Your Directors have pleasure in presenting their Seventieth Annual Report togetherwith audited accounts for the year ended 31st March 2016.
| || ||Rs. in Crore |
| ||For the year ended 31st March |
| ||2016 ||2015 |
|FINANCIAL RESULTS || || |
|Profit before Interest Depreciation & Exceptional Items ||791.88 ||713.35 |
|Less : Finance costs ||370.35 ||425.99 |
|Less : Depreciation / Amortization ||218.02 ||257.91 |
|Less : Exceptional Items ||3.20 ||0.00 |
|Profit Before Tax ||200.31 ||29.45 |
|Current Tax ||60.37 ||6.40 |
|MAT credit entitlement ||(27.11) ||(6.40) |
|Deferred Tax ||29.24 ||0.00 |
|Profit After Tax ||137.81 ||29.45 |
|Add : Surplus brought forward from last year ||826.95 ||1030.17 |
|Less : Proposed dividend on Equity Capital (including Dividend Distribution Tax) ||36.97 ||0.00 |
|Less : Transfer to General Reserve ||40.00 ||0.00 |
|Less : Transfer to Depreciation Account ||0.00 ||232.67 |
|Surplus carried forward ||887.79 ||826.95 |
The Board of Directors has recommended a dividend of Re.1/- per Equity Share of Rs.10/-each on 307177340 Equity Shares of Rs.10/- each for the year ended 31st March 2016 andproportionate dividend on 1317 Equity Shares having calls in arrears.
TRANSFER TO RESERVES
The Company proposes to transfer Rs.40 Crores to the General Reserve and to retainRs.887.79 crores as surplus in the Profit and Loss Account.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Regulation 34(2) of Securities and Exchange Board of India [ListingObligations and Disclosure Requirements] Regulations 2015 [SEBI (LODR) Regulations2015] a Management Discussion and Analysis Report is given as addition to this report.
Pursuant to Regulation 34(3) of SEBI (LODR) Regulations 2015 a report on CorporateGovernance along with Auditors' Certificate confirming its compliance is included as partof the Annual Report and is given in Annexure 'C' and Annexure 'D' respectively. Furthera declaration on Code of Conduct signed by the Vice Chairman & Managing Director inhis capacity as Chief Executive Officer of the Company is given in Annexure 'E'.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
A report on CSR activities of the Company during 2015-16 is given in Annexure 'F'.
LICENCES & RECOGNITIONS
The Company's Malkapur plant has been granted license for Occupational Health andSafety Management System Certification in accordance with IS 18001:2007. The Company'sMalkapur and Yerraguntla plants have been granted Environmental Management SystemCertification ISO 14001:2004. The Company's Chennai Grinding Unit and Chilamkur plant havebeen granted ISO 9001:2008 certification for Quality Management Systems. The Company'sDalavoi plant won the 3rd prize for the best safety practices among industries from theDirectorate of Industrial Safety and Health Tamil Nadu.
The Company's performance has been discussed in detail in the Management Discussion andAnalysis section. The cement industry had to operate in a surplus situation throughout theyear with a meagre growth of around 5% only during the year as per the informationpublished by the Department of Industrial Policy and Promotion (DIPP). The South inparticular had to operate under a nil growth scenario with a negative growth in productionof around 5% in Tamil Nadu during the year under review. Considering the fact that theentire southern Indian cement industry operated at sub 60% of its capacity theperformance of the Company can be considered to be satisfactory with capacity utilizationof around 60% during the year. The sales volume including clinker was at 86.78 lakh tonsas compared to 91.10 lakh tons in the previous year. With fairly consistent selling pricesof cement during the year the total sales and other income was at Rs.4249 crores ascompared to Rs.4454 crores in the previous year a drop of nearly 5%. The operatingparameters of power and fuel consumption were kept under control despite the lowercapacity utilization. This together with the improvement in blending efficiency alongwithreduction in the fuel prices resulted in a higher EBIDTA of Rs.791.88 crores animprovement of 11% over that of previous year of Rs.713.35 crores. The interest chargeswere lower at Rs.370.35 crores as compared to Rs.425.99 crores while depreciation was atRs.218.02 crores as compared to Rs.257.91 crores in the previous year. The consequentprofit before exceptional items and tax was at Rs.203.51 crores compared to Rs.29.45crores in the previous year. The performance can be considered to be satisfactoryconsidering the weak growth in cement demand.
