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Somany Ceramics Ltd.

BSE: 531548 Sector: Consumer
NSE: SOMANYCERA ISIN Code: INE355A01028
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670.00

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OPEN 670.00
PREVIOUS CLOSE 649.80
VOLUME 2694
52-Week high 973.80
52-Week low 615.00
P/E 38.31
Mkt Cap.(Rs cr) 2,727
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 670.00
CLOSE 649.80
VOLUME 2694
52-Week high 973.80
52-Week low 615.00
P/E 38.31
Mkt Cap.(Rs cr) 2,727
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Somany Ceramics Ltd. (SOMANYCERA) - Director Report

Company director report

Dear Members

Yours Directors have pleasure in presenting the 49th Annual Report together with theAnnual Audited Financial Statements of the Company for the year ended 31st March 2017.

FINANCIAL RESULTS

(Based on Standalone Financial Statements)

( H in Lakhs)
Particulars 2016-17 2015-16
Gross Revenues from Operations 192276 179938
Net Revenues from Operations 184057 173070
Other income 1512 921
Profit before Interest depreciation and tax (EBIDTA) 17923 13221
Interest and finance charges 1652 1633
Profit Before Depreciation 16271 11588
Less: Depreciation 2532 2057
Profit before Exceptional Item 13739 9531
Exceptional Item 406 443
Profit before tax (PBT) 13333 9088
Less: Provision for tax (net) 4724 2982
Profit after tax (PAT) 8609 6106
Add: Balance brought forward 19658 15325
Surplus available for appropriation 28267 21431
Appropriations: - -
Proposed dividend on equity shares - 975
Tax on proposed dividend - 198
Transferred to general reserve - 600
Balance Carried to balance sheet - 19658
Total 28267 21431

FINANCIAL REVIEW

Your Company continued to perform well in the financial year under review even when itfaced multiple odds such as demonetisation continuing slowdown in the real estate sectoretc. adversely affecting building material industry including tiles.

Your Company has always performed better than the industry and the same was reflectedthis year where the Company's growth rate of sales was 6.7% achieving a 5 years' CAGR of15.7%.

The net revenues strengthened to 184056.78 Lakhs in the year under review which is agrowth of 6.3% over the preceeding year. The Earnings before Interest Depreciation andTax (EBIDTA) Profit before Tax (PBT) and Profit after Tax (PAT) have also grownsubstantially during the year under review by 35.6% 46.7% and 41.0% respectively.

CORPORATE HIGHLIGHTS

Access to Capacity

During the year under review your Company had access to 60.25 million square meters(msm) of tiles through own plants (25.55 msm) Subsidiaries/ Associates (25.70 msm) andother outsource partners (9 msm).

Capital Expenditure

Your Company continued to invest significantly in expanding and upgrading its plant andmachinery and infrastructure. During the year under review the gross block increased byH3280.82 Lakhs (previous year H9642.11 Lakhs) towards meeting routine capitalexpenditure requirements of own manufacturing plants.

Branding and Distribution

The main objectives to be achieved from brand and distribution were: • To increasetop of mind brand recall and connect • To be in the top 2 consideration list ofconsumer/influencer • Constant brand engagement

Your company followed a focussed communication strategy to reach out to its targetgroup not only through the conventional medium of TV commercial print cinemaexhibitions etc. but also through innovative activities like the studio bus lounge showroom activations smart kiosks at Airports and many more . It focussed on makingstate of the art retail showrooms across the country to enhance customer experiencecomplemented with an upgraded visual merchandising at the stores. The TV commercial wasaired in Kerala market owing to the focus we wanted to put in that market and helpedcreate a new persona of our products.

During the year your company also participated in prestigious international andnational exhibitions namely CERSAI at Bologna (Italy) Revestir at Sao Paulo (Brazil) andACETECH at Delhi and Mumbai.

Your company also released new consumer ads for product categories like DuragresVitro Glosstra and French Collection sanitaryware range; considering the latest trends inmarket and to further strengthen our brand persona as a young trendy and vibrant brand.The media plan had an equal inclination towards trade and lifestyle magazines.

Many new product launches were done to keep abreast of the latest trends in the dynamicindustry e.g. new GVT series 40x80 Ceramic launch and the biggest launch of the year– The French Collection a premium sanitaryware range that went on to become a rageand still expanding. The launch led to setting standards within the Indian Sanitary wareIndustry which was very well appreciated by internal & external audiences.

The Business Lounge

To reach out to Target Groups (TGs) like Architects Contractors & Builders wecreated an experiential lounge in a 40 Feet bus & took it to the doorstep of the TGs.The experiential lounge is stationed at a central hub wherein the targeted audience isinvited for engagement and interactions. Also small events are created around the lounge.

Your company also organised the fourth edition of ‘Architecture & DesignSummit 2016' to applaud the creativity in architecture and design which took place inconjunction with Economic Times.

Enhanced brand exposure through a Visualization Software & Mobile App and updatedpresence on social media platforms is also helping gain a lot of mileage. Also variousonline yearly engagement contests like #Har Kahani Mein Somany amplified the brand reachpan India.

