The Directors present the 59th Annual Report Audited Accounts and Auditors Report forthe Financial Year ended on the 31st of March 2017.
The highlights of the financial results for the Financial year ended 31st of March 2017are given below.
(Rs. in Million)
|Particulars ||Standalone ||Consolidated |
| ||Current ||Previous ||Current ||Previous |
| ||Financial Year ||Financial Year ||Financial Year ||Financial Year |
| ||2016-2017 ||2015-16 ||2016-2017 ||2015-16 |
|Revenue from Operation (Net of Excise) and Other Income ||4855.14 ||5425.07 ||4856.56 ||5426.27 |
|Profit / (Loss) before Interest Depreciation Exceptional items and Tax ||333.69 ||758.37 ||334.11 ||758.70 |
|Finance Cost ||36.54 ||48.07 ||36.54 ||48.07 |
|Profit/(Loss) before Depreciation Exceptional Items and Tax ||297.15 ||710.30 ||297.57 ||710.63 |
|Depreciation & Impairment ||141.70 ||126.86 ||141.99 ||126.92 |
|Profit/(Loss) before Exceptional items and Tax ||155.45 ||583.44 ||155.58 ||583.71 |
|Exceptional Items ||- ||103.70 ||- ||103.70 |
|Tax Expense ||34.44 ||186.87 ||34.55 ||186.93 |
|Deferred Tax Adjustment ||24.65 ||62.48 ||24.65 ||62.48 |
|Profit/(Loss) after Tax ||96.36 ||437.79 ||96.38 ||438.00 |
|Brought forward Profit/(Loss) from earlier years ||58.12 ||(191.03) ||38.40 ||(210.96) |
|Interim Preference Dividend & Dividend Distribution Tax thereon ||- ||122.82 ||- ||122.82 |
|Proposed Equity Dividend & Dividend Distribution Tax thereon ||- ||65.82 ||- ||65.82 |
|Balance of Profit / (Loss) carried to Balance Sheet (Reserves) ||154.48 ||58.12 ||134.78 ||38.40 |
THE YEAR UNDER REVIEW
The year 2016-17 was marked by excess cement capacity in the country falling demandpost demonetization and drop in cement prices during second half of the year. In thesechallenging conditions the Company's profitability was also impacted.
The Indian cement industry registered a negative growth rate during the fiscal year2016-17. The cumulative index of cement production (with a weightage of 2.41 percent inthe Index of Industrial Production) during 2016-17 declined by 1.3 percent first time indecade as compared to 5 percent growth during the previous year.
Consumption growth of cement in our home market Gujarat remained almost stagnant with amarginal increase of around one percent. In spite of a comparatively better monsoon thecement consumption was adversely affected due to inadequate investments in infrastructuralprojects and also due to the economic situation on account of demonetization in the secondhalf of the year.
The energy costs were showing an escalation trend on account of increase in the coaland pet coke prices. The taxes by way of royalty on minerals excise duty octroi servicetax etc. continued to be high. The lower cement prices in the domestic market and unviableprices in the export markets resulted in lower profitability.
Production and Sales
The production of clinker for the year ended March 2017 was 1.298 million tonnes whichis around 1 percent higher than the clinker production of 1.287 million tonnes for theyear ended in March 2016. The cement production for the year ended March 2017 was 1.434million tonnes which is around 2 percent lower than the cement production of 1.465million tonnes in the previous year ended in March 2016.
The overall sales (cement and clinker) is 1.433 million tonnes during the year endedMarch 2017 which is around 4 percent lower than the overall sale of 1.489 million tonnesin the previous year ended March 2016.
The export of cement for the year ended March 2017 was 0.081 million tonnes as comparedto 0.237 million tonnes in the previous year. The export market remained less viable withunremunerative prices and specific quality requirements of the customer.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report is provided in a separate section andforms a part of this Report as Annexure A.
Your Directors are pleased to recommend a final dividend of Rs. 1 per share on69191065 fully paid-up Equity Shares of Rs. 10/- each for the Financial Year ended 31stMarch 2017.
Equity Share Capital
The paid up Equity Share Capital of the Company as on 31st March 2017 including theforfeited shares was Rs. 6919.42 lacs.
INDIAN ACCOUNTING STANDARD (IND AS)
The Ministry of Corporate Affairs vide its notification dated February 16 2015 hasnotified the Companies (Indian Accounting Standard) Rules 2015.
