Your Directors have pleasure in presenting their 76th Annual Report of the companytogether with the Audited Financial Statements for the year ended 31st March 2017.
1. Financial Results:
| || || || ||(Rs in Lakhs) |
| || |
For the year ended
For the year ended
|Particulars ||31/03/2017 ||31/03/2016 ||31/03/2017 ||31/03/2016 |
| ||Stand Alone ||Consolidated (GROUP) |
|Revenue from Operations ||94899 ||86199 ||141365 ||140976 |
|Profit for the year (PBDIT) ||14434 ||14965 ||22751 ||24139 |
|Less: a) Interest and Finance charges ||4630 ||4541 ||4967 ||5234 |
|b) Depreciation ||5053 ||3912 ||6469 ||4829 |
|Profit before Tax ||4751 ||6512 ||11315 ||14077 |
|a) Provision for current tax ||1026 ||1392 ||1137 ||1461 |
|b) Deferred Tax ||1386 ||2122 ||1383 ||2194 |
|c) Short / (Excess) Tax Provision for earlier years ||- ||102 ||11 ||97 |
|Add: a) Refund of Income Tax ||- ||- ||- ||- |
|b) MAT Entitlement tax ||649 ||1390 ||628 ||1420 |
|Less : Minority share of profit ||- ||- ||2107 ||2410 |
|Profit for the Year from Continuing Operations ||2988 ||4286 ||7305 ||9335 |
|Profit / (Loss) from Discontinued Operations ||(36) ||- ||(36) ||- |
|Less : Tax expense of Discontinued Operations ||(8) ||- ||(8) ||- |
|Profit / (Loss) from Discontinued Operations After Tax ||-28 ||- ||-28 ||- |
|Profit for the Year ||2960 ||4286 ||7277 ||9335 |
|Add: Surplus brought forward from earlier year ||7571 ||4709 ||19097 ||11275 |
|Amount available for appropriations ||10531 ||8995 ||26373 ||20610 |
|Less: || || || || |
|Transfer to General Reserve ||- ||- ||- ||41 |
|Proposed Final Dividend Equity Shares ||- ||- ||- ||40 |
|Interim Dividends Paid Equity Shares ||- ||1289 ||- ||1289 |
|Tax on Distributed Profits Equity shares ||- ||135 ||- ||143 |
|Surplus at the end of the Year ||10531 ||7571 ||26373 ||19097 |
2. Financial Performance:
Your Company reported a top-line growth of 10% on Standalone basis and 3% onConsolidated basis over the Previous Year. At Standalone level the Gross Revenue fromoperations stood at Rs.94899 lakhs compared with Rs. 86199 lakhs inthe Previous Year. The Operating Profit before tax (PBDIT) stood at Rs.14398 Lakhs asagainst 14965 Lakhs in the Previous Year. The Net Profit for the year stood at Rs.2960Lakhs against Rs.4286 Lakhs reported in the Previous Year.
The Consolidated Gross Revenue from operations for FY 2017 was at Rs.141365 (PreviousYear: 140976 Lakhs) The Consolidated Operating Profit(PBDIT) stood at Rs.22715 Lakhs(Previous Year: Rs.24139 Lakhs). The Consolidated Profit after tax stood at Rs. 7277Lakhs (Previous Year: Rs.9335 Lakhs).
There are no material changes or commitments affecting the financial position of thecompany which have occurred between the end of the financial year and the date of thisReport.
The Board of Directors at their Meeting held on May 22 2017 recommended dividend forapproval of the shareholders at the ensuing Annual General Meeting of Re.2/- per share i.e200% on paid-up share capital of the company for the Financial Year 2016-17 (includingRe.1/- as special dividend to Commemorate the 75th year of the company). The Dividendshall be paid to the members whose names appear on Company's Register of Members on August25 2017 in respect of physical shareholders and whose name appear in the list ofbeneficial Owners on August 25 2017 furnished by NSDL and CDSL for this purpose. Thedividend if declared at the Annual General Meeting will be paid on or after September 82017.
In terms of Regulation 43A of Listing Regulations Formulation of Dividend distributionpolicy is applicable to top 500 listed companies only.
