORATE SOCIAL RESPONSIBILITY

In view of absence of required profit/net worth/turnover the provisions of theCompanies Act 2013 relating to Corporate Social Responsibility are not applicable to theCompany.

12. MATERIAL CHANGES AND COMMITMENTS

In terms of Section 134(3) (i) of the Companies Act 2013 except as disclosedelsewhere in this report no material changes and commitments which could affect theCompany's financial position have occurred between the end of the year and date of thisreport.

13. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A Report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport along with the required Certificate from the Practicing Company Secretaryconfirming compliance with conditions of Corporate Governance.

As required under Regulation 34(2)(c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion & Analysis Report onoperations and financial position of the Company has been provided in a separate sectionwhich forms part of this Annual Report.

14. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Directorsbased on the representation received from the operating management certification by CEOand CFO to the Board of Directors and after due enquiry confirm that in respect of theAudited Annual Accounts for the year ended 31st March 2017 that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and that there were no material departures;

b) the Directors had in consultation with the Statutory Auditors selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company for the year ended 31st March 2017 and the loss of the Company forthat period;

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

e) the Directors had laid proper internal financial controls to be followed and thatsuch internal financial controls were adequate and were operating effectively; and

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

15. WHISTLE BLOWER POLICY AND VIGIL MECHANISM

The Company has in terms of the provisions of Section 177(9) of the Companies Act2013 read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules 2014 andRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 formulated Whistle Blower Policy and Vigil Mechanism for Directors and employeesunder which protected disclosures can be made by a whistle blower. (www.andhracements.com)

16. INTERNAL FINANCIAL CONTROL

The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Internal Auditors of the Company forinsufficiency or inadequacy of such controls.

The information about internal financial controls is set out in the ManagementDiscussion & Analysis Report which forms part of this Report.

17. DEPOSITS

The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014 during the year under review. Hence thedetails relating to deposits as also requirement for furnishing of details of depositswhich are not in compliance with Chapter V of the Act is not applicable.

However In accordance with the Modified Rehabilitation Scheme (MS-08) the Company issettling the claims lodged by fixed deposit holders. During the period No Fixed Depositclaims were settled.

18. REDEMPTION OF PREFERENCE SHARES

The company paid redemption claims of Preference Shares remains unclaimed. It has notbeen possible to locate the addresses of the shareholders despite notices being publishedin daily newspapers. These are being paid as and when claimed. There is no liability fordividend on these shares.

19. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said Rules forms part of this Annual Report and isprovided as "Annexure- D (I)" in this report.

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided as "Annexure- D (II)" tothis Report.

20. PARTICULARSOFENERGY CONSERVATIONTECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Second Amendment Rules 2015 (as per the notificationdated 4th September 2015) is annexed herewith as

"Annexure-E".

21. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an Anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Woman at Workplace (Prevention Prohibition andRedressal) Act 2013. During the year under review no complaints were received by theCompany.

22. ACKNOWLEDGEMENT

The Board places on record its sincere appreciation and gratitude to variousDepartments and Undertakings of the Central Government and State Governments FinancialInstitutions Banks and other authorities for their continued co-operation and support tothe Company. The Board sincerely acknowledges the faith and confidence reposed by theShareholders in the Company.

For and on behalf of the Board

K.N. BHANDARI

Chairman

Place: New Delhi

Date: 5th August 2017

[DIN: 00191219]