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Cera Sanitaryware Ltd.

BSE: 532443 Sector: Consumer
NSE: CERA ISIN Code: INE739E01017
BSE LIVE 15:40 | 23 Jun 2953.55 6.90
(0.23%)
OPEN

2996.25

HIGH

2999.00

LOW

2929.00

NSE 15:31 | 23 Jun 2980.90 21.90
(0.74%)
OPEN

3000.00

HIGH

3004.95

LOW

2930.05

OPEN 2996.25
PREVIOUS CLOSE 2946.65
VOLUME 485
52-Week high 3225.00
52-Week low 1853.15
P/E 38.36
Mkt Cap.(Rs cr) 3,840
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2996.25
CLOSE 2946.65
VOLUME 485
52-Week high 3225.00
52-Week low 1853.15
P/E 38.36
Mkt Cap.(Rs cr) 3,840
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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 2016.

Performance

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

(Rs. in lacs)
Year ended March 312016 Year ended March 312015
Profit before Depreciation and Taxes & Exceptional item 14578.40 11638.71
Deducting there from Depreciation of 1631.98 1546.09
Profit before Tax 12946.42 10092.62
Deducting there from taxes of:
- Current Year 3943.12 2525.25
- Deferred Tax 656.88 800.92
Profit after Tax 8346.42 6766.45
Add: Balance brought forward from previous year 5000.00 3000.00
Amount available for Appropriations 13346.42 9766.45
The proposed appropriations are:
1. Proposed Dividend 1170.53 812.87
2. Tax on Proposed Dividend 244.67 165.48
3. General Reserve 3931.22 3788.10
4. Balance carried forward 8000.00 5000.00
Total 13346.42 9766.45

Transfer to Reserves

The Company has transferred a sum of ' 3931.22 Lacs to General Reserve in the currentyear (previous year ' 3788.10 Lacs).

Highlights / Performance of the Company

Turnover of the Company for the year increased by 13.63% to ' 933.69 Cr. as compared to' 821.67 Cr. previous year.

Profit before tax for the year increased by 28.26% to ' 129.46 Cr. as compared to '100.93 Cr. previous year.

Profit after tax for the year increased by 23.35% to ' 83.46 Cr. as compared to ' 67.66Cr. previous year.

The Directors are pleased to inform you that your Company has continued to grow despiteadverse market conditions in 2015-16 due to its customer loyalty distribution strengthproduct quality brand 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

During the year the plant had run at its optimum capacity. The focus of your Companynow is on premiumisation by producing more of high value items now onwards thusmaximizing its optimum capacity.

Faucetsware Unit

The new ranges and designs of Faucets have been well accepted by the market. Theexpansion plan of the Company has been attained in the year. Owing to this success theCompany has plans for premiumisation by producing more of high value items.

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.

Joint Ventures

Your Company has entered into a Joint Venture with Anjani Tiles Limited at AndhraPradesh with 51% Equity and 55.92% Preference Share holding amounting to ' 19.64 Cr. forproducing Vitrified Floor Tiles of 10000 Sq. Mtr. per day having total project cost of '68 Cr. The commercial production of tiles from this plant has started from 1stApril 2016.

Green Energy Unit

As a part of national policy and Green initiative company has stabilized power cost bygeneration of electricity through nonconventional sources for captive use.

The installed capacity of Non-conventional Energy unit of the Company now stands at12.825 M.W.

The non-conventional Wind and Solar Power has produced 20337139 KWH for captive useagainst 10361993 KWH in the previous year.

Packaging Unit

Your Company is also proposing to enter into Joint Venture for packaging unit formanufacture of corrugated boxes with an equity of 51%. The total project outlay will be '2.70 Cr.

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 operating the plant. The pricing and quantity of the gas is basedon the 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 is electricity supplied by localDiscom. To compensate within the energy consumption by way electricity the Company hasset up Wind Turbines of 11.825 MWand 1.00 MW Solar Plant which will generate about 90% ofthe requirements and it will offset against monthly consumption of energy bill.

Technology absorption and foreign exchange earnings and outgo

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-I.

Subsidiary Company

The Company has one Subsidiary company namely Anjani Tiles Limited which becamesubsidiary of the company w.e.f. 23rd November 2015. It has started commercialproduction from 1st April 2016. There are no associate companies within themeaning of Section 2(6) of the Companies Act 2013 ("Act"). Further there hasbeen no material change in the nature of business of the subsidiary.

Those Shareholders who are interested in obtaining a copy of the audited annualaccounts of the subsidiary company may write to the Company.