4. Transfer to Reserves
Current year's profits along with carried forward balance of previous year amount toRs.10531 lacs. The board has not recommended any transfer to Reserves.
5. Share Capital
The paid up Equity Share Capital as at March 31 2017 is 128921160. The Company hasneither issued shares with differential rights as to dividend voting or otherwise norissued shares (including sweat equity shares) to the employees or Directors of theCompany under any Scheme. No disclosure is required under Section 67(3)(c) of theCompanies Act 2013 in respect of voting rights not exercised directly by the employees ofthe company as the provisions of the said Section are not applicable and the company hasnot issued any convertible instruments during the year.
6. Credit Rating
During the year under review the Rating agency CRISIL has revised (upgraded) theratings of the
Company bank loan facilities and other debt facilities as detailed below.
|Long Term Rating ||CRISIL A-/Stable (upgraded from CRISIL BBB+/Positive) |
|Short Term Rating ||CRISIL A2 +(upgraded from A2) |
|Rs. 7000 lakhs ||CRISIL A-((upgraded from |
|Non-Convertible ||BBB+/Positive)) |
|Debentures || |
|Fixed Deposits ||FA/Stable (upgraded from |
| ||FA-/Positive). |
7. Fixed Deposits:
The total amount of Fixed Deposits outstanding as on March 31 2017 was Rs.9231.02 Lacsas compared to the figure of Rs.8375.87Lacs as on March 31 2016 and the total amount ofFixed Deposits matured and remaining unclaimed is Rs.150.05 lacs from 232 Depositors.Fixed Deposits of 48 Depositors amounting to Rs.60.55lacs have been renewed and FixedDeposits of Rs. 4.10lacs of 14 depositors repaid.
Formal intimations have been sent to Depositors about the maturity of deposits with arequest to either renew or claim their deposits. Interms of the provisions of Section124(5) of the Companies Act 2013 deposits remaining unclaimed for a period of sevenyears from the date they became due for payment have to be transferred to the InvestorEducation and Protection Fund (IEPF) established by the Central Government.
Accordingly during the year an amount of Rs.63000/- unclaimed deposits has beentransferred to the IEPF.
8. Particulars of Loans Guarantees and Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the financial statements.
9. Consolidated Financial statements
The Consolidated Financial Statements of the Company for the year ended 31st March2017 are prepared in compliance with the applicable provisions of the Companies Act 2013and as stipulated under Regulation 33 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
The consolidated fi nancial statements have been prepared on the basis of the AuditedFinancial Statements of the company its subsidiary KCP Vietnam Industries Ltd Jointventure Fives Cail K C P Ltd.
10. Management Discussion & Analysis report:
The Management Discussion and Analysis Report on the operations of the Company asrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isprovided in a separate section and forms part of this Report.
11. Line 2 Expansion of Brown filed cement project Muktyala:
Discussed in detail in Management Discussion & Analysis report
12. Inter Corporate Loans and Investments
The Company has no inter corporate loans and investments or Guarantees given in termsof Section 186 of the Companies Act 2013
13. Related Party transactions:
The details of contracts or arrangements entered with the related parties along withthe Justification is provided in Form AOC 2 as Annexure- 6 of this report.
No whole time Director or Managing Director of the company is in receipt of anysalary or Commission from Subsidiary company in terms of Section 197(4) of the CompaniesAct 2013.
14. Corporate Social Responsibility (CSR)
As part of its initiatives under "Corporate Social Responsibility (CSR) theCompany has undertaken projects in the areas of Education Training Women empowermentHealth Water and Sanitation. These projects are largely in accordance with Schedule VIIof the Companies Act 2013.
A Committee of the Board comprising of Smt V L Indira Dutt Joint Managing Director SmtKavitha D Chitturi Executive Director Sri. P.S. Kumar Sri V Gandhi and Sri Vijay Sankarhas been formed to monitor the CSR activities and suggest further improvement to make itmore productive.
The Annual Report on CSR activities is annexed herewith as "Annexure 3".
Details of various social projects and initiatives undertaken as part of our CorporateSocial Responsibility are given in report on CSR activities which forms part of thisAnnual Report.
15. Risk Management
Our Company has implemented a Risk Management framework aimed at timely identificationand assessment of risks and implementing mitigation measures.