INDUSTRY SCENARIO AND OUTLOOK

India was once again the world's third largest tile producer and consumer country in2015. National production rose from 825 to 850 million sq. m. (+10%). Domestic consumptionalso increased by just 7 million sq. m. to 763 million sq. m. (+0.9%). Exports from thecountry witnessed a growth from 92 to 122 million sq. m. (+32.6%) corresponding tofourfold growth in just 3 years positioning India 4th in the rankings of top worldexporters. Going forward the anti-dumping duty proposed on certain categories of tilesimported from China will provide a level playing field for domestic players creatingsustained demand. The proposed Goods and Services Tax (GST) will create a seamlessnational market for the organised players resulting in removal of inter-state barriersand improvement in supply chain besides reducing the price differential between theorganised and unorganised players.

DIVIDEND

Your Directors are pleased to recommend a dividend of 135% i.e H2.70 per equity sharefor the year under review as against 115% at H2.30 per share in the previous year. Thisrepresents a payout ratio of 16%.

TRANSFER TO RESERVES

No amount was transferred to the General Reserve of the Company for the financial yearended 31st March 2017.

UTILISATION OF PROCEEDS ON ISSUE OF SHARES

Out of H11999.97 lakhs raised through qualified institutions placement of equityshares in December 2015 the Company has so far utilized H1849.97 lakhs (including issueexpenses of H307.34 lakhs) for the purpose the funds were so raised and balance H10150.00lakhs has been temporarily invested mainly in the debt instruments/funds.

PUBLIC DEPOSITS

Your Company has not accepted any fixed deposits within the meaning of Section 73 ofthe Companies Act 2013.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES

During the year your company invested in 50% equity of M/s. Sudha Somany CeramicsPrivate Limited.

During the year under review your company increased equity stake in associate companyM/s Vintage Tiles Private Limited from 26% to 50%.

There was no business activity in M/s SKPL Ceramics Private Limited (Formerly known asSomany Keraben Private Limited) a 50:50 joint venture between your Company and M/sKeraben Grupo S.A. (Formerly known as M/s Keraben S.A.). The Board decided to terminatethe Joint Venture Agreement executed between the Company and M/s. Keraben Grupo S.A.

During the year the Board of Directors reviewed the affairs of the subsidiaries. Inaccordance with Section 129(3) of the Companies Act 2013 we have prepared consolidatedfinancial statements of the Company and all its subsidiaries which forms part of thisAnnual Report.

In accordance with Section 136 of the Companies Act 2013 the audited financialstatements including the consolidated financial statements and related information of theCompany and audited accounts of each of its subsidiaries are available on Company'swebsite http://www. somanyceramics.com. These documents will also be available forinspection at our registered office in New Delhi India between 3:00 p.m. and 5:00 p.m.in working days till the date of ensuing AGM.

The statement required under Section 134 of the Companies Act 2013 in respect of thesubsidiary companies associates and joint venture is provided at Annexure 1 to thisreport which comprises performance and financial position of each of subsidiariesassociates and joint venture.

PARTICULARSOFCONTRACTSORARRANGEMENTS MADE WITH RELATED PARTIES

All transactions entered with Related Parties during the financial year were on arm'slength basis and were in the ordinary course of business. Further there are no materiallysignificant related party transactions during the year under review made by the Companywith Promoters Directors Key Managerial Personnel or other designated persons which mayhave potential conflict with the interest of the Company at large. Accordingly thedisclosure of related party transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not required. Your directors draw attention of theshareholders to the financial statements which set out related party dosclosures.

Related Party Transactions Policy as approved by the Board has been uploaded on theCompany's website www.somanyceramics.com at the web link:https://www.somanyceramics.com/wp-content/uploads/2017/06/Related-Party-Policy_Revised_24.01.2017.pdf

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Loans guarantees and investments covered under Section 186 of the Companies Act 2013forms part of the notes to the financial statements provided in this Annual Report.

RISK MANAGEMENT

The Company has initiated measures to develop and implement Risk Management Systems inaccordance to Section 134(3)(n) of the Companies Act 2013 post it identified the factorswhich in the opinion of the Board could threaten the Company's existence. The RiskManagement process that is followed to identify assess and prioritise risks that need tobe minimised monitored and mitigated is quite elaborate. These measures help in reducingand controlling the impact of adverse events and maximise the realisation ofopportunities. This procedure of Risk Management that has been developed is audited by theAudit Committee post stringent review from time to time which ensures that the executivemanagement controls risks through means of a properly defined framework. Major risks areidentified systematically and mitigated on a continous basis. A few of the identifiedrisks pertain to competitive intensity and cost volatility.

INVESTOR EDUCATION & PROTECTION FUND (IEPF)

The Company is required to transfer dividends which remained unpaid/ unclaimed for aperiod of seven years to the IEPF established by the Central Government. The unpaid/unclaimed dividend for the year ended 31st March 2010 is due for transfer to IEPF on orafter 27th August 2017.

