We have pleasure in presenting the 119th Annual Report of the Company alongwith the audited statement of accounts for the year ended 31st March 2016. Thefinancial results for the year are shown below. The working and operational parameters ofall the plants of the Company were quite satisfactory during the year. Although Earningsbefore finance cost tax depreciation and amortisation (EBITDA) have shown someimprovement there is a net loss mainly due to high interest burden depreciation andlower profitability in cement because of lacklustre demand and pressure on sellingprices. Labour relations at all the plants are cordial and an atmosphere of mutual trustand confidence prevails.
1. SUMMARISED FINANCIAL RESULTS:
(Rs. in crore)
| ||2015-16 ||2014-15 |
|Earnings before finance cost tax depreciation and amortisation ||775.06 ||700.14 |
|(EBITDA) || || |
|Less: || || |
|Finance Cost ||567.72 ||484.62 |
|Profit after Finance Cost ||207.34 ||215.52 |
|Less: || || |
|Depreciation ||287.82 ||249.21 |
|Profit / (Loss) before tax ||(80.48) ||(33.69) |
|Less: || || |
|(Excess) / Short Provision for tax adjustments in respect of earlier years (Net) ||(0.76) ||1.41 |
|Deferred Tax Debit / (Credit) ||(25.20) ||(50.59) |
| ||25.96 ||49.18 |
|Net Profit / (Loss) ||(54.52) ||15.49 |
|Add: || || |
|Balance brought forward ||47.77 ||137.31 |
|Available Profit/(Loss) dealt with as under ||(6.75) ||152.80 |
|(Transfers) & Appropriations: || || |
|Transfer from General Reserve ||(80.69) ||- |
|Proposed Equity Dividend ||61.43 ||55.83 |
|Tax on proposed equity dividend ||12.51 ||11.37 |
|Transitional effects on revision of depreciation on useful life of assets in accordance with Schedule II of the Companies Act 2013 || || |
|Debenture Redemption Reserve ||- ||15.49 |
|Balance carried forward ||- ||47.77 |
| ||(6.75) ||152.80 |
The performance of each business segment of the Company has been comprehensivelydiscussed in the Management Discussion and Analysis Report (forming part of thisDirectors' Report) based on the reports of the Senior President/CEO of each of the unitsof the Company.
The Board of Directors has recommended a dividend of 55% i.e. '5.50 (Rupees Five andpaise fifty) per share of the face value of '10/- each for the approval of theshareholders. Last year the dividend was paid at the same rate. This dividend will be paidwhen declared by the shareholders in accordance with law out of General Reserve and willbe free of tax in the hands of the shareholders. The Company will have to pay dividenddistribution tax plus applicable surcharge education cess and/or any other cessapplicable on the dividend distribution tax at the time of declaration and payment ofdividend which amounts to 20.36% approximately.
3. SHARE CAPITAL:
The Company's equity Share Capital has increased by '10.18 crore during the yearraising the total equity capital to '111.69 crore. The increase was on account ofpreferential allotment of shares to promoters/ promoter group due to conversion ofpreferential warrants.
The total exports of the Company amounted to '504 crore (Previous year '589 crore)representing about 7 percent of the net sales.
5. EXPANSION & MODERNISATION:
a) Rayon Tyre Cord & Chemicals
Eight CSY machines have been commissioned during the year thus a total of 50 CSYmachines are in the production line.
During the year capacity of the doubling & twisting unit has been enhanced from 90tonnes per month to 150 tonnes per month. Additional capacity for Zero Twist Rayon TyreYarn was commissioned by adding 72 winding position during the second half of the year.
Modernisation & Technological upgradation programmes continue at all the units ofthe Company to maintain competitiveness and achieve better quality. Stringent costcontrol measures remain in place in all possible areas and are regularly reviewed. Specialemphasis is being given to water and energy conservation.
6. FORMATION OF BIRLA ESTATES:
A new Division called 'Birla Estates' has been set up which will undertake workrelated to property development of available existing land parcels of the Company as wellas new land to be purchased/acquired in the future for the purpose of development.