In terms of proviso to sub section (3) of Section 129 of the Act the salient featuresof the financial statement of the subsidiaries is set out in the prescribed form AOC - 1which is attached herewith as a separate Annexure - II.

Particulars of contracts or arrangements with related parties

All transactions entered into with Related parties as defined under the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 duringthe financial year were in the ordinary course of business and on an arm's length basisand do not attract the provisions of Section -188 of the Act.

There were no materially significant related party transactions made by the Companywith Directors Key Managerial Personnel or other designated Persons which may have aPotential Conflict with the interest of the Company at large. All related partytransactions were placed before the Audit Committee and also the Board for approval. ThePolicy on related Party transactions as approved by the Board is uploaded on the Company'swebsite i.e. www.cera- india.com.

The particulars of contracts or arrangements with related parties as per Section 188(1)of the Companies Act 2013 including arm's length transactions as per Form No.AOC-2 areenclosed as separate Annexure - III.

Corporate Social Responsibility

Your Company has always laid emphasis on progress with social commitment. We believestrongly in our core values of empowerment and betterment of not only the employees butalso our communities. Following this principle the Company had laid the foundation of acomprehensive approach towards promoting and facilitating various aspects of oursurrounding communities.

The Board has approved a policy for Corporate Social Responsibility and same has beenuploaded on the website i.e. www.cera- india.com

As required under Section 135 of the Companies Act 2013 and to demonstrate theresponsibilities towards Social upliftment in structured way the Company has formed aPolicy to conduct the task under CSR during the year.

The report on Corporate Social Responsibility (CSR) Activities along with Annexure asper Rule 9 of Companies (Corporate Social Responsibility Policy) Rules 2014 is annexed asa separate Annexure - IV.

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 standards havebeen followed and there are no material departures;

that such accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on March 312016 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 the company andthat such internal financial controls are adequate and were operating effectively.

that proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

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 -V.

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 - VI.

Company has not offered its shares to its employees under ESOS during the year underreview.

Company has not sanctioned loan to any of its employees for purchase of company'sshares under any scheme.

Corporate Governance and Management Discussion and Analysis

Pursuantto SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015report on Corporate Governance along with the Auditors' statement on its compliance andManagement discussion and Analysis have been includedin this Annual Report as per separateAnnexure -VIII and Annexure-A respectively.

Number of Meetings of the Board

The Board of Directors during the financial year 2015-16 duly met 5 times on23.04.2015 11.06.2015 15.07.2015 23.10.2015 and 02.02.2016 in respect of whichmeetings proper notices were given

and the proceedings were properly recorded and signed in the Minutes Book maintainedfor the purpose.

Extract of Annual Return

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

Particulars of Loans guarantees or investments u/s 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.

Risk Management Policy

The Board has approved and implemented risk management Policy of the Company includingidentification and element of risks.

The Risk Management is overseen by the Audit Committee / Board of Directors of theCompany on a continuous basis. The Committee oversees Company's process and policies fordetermining risk tolerance and review management's measurement and comparison of overallrisk tolerance to established levels. Major risks identified by the businesses andfunctions are systematically addressed through mitigating actions on a continuous basis.For details please refer to the Management Discussion and Analysis enclosed as separateAnnexure - A to this report.

Audit Committee

The Company has constituted Audit Committee. For details please refer CorporateGovernance Report attached as a separate Annexure- VIII.

Internal Control System and its adequacy

The Company has internal control system commensurate with the size scale andcomplexity of its business operations. The scope and functions of Internal Auditor aredefined and reviewed by the Audit committee. The Internal Auditor reports to the Chairmanof the Audit Committee. The Internal Auditor assesses opportunities for improvement ofbusiness processes systems and controls to provide recommendations which can add valueto the organization.

Dividend

Your Directors recommend a dividend of ' 9.00/- per share (180%) (Previous year '6.25/- per share) (125%) on 13005874 equity shares of ' 5/-each fully paid forthe year ended 31.03.2016 to be paid subject to approval by the members at the ensuingAnnual General Meeting.

During the year the unclaimed dividend pertaining to the financial year ending 2007-08were transferred to the Investor Education and Protection Fund.

Share Capital

The paid up Equity Share Capital as on 31st March 2015 was ' 650.29lacs. During the year under review the Company has not issued any equity shares. As on 31stMarch 2016 the Share Capital was ' 650.29 lacs.

No shares with differential voting rights stock or sweat equity shares were issued bythe Company during the year under review.

Exchequer

The Company has contributed ' 142.40 Crores to the exchequer by way of exciseduty customs 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 FixedDeposit matured and remaining unclaimed with the Company as on 31st March 2016was ' 1.34 lacs.

