Your Directors have pleasure in submitting their twelfth report alongwith the financialstatements of the Company and the highlights of the performance of subsidiariesassociates and joint venture companies and their contribution to the overall performanceof the Company for the financial year ended March 31 2017.
| || || || ||(Rs Crore) |
|Particulars ||Standalone ||Consolidated |
| ||FY2016-17 ||FY2015-16 ||FY 2016-17 ||FY2015-16 |
|Gross Revenue ||222.51 ||204.31 ||8348.10 ||7262.15 |
|Less: Excise Duty ||- ||- ||916.44 ||889.55 |
|Net Revenue ||222.51 ||204.31 ||7431.66 ||6372.60 |
|Profit before interest depreciation and tax ||121.06 ||87.41 ||2200.66 ||1821.10 |
|Less: Interest and Financial Charges ||21.47 ||2.02 ||889.99 ||730.19 |
|Profit before depreciation and tax ||99.59 ||85.39 ||1310.67 ||1090.91 |
|Less: Depreciation ||5.36 ||4.36 ||602.71 ||580.87 |
|Profit before tax ||94.23 ||81.03 ||707.96 ||510.04 |
|Provision for current tax ||29.67 ||20.54 ||265.70 ||132.33 |
|Provision for deferred tax ||1.19 ||(2.73) ||23.51 ||113.29 |
|Prior year tax charge ||- ||0.74 ||(13.06) ||(0.12) |
|Profit / (loss) after tax before share of profit in associates ||63.37 ||62.48 ||431.81 ||264.54 |
|Less: Share of minority interest ||- ||- ||87.01 ||74.53 |
|Profit / (loss) after tax ||63.37 ||62.48 ||344.80 ||190.01 |
|Other Comprehensive Income ||(2.46) ||0.49 ||23.22 ||14.65 |
|Total Comprehensive Income ||60.91 ||62.97 ||368.02 ||204.66 |
|Add: Surplus brought forward ||192.79 ||161.09 ||942.36 ||825.79 |
|Add: Amount transferred from debenture redemption reserve ||- ||- ||25.00 ||95.83 |
|Add: Provision for dividend Distribution tax written back ||- ||1.64 ||- ||1.64 |
|Profit available for appropriation ||253.70 ||225.70 ||1335.38 ||1127.92 |
|Surplus carried forward after appropriations ||253.70 ||192.79 ||1153.25 ||942.36 |
Previous financial year figures have been restated as per IND AS.
Operations and Business Performance
The net revenue of the Company for the financial year 2016-17 has increased by 8.90%which is Rs 222.51 crore as compared to Rs 204.31 crore in financial year 2015-16 and theprofit before tax for financial year 2016-17 has increased by 16.29% which is Rs 94.23crore as compared to Rs 81.03 Crore in financial year 2015-16.
The performance of the Company alongwith its subsidiaries associates and joint venturecompanies (collectively "the Group") during financial year 2016-17 is a showcaseof how cement companies that have invested in the right strategy can grow across industrycycles. The Group has focused on improving all the efficiencies parameter which in turnhas helped to improve the margins. The result is that we have been successful inincreasing gross revenue of the Group for the financial year 2016-17 by 14.95% which is Rs8348.10 crore as compared to Rs 7262.15 crore in financial year 2015-16 and the profitbefore tax for financial year 2016-17 has increased by 38.80% which is Rs 707.96 crore ascompared to Rs 510.04 crore in financial year 2015-16.
Please refer to the chapter on Management Discussion and Analysis for a detailedanalysis of the performance of the Company during the financial year 2016-2017.
The Company continues to be engaged in the same line of business during the financialyear 2016-17. There have been no material changes or commitments affecting the financialposition of the Company which have occurred between the end of the financial year and thedate of this report.
Transfer to reserves
The Company proposes to retain the entire earnings in the profit and loss account andnot to transfer any amount to the General Reserve.
Your Directors have recommended a dividend of Rs 2.20/- (110%) per equity share of facevalue of Rs 2/- each for the current financial year ended on March 31 2017 as againstdividend of Rs 2/- (100)% per equity share paid in the immediately preceding year. Theproposed dividend is based on the financial and non-financial factors prevailing duringthe year in terms of the Dividend Distribution Policy of the Company.
During the financial year 2016-17 CARE has reaffirmed the rating for long term and theshort term facilities at AA- and A1+ respectively signifying the sound financialmanagement and the ability to meet its financial obligations.
Board of Directors its Committees and their Meetings
During the financial year 2016-17 five Board meetings were held. Reference is invitedto the Corporate Governance Report which forms part of this Report for the details ofBoard of Directors its Committees and their meetings.