EXPANSION / MODERNISATION
As already informed necessary approvals are in place from the environmentalauthorities for installing new energy efficient cement grinding facility at Sankarnagarreplacing some of the old cement mills. The Company has also got approval from theauthorities for enhancing the capacity of its Sankari plant and its Dalavoi plant in TamilNadu.
The Shipping Division continued to operate 2 vessels during the year and performed 45voyages mainly in Coastal Trade and tramping. The total earnings of the Division were atRs.40.71 crores a drop of 13% when compared to Rs.46.97 crores in the previous year dueto reduction in the overall shipping freight rates.
CHENNAI SUPER KINGS CRICKET LIMITED (CSKCL)
The Company was informed that CSKCL had sought the permission of BCCI for thedistribution of its shares by India Cements Shareholders Trust to the non-promotershareholders of India Cements and India Cements Ex-cricketers Trust on September 302015. The Company has also been informed that the approval of BCCI is awaited.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Section 129(3) of the Companies Act 2013 read with Rules the AuditedConsolidated Financial Statement of the Company and of all the subsidiary and AssociateCompanies is enclosed. A separate statement containing the salient features of the auditedfinancial statement of all the subsidiary and Associate Companies is also enclosed in FormAOC-1 (Annexure 'G') as prescribed under the Companies Act 2013 and the Rules madethereunder.
POLICY ON DETERMINATION OF MATERIAL SUBSIDIARIES
The India Cements Limited (India Cements) has as on date 10 subsidiaries controlledthrough shareholdings in such Companies. India Cements has one listed subsidiary namelyTrinetra Cement Limited (TCL). Four Independent Directors of India Cements are also on theBoard of TCL. It is the policy of India Cements that TCL is managed through Board ofDirectors consisting of non-executive directors. A Scheme of amalgamation of TCL alongwith Trishul Concrete Products Limited with India Cements has been filed in the Hon'bleMadras High Court for approval. The Appointed Date is 1st January 2014. The statutoryrecords and books of accounts of TCL are overseen from time to time by the concerneddepartments of India Cements.
TRINETRA CEMENT LIMITED
As mentioned elsewhere the Northern markets had a reasonable growth of around 8% ofcement production during the year under review. The only plant which is situated in theNorthern India achieved significant strides in its operations clocking the highest clinkerand cement production since inception during the year under review. The clinkerproduction was at 9.78 lakh tons as compared to 8.68 lakh tons in the previous year whilethe cement grinding was at 13.46 lakh tons (12.10 lakh tons) registering a capacityutilization of 90%. The operating parameters further improved during the year under reviewand the unit turned out a much improved bottom line with a net profit of Rs.9.32 crores ascompared to a loss of Rs.24.18 crores in the previous year.
TRISHUL CONCRETE PRODUCTS LIMITED
The meagre demand growth for cement also had its impact on the sale of ready mixconcrete with the unit achieving only 2.54 lakh cubic meters of sale of concrete ascompared to 3.04 lakh cubic meters achieved in the earlier year. The total revenue was atRs.103 crores against Rs.121 crores in the previous year. While the selling prices weremaintained as that of previous year the lower volume resulted in a profit before tax ofRs.67 lakhs only during the year as compared to a profit before tax of Rs.3.88 crores inthe previous year.
MERGER OF TWO SUBSIDIARIES WITH THE COMPANY
The shareholders and creditors of the Company and of Trinetra Cement Limited (TCL) andTrishul Concrete Products Limited (TCPL) have approved a Scheme of Amalgamation andArrangement between TCL and TCPL with the Company. Petitions have been filed in theHonorable High Court of Judicature at Madras under Sections 391 to 394 of the CompaniesAct 1956 for getting the sanction of the Honorable High Court.
