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Cera Sanitaryware Ltd.

BSE: 532443 Sector: Consumer
NSE: CERA ISIN Code: INE739E01017
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OPEN 2220.00
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VOLUME 523
52-Week high 2759.00
52-Week low 1475.00
P/E 28.98
Mkt Cap.(Rs cr) 2793.90
Buy Price 0.00
Buy Qty 0.00
Sell Price 2130.00
Sell Qty 3.00
OPEN 2220.00
CLOSE 2234.50
VOLUME 523
52-Week high 2759.00
52-Week low 1475.00
P/E 28.98
Mkt Cap.(Rs cr) 2793.90
Buy Price 0.00
Buy Qty 0.00
Sell Price 2130.00
Sell Qty 3.00

Cera Sanitaryware Ltd. (CERA) - Director Report

Company director report

To

The Members

The Directors have pleasure in submitting the Annual Report together with the Statementof Accounts of your Company for the year ended 31st March 2015.

Performance

The summary of your Company’s financial performance is given below:

(Rs. in lacs)
Year ended March 31 2015 Year ended March 31 2014
Profit before Depreciation and Taxes & Exceptional item 11638.71 9464.65
Deducting there from Depreciation of 1546.09 1224.70
Profit before Tax 10092.62 8239.95
Deducting there from taxes of:
- Current Year 2525.25 2651.35
- Deferred Tax 800.92 398.04
Profit after Tax 6766.45 5190.56
Add: Balance brought forward from previous year 3000.00 1900.00
Amount available for Appropriations 9766.45 7090.56
The proposed appropriations are:
1. Proposed Dividend 812.87 632.74
2. Tax on Proposed Dividend 165.48 111.45
3. General Reserve 3788.10 3346.37
4. Balance carried forward 5000.00 3000.00
Total 9766.45 7090.56

Highlights / Performance of the Company

Turnover of the Company for the year increased by 23.80% to Rs. 821.67 Cr. as comparedto Rs. 663.69 Cr. previous year.

Profit before tax for the year increased by 22.48% to Rs. 100.93 Cr. as compared to Rs.82.40 Cr. previous year.

Profit after tax for the year increased by 30.36% to Rs. 67.66 Cr. as compared to Rs.51.90 Cr. previous year.

The Directors are pleased to inform you that your Company has continued to grow despiteadverse market conditions in 2014-15 due to its distribution strength product qualitybrand equity and after-sales service.

The well-entrenched distribution network of your Company is being supplemented with anarray of CERA Style Studios and CERA Style Galleries in different towns which showcaseyour Company’s products in an exclusive ambience.

Sanitaryware Unit

Your Company has expanded its annual production capacity to 3.0 Mn. Pcs. for meetingthe increased demand of its products. During the year the plant had run at its optimumcapacity despite being affected by the flooding due to heavy rains. Further by addingbalancing equipments the company aims to achieve production of 3.2 Mn. Pcs. p.a.

Faucetsware Unit

The new ranges and designs of Faucets have been well accepted by the market. Thecompany attained its full capacity in the year. Owing to this success the company hasfurther expanded its capacity to 2.34 Mn. Pcs. p.a.

Bathware Unit

Your Company has continued to market products like kitchen sinks and mirrors to itsrange besides products like shower cubicles shower panels steam cubicles whirlpools andimporting & marketing high-end wellness range under the brand name CERA.

Tiles Unit

Your Company has successfully launched CERA tiles in all markets. The exclusive tie upwith manufacturers of tiles has helped your Company maintain its quality standards whichdistinguishes CERA tiles.

Green Energy Unit

As a part of national policy and Green initiative generation of electricity throughnon-conventional sources and to stabilize power cost company has installed twoWIND-TURBINES of 4.00 MW and SOLAR ENERGY of 1.00 MW capacity at Dist. Jamnagar &Dist. Mehsana respectively in Gujarat during the year.

