The Directors have pleasure in submitting the Annual Report together with the Statementof Accounts of your Company for the year ended 31st March 2017.
The summary of your Company's financial performance is given below:
(Rs. in lacs)
| ||Year ended March 31 2017 ||Year ended March 31 2016 |
|Profit before Depreciation and || || |
|Taxes & Exceptional item ||17393.58 ||14578.40 |
|Deducting there from Depreciation of ||1811.86 ||1631.98 |
|Profit before Tax ||15581.72 ||12946.42 |
|Deducting there from taxes of: || || |
|- Current Year ||5318.23 ||3943.12 |
|- Deferred Tax ||131.77 ||656.88 |
|Profit after Tax ||10131.72 ||8346.42 |
|Add: Balance brought forward from previous year ||8000.00 ||5000.00 |
|Amount available for Appropriations ||18131.72 ||13346.42 |
|The proposed appropriations are: || || |
|1. Proposed Dividend ||- ||1170.53 |
|2. Tax on Proposed Dividend ||- ||244.67 |
|Add : Tax on Dividend - || || |
|Excess Provision ||6.38 ||- |
|3. General Reserve ||- ||3931.22 |
|4. Balance carried forward ||18131.72 ||8000.00 |
|Total ||18138.10 ||13346.42 |
Transfer to Reserves
The Company has not transferred any amount to General Reserve in the current year(previous year Rs. 3931.22 Lacs) in compliance with Revised AS-4 effective financial year2016-17.
Highlights / Performance of the Company
Turnover of the Company for the year increased by 10% to Rs. 1009.17 Cr as compared toRs. 917.24 Cr previous year.
Profit before tax for the year increased by 20% to Rs. 155.82 Cr as compared to Rs.129.46 Cr previous year.
Profit after tax for the year increased by 21% to Rs. 101.32 Cr as compared to Rs.83.46 Cr previous year.
The Directors are pleased to inform you that your Company has continued to grow in2016-17 due to brand CERA's increasing popularity and customer preference backed bydistribution strength product quality brand equity and after-sales service.
During the year the plant had run at its optimum capacity. The focus of your Companynow is shifting towards premiumization by producing more of high value items likeone-piece WCs etc. thus maximizing its optimum capacity.
Your company has been constantly upgrading its technology for continuous improvement inproductivity and quality.
In the Faucetware plant too technology upgradation has been helping your company inproductivity and quality.
Several new ranges of faucets were conceived and launched in the market which are nowhelping in driving the sales.
Your Company has continued to market wellness range consisting of shower panelsshower rooms steam cubicles and whirlpools and products like kitchen sinks and mirrors.
Your Company continued to spread its market reach in tiles. The JV with Anjani TilesLimited has further strengthened its market penetration in South.
CERA Home Upgrade
Your Company expects that the renovation of bathrooms would go up in the coming years.To tap this growing business vertical your Company has commenced CERA Home Upgrade inselect cities of Ahmedabad Mumbai Pune and Bengaluru. It would be expanded to morecities.
Your company has entered into a Joint Venture with Anjani Tiles Limited at AndhraPradesh with 51% Equity and 54% Preference Share holding in aggregate amounting to Rs.26.78 Cr. (Previous Year
Rs. 19.64 Cr.) for producing Vitrified Floor Tiles of 10000 Sq. Mtr. per day. Thecommercial production of tiles from this plant has started from 1st April 2016.
Green Energy Unit
As a part of national policy and Green initiative company has stabilized power cost bygeneration of electricity through non-conventional 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 21611931 KWH for captive useagainst 20346390 KWH in the previous year.
Your Company has entered into Joint Venture for packaging unit for manufacture ofcorrugated boxes with an equity of 51%.
Dubai & Sharjah operations
Company has started Showroom in Dubai at main Sanitaryware market to have sale anddisplay of Company's products. In addition to this Company has opened warehousing facilityat Sharjah to cater UAE market and appointed dealers having CERA display gallery.
Conservation of energy technology absorption and foreign exchange earnings and outgo
Conservation of energy
The Company has two sources of its main energy viz. Natural Gas GAIL andSabarmati Gas Ltd. for operating its sanitary ware plant. The pricing and quantity of thegas are based on the availability international pricing and the contract into with thesesuppliers by the company. For energy conservation the company has installed fuelefficient burners to control gas consumption and in addition to this every effort is doneto adapt any technological developments in energy conservation by the company.
The second energy viz. electricity required for running the machineries is suppliedby the local Discom. To compensate within the energy consumption by way of electricityyour Company has set up Wind Turbines of 11.825 MW and 1.00 MW Solar Plant which generatesabout 90% of the requirements and it is being offset against monthly consumption of theenergy 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.
Anjani Tiles Limited became subsidiary of the Company w.e.f. 23rd November 2015. Ithas started commercial production from 1st April 2016. There are no associate companieswithin the meaning of Section 2(6) of the Companies Act 2013 ("Act"). Furtherthere has been no material change in the nature of business of the subsidiary.
The Company does not have any material subsidiary. The Policy on Material Subsidiaryframed by the Board of Directors of the Company is available on Company's website at thelink https:// www.cera-india.com/corporate/policy-for-determining-material-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 subsidiary Company is set out in the prescribed form AOC- 1 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 basis.
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 8 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 31 2017 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 companyand that 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.