In pursuance of this notification the Company will adopt the same with effect fromApril 01 2017. The Company has adequate systems in place to migrate to IND AS and toensure proper reporting and accounting under IND AS.
CONSOLIDATED FINANCIAL STATEMENTS
As required under Section 136 of the Companies Act 2013 and Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 theConsolidated Financial Statements have been prepared by the Company in accordance with therequirements of Accounting Standard 21 Consolidated Financial Statements' issued byThe Institute of Chartered Accountants of India'. The Audited Consolidated FinancialStatements together with Auditors' Report thereon forms a part of the Annual Report.
The Consolidated Net Profits of the Company amounted to Rs. 963.78 lacs for theFinancial year ended 31st of March 2017.
SUBSIDIARY AND ASSOCIATE COMPANIES
The Company has five subsidiaries.
Section 136 of the Companies Act 2013 has exempted the listed companies from attachingthe financial statements of the Subsidiary companies to the Annual Report of the Company.
In accordance with Section 129(3) of the Companies Act 2013 read with the rules madethere under; statement containing the salient features of the Financial Statement of theCompany's Subsidiary and associate Companies is disclosed separately in this Annual Reportunder Form AOC 1.
The Company will make available the Annual Accounts of the subsidiary companies to anymember on their request and shall also be kept open for inspection by any member at theRegistered office of the Company. The statement is also available at the website of theCompany at http://scl.mehtagroup.com/investors/financials.
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.
(a) that in the preparation of the annual financial statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures; if any;
(b) that the accounting policies as mentioned in Note No.1 to the Financial statementshave been selected and applied consistently and judgments and estimates have been madethat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit and loss of the Companyfor that period;
(c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws are inplace and were adequate and operating effectively.
The Company is committed to maintain the highest standards of Corporate Governance andadhere to Corporate Governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 and a certificate of Compliance from theAuditors of the Company confirming compliance with the conditions of Corporate Governanceas stipulated in Regulation 15(2) of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 for the year ended March 312017 forms a part of this Report. A declaration by CEO and CFO that Board andsenior members have complied with the Code of Conduct of the Company also forms a part ofthis Report as Annexure B.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013including certain arms length transactions under third proviso thereto is Annexed herewithat Annexure C in Form No. AOC -2.
CORPORATE SOCIAL RESPONSIBILITY
The Company has been at the forefront in extending benefits to the local communities inand around the Company's operations at Ranavav. The Company has always believed in thesustainable development of the Society.
The Board of Directors have based on the recommendation of the Corporate SocialResponsibility committee formulated a Corporate Social Responsibility Policy for welfareof the society.
The CSR policy outlining various areas of development viz. Health Care EducationSanitation Ensuring environmental sustainability and Rural development projects wasadopted by the Board and the same is available at the following link:http://scl.mehtagroup.com/policy/ csr-policy.
During the year under review your Company has undertaken projects relating to Healthcare & sanitation providing good quality education and upliftment of the localsthrough rural development projects.
The constitution and functions of the Corporate Social Responsibility Committee isprovided under the Corporate Governance Report.
The details of various CSR activities undertaken during Financial Year 2016-17 isdiscussed in detail in Management Discussion and Analysis report.
The annual report on CSR activities and expenditure required under Section 134 &135 of the Companies Act2013 read with Rule 8 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 and Rule 9 of the Companies (Account) Rules 2014 isgiven in Annexure D of the Report.
LOANS GUARANTEES AND INVESTMENTS
The particulars of Loans Guarantees and Investments covered under the provisions ofSection 186 of the Companies Act 2013 and under Schedule V of the Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 areprovided in Notes to the Standalone Financial Statements.
A formal Risk Management System has been implemented on an Enterprise Risk Management(ERM) as a part of strengthening and institutionalizing the decision making process andmonitoring the exposures that are faced by the Company.
Company has a robust risk assessment and management system wherein the risk isidentified minimized deliberated and mitigated in lively manner. The risks areperiodically reviewed and reported to the Audit Committee and Board on quarterly basis.
INTERNAL FINANCIAL CONTROLS
The Company has an internal control system commensurate with the size scale andcomplexity of its operations. In order to enhance controls and governance standards theCompany has adopted Standard Operating Procedures which ensure that robust internalfinancial controls exist in relation to operations financial reporting and compliance. Inaddition the Internal Audit function monitors and evaluates the efficiency and adequacy ofthe internal control system in the Company its compliance and operating systemsaccounting procedures and policies at all locations. Periodical reports on the same arealso presented to the Audit Committee.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Reappointment of Directors
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr.Hemnabh R. Khatau (DIN: 02390064) will retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for reappointment. Brief resume of Directorseeking re-appointment along with other details as stipulated under Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 is enclosed herewith as Annexure E.