Thereby the installed capacity of Non-conventional Energy unit of the company nowstands at 12.825 MW from 7.825 MW.

The non-conventional Wind and Solar Power has produced 10361993 KWH against6285830 KWH in the previous year.

Corporate Governance and Management Discussion and Analysis

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges report onCorporate Governance along with the Auditors’ statement on its compliance andManagement discussion and Analysis have been included in this Annual Report as a separateannexure.

Corporate Social Responsibility

The report on Corporate Social Responsibility (CSR) Activities alongwith Annexure asper Rule 9 of The Companies (Corporate Social Responsibility Policy) Rules 2014 isannexed as a separate Annexure.

Directors’ Responsibility Statement

In compliance of Section 134 (5) of the Companies Act 2013 the Directors of yourCompany confirm:

• that in the preparation of annual accounts the applicable accounting standardshave been followed and there are no material departures;

• that such accounting policies have been selected and applied consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2015 and of the Profit of theCompany for the year ended on that date.

• that proper and sufficient care has been taken 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;

• that the annual accounts have been prepared on a going concern basis.

• that internal financial controls have been laid down to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

• that proper systems have been devised to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Dividend

Your Directors recommend a dividend of Rs. 6.25/- per share (125%) (Previous year Rs.5/- per share (100%) on 13005874 (12654874) equity shares of Rs. 5/- each fully paidfor the year ended 31.03.2015 to be paid subject to approval by the members at theensuing Annual General Meeting.

During the year the unclaimed dividend pertaining to the financial year ending 2006-07was transferred to the Investor Education and Protection Fund.

Share Capital

The paid up Equity Share Capital as on 31st March 2014 was Rs. 632.74 lacs.During the year under review the Company has issued 351000 equity shares on preferentialbasis. As on 31st March 2015 the Share Capital was Rs. 650.29 lacs. Since theshares on preferential basis were issued in March 2015 funds could not be utilized forthe objects for which the same were raised. Hence it is parked temporarily with theBankers and in market securities.

No shares with differential voting rights stock option or sweat equity shares wereissued by the Company during the year under review.

Conservation of energy technology absorption and foreign exchange earnings and outgo

Conservation of energy:

The Company has two sources of energy i.e. Natural Gas is being supplied by GAIL &Sabarmati Gas Ltd. for running the Kilns. The pricing and quantity of the gas is based onthe availability international pricing and contract with the company. For energyconservation company has installed fuel efficient burners to control gas consumption andevery technological development is being taken care of.

Second source of energy for running machineries are electricity supplied by localDiscom. To compensate within the energy consumption by way of electricity the Company hasset up Wind Turbines of 11.825 MW and 1.00 MW Solar Plant which will generate about 90 %of the requirements and it will offset against monthly consumption of energy bill.

The Company has spent Rs. 36.08 crores for setting up 4.00 MW wind turbines and 1.00 MWsolar energy during the year.

The information on technology absorption and foreign exchange earnings and outgostipulated under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed herewith as a separate Annexure.

Exchequer

The Company has contributed Rs. 121.34 Crores to the exchequer by way of excise dutycustoms duty service tax income tax VAT sales tax and other fiscal levies.

Deposits

The Company has discontinued its Fixed Deposit Scheme from the Financial Year 2012-13.Despite efforts to identify and repay the unclaimed deposits the total amount of FixedDeposits matured and remaining unclaimed with the Company as on 31st March2015 was Rs. 2.74 lacs.

The Company has not accepted fixed deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014.

Finance

During the year under review the Company repaid loans of Rs. 675.02 lacs to FinancialInstitutions and Banks.

Managerial Remuneration and Employees

Details required pursuant to Rule 5 (1) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are enclosed as a separate Annexure.

Details of employees required pursuant to Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as a separate Annexure.

