It gives me immense pleasure to present the 30th Annual Report. I extend mythanks to all associates shareholders & employees in particular. Your company couldcomplete successful 30 years with their support and commitment. With this I am pleased topresent annual report along with audited accounts and Auditor's report thereon for thefinancial year ended 31st March 2016 as under :-
| || ||(Rs. in Lakhs) |
|Particulars ||31/03/2016 ||31/03/2015 |
|Turnover ||7834.20 ||7533.08 |
|Operating Income ||924.37 ||964.73 |
|Other Income ||42.21 ||39.63 |
|PBIDT ||966.58 ||1004.36 |
|Less: Interest ||363.13 ||337.55 |
|Cash Profit (PBDT) ||603.45 ||666.81 |
|Less: Depreciation & Amortization ||539.64 ||390.61 |
|Profit before Taxation (PBT) ||63.81 ||276.20 |
Capacity utilization was about 70% in line with National average. However sellingexpenses were relatively higher for re-introducing Sumangal' brand which wasdiscontinued in the year 2007. Due to long shut down of Kiln part quantity of clinker wasout-sourced (about 6% of total consumption) at higher cost. For this operating income wasreduced despite increase in turnover.
Capex for interim expansion from 1.32 lakh TPA to 1.98 lakh TPA was almost completed inthe ensuing year. However commercial production could not commence due to variousreasons. As a result of which depreciation cost has gone up significantly depressingprofit after depreciation.
Economic Scenario & Out look
India achieved 6.7% growth of GDP in FY 2016 compared to 7.2% in FY 2015. InflationFiscal and Current Account deficits were also moderated. All these macro indicators isdisplaying positive trend. However there are many concerns. Index of IndustrialProduction (IIP) had grown by bare 2.4%; which is discouraging. Gross Capital Formation(GCF) declined from 31.2% to 29.3% in FY 2016. Visible recovery in Core sector and Capitalgoods sector is almost absent. Growth in rural demand is not keeping a pace; whichrepresents large population of India.
Indian economy is thriving on consumption led demand instead of investment led demand.India could attract large inflow of Global funds; but those were mostly not invested inCapital assets. Lately Government has pushed Infra spending particularly in transportsector. But somehow private investment is sluggish due to high interest stretchedbalance sheets and non-compatible regulations. Government succeeded in creatingcompetition among states for attracting investment; that will certainly give long termbenefits. However attention for relieving stress of existing productive assets issomewhat missing.
Considering sincere efforts of Government favorable monsoon and latent potential ofIndia Indian economy will re-bound beyond doubt may be second half of FY-2017. For thisIndia must overcome past legacy and deploy financial resources to productive activities.Simultaneously exports may be made competitive by reducing cost of basic inputs likeEnergy Logistics Capital & Minerals.
Cement Industry Outlook & Opportunities
Over all capacity utilization in India was around 70% in FY-2016 which has causedsupply over-hang situation particularly with cluster located plants. Decline inindustrial investment and infrastructure spending has reduced demand growth below 5%;which is very low as per past 10 year's trend. Past data after 2000 reveals that; movingaverage of demand growth was always above 7%. It is therefore expected that demand willsurge in FY 2017 and take a leap jump in FY 2018. Recent Merger and Acquisitions is alsoindicating the same. Good monsoon will push up rural demand. Infra-spending and Industrialinvestment will supplement. Recent announcement of schemes like "House for all"and "Smart City" will give a further boost.
Historically indirect taxes on Cement were too high pushing the consumer's cost.Upcoming GST will give relief to the consumer pushing demand. Cheap land and easyavailability of construction materials like sand & aggregates will give a big push tohousing sector.
Expansion plan up to 1.0 MnT was deferred and term loan sanctioned by PNB and IDBI Bankwere not available in past years mainly due to non receipt of committed investment by acement major company. Hence your company is now scouting for other strategic investors forcompleting un-finished agenda. It has appointed Financial Advisor for this purpose. It islikely to be finalized in FY 2017. Your company is having ample limestone reserve formeeting the expansion need. Land and approvals are in place. Part capex is also done. Inview of this gestation period for completing the project will be too low.
