The Directors of your Company are pleased to present the Seventy Seventh Annual Reporttogether with the Audited Accounts of the Company for the Year (comprising 9 months) ended31st March 2016.
Summary of the working results of the Company for the period under report are as under:
( Rs. in lakhs)
| ||Current Period ||Previous period |
| ||2015-16 ||2014-15 |
| ||(9 Months) ||(15 months) |
|Net Sales ||29197 ||27802 |
|Other Income ||288 ||906 |
|PBIDT ||3686 ||3327 |
|Finance Cost ||7304 ||6246 |
|Depreciation ||2892 ||2519 |
|Profit/(Loss) before ||(6510) ||(5438) |
|exceptional Items || || |
|Profit/(Loss) before Tax ||(6510) ||(9891) |
|Deferred Tax ||- ||- |
|Net Profit / (Loss) ||(6510) ||(9889) |
1. SHARE CAPITAL
The paid up equity share capital as at 31st March 2016 is Rs. 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.
In view of the absence of profit during the period under review the Directors regrettheir inability to recommend any dividend.
PRODUCTION (In Tones)
|Particular ||July 2015 to March 2016 ||Dec 14 to June 2015 ||Change over previous |
| ||(9 Months) ||(7 Months) ||Period |
|Clinker Production ||538011.00 ||478116.00 ||59895.00 |
|Cement Production ||708762.00 ||634583.00 ||74179.00 |
While the overall growth of cement market for the country was at 4% as against 6%growth in the previous year the market in Southern States have de-grown by 5% during theyear due to lack of demand. This was mainly due to subdued economic conditions shrinkageof construction activity owing to inadequate infrastructural spending by the Governmentirregular monsoon and continued decline in industrial production which have affected thedemand drivers. While the capacity utilisation of the industry in the remaining part ofthe country was at 75% during the year the utilisation levels were at 55% only in thesouthern states. During the first two quarters of the year under review the Southernmarkets have de-grown by 12%. From the third quarter onwards the southern market startedshowing improvements thereby the trend of de-growth was reduced to 5%. During the fourthquarter the Southern market has come to the growth trajectory. During the year underreview the sale of cement for the Company was at 707556 tons compared to 632239 tonsof the previous period.
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 by around 15%.This has resulted in reduction in mining cost and transportation cost of both incoming andoutgoing materials. Moreover the Company has opted in favour of road movements instead ofrail movements 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% witheffect from 15-11-2015 on all taxable services. This levy being Non-Cenvatable the costof services has increased.
3.2 CAPTIVE POWER PLANT
The Captive Power Plant (30 MW) of the company has been commissioned in September 2015.During the period under review the plant was under trial run and achieved PLF of 67%.
4. DIRECTORATE AND KEY MANAGERIAL PERSONNEL
During the period under report the following changes took place in the Board of theCompany:
1. Shri Pankaj Gaur and Shri Naveen Kumar Singh Directors would retire by rotation atthe ensuing Annual General Meeting and being eligible they offer themselves forre-appointment.
2. During the period under report the Board Meet 4 times the details whereof aregiven in Report on Corporate Governance. The meetings of Board of Directors were held on28th August 2015 2nd November 2015 28th December 2015 and 30th January 2016.
3. 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 Regulation16(1)(b) and 25(1) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
4. 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.
5. 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 Rs. 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 CompanysHR policies. The breakup of the pay scale and quantum of perquisites includingemployers contribution to PF pension scheme medical expenses etc. shall be as perthe Companys HR 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 ofother employees shall be reviewed/decided on an annual basis or earlier if deemednecessary based on performance appraisal of individual employees taking into accountseveral factors such as job profile qualifications seniority experience commitmentincluding time commitment performance and their roles and duties in the organization.
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 arms length basis and were in the ordinary course of business. During the periodthe Company had not entered into any contract/ arrangement/transaction with relatedparties which 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 Companys 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 expect onthe application submitted by the Company to the Board for Industrial and FinancialReconstruction (BIFR) in terms of Section 23 of Sick Industrial Companies (SpecialProvisions) Act 1985 (SICA) with regard to potential sickness of the Company. The BIFRinformed that the Companys peak net worth is below 50% and therefore the Companynot covered under the provisions of SICA 1985 and the Companys reference to BIFRnot processed further.
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 a period of Fiveconsecutive years till the conclusion of Eightieth AGM of the Company to be held in theyear 2019. The appointment of Statutory Auditors has to be ratified at every AGM. TheStatutory Auditors being eligible offer themselves for re-appointment. The Company hasobtained a written consent and a certificate from the Statutory Auditors to the effectthat their appointment if ratified would be in accordance with the conditions asprescribed and they fulfill the criteria laid down in Section 141 of the Companies Act2013.
Based on the recommendations of the Audit Committee the Board has recommended theratification of appointment of M/s. Chaturvedi & Partners Chartered Accountants asStatutory Auditors of the Company to hold office till the conclusion of the EightiethAnnual General Meeting to be held in the year 2019 subject to ratification of theirappointment in every AGM.
7.2 Cost Auditors
For the Financial Year 2016-17 the Board of Directors of the Company have on therecommendation of Audit Committee appointed M/s. J.K. Kabra & Associates costaccountants (Firm Regn. No. 009) Cost Auditors of the Company for auditing the CostRecords relating to the product Cement. In this regard they have submittedcertificate certifying their independence and their arm's 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 (comprising 9 months) ended on 31stMarch 2016 issued by M/s. Savita Jyoti Associates Company Secretaries in form MR-3forms part of this 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 2017.
7.4 Internal Auditor
The Board on recommendations of Audit Committee has appointed M/s Lodha and CoChartered Accountants as Internal Auditors of the Company for the Financial Year 2016-17.
8. EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the 9 months period ended 31st March 2016 madeunder provisions of Section 92(3) of the Act is attached as "Annexure-C"which forms 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 theCompanys financial position have occurred between the end of the 15 months periodand date of this report.
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 9 months period ended 31st March 2016that:
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 9 months period ended 31st March 2016 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) Directors had devised proper systems to ensure compliance with the provisions of allapplicable 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 Act 2013read 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. REFERENCE TO BIFR FOR POTENCIAL SICK INDUSTRY
The Company has submitted an application to the Board for Industrial and FinancialReconstruction (BIFR) in terms of Section 23 of the Sick Industrial Companies (SpecialProvisions) Act 1985 ("SICA") with regard to the erosion in the peak net worthof the company more than 50% as per the Resolution passed by the Members of the Companyat the Extra ordinary General Meeting held on 25th February 2016. TheBIFR informed that the Companys peak net worth is below 50% and therefore theCompany not covered under the provisions of SICA 1985 and the Companys referenceto BIFR not processed further.
17. 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.
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.
19. REDEMPTION OF PREFERENCE SHARES
A sum of Rs. 1.92 lacs towards redemption of Preference Shares remains unclaimed. Ithas not been possible to locate the addresses of the shareholders despite notices beingpublished in daily newspapers. These are being paid as and when claimed. There is noliability for dividend on these shares.
20. 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.
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
22. 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 the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. During the year under review no complaints were received by the Company.
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 |
|Place: New Delhi ||Chairman |
|Date: 29th May 2016 ||[DIN: 00191219] |