AUDITORS' REPORT

All the items on which the Auditors' have commented in their report areself-explanatory and suitably explained in the Notes to the Accounts. The Auditors' Reportto the Shareholders for the year under review does not contain any qualifications.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of the knowledge and belief of the Directors of the Company and accordingto the information and explanations obtained by them your Directors make the followingstatement in terms of Section 134(3) (c) of the Companies Act 2013.

(a) In the preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

(b) The Directors' have selected such accounting policies applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2017 and of the profitof the Company for the year ended on that date.

(c) The Directors have taken proper and sufficient care 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) The Directors have prepared the annual accounts on a going concern basis.

(e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

CONSOLIDATED FINANCIAL RESULTS

As required by Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the consolidated financial statements have been prepared in accordancewith applicable Accounting Standards. The audited consolidated financial statementstogether with Auditors' Report forms part of this Annual Report.

The consolidated net profit of your Company was H9307 Lakhs in the year under reviewcompared to H6470 Lakhs in the corresponding previous year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Abhishek Somany retires by rotation at the ensuing Annual General Meeting and beingeligible has offered himself for re-appointment.

In view of the sale of shares by M/s. Latinia Limited held in the Company M/s LatiniaLimited withdrawn the nomination of Mr. Narayan Anand from the Board of Directors of theCompany with effect from 12 April 2017. Consequently he resigned from the Board on thesaid date.The Board place on record the valuable contribution made by him during histenure as director of the Company.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under the Actand Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

BOARD EVALUATION

Regulation 4(2)(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 mandates that the Board shall monitor and review the Board evaluationframework. Clause (p) of sub-clause 3 of Section 134 of the Companies Act 2013 statesthat a formal annual evaluation needs to be made by the Board of its own performance andthat of its committees and the Directors individually. Schedule IV to the Companies Act2013 states that the performance evaluation of Independent Directors shall be done by theentire Board excluding the Directors being evaluated. Performance evaluation was made bythe Board on the various parameters and criteria governing performance of the Board andthat of its committees and Directors and the same was taken on record.

NOMINATION AND REMUNERATION POLICY

The Company's Policy on Directors appointment and remuneration as required by Section134(3)(e) of the Companies Act 2013 and Regulation 19 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 (Listing Regulations) read with Part D ofSchedule II of the said Listing Regulations has been uploaded on the website of theCompany at www.somanyceramics.com at the weblink: https://www.somanyceramics.com/wp-content/uploads/2016/06/SCL-Nomination-Remuneration-Policy.pdf

MEETINGS OF THE BOARD

Four meetings of the Board of Directors were held during the year the details of whichare given in the Corporate Governance Report forming part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee comprises Independent Directors namely Mr. R.K. Daga (Chairman)Dr. Y.K. Alagh Mr. Salil Singhal Mr. Siddharath Bindra and a non-independent directorMr. G.L. Sultania. All the recommendations made by the Audit Committee were accepted bythe Board.

AUDITORS

M/s. Lodha & Co. Chartered Accountants Statutory Auditors of the Company havingFirm Registration No. 301051E were appointed as Statutory Auditors for a period of 3(three) consecutive years at the 46th Annual General Meeting (AGM) held on 4th September2014 to hold office till the conclusion of the 49th AGM of the Company subject toratification of their appointment at every AGM in terms of the first proviso to Section139 of the Companies Act 2013 read with Rule 3(7) of Companies (Audit and Auditors)Rules 2014.

M/s. Lodha & Co. Chartered Accountants cease to be the Statutory Auditors of theCompany at conclusion of the ensuing AGM of the Company. The Company has received a letterfrom M/s Singhi & Co. Chartered Accountants conforming that they are eligible forappointment as Statutory Auditors of the Company under Section 139 of the Companies Act2013 and meet the criteria for appointment specified in Section 141 of the said Act.

Based on the recommendations of the Audit Committee the Board of Directors of theCompany have recommended the appointment of M/s Singhi & Co. Chartered Accountantshaving Firm Registration No. 302049E as Statutory Auditors of the Company for a term of5 (five) consecutive years from the conclusion of the 49th AGM of the Company subjectto the approval of Shareholders.

CORPORATE GOVERNANCE

Your Company has been following the principles and practices of good CorporateGovernance. A separate report on Corporate Governance and a certificate from the StatutoryAuditors confirming compliance with the Corporate Governance requirements forms part ofthis Annual Report.

SECRETARIAL AUDITOR AND THEIR REPORT

The Board had appointed M/s Pinchaa and Company Company Secretaries having firmregistration number P2016RJ051800 to conduct Secretarial Audit under the provisions ofSection 204 of the Companies Act 2013 for the financial year 2016-17. The SecretarialAudit Report for the financial year ended 31st March 2017 is annexed and marked asAnnexure 2 to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

EXTRACT OF ANNUAL RETURN

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as Annexure 3 to this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Corporate Social Responsibility Committee (CSR Committee) of the Company hasformulated a Corporate Social Responsibility Policy in terms of provisions of Section 135of the Companies Act 2013 read with Corporate Social Responsibility Policy Rules 2014.CSR Committee undertakes CSR activities in accordance with its Corporate SocialResponsibility Policy (CSR Policy) uploaded on the Company's website atwww.somanyceramics.com at the weblink: https://www.somanyceramics.com/wp-content/uploads/pdfs/policies/scl-corporate-social-responsibility-policy.pdf

The CSR initiatives of the Company are implemented directly and through varioustrusts/societies/NGO's. The Company also carried out the CSR activities through a Section8 Company under the Companies Act 2013 incorporated under the name M/s H. L. SomanyFoundation. The Company would also undertake other need based initiatives in compliancewith Schedule VII to the Companies Act 2013.

