Your Directors take pleasure in presenting the Thirty Third Annual Report and theAudited Accounts of the Company for the year ended March 31 2017.
| || ||(` in Lakhs) |
| ||Current Year ||Previous Year |
| ||Ended ||Ended |
| ||31/03/2017 ||31/03/2016 |
|Revenue from Operations(Gross) ||36010 ||31944 |
|Profit before Interest Depreciation ||8369 ||8300 |
|Less: Interest ||944 ||1584 |
|Less: Depreciation ||1706 ||2312 |
|Profit/(Loss) Before ax ||5719 ||4404 |
|Provision for Taxation including deferred Tax ||1231 ||2425 |
|Profit/(Loss)after Taxation ||4488 ||1979 |
|Appropriations || || |
|Debenture Redemption Reserve ||500 ||500 |
|Dividend ||252.86 || |
|Dividend Distribution Tax ||51.48 || |
INDIAN ACCOUNTING STANDARDS
The Company has adopted Indian Accounting Standards (Ind AS) as per the notificationissued by the Ministry of Corporate Affairs .The Company has published financials usingInd AS for the year ended March 31 2017 along with the comparable figures as on March 312016 and opening Statement of Assets and Liabilities as on April 1 2015.
Your Directors have recommended a final dividend of `1/- per equity share for FY2016-17. The Interim Dividend of `1/- per equity share was paid in the month of September2016. The Final Dividend subject to the approval of the shareholders at the ensuing AGMwill be paid within the time stipulated as per the Companies Act 2013 . The totaldividend for the financial year including the proposed Final Dividend amounts to ` 2/-per equity share and will absorb ` 608.67 lakhs including Dividend Distribution Tax of `102.95 lakhs.
PERFORMANCE OF THE COMPANY
| ||PRODUCTION in M.T ||SALES in M.T |
|Cement ||849656 ||849933 |
This is covered under the topic Management Discussion and Analysis.
MANAGEMENT DISCUSSION AND ANALYSIS
Economy and Developments
In 2016-17 the world economy showed a very moderate increase. The global economy for along time has been bearing the brunt of the sluggish pace in global investment and addingto the woes have been the diminishing growth of world trade. For the April 2016-March 2017period the Indian economy advanced 7.1 percent in line with the estimate but below 8percent in the previous year. However as compared to the world economy the Indian economyhas shown a positive trend.
The demonetization move by the Government in December 2016 had a short term adverseimpact on the Indian economy. For the first time in over a decade the production volume inthe Industry showed a decline. However the Cement Industry was quickly able to recoverfrom this disturbance and was probably one of the sectors to show the quickest recoveries.
Opportunities Threats Risks Concerns and Outlook
The Union Budget 2017-18 has been considered as a very optimistic budget especially forthe infrastructure sector. With the PM Awaas Yojana there will be one crore houses to bemade for the homeless the allocation for the same has increased from ` 15000 crore to `23000 crore.
Infrastructure and Rural development as in the last year has been a focus in thecurrent year as well which will definitely boost the demand for cement.
The prices of coal and petcoke have risen sharply in the past six months leading tohigher fuel costs which is a matter of high concern for the Cement Industry.
However considering the Government's constant endeavor towards infrastructuraldevelopment the best days for the Cement Industry are not far away
Segment wise or Product Performance
The Company has only one business segment and that is manufacturing and sale of cement.Given below are the variety - wise production figures for the financial year 2016-17.
|Grades of Cement ||Quantity in M.T |
|OPC-43 grade and 53 grade ||626679 |
|PPC ||209883 |
|RHPC ||13094 |
Internal Control System and their adequacy
The Company has got an adequate system of internal control in place commensurate withthe size of its operation and is properly designed to protect and safeguard the assets ofthe Company. There is a proper system for recording all transactions which ensures thatevery transaction is properly authorized and executed according to norms.
The Company has also appointed M/s M. Bhaskara Rao & Co. Chartered Accountants asInternal Auditors to conduct the Systems and Compliance Audit of the Company.
Financial Performance in comparison to Operational Performance
In the Financial year 2016-17 the Company's production level touched 8.50 lakh tonswhich reflects a growth of 12.20% year on year.
The volume of Cement sales was at 8.5 lakh tons recording a growth of 11.80%. This wasmainly because of significant efforts made by the Company in Andhra Pradesh and Tamilnaducement market.
Cement Sales revenue grew 12.66% to ` 35981 lakhs mainly on account of increased salevolumes and also due to better price realization.