COROMANDEL ELECTRIC COMPANY LIMITED
The power generation from the gas power plant was continued to be affected due torestrictions imposed on the evacuation of power by State Load Despatch Centre of TamilNadu Transmission Corporation Limited during the year and hence the plant was able togenerate only 163 million KWH as against 187 million KWH in the previous financial year.The company had sold 49 million KWH of power to the cement plants of The India CementsLimited located in Tamil Nadu State while the balance power of 114 million KWH was sold toother group captive consumers third party consumers and also to Tamil Nadu Generation andDistribution Corporation Limited on short term tender basis. The net income fromoperations earned by the Company was at Rs.86.43 crores (Rs.85.44 crores) and the netprofit after tax was at Rs.5.18 crores against Rs.6.80 crores in the previous year. As perthe existing practice equity dividend was maintained at 9% while the dividend for theparticipating preference share capital was at the respective coupon rate. The Company alsoredeemed the 5th and final installment of redeemable cumulative participating preferenceshares on the due date and with this the Company has redeemed the entire paid uppreference share capital.
INDIA CEMENTS INFRASTRUCTURES LIMITED
The Company has taken up for joint development a property in Coimbatore. Necessaryapprovals for the project have been obtained and the work has already commenced. Duringthe current year depending on the market the Company is expected to take up additionalprojects. The financials are given in Annexure - G.
PT. COROMANDEL MINERALS RESOURCES INDONESIA AND COROMANDEL MINERALS PTE LIMITEDSINGAPORE
The international prices of coal continued to be soft and in view of this it was feltprudent to conserve the reserves of our mines. The Company is taking steps to secure themines fully to derive the benefits by the time international price of coal begins toharden. The financials are given in Annexure - G.
ASSOCIATE COMPANIES COROMANDEL SUGARS LIMITED
During the year the crushing was marginally lower than last year at 7.47 lakh tonnes(7.61 lakh tonnes) and the recovery was also lower at 9.49% as against 9.69% in theprevious year. Consequent to this sugar production was lower at 70888 tonnes as against73767 tonnes in the previous year. However the company sold higher quantum of sugardrawing from stock which was at 83330 tonnes as against 81414 tonnes in the previousyear. During the year sugar prices crashed well below the cane prices affecting theperformance of the industry. Coromandel Sugars Limited has earned an EBIDTA of Rs.21.08crores as against Rs.22.41 crores in the previous year. There was a marginal loss ofRs.0.33 crores as compared to a profit of Rs.0.32 crores made in the previous year. Thesugar prices have recovered smartly in the latter part of the year and is currentlyhovering around Rs.3375 per quintal as against Rs.1950 it touched during the year. TheCompany is expected to derive the benefit of the 30 MW Cogeneration project from currentyear.
INDIA CEMENTS CAPITAL LIMITED (ICCL)
The main focus of the Company continues to be on various fee-based activities such asFull Fledged Money Changing [FFMC] Travel & Tours and Forex Advisory Services. TheCompany's FFMC division continues to enjoy the status of Authorised Dealers Category II.The wholly owned subsidiary viz. India Cements Investment Services Limited (ICISL) is intoStock Broking. The Gross income from operations of ICCL was Rs.402.72 lakhs and that ofICISL was Rs.158.85 lakhs for the year ended 31st March 2016.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
In accordance with Section 134(5)(e) of the Companies Act 2013 and Rule 8(5)(viii) ofCompanies (Accounts) Rules 2014 the Company has an Internal Financial Control Policy andProcedures commensurate with the size and nature of operations and financial reporting.
The Company has defined standard operating procedures covering all functional areaslike sales marketing materials fixed assets etc. The Company has engaged the servicesof Chartered Accountant firms for carrying out internal audit of all its plants as well asmarketing offices. The internal auditors have been given the specific responsibility toverify and report on compliance of standard operating procedures. The auditors havereported that there are adequate financial controls in place and are being followed by theCompany. This has been further explained in the Management Discussion and Analysis Report.