Directors and Key Managerial Personnel
Mr. Jayesh Doshi Whole-time Director and Chief Financial Officer retires by rotationat the ensuing Annual General Meeting and being eligible offers himself forre-appointment. Mr. Jayesh Doshi has given declaration to the effect that he is qualifiedto be reappointed as a Director of the Company.
The Key Managerial Personnel namely Mr. Jai Hari Dalmia Managing Director Mr. Y.H.Dalmia Managing Director Mr. Jayesh Doshi Chief Financial Officer and Whole-timeDirector and Ms. Nidhi Bisaria Company Secretary continue to hold their respectiveoffices during the current financial year.
The Independent Directors namely Mr. N. Gopalaswamy Mr. V.S. Jain and Mr. P.K.Khaitan have given their respective declaration of independence and have also held aseparate meeting wherein they inter alia reviewed the performance of the Non-IndependentDirectors Chairman and Board as a whole.
The details of familiarisation programmes imparted to the Independent Directors of theCompany during the financial year 2016-17 can be accessed athttps://www.dalmiabl.com/upload/ Familarisation-Programme-for-ID-2016-17.pdf.
The Nomination and Remuneration Policy of the Company on Director's appointment andremuneration is attached as Annexure 1 and forms part of this Report.
Your Directors have conducted a formal evaluation of its own performance and of theperformance of its Committees and that of individual Directors in accordance with normslaid down in the Nomination and Remuneration Policy of the Company and SEBI Guidance Noteon Board Evaluation.
Directors' Responsibility Statement
Your Directors state that:
(a) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards have been followed and there are no material departuresfrom the same;
(b) the Directors have selected such accounting policies and applied them consistentlyand made judgements 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 of the Company for that period;
(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern basis;
(e) the Directors have 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 have devised proper system to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Particulars of Remuneration of Directors' Key Managerial Personnel and Employees'
The particulars of remuneration to Directors and Key Managerial Personnel and otherrequired particulars are attached as Annexure 2 and forms part of this Report.
Further a statement showing the names and other particulars of the employees drawingremuneration in excess of the prescribed limits is attached as Annexure 2A andforms part of this Report.
Employees' Stock Option Scheme
The Nomination and Remuneration Committee of the Company has granted 1067000 stockoptions net of lapsed options to eligible employees of your Company.
During the year 172500 stock options have vested to eligible employees and theNomination and Remuneration Committee allotted 166500 equity shares of Rs 2/- each ofyour Company upon exercise of stock options by the employees.
In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations2014 the details of the Stock Options granted under the Scheme are available on yourCompany's website viz. www.dalmiabharat.com.
A certificate from the Statutory Auditor on the implementation of your Company'sEmployees Stock Option Scheme will be placed at the ensuing Annual General Meeting forinspection by the Members.
Subsidiaries Associates and Joint Venture Companies
A detailed report on the highlights of performance of each of the Company'sSubsidiaries and joint ventures companies for the financial year ended March 31 2017 inForm AOC 1 is attached and marked as Annexure - 3 to this report. The contribution of theCompany's Subsidiaries and joint ventures companies to the overall performance of theCompany during the period under report is given under the financial highlights above.
The Company has 39 subsidiaries including step down subsidiaries namely Dalmia Cement(Bharat) Limited Dalmia Power Limited DCB Power Ventures Limited Kanika InvestmentLimited Adwetha Cement Holdings Limited and the Subsidiaries of Dalmia Cement (Bharat)Limited viz. Ishita Properties Limited Shri Rangam Properties Limited Geetee EstatesLimited D. I. Properties Limited Hemshila Properties Limited Arjuna Brokers &Minerals Limited Shri Radha Krishna Brokers & Holdings Limited Dalmia Minerals &Properties Limited Sri Subramanya Mines & Minerals Limited Sri Swaminatha Mines& Minerals Limited Sri Shanmugha Mines & Minerals Limited Sri DhandauthapaniMines and Minerals Limited Sri Trivikrama Mines and Properties Limited Sri MadhusudanaMines and Properties Limited Cosmos Cements Limited Sutnga Mines Private LimitedRajputana Properties Private Limited Golden Hills Resort Private Limited Calcom CementIndia Limited Vinay Cement Limited SCL Cements Limited RCL Cements Limited AdhunikCement Limited Adhunik MSP Cement (Assam) Limited Alsthom Industries Limited DalmiaBharat Cements Holdings Limited Shri Rangam Securities & Holdings Limited JayeVijayAgro Farms Private Limited Dalmia Cement East Limited Bangaru Kamakshiamman Agro FarmsPrivate Limited OCL India Limited OCL Global Limited OCL China Limited and OdishaCement Limited.