Company continued to maintain its cost streamlining efforts during the year. Thecontinued efforts resulted in bringing down the variable costs at slightly lower levels ascompared to previous year.
The Company rationalized its finance costs during the year by repaying its term loanthrough internal accrual and efficient utilization of working capital limits.
Depreciation cost during the year was lower as compared to previous year as major partof Plant & Machinery (Line I) was depreciated fully during previous year based onuseful life as provided in Part C of Schedule II to the Companies Act 2013.
As a result of combined effect on account of growth in cement volumes costrationalization and improved price realization profit before tax of Company was up by29.86% to ` 5719 lakhs.
Material Development in Human Resources/Industrial Relations front includingnumber of people employed.
The Industrial relation during the current year has been cordial and contributed tomutual development.
The number of personnel in direct employment of the Company are 277.
Your Company has not accepted any deposits from the public or its employees during theyear under review and there are no outstanding Fixed Deposits at the end of the financialyear 2016-17.
CAPTIVE POWER PLANT
Tha Captive Power Plant was commissioned in January 2017. The Gross power generationfor the year under review was 184.88 lakh units out was which 16.30 lakh units wereauxiliary consumed and the balance of 168.58 lakh units were captively consumed by theCement plant.
CHANGE OF STATUS OF HOLDING COMPANY
With effect from May 3 2017 the status of the Holding Company was changed to aPrivate Limited Company pursuant to the conversion of the same being approved by itsShareholders and the National Company Law Tribunal.
LISTING ON NATIONAL STOCK EXCHANGE OF INDIA LIMITED
The Equity shares of our Company are listed on the BSE Limited. The Board of Directorswere of the opinion that NSE of India Limited being the largest exchange in the countryand having trading platforms all over the country it would be considered advisable tolist the Company's shares on the NSE of India Limited so as to create more visibility. Inpursuance of this the shares of the Company were listed on the NSE of India Limited onApril 10 2017.
REPORT ON CORPORATE GOVERNANCE
A report on Corporate Governance is given as an Annexure to this Report.
At the 32nd AGM of the Company of M/s Ramanatham & Rao CharteredAccountants (Firm Registration Number (S-2934) were appointed as Statutory Auditors for aperiod of three consecutive years. As required under the Companies Act 2013 theappointment of the auditors will be placed before the shareholders for their ratificationat every Annual General Meeting. Accordingly a resolution seeking ratification fromMembers is included as Item no. 4 of the Notice convening the Annual General meeting.
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its cement activity is required to be subject to Cost Audit. Your Directorshave appointed M/s Narasimha Murthy & Co. Cost Accountants Hyderabad to audit thecost records of the Company for the financial year 2017-18 on a remuneration of`175000/- (Rupees One Lakh Seventy Five Thousand Only) . As required under the CompaniesAct 2013 the remuneration payable to the cost auditor is required to be placed beforethe Members in the Annual General meeting for their ratification. Accordingly aResolution seeking Member's ratification for the remuneration payable to M/s NarasimhaMurthy & Co. Cost Accountants Hyderabad is included as Item no. 5 of the Noticeconvening the Annual General meeting.
The Cost Audit Report for the Financial year 2015-16 due to be filed with Ministry ofCorporate Affairs within a period of 180 days from the close of the financial year hadbeen filed on September 26 2016. The Cost Audit Report for the Financial year 2016-17would be filed within the period mentioned in the Companies (Cost Record and Audit) Rules2014.
REQUIREMENT UNDER THE COMPANIES ACT 2013 A. DIRECTORS AND KEY MANAGERIALPERSONNEL
There has been no change in the composition of the Directors and the Key ManagerialPersonnel for the Financial year ended March 31 2017.
B. DISCLOSURE AS PER SEXUAL HARRASMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
Your Company has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder. The details of the Policy are uploaded on the website of the Company.
No complaint was filed during the financial year 2016-17.
C. EXTRACT OF ANNUAL RETURN
The extract of Annual Return as provided under Sub-Section (3) of Section 92 of theCompanies Act 2013 ( the "Act") is enclosed as an Annexure in the prescribedform MGT-9 and forms part of this Report.
D. NUMBER OF MEETINGS OF THE BOARD
6 meetings of the Board of Directors of the Company were held during the year. Fordetail of the meetings please refer to the Corporate Governance Report which forms partof this Report.
E. INDEPENDENT DIRECTORS DECLARATION
The Board has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 (Section 149(6)) and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
F. POLICY OF DIRECTORS' APPOINTMENT AND REMUNERATION
Company's policy on Directors appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided under section 178(3) of the Act are covered in the Corporate GovernanceReport which forms part of this Report.
