Your Directors take pleasure in presenting the Thirty Second Annual Report and theAudited Financial Statements of the Company for the year ended March 31 2016
1. FINANCIAL RESULTS:
| || ||(Rs. in Lakhs) |
| ||Current Year Ended 31/03/2016 ||Previous Year Ended 31/03/2015 |
|Revenue from Operations(Gross) ||35174.72 ||29771.93 |
|Profit before Interest Depreciation ||8157.04 ||5236.31 |
|Less: Interest ||1580.33 ||2779.87 |
|Less: Depreciation ||2308.08 ||1059.37 |
|Profit/(Loss) Before Tax ||4268.63 ||1397.07 |
|Provision for Taxation including deferred Tax ||2391.60 ||(274.19) |
|Profit/(Loss)after Taxation ||1877.03 ||1671.26 |
|Appropriations || || |
|Debenture Redemption Reserve ||500.00 ||500.00 |
Your company has made a profit of `1877.03 lakhs during the current year howeverkeeping in view the ongoing projects and the expansion/growth plans of the company it hasbeen decided to reinvest the profits back into the company for better returns to theShareholders in the future.
3. TRANSFER TO RESERVES
The company has transferred an amount of Rs. 500 lakhs out of the profits of thecompany for the financial year ended March 31 2016 to Debenture redemption Reserve.
4. PERFORMANCE OF THE COMPANY
| ||PRODUCTION in M.T ||SALES in M.T |
|Cement ||757229 ||760107 |
This is covered under the topic Management Discussion and Analysis.
6. MANAGEMENT DISCUSSION AND ANALYSIS
Economy and Developments
As has been the case in the last few years the global economy continues to be extremelygloomy and volatile and the effects in the market are only palpable. The biggest task inwhich India has been continually excelling is the one of insulating its economy from theramifications of global economic uncertainties. India continues to be among the moststable and growth oriented economies in the world. While the Global economy reels under agrowth of less than 4% the Indian economy stands strong at around 7% growth. Sustenanceis the key and the fact that India can still do better by reducing the Corporate Debt andimproving credibility only shows that a long term growth vision of 8-10% growth is notover optimistic.
Being just short of 400 Million Tonnes capacity India is the second largest cementproducer in the world. The demand for cement in the last year has once again failed toreach the expected levels due to the sluggish real estate sector and the industrial demandnot picking up. The major demand for cement is largely from the housing sector howeverthe industry did not see the spurt in demand as anticipated.
The industry currently stands at crossroads wherein the production capacities have beenincreased in anticipation of the infrastructural development creating a huge demand supplyinequality. However once the infrastructure projects take off we can expect thisinequality to be considerably reduced
Opportunities Threats Risks Concerns and Outlook
Cement is indispensable for nation building and despite the current slowdown; thedemand for cement is expected to rise considering the slew of infrastructural and otherprojects that the Government has visualized to execute.
The Government has in the current budget announced a 100 per cent deduction for profitsto an undertaking in housing project for flats upto 30 sq. metres in four metro cities and60 sq. metres in other cities approved during June 2016 to March 2019 and completed inthree years. This continued emphasis that the Government has been giving the housingsector will in the years to come give a definitive impetus to the Cement Sector.
Currently both the demand for cement as well as prices of coal and fuel is at itslowest. The production process of cement being fuel intensive any increase in fuel andCoal prices coming along with an increase in demand for cement would impact the pricerealization substantially. This is a risk and concern constantly confronted by the CementIndustry.
Though India is the second largest producer of Cement in the World its per capitaconsumption still ranks among the lowest in the world. So there is huge scope forimprovement and outlook is always positive.
The Central Government has announced additional allocation for Smart City developmentand Pradhan Mantri Gram sadak yojana to the tune of over Rs. 25000 crores. The variousState Governments have also made substantial schemes and provisions forinfrastructural development in their respective budgets. Any activity of infrastructuraldevelopment is good news for the prospect of Cement Industry and its future outlook.
The Governments impetus for affordable housing will also give a boost to thecement sector.
Although the current scenario seems bleak but the Governments continued effortsto improve the infrastructure condition will definitely lead to a boost in the cementsector.
Segmentwise or Productwise Performance
The Company has only one business segment that is manufacture and sale of cement.Given below are the varietywise production figures for the financial year 2015-16.
|Grades of Cement ||Quantity in M.T |
|OPC-43 grade and 53 grade ||544445 |
|PPC ||201859 |
|RHPC ||10925 |
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 in place an internal control procedures and has established internalcontrols system designed to ensure proper recording of financial and operationalinformation and compliance of various internal controls and other regulatory and statutoryprovisions.
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
The Company has produced a quantity of 757229 MT cement during the current financialyear as compared to the previous year production of 655896 MT of cement reflecting anincrease of 15%.