Directors

Members at the Annual General Meeting held on 22-08-2014 have appointed Shri AshokChhajed Shri Sajan Kumar Pasari Shri Govindbhai P. Patel and Shri Lalitkumar Bohania asIndependent Directors of the Company to hold office for five consecutive years for a termup to 31st March 2019 (they will not retire by rotation). Members have alsoappointed Smt. Deepshikha Khaitan as Director and Shri Atul Sanghvi as Director &Executive Director and Shri Vikram Somany as Chairman and Managing Director.

Dr. K.N. Maiti is due to retire at the end of the ensuing Annual General Meeting andbeing eligible offers himself for re-appointment. Brief resume of Dr. K.N. Maiti asrequired as per clause 49 of the Listing Agreement executed with the Stock Exchanges isprovided in the notice convening the Annual General Meeting of the Company.

All independent directors have given declarations that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013. The companykeeps informed independent directors about changes in the Companies Act 2013 and rulesfrom time to time and their role duties and responsibilities.

Auditors

H.V. Vasa & Co. Statutory Auditors of the company retire at the end of forthcomingAnnual General Meeting and being eligible offer themselves for re-appointment. The Boardrecommends their re-appointment at the ensuing Annual General Meeting.

Cost Auditors

The Company has appointed K.G. Goyal & Co. as Cost Auditors for conducting costaudit for the year.

Secretarial Audit

Secretarial Audit Report given by Umesh Parikh and Associates Company Secretaries inpractice is annexed with this report.

Extract of Annual Return

The details forming part of the extract of annual return in Form No.MGT-9 is annexedherewith as a separate Annexure.

Particulars of loans guarantees or investments under section 186

The loans if any made by the Company are within the limits prescribed u/s 186 of theCompanies Act 2013 and no guarantee or security is provided by the Company.

Details of Investments covered u/s 186 of the Companies Act 2013 are given in thenotes to the Financial Statements.

Particulars of contracts or arrangements with related parties

Particulars of contracts or arrangements with related Parties as per Section 188(1) ofCompanies Act 2013 including arm’s length transactions are enclosed as a separateAnnexure in Form No.AOC-2 .

There are no materially significant related Party transactions made by the Company withDirectors Key Managerial Personnel or other designated Persons which may have a PotentialConflict with the interest of the Company at large. All related party transactions wereplaced before the Audit Committee and also the Board for approval. The Policy on relatedParty transactions as approved by the Board is uploaded on the Company’s website.

Insurance

Your Company has adequately insured all its properties including Plant and MachineryBuildings and Stock.

Industrial Relations

Your Company’s relations with its employees remained cordial throughout the year.The Directors wish to place on record their deep appreciation for the services rendered byworkers staff members and executives of the Company.

Your Company has taken adequate steps for the health and safety of its employees asrequired under the Gujarat Factories Rules 1963. The Company has not received anycomplaint under The Sexual Harassment of women at Workplace (prevention prohibition andredressal) Act 2013 and the Company has organized three workshops under the said Act.

Appreciation

Your Directors thank the Financial Institutions and Bankers for extending timelyassistance in meeting the financial requirements of the Company. They would also like toplace on record their gratitude for the co-operation and assistance given by State Bank ofIndia Kotak Mahindra Bank Ltd Yes Bank Ltd and various departments of both State andCentral Governments.

For and on behalf of the Board of Directors
Ahmedabad. Vikram Somany
23rd April 2015 Chairman and Managing Director

Annexure to the Directors' Report

Disclosure of particulars with respect to information on conservation of energytechnology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of The Companies (Accounts) Rules 2014and forming part of the Report of the Board of Directors for the year ended 31stMarch 2015.