RISK MANAGEMENT POLICY
Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 17(9) of SEBI(LODR) Regulations 2015 the Company has developed and implemented a Risk ManagementPolicy. The Policy envisages identification of risk and procedures for assessment andmitigation thereof.
MARKET CAPITALISATION OF THE COMPANY
The details are given in Annexure H.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In accordance with Section 177(9) and (10) of the Companies Act 2013 and Regulation 22of SEBI (LODR) Regulations 2015 the Company has established a Vigil Mechanism and has aWhistle Blower Policy. The policy has been uploaded on the Company's websitewww.indiacements.co.in.
India Cements has always been encouraging its employees to give constructive criticismand suggestions which will better the overall prospects of the Company and its variousstakeholders. India Cements will continue to adopt this as a corner stone of its PersonnelPolicy.
THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL)ACT 2013
The Company has in place an anti-sexual harassment policy in line with the requirementsof the captioned Act and Rules made thereunder.
There was no complaint of harassment reported during the year.
POLICY ON DEALING WITH RELATED PARTIES
All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions entered by the Company with Promoters DirectorsKey Managerial Personnel or other designated persons which may have a potential conflictwith the interest of the Company at large. All Related Party Transactions are placedbefore the Audit Committee as also the Board for approval. Prior omnibus approval of theAudit Committee is obtained for the transactions which are of a foreseeable and repetitivenature. The transactions entered into pursuant to the omnibus approval so granted areaudited and a statement giving details of all related party transactions is placed beforethe Audit Committee and the Board of Directors for their approval on a quarterly basis.The policy on Related Party Transactions as approved by the Board has been uploaded on theCompany's website. None of the Directors has any pecuniary relationships or transactionsvis--vis the Company other than remuneration in the case of whole time directors orsitting fee in the case of others.
TRANSACTIONS WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties in Form AOC-2 along withjustification are given in Annexure I.
LOANS / INVESTMENTS / GUARANTEES ETC UNDER SECTION 186 OF THE COMPANIES ACT 2013
Details of loans investments and guarantees covered under Section 186 of the CompaniesAct 2013 are given in Notes No.33.4 and 33.18(B to D) on accounts for the financial year2015-16.
ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNALS
There has been no order passed by any Regulatory authority or Court or Tribunalimpacting the going concern status and future operations of the Company.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between 1st April 2016 and the date of this report otherthan those disclosed in the financial statements.
Extract of the Annual Return in Form No. MGT-9 is attached with this Report as Annexure- J.
Your Company has not been accepting deposits from public and shareholders since 16thSeptember 2013. Deposits totalling Rs.15 lakhs have not so far been claimed by thedepositors.
CONSERVATION OF ENERGY ETC.
Necessary particulars regarding conservation of energy etc. as per provisions ofSection 134 of the Companies Act 2013 are set out in Annexure A.
RESEARCH & DEVELOPMENT
During the year your Company spent Rs.159.40 Lakhs towards revenue expenditure on theR&D department besides a contribution of Rs.61.47 lakhs to National Council for Cementand Building Materials (NCCBM) which carries out research on behalf of cement industry asa whole.
Under Article 109 of the Articles of Association of the Company Smt. Chitra Srinivasanretires by rotation at the ensuing Annual General Meeting of the Company and she iseligible for reappointment.
Sri Rabinarayan Panda was appointed as a nominee Director by IDBI Bank Limited witheffect from 29.12.2015 in the place of Sri Nagaraj Garla and he will hold the office uptothe date of the ensuing Annual General Meeting and the resolution for his election asdirector liable to retire by rotation is included under Special Business in the Noticeconvening the 70th Annual General Meeting of the Company.