Based on a market feasibility study for each of the existing land parcels newerprojects in commercial residential or other segments would be developed ensuring optimumviability. Necessary steps are being taken to procure various government approvals whichwill help pave the way for smooth progress.
Two new office buildings Birla Aurora adjacent to Century Bhavan and CenturyGreenspan on erstwhile Century Mill's land are complete and both the buildings have beenpartially leased out. All efforts are being taken to fully lease out the buildings.
(a) Shri B.L. Jain Senior President of the Cement Divisions and Whole-time Directorretired from the services of the Company on 31st March 2016. Your Companywishes to place on record its appreciation for the valuable services rendered by Shri Jainduring his long tenure with the Company including that of a Director.
(b) Shri D.K. Agrawal President (Corporate Affairs) of the Company has been appointedas Whole-time Director of the Company with effect from 1st April 2016. A suitableresolution in this behalf is being proposed at the forthcoming Annual General Meeting forthe approval of the members for his appointment as Whole-time Director of the Company.
(c) Pursuant to the provisions of Section 152 of the Companies Act 2013 Shri KumarMangalam Birla (DIN 00012813) retires by rotation as Director at the ensuing AnnualGeneral Meeting and being eligible offers himself for the re-appointment. The Boardrecommends his re-appointment.
(d) Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI Regulations the Boardhas carried out the annual performance evaluation of its own performance of the Directorsindividually as well as the evaluation of the working of its Audit Nomination &Remuneration and other Committees of the Board. At the meeting of the Board all therelevant factors that are material for evaluating the performance of individual Directorsthe Board and its various Committees were discussed in detail. A structured questionnaireeach for evaluation of the Board its various Committees and individual Directors wasprepared and recommended to the Board by the Nomination & Remuneration
Committee for doing the required evaluation after taking into consideration the inputreceived from the Directors covering various aspects of the Board's functioning such asadequacy of the composition of the Board and its Committees execution and performance ofspecific duties obligations and governance etc.
A separate exercise was carried out to evaluate the performance of individualDirectors including the Chairman of the Board who were evaluated on parameters such aslevel of engagement and contribution independence of judgement safeguarding the interestof the Company and its minority Shareholders etc. The performance evaluation of theindependent Directors was carried out by the entire Board. The performance evaluation ofthe Chairman and nonindependent Directors was also carried out by the IndependentDirectors at their separate meeting. The Directors expressed their satisfaction with theevaluation process.
During the year five Board meetings were convened and held. The details thereof aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
Various Divisions of the Company have received notable awards as mentioned below:-
(a) Rayon Tyre Cord & Chemicals:
IMC Ramkrishna Bajaj National Quality Award 2015 - Certificate of Merit.
Bagged IMC Ramkrishna Bajaj National Quality 'Best Practices award' for in-housedeveloped system for monitoring statutory compliance and e-intelligence data bank.
Awarded as "Excellent Energy Efficient Unit" for the year 2015 by CIIfor energy conservation & management.
Platinum Award by Greentech Foundation in the chemical sector for good safetypractices for the year 2015 at our Chemical plant.
(b) Century Cement:
First prize for "Overall Performance" and maintenance of HEMMS &workshop for the limestone mines during Annual Safety Celebrations-2015 held under theaegis of the Directorate General of Mines Safety Bilaspur & Raigarh Region.
(c) Maihar Cement:
First prize in "Water Quality Management" in the group of fullymechanized mines (more than 1 million tonnes) and First prize in "Noise Vibration andAesthetic Beauty" "Water Quality Management" and "Air QualityManagement" in the group of fully mechanized mines (less than 1 million tonnes) forits limestone mines from the Indian Bureau of Mines Jabalpur Region during the MinesEnvironment & Mineral Conservation week 201516.
(d) Manikgarh Cement:
First prize in the "Explosives" for its limestone mines during theMine Safety Week 2015-16 from the Dy. Directorate General of Mines Safety Western ZoneGovernment of India Nagpur.
First prize in the "Noise Vibration Control and Aesthetic Beauty" forits limestone mines during the Mines Environment and Mineral Conservation Week 2015-16held under the aegis of the Indian Bureau of Mines Nagpur Chhattisgarh & MadhyaPradesh Region and also received special award namely "PANDWANI" award forachieving First prize in the "Noise Vibration Control and Aesthetic Beauty"consecutively for three years.
(e) Century Pulp & Paper (CPP):
During the year CPP Lalkua participated in 98th Agro-IndustrialExhibition organised by and held at G B Pant University of Agriculture and Technology andCPP has been adjudged First place.
This was consecutively for the eighth time to remain adjudged First.
CPP has bagged "National energy Efficient Unit Award" in the Paper& Sugar sector by CII in a National Level Award competition for "Excellence inenergy Management-2015".
M/s. Dalal & Shah Chartered Accountants (Firm Registration Number: 102021W) whoare the Statutory Auditors of the Company will hold office up to the forthcoming AnnualGeneral Meeting. As per the Companies Act 2013 a new firm M/s. SRBC & Co. LLPChartered Accountants (ICAI Firm Registration No.324982E) has been recommended forappointment as Statutory Auditors of the Company for a term of 5 years from the conclusionof the forthcoming Annual General Meeting of the Company subject to ratification by theshareholders every year. They have confirmed their eligibility under Section 141 of theAct and the Rules framed thereunder for their appointment as Auditors of the Company.
10. AUDITORS' REPORT:
The Auditors' Report to the Shareholders does not contain any reservationqualification or adverse remark.
11. COST AUDITORS AND COST AUDIT REPORT:
Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Rules 2014 the cost audit records maintained by the Company inrespect of various manufacturing activities are required to be audited. The cost auditreport for the financial year 2014-15 was filed with the Ministry of Corporate Affairs on24th September 2015. M/s. R. Nanabhoy & Co. Cost Accountants werenominated as the Company's Lead Cost Auditor.
Your Directors have on the recommendation of the Audit Committee appointed M/s. R.Nanabhoy & Co. Cost Accountants to audit the cost accounts of the Cement Paper andTextile products of the Company on a remuneration of ' 3.40 lacs and appointed Shri M.R.Dudani Cost Accountants to audit the cost accounts of the Rayon & Chemicals productson a remuneration of '2.08 lacs for the year 2016-17.
As required under the Companies Act 2013 the remuneration payable to the cost auditoris required to be placed before the members in a general meeting for their ratification.Accordingly a resolution seeking members' ratification for the remuneration payable toM/s. R. Nanabhoy & Co. and Shri M.R. Dudani Cost Auditors is included in the Noticeconvening the Annual General Meeting of the Company.
12. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Gagrani & Gagan Company Secretaries in practice (CP No.1388) to undertakethe Secretarial Audit of the Company for the year ending 31st March 2017. TheSecretarial Audit Report for the year ended 31st March 2016 is annexedherewith as 'Annexure -I' to this Report. The Secretarial Audit Report does not containany adverse qualification reservation or remark.
13. FIXED DEPOSITS:
During the year the Company has not accepted any deposits from the public and as suchthere are no outstanding deposits in terms of the Companies (Acceptance of Deposits)Rules 2014.
14. LOANS GUARANTEES AND INVESTMENTS:
It is the Company's policy not to give loans directly or indirectly to any person orother body corporate or give any guarantee or provide any security in connection with aloan to any other body corporate or person. The details of the investments covered underthe provisions of Section 186 of the Companies Act 2013 are given in the FinancialStatements.
15. DIRECTORS' RESPONSIBILITY STATEMENT:
The Board of Directors acknowledge the responsibility for ensuring compliance with theprovisions of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 in thepreparation of the annual accounts for the year ended on 31st March 2016 andstate that:
a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that 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 down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
16. CHANGE IN KEY MANAGERIAL PERSONNEL:
In view of the retirement of Shri B.L. Jain on 31st March 2016 from theservices of the Company he has ceased to be a Whole-time Director. With effect from 1stApril 2016 Shri D.K. Agrawal has been appointed as Whole-time Director of the Companyand has ceased as Secretary of the Company and Shri Atul K. Kedia has been designated asCompany Secretary. Shri R.K. Dalmia continues to be the Chief Financial Officer of theCompany.
17. CORPORATE GOVERNANCE:
A separate report on Corporate Governance is enclosed as a part of this Annual Report.A certificate from the Auditors of the Company regarding compliance with the CorporateGovernance norms stipulated is annexed to the Report on Corporate Governance.
18. AUDIT COMMITTEE VIGIL MECHANISM & RISK MANAGEMENT:
Audit Committee comprises of four members and all members are Independent Directors.The Company Secretary is the Secretary of the Committee. All transactions with relatedparties are on an arm's length basis. During the year there are no instances where theBoard had not accepted the recommendations of the Audit Committee. The Company has inplace a vigil mechanism for Directors and Employees to report genuine concerns about anywrongful conduct with respect to the Company or its business or affairs. This policycovers malpractices misuse or abuse of authority fraud violation of the Company'spolicies or Rules manipulations negligence causing danger to public health and safetymisappropriation of monies and other matters or activity on account of which the interestof the Company is affected or is likely to be affected and formally reported by whistleblowers. The Policy provides that all Protected Disclosures can be addressed to theVigilance and Ethics Officer of the Company or to the Chairman of the Audit Committee /Whole-time Director in exceptional cases. All protected disclosures under this policy willbe recorded and thoroughly investigated. If an investigation leads the Vigilance andEthics Officer / Chairman of the Audit Committee to conclude that an improper or unethicalact has been committed the Vigilance and Ethics Officer / Chairman of the Audit Committeeshall recommend to the management of the Company to take such disciplinary or correctiveaction as he may deem fit. The details of the vigil mechanism are also available on theCompany's website www.centurytextind.com
The Audit Committee has also been delegated the responsibility for monitoring andreviewing risk management assessment and minimization procedures developingimplementing and monitoring the risk management plan and identifying reviewing andmitigating all elements of risks which the Company may be exposed to. The Board alsoreviews the risk management assessment and minimization procedures. Further in accordancewith SEBI Regulations a Risk Management Committee has also been formed which alsooversees the risk management of the Company.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:
The CSR Committee comprises of four members. Three members of the Committee areIndependent Directors.
Due to the average net profit for last three years being negative your Company is notrequired to spend any amount on CSR activities during the year under review.
The Committee met once during the year to review the Corporate Social ResponsibilityPolicy. The annual report on CSR containing the particulars specified in the Annexure tothe Companies (CSR Policy) Rules 2014 is annexed as 'Annexure-II' and forms a part ofthis Report.
20. NOMINATION AND REMUNERATION COMMITTEE:
Nomination and Remuneration Committee comprises of five members of which fourincluding the Chairman of the Committee are Independent Directors.
The Company's Remuneration Policy is attached as 'Annexure-III' and forms a part ofthis Report.
21. RELATED PARTY TRANSACTIONS:
All transactions entered into with related parties as defined under the Companies Act2013 during the financial year were in the ordinary course of business and on an arm'slength pricing basis and do not attract the provisions of Section 188 of the CompaniesAct 2013. There were no materially significant transactions with the related partiesduring the financial year which were in conflict with the interest of the Company andhence enclosing of Form AOC-2 is not required. Suitable disclosure as required by theAccounting Standard (AS18) has been made in the notes to the Financial Statements.
All Related Party Transactions are placed before the Audit Committee. Prior omnibusapproval of the Audit Committee is obtained on a yearly basis for the transactions whichare of a foreseen and repetitive nature. The transactions entered into pursuant to theomnibus approval so granted are audited and a statement giving details of all relatedparty transactions is placed before the Audit Committee for their approval on a quarterlybasis.
The policy on Related Party Transactions as approved by the Board has been uploaded onthe Company's website.
None of the Directors has any pecuniary relationships or transactions vis-a-vis theCompany.
The Solicitors for the Company M/s. Mulla & Mulla & Craigie Blunt & Caroeprovides the legal services required by the Company from time to time. The transactionswith the said firm are on an arm's length basis and in the ordinary course of business.Shri Yazdi P. Dandiwala one of the Directors of the Company is a Senior Partner in thesaid firm of Solicitors.
