Your Directors have pleasure in presenting the 60th Annual Report andAudited Statements of Accounts for the year ended 31st March 2016:
FINANCIAL RESULTS :
| || ||(Rs.in lakhs) |
| ||Year ended 31st March 2016 ||Year ended 31st March 2015 |
|Income: || || |
|Gross Sales of manufactured products ||27303.31 ||11265.10 |
|Less: Excise Duty and Sales Tax ||6048.30 ||2366.79 |
|Net Sales of manufactured products ||21255.01 ||8898.31 |
|Other Income ||996.69 ||523.13 |
|Total ||22251.70 ||9421.44 |
|Profit (+) / (Loss) (-) before Interest and Depreciation ||3160.59 ||256.39 |
|Less: Interest and Finance charges ||1402.11 ||1179.43 |
|Less: Depreciation ||626.74 ||592.50 |
|Net Profit (+) / (Loss) (-) / before Exceptional || || |
|Extra Ordianary Items and Tax ||1131.74 ||(-) 1515.54 |
|Add - exceptional items on transfer of wire Division Land property under Joint Development Aggrement. ||58.64 ||0.00 |
|Net Profit (+) / (Loss) (-) / before Tax ||1190.38 ||(-) 1515.54 |
|Less Provision for - Income Tax for the year (MAT) ||122.00 ||0.00 |
|Deferred Tax Liability ||- ||0.00 |
|Net Profit / (Loss) after tax ||1068.38 ||(-) 1515.54 |
|Loss Brought Forward from previous year ||(-) 3488.56 ||(-)1950.65 |
|Depreciation on Fixed Assets whose || ||(-) 22.37 |
|Useful life is over || || |
|Loss carried to Balance Sheet ||(-) 2420.18 ||(-) 3488.56 |
The company has produced during the year 2015-16 589660 M.Tonnes of cement asagainst 244852 M. Tonnes produced during the previous year. The performance of theCompany has improved during the current financial year as compared to the last year. Themajor factor for improved performance was primarily due to favourable market conditionsand the manufacture of slag cement.
The gross sales for the year under report was Rs. 27303.31 lakhs as against Rs.11265.10lakhs in the previous year. The Net profit after tax for the year was Rs.1068.38 lakhs asagainst net loss of Rs. 1515.54 lakhs in the previous year.
As stated in our last year Annual Report the developer Greenage Griha Nirman PrivateLimited (formerly known as Bhimshankar Realtors Private Limited) has completed the firstphase of construction consisting of four blocks and out of the remaining six blocks insecond phase two blocks namely CEDAR and DEODAR are completed and blocks EBONY andHIBISCUS will be completed by September and December 2016 respectively and remaining twoblocks namely GINGER and FERN to be completed by next year end with grace period of sixmonths.
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 shelved to stabilize the operations of the unit. However the railway siding workwhich was under progress was completed and the railway inspection works are going on andwe may get the permission from the railway authorities soon. Immediately on getting of theapproval we may commence the dispatches by wagons during August 2016. Further thesecondary crusher works were also completed and the crusher is under operation. This willhelp us to improve the operations of the company in the coming years. As per the CentralPollution Control norms the modification of Kiln 1 is taken up. For Kiln 3 we have takenup installation of pulse jet bag filters and ESP for cooler. The said works are underprogress.
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 2016.
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.
As soon as we get the permission from the Railway authorities we may commencedispatches of cement in rakes and it will help us to improve our sales during the currentfinancial year. Further the secondary crusher works were also completed and the crusheris under operations. This will help us to improve the operations of the company in thecoming years.
Cement demand in India is expected to increase due to Government's push for largeinfrastructure projects. The housing sector is the biggest demand driver of cementaccounting for 67 per cent of the total consumption in India. Some of the recent majorgovernment initiatives such as development of about 98 smart cities are expected toprovide a major boost to the cement sector.
ALLOTMENT OF WARRANTS & NON CONVERTIBLE DEBENTURES:
In order to raise the debt the company has made private placement of 978 (Nine hundredand seventy eight only) 14% -Secured Rated Listed Redeemable Non Convertible Debenturesin dematerialized form of the face value of Rs.1000000/- each for cash at par in threetrenches after getting approval of the same from the members of the company in the GeneralMeeting held on 25th January 2016. The BSE Limited Mumbai has admitted the above NCDsissued in three series on the BSE Limited Mumbai for dealing in the said securities.These NCDs were allotted to the two investors. Viz. EW India Special Assets Pte. LimitedSingapore and E Cap Equities Limited Hyderabad.