Awards & Recommendations
Your Managing Director has written several articles on Indian economy those werepublished in magazines and newspapers. Several compliments have been received from VIPs tothis effect. It is also displayed in company website.
Shiva Cement Limited has been awarded with Second Prize for "General working"of our Limestone mines on the occasion of 53rd Annual Mines Safety WeekCelebration 2015.
Company is maintaining cordial and healthy relations with its employees. Employees atall levels are extending their full support. Company has strong faith in potential ofhuman resources. It believes in the creative abilities of the people who work forcompany. It believes in participatory management. Considering high inflation your companyhas entered into wage settlement of the workers that will be valid till the year 2017.
Internal Control Systems
Company has an internal management audit team commensurate with the size of company. Itcarries out desired level of audit of various activities of company. This is with an aimto ensure that the laid down system and procedures are followed. Audit reports arepresented to Audit committee of the board which meets at periodic intervals.
Business Responsibility Report
As stipulated under the Listing Agreement the Business Responsibility reportdescribing the initiatives taken by the Company from environmental social and governanceperspective has been described in this Annual Report.
Environmental & Social Obligation
Environment clearance from Ministry of environment & forest (MoEF) has been alreadyobtained for it's proposed expansion upto 1.05 MTPA capacity. MoEF clearance has been alsoobtained for expanding the capacity of mines.
Your company has undertaken the CSR activities in nearby villages such as constructionof Toilet rooms and Water storage tank in different local schools specially for girlstudents at Kandeimunda Guleipada Telighana Mangapada etc. five no. of bathing Ghats atGoleipada Bhoktapada. Road from Jindapada and Kandeimunda connecting roads to SH-10 wasrepaired by Murrum.
Hockey Football and Cricket tournaments were organized with the help of KandeimundaPanchayat for local youths and providing them sports kits. We are associated withdifferent health awareness programmes like Pulse Polio etc.
Club House was renovated for social meets meetings and different cultural functions.Celebration of Independence and Republic Day was done at Kandeimunda Telighana and localschools. Several other cultural & social programmes were undertaken surrounding plantarea. All such activities have created a social harmony.
Keeping in view of ongoing expansion plans and working capital requirements of theCompany your directors have not recommended any dividend for the year under review.
Listing at Stock Exchange
Equity shares of the company continue to be listed on Bombay stock exchange andCalcutta stock exchange. We sincerely express our thanks to all shareholders for imposingtheir faith in the company despite delay in implementation of the expansion plan. Theannual listing fee for the year 2015-16 had been paid to Bombay stock exchange.
We are thankful to IDBI Bank for sanctioning the term loan of Rs.10 crore for meetingsome pressing needs including capex for complying Pollution control norms and requirementof funds for Stamp duty towards mining lease extension. However need based workingcapital for the expanded capacity of 1.98 lakh TPA was not favourably considered. Due towhich commercial production of expanded capacity could not commence till year end.
CARE rating have also assigned "CARE BB" for long term bank facilities &"CARE A4" for short term bank facilities amounting to Rs.47.44 crore. Thisincludes existing and proposed loan.
During the year under report the Board of Directors have met 6 (Six) times. TheDetails of board meetings and the attendance of the Directors are provided in theCorporate Governance Report.
Company has accepted deposits from public including share holders and employees withinthe meaning of section 73 of the Companies Act 2013 and rules made there under and havemade compliance with the provisions of the Companies (Acceptance of Deposits) Rules 2014as per expert opinion obtained by the Company regarding eligibility to accept deposits.
Pursuant to the provisions of Section 177 of the Companies Act 2013 the AuditCommittee was formed by the Board of Directors to look after the internal control systemof the Company and to review the financial statements. The said Committee is consisting ofthe following directors of the Company.
|Sri K. P. Jhunjhunwala ||- ||Chairman |
|Sri B.K. Mangaraj ||- ||Member |
|Sri Mahendra Singh ||- ||Member |
The details of the Audit Committee meeting have been mentioned in the CorporateGovernance report.