Further information about elements of remuneration package of individual directors isprovided in the extract of Annual Return as provided under Section 92(3) of the Act isenclosed in the prescribed form MGT-9 and forms part of this Report. The Nomination andRemuneration Policy of the Company is available on the Company's website:www.anjanicement.com
G. AUDITORS AND SECRETARIAL AUDITORS REPORT
There are no disqualifications reservations or adverse remarks or disclaimers in theAuditors and Secretarial Auditors Report. The Report of the Secretarial Auditor asconducted by Mrs. Shailashri Bhaskar Practising Company Secretary is given as an Annexurewhich forms part of this report.
H. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
There have been no loans guarantees and investments under Section 186 of the Actduring the financial year 2016-17.
I. RELATIONSHIP BETWEEN DIRECTORS
None of the Directors are related to each other within the meaning of the term"relative" as per Section 2(77) of the Act.
J. TRANSACTIONS WITH RELATED PARTIES
The Company has not entered into contract / arrangements pursuant to provisions ofSection 188 (1)of the Act.
The Company however has entered into related party transactions pursuant to SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. These transactionswere material in nature and appropriate shareholder approval pursuant to Regulation 23 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has beenobtained at the Annual General Meeting of the Company held last year
K. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT
The Directors and members of Senior Management have affirmed compliance with the Codeof Conduct for Directors and Senior Management of the Company.
L. MATERIAL CHANGES AND COMMITMENTSIF ANY AFFECTING THE FINANCIAL
POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TOWHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There have been no material changes and commitments affecting the Financial position ofthe Company which have occurred between the end of the Financial Year to which thefinancial statement relates and the date of the report.
M. RISK MANAGEMENT POLICY
The management of the Company is spearheaded by a Whole Time Managing Director and riskassessment and mitigation forms a concurrent part of the management procedures.Periodical reviews of various operational marketing and legal parameters affecting theCompany is conducted and risk management and mitigating procedures are adopted on acontinuous basis.
N. POLICY ON CORPORATE SOCIAL RESPONSIBILITY
Pursuant to Section 135 of the Companies Act 2013 read with Companies (CorporateSocial Responsibility Policy) Rules 2014 The Corporate Social Responsibility Policy hasbeen approved by the Board of Directors of the Company. The report on CSR is given as anAnnexure and forms part of this report.
The Company was required to spend an amount of `19.51 Lakhs in CSR activities duringthe financial year 2016- 17 as per the provisions of 135(5) of the Companies Act 2013and the Company has spent an amount of ` 24.49 Lakhs during the year.
O. PARTICULARS OF REMUNERATION
The information required under Section 197 of the Act and the Rules made there-underin respect of employees of the Company is as follows:-
a) The ratio of the remuneration of each director to the median remuneration of theemployees of the Company for the financial year;
|Directors ||Ratio to Median Remuneration |
|Non-Executive Directors || |
|Mr. P. Gopal ||- |
|Mr. V. Subramanian ||- |
|Dr.(Mrs.) S.B. Nirmalatha ||- |
|Executive Directors || |
|Mr. A. Subramanian ||15.51 times |
The median remuneration of the employees of the Company for the financial year 2016-17is ` 3.09 lakhs.
b) The percentage increase in remuneration of each Director Chief Executive OffcerChief Financial Offcer Company Secretary or Manager if any in the Financial year;
|Name of Person ||Percentage Increase in Remuneration |
|Non-Executive Directors || |
|Mr. P. Gopal ||- |
|Mr. V. Subramanian ||- |
|Dr. (Mrs.) S. B. Nirmalatha ||- |
|Executive Directors || |
|Mr. A. Subramanian ||- |
|CFO and CS || |
|Mr. M.L. Kumavat ||- |
|Mrs. Anu Nair ||16 |
c) The percentage increase in the median remuneration of employees in the Financialyear 2016-17 is 8.75%.
d) The number of permanent employees on the rolls of Company: 277.
e) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last Financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration.
On an average salaries of employees decreased by 3.47%.
