You are here » Home » Companies » Company Overview » Kajaria Ceramics Ltd

Kajaria Ceramics Ltd.

BSE: 500233 Sector: Consumer
NSE: KAJARIACER ISIN Code: INE217B01036
BSE LIVE 15:40 | 16 Aug 620.05 -1.50
(-0.24%)
OPEN

620.00

HIGH

629.00

LOW

610.70

NSE 15:56 | 16 Aug 622.10 -1.70
(-0.27%)
OPEN

621.00

HIGH

629.00

LOW

611.25

OPEN 620.00
PREVIOUS CLOSE 621.55
VOLUME 12198
52-Week high 787.55
52-Week low 437.30
P/E 38.02
Mkt Cap.(Rs cr) 9,853
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 620.00
CLOSE 621.55
VOLUME 12198
52-Week high 787.55
52-Week low 437.30
P/E 38.02
Mkt Cap.(Rs cr) 9,853
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kajaria Ceramics Ltd. (KAJARIACER) - Director Report

Company director report

Dear shyrhtdeirSy

Your Directors are pleased to present the 30th Annual Report together with the auditedfinancial statements of your Company for the financial year ended 31st March 2016.

FINANCIAL RESULTS

The Company's Financial performance for the year ended on 31st March 2016 is summarisedbelow:

Particulars

Standalone

Consolidated

Year ended 31st March 2016 Year ended 31st March 2015 Year ended 31st March 2016 Year ended 31st March 2015
Revenue (Net Sales) 2441 2227 2409 2178
Profit Before Depreciation Interest and taxes 392 286 463 354
Profit before Tax 351 243 358 270
Tax Expense 117 75 124 85
Profit After Tax (before Minority interest) 235 168 234 185
Minority Interest - - 5 9
Profit After Tax (after Minority interest) 235 168 229 176
Balance of Profit & Loss brought forward from previous year 353 263 372 274
Profit available for appropriation 588 431 601 450
APPROPRIATIONS
Proposed Dividend 40 32 40 32
Dividend Distribution Tax 8 6 8 6
Transferred to General Reserve 60 40 60 40
Surplus Credited to Balance Sheet 480 353 493 372

Financial highlights & State of Affairs of the Company

(The financial discussion is based on Standalone Financial Statements)

Even as the performance of the housing sector remained subdued your Company continuedto tread the historic growth path. Your Company reported a 10% growth in net sales from Rs2227 crore in 2014-15 to Rs 2441 crore in 2015-16 - consequent to the successfulimplementation of volume-driven and value-led strategies.

A decline in gas prices and continued focus on streamlining shop-floor efficienciesstrengthened business profitability. EBIDTA grew by 37% from Rs 286 crore in 2014-15 to Rs392 crore in 2015-16; the EBIDTA margin improved from 12.84% to 16.05% over the sameperiod. The profit after tax grew by 40% from Rs 168 crore in 2014-15 to Rs 235 crore in2015-16.

Consequently the earnings per share (basic) increased from Rs 21.80 in 2014-15 to Rs29.56 in 2015-16.

No material change has been incurred after close of the year till the date of thisreport which have effect the financial position of the Company. The State of affairs ofthe Company is disclosed in the "Management Discussion & Analysis" sectionwhich forms part of this report.

Outlook

While soaring aspirations has been an important ingredient for increasing offtake theprimary trigger has been the significantly enhanced tile availability. This has workedtowards making the product more affordable.

Hence what was once considered a rich man's foot-step luxury has now transcended intoan Indian's regular wall and flooring solution. While this change remained concentrated inmetros and urban India in earlier years this transformation is currently sweeping Tier IIand Tier III towns in India.

Growth drivers

The Indian tile industry is poised to experience significant growth over the comingyear. This optimism stems from the important realities that are expected to catalyse tiledemand pan-India.

The housing sector is expected to report reasonably good growth over the medium termprimarily catalysed by the Government's policies namely 'Housing for All' "SwachhBaharat Abhiyan" the Real Estate Regulator Bill the 'Smart City' initiative andthe Shyama Prasad Mukherji urban Mission. In addition the softening of the interest ratesby the RBI is expected to stimulate housing sector growth.

Further recommendations in the Union Budget 2016-17 and the announcements by the 7thPay Commission are expected to increase the disposable income in the hands of the averageIndian which is expected to provide considerable impetus to tile offtake across India.