The 2% of the average net profit of the Company made during the three immediatelypreceding financial years comes out to be H 135.92 Lakhs. A report on CSR activities isprovided at Annexure 4 to this report.

INTERNAL CONTROL SYSTEMS

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year no reportable material weakness in the design oroperation was observed.

HUMAN RESOURCE (HR)

In Last few years we have put consistent efforts to establish standardized processesfor each HR deliverable. This has eliminated many redundant and unproductive work flowsand enabled us to achieve higher benchmarks in HR operations. Technology combined withprocess has supported employee transactions with more speed ease and transparency.Leveraging on this increased operational effectiveness we aim to strengthen our focus onstrategic talent management which is a long term talent planning and development practiceto foster business competitiveness in future. To realize this aim we see performanceengagement and reinforcement as the key differentiator to business success. Ourperformance management model has clearly integrated individual performance and potentialto the business vision. The Model has founded effective framework to facilitate assessdistinguish & recognize people's performance and to engage their capabilities andaspirations with business requirements. The meaningful insights driven from theseperformance analytics guide our talent management and performance strategies.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

The Company has in place a Whistle Blower Policy in terms of Section 177(9) of theCompanies Act 2013 and Regulation 22 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 which works as Vigil Mechanism for all the directors andemployees to report genuine concerns to the appropriate authority. Protected disclosurescan be made by a whistle blower through an e-mail or a letter to a task force referred inthe said Policy.

The Whistle Blower Policy may be accessed on the Company's websitewww.somanyceramics.com at the weblink: https://www.somanyceramics.com/wp-content/uploads/pdfs/policies/whistel-blower-policy.pdf

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report forms integral part of this Annual Report.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE EARNINGS AND OUTGO

The information on conservation of energy R&D technology absorption foreignexchange earnings and outgo as required under Section 134 of the Companies Act 2013 readwith the Companies (Accounts) Rules 2014 is annexed as Annexure 5 forming part of thisReport.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided at Annexure-6.

In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names of employees and other particularsof the top ten employees and employees drawing remuneration in excess of the limits asprovided in the said rules are set out in the Board's Report as an addendum thereto.However in terms of provisions of the first proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report is being sent to the members of the Company excluding theaforesaid information. The said information is available for inspection at the RegisteredOffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has a Policy on Prevention Prohibition and Redressal of Sexual Harassmentof Women at Workplace and matters connected therewith or incidental thereto covering allthe aspects as contained under "The Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013".

During the period under review the Company has not received any complaint under thisPolicy.

BUSINESS RESPONSIBILITY REPORT

The Board of Directors presents the Business Responsibility Report (BR) of the Companyfor the financial year ended on 31st March 2017 pursuant to Regulation 34 (2)(f) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1. Corporate Identity Number (CIN) of the Company L40200DL1968PLC005169
2. Name of the Company Somany Ceramics Limited
3. Registered address 82/19 Bhakerwara Road Mundka New Delhi – 110041
4. Website www.somanyceramics.com
5. E-mail id sclinvestors@somanytiles.co.in
6. Financial Year reported 1st April 2016 to 31st March 2017
7. Sector(s) that the Company is engaged in (industrial activity code- wise) Code as per NIC – 23929 - Ceramic/Vitrified Wall & Floor Tiles Sanitaryware and Bath Fittings.
8. List three key products/services that the Company manufactures/ provides (as in balance sheet) Ceramic/Vitrified Wall & Floor Tiles Sanitaryware & Bath Fittings.

9. Total number of locations where business activity is undertaken by the Company

A Number of International Locations Nil
B Number of National Locations
i Tile manufacturing locations
Own 2
Subsidiaries/Associates/JVs 7
ii Sales Depot 19
iii Display Centers 18
iv Registered & Corporate office s 2

10. Markets served by the Company Local State National International

? ? ? ?