M/s. Tibrewal Chand & Co. Chartered Accountants Rourkela (FRN 311047E) theStatutory Auditors of the Company will retire at the conclusion of the ensuing AnnualGeneral Meeting. In their place M/s. M.K. Thaberia & Associates CharteredAccountants Rourkela (FRN 321180E) may be appointed. The Company has received a letterfrom them to the effect that their appointment if made would be within the limitprescribed under Section 139 of the Companies Act 2013 and that they are not disqualifiedwithin the meaning of Section 141 of the Companies Act 2013 read with Rule 4(1) of theCompanies (Audit & Auditors) Rules 2014.
The Notes to Accounts forming part of financial statements are self-explanatory andneed no further explanation.
The explanations/clarifications to the qualified opinion of the statutory Auditors areas under :-
As mentioned in the Auditors Report regarding eligibility to accept public depositsyour Company has obtained expert opinion and continued to accept hold & renew thedeposits.
As mentioned in the Auditor's Report regarding default in repayment of installmentsrelating to redemption of preference shares of Rs.65.00 lakhs and term loan installmentsand interest of Rs.54.77 lakhs due to banks & Financial Institutions in this regardyour directors submit that the Management has approached Preference shareholders fordeferment of their installments. As regards repayment of term loan interest andinstallments your directors submit that the said payments could not be made due tomismatch of cash flow during the financial year 2015-16. The said payments shall be madeduring the financial year 2016-17.
As mentioned in the Auditors Report regarding irregularity in deposits of statutorydues amounting to Rs.437.18 Lacs your directors submit that the said payments could notbe made due to mismatch of cash flow during the financial year 2015-16. The said paymentsshall be made during the financial year 2016-17.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board ofDirectors have appointed M/s. Prakash Sahoo & Associates Practicing CompanySecretaries of Rourkela to undertake the Secretarial Audit of the Company for the FY2015-16. The report of Secretarial Audit forms part of this Board's Report in"Annexure A".
There are no qualifications or adverse remarks in the Secretarial Auditors' Reportwhich require any clarification or explanation.
Pursuant to the provisions of Section 177 (9) of the Companies Act 2013 theBoard of Directors has established a committee to provide adequate safeguard against thevictimization & to protect the interest of the directors and employees to report theirgenuine concerns. The Company has uploaded in its website (www.shivacement.com) the codeof conduct in relation to the employees & directors. The Policy on vigil mechanism andwhistle blower policy may be accessed on the Company's website.
Foreign Exchange Earnings and Outgo
There have been no foreign Exchange earnings during the year. However company haspurchased imported coal from the domestic market.
Conservation of Energy Technology Absorption
A statement containing necessary information as required under the Companies Act 2013is annexed hereto in Annexure-"B".
Corporate Social Responsibility and Governance Committee
Your directors have constituted the Corporate Social Responsibility (CSR Committee)comprising Shri R P Gupta as the Chairman and Shri B.K. Mangaraj and Shri Mahendra Singhas other members.
The said Committee has been entrusted with the responsibility of formulating andrecommending to the Board a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company monitoring the implementationof the framework of the CSR Policy and recommending the amount to be spent on CSRactivities.
Nomination and Remuneration Committee & Stakeholder Relationship Committee
During the year under report pursuant to the provisions of Section 178 of CompaniesAct 2013 the nomination and Remuneration Committee & Stakeholder RelationshipCommittee has been functioning in order to protect the interest of the shareholder of theCompany.
The Committee has been headed by Shri R. P. Gupta as Chairman Shri B. K. Mangaraj asMember & Shri Akash Gupta as other member.
Extracts of Annual Return
Pursuant to the provisions of Section 92(3) of the Companies Act 2013 an Extract ofthe Annual Return in Form MGT-9 forms part of this Report as Annexure-C.
Particulars of Employees
The provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are notapplicable as none of the employees were in receipt of remuneration exceeding the limitsspecified therein.
Directors' Responsibility Statement
In terms of the provisions of section 134(3)(c) of the Companies Act 2013 we confirmthat:-
a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;
d. the directors had prepared the annual accounts on a going concern basis; and
e. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Pursuant to Clause-49 of the listing agreement report on Corporate Governance and thecompliance certificate thereon from the practising comany secretary is attached to thisreport.
Your directors place on record their appreciation of the assistance and supportextended by government authorities Bankers NBFCs consultants shareholders employeessuppliers & contractors of the company.