For a detailed review on the growth drivers of the Indian tile industry we request youto go to "Management Discussion & Analysis" section.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company prepared in accordance with theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBI (LODR)Regulations 2015) and applicable Accounting Standards issued by the Institute ofChartered Accountants of India forms part of this Annual Report.

Holding Subsidiaries Associate Companies and their performance

During the year under review M/s Floera Ceramics Private Limited has become thesubsidiary of the Company. During the year under review there is no Company who ceases tobe the subsidiary of the Company.

A report on performance and financial position (form AOC-1) of each of the subsidiariesas per the Companies Act 2013 is provided as Annexure-I.

Dividend

Your Directors have recommended a dividend of Rs. 5.00 (i.e 250%) on equity shares(previous year Rs. 4.00 per equity share) of face value of Rs. 2 each fully paid-up forthe financial year ended on 31st March 2016. The total payout will be Rs. 47.83 Crores(including dividend distribution tax of Rs. 8.09 Crores).

The dividend payout for the year under review has been formulated in accordance withthe Company's Policy to pay sustainable dividend linked to long term growth objectives ofthe Company to be met by internal cash accruals.

Share Capital

The Authorised Share Capital of the Company is Rs. 35 Crores comprising of 12.50 Croresof equity shares of Rs. 2 each and 10 Lakh preference shares of Rs. 100 each. The paid upequity share capital of the Company as on 31st March 2016 was Rs. 15.89 Crores dividedinto 79469000 equity shares of Rs. 2 each.

During the year under review the Company has not issued shares with differentialvoting rights. As on March 31 2016 none of the Directors of the Company hold instrumentsconvertible into equity shares of the Company.

Employee Stock Option Scheme (ESOP)

The members of the Company had approved the Employees Stock Options Scheme 2015 (ESOS2015) on 7th September 2015 for issue and allotment of options exercisable into not morethan 531000 (Five lakhs thirty one thousand) equity shares of face value of Rs. 2 each toeligible employees of the Company and its subsidiaries. Each option when exercised wouldbe converted into one fully paid up equity share of Rs. 2 each. ESOS 2015 is administeredby Nomination and Remuneration Committee of the Board of Directors of the Company. Duringthe year under review on 20th October 2015 the Nomination and Remuneration Committee ofthe Company has granted 229000 (Two lakhs twenty nine thousand) stock options to theemployees of the Company. There is no material change in the scheme and the scheme is incompliance with the SEBI (SBEB) Regulations 2014. Further the details required under SEBI(SBEB) Regulations 2014 are disclosed on the website of the Company and the same can beaccessed at http://www. kajariaceramics.com

Transfer to Reserves

A sum of Rs. 60 Crores has been transferred to the Company's General Reserve accountand the balance has been carried to surplus in statement of profit and loss.

Directors' Responsibility Statement

In terms of the provisions of the Companies Act 2013 the directors confirm that:

i) In the preparation of the annual accounts for the year ended on 31st March 2016the applicable accounting standards had been followed and that no material departures havebeen made from the same.

ii) Appropriate accounting policies have been selected and applied consistently andjudgments and estimates made are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on 31st March 2016 and the profit and cash flowof the Company for the period 31st March 2016.

iii) 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.

iv) The annual accounts have been prepared on a going concern basis.

v) The Company is following up the proper Internal financial controls laid down by thedirectors of the Company and such internal financial controls are adequate and areoperating effectively and

vi) The Company has devised proper system to ensure the Compliance with the Provisionsof all the applicable laws and that such systems are adequate and operating effectively.

Corporate Governance

The Company has complied with the Corporate Governance requirements as stipulated underthe SEBI (LODR) Regulations 2015. A separate section on corporate governance along with acertificate from the Company Secretary in practice confirming the compliance is annexedand forms part of the Annual Report.

Management discussion and analysis report

Management discussion and analysis on matters related to the business performance asstipulated in SEBI (LODR) Regulations 2015 is given as a separate section in the AnnualReport.

Related Party Transactions

For all related party transactions prior omnibus approval of the Audit Committee isobtained on a yearly basis for the transactions which are of a foreseen and repetitivenature and such approval is in the interest of the Company. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their approval. All related parties transactions are disclosed in notenumber 35 to the financial statements. Material related party transactions withsubsidiaries which are at arm's length price are disclosed in form AOC-2 annexed asAnnexure- 2.