Number of Meetings of the Board
The Board of Directors during the financial year 2016-17 duly met 5 times on03.05.2016 12.07.2016 29.07.2016 13.10.2016 and 07.02.2017 in respect of whichmeetings proper notices were given and the proceedings were properly recorded and signedin the Minutes Book maintained for 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.
Corporate Governance and Management Discussion and Analysis
Pursuant to 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 included in this Annual Report as perseparate annexure -VIII and annexure -A respectively.
Business Responsibility Reporting
As required under Regulation 34(2)(F) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Business Responsibility Report forms part of theDirectors' Report and is enclosed as separate Annexure IX.
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.
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.
Your Directors recommend a dividend of Rs. 12/- per share (240%) (Previous year Rs. 9/-per share (180%) on 13005874 equity shares of Rs. 5/- each fully paid for the yearended 31.03.2017 to be paid subject to approval by the members at the ensuing AnnualGeneral Meeting.
During the year the unclaimed dividend pertaining to the financial year ending 2008-09were transferred to the Investor Education and Protection Fund.
The paid up Equity Share Capital as on 31st March 2017 was Rs. 650.29 Lacs. During theyear under review the Company has not issued any equity shares. As on 31st March 2017 theShare Capital was Rs. 650.29 Lacs.
No shares with differential voting rights stock or sweat equity shares were issued bythe Company during the year under review.
The Company has contributed Rs. 166.65 Cr. to the exchequer by way of excise dutycustoms duty service Tax income tax VAT sales tax and other fiscal levies.
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 2017 was Rs.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.
During the year under review the Company repaid loans of Rs. 890.30 Lacs to FinancialInstitutions and Banks.
Members at the Annual General Meeting held on 22-08-2014 have appointed Shri SajanKumar Pasari Shri Govindbhai P. Patel and Shri Lalit Kumar Bohania as IndependentDirectors of the Company to hold office for five consecutive years for a term up to 31stMarch 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 and under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and there has been nochange in the circumstances which may affect their status as Independent director duringthe year under review. The Company keeps informed independent directors about changes inthe Companies Act 2013 and rules from time to time and their role duties andresponsibilities.
Shri Jugal Kishore Taparia (DIN 07509049) was appointed as Additional Director(Independent) on the Board of the Company w.e.f. 29th July 2016 to hold office up to theensuing Annual General Meeting. Shri Jugal Kishore Taparia is proposed to be appointed asIndependent Director for five consecutive years at the ensuing Annual General Meeting ofthe Company.
Shri Atul Sanghvi (DIN 00045903) is due to retire at the end of the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment. Shri Ashok Chhajedceased to be a director of the company w.e.f. 23.04.2016 on his resignation.
The Board of Directors has re-appointed Shri Atul Sanghvi as Executive Director for aperiod of three years w.e.f. 01.04.2017 and Shri Vikram Somany as Chairman and ManagingDirector for five years w.e.f. 01.07.2017.
Brief resumes of the Directors who are proposed to be appointed/ reappointed at theensuring Annual General meeting as required as per SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is provided in the notice convening the AnnualGeneral Meeting of the Company.
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 and Key ManagerialPersonnel on the basis of attendance contribution and various criteria as recommended bythe Nomination and Remuneration 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
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 specific area of business integrity levelof independence from the Board and the Company etc. Independent Directors are appointed onthe basis of requirement of the Company qualifications & experience expertise in anyarea of business association with the Company etc. He should also devote sufficient timeto his professional obligations for informed and balanced decision making; and assist thecompany in implementing the best corporate governance 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 /Whole Time Director(s) 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.
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 the ensuingAnnual General Meeting.
As per second proviso to Section 139(2) of the Companies Act 2013 (the Act') atransition period of three years from the commencement of the Companies Act2013 isprovided to appoint a new auditor when the existing Auditor's firm has completed terms ofFive consecutive years. Accordingly the existing Auditors H.V. Vasa & Co hascompleted term of five consecutive years and as per the said requirements of the Act N.M.Nagri & Co. Chartered Accountants are proposed to be appointed as auditors from theconclusion of 19th AGM till the conclusion of the 24th AGM (AGM of Financial year2021-22) subject to ratification by members every year as may be applicable.
The Audit Committee and the Board of Directors recommend the appointment of N.M. Nagri& Co. Chartered Accountants as statutory auditors of the Company from the conclusionof the 19th AGM till the conclusion of 24th AGM to the shareholders.
The Auditors' Report and Secretarial Audit Report to the members for the financial yearunder review does not contain any qualification reservation or adverse remark ordisclaimer.
The Statutory Auditors have not reported any fraud during the year under review.
Company has appointed K.G.Goyal & Co. as Cost Auditors for conducting cost auditfor the year 2017-18.
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 2017-18.
The Secretarial Audit Report given by Umesh Parikh and Associates Company Secretariesin practice is annexed with this report.
Your Company has adequately insured all its properties including Plant and MachineryBuildings and Stocks.
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 2017 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 2016-17.
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.
The company has implemented Vigil Mechanism. For details please refer CorporateGovernance Report attached as a separate Annexure-VIII.
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 and various departments of both State and Central Governments.
| ||For and on behalf of the Board of Directors |
|Ahmedabad. ||Vikram Somany |
|4th May 2017 ||Chairman and Managing Director |