A. Conservation of Energy

Discussed in the main report

B. Technology Absorption

NIL

Research and Development (R & D)

1. Specific areas in which R & D is carried out : The Company’s Research & Development Unit recognized by the Department of Scientific and Industrial Research (DSIR) Government of India since1989 has been relentlessly working for the improvement in quality of sanitaryware products cost reduction through the use of new and cheaper raw materials changes incorporated in their quality specifications minimizing wastes and losses at different stages of production recycling of unfired and fired wastes generated in production as well as pollution abetment to keep the company ahead of market competition.
Some innovative R&D activities carried out and fully/partly commenced commercial production during the year under report are :
• An Opaque Glaze named as "Snow White" developed earlier and voted as the product of the year in Sanitary ware category for successive two years since 2011 in a row has been further upgraded through replacement of costly ingredients by cheaper substitutes and still maintained the high quality standard and also better than previous.
• Several dark colored glazes have been developed utilizing colorants/ stains from indigenous source through import substitution and commenced commercial production minimizing several teething problems.
• Development of a new cost effective body utilizing increased quantity of fired waste (pitcher) in the body composition and commenced commercial production during the year under report. The said development has thus helped not only on consumption of increased quantity of solid wastes but also in conserving the same quantity of fresh raw materials for future use.
• Developing of an Antimicrobial glaze utilizing the indigenously developed antimicrobial material available in the market and its up-scaling activity leading to commercial production is still under consideration.
• Development of a new and innovative crack resistant body utilizing a new and an unconventional raw material initiated at R & D sometimes back has been completed successfully with promising result. The said body and also other bodies incorporating indigenous raw materials are under trial in the pilot plant. On successful completion of pilot plant production the said bodies would be introduced for commercial production.
• The company has launched a project titled "Waste Minimization & Waste Utilization Programme" and lots of measures have been taken to arrest wastage in solid liquid and gaseous as well as electricity at different stages of production as a continuous programme. Simultaneously the generated wastes of body & glaze are being benefited and used on regular basis at pilot level. Necessary infrastructure is being developed to continue the activities on commercial basis as a part of regular activity of the company.
2. Benefit derived as a result : With the introduction of new and cheaper raw materials from new sources and import substitution of raw materials colors and other inputs the cost of production is expected to reduce.
3. Future plan of action :

• To minimize imports through utilization of raw materials and other inputs from indigenous sources for better inventory management and cost reduction.

• To develop various eco-friendly glazes matching to the international standards of quality.
• To initiate further innovation in the areas of development of bodies and glazes as R&D is a never ending process for making improvement in both once-fired and refire recovery as well as energy conservation.
• The modernization of entire R & D activities through replacement of old and obsolete equipments and addition of new are under progress during the year under report.
4. Expenditure on R & D
a) Capital : Rs. 3.88 Lacs
b) Recurring : Rs. 101.75 Lacs
c) Total : Rs. 105.63 Lacs
d) Total R & D Expenditure as a
percentage of total turnover : 0.13%

C. Foreign Exchange earnings and outgo

The Company has continued to maintain focus and avail of export opportunities based oneconomic considerations. Foreign exchange used and earned by the Company during the yearis as under :

Total foreign exchange used : Rs. 8299.94 Lacs
Total foreign exchange earned : Rs. 636.60 Lacs

Annexure to the Directors' Report

Details as per Rule 5 (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules2014

S. N. Particulars
i. The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year Wholetime Directors
CMD ED
69x 13.4x

 

ii. The % increase in remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year Wholetime Directors KMPs
CMD ED CEO CFO CS
25% 30% 20% 20.30% 23%
iii. The % increase in the median remuneration of employees in the financial year 18 – 20%
iv. The number of permanent employees on the rolls of company. 2380
v. The explanation on the relationship between average increase in remuneration and company performance. Annual increase in remuneration is based on the remuneration policy for different grades industry pattern qualifications and experience responsibilities shouldered and individual performance of the Key Managerial personnel & other employees and also performance of the Company.
vi. Comparison of the remuneration of the Key Managerial Personnel against the performance of the company.