The Company has not accepted fixed deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposits) Rules2014. There have been no default in repayment of deposits or payment of interest thereonduring the year.

Finance

During the year under review the Company repaid loans of' 890.30 Lacs toFinancial Institutions and Banks.

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 Lalit Kumar 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).

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.

Smt. Deepshikha Khaitan is due to retire at the end of the ensuing Annual GeneralMeeting and being eligible offers herself for reappointment. Brief resume of Smt.Deepshikha Khaitan as required as per SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is provided in the notice convening the Annual GeneralMeeting of the Company. Shri Ashok Chhajed ceased to be a director of the company w.e.f.23.04.2016 on his resignation.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and Rules made thereunderSchedule - IV of the Act and SEBI (LODR) Regulations 2015 the Board has carried theevaluation of its own performance Individual Directors its Committees on the basis ofattendance contribution and various criteria as recommended by the Nomination andRemuneration Committee of the Company.

The performance of each of the non-independent directors (including the chair person)was also evaluated by the Independent Directors at the separate meeting held ofIndependent Directors of the Company.

Policy on Directors appointment and remuneration

Criteria determining the qualifications positive attributes and independence ofDirectors

Independent Directors

• Qualifications of Independent Director

An Independent director shall possess appropriate skills qualifications experienceand knowledge in one or more fields of finance law management marketingadministration corporate governance operations or other disciplines related to theCompany's business.

• Positive attributes of Independent Directors

An independent director shall be a person of integrity who possesses knowledgequalifications experience expertise in any area integrity level of independence fromthe Board and the Company etc. Independent Directors are appointed on the basis ofrequirement of the Company qualifications & experience association with the Companyetc. He should also devote sufficient time to his professional obligations for informedand balanced decision making; and assist the company in implementing the best corporategovernance practices.

• Independence of Independent Directors

An Independent director should meet the requirements of Section 149(6) of the CompaniesAct 2013 and SEBI (LODR) Regulations 2015.

Other Directors and Senior Management

The Nomination and Remuneration Committee shall identify and ascertain thequalifications expertise and experience of the person for appointment as Director or atSenior Management level and recommend to the Board his / her appointment.

The Company shall not appoint or continue the employment of any person as Whole-timeDirector or Senior Management Personnel if the evaluation of his performance is notsatisfactory.

Other Details are disclosed in the Corporate Governance Report under the headNomination and Remuneration Committee and details of Remuneration (Managing Director/WholeTime Director and Non- Executive Directors).

Remuneration / commission from Holding or Subsidiary Company

Managing Director or Whole Time Director is not receiving any remuneration / commissionfrom any Holding Company or Subsidiary Company.

Remuneration Policy

It is separately disclosed in the Corporate Governance Report attached as a separateAnnexure - VIII to this Report.

Auditors and their Observations:

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.

The Auditors' Report and Secretarial Audit Report to the members for the year underreview does not contain any qualification reservation or adverse remarks or disclaimer.

The Statutory Auditors have not reported any fraud during the year under review.

Cost Auditors

Company has appointed K.G.Goyal & Co. as Cost Auditors for conducting cost auditfor the year 2016-17.

Secretarial Audit

Pursuant to provisions of Section 204 of Companies Act 2013 and rules made thereunder the Company has appointed Umesh Parikh and Associates Practicing CompanySecretaries to undertake the Secretarial Audit of the Company for the year 2016-17.

The Secretarial Audit Reportgiven by Umesh Parikh and Associates Company Secretariesin practice is annexed with this report.

Insurance

Your Company has adequately insured all its properties including Plant and MachineryBuilding and Stocks.

Industrial Relations

Your Company's relations with its employees remained cordial throughout the year. TheDirectors 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.

Material Changes Affecting Financial Position of the Company

No material changes or commitments affecting the financial position of the Companyhave occurred between the end of the financial year of the company to which the financialstatements relate i.e. 31st March 2016 and the date of the Board's Report.

Change in nature of business

No changes has been made in nature of business carried out by the company during thefinancial year 2015-16.

Orders passed by Regulatory Bodies or Courts

No regulatory body or court or tribunal has passed any significant and material ordersimpacting the going concern status and operations of the Company.

Vigil Mechanism

The company has implemented Vigil Mechanism. For details please refer CorporateGovernance Report attached as a separate Annexure - VIII.

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 Yes Bank Ltd. Kotak Mahindra Bank Ltd. and various departments of both State andCentral Governments.

For and on behalf of the Board of Directors
Kolkata. Vikram Somany
3rd May 2016 Chairman and Managing Director