SECTION B: FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital H847.59 Lakhs
2. Total Turnover H190980.22 Lakhs
3. Total profit after taxes H8608.81 Lakhs
4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) H128.80 Lakhs. 1.90% of the average net profit after taxes in the previous three financial years.
5. List of activities in which expenditure in 4 above has been incurred:- • Youth Empowerment through Skill Development
• Healthcare and Sanitation Programmes
• Vocational Training
• Women Empowerment
• Promotion of Sports
• Support to Charities/ NGOs

SECTION C: OTHER DETAILS

Does the Company have any Subsidiary Company/ Companies? Yes
Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent company? If yes then indicate the number of such subsidiary company(s). No direct participation. However the Company encourages its subsidiaries to adopt its policies and practices.
Do any other entity/entities (e.g. suppliers distributors etc.) that the No
Company does business with participate in the BR initiatives of the
Company? If yes then indicate the percentage of such entity/entities?
[Less than 30% 30-60% More than 60%]

SECTION D: OTHER DETAILS

1. Details of Director/Directors responsible for BR a) Details of Director responsiblefor implementation of the BR policy/policies

1. DIN : 00021423

2. Name : Shri Shreekant Somany

3. Designation : Chairman and Managing Director b) Details of the BR Head

Particulars Details
1. DIN (if Applicable) NA
2. Name Shri R.K.Lakhotia
3. Designation Vice President-Finance
4. Telephone number 01276-223300
5. E-mail id fin@somanytiles.co.in

2. Principle-wise (as per National Voluntary Guidelines) BR Policy/policies a) Detailsof compliance (Reply in Y/N)

Principle 1 (P1) Businesses should conduct and govern themselves with Ethics Transparency and Accountability
Principle 2 (P2) Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle
Principle 3 (P3) Businesses should promote the well-being of all employees.
Principle 4 (P4) Businesses should respect the interests of and be responsive towards all stakeholders especially those who are disadvantaged vulnerable and marginalized.
Principle 5 (P5) Businesses should respect and promote human rights
Principle 6 (P6) Businesses should respect protect and make efforts to restore the environment.
Principle 7 (P7) Businesses when engaged in influencing public and regulatory policy should do so in a responsible manner.
Principle 8 (P8) Businesses should support inclusive growth and equitable development.
Principle 9 (P9) Businesses should engage with and provide value to their customers and consumers in a responsible manner.

 

P1 P2 P3 P4 P5 P6 P7 P8 P9
1. Do you have a policy/ policies for ……. Y Y Y Y Y Y Y Y Y
2. Has the policy being formulated in consultation with the relevant stakeholders? Y Y Y Y Y Y Y Y Y

 

3. Does the policy conform to any national / international standards? If yes specify? (50 words) Company has adopted various national and international standards viz:

 

1. ISO 9001: 2008 for Quality Management System
2. ISO 14001: 2004 for Environment Management System
3. BS OHSAS 18001: 2007 Occupational Health and Safety Management System.
4. ISO 22000: 2005 for Food Safety Management System
5. 5 ‘S' Practices: for Shop Floor Management System

 

4. Has the policy being approved by the Board? If yes has it been Y Y Y Y Y Y Y Y Y
signed by MD/owner/CEO/appropriate Board Director?
5. Does the company have a specified committee of the Board/ Director/ Official to oversee the implementation of the policy? Y Y Y Y Y Y Y Y Y

 

6. Indicate the link for the policy to be viewed online? http://www.somanyceramics.com/policies/
7. Has the policy been formally communicated to all relevant internal and external stakeholders? The policies have been posted on the Company's website for information of all stakeholders.
8. Does the company have in-house structure to implement the policy/policies. Y Y Y Y Y Y Y Y Y
9. Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders' grievances related to the policy/ policies? Y Y Y Y Y Y Y Y Y
10. Has the company carried out independent audit/ evaluation of the working of this policy by an internal or external agency? Y Y Y Y Y Y Y Y Y

(a) If answer to the question at serial number no. 1 against any principle is ‘No' explain why: (Tick up to 2 options) : N/A

Questions P1 P2 P3 P4 P5 P6 P7 P8 P9
1 The company has not understood the Principles NA NA NA NA NA NA NA NA NA
2 The company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles NA NA NA NA NA NA NA NA NA
3 The company does not have financial or manpower resources available for the task NA NA NA NA NA NA NA NA NA
4 It is planned to be done with in next 6 months NA NA NA NA NA NA NA NA NA
5 It is planned to be done within the next 1 year NA NA NA NA NA NA NA NA NA
6 Any other reason(please specify) NA NA NA NA NA NA NA NA NA

3. Governance related to BR

(a) Indicate the frequency with which the Board of Directors Committee of the Board orCEO to assess the BR performance of the Company. Within 3 months 3-6 months AnnuallyMore than 1 year.

This is the first time Company is publishing the Business Responsibility Report.Therefore there is no defined frequency. However assessment is an ongoing activity andis an integral part of corporate functions.

(b) Does the Company publish a BR or a Sustainability Report? What is the hyperlink forviewing this report? How frequently it is published? No.

SECTION E: PRINCIPLE- WISE PERFORMANCE

Principle 1 - Business should conduct and govern themselves with Ethics Transparencyand Accountability.

1. Does the policy relating to ethics bribery and corruption cover only the company?Yes/ No. Does it extend to the Group/Joint Ventures/ Suppliers/Contractors/NGOs /Others?

Yes The Company's policy relating to ethics bribery and corruption serves as theguiding philosophy for all employees of the company as well as subsidiary companies.

2. How many stakeholder complaints have been received in the past financial year andwhat percentage was satisfactorily resolved by the management? If so provide detailsthereof in about 50 words or so.

During the year 8 complaints were received from the investors. All these investor'scomplaints were properly attended and necessary actions were taken. In addition thecompany received customer complaints which were addressed suitably from time to time.

Principle 2 - Businesses should provide goods and services that are safe and contributeto sustainability throughout their life cycle.

1. List up to 3 of your products or services whose design has incorporated social orenvironmental concerns risks and/or opportunities.

(a) Anti-Slip Floor Tiles with Slip Resistant Coating (b) Process Waste Recycle (c)Energy efficient processes

(d) Training of masons on tile laying (Known as Tile Master Programme)

2. For each such product provide the following details in respect of resource use(energy water raw material etc.) per unit of product (optional):

(a) Reduction during sourcing/production/distribution achieved since the previous yearthroughout the value chain?

(b) Reduction during usage by consumers (energy water) has been achieved since theprevious year?

Energy efficient process:

a. (1) Installations of Solar Plant of 0.5 Megawatt at Kadi Plant of the Company (2)Installation of LED Lights (3) Installation of variable frequency drives (4) Installationof temperature sensor and Energy efficient motors.

b. Use of thermal waste energy in different process like pre heating of combustion airand using pre-dryers for pre-drying the tiles.

c. Use of smoke waste by using the equipment's heat pipe technology require the energyfrom the stack

Further the data regarding reduction during usage by consumers (energy water) is notavailable with the company.

3. Does the company have procedures in place for sustainable sourcing (includingtransportation)?

(a) If yes what percentage of your inputs was sourced sustainably? Also providedetails thereof in about 50 words or so.

The sourcing practices of the Company are devised to achieve environmentalsustainability cost reduction and social interest. The Company endeavor that the criteriaused for vendor selection including transportation are cost effective with high qualitystandard and are eco-friendly. The selection of the vendors is done on the principles ofsustainability it is always ensured that the vendors adopt best human resource practicesand take care of global warming.

4. Has the company taken any steps to procure goods and services from local & smallproducers including communities surrounding their place of work?

If yes what steps have been taken to improve their capacity and capability of localand small vendors?

Company accords priority to local suppliers of goods and services. Company takes stepsfor capacity building of local and small vendors. Company's contractors who supply labourand transportation services for plant operations employ workmen from nearby communities.The training is provided to workforce for occupational health and safety.

5. Does the company have a mechanism to recycle products and waste? If yes what is thepercentage of recycling of products and waste (separately as<5% 5-10%>10%). Alsoprovide details thereof in about 50 words or so.

The Company's product are Ceramics/Vitrified wall & floor tiles and the Company hastaken steps to reuse or recycle the waste. For treatment of water e_uents the company hasinstalled STP Plant and 100% recycled water is used in the processes. Solid waste is usedas a raw material in the process.

Principle 3 - Businesses should promote the wellbeing of all employees. i. Pleaseindicate the Total number of employees.

The total number of permanent employees are 2277 as on 31st March 2017.

ii. Please indicate the Total number of employees hired on temporary/contractual/casual basis.

Total temporary/contractual/casual employees are 1058 as on 31st March 2017.

iii. Please indicate the Number of permanent women employees. There were 50 Permanentwomen employees as on 31st March 2017.

iv. Please indicate the Number of permanent employees with disabilities.

There were 2 permanent employees with disabilities as on 31st March 2017.

v. Do you have an employee association that is recognized by management?

No there is no employee association which is recognized by Management.

vi. What percentage of your permanent employees is members of this recognized employeeassociation?

N.A

vii. Please indicate the Number of complaints relating to child labour forced labourin voluntary labour sexual harassment in the last financial year and pending as on theend of the financial year.

Category No. of complaints filed during the financial year No. of complaints Pending as on end of the financial year
1 Child labour/forced labour/involuntary NIL NIL
2 Sexual harassment NIL NIL
3 Discriminatory employment NIL NIL

viii. What percentage of your under mentioned employees were given safety & skillup- gradation training in the last year?

I Permanent Employees 57.8%
II Permanent Women Employees 42.8%
III Causal/Temporary/Contractual 81.7%
Employees
IV Employees with Disabilities 0%

Principle 4 - Businesses should respect the interests of and be responsive towards allstakeholders especially those who are disadvantaged vulnerable and marginalized

1. Has the company mapped its internal and external stakeholders? Yes/No Yes.

2. Out of the above has the company identified the disadvantaged vulnerable &marginalized stakeholders?

Yes.

3. Are there any special initiatives taken by the company to engage with thedisadvantaged vulnerable and marginalized stakeholders? If so provide details thereofin about 50 words or so.

Our CSR approach focuses on the development of communities around the vicinity of ourplants. We have also developed innovative programmes that leverage our capabilities as atile manufacturer.

Our "Tile Master" initiative has cumulatively trained more than 5000 masonworkers on tile laying techniques and improved their productivity and livelihood.

Principle 5 - Business should respect and promote human rights.

1. Does the policy of the company on human rights cover only the company or extend tothe Group/Joint Ventures/Suppliers/ Contractors/NGOs/Others?

The Policy on Human Rights covers the Company only. Company encourages partiesassociated with its value chain like vendors suppliers contractors etc. to follow theprinciples stated in the policy.

2. How many stakeholder complaints have been received in the past financial year andwhat percent was satisfactorily resolved by the management?

The Company has not received any complaint from any stakeholder except the investorcomplaints during the period under review.

Principle 6 - Business should respect protect and make efforts to restore theenvironment.

1. Does the policy related to Principle 6 cover only the company or extends to theGroup/Joint Ventures/Suppliers/Contractors/NGOs/ others?

The Policy on environment covers the Company only.

2. Does the company have strategies/initiatives to address global environmental issuessuch as climate change global warming etc.? Y/N. If yes please give hyperlink forwebpage etc.

Yes. The Company has Environmental Policy which guides the organization to continuallymitigate the impact on climate change and global warming as a result of our operations.The company works continuously to reduce the waste and is focused on creating greeninfrastructure which are designed for better energy efficiency and efficient operations.

3. Does the company identify and assess potential environmental risks? Y/N

Yes.

4. Does the company have any project related to Clean Development Mechanism? If soprovide details thereof in about 50 words or so. Also if Yes whether any environmentalcompliance report is filed?

The locations of the Company are certified for requirements under ISO 14001(Environmental System) and OHSAS 18001 (Occupational Health and Safety System). Audit byIndependent Auditors are carried out to check the level of compliance.

5. Has the company undertaken any other initiatives on – clean technology energyefficiency renewable energy etc. Y/N. If yes please give hyperlink for web page etc.

The initiative taken by the Company are covered under the Directors' Report whichforms part of the Annual Report.

6. Are the Emissions / Waste generated by the company within the permissible limitsgiven by CPCB / SPCB for the financial year being reported?

Emissions and Waste generated by the company are within the permissible limits.

7. Number of show cause/legal notices received from CPCB/SPCB which are pending (i.e.not resolved to satisfaction) as on end of Financial Year.

None.

Principle 7 - Businesses when engaged in influencing public and regulatory policyshould do so in a responsible manner.

1. Is your company a member of any trade and chamber or association? If Yes Name onlythose major ones that your business deals with: Yes the Company is member of followingtrade associations which make efforts towards sustainable business development - (a)Indian Council of Ceramic Tiles and Sanitary ware (ICCTAS) (b) Confederation of IndianIndustry (CII) (c) PHD Chamber of Commerce (d) MCC Chamber of Commerce and Industry

2. Have you advocated/lobbied through above associations for the advancement orimprovement of public good? Yes/No; if yes specify the broad areas (drop box: Governanceand Administration Economic Reforms Inclusive Development Policies Energy securityWater Food Security Sustainable Business Principles Others)

The Company has represented through above associations from time to time for variouseconomic and corporate governance issues in the interest of the Industry in general andCeramic Industry in particular.

Principle 8 - Businesses should support inclusive growth and equitable development.

1. Does the company have specified programmes/initiatives/projects in pursuit of thepolicy related to Principle 8? If yes details thereof.

The Company has taken a holistic approach towards the development of the deprivedgroups of the society. The Company work in the areas of education vocational skillstraining and empowerment of women development of children. To oversee implementation ofvarious initiatives Company has formed a Board Level Committee called Corporate SocialResponsibility (CSR) Committee.

2. Are the programmes/projects undertaken through in-house team/ ownfoundation/external NGO/government structures/any other organization?

The projects are undertaken by in-house team/ CSR Foundation of the Company and inco-ordination with external agencies like NGOs and trusts.

3. Have you done any impact assessment of your initiative?

The CSR programme and their impacts/outcomes are monitored and reviewed by theCommittee.

4. What is your company's direct contribution to community development Projects-Amountin INR and the details of the projects undertaken?

The company has spent an amount of H298.34 Lakhs in various

CSR activities during the year 2016-17 which includes H128.80 Lakhs being the amountrequired to be spent by the Company in terms of CSR Regulations in the financial year2016-17. The details of the amount incurred on areas covered are given in Annexure to thereport on Corporate Social Responsibility forming part of this Report.

5. Have you taken steps to ensure that this community development initiative issuccessfully adopted by the community? Please explain in 50 words or so.

Company has a process of engaging with local community to understand their concerns.The CSR interventions are carried out on a need based approach which is developed afterconsultations with the local community to ensure that the activities are adopted by them.

Principle 9 - Businesses should engage with and provide value to their customers andconsumers in a responsible manner.

1. What percentage of customer complaints/consumer cases are pending as on the end offinancial year?

The Company has an effective system for addressing customer complaints. The customercases filed against the Company for defects in tiles or relating to sales are notsignificant in number compared with annual sales volume.

2. Does the company display product information on the product label over and abovewhat is mandated as per local laws? Yes/ No/N.A./Remarks (additional information) TheCompany displays all information as mandated by the regulations to ensure full compliancewith relevant laws.