The quantity of cement sold during the year under review stands at 760107 MT comparedto 650198 MT during the previous financial year showing a increase of 17%.
The gross turnover for cement during the year under review increased and stood at Rs.35167.70 Lakhs an increase of 23 % from the last year.
The company has made a Net Profit of Rs. 1877.03 lakhs during the financial year2015-16 as compared to a Net Profit of Rs. 1671.26 lakhs in the previous year signifyinga growth of 12.31% year on year.
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 289
7. FIXED DEPOSITS:
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 2015-16.
8. ISSUE OF SHARES ON A RIGHTS BASIS
The Company came out with a Rights Issue of 6896099 Equity shares at the rate of`108.75 per Equity Share (including a Premium `98.75 per equity share ) for an amount notexceeding Rs. 75 crores to be issued to the existing Shareholders of the company as onthe Record Date in the ratio of 3 shares for every 8 shares held by the existingShareholders of the company to part fund the installation of Captive Thermal Power Plantat the factory premises of the company in Chintapalem Village Mellacheruvu MandalNalgonda District Telangana. The Rights Issue opened on May 252016 and closed on June82016 The Issue was oversubscribed to the extent of 1.16 times. The allotment of Sharesto the eligible applicants was completed by June 17 2016. The funds from the rights issueare being used towards commissioning of the captive Thermal Power plant at the Factory atChintalapalem Village Nalgonda District Telangana.
9. CAPTIVE POWER PLANT
The work towards setting up of the Power Project is proceeding as per the anticipatedtimelines . The electricity generated is intended to be used for captive consumption atour Companys cement factory situated at Survey No. 226 Chintalapalem VillageMellacheruvu Nalgonda District Telangana. The power generated by the Power Project wouldsupplement the power that our Company currently purchases from the Telangana StateElectricity Board.
As per the Implementation Schedule the commissioning of the Captive Thermal Power Plantshould be completed by end of October and the company should be able to accrue benefits ofthe same in the long run.
10. PRODUCT LAUNCH
The company in a constant quest to meet the ever changing demand of customers launchedrapid hardening Portland cement in the month of September 2015 by the name of"ANJANI PRATHISTTA".
This is the first of its kind product launched in the state of Telangana and thecustomer response to the same has been extremely positive. Anjani Prathistta is most idealfor dense concreting and has superior resistance to sulphide and chloride attacks. It isalso highly durable and highly preferable for high speed setting.
11. REPORT ON CORPORATE GOVERNANCE:
A report on Corporate Governance is given in Annexure to this Report.
12. STATUTORY AUDITORS:
The Auditors M/s Ramanatham & Rao Chartered Accountants (Firm Registration NoS-2934) retire at the ensuing Annual General Meeting and are eligible for reappointment.M/s Ramanatham & Rao have given their consent to act as Auditors and have confirmedthat the appointment if made would be in compliance with Section 141 of the CompaniesAct 2013 read with Companies (Audit and Auditors) Rules 2014.
13. COST AUDITORS:
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 2016-17 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 Members ratification for the remuneration payable to M/sNarasimha Murthy & Co. Cost Accountants Hyderabad is placed in the ensuing AnnualGeneral Meeting.
The Cost Audit Report for the Financial year 2014-15 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 24 2015 The Cost Audit Report for the Financial year 2015-16would be filed within the period mentioned in the Companies(Cost Record and Audit) Rules2014.
14. REQUIREMENT UNDER THE COMPANIES ACT 2013 A. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. K.V. Vishnu Raju and Mr. P. V. R. L. Narasimha Raju resigned from the Board ofDirectors with effect from September 28 2015. The Board of Directors placed on recordtheir appreciation for the invaluable contribution and guidance provided by them
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 in the investor section on the Companyswebsite at http://www.anjanicement.com.
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
5 meetings of the Board of Directors of the Company were held during the year. Fordetails of the meetings please refer to clause 3 of the Corporate Governance Reportwhich forms part of 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 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
F. POLICY OF DIRECTORS APPOINTMENT AND REMUNERATION
Companys policy on Directors appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided under section 178(3) of the Act are covered in the CorporateGovernance Report which forms part of this Report. Further information about elements ofremuneration package of individual directors is provided in the extract of Annual Returnas provided under Section 92(3) of the Act is enclosed in the prescribed form MGT-9 andforms part of this Report. The Nomination and Remuneration Policy of the company isavailable in the investor section on the Companys website at http://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
The Company has not given any loans guarantees or made any investments under Section186 of the Act during the financial year 2015-16.
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 entered into contract / arrangements with the related parties in theordinary course of business and on arms length basis. Thus provisions of Section 188(1) of the Act are not applicable in respect of these transactions.
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 COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIALYEAR RELATE AND THE DATE OF THE REPORT
The Company issued 6896099 Equity shares to its shareholders on rights basis. Owingto the issue of Rights shares the share capital of the Company has increased from Rs.183895970 to Rs. 252856960.