During the year under review Alsthom Industries Limited was incorporated as astep-down subsidiary of the Company w.e.f. December 20 2016
During the said financial year no company ceased to be a subsidiary of the Company orits Subsidiary.
During the financial year 2016-17 Dalmia Renewables Energy Limited became an associateof Company's subsidiary Dalmia Cement (Bharat) Limited w.e.f. February 2017. Apart fromthis the Company's subsidiary Dalmia Cement (Bharat) Limited has one joint venturecompany Khappa Coal Company Private Limited and OCL India Limited the step downsubsidiary has one joint venture company Radhikapur (West) Coal Mining Private Limited.
Any Member desirous to inspect the detailed Annual Reports of any of the aforementionedsubsidiaries may inspect the same at the Registered Office of the Company during businesshours.
The policy for determining material subsidiaries may be accessed at the Company'swebsite at http://www.dalmiabl.com/upload/ policies/DBL-Material-Subsidiary-Policy.pdf
Schemes of Arrangement and Amalgamation
The following Schemes of Arrangement and Amalgamation involving the subsidiaries /step down subsidiaries of the Company their respective shareholders and creditors asapproved by the respective board of directors of said companies had been filed withjurisdictional High Courts and later transferred to jurisdictional NCLTs:
a) Scheme of Arrangement and Amalgamation involving Company's step down subsidiariesi.e. OCL India Limited ("OCL") Odisha Cement Limited Dalmia Cement EastLimited Shri Rangam Securities & Holdings Limited and Dalmia Bharat Cement HoldingsLimited ("Scheme 1").
b) Scheme of Arrangement and Amalgamation involving Company's subsidiary Dalmia Cement(Bharat) Limited ("DCBL") and its related parties DCB Power Ventures LimitedDalmia Power Limited and Adwetha Cement Holdings Limited ("Scheme 2").
c) Scheme of Arrangement involving DCBL and its subsidiaries i.e. Adhunik CementLimited and Adhunik MSP Cement (Assam) Limited ("Scheme 3").
All the aforesaid schemes have not come into effect since final sanction of thejurisdictional NCLTs in respect of some of the companies are pending.
Further the Board of Directors of the Company at their meeting held on November 52016 had approved the scheme of arrangement and amalgamation amongst Odisha CementLimited the Company and Dalmia Cement (Bharat) Limited ("Scheme 4") which isinter alia conditional upon the effectiveness of Schemes 1 and 2. Scheme 4 has beenapproved by the Stock Exchanges. The said Scheme is expected to be filed before the NCLTChennai having jurisdiction over the Registered Office of the aforesaid companiesshortly.
Consolidated Financial Statements
This Annual Report also includes Consolidated Financial Statements for the financialyear 2016-17 which have been prepared based on audited Financial Statements of all thesubsidiaries including step down subsidiaries of the Company. In this regard attention isinvited to note no. 33(B) of the notes to accounts to the Consolidated FinancialStatements of the Company for the year ended March 31 2017 which fully explains thematter and replies to the Auditors observation under "Emphasis of Matter".
Corporate Governance Report
Your Directors believe that corporate governance is an ethically driven businessprocess that is committed to values aimed at enhancing the growth for the Company YourCompany's corporate governance practices are driven by strong Board oversight timelydisclosures transparent accounting policies and high levels of integrity indecision-making. The Company's corporate governance practices have been detailed in theCorporate Governance Report and same is attached together with the Auditors' certificatethereon and forms part of this Report.
Business Responsibility Report
A separate section on Business Responsibility forms part of this Annual Report.
Extract of Annual Return
The extract of the annual return is attached in Form MGT-9 giving inter-alia details ofshareholding pattern indebtedness managerial remuneration and forms part of this reportas Annexure 4.
Corporate Social Responsibility (CSR)
Your Directors have constituted a Corporate Social Responsibility Committee responsibleto identify monitor and review corporate social responsibility activities of the Companyand provide strategic direction for implementation of the corporate social responsibilitypolicy of the Company which can be accessed on the website of the Company athttp://www.dalmiabl.com/upload/policies/DBL-CSR-Policy.pdf.
The Committee decided to expend an amount of Rs 0.81 crore on CSR activities coveringeradication of extreme hunger and poverty promotion of education including specialeducation ensuring environmental sustainability and ecological balance etc. healthsanitation education and environment sustainability. Pursuant to the said policy theCompany has made expenses aggregating to Rs 0.81 crore towards Corporate SocialResponsibility activities during the financial year 2016-17 which is equal to 2% ofaverage net profits of the Company made during three immediately preceding financialyears. The Annual Report on CSR activities is attached as Annexure - 5 and forms part ofthis Report.