3. Is there any case filed by any stakeholder against the company regarding unfairtrade practices irresponsible advertising and/or anti-competitive behaviour during thelast five years and pending as on end of financial year? If so provide details thereofin about 50 words or so.

No there is no case filed by any stakeholder during last five year regarding unfairtrade practices irresponsible advertising and/or anti-competitive behavior.

4. Did your company carry out any consumer survey/consumer satisfaction trends?

The Company has received various awards for its contribution to the Industry whichrepresents customer satisfaction.

OTHER DISCLOSURES

I. There were no significant material orders passed by the Regulators / Courts duringthe financial year 2016-17 which would impact the going concern status of the Company andits future operations.

II. The Board has approved shifting of Registered Office of the Company from NationalCapital Territory (NCT) of Delhi to the state of West Bengal subject to approval ofShareholders through Postal Ballot.

III. There were no significant material changes and commitments in terms of Section134(3) (l) of the Companies Act 2013 affecting the financial position of the Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with sincere gratitude the cooperation and help extended byall the stakeholders of your Company including its esteemed shareholders governmentdepartments and agencies financial institutions and banks customers vendors andemployees.

For and on behalf of the Board

SHREEKANT SOMANY

Chairman and Managing Director

Place: New Delhi

Dated: 24th May 2017

ANNEXURE - 1

Statement pursuant to Section 134 of the Companies Act 2013 Form AOC-1

(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of theCompanies (Accounts) Rules 2014) Statement containing salient features of the financialstatement of Subsidiaries/ Associate Companies/ Joint ventures

Part- A: Subsidiaries

(H in Lakhs)
Name of the SR Continental Somany Global Somany Excel Amora Tiles Somany Fine Somany Sanitary
Subsidiary companies Ltd. Ltd. Vitrified Pvt. Ltd. Pvt. Ltd. Vitrified Pvt. Ltd. Ware Pvt. Ltd.
Reporting period 2016-17 2016-17 2016-17 2016-17 2016-17 2016-17
Share Capital 18.50 50.00 151.00 1040.00 2200.00 990.00
Reserves & surplus / 122.20 21.16 -16.76 723.93 479.57 105.57
(Accumulated Losses)
Total assets 149.14 90.49 137.71 4241.46 7209.11 4029.14
Total liabilities (Excluding Share 8.44 19.33 3.47 2477.53 4529.54 2933.57
Capital & Reserves)
Investments 105.96 50.34 Nil Nil Nil Nil
Turnover including other income 58.87 2.90 Nil 9901.49 10686.04 1744.89
Profit / (Loss) before taxation 45.42 0.64 -2.79 429.25 495.53 116.80
Provisions for taxation 1.88 0.07 Nil 118.00 167.08 8.76
Profit / (Loss) after taxation 43.54 0.57 -2.79 311.25 328.45 108.04
Proposed Dividend Nil Nil Nil Nil Nil Nil
% of shareholding 100% 100% 100% 51% 51% 51%

A Section 8 Company under the Companies Act 2013 was incorporated on 2nd March 2015under the name and style M/s H.L. Somany Foundation to carry out the Corporate SocialResponsibility activities of the Company. The Company would also undertake other needbased initiatives in compliance with Schedule VII to the Act.

Part B: Associates and Joint Ventures

Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures

Name of the associates/ joint ventures Acer Granito Pvt. Ltd. Commander Vitrified Pvt. Ltd. Vicon Ceramic Pvt. Ltd. Vintage Tiles Pvt. Ltd. SKPL Ceramics Pvt. Ltd. (Formerly Somany Keraben Pvt. Ltd.) Sudha Somany Ceramics Private Limited (Formerly Sudha Ceramics Pvt. Ltd.)
Latest audited balance sheet date 31 st March 2017 31st March 2017 31st March 2017 31st March 2017 31st March 2017 31st March 2017
Shares of associate/ joint ventures held by the Company at the year end 1460000 3250000 1885000 4500000 893000 2509000
Amount of investment in associates/ joint venture (H in Lakhs) 511.00 325.00 188.50 1399.50 89.30 250.90
Extend of Holding % 26.00% 26.00% 26.00% 50.00% 50.00% 50.00%
Description of how there is significant influence Section 2(6) Section 2(6) Section 2(6) Section 2(6) Section 2(6) Section 2(6)
Reason why the associates/ joint venture is not consolidated NIL NIL NIL NIL NIL Nil
Net worth attributable to Shareholding as per latest audited Balance Sheet (H in Lakhs) Profit/ Loss for the year (H in Lakhs) 537.66 608.99 217.61 1025.19 0.13 243.61
a) Considered in Consolidation 62.31 24.04 30.65 161.99 (0.98) (7.19)
b) Not considered in consolidation 177.33 68.41 87.24 161.99 (0.98) (7.19)

 

Place: New Delhi
Date: 24th May 2017

 

Shreekant Somany Abhishek Somany T.R. Maheshwari Ambrish Julka
Chairman & Managing Director Managing Director Dy. Chief Executive Office r & Chief Financial Office r DGM (Legal) & Company Secretary