In accordance with Section 62 of the Companies Act read with Section 42 of theCompanies Act. 2013 the company has issued and allotted 843060 warrants convertibleinto Equity Share of Rs.10/- each at a price of Rs.84.61 per warrant to EW India SpecialAssets Pte. Limited Singapore and E Cap Equities Limited Hyderabad after getting theapproval of the same from the members of the Company at their General Meeting held on 25thJanuary 2016. Further the BSE Limited Mumbai has also given its in-principle approvalfor the said issue vide its letter No.DCS/PREF/ND/PRE/786/2015-16 dated 3rd March 2016.The investors can exercise their right for conversion of warrants into equity at any timewith in a period of 18 months from the date of issue of such warrants. Further inaccordance with Chapter VII of SEBI ICDR Regulations the company has received 25% of theconsideration payable on the warrants.
REPAYMENT OF TERM LOANS TO BANKS:
The company has repaid the entire outstanding term loans to State Bank of India; StateBank of Hyderabad and Indian Overseas Bank before 31st March 2016 out of the NCDProceeds and the company is continuing the working capital facilities with the said banks.
Company's Industrial Relations continue to be harmonious and cordial.
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. Brahmayya & Co. Chartered Accountants Adoni were appointed as StatutoryAuditors of the Company for a term of 3 years upon the recommendation of the AuditCommittee at its meeting held on 13th August 2014 by the Board in its meeting held on13th August 2014 subject to the members ratification every year to comply with theSection 143 of the Companies
Act 2013. Accordingly a resolution for ratification by the members will be placed atthe ensuing Annual General Meeting and will be effective upto the next Annual GeneralMeeting.
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 the Company is clearing the statutory dues in a faced phasedmanner.
The Central Government has ordered the audit of cost accounts relating to manufactureof cement for the financial year ended 31st March 2016. 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.
However for the financial year 2014-15 the Cost Audit was not applicable as theturnover of the company (Net sales) was below Rs.100 crores during the previous financialyear pursuant to Section 148 of the Companies Act 2013.
The Board has appointed M/s. GMV Dhanunjaya Rao Practising Company Secretary toconduct Secretarial Audit for the FY 2015-16. The Secretarial Audit Report for thefinancial year ended March 31 2016 is annexed herewith marked as Annexure... to thisReport. The Secretarial Audit Report does not contain any qualification reservationadverse remark or disclaimer.
In terms of the Articles of Association of the Company Sri V. Suresh Kumar and Sri V.Ramnath will retire by rotation at the ensuing Annual General Meeting and being eligibleoffer themselves for re-appointment.
Pursuant to provisions of 149 152 and other applicable provisions if any of theCompanies Act 2013 read with schedule IV to the Act Sri S. Panduranga Rao (DINNO.07339056) was appointed as an Independent Director of the Company to hold the saidoffice for a period of five years with effect from 30th November 2015. The Company hasreceived Notices in writing from a Member proposing the candidature of Sri S. PandurangaRao for the office of Director.
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. Nageswara Reddy has been appointed as Chief Financial Officerof the Company w.e.f. 30th March 2015.
MEETINGS OF THE BOARD
12 (Twelve) meetings of the Board of Directors were held during the year. Theparticulars of number of meetings held and attended by each Director are detailed in theCorporate Governance Report which forms part of this Report.
The Audit Committee was reconstituted with the following members Sri P.Jayarama ReddySri V.Ramnath and Sri S.Panduranga Rao. Sri P.Jayarama Reddy is the Chairman of the AuditCommittee.
During the year all the recommendations made by the Audit Committee were accepted bythe Board.
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 by Securities Exchange Boardof 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 and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 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 thereunder.
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.
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 effectivefrom December 1 2015. Accordingly all listed entities were required to enter into theListing Agreement within 6 months from the effective date. The Company entered\ intoListing Agreement with BSE Limited on 29th February 2016 wherein the Equity Shares andNon Convertible Bonds issued by the Company are listed.
