Your Directors have pleasure in presenting Fourteenth Annual Report of the Companytogether with the Audited Balance Sheet as at 31st March 2015 and the Statement of Profit& Loss for the year ended on that date.
The highlights of the financial performance of the Company for the financial year ended31st March 2015 as compared to the previous financial year are as under:
| || || |
(Rs. in Lacs)
|Particulars || |
| ||2014-15 || |
|2014-15 || |
|Net Sales / Income ||143120.91 ||103060.96 ||111408.52 ||73675.38 |
|Profit before Interest Depreciation Tax and extra ordinary items ||43723.31 ||23650.50 ||17599.61 ||6595.92 |
|Extraordinary Items ||1.83 ||(102.39) ||(1.31) ||(108.11) |
|Profit before Interest Depreciation and Tax ||43725.14 ||23548.11 ||17598.30 ||6487.81 |
|Interest & Finance Charges ||(8738.44) ||(8344.19) ||(4452.40) ||(3486.25) |
|Depreciation ||(22374.29) ||(15683.18) ||(8645.70) ||(4531.79) |
|Profit/(Loss) before Tax ||12612.41 ||(479.26) ||4500.19 ||(1530.23) |
|Provision for taxation: || || || || |
|- Current Tax ||2640.09 ||87.87 ||953.27 ||- |
|- Less: MAT credit entitlement ||(2640.09) ||- ||(953.27) ||- |
|- Net Current Tax ||- ||(87.87) ||- ||- |
|-MAT Credit entitlement of earlier years ||- ||(26.61) ||- ||- |
|- Income Tax for earlier years ||16.52 ||0.40 ||- ||- |
|- Deferred Tax ||(496.65) ||247.62 ||102.44 ||(39.15) |
|-Minority Interest ||(266.88) ||(74.15) ||- ||- |
|Net Profit after Tax (after minority) ||11865.39 ||(419.88) ||4602.63 ||(1569.38) |
|Add: Balance as per the last financial statement ||52443.43 ||54209.46 ||36257.92 ||39173.45 |
|Profit available for appropriation ||64308.82 ||53789.58 ||40860.54 ||37604.06 |
|Appropriations: || || || || |
|General Reserve ||- ||(120.00) ||- ||(120.00) |
|Proposed Dividend on Equity Shares ||(3353.71) ||- ||(3353.71) ||- |
|Corporate Dividend Tax ||(670.55) ||(178.11) ||(670.55) ||(178.11) |
|Interim Dividend ||- ||(1048.03) ||- ||(1048.03) |
|Total ||(4024.26) ||(1346.15) ||(4024.26) ||(1346.15) |
|Balance carried forward to Balance Sheet ||60284.57 ||52443.43 ||36836.29 ||36257.92 |
FY 2014-15 has been more a year of consolidation for operations of your Company and itssubsidiaries. The operational performance of clinkerisation unit of subsidiary M/s. StarCement Meghalaya Limited and grinding unit at Guwahati was further stabilised. M/s. StarCement Meghalaya Limited has been able to produce 1549349 MT of clinker during FY2014-15 as against 1102905 MT during FY 2013-14 registering a growth of 40%. In terms ofcapacity utilisation the unit was able to utilise close to 89% of its installed capacityin FY 2014-15 as against 63% during FY 2014-15. Similarly the grinding unit at Guwahatiproduced 1444955 MT of Cement during FY 2014-15 as against 954679 MT registering agrowth of 51% over previous year. On capacity utilisation front too the Guwahati grindingunit was able to operate at 90% of its installed capacity during FY 2014-15 as against 60%during FY 2013-14.
On Consolidated basis total clinker production was at 1879359 MT during FY 2014-15 asagainst 1378616 MT during FY 2013-14 registering a growth of 36%. Your Company has madearrangements with grinding units in West Bengal also to supplement its market requirement.The total cement production on Consolidated basis (including the hired Grinding units) wasat 2171666 MT during FY 2014-15 as against 1664037 MT during FY 2013-14 registering agrowth of 31%.
On the sales side too your Company has been able to register highest ever sales volumeduring FY 2014-15. Your Company has been able to sale 2169251 MT of Cement in FY 2014-15as against 1631048 MT during FY 2013-14 registering a growth of 33% over previous year.
With improved outlook of economy during the ensuing financial years your Companyexpects to improve its performance on operational side even better.
INDIAN ECONOMY AND GLOBAL CONDITIONS
After prolonged stagnation observed in Indian Economy in recent past year 2014-15started showing indications of consolidation and recovery. This is getting reflectedthrough various indicators like annual growth rate of Gross Domestic Product (GDP) wasseen to improve to 7.5 per cent in the last October-December quarter as against 6.4 percent in the October-December quarter of 2013. GDP growth in the first three quarters ofthe FY15 has averaged at 7.4 per cent year on year basis.