The Related Party Transactions Policy as approved by the Board is uploaded on theCompany's website i.e. http://www.kajariaceramics.com/pdf/RelatedPartyTransactionPolicy.pdf.

Corporate Social Responsibility Initiatives

In terms of provisions of Section 135 of the Companies Act 2013 and Corporate SocialResponsibility Policy Rules 2014 the Corporate Social Responsibility committee (CSRCommittee) has formulated a CSR policy indicating the activities to be undertaken by theCompany. The constitution of CSR Committee is disclosed in Corporate Governance Report.

The CSR policy may be accessed on the Company's website i.ehttp://www.kajariaceramics.com/pdf/CSR_Policy.pdf

Your Company strives to make a difference in the lives of people with a special focuson neighbouring areas. Your Company has implemented various CSR programmes / projectswhich made positive impacts mainly in the areas of sanitation and promoting education. TheCSR programmes initiated by the Company includes taking steps for preventive health careconstructing sanitation facilities in the schools near the manufacturing facilitiescontributing to the education and social economic development of under privileged childrenand for slum area / rural area development. These CSR initiatives are implemented directlyand through various trusts/ societies / NGOs.

These projects are in accordance with Schedule VII of the Companies Act 2013.

The Annual report on CSR activities as required under the Company's Corporate SocialResponsibility Policy Rules 2014 is set out as Annexure-3 forming part of this Report.The Company has incurred CSR expenditure of Rs 3.60 crore during the current financialyear. The Company has spent about 94% of the proposed CSR Budget. The small shortfall of6% in the required expenditure on CSR was due to non-identification of appropriateprojects / activities in line with the CSR policy of the Company.

Risk Management

A risk management policy in terms of provisions of Section 134(3)(n) of the CompaniesAct 2013 is already in place and is uploaded on the website of the Company i.e www.kajariaceramics.com

The policy outlines the parameters of identification assessment monitoring andmitigation of various risks which are key to the business objectives. This is an ongoingprocess and the Audit Committee periodically reviews all the risks and suggest thenecessary steps to mitigate the risk if any which may threaten the existence of theCompany

There is no such risks which in the opinion of the Board may threaten the existence ofthe Company

Internal Financial Control and its Adequacy

The Company has policies and procedures for ensuring the orderly and efficient conductof its business including adherence to Company's policies safeguarding of its assetsprevention and detection of frauds and errors accuracy and completeness of accountingrecords and timely preparation of reliable financial information.

The Internal auditors monitor and evaluate the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company and its subsidiaries. Based onthe report of internal audit process owners undertake corrective actions in theirrespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.

Further adequacy of internal financial control system has also been testedindependently by the Statutory Auditors during the financial year 2015-16 as mandatedunder the provisions of Companies Act 2013.

In the opinion of the Board the Company has an Internal Financial Control Systemcommensurate with the size scale and complexity of its operations.

Directors and Key Managerial Personnel

i. Mr. Ashok Kajaria (DIN 00273877) was re-appointed as Chairman & ManagingDirector of the Company by the Board of directors in its meeting held on 27th January 2016on the recommendation of Nomination and Remuneration Committee and subject to the approvalof the members.

ii. Mr. Basant Kumar Sinha (DIN 03099241) was re-appointed as Director-Technical of theCompany by the Board of directors in its meeting held on 27th January 2016 on therecommendation of Nomination and Remuneration Committee and subject to the approval of themembers. He is also liable to retire by rotation and being eligible offered himself forre-appointment at the ensuing Annual General Meeting.

The Board recommends for their re-appointment in the forthcoming Annual GeneralMeeting.

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 SEBI (LODR)Regulations 2015.

No director has resigned during the year under review.

Board Evaluation

The Board has carried out an annual performance evaluation of its own performance itsCommittees and the Directors including Chairman.

The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.

Remuneration Policy

On the recommendation of the Nomination & Remuneration Committee the Board hasframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Nomination and remuneration policy including criteria for determiningqualification positive attributes & independence is also placed on the website of theCompany

i.e http://www.kajariaceramics.com/pdf/Nomination_

Remuneration_Policy.pdf

Details of remuneration under Section 197 of the Companies Act 2013 and detailsrequired under Rule 5 (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are also stated in Annexure- 4 which forms part of this report.

Statutory Audit

M/s O. P. Bagla & Co. (Firm Reg. No. 000018N) Chartered Accountants the StatutoryAuditors of the Company would retire at the ensuing Annual General Meeting. They haveconfirmed their eligibility under section 139 & 141 of the Companies Act 2013 andwillingness for re-appointment as statutory auditors of the Company.

The Board of Directors recommends the re-appointment of M/s O. P. Bagla & Co. (FirmReg. No. 000018N) as Statutory Auditors from the Conclusion of ensuing Annual GeneralMeeting till the conclusion of next Annual General Meeting.

The report given by the Statutory Auditors on the financial statements of the Companyis a part of the Annual Report. There has been no qualification reservation adverseremark or disclaimer given by the Auditors in their report. There were no frauds reportedby the auditors under sub section 12 of section 143 of the Companies Act 2013.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s ChandrasekaranAssociates a firm of Company Secretaries in Practice has been appointed to undertakethe Secretarial Audit of the Company for the year ended on 31st March 2016. The Report ofthe Secretarial Audit Report is annexed herewith as "Annexure 5".

There are no qualifications reservations adverse remarks or disclaimer made bySecretarial Auditors in their report.

Disclosures under the Companies Act 2013 and rules thereunder:

Extract of Annual Return

The extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure-6".

Meetings of the Board

The Board of Directors met 4 (four) times during the year 201516. Details of the numberof Meetings of Board held during the financial year 15-16 forms part of the CorporateGovernance Report.

Particulars of Loans Guarantee and Investments

Particulars of Loans Guarantees and Investments covered under the provisions ofSection 1 86 of the Companies Act 2013 are given in the notes 13 14 18 & 27 to theFinancial Statements.

Conservation of energy technology absorption and foreign exchange earnings/outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure -7 to this report.

Audit Committee

The Composition of Audit Committee is disclosed in the Corporate Governance Report. Allthe recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has established a Vigil Mechanism for directors and employees by adoptingthe Whistle Blower Policy to report genuine concerns or grievances. The Whistle BlowerPolicy may be accessed on the website of the Company i.e http://www.kajariaceramics.com/pdf/Whistle_Blowing_Policy.pdf

Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act2013

The Company has in place a Prevention of sexual harassment policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013. This policy may be accessed on the Company's website

i.e. http://www.kajariaceramics.com/pdf/Prevention_of_sexual_harassment_at_workplace.pdf

Internal Complaints Committee has been set up to redress complaints received regardingsexual harassment. All employees (permanent Contractual temporary trainees) are coveredunder this policy. We have not received any sexual harassment complaints during the year2015-16.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is attached as Annexure- 8 to the Directors Report.

Fixed deposits

The Company did not invite/accept any fixed deposit within the meaning of Section 73 ofthe Companies Act 2013 and the rules made there under.

Significant and material orders passed by the regulators or courts

There is no significant and material order passed by the regulators or courts.

Cautionary Statement

Statements in this "Director's Report" & "Management Discussion andAnalysis" describing the Company's objectives projections estimates expectationsor predictions may be forward looking statements within the meaning of applicablesecurities laws and regulations. Actual results could differ materially from thoseexpressed or implied. Important factors that could make difference to the Company'soperations including raw material/ fuel availability and its prices cyclical demand andpricing in the Company's principle markets changes in the Government regulations taxregimes economic developments within India and the Countries in which the Companyconducts business and other ancillary factors.

Appreciation and Acknowledgement

The directors take this opportunity to express their deep sense of gratitude to thebanks Central and State Governments and their departments and the local authorities fortheir continued guidance and support.

Your directors would also like to record its appreciation for the support andcooperation your Company has been receiving from its suppliers dealers business partnersand other associated with the Company.

Your directors place on record their sincere appreciation to the employees at alllevels for their hard work dedication and commitment. The enthusiasm and unstintingefforts of the employees have enabled the Company to remain as industry leader.

And to you our shareholders we are deeply grateful for the confidence and faith thatyou have always reposed in us.

For and on behalf of the Board

Ashok Kajaria

Chairman & Mg. Director

DIN: 00273877

Place: New Delhi

Date: 27th May 2016