22. DECLARATION BY INDEPENDENT DIRECTORS:
Necessary declarations have been obtained from all the Independent Directors undersub-section (6) of Section 149 of the Companies Act 2013.
23. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:
The Competition Appellate Tribunal (COMPAT) set aside in December 2015 an order passedby the Competition Commission of India (CCI) and remanded back the matter to theCommission for fresh adjudication. The said CCI order was in response to a complaint filedby the Builders Association of India against leading Cement Companies (including Century)alleging violation of certain sections of the Competition Act 2002.
The CCI order had levied a penalty on Cement Companies which for the Company was'274.02 crore.
Responding to appeals against payment of this penalty COMPAT had granted an interimstay while directing the Company and others to deposit 10% of the penalty which wasplaced as Fixed Deposit with a bank with the Commission having a lien thereon. Thedeposit amount has since been refunded to the Company.
24. INTERNAL FINANCIAL CONTROL:
The Company has in place internal financial control systems commensurate with the sizeand complexity of its operations to ensure proper recording of financial and monitoringof operational effectiveness and compliance of various regulatory and statutoryrequirements. The internal auditor monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company. Based on the report of the internal auditorrespective departments undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.
25. INDIAN ACCOUNTING STANDARDS (IND AS) IFRS CONVERGED STANDARDS:
The Ministry of Corporate Affairs vide its notification dated 16.02.2015 has notifiedthe Companies (Indian Accounting Standard) Rules 2015. In pursuance of this notificationthe Company has adopted IND AS with effect from 1st April 2016 with the comparatives forthe year ended 31st March 2016.
26. ASSOCIATE COMPANIES:
During the year Kesoram Insurance Broking Services Ltd. and Vasavadatta Services Ltd.have ceased to be Associates of the Company. The Board of Bander Coal Co. Pvt. Ltd. yourCompany's associate has resolved to initiate the process of closure of the said associateas there is no business left with it.
27. ENERGY CONSERVATION TECHNOLOGY 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(3) of The Companies (Accounts) Rules 2014 is annexed herewith as 'Annexure-IV'.
28. ENVIRONMENT AND POLLUTION CONTROL:
Your Company strives to maintain the highest standards of environmental care andensures that increasing level of operations do not adversely impact standards of healthand environment. To combat pollution and strengthen the area ecology considerableemphasis is placed on plantation of fragrant and shady trees. All manufacturing facilitiespossess the required environmental clearance from the respective Pollution Control Boardsand do comply with the relevant statutory provisions.
The Company is well aware of its responsibility towards a better and cleanerenvironment. Our efforts in environment management go well beyond mere compliance withstatutory requirements. The Company has always maintained harmony with nature by adoptingeco-friendly technologies and upgrading the same from time to time incidental to itsgrowth programmes.
29. PARTICULARS OF EMPLOYEES:
The prescribed particulars of employees required under Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are attached as'Annexure-V' and forms part of this Report.
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 and forming part of the Directors' Report for the year ended 31stMarch 2016 is given in a separate Annexure to this Report.
The said Annexure is not being sent along with this Report to the Members of theCompany in line with the provisions of Section 136 of the Companies Act 2013. Members whoare interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The aforesaid Annexure is also available for inspectionby the Members at the Registered Office of the Company 21 days before the 119thAnnual General Meeting and up to the date of the said Annual General Meeting during thebusiness hours on working days.
None of the employees listed in the said Annexure is a relative of any Director of theCompany. None of the employees hold (by himself or along with his/her spouse and dependentchildren) more than two percent of the equity shares of the Company.
30. EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as 'Annexure-VI'.
Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year. The Directors place on record their sincereappreciation to all employees of the Company for their unstinted commitment and continuedcontribution to the Company's well being.
|Registered Office: ||On behalf of the Board |
|Century Bhavan || |
|Dr. Annie Besant Road ||B.K. Birla |
|Worli Mumbai - 400 030 ||Chairman |
|Dated: 3rd May 2016 || |