On the inflation side sustained efforts by Government to control price rise coupledwith falling crude prices resulted into lower inflationary pressure. Food Inflation indexhas fallen tremendously from 9.66 per cent around April 2014 to 4.78 per cent byDecember 2014. Retail inflation (CPI-Consumer Price Index) has also moderated. Itdeclined to all time low of 5 per cent in Q3 of 2014-15 after having remained stubbornlystuck around at 9-10 percent for last 2 years. The Rupee remained relatively stable andthe Current Account Deficit (CAD) is continuously shrinking from 2 per cent of GDP in Q4of 2013-14 to 1.6 per cent in Q3 of 2014-15.
Initiatives undertaken by Government in the areas of unblocking of Coal Blocksallocation of Telecom Spectrum deregulation of diesel prices resulting into reduced costof import bills and visible intent of New Government at Centre to bring reforms inFinancial and Economic Sectors has boosted overall confidence of investors in IndianEconomy which is well reflected by data of Foreign Direct Investment that has increasedfrom USD 2133 million by March 2014 to USD 5502 Million by January 2015.The Businessconfidence index has been continuously rising from 49.90 in Q4 of 2013-14 to 56.40 in Q4of 2014-15. The Consumer confidence index also shows positive signs.
On the other hand performance of other economies of the globe was uneven and mixed. InEurope and Advanced European countries there are signs of pickup and some positivemomentum in the euro area reflecting lower oil prices and supportive financialconditions but risks of prolonged low growth and low inflation remain. Economic activitysoftened in emerging and developing Europe last year and more countries slipped intodeflation. External demand remains subdued and high corporate debt continues to weigh oninvestment. Asia's growth is forecast to hold steady in 2015 and the region is expectedto continue outperforming the rest of the world over the medium term. While the Chineseeconomy is shifting to a more sustainable pace growth is projected to pick up elsewherein the region. This reflects the boost from lower world oil prices strengthening externaldemand and still-accommodative financial conditions despite some recent tightening.Growth in Latin America and the Caribbean slowed to 1.3 percent in 2014 and is projectedto soften to an even lower rate in 2015.
INDIAN CEMENT INDUSTRY RETROSPECT AND OUTLOOK
In line with trend of recovery in Indian Economy as a whole Indian Cement Industry hasalso shown trend of recovery during FY 2014-15. After witnessing an all-time low demandand profitability during the previous financial year in the first nine months of FY2014-15 cement productions has grown by 7.90% as against 3.70% in corresponding periodlast year and 3% in FY 2013-14. Apart from other economic factors which helped the economyas a whole to grow the delayed monsoons which extended the window for continuation ofconstruction activities helped cement industry in particular to grow during the year underreview.
The recent past has witnessed a slowdown in the new capacity addition in cementindustry due to demand constraints. Between FY 2010-11 to FY 2013-14 the industry added 65MTPA cement capacity as against 92 MTPA in the preceding three-year period of FY 2007-08 FY 2010-11.
The slowdown in demand resulted into lower capacity utilisation from 77% in FY 12 to72% in FY 14 despite slowdown in fresh capacity addition.
The growth outlook for Indian cement industry remains positive on the back of risinginfrastructure activities increasing demand from Housing Sectors and recovery witnessedin construction industry. Recent developments in the industry supported by Governmentsinitiatives in form of considerable thrust and importance assigned for the development ofInfrastructure Roads Urban and Rural Housing Ports Ultra Mega Power Projects etc. thedemand outlook remains positive in the years to come. During next three years it isexpected that demand would grow by more than 8% leading to increase in rate of capacityutilisation from 72% in FY 14 to 75% in FY 16. The capacity utilisation is likely tofurther improve to 79% in FY 17.
The major cost drivers of cement industry being logistic cost power and fuel remainedunder pressure. Falling crude oil prices in international market coupled with deregulationof diesel prices in the country resulted into availability of diesel at lower prices.However the increase in rates of railway freight has offset this benefit. Timelyavailability of Railway Rakes was another constraint which industry as a whole had to faceon logistic front. Price and availability of quality coal remained a constraint for theindustry during the year under review too. Non-availability of coal to power plantsresulted into restricted power supply which had implication on power cost too. Howeverunblocking of coal blocks in recent past is likely to help the power and cement industryboth.
CEMENT SCENARIO EAST
Looking at huge potential and opportunities in the North Eastern Region (NER) as awhole NER Markets continue to remain the focus market for your Company. In line withtrend of slowdown in economic activities in rest of the country the economic activitiesin NER also witnessed to grow at a slower pace but still faster than rest of country owingto its under developed status in recent years. NER represents 9 per cent of India'sgeographical area and contributes 3 per cent to the country's gross domestic product(GDP). In relative terms it is one of India's economically under-developed regions.However given its natural resources base and strategic location NER has the potential tobecome India's "powerhouse" in terms of trade and investment. Although the NERis rich in resources like hydrocarbons and other minerals and has immense potential toproduce hydroelectricity absence of adequate infrastructure has impeded its development.