Sri M.R.Kumar was appointed as a nominee Director of Life Insurance Corporation ofIndia (LIC) with effect from 26th May 2016 in the casual vacancy caused by the withdrawalof nomination of Sri Basavaraju by LIC.
The Board expresses its appreciation of the valuable contributions made by Sri NagarajGarla and Sri Basavaraju during their tenure as directors.
Sri S.Balasubramanian Adityan was appointed as an additional Director by the Board ofDirectors at their meeting held on 07.12.2015 and he will hold the office upto the date ofthe ensuing Annual General Meeting and the resolution for his election as an IndependentDirector for a term of 5 consecutive years from 7.12.2015 to 6.12.2020 is included underSpecial Business in the Notice convening the 70th Annual General Meeting of the Company.
Under Section 149 of the Companies Act 2013 Sri Arun Datta Sri R.K.Das SriN.R.Krishnan Sri V.Manickam and Sri N.Srinivasan (F&R) were appointed as IndependentDirectors of the Company for a term of two consecutive years with effect from 26thDecember 2014 to 25th December 2016 or the date of 70th Annual General Meeting of theCompany whichever is earlier. The Company proposes to reappoint Sri Arun Datta SriN.R.Krishnan Sri V.Manickam and Sri N.Srinivasan (F&R) as Independent Directors ofthe Company to hold office for a second term of 2 consecutive years from 29th August 2016to 28th August 2018 and special resolutions for their reappointments as IndependentDirectors of the Company are included in the Notice convening the 70th Annual GeneralMeeting of the Company.
The Board has appointed Sri N.Srinivasan as Managing Director for a fresh term of fiveyears with effect from 26th May 2016 in terms of Section 196 of the Companies Act 2013read with Schedule V of the said Act. Necessary Special Resolutions seeking the approvalof the Shareholders for his appointment as Managing Director alongwith ExplanatoryStatement justifying the appointment are included in the Notice convening the 70th AnnualGeneral Meeting of the Company.
Brief particulars of Directors eligible for appointment / reappointment are annexed tothe Notice convening the 70th Annual General Meeting.
Smt. Chitra Srinivasan and Smt. Rupa Gurunath are related to Sri N.Srinivasan ViceChairman & Managing Director of the Company and are also related to each other. Noother director is related to them or each other.
The details of shares and convertible instruments held by non-executive directors aregiven in Annexure 'C'.
A statement on declaration given by Independent Directors under Section 149(7) of theCompanies Act 2013 that they meet the criteria of independence as provided under Section149(6) of the Companies Act 2013 has been received by the Company. The Company hasstarted sponsoring Independent Directors for training programmes in a phased manner. Thedetails of familiarization programme for independent directors have been uploaded in theCompany's website www.indiacements.co.in.
Senior management personnel of the Company on a structured basis interact withdirectors from time to time to enable them to understand the Company's strategy businessmodel operations service and product offerings markets organization structurefinance human resources technology and risk management and such other areas. Thedirectors also are facilitated to visit Company's plants to familiarize themselves withfactory operations.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134(5) of the CompaniesAct 2013. "We confirm:
1. That in the preparation of the annual accounts for the year ended 31st March 2016the applicable accounting standards have been followed along with proper explanationrelating to material departures.
2. 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 at 31st March 2016 and of the profit of theCompany for the year ended on that date.
3. 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.
4. That the annual accounts for the year ended 31st March 2016 have been prepared on agoing concern basis.
5. That internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and are operating effectively.
6. That proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems are adequate and operating effectively."
As prescribed under Section 197(12) of the Companies Act 2013 ("Act") andRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the details are given in Annexure H. In terms of provisions of Section 197(12) ofthe Companies Act 2013 and Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 a statement showing names of the employees and otherparticulars drawing remuneration in excess of the limits as prescribed in the said Rulesforms part of this report. However in terms of first proviso to Section 136(1) of theAct the Annual Report excluding the aforesaid information is being sent to the membersof the Company. The said information is available for inspection at the Registered Officeof the Company during working hours and any member who is interested in obtaining theseparticulars may write to the Company Secretary of the Company.