These risks are continuously reviewed to ensure their relevance and also to identifyexistence of any new risks.
The Board of Directors of the Company has formed a Risk Management Committee (even itis not mandatory) to monitor the risk management plan for the Company and ensuring itseffectiveness.
The key risks identified by the Company and their mitigation measures are as under:
The Financial Risk for your Company emanates from fluctuations in interest rateexchange rate and commodity prices. Your Company has well defined policies for foreignexchange treasury investments interest rate and imported coal hedging. The policies arereviewed periodically to align with the changes in financial market practices andregulations.
The Cement Industry is becoming intensely competitive with the foray of new entrantsand some of the existing players adopting inorganic growth strategies. To mitigate thisrisk the Company is leveraging on its expertise experience and it's created capacitiesto increase market share enhance brand equity / visibility and enlarge product portfolioand service offerings.
16. Internal controls system and their adequacy
The company has designed and implemented a process driven framework for Internalcontrols within the meaning of the explanation to Section 134(5)(e) of the Companies Act2013 and the necessary control systems considering the business requirements scale ofoperations geographical spread and applicable statues of the company are in place in theorganisation.
The Audit Committee of the Board of Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame.
Internal Audit plays a key role in providing assurance to the Board of Directors.Significant Audit observations and corrective actions taken by the management arepresented to the Audit Committee.
17. Human Resources / Industrial Relations
Our Company continuously focus on people related programmes aimed at attractingdeveloping and retaining talent within organisation by way of:
a) Employee Engagement - Company enjoys high engagement levels from its employees whichis reflected in its consistently improving performance. Company continuously aims toenhance the engagement levels of its people by ensuring that its business practices are inalignment with the holistic growth and development of its people which drives them to beactively engaged with the Company.
b) Talent Management - Company is continuously working on strengthening and buildingtalent in its Human Resources management team for supporting its growth.
c) Work Environment - Company provides a congenial work atmosphere where every employeeenjoys his/her work and It works on creating people practices which makes it the bestplace to work for everyone.
d) Occupational Health and Safety
Safety of employees and workers is of utmost importance to the Company. Varioustraining programmes have been conducted at the plants such as behaviour based safetytraining program Visible Safety Leadership program Logistics Safety program etc.
The Company continuously undertakes initiatives aimed at providing a healthy and safeworkplace to its people.
Employee Relations at all the Units and divisions of the company remained Cordial.
Company's sustainability initiatives are focussed on low Carbon Emission use ofAlternate fuels Water & resource conservation and environment management.
Focus on sustainability is manifested in the Company policies being recognised as oneof the most energy efficient cement manufacturing organisation with low energy consumptionlevels use of alternative fuel and raw materials low GHG emissions etc.
19. Indian Accounting Standards (IND AS) convergence.
In terms of MCA notification dated 16.02.2015 Listed Companies having net worth ofless than Rs. 500 crores are required to comply with Ind AS in the preparation of theirfinancial statements for accounting period beginning on or after 1st April 2017 with thecomparatives for the period ending 31st March 2017.
The Company and its subsidiary and joint venture Company will adopt Indian AccountingStandards (Ind AS) with effect from 1st April 2017.
20. Vigil Mechanism / Whistle Blower Policy
The Company has a vigil mechanism named Whistleblower Policy to deal with instance ofFraud and Mismanagement if any.
The details of the Whistleblower Policy is explained in the Corporate Governance Reportand also posted on the website of the Company.
Weblink: http: //www.kcp.co.in/downloads/PDF/wb-policy. pdf
21. Report under the Prevention of Sexual Harassment Act
Pursuant to The Prevention of Sexual Harassment of Women at Workplace (PreventionProhibition and
Redressal) Act 2013 and Rules framed there under Company has implemented a policy onprevention prohibition and redressal of sexual harassment at the workplace.
All women permanent temporary or contractual including those of service providers arecovered under the policy and an Internal Complaints committee has been formed to redressthe complaints.
There were no complaints reported during the year.