The Group as a whole has spent Rs 10.16 crore towards Corporate Social Responsibilityactivities during the said financial year.
Related Party Policy and Transactions
The policy on related party transactions may be accessed at the Company's website athttp://www.dalmiabl.com/upload/policies/ DBL-Related-Party-Policy.pdf
The particulars of material contracts or arrangements with the related parties isattached in Form AOC 2 and forms part of this Report as Annexure - 6.
Risk Management Policy
Your Company has constituted a Risk Management Committee to review the risk managementplan / process of your Company and that the Company has adequate risk managementprocedures which are based upon business environment operational controls and complianceprocedures. The major risks are assessed through a systemic procedure of riskidentification and classification. Risks are prioritised according to significance andlikelihood. The risk assessment is not limited to threat analysis but also identifiespotential opportunities. The Risk Management Committee oversees the risk managementprocess.
Whistle Blower Policy and Vigil Mechanism
The Company has in place the Whistle Blower Policy and Vigil Mechanism with a view toprovide for adequate safeguards against victimisation of persons who use such mechanismand provide for direct access to the Chairperson of the Audit Committee in appropriatecases.
The policy can be accessed at the website of the Company at http:// www.dalmiabl.com/upload/ policies/ DBL-Whistle-Blower-Policy-Vigil-Mechanism.pdf.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.
No such complaints have been received by the said Committee during the financial year2016-17.
Loans Guarantees Security and Investments
The particulars of investments made and securities/guarantees given by the Company areprovided at Note Nos. 5 8 and 29 read with 30(F) of the notes to accounts to theStandalone Financial Statements of the Company. The details of loans given by the Companyare provided at Note Nos. 37 and 38 of the notes to accounts to the Standalone FinancialStatements of the Company.
Adequacy of Internal Financial Controls
Your Company has in place adequate internal control systems commensurate with the sizeof its operations. The Company has requisite policies and procedures for ensuring theorderly and efficient conduct of its business including adherence to the Company'spolicies the safeguarding of its assets the prevention and detection of fraud errorreporting mechanisms accuracy and completeness of the accounting records and the timelypreparation of reliable financial disclosures.
The internal control systems are subjected to regular reviews self-assessments andaudits and based on such reviews we believe that these systems provide reasonableassurance that our internal financial controls are designed effectively and are operatingas intended.
Energy Conservation Technology Absorption and Foreign Exchange Transactions
The particulars of energy conservation technology absorption are not applicable to theCompany as it is not engaged in any manufacturing activity. The details of foreignexchange earnings and outgo is an under:
(a) Activities relating to exports; initiatives taken to increase exports; developmentof new export markets for products and services and export plans:
The Company has not undertaken any exports during the year under review.
(b) Total foreign exchange used and earned during the year:
(i) Used: Rs 1.63 crore (ii) Earned: Hnil.
M/s. S.S. Kothari Mehta & Co. were appointed as the Statutory Auditors of theCompany at the Annual General Meeting held on 30th September 2015 for a period of fiveyears subject to ratification by members of the Company every year. The Board recommendsthe ratification of their appointment till the conclusion of the next following AnnualGeneral Meeting of the Company.
The Company has obtained from them a certificate to the effect that they are eligibleto continue as the Statutory Auditors of the Company and that they comply with theprescribed requirements.
Secretarial Auditor and Their Report
The Board of Directors of the Company appointed Mr. R. Venkatasubramanian PractisingCompany Secretary as the Secretarial Auditor to conduct the Secretarial Audit. The Reportof Secretarial Audit is attached in Form MR 3 and forms part of this Report as Annexure -7.
Comments on Auditors' Observations
The Report submitted by the Statutory Auditors on the Standalone Financial Statementsof the Company and the Report by the Secretarial Auditor does not contain anyqualification reservation or adverse remark or disclaimer. The Notes on FinancialStatements referred to in the Statutory Auditors' Report are self-explanatory and do notcall for any comments and explanation.
During the year under review the Auditors have not reported any matter under Section143 (12) of the Act.
The Company has not accepted any deposits from public till date.
Orders passed by Regulators
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
The Board of Directors would like to express their sincere appreciation for theassistance and co-operation received from the Government authorities financialinstitutions banks customers vendors and members during the year under review. TheBoard of Directors also wish to place on record its deep sense of appreciation for thecommitted services by the Company's executives staff and workers.
| ||For and on behalf of the Board |
| ||P. K. Khaitan |
|Place: New Delhi ||Chairman |
|Dated: May 10 2017 ||DIN-0004821 |