Owing to its geographical location NER is unique in terms of the economicopportunities it offers. About 98 per cent of the region borders form India'sinternational boundaries. It shares borders with China Bangladesh Bhutan and Myanmar.Given its strategic location the region has potential to be developed as a base forIndia's growing economic links not only with the Association of Southeast Asian Nations(ASEAN) but also with neighbouring countries viz. Bangladesh Bhutan and Nepal.
The North East Region (NER) is a land of opportunities with huge potential for growthand development. On the Hydro Power Front the region of North East is said to beThe Power House of India'. It has been estimated that North Eastern States including
Sikkim have the potential of 84000 MW of hydro power which is about 43 per cent of thetotal hydro power generation capacity in the country. Conversely only five per cent ofits potential has been harnessed so far. The Central Government is promoting privatesector in the region to boost investment in power sector and about 14000 MW has alreadybeen allotted to private players in NER as part of "50000 MW hydro initiative".
Road is an important mode of travel in the hilly areas as other mode of travel iseither too expensive or difficult. The road infrastructure is relatively deficient in theNER. To address this The Ministry of Road Transport and Highways has been paying specialattention to the development of national highways in the region. The ministry hasearmarked 10% of the total allocation for the NE region. There has also been a specialthrust in building the road infrastructure. Sufficient funds have also been allocated inbuilding the road infrastructure in the NE states.
The coverage of Railway still remains poor in the region. The Ministry of Railways hasundertaken a lot of gauge conversion and new line projects in the North Eastern Region. Atpresent there are 7 new lines 6 gauge conversion 2 doubling and 3 railwayelectrification ongoing railway projects under North Eastern Railway. New railway lines onAzra-Byrnihat Dudhnoi- Mehendi Pather and Byrnihat-Shillong routes in Meghalaya are underconstruction. The construction of the extension of a vital broad gauge rail link betweenBairabi rail terminus on the Mizoram-Assam border and Sairang a village 20 km west ofAizawl is in progress. In Sikkim rail connectivity is being created between Rangpoo andSiliguri in West Bengal. A railway track is also to be laid for connecting Agartala withAkhaura in Bangladesh.
All above infrastructure development projects is expected to convert in huge cementdemand in NER. On the retail side of demand with increased focus on housing sectorretail demand in the region is likely to get a boost. Per Capita Cement consumption in NERis lowest in the country presenting huge potential for cement demand. In line with trendof Indian Economy the per capita income and disposable surplus has seen a rising trend inNER also. This has led to a boost in retail housing sector too.
In the backdrop of above NER presents huge opportunities for cement demand in theNorth Eastern Region. As mentioned earlier your Company has been able to register agrowth of 5.78% in sale of Cement in NER during the year under review over previous year.On the capacity side there is no major cement capacity in pipeline in NER and in thebackdrop of potential demand growth expected to come in NER owing to ongoing and upcominginfrastructure projects coupled with surge in retail demand your Company enjoys strategicadvantage of having its surplus capacity in the region.
Keeping strong foothold intact in the markets of NER and consolidating its positionfurther your Company is expanding its reach in other parts of Eastern India in the Statesof West Bengal and Bihar. As compared to rest of India the Eastern Part is stillunder-developed in terms of infrastructure and also in housing sector. The per capitaconsumption of Cement in West Bengal Bihar and Jharkhand is much lower to rest of India.Capitalising on the growth opportunities existing in these States of East your Companyhad launched its product during later part of FY 2013-14 and during the year under reviewhas been able to make the presence of its brand "STAR CEMENT" felt in theseStates. To augment on the capacity front your Company has made arrangements with fewgrinding units in West Bengal. With strategically located clinker manufacturing facilityin the State of Meghalaya having reach to quality limestone and quality fuel at relativelylower cost the grinding unit arrangement in West Bengal presents strategic advantage toyour Company to compete with relatively more established players in these States. TheCompany is expecting even better volumes in these markets in the ensuing financial yearand years to come.
During FY 2014-15 your Company continued to enjoy Brand-Leadership position in theMarkets of North Eastern Region (NER). With more stabilised operations of newlycommissioned Cement Grinding Unit at Sonapur Guwahati and Clinkerisation unit atLumshnong in Meghalaya coupled with concerted marketing efforts your Company was able toachieve highest ever volume in the markets of NER. During the year under review the totalsale in NER was at 1498380 MT as against 1416426 MT in FY 2013-14 registering a growthof 5.78% over previous year. During the first half of year under review there wasslowdown in cement demand in NER which started picking up in third quarter and the lastquarter of the year closed at very healthy note in terms of demand pick-up. Company'sfocused approach to expand its reach in urban and semi-urban markets of NER resulted intoconsolidating the presence of your brand "STAR CEMENT" and company was able tofurther improve its market share during the year under review.