M. RISK MANAGEMENT POLICY
The Company has a risk management policy. The management of the company is spearheadedby the Managing Director and risk assessment and mitigation forms a concurrent part ofthe management procedures. Periodical reviews of various operational marketing and legalparameters affecting the company is conducted and risk management and mitigatingprocedures are adopted on a continuous basis.
There are no risks which in the opinion of the Board threaten the existence of theCompany. However some of the risks which may pose challenges are set out in theManagement Discussion and Analysis which forms part of this Report.
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 same is available on thewebsite of the Company i.e. www.anjanicement.com.
The company was not required to spend any amount in CSR activities during the financialyear 2015- 16 as per the provisions of 135(5) of the Companies Act 2013 on account ofthe average profits being negative.
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 ||10.58 times |
|Mr. K.V. Vishnu Raju ** ||- |
|Mr. P.V.R.L. Narasimha Raju ** ||- |
**Mr. P.V.R.L. Raju and Mr. K. V. Vishnu Raju resigned from the Board of Directors onSeptember 28 2015
The median remuneration of the employees of the company for the financial year 2015-16is ` 2.86 lakhs.
b) The percentage increase in remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary or Manager if any in the financial year;
|Name of Person ||Percentage Increase in Remuneration |
|Non-Executive Directors || |
|Mr. B. Ramesh ||- |
|Mr. P. Gopal ||- |
|Mr. V. Subramanian ||- |
|Dr. (Mrs.) S. B. Nirmalatha ||- |
|Mr. K.V. Vishnu Raju ||- |
|Mr. P.V.R.L. Narasimha Raju ||- |
|Executive Directors || |
|Mr. A. Subramanian * ||- |
|CFO and CS || |
|Mr. M.L. Kumavat ||17.93 |
|Mrs. Anu Nair ||30.00 |
*Cannot be calculated as there is no comparable information corresponding to theprevious year.
c) The percentage increase in the median remuneration of employees in the financialyear 8.59% d) The number of permanent employees on the rolls of company; 289
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 employees received an increase of 11.64%. The increase in remunerationis in line with the market trends and the remuneration policy of the company.
However if a comparison has to be made for the managerial remuneration paid in the year2014-15 as compared to the managerial remuneration paid in 2015-16 there has been anincrease of 47.50%
f) The key parameters for any variable component of remuneration availed by thedirectors; Nil
g) Affirmation that the remuneration is as per the remuneration policy of the Company
The Company affirms that remuneration is as per the remuneration policy of the Company.
P. FORM FOR DISCLOSURE OF PARTICULARS OF CONTRACTS/ARRANGEMENTS ENTERED INTO BY THECOMPANY WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THECOMPANIES ACT 2013 INCLUDING CERTAIN ARMS LENGTH TRANSACTIONS UNDER THIRD PROVISOTHERE TO.
All related party transactions entered into by the company are on arms lengthbasis and it has not entered into any material contracts or arrangements or transactionswith related parties.
Q. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY REGULATORS COURTS TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN THE FUTURE
There is no significant and material order passed by the Regulators or Courts orTribunals impacting the going concern status and Companys operations.
R. BOARD EVALUATION
The Board based on the parameter provided by the Nomination & RemunerationCommittee 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 Companys 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. STATEMENT PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OFMANAGERIAL PERSONNEL) RULES 2014 FORMING PART OF THE DIRECTORS REPORT FOR THE YEARENDED MARCH 31 2016.
There are no employees in the Company falling within the definition mentioned above
T. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars as prescribed under 134 (3) (m) of the Companies Act 2013 and theRules prescribed thereunder are set out as an Annexure to this report.
U. SUBSIDIARY COMPANIES:
Your company has no subsidiaries within the meaning of Section 2(6) of the CompaniesAct 2013.
V. DIRECTORS RESPONSIBILITY STATEMENT:
As required under Section 134(5) of the Companies Act 2013 the Directors herebyconfirm 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 them consistently andmade judgments and estimates that are reasonable and prudent so as to give true and fairview of the state of affairs of the Company at the end of the financial year and of theprofits of 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.
15 CAUTIONARY STATEMENT:
Statements made in this report including those stated under the caption"Management Discussion and Analysis" describing the companys objectivesexpectations or projections may constitute "forward looking statements" withinthe meaning of applicable securities laws and regulations.
Important factors that could influence Companys operations include global anddomestic supply and demand conditions affecting the selling price of finished goodsavailability of inputs and their prices changes in Government regulations tax lawseconomic developments within the country and outside and other factors such as litigationsand Industrial 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 || |
|Place: Chennai ||A. Subramanian ||V. Subramanian |
|Date: August 11 2016 ||Managing Director ||Director |