The Equity/Preference Shares / NCDs of the Company are listed on the BSE Limited andthe annual listing fee was paid to the said Stock Exchange for the financial year 2016-17on 7th May 2016.
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.
CORPORATE SOCIAL RESPONSIBILITY
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. The Corporate Social Responsibility Committee hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which has been approvedby the Board.
In view of the in adequate net profits during the last three years the company couldnot spent any amount on CSR activities.
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 no materially significant related party transactions that may have potentialconflict with interest of the Company at large. Members may refer to the financialstatements which sets out related party disclosures pursuant to AS - 18.
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 2015-16.
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 Chairman and Managing Director theBoard will take collective decision within the parameter of various statutes includingCompanies Act 2013 and Listing Agreement. The Committee will follow the Company's policyto discharge its duties whenever necessity arises. It will not be out of place to mentionthat the set policy 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:
The details of Annual Return in MGT-9 format is enclosed.
Your Directors are happy to acknowledge the financial assistance given to the Companyby the Banks and Edelweiss Your Directors also express their thanks to the variousCentral and State Government Departments and the shareholders for their support and helpextended during the year.
By Order of the Board of Directors
For Panyam Cements & Mineral Industries Ltd
S. SREEDHAR REDDY
Dt:- 27th May - 2016
ANNEXURE TO DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH 2016:
A. Conservation of Energy:
(a) Energy conservation measures taken:
High Efficiency fans are being installed Raw Mills out put has increased around 30%which will save atleast 5% of power consumption in this section by installation ofsecondary crusher.
Installation of VRPM is being taken up to increase the out put of cement mills by about60% so that power consumption can be reduced by 10%.
To increase the Mills efficiency AIA liners are being installed in all the seven mills.
(b) Additional investments and proposals if any being implemented for reduction ofconsumption of energy:
High Efficiency separators are being installed for better output and energy saving.
(c) Impact of the measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production:
Savings on energy thereby reducing the cost of production.
(d) Total energy consumption per unit of production:
Particulars given in Form "A" annexed.
B) Technology Absorption:
Particulars given in Form "B" annexed.
C) Foreign Exchange Earnings and Outgo: a) Activities relating to exportsinitiatives taken to increase the export development of new export market for productsand services and export plans:
No exports were made during the year under review.
|b) Total foreign exchange used: ||Nil |
|c) Total Foreign Exchange earned ||Nil |
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
| || ||CEMENT DIVISION |
|Particulars ||Unit ||31-03-2016 ||31-03-2015 |
|A. Power and Fuel Consumption: || || || |
|1. Electricity: || || || |
|a) Purchased || || || |
|Units ||000 KWH ||65148 ||33137.63 |
|Total Amount ||Rs. Lakhs ||4056.94 ||2297.91 |
|Average Rate ||Rs./KWH ||6.22 ||6.93 |
|b) Own Generation || || || |
|Units ||000 KWH ||- ||- |
|Units per Litre of Diesel ||KWH ||- ||- |
|Cost per unit ||Rupees ||- ||- |
|2. Cost (Mineral Coal || || || |
|C - E / Imported Grade) || || || |
|Quantity ||Tonnes ||90007 ||59926 |
|Total Cost ||Rs.Lakhs ||4083.47 ||2330.61 |
|Average Rate ||Rs.per MT ||4536.85 ||3889.15 |
|3. Furnace Oil || || || |
|Quantity ||KILO. LTS ||- ||- |
|Total Cost ||Rs.lakhs ||- ||- |
|Average Rate ||Rupees ||- ||- |
|B Consumption per unit of || || || |
|Production: || || || |
|Electricity ||KWH/tonnes ||110 ||135 |
| ||of cement || || |
|Coal ||Kgs/tonnes ||153 ||244 |
| ||of cement || || |
A. RESEARCH AND DEVELOPMENT (R & D)
1. Specific area in which R & D is carried out by the Company:
The company has not carried out R & D in any specific area.
2. Benefits derived as a result of the above efforts
- Not applicable -
3. Future course of action:
The Company has a system of continuously evaluating various production processes forupgradation
4. Expenditure on R and D:
No separate amount is incurred in respect of Research and Development.
B. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:
- Not applicable -