There has been no change in the managerial remuneration for the year underconsideration. f) The key parameters for any variable component of remuneration availed bythe directors; Nil g) Affirmation that the remuneration is as per the remuneration policyof the Company The Company affirms that remuneration is as per the remuneration policy ofthe Company.
h) Statement containing Particulars of Employees pursuant to Section 197 (12) of theCompanies Act 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this Report. However as per theprovisions of Sections 134 and 136 of the Companies Act 2013 the Report and FinancialStatements are being sent to the Members and others entitled thereto excluding theStatement containing Particulars of Employees which is available for inspection by theMembers at the Registered Office of the Company during business hours on all working days(except Saturdays) upto the date of ensuing Annual General Meeting. Any Member interestedin obtaining a copy of such Statement may write to the Company Secretary at the RegisteredOffice of the Company.
P. FORM FOR DISCLOSURE OF PARTICULARS OF CONTRACTS/ARRANGEMENTS ENTERED INTO BY THECOMPANY WITH RELATED PARTIES REFERRED TO IN SUBSECTION (1) OF SECTION 188 OF THE COMPANIESACT 2013 INCLUDING CERTAIN ARM'S LENGTH TRANSACTIONS UNDER THIRD PROVISO THERETO.
There were no related party transactions pursuant to the provisions of Section 188(1)of the Act.
Q. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY REGULATORS COURTS TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN THE FUTURE
There is no significant and material order passed by the Regulators or Courts orTribunals impacting the going concern status and Company's operations.
R. BOARD EVALUATION
The Board evaluated the performance of the Board Committees and Individual Directorsbased on the under mentioned parameters
EVALUATION OF THE BOARD
Development of suitable strategies and business plans at appropriate time andits effectiveness;
Implementation of robust policies and procedures;
Size structure and expertise of the Board;
Overview of the Financial Reporting Process including Internal Controls;
Willingness to spend time and effort to learn about the Company and itsbusiness; and
Awareness about the latest developments in the areas such as corporategovernance framework financial reporting industry and market conditions.
EVALUATION OF THE COMMITTEES
Discharge of its functions and duties as per its terms of reference;
Process and procedures followed for discharging its functions;
Effectiveness of suggestions and recommendations received;
Size structure and expertise of the Committee; and
Conduct of its meetings and procedures followed in this regard.
EVALUATION OF THE INDIVIDUAL DIRECTORS
The performance evaluation of the Director mentioned below was done by the entire Boardexcluding the person being evaluated.
Display of leadership qualities i.e. correctly anticipating business trendsopportunities and priorities affecting the Company's prosperity and operations;
Establishment of an effective organization structure to ensure that there ismanagement focus on key functions necessary for the organization to align with itsmission; and
Managing relationships with the Board management team regulators bankersindustry representatives and other stakeholders.
Participation at the Board / Committee meetings;
Commitment (including guidance provided to senior management outside of Board/Committee meetings);
Effective deployment of knowledge and expertise;
Integrity and maintaining of confidentiality;
Independence of behavior and judgment;
S. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS ANDOUTGO:
The particulars as prescribed under 134 (3)(m) of the Companies Act 2013 and the Rulesprescribed thereunder are set out in Annexure to this report.
T. SUBSIDIARY COMPANIES
Your Company has no subsidiaries within the meaning ofSection2(6)oftheCompaniesAct2013.
U. DIRECTORS RESPONSIBILITY STATEMENT:
As required under Section 134(5) of the Companies Act 2013 the Directors here byconfirm that
a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and that no material departures are made from the same.
b) Appropriate accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitsof the Company for the period;
c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;and
d) The annual accounts have been prepared on a going concern basis.
e) Appropriate Internal Financial Controls have been laid down and followed and suchinternal financial controls are adequate and operating effectively.
f) Proper systems to ensure compliance with the provisions of all applicable laws andsuch systems are adequate and operating effectively.
Statements made in this report including those stated under the caption"Management Discussion and Analysis" describing the Company's objectivesexpectations or projections may constitute "forward looking statements" withinthe meaning of applicable securities laws and regulations.
Important factors that could influence Company's operations include global and domesticsupply and demand conditions affecting the selling price of finished goods availabilityof inputs and their prices changes in government regulations tax laws economicdevelopments within the country and outside and other factors such as litigations andIndustrial relations.
The Company assumes no responsibilities in respect of the forward looking statementswhich may undergo changes in the future on the basis of subsequent developmentsinformation or events.
The Board of Directors wish to thank all the shareholders statutory bodies anddepartments of the State and Central Government and Bankers Suppliers Customers and allemployees for their valuable support to the Company.
| ||On Behalf of the Board of Directors |
| ||A. Subramanian ||V. Subramanian |
|Place: Chennai ||Managing Director ||Director |
|Date: August 9 2017 ||(DIN : 06693209) ||(DIN 06693099) |