Your Company has also added its product portfolio with value added feature and hasrecently launched its newly developed "Anti-Rust Cement" in the markets of NER.The product is presently under test marketing and is expected to present a better volumein years to come.
As reported last year your Company had launched its product in the same brand name"STAR CEMENT" in the markets of West Bengal & Bihar. Your Directors arepleased to report that markets of West Bengal and Bihar have responded well for yourproduct "STAR CEMENT" in terms of demand and acceptability both. During the yearunder review your Company has been able to achieve sale of 670871 MT of Cement in thesemarkets as against 214622 MT during the FY 2013-14 registering more than 200% growth. Inorder to cater to the needs of markets of West Bengal Bihar and adjoining StateJharkhand your Company has tied up with two grinding units in West Bengal to augment itscapacity in addition to supplying cement to these markets from its own units located inAssam and Meghalaya.
The expansion of dealer and retail network in NER and more particularly in Rural andSemi-Urban Areas of the Region has remained to be focus area of your Company during theyear under review too. Your Company has added more than 500 dealers and more than 1000sub-dealers to the family. The strong dealer and retail network in NER and in the marketsof West Bengal & Bihar coupled with huge branding activities has resulted into betterproduct placement acceptability and top of mind recall for your product "STARCEMENT". On the back of strong dealer and retail network with consistency in productquality followed up by branding activities your Company expects to put much improvedperformance at market place in the ensuing financial year.
PRODUCTION AND COST DEVELOPMENTS
Your Company has been able to further optimise on production and cost sides. Withincreased volumes during the FY 2014-15 your Company has been able to have advantage ofspread of its fixed costs on increased volumes. In addition the close proximity of coaland limestone added further to its cost effectiveness.
Your Company continued to promote environment friendly blended cement using fly ash andproduced 1745710 MT of Portland Pozzolana Cement (PPC) (including from hired grindingunits) on consolidated basis out of total production of 2171666 MT of cement during FY2014-15. Usage of fly ash in cement is not friendly to environment only but also providescost optimisation. Your Company has been able to utilise the fly ash generated by powerplant of its subsidiary M/s. Meghalaya Power Limited and such close access to fly ashprovides competitive edge to your Company in term of cost. In addition your Company hasalso made arrangements with major power plants like NTPC Tata Power and few others toensure its long term requirement of fly ash.
With more stabilised operations of its power subsidiary M/s. Meghalaya Power Limitedyour Company has been able to reduce its dependency on state supplied grid power. YourCompany has made long term arrangement with its subsidiary for supply of quality power atcompetitive rates. During the year under report your Company has been able to capitaliseon the opportunity of availability of reliable and quality power sourced from IndianEnergy Exchange (IEX) for its grinding unit at Guwahati and has been able to reduce thepower cost too by optimising the source mix between power supplied by IEX and Grid.
Logistics & Freight
On Logistics front your Company has expanded distribution network in the states of WestBengal Bihar & Jharkhand besides reaching out to interior most areas of North EastIndia. Warehousing network was increased substantially during the year.
Railway siding near Guwahati Grinding Unit was constructed and commissioned in recordtime giving boost to Railway Rake handling capacity for inbound and outbound traffic whileensuring cost saving on Transportation and handling expenses.
Freight cost came under pressure during the year under review due to increase inRailway Freight and Road Freight in North East. Railway freight increased by 6.5% duringJuly 14. Your Company braved such inflationary situations through various innovativemeasures and using the right mix of mode of transportation through Rail Road Containerand Bulkers. Your Company used online reverse auction for freight finalisation ensuringcompetitive freights. Freight discount offered by railway on empty flow direction helpedCompany to partially neutralise the effect of increase in railway freight.
Railway network in North East has increased with commissioning of Broad Gauge Link fromLumding to Badarpur and Rangia to Silapathar. Your Company is geared up for taking bestadvantage of such developments.
Few of the major highlights of the performance are:
KEY PERFORMANCE HIGHLIGHTS
Consolidated cement production was 2171666 MT during the year as against1664037 MT during the previous financial year registering a growth of 31%.
Consolidated net sales were RS.143042.78 Lacs during the year under review ascompared to RS.102798.95 Lacs during the financial year 2013-14 registering a growth of39%.
Consolidated EBIDTA was 85% higher at RS.43723.31 Lacs as compared toRS.23650.50 Lacs during the immediate previous financial year.
Consolidated profit before tax during the year 2014-15 was at RS.12612.41 Lacsas against a loss of RS.479.26 Lacs in the year 2013-14.
The paid up Equity Share Capital as on 31st March 2015 was RS.4192.14 Lacs. Duringthe year under review the Company has not issued shares with differential voting rightsnor granted stock options or sweat equity shares.
EXTRACT OF ANNUAL RETURN
In terms of requirement of Section 134 (3) (a) of the Companies Act 2013 the extractof the Annual return in form MGT-9 is annexed herewith and marked Annexure 1.
MEETINGS OF THE BOARD
During the year six (6) Board Meetings were convened and held. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013.
MEETINGS OF INDEPENDENT DIRECTORS
During the year under review a meeting of Independent Directors was held on 19thMarch 2015 wherein the performance of the Non-Independent Directors and the Board as awhole was reviewed. The Independent Directors at their meeting also assessed the qualityquantity and timeliness of flow of information between the Company management and theBoard of Directors of the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134 (3) (c) read with Section 134 (5) of theCompanies Act 2013 the Directors hereby confirm and state that:
In the preparation of Annual Accounts the applicable Accounting Standards havebeen followed along with the proper explanation relating to material departures if any;
The Directors have selected such accounting policies and have applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2015and of the profit of the Company for the year under review;
The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
The Directors have prepared the annual accounts on going concern basis;
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013. Mr. ManindraNath Banerjee and Mr. Mangilal Jain are Independent Directors on the Board of yourCompany. In the opinion of the Board and as confirmed by these Directors they fulfil theconditions specified in Section 149 of the Act and the Rules made thereunder about theirstatus as Independent Director of the Company.
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS
The Board has framed a Remuneration Policy for selection appointment and remunerationof Directors Key Managerial Personnel and Senior Management staff. The remunerationpolicy aims to enable the Company to attract retain and motivate highly qualified membersfor the Board and at other executive levels. The remuneration policy seeks to enable theCompany to provide a well-balanced and performance-related compensation package takinginto account shareholder interests industry standards and relevant Indian corporateregulations.
AUDITORS & AUDITORS' REPORT
M/s. Kailash B. Goel & Co. Chartered Accountants Statutory Auditors (FirmRegistration no. 322460E) of the Company will retire at the conclusion of the ensuingAnnual General Meeting of the Company. Being eligible they have offered themselves forre-appointment and have confirmed that their appointment if made will be in accordanceto the provisions of Section 141 read with Section 139 of the Companies Act 2013 and therules framed there under for re-appointment of Auditors. Members are requested to approveand ratify their appointment. Members are also requested to empower the Board for fixationof Auditors' Remuneration.
The Auditors' Report to the Shareholders for the year under review does not contain anyqualification.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of its manufacturing activity is required to be audited. Your Directors haveon the recommendation of the Audit Committee appointed M/s. B. G. Chowdhury & Co.Cost Accountants (Firm Registration number 000064) as Cost Auditor of the Company for thefinancial year ended 31st March 2015.
The Board on recommendation of Audit Committee has appointed M/s. B. G. Chowdhury& Co. Cost Accountants for audit of cost records for the ensuing financial year. Theremuneration proposed to be paid to them as recommended by Audit Committee requiresratification of the shareholders of the Company. In view of this your ratification forpayment of remuneration to Cost Auditors is being sought at the ensuing AGM.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Manoj Kumar Banthia Practising Company Secretary M/s. MKB &Associates a firm of Company Secretaries in Practice to undertake the Secretarial Auditof the Company. The Secretarial Audit Report is annexed herewith marked Annexure 2. Thereport is self-explanatory and do not call for any further comments.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review your Company has not given any loan to any person fallingunder ambit of Section 186 of the Companies Act 2013.
Details of Guarantees and Investments covered under the provisions of Section 186 ofthe Companies Act 2013 are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year underreview were entered on an arm's length basis and in the ordinary course of business. Thereare no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.
A Statement of all related party transactions is presented before the Audit Committeeon quarterly basis. The details of transactions entered into with the Related Parties areannexed herewith and marked Annexure 3.
During the year under review no amount was transferred to reserves.
Your Directors are pleased to recommend a Final Dividend of 80% (RS.8/- per equityshare of RS.10/- each) (Previous year: Interim Dividend @ 25% i.e. RS.2.50 per equityshare of RS.10/- each). Total payout on account of Dividend for the year under reviewamounts to RS.4024.26 Lacs including Dividend Distribution Tax of RS.670.55 Lacs.
CONSERVATION OF ENERGY (STEPS TAKEN / IMPACT ON CONSERVATION OF ENERGY STEPS TAKEN FORUTILISING ALTERNATE SOURCES OF ENERGY CAPITAL INVESTMENT IN ENERGY CONSERVATIONEQUIPMENTS)
Your Company has taken following steps towards Conservation of Energy during the yearunder review:
Optimisation of Load on incoming transformers;
Generation pressure of compressor was reduced;
Leakages in compressed air line of cement mill and CSP were arrested;
Dampers were removed to avoid pressure loss in RABH fan;
RPM of Cement Mill Pump was reduced;
Removal of Damper to avoid pressure loss across fans in Raw Mill Silo;
Modification was carried out in Coal Mill inlet chute by fixing polymer liner;
Feed opening of the Inlet chute of Coal Mill was increased to arrest frequentof the chute;
Development of New Product with Anti-Rust properties;
Replacement of Mill Scale with Laterite Clay in Raw Mill;
Trial on optimisation of Fly Ash Mix;
Trial on automation of Fly Ash feeding system.
EXPENDITURE ON RESEARCH & DEVELOPMENT
The Company has developed a Research & Development cell for carrying out R&DProjects in the plant with specific objective of development of advanced systems forquality improvement.
During the year under review your Company incurred Capital expenditure of RS.40.28Lacs and Revenue Expenditure of RS.38.38 Lacs in Research & Development.
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the period under review Foreign Exchange Earning was RS.51.58 Lacs and theForeign Exchange Outgo was RS.9213.37 Lacs.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES (CSR)
Your Company is committed to communities in remote areas of its geographical presencewhere the Company essentially operates and gives prime importance to sustainabledevelopment of the entire region. With an aim to make CSR a progressive model theCompany has aligned its CSR policy & practices in accordance with Schedule VII ofCompanies Act 2013.
Your Company's CSR strategy ensures compliance with ethical standards in businesspractices; minimising environmental impacts and waste; addresses the challenges ofimproved access to education health sports drinking water sanitation and livelihoodopportunities; and helping underprivileged communities to become resilient andself-reliant.
The Company's quest for improved literacy and education in Lumshnong region saw theadvent of CMCL VidyaMandir which is imparting quality education up to secondary levelunder CBSE affiliation. Extension of school building is being undertaken in full pace toupgrade the school to higher secondary level in the forthcoming years. The school isactively reaching out to the locals of surrounding communities by providing free-ships tothe underprivileged. Additionally your Company is also supporting few governmentaffiliated schools of the periphery villages by meeting their infrastructural andday-to-day educational needs.
The Company has been actively participating in socio-economic development of Lumshnongregion and other surrounding villages and has been one of the key contributors to theLocal Villages and NarpuhElaka (local territory) Development Funds. A need based strategyhas been followed in consultation with local headman in constructing a community hall andfew internal concrete roads in Lumshnong village. With a view to increase access tolivelihood opportunities your Company has been engaging local people as suppliers oflimestone coal river sand etc.
The Company is providing quality health care facilities through CMCL hospital. With itsqualified team of doctors and support staff the hospital is facilitating out andin-patient medical care pathology x-ray dispensary and ambulance facility to meet anyemergency condition. During the year under review several free community health check-upand vaccination camps were conducted by your Company.
The Company is also a frontrunner in nurturing local sporting talent. During the yearunder review local football team from Lumshnong village has been actively supported withinfrastructural requirements and equipments.
To reinforce its commitments as a responsible corporate citizen your Company has adedicated team to implement monitor & evaluate community engagement programmes. YourCompany has plans to set a benchmark to sustainable development of Community and localarea through its cutting edge CSR programme. Over the years CMCL has been efficientlyable to hold on to what is good; hold on to what it believed; hold on to what it must doto promote itself from a doer's to enabler's.
Annual Report on CSR as required to be annexed in terms of requirement of Section 135of Companies Act 2013 and rules framed thereunder is annexed herewith and markedAnnexure- 4.
EVALUATION OF THE BOARD'S PERFORMANCE
In accordance with the Companies Act 2013 the performance evaluation of the Board wascarried out during the year. The Board follows a formal mechanism for the evaluation ofthe performance of the Board as well as Committee. The evaluation reflected the overallengagement of the Board and the Committee.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering various aspects of the Board's functioning such as adequacyof the composition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance.
The Nomination and Remuneration Committee at its meeting established the criteria basedon which the Board will evaluate the performance of the Directors.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board on parameters such as level of engagement andcontribution independence of judgment safeguarding the interest of the Company and itsminority shareholders etc. The performance evaluation of the Non-Independent Directorsand Board as a whole was also carried out by the Independent Directors.
The Directors expressed their satisfaction over the evaluation process and resultsthereof.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The shareholders have ratified the appointment of Mr. Manindra Nath Banerjee asIndependent Director who was appointed as Additional Director with effect from 15th July2014 by the Board as also appointment of Mr. Mangilal Jain as Independent Director at theAnnual General Meeting held on 10th September 2014 for a period of five years.
Further Mr. Sanjay Agarwal was appointed as Managing Director of the Company witheffect from 1st August 2014 which was ratified by the shareholders at their AnnualGeneral Meeting held on 10th September 2014. Also Mr. Sajjan Bhajanka Mr. RajendraChamaria and Mr. Sanjay Agarwal were re-appointed as Managing Director for a furtherperiod of 3 years subject to the ratification in the ensuing General Meeting.
In accordance with the provisions of Companies Act 2013 and in terms of the Memorandumand Articles of Association of the Company Mr. Prem Kumar Bhajanka and Mrs. Clara Sujawill retire by rotation and being eligible offers themselves for re-appointment. In viewof their considerable experience your Directors recommend their re-appointment asDirectors of the Company.
During the year under review the Board on the recommendation of the Nomination andRemuneration Committee appointed Mr. Dilip Kumar Agarwal as Chief Financial Officer witheffect from 20th September 2014 and Mr. Sanjay Kumar Gupta was appointed as ChiefExecutive Officer with effect from 26th March 2015.
The following personnel are Key Managerial person of the Company:
|1. Mr. Sajjan Bhajanka ||: ||Managing Director |
|2. Mr. Rajendra Chamaria ||: ||Managing Director |
|3. Mr. Sanjay Agarwal ||: ||Managing Director |
|4. Mr. Sanjay Kumar Gupta ||: ||Chief Executive Officer |
|5. Mr. Dilip Kumar Agarwal ||: ||Chief Financial Officer |
|6. Mr. Manoj Agarwal ||: ||Company Secretary |
HOLDING SUBSIDIARIES AND ASSOCIATE COMPANY
Star Ferro and Cement Limited continue to remain the Holding Company with a stake of70.48% in your Company.
M/s. Star Cement Meghalaya Limited M/s. Megha Technical & Engineers PrivateLimited M/s. Meghalaya Power Limited and M/s. NE Hills Hydro Limited continue to remainsubsidiaries of the Company.
Star Cement Meghalaya Limited is engaged in manufacturing of Cement Clinker and has aClinkerisation plant with an installed capacity of 1.75 MTPA. During the year underreview the Company manufactured 1549349 MT of clinker as against 1102905 MT in FY2013-14.
Megha Technical & Engineers Private Limited is engaged in the manufacture of cementand generation of power. During the year under review the Company produced 320836 MT ofCement.
Meghalaya Power Limited is engaged in the generation of Power. During the year underreview the Company generated 1679.23 Lacs units of power
NE Hills Hydro Ltd. wholly owned subsidiary of your Company is currently notoperational.
AUDITED FINANCIAL STATEMENTS OF THE COMPANY'S SUBSIDIARIES
Pursuant to sub-section (3) of Section 129 of the Act the statement containing thesalient feature of the financial statement for the year ended 31st March 2015 for each ofthe Company's subsidiaries viz. Star Cement Meghalaya Limited (SCML) Megha Technical& Engineers Private Limited (MTEPL) Meghalaya Power Limited (MPL) and NE Hills HydroLimited (NHHL) are annexed in the Form AOC 1 and marked as Annexure-5.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company have been prepared as perAccounting Standards- AS 21 as prescribed by the Institute of Chartered Accountants ofIndia and has been included as a part of this Annual Report.
The detailed financial statements and audit reports of each of the subsidiaries of theCompany are available for inspection at the registered office of the Company during officehours between 11 A.M. and 1 P.M. The Company will arrange to send the financial statementsof the subsidiaries upon written request from a shareholder to the registered address ofthe said shareholder.
During the year under report the Company has not accepted any deposits from public orfrom any of the Directors of the Company or their relatives falling under ambit of Section73 of the Companies Act 2013.
CHANGES IMPACTING GOING CONCERN STATUS AND COMPANY'S OPERATIONS
During the year under review there have been no material orders passed by theRegulators/Courts impacting materially the going concern status or future operations ofthe Company.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board.
The Company has evolved a risk management framework to identify assess and mitigatethe key risk factors of the business. The Board of the Company is kept informed about therisk management of the Company.
COMMITTEES OF THE BOARD
The details of composition of the Committees of the Board of Directors are as under:-
a. Audit Committee
Your Company has an Audit Committee at the Board level which acts as a link betweenthe management the statutory and internal auditors and the Board of Directors to overseethe financial reporting process. During the year the Audit Committee was reconstituted asper the requirements of Section 177 (2) of the Companies Act 2013.
The Composition of the Committee is as mentioned below:
|Name of the Director ||Category ||Chairman/ Members |
|1. Mr. Mangilal Jain ||Independent ||Chairman |
|2. Mr. Manindra Nath Banerjee ||Independent ||Member |
|3. Mr. Sajjan Bhajanka ||Non-Independent ||Member |
During the year the Committee met on 17th May 2014 7th July 2014 15th October2014 13th January 2015.
Pursuant to the requirement of the Act the Company has established vigil mechanism.The Board has framed a Vigil Mechanism Policy of the Company. A Vigil (Whistle Blower)mechanism provides a channel to the Employees and Directors to report to the Managementconcerns about unethical behavior actual or suspected fraud or violation of the Codes ofconduct or policy. The mechanism provides for adequate safeguards against victimisation ofemployees and Directors to avail of the mechanism and also provide for direct access tothe Chairman of the Audit Committee in exceptional cases.
b. Nomination & Remuneration Committee
The Board of company has also constituted a Committee for appointment and remunerationof Directors Key Managerial Personnel and Senior Management staff. The Committee wasreconstituted during the year under review as per the requirements of Section 178(1) ofthe Companies Act 2013 with the following members:
|Sl. No. ||Name ||Category ||Chairman/ Members |
|1. ||Mr. Mangilal Jain ||Independent ||Chairman |
|2. ||Mr. Manindra Nath Banerjee ||Independent ||Member |
|3. ||Mr. Brij Bhushan Agarwal ||Non-Independent ||Member |
During the year the Committee met on 6th July 2014 18th September 2014 and 25thMarch 2015.
a. Corporate Social Responsibility Committee
During the year under review the Company has constituted
Corporate Social Responsibility Committee as per the requirements of Section 135 of theCompanies Act 2013. The Committee is headed by Mr. Sanjay Agarwal Director of yourCompany and consists of members as stated below:
|Sl. No. ||Name of the Director ||Category ||Chairman/ Members |
|1. ||Mr. Sanjay Agarwal ||Non-Independent ||Chairman |
|2. ||Mr. Brij Bhushan Agarwal ||Non-Independent ||Member |
|3. ||Mr. Mangilal Jain ||Independent ||Member |
HUMAN RESOURCE DEVELOPMENT & INDUSTRIAL RELATIONS
The core of achieving business excellence lies in a committed talented and focusedworkforce. People are the foremost stakeholders and are considered the building blocks ofan organisation. For achievement of business objectives it is imperative to have adedicated and talented pool of people.
The Company has always provided a congenial atmosphere for work to all sections ofsociety. It has provided equal opportunities of employment to all irrespective to theircaste religion colour marital status and sex. The Company believes that human capitalof the Company is its most valuable assets and its human resource policies are alignedtowards this objective of the Company.
The Company adopts latest techniques in evaluating the potential and training needs ofthe employees at all levels. Designing of tailor-made training programs that fill theknowledge/skill gap and imparting in-house training in addition to utilising externalprograms are significant functions of HR Department of the Company.
During the year under report your Company completed 10 successful years since itcommenced its commercial operations. Your Company recognised the association of all thoseemployees who have completed ten successful years with your Company in a function held atall factories and offices of the Company.
PARTICULARS OF EMPLOYEES
The information required under the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 in respect of the employees of the Company is asmentioned below:
|Name ||Mr. Sanjay Kumar Gupta |
|Remuneration (Gross) ||RS.7372000/- |
|Designation & Nature of Employment ||Chief Executive Officer* |
|Qualification and total experience ||Chartered Accountant |
|Date of commencement of employment ||10.03.2003 |
|Total experience ||22 years |
|Age ||45 years |
|Last employment ||Vinaya Cement Ltd. |
*Designated as Chief Executive Officer w.e.f. 26.03.2015.
Your Directors take this opportunity to express their deep sense of gratitude to theBanks Central and State Governments and their departments and the local authoritiescustomers vendors business partners/associates and Holding Company for their continuedguidance and support.
Your Directors would also like to place on record their sincere appreciation for thecommitment dedication and hard work put in by every member of the Company and dedicatesthe credit for the Company's achievements to them. Last but not least your Directorsexpress their gratitude to the shareholders of the Company for reposing their confidenceand faith in the Management of the Company.
| ||For and on behalf of the Board of Directors |
|Place: Kolkata ||SAJJAN BHAJANKA |
|Date: 28th April 2015 || |
| ||(DIN: 00246043) |
FORM AOC -2
(Pursuant to clause (Rs.) of sub-section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Disclosure of particulars of contracts/arrangements entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arm's lengthbasis : During the year under review the contracts or arrangements with related partywere done at arm's length basis.
2. Details of material contracts or arrangement or transactions at arm's length basis :
|Name of Related party ||Nature of relationship ||Duration of contract ||Salient terms of the contracts or arrangements or transactions including the value if any ||Amount (Rs. in Lacs) |
|Purchase of goods || || || || |
|and services Meghalaya Power Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||2832.42 |
|Megha Technical & Engineers Private Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||1.37 |
|Star Cement Meghalaya Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||32617.30 |
|Century Plyboards (I) Limited ||Associate ||Short term ||Based on transfer pricing guidelines ||2.40 |
|Shyam Century Ferrous Limited ||Associate and services ||Short term ||Based on transfer pricing guidelines ||16.36 |
|Sale of goