Your Directors have pleasure in presenting the 61st Annual Report andAudited Statements of Accounts for the year ended 31st March 2017:
FINANCIAL RESULTS :
| ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Income: || || |
|Gross Sales of manufactured products .. ||26655.42 ||27303.31 |
|Less: Excise Duty and Sales Tax .. ||5847.39 ||6048.30 |
|Net Sales of manufactured products .. ||20808.03 ||21255.01 |
|Other Income .. ||1288.04 ||996.69 |
|Total .. ||22096.07 ||22251.70 |
|Profit before Interest and Depreciation .. ||3024.64 ||3160.19 |
|Less: Interest and Finance charges .. ||1797.39 ||1402.11 |
|Less: Depreciation .. ||701.51 ||626.74 |
|Net Profit before Exceptional Extra Ordinary Items and Tax ||525.74 ||1131.74 |
|Add Exceptional Items on transfer of Wire Division Land ||23.29 ||58.64 |
|Property under Joint Development Agreement || || |
|Net Profit before tax ||549.03 ||1190.38 |
|Less Provision for - Income Tax for the year (MAT) ||125.00 ||122.00 |
|Deferred Tax Liability || || |
|Net Profit after tax ||424.03 ||1068.38 |
|Loss Brought Forward from previous year ||(-) 2420.18 ||(-) 3488.56 |
|Depreciation on Fixed Assets whose || || |
|Useful life is over || || |
|Loss carried to Balance Sheet ||(-)1996.15 ||(-)2420.18 |
The Company has produced 574882 M.Tonnes of cement during the year 2016-17 asagainst 589660 M. Tonnes produced during the previous year. The performance of theCompany was satisfactory. The market conditions have continued at the same level as wasprevailing in the last year. The gross sales for the year under report was Rs.26655.42lakhs as against Rs.27303.31 lakhs in the previous year. The Net profit after tax for theyear was Rs.424.03 lakhs as against net profit of Rs.1068.38 lakhs.
As stated in our last year Annual Report the developer Greenage Griha Nirman PrivateLimited (formerly known as Bhimshankar Realtors Private Limited) has Completedconstruction of all the blocks except two blocks. which are under final stage ofconstruction and is expected to be completed by the end of next year i.e. 31/12/2018with grace period of six months. The Flatsunder these two blocks ie. F-Fern and G-Gingerare premium apartments consisting of 64 apartments in each block which are of large insize.
MODERNISATION OF THE CEMENT UNIT:
As stated in our last year Annual Report the modernization works for improving theefficiency and productivity to reduce the operational costs and cutting down of logisticshas been put on hold to stabilize the operations of the unit.
The Railway Siding works have been completed and the same has been cleared by theRailway Authorities. We have started dispatching of cement and also started getting coalby rakes. This has resulted in reducing the logistic costs. Further the secondary crusherworks have been completed successfully and the same is under operation and getting goodresults. The output of the raw mills has increased considerably. This has in turn hasresulted in the reduction of power consumption in the raw mills sections. We haveinstalled a bucket elevator for the transportation of ground raw meal from the mills inplace of F.K.Pumps and Air Lift Pump. This has resulted in reduction of power consumptionand also facilitated the transfer of material among the storage and blending silos. As perthe Central Pollution Control norms the modification of works in respect of Kiln 1 arecompleted and for No.3 is under installation.
Your Directors regret their inability to recommend any dividend on Equity Shares inview of the carry forward losses. Consequently the payment of dividend in respect ofRedeemable "C" Cumulative Preference Shares held by the Financial Institutionsalso has been passed over.
The Company has not accepted any Fixed Deposit during the year and there are no fixeddeposits outstanding as on 31st March 2017.
The assets of the Company are adequately insured.
CURRENT YEAR PROSPECTS:
The efforts taken by the management to improve the performance of the company hasstarted yielding improved results. Cement demand in India is expected to increase due toGovernment's push for large infrastructure projects. The housing sector is the biggestdemand driver of cement accounting for 67 per cent of the total consumption in India.Some of the recent major government initiatives such as development of about 98 smartcities are expected to provide a major boost to the cement sector. Further about 10-18%growth in demand is expected from two Telugu States viz. Telangana and Andhra Pradeshduring next 2-3 years due to various heavy projects undertaken by the respectiveGovernments.
CONVERSION OF WARRANTS:
Pursuant to Section 42 and 62 and all other applicable provisions if any of theCompanies Act 2013 and Rule 14 of the Companies (Prospectus and Allotment of Securities)Rules 2014 read with the enabling provisions of the Memorandum and Articles ofAssociation of the Company and pursuant to the approval obtained from the shareholders intheir Extra Ordinary General Meeting held on 25th January 2016 the Board of Directors ofthe Company at their meeting held on 17th March 2016 have issued 843060 Convertiblewarrants at a price of Rs.84.61 per warrant (including premium of Rs.74.61 per warrant)with option to the allottes to convert the said warrants into equity within a period of 18months from the date of issue of such warrants to M/s.EW India Special Assets Pte. Ltd.and M/s.Ecap Equities Limited.
The said allottees have requested the company to convert the warrants into equity on15th March 2017 and also they have remitted the balance amount of Rs.53498481/- (beingthe balance 75% of the total amount) on 1st March 2017. Accordingly the Board ofDirectors of the Company at their meeting held on 1st March 2017 have issued and allotted843060 Equity Shares to the said allottees subject to the approval of the same by theBSE. The company has already submitted an application to BSE for listing of the saidshares and the same is pending before BSE.
The Company continued to enjoy peaceful industrial relations during the year.
Your Directors wish to place on record their sincere appreciation of the whole-heartedco-operation extended and the valuable contribution made by the employees at all levels.
M/s. K.S.Rao & Co. (Firm Registration No. 003109S) Chartered AccountantsHyderabad were appointed as Statutory Auditors of the Company for a term of 5 years uponthe recommendation of the Audit Committee at its meeting held on 26th August 2017 by theBoard in its meeting held on 26th August 2017 subject to the members ratification everyyear to comply with the Section 143 of the Companies Act 2013. Accordingly a resolutionfor their appointment will be placed at the ensuing Annual General Meeting for members'approval.
As regards non-provision of gratuity superannuation and leave encashment liability onactuarial valuation it is provided on the retirement of employees on a consistent basisand the liability is not ascertained.
As regards non-remittance of undisputed statutory dues as mentioned in para vii(a) ofAnnexure to Auditors' Report and dues to banks as mentioned in para (ix) of the Annexureto the Report the Company is clearing the statutory dues in a phased manner.
The Central Government has ordered the audit of cost accounts relating to manufactureof cement for the financial year ended 31st March 2017. With the approval of the CentralGovernment M/s. Aruna Prasad & Co. Cost Accountants Chennai have been appointed toaudit the cost accounts. The Cost Audit is under progress.
The Board has appointed M/s. GMVDR Associates Practising Company Secretaries toconduct Secretarial Audit for the FY 2016-17. The Secretarial Audit Report for thefinancial year ended March 31 2017 is annexed to this Report as Annexure - III Theqaulification / remarks made in the Secretarial Audit Report are self - explanatory
In terms of the Articles of Association of the Company Dr. Ramakrishna Prasad and Smt.Aravinda Rani Vemuri will retire by rotation at the ensuing Annual General Meeting andbeing eligible offer themselves for re-appointment.
The Company has received necessary declaration from all the Independent Directors underSection 149(7) of the Companies Act 2013 that they meet the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.
The Board evaluated the effectiveness of its functioning and that of the Committees andindividual Directors by seeking their inputs on various aspects of Board/CommitteeGovernance.
The aspects covered in the evaluation included the contribution to and monitoring ofcorporate governance practices participation in the long term strategic planning and thefulfillment of Directors' obligation and fiduciary responsibilities including but notlimited to active participation at the Board and Committee Meetings.
The Chairman of the Board has one-on-one meetings with the independent directors andthe Chairman of the Nomination and Remuneration Committee had one-on-one meetings with theExecutive and Non-Executive Directors. These meetings were intended to obtain Directors'inputs on effectiveness of Board/Committee processes.
The Board considered and discussed the inputs received from the Directors.
Further the independent Directors at their meeting reviewed the performance of BoardChairman of the Board and Non-Executive Directors.
The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing Agreement includes an Ethics and Compliance Task Force comprisingSenior Executives of the Company Protected disclosures can be made by a whistle blowerthrough an e-mail or a letter to the Task Force or to the Chairman of the Audit Committee.The Policy on Vigil Mechanism and whistle blower policy may be accessed on the company'swebsite at the link http: / www.panyamcements.com.
APPOINTMENT OF WOMAN DIRECTOR
To comply with the requirements of Section 149(1) of the Companies Act 2013 read withlisting Agreement executed with BSE Limited Mrs. V. Aravinda Rani was appointed as aNon-Executive Woman Director on the Board of the Company with effect from August 13 2014.
KMPS OTHER THAN DIRECTORS:
In accordance with the provisions of the Companies Act 2013 and Listing Agreement withthe Stock Exchange Sri. S. Sreedhar Reddy Managing Director and Sri S. Nageswara ReddyChief Financial Officer of the Company have been designated as the KMPs of the Company.
MEETINGS OF THE BOARD
The Board of Directors of your Company met 10 times during the year to deliberate onvarious matters. Further details on the Board of Directors are provided in the CorporateGovernance Report forming part of this Annual Report.
The Audit Committee was reconstituted with the following members Sri P.Jayarama ReddySri V. Ramnath and Sri S.Panduranga Rao. The Committee comprises of majority ofindependent directors with Sri P.Jayarama Reddy being the Chairman. Sri. S Sreedhar ReddyManaging Director and Sri. S. Nageswar Reddy CFO are the permanent invitees. Furtherdetails relating to the Audit Committee are provided in the Corporate Governance Reportforming part of this Annual Report.
During the year all the recommendations made by the Audit Committee were accepted bythe Board.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 of the Act read with Companies (CorporateSocial Responsibility Policy) Rules 2014 the Board of Directors of your Company hasconstituted a Corporate Social Responsibility ("CSR") Committee which is chairedby Sri. V. Suresh Kumar The other Members of the Committee are Sri. P.J. Reddy IndependentDirector Sri.V. Ramnath Non-Executive Director. Your Company also has in place a CSRPolicy which is accessible on your Company's website viz. www.panyamcements.com.
The Company has taken various Corporate Social Responsibility (CSR) activity around thefactory site since its inception. The Company has taken appropriate steps to the possibleextent to implement CSR activities for the development of areas surrounding the company inparticular and other areas in general.
In view of the in adequate net profits during the last three years the company couldnot spent any amount on CSR activities.
Your Directors reaffirm their continued commitment to good corporate governancepractices. During the year under review your company was in compliance with theprovisions of Listing Regulations relating to Corporate Governance as set out bySecurities Exchange Board of India.
A separate report on Corporate Governance is incorporated along with a certificate fromthe Auditors of the Company regarding compliance of the conditions of Corporate Governanceand are given separately as a part of the Directors' Report. Further as a part of thereport "Management Discussion and Analysis" has also been furnished.
DIRECTORS' RESPONSIBILITY STATEMENT: To the best of their knowledge and belief andaccording to the information and explanations obtained by them your Directors make thefollowing statements in terms of Section 134(3)(c) of the Companies Act 2013:-
i. That in the preparation of the annual Accounts the applicable accounting standardshad been followed with proper explanation and that there were no materials departures.
ii. That the Directors had selected such accounting policies applied consistently andmade judgment and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for the year.
iii. That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
iv. That the annual financial statements have been on a going concern basis.
v. That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
vi. That systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has zero tolerance towards sexual harassment at the work place and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules there under.
The Company has no such cases of sexual harassment at workplace.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO:
Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo required under section 134 (3) (m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are set out in the Annexure I and forms part of thereport.
Please refer to form No. AOC-2 in Annexure - V for the details of related partycontracts are arrangements.
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforceability. The said regulations were effectiveDecember 1 2015. Accordingly all listed entities were required to enter into the ListingAgreement within 6 months from the effective date. The Company entered into ListingAgreement with BSE Limited on 29th February 2016 wherein the Equity Shares and NonConvertible Bonds issued by the Company are listed.
The Equity/Preference Shares of the Company are listed on the BSE Limited and theannual listing fee was paid to the said Stock Exchange for the financial year 2016-17 on7th April 2017
A Special Team with Senor Executives has been formed which has been entrusted with theresponsibility to assist the Managing Director in (a) Over seeking and approving theCompany's enterprise risk management frame work and (b) Overseeking that all the risksthat the operation faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks.
The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's managementsystems organizational structures processes standards code of conduct and behaviorstogether form the Management and business the Company.
The Company has introduced several improvements to Integrated Enterprise RiskManagement Internal controls Management and Assurance frameworks and processes to drivea common integrated view of risks optimal risk mitigation responses and efficientmanagement of internal control and assurance activities. This integration is enabled byall three being fully aligned across country wide Risk Management Internal Control andInternal Auditor methodologies and processes.
CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and at an arm's lengthbasis. During the year the Company had not entered into any contract/ arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions. There are nomaterially significant related party transactions that may have potential conflict withinterest of the Company at large. Please refer to form No. AOC-2 in Annexure - V for thedetails of related party contracts are arrangements.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company is not having any Subsidiaries Joint Ventures and Associated Company.
EXTRACTION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLOSURES MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
Statutory Auditors of the Company and the Practicing Company Secretary who haveconducted statutory audit and Secretarial Audit have not made any adverse comments on theactivities of the Company for the financial year 2016-17. The remarks made in theAuditors' Report and Secretarial Audit Report are self - explanatory.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES.
The Nomination and Remuneration Committee has been constituted by the Board in itsmeeting held on 30th March 2015 to ensure the appointment of persons having vide exposurein their fields having independence as defined in the Act to be available for appointmentas Director (The Committee always keeps a list of eminent persons having independenceavailable for the Company's requirement depending upon vacancy on the Board). As regardsremuneration payable to Whole time Directors including Managing Director the Board willtake collective decision within the parameter of various statutes including Companies Act2013 and Listing Agreement. The Committee will follow the Company's policy to dischargeits duties whenever necessity arises. It will not be out of place to mention that the setpolicy being followed since inception of the Company to ensure transparency.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There were no material changes and commitments if any affecting the financialposition of the company which have occurred between the end of the financial year of thecompany to which the financial statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
ANNUAL RETURN IN FORM MGT-9 FORMAT:
In terms of the provisions of Section 92 (3) of the Act read with the Companies(Management and Administration) Rules 2014 an extract of the Annual Return of yourCompany for the financial year ended 31st March 2017 is given in Annexure - IV.
Statements in the Directors' Report and the Management Discussion and Analysisdescribing the Company's objectives projections estimates expectations or predictionsmay be "forward looking statements" within the meaning of applicable securitieslaws and regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make a difference to your Company's operationsinclude demand supply conditions finished goods prices cyclical demand and pricing inyour Company's principal markets changes in Government regulations tax regimes economicdevelopments within India within which your Company conducts business and other factorssuch as litigation and labour negotiations. Your Company is not obliged to publicly amendmodify or revise any forward looking statements on the basis of any subsequentdevelopment information or events or otherwise.
Your Directors are happy to acknowledge the financial assistance given to the Companyby the Banks and Institutions Debenture Holders Stakeholders and business associates.Your Directors also express their thanks to the Central and State Government Departmentsfor their co operation and support and look forward to their continued support in future.We thank our employees for their contribution to your Company's performance. We applaudthem for their superior levels of competence dedication and commitment to your Company
|By Order of the ||Board of Directors |
|For Panyam Cements & Mineral Industries Ltd || |
|S. SREEDHAR REDDY ||V. SURESH KUMAR |
|Managing Director ||Director |
|Place: Nandyal || |
|Dt:- 26th August 2017 || |