During the year seven Board Meetings were held. The details of the meetings of theBoard and its Committees are given in the Corporate Governance Report (AnnexureC).
EVALUATION OF BOARD / BOARD COMMITTEES
Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out annual performance evaluation of its own performance thedirectors individually as well as evaluation of the working of its Committees.
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a Policy for selection and appointment of Directors Key Managerial Personnel (KMP)and other employees and their remuneration for implementation.
Broadly the performance of the employee concerned and the performance of the Companyare the fundamental parameters determining the remuneration payable to an employee. Morespecifically there will be reciprocity in the matter of remunerating executive directorsKMPs and other employees.
At the middle and lower levels of management the yardsticks of assessment aredifferent. The ability to speedily execute policy decisions sincerity and devotion anddiscipline are the main attributes expected.
KEY MANAGERIAL PERSONNEL
The Key Managerial Personnel of the Company for the purpose of Companies Act 2013 areSri N.Srinivasan Vice Chairman & Managing Director (Chief Executive Officer) Smt.Rupa Gurunath Wholetime Director Sri G.Balakrishnan Senior President & CompanySecretary (till 31.03.2016) and Sri R.Srinivasan President (Finance & Accounts)(Chief Financial Officer).
Consequent to the attainment of superannuation by Sri G.Balakrishnan on 31.03.2016 SriS.Sridharan has been appointed as Company Secretary with effect from 01.04.2016.
Industrial relations continued to remain cordial during the year.
EMPLOYEES STOCK OPTION SCHEME
No fresh options have been granted under India Cements Employees Stock Option Scheme2006 during the financial year.
No options at all have been granted under India Cements Employees Stock Option Scheme2007.
The Shareholders of the Company at the 68th Annual General Meeting held on 26thDecember 2014 appointed Messrs. Brahmayya & Co. and P.S.Subramania Iyer & Co.Chennai the Auditors of the Company to hold office for a period of 3 years from theconclusion of the 68th Annual General Meeting until the conclusion of the 71st AnnualGeneral Meeting. Their appointment is subject to ratification by members every year at theAnnual General Meeting and hence is included in the Notice convening the 70th AnnualGeneral Meeting of the Company.
Messrs Capri Gopalaiyer & Subramanian Kalyanasundaram & Associates and Bala& Co. Chennai have been appointed as Internal Auditors for the year 2016-17.
Sri S.A.Murali Prasad Cost Accountant Chennai has been appointed as Cost Auditor forthe year 2016-17 at a remuneration of Rs.15 lakhs. The remuneration is subject toratification of members and hence is included in the Notice convening the 70th AnnualGeneral Meeting of the Company.
Smt. P.R.Sudha Practising Company Secretary Chennai has been appointed asSecretarial Auditor of the Company for the year 2016-17. Secretarial Auditor's Report inForm MR-3 as prescribed under Section 204(1) of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Management Personnel) Rules 2014 isenclosed as Annexure K. The Secretarial Audit Report does not contain any qualificationreservation or other remarks.
The Directors are thankful to the Financial Institutions and the Bankers for theircontinued support. The Directors also thank the Central Government and the various StateGovernments for their support. The stockists continued their excellent performance duringthe year and the Directors are appreciative of this. The continued dedication and sense ofcommitment shown by the employees at all levels during the year deserve special mention.
| || ||On behalf of the Board || |
| ||N.SRINIVASAN ||RUPA GURUNATH ||CHITRA SRINIVASAN ||ARUN DATTA |
| ||Vice Chairman & ||Wholetime Director ||R.K.DAS ||N.R.KRISHNAN |
| ||Managing Director || || || |
| || || ||V. MANICKAM ||RABINARAYAN PANDA |
| || || ||N. SRINIVASAN ||PL. SUBRAMANIAN |
| || || ||S.BALASUBRAMANIAN ADITYAN |
|Place : Chennai || || || || |
|Date : 26th May 2016 || || || ||Directors |