Statements in the directors' report and the management discussion & analysisdescribing company's objectives expectations or predictions may be forward-lookingstatement within the meaning of applicable laws and regulations. Although we believe ourexpectation is based on reasonable assumption actual results may differ materially fromthose expressed in the statement. Important factors that could influence the company'soperations include: global and domestic demand and supply conditions affecting sellingprices new capacity additions availability of critical materials and their cost changesin government policies and tax laws economic development of the country and such otherfactors which are material to the business operations of the company.
| ||For and on behalf of the Board of Shiva Cement Limited |
|Rourkela - 769 004 || |
|Dated : 30/05/2016 ||(R.P.Gupta) |
| ||(Managing Director) |
| ||DIN No. : 1325989 |
Annexure - B To The Directors' Report
FORM - A [ See Rule - 2 ]
Form for Disclosure of Particulars with respect to Conservation of Energy
A. Power and Fuel Consumption
|Particulars ||31/03/2016 ||31/03/2015 |
|1. Electricity || || |
|a) Purchased || || |
|Units (in Thousand) ||8258.45 ||7474.95 |
|Total amount (in Thousand) ||52614.84 ||46783.90 |
|Rate/Unit (including DPS) ||6.37 ||6.26 |
|b) Own Generation || || |
|i) Through Diesel Generator || || |
|Units (in Thousand) ||28.68 ||24.82 |
|Cost/Unit (Rs.) ||28.44 ||39.29 |
|ii) Through Steam Turbines Generator || || |
|Units ||N.A ||N.A |
|Unit per Ltr. for Fuel oil Gas || || |
|Cost/Unit. || || |
|2. Coal || || |
|Quantity (in Mt) ||15274.00 ||15017.06 |
|Total Cost (Rs. in Thousand) ||51425.01 ||73407.36 |
|Average Rate (Rs. Per Mt) ||3366.83 ||4888.26 |
|3. Diesel Oil || || |
|Quantity (in K. Ltr) ||107.52 ||145.40 |
|Total Cost (Rs. in Thousand) ||4868.81 ||8054.55 |
|Average Rate (Rs. Per Litre) ||45.28 ||55.40 |
|4. Other/Internal Generation || || |
|Quantity (in Mt) || || |
|Total Cost (Rs. in Thousand) ||N.A ||N.A |
|Average Rate (Rs.) || || |
|Consumption per unit of production (Cement & Surplus clinker) || || |
|Particulars Standards if any ||Current Year ||Previous Year |
|Power Units Per Tonne ||91.27 ||95.68 |
|Coal Cons. (%) ||16.82% ||19.16% |
Reasons for variation in consumption of power & fuel from previous year :
n Apparent reduction in power consumption is due to out-sourcing of part quantityof clinker.
n Apparent saving in coal consumption is due to better quality of coal.
FORM - B [ See Rule - 2 ]
Form for Disclosure of Particulars with respect to technology absorption researchand developement (R&D) for the year ended 31/03/2016
|A. Research & Development (R & D) || |
|Specific areas in which R & D carried out by the Company ||No specific work |
|Benefits derived as a result of the above R & D ||No specific Benefits |
|Future Plan of action ||To continue efforts on reducing clinker power and fuel consumptiom. |
|Expenditure on R & D || |
|a) Capital || |
|b) Recurring || |
|c) Total ||No specific expenditure incurred on R & D |
|d) Total R & D expenditure as a percentage of total turnover || |
|Technology absorption adaptation and innovation || |
|B. Foreign Exchange Earnings Outgo ||NIL |
|C. Technology Absorption Adoption & Innovation || |
The efforts towards technology absorption/adoption/innovation and correspondingbenefits are summarized as under:-
On-line stack monitoring equipment were installed for measuring SOX NOX andSPM of Kiln fluid gas for improvement of environment.
Water sprinklers at many places were installed for suppressing fugitiveemission on road arising due to internal transport within the plant. Also the internalroads were concretized for suppressing fugitive emission.
Bags of Kiln bag house were replaced with high temperature resistance bags.Also an additional bag house in the Kiln was installed.
Elevator internals of Cement mill-1 elevators were replaced for highercapacity considering increase in the capacity of Cement mill-1.
Ground slag feed hopper was installed in Cement mill-2 for reducingclinker consumption.