 

vii. Variations in the market capitalization of the company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed company. 2014-15 2013-14
Market Capitalisation Rs. 3227.21 Cr. Rs. 1118.88 Cr.
PE Ratio 46.50 21.55
Last Public Offer Market Quotation (Not Applicable as no public offer made by the company.)
viii. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. The percentage increase in the salaries of employees other than the managerial personnel in the last financial year is 18%- 20% as against an increase of 25%-30% in the salary of the Chairman and Managing Director & Executive Director (managerial personnel as defined under the Act.). Annual increase in remuneration is based on different grades industry pattern qualifications & experience responsibilities shouldered and individual performance of managerial personnel and other employees.
ix. Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company. Particulars % of Net Sales for F.Y 2014-15.
CMD 0.61%
ED 0.12%
CEO 0.28%
CFO 0.06%
CS 0.04%
x. The key parameters for any variable component of remuneration availed by the directors. Key parameters of Whole time Directors’ variable remuneration includes components like incentive on growth of top-line and growth in profitability.
xi. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year and NOT APPLICABLE
xii. Affirmation that the remuneration is as per the remuneration policy of the company. Remuneration is as per the remuneration policy of the company.

Annexure to the Directors' Report

Details of employees as per Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 and forming part of the Directors’ Report for theyear ended 31st March 2015.

A. Names of Employees employed through out the year and were in receipt of remunerationof not less than Rs. 6000000/- during the year:

Sr. No. Name & Age (Years) Designation/ Nature of Duties Remuneration (Rs.) Qualifications & Experience (Years) Date of commencement of employment Last Employment Name of employer Post held and period (Years) Equity shares held with spouse & dependent children (in %)
(1) (2) (3) (4) (5) (6) (7) (8)
1 Shri Vikram Somany (65 years) Chairman and Managing Director 49991953 B.Sc. FCMI (U.K.) (40 years) 13.08.2002 Madhusudan Industries Limited Chairman cum Managing Director (1 year) 19.87
2 Shri Subhash Chandra Kothari (70 years) C E O 22612800 B.Com. LLB FCA (41 years) 12.09.2012 Cera Sanitaryware Ltd. (Whole Time Director) (24 Years) 0.05
3 Shri Atul Sanghvi (53 years) Executive Director 9660494 MBA (Marketing) (31 years) 18.01.1999 Grasim Industries Ltd. Cement Division GM (Marketing) (11 years) 0.00
4 Shri Vivek Tewari (47 years) President (Works) 6949201 M.Tech. MBA (23 years) 03.12.2013 HSIL Ltd. Associate VP(works) (5 years) 0.00
5 Shri Abbey Rodrigues (44 years) Sr. V.P (Marketing) 8189042 B.Com.PGDMSM (21 years) 09.12.1996 Deluxe Sanitary Appliances Sales Executive (1.5 years) 0.03
6 Shri P. K. Shashidharan (56 years) Sr. V. P. (Marketing) 7696879 M.A. (English) (35 years) 15.10.1991 Mudra Commu. Ltd. Sr.Media Executive (12 Years) 0.00

B. Names of Employees employed for part of the year and were in receipt of remunerationof not less than Rs. 500000/- per month:

Sr. No. Name & Age (Years) Designation/ Nature of Duties Remuneration (Rs.) Qualifications & Experience (Years) Date of commencement of employment Last Employment Name of employer Post held and period (Years) Equity shares held with spouse & dependent children (in %)
(1) (2) (3) (4) (5) (6) (7) (8)
1 Shri M. K. Bhandari (63 years) Executive 10014228 B.E. (Mech.) (40 years) 13.06.1992 Willard India Limited V.P. (Operations) (3 years) 0.00

Notes :

1. Gross remuneration as above includes Salary Incentives Company’s contributionto Provident & Gratuity Funds Gratuity Leave Encashment Leave Travel ReimbursementMedical Expenses Reimbursement House Rent Allowance Housing Accommodation and Monetaryvalue of perquisites calculated in accordance with the provisions of Income Tax Act 1961and Rules made there under.

2. Shri Vikram Somany is a father of Smt. Deepshikha Khaitan director of the Company.

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