22. Directors and Key Managerial Personnel
During the year the shareholders of the company have approved the resolutions forappointment of Dr. V.L.Dutt as Executive Chairman Smt. V.L.Indira Dutt as ManagingDirector Smt. Kavitha Dutt Chitturi as Joint Managing Director and re-appointment ofSri.V. Gandhi as Technical director of the company.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Dr.V.L.Dutt retires by rotation at the forthcomingAnnual General Meeting and being eligible offers himself for re-appointment. The Boardrecommends his re-appointment for the consideration of the Members of the Company at theensuing Annual General Meeting.
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 Regulation16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The following are the Key Managerial Personnel of the Company:
1. Dr.V.L.Dutt: Chairman and Managing Director
2. Smt.V.L.Indira Dutt: Joint Managing Director
3. Smt.Kavitha Dutt Chitturi : Executive Director
4. Sri.V.Gandhi : Technical Director
5. Sri.G.N.Murty : Chief Financial Officer
6. Sri.Y.Vijayakumar: Company Secretary
23. Board Meetings
During the year five Board Meetings were convened and held and the details are given inthe Corporate Governance Report.
The intervening gap between the Meetings was within the period prescribed under theCompanies Act2013 and the SEBI (LODR) Regulations 2015.
24. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI Regulations the Boardhas carried out an Annual Evaluation of its own performance the Directors individually aswell as the evaluation of the working of its Committees. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
The Details of Familiarisation programme arranged for independent Directors have beendisclosed on website of the company and is available at the following link:
Weblink: http://www.kcp.co.in/downloads/PDF/FProgamme. pdf
Pursuant to the provisions of Section 139 of the Companies Act 2013 and Rules madethere under the term of office of M/s. Brahmayya & Co Chartered AccountantsVijayawada (Firm Registration No.000513S) as the Statutory Auditors of the Company willconclude from the close of ensuing Annual General Meeting of the Company.
The Board of Directors places on record their appreciation to the services rendered byM/s.Brahmayya &Co Chartered Accountants Vijayawada as the Statutory Auditors of theCompany.
Subject to the approval of the Members the Board of Directors of the Company haverecommended the appointment of M/s. K.S. Rao & Co Chartered Accountants (FirmRegistration No.003109S) Hyderabad as the Statutory Auditors of the Company.
Accordingly the Board recommends the resolution in relation to appointment ofStatutory Auditors for the approval by the shareholders of the Company.
There is No Audit qualification for the year under review.
26. Cost Auditors
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time your Company has beencarrying out Audit of Cost Records relating to Cement and Engineering Divisions of thecompany. The Board of Directors on the recommendation of Audit Committee have appointedM/s Narsimhamurthy & Co Cost Accountants Hyderabad and M/s Mahadevan & CoChennai as the Cost Auditors for the Cement and Engineering Divisions respectively for theyear 2017-18. As required under the Companies Act 2013 a Resolution seeking member'sapproval for the remuneration payable to the Cost Auditor forms part of the Noticeconvening the Annual General Meeting for their ratification.
The Cost Audit Reports for the year 2015-16 were filed by the Cost Auditors within thedue date.
27. Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed Smt. Sobana Pranesh Company Secretary in Practice(CP No. 2403) to undertake the Secretarial Audit of the Company.
The Secretarial Audit Report is annexed as "Annexure 7" and forms partof this Report.
There is No Secretarial Audit qualification for the year under review.
The Board has appointed Smt. Sobana Pranesh as Secreterial Auditor of the Company forthe Year 2017-18.
28. Subsidiary Company:
Your Company does not have any Indian Subsidiary company.
The Audit Committee and Board review the financial statements significanttransactions Working and the Financial Results of the Subsidiary company in Vietnam KCPVietnam Industries Limited.
There is no material change in the nature of the business of the subsidiary.
A statement containing brief financial details of the subsidiaries is included in theAnnual Report in Form AOC 1 as Annexure 5.
The Annual accounts of the subsidiary and the related information will be madeavailable to any member of the Company for inspection at the registered office of theCompany during business hours. The Company shall furnish a copy of the details of annualaccounts of the subsidiary to any member on request.
The Annual accounts of the subsidiary company will be placed on the website of thecompany www.kcp.co.in.
No company ceased to be its Subsidiary joint venture or associate company during theyear 29. Transfer of amounts to Investor Education and Protection Fund (IEPF)
Pursuant to sections 124 and 125 and other applicable provisions if any of theCompanies Act 2013 all Unclaimed Dividend and interest on Deposits as well as theprincipal amount of Deposits as applicable remaining unclaimed for a period of sevenyears from the date they became due for payment have been transferred to the IEPFestablished by the Central Government.
30. Transfer of shares to DEMAT account of Investor
Education and Protection Fund (IEPF) Authority.
Pursuant to Section 124(6) of the Companies Act 2013 and Rules all shares in respectof which dividend has not been claimed by the shareholder for seven consecutive years ormore shall be transferred by the Company in the name of Investor Education and ProtectionFund (IEPF) and the company is in the process of transferring the said shares to the DEMATaccount of IEPF Authority.
31. Corporate Governance:
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on Corporate Governancepractices followed by the Company together with a certificate from the Company's Auditorsconfirming compliance forms part of this Report.
32. Remuneration Policy:
The Board of Directors have framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members.
The details of this policy are explained in the Corporate Governance Report and isplaced on website of the company: www.kcp.co.in
33. Particulars of Employees
The Disclosure required under Section 197(12) of the Companies Act 2013 read with theRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed as Annexure - 1 and forms part of this Report.
The above Annexure is not being sent along with this Annual Report to the Members ofthe Company in line with the provision of Section 136 of the Companies Act 2013. Memberswho are interested in obtaining these particulars may write to the Company Secretary atthe Registered office of the Company. The aforesaid Annexure is also available forinspection by Members at the Registered office of the Company 21 days before and up tothe date of the ensuing Annual General Meeting during the business hours on working daysand is also available on the website of the Company.
a) The ratio of the remuneration of each director to the median employee'sremuneration for the financial year and such other details as prescribed is as givenbelow:
|Name of the Director ||Director remuneration (Rs. Lacs) ||Median employee's remuneration (Rs. Lacs) ||Ratio |
|Dr.V.L.Dutt - CMD ||216.95 ||4.31 ||50 : 1 |
|Smt.V.L.Indira Dutt - JMD ||166.05 ||4.31 ||38 : 1 |
|Smt.Kavitha Dutt Chitturi - ED ||165.60 ||4.31 ||38 : 1 |
|Sri.V.Gandhi - TD ||160.73 ||4.31 ||37 : 1 |
b) The percentage increase/ (decrease) in the median remuneration of employees in theFinancial Year: 10.52%
c) The number of permanent employees (Management staff) on the rolls of company: 548
d) Average increase in Managerial Remuneration is at par with increase in remunerationof Employees other than Managerial Personnel and there is/are no exceptional circumstancesfor increase in the managerial remuneration.
e) If remuneration is as per the remuneration policy of the company: Yes
34. Extract of Annual return
The details forming part of the extract of the Annual Return in form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is annexed and forms part of this Report as "Annexure4".
35. Significant and Material orders passed by the Regulators or Courts
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
36. Particulars regarding Conservation of Energy Technology absorption and Foreignexchange earnings and outgo
The information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with theRule 8(3) of the Companies (Accounts) Rules 2014 is annexed as Annexure - 2 andforms part of this Report.
37. Director's Responsibility Statement
To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013: (a) that in the preparation of the AnnualFinancial Statements for the year ended 31st March 2017 the applicable accountingstandards read with requirements set out under Schedule III to the Act have beenfollowed and there are no material departures from the same; (b) the Directors haveselected such accounting policies and applied them consistently and made judgements andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company and for preventing and detecting fraud and other irregularities;(c) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;(d) that 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 the Companyand that such Internal Financial Controls are adequate and are operating effectively; and(f) the Directors have devised proper systems to ensure compliance with provisions of allapplicable laws and that such systems are adequate and operating effectively.
The Board of Directors wishes to place on record their gratitude to the CentralGovernment State Governments Company's Bankers Customers Dealers and other BusinessAssociates for the assistance co- operation and encouragement they extended to theCompany. Your Directors wish to whole heartedly thank the employees for their sincere anddevoted contribution to the company's continued performance and are thankful to theShareholders and Deposit holders for their continued patronage.
| ||For and on behalf of the |
| ||Board of Directors |
|Place: Chennai ||(V.L. DUTT) |
|Date: 22nd May 2017 ||Chairman and Managing |
| ||Director |