The Board recommends the re appointment.
In accordance with the provisions of the Companies Act 2013 and Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 the Board of Directors evaluated the performance of the Board as a whole havingregard to various criteria such as Board composition Board processes Board dynamics etc.The Independent Directors at their separate meetings also evaluated the performance ofthe Board as a whole based on various criteria.
The Board evaluated the effectiveness of its function and that of the committees andindividual director by seeking their valuable inputs on various aspects of Board/Committeegovernance. Based upon various evaluation criteria the Board and Independent Directorswere of the view that the Board and Committee performance is in consonance of thestandards / criteria being identified by Nomination & Remuneration Committee and theIndependent Directors.
Declaration by Independent directors
All the Independent Directors have furnished declarations stating that they meet thecriteria of independence as laid down under Section 149 (6) of the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015.
M/s. Bansi S. Mehta & Co Chartered Accountants the Statutory Auditors of theCompany who was reappointed to audit the accounts of the Company for the Financial Year2016-17 hold office upto the conclusion of the ensuing Annual General Meeting and hascompleted their term of office in accordance with the provisions of Section 139(2) of theCompanies Act 2013.
It is proposed to appoint M/s. Manubhai & Shah LLP Chartered Accountants asStatutory Auditors of the Company to audit the accounts of the Company for the FinancialYear 2017-18 who shall hold office from the conclusion of the ensuing Annual GeneralMeeting till the conclusion of next Annual General Meeting. As required under theprovisions of the Companies Act 2013 the Company has received written confirmation fromM/s. Manubhai & Shah LLP Chartered Accountants that their appointment if made willbe in conformity with the limits specified in the Section 143(1)(g) of the Companies Act2013.
M/s Ragini Chokshi & Company Practicing Company Secretaries were appointed by theBoard of Directors as the Secretarial Auditor of the Company to carry out SecretarialAudit under the provisions of Section 204 of the Companies Act 2013 for the FinancialYear 2016-17. The report of the Secretarial Auditor is annexed as Annexure F tothis report.
The Board of Directors of the Company on the recommendation of the Audit Committeeappointed M/s. Ragini Chokshi & Company Practicing Company Secretaries as SecretarialAuditor of the Company for the Financial Year 2017-18.
The Board of Directors on the recommendation of the Audit Committee appointed M/s.Bansi S. Mehta & Co. Chartered Accountants to carry out the Tax Audit for theAssessment Year 2017-18.
The Board of Directors on the recommendation of the Audit Committee appointed M/s.Haribhakti & Co LLP Chartered Accountants to carry out the Internal Audit of theCompany for the Financial Year 2017-18.
In accordance with the provisions of Section 148 of the Companies Act 2013 on therecommendation of Audit Committee M/s. V. J. Talati & Co Cost Accountants have beenappointed by the Board as Cost Auditor of the Company for the Financial Year 2017-18 and acertificate of eligibility under Section 148 of the Companies Act 2013 has been received.As required under the Act the remuneration payable to the Cost Auditor is required to beplaced before the Members in a General Meeting for their ratification. Accordingly aResolution for seeking Members ratification for the remuneration payable to M/s. V. J.Talati & Co. Cost Auditor is included at item no.5 of the Notice convening theAnnual General Meeting.
OTHER DISCLOSURES UNDER COMPANIES ACT 2013 AND SEBI (LISTING OBLIGATIONS ANDDISCLOSURE REQUIREMENTS) REGULATIONS 2015
The Company has an Audit Committee and details of its constitution terms of referenceare set out in the Corporate Governance Report.
Nomination & Remuneration Committee and Policy
The Company has a Nomination & Remuneration Committee and has also adoptedNomination & Remuneration Charter and Remuneration/ Compensation Policy. Theconstitution of the Committee along with the terms of reference to the Committee are setout in the Corporate Governance Report.
The Company has established a Vigil Mechanism / Whistle Blower Policy and the directorsand employees of the Company can approach the Audit Committee when they suspect or observeunethical practices malpractices non-compliances of Company policies etc.
Number of Board Meetings
During the year under review five meetings of the Board of Directors were held. Themeetings were held on 23rd day of May 2016 11th day of August 2016 14th day ofSeptember 2016 24th day of October 2016 and 24th day of January 2017.
Energy Conservation Technology Absorption & Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under section 134 (3) of theCompanies Act 2013 are provided in Annexure G forming a part of this Report.
Extract of the Annual Return
The extract of the Annual Return in Form No. MGT 9 forms a part of this reportas Annexure H.
Particulars of Employees
There were 472 permanent employees of the Company as on 31st March 2017. The disclosurepertaining to remuneration and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this report at Annexure I.
Further a statement showing the names and other particulars of employees drawingremuneration in excess of the limits as set out in the Rule 5(2) and other details asrequired under Rule 5(3) of the aforesaid Rules forms part of this report. However interms of first proviso to Section 136(1) of the Act the Annual Report and Accounts arebeing sent to the members and others entitled thereto excluding the aforesaidinformation. The said information is available for inspection by the members at theRegistered Office of the Company during business hours on working days upto the date ofthe ensuing Annual General Meeting. If any member is interested in obtaining a copythereof such member may write to the Company Secretary whereupon a copy would be sent.Further the details are also available on the Company's website:http://scl.mehtagroup.com/investors.
Sexual Harassment of Women at Work Place (Prevention Prohibition & Redressal) Act2013
The Company has in place a formal policy on Prohibition Prevention and Redressal ofSexual Harassment of Women at Workplace. Detailed note is set out in the CorporateGovernance report.
During the year under review the Company has not received any complaints of sexualharassment from any of the women at work place of the Company.
Related Party Transactions
All related party transactions are in accordance with the approvals being granted bythe Audit Committee Board and the Members at the General Meeting. The other details asrequired under Securities & Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 and Section 134 (3) of the Companies Act 2013are mentioned in the Corporate Governance Report.
No disclosure or reporting is made in respect of the following items as required underthe Companies Act 2013 and Securities & Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 as there were no transactions during theyear under review:
Details relating to deposits covered under Chapter V of the Companies Act 2013.
Issue of equity shares with differential rights as to dividend voting orotherwise.
Issue of shares to the employees of the Company under any scheme (sweat equityor stock options).
The Company does not have any scheme or provision of money for the purchase ofits own shares by employees or by trustees for the benefit of employees.
The Managing Directors of the Company do not receive any remuneration orcommission from any of its subsidiaries.
No material fraud has been reported by the Auditors to the Audit Committee orthe Board.
There was no revision in the financial statements.
There was no change in the nature of business.
Listing of Equity Shares
The Company's equity shares are listed on the Bombay Stock Exchange Ltd (BSE). Listingfees have been paid up to 31st March 2018.
Industrial relations at our Factory and Offices remained cordial.
Awards and accolades
During the year under review the Company has been conferred with the following awards& accolades.
In the areas of Environment;
In recognition of our outstanding contribution in the field of environment protectionenvironmental management system pollution prevention recycling and consumption of AFRbiodiversity conservation rain water harvesting and water conservation energyconservation and corporate social responsibility the following awards have been conferredon the Company.
1. FAME Excellence Award_2016- Platinum Award for Environment Protection
2. Greentech Environment Award_2016-17- Gold Award for Environment Protection
3. Rashtra Vibhusan Award_2016-17- Platinum Award for Environment Protection
In the area of Mines;
Metalliferous Mines Safety Week-2016 organised by Directorate General of Mines &Safety :- The Company bagged First Second and Third ranks in Health Safety &occupational health check up Mine Machinery improvement innovation and Mine working& Implementation respectively. The Company also bagged Second and Third rank inOverall performance relating to Vocational Training & Statutory records and TradeTest First aid drill.
Mines Environment and Mineral Conservation ( MEMC) Week-2016 by Directorate General ofMines & Safety: This week long celebration includes various trade tests competitionsand inspections of mine working machineries lighting publicity propaganda and variousother events followed by a Final Day Function.
In this grant event around 90 mechanized and semi-mechanized mines participated fromGujarat Region. The Company being an active participating member like every year alsotook part in this event and bagged Second rank in Waste Dump Management and MineralBeneficiation.
The Directors thank the Central Government Government of Gujarat FinancialInstitutions Bankers Shareholders Employees Stockists Dealers and all otherstakeholders associated with its operations for the co-operation and encouragementextended to the Company. The Board also takes this opportunity to express its sincereappreciation of the contribution and dedicated work of all the employees of theCompany.
| ||On behalf of the Board of Directors |
|Place : Mumbai ||M.S. Gilotra ||Jay Mehta |
|Dated: 23.05.2017 ||Managing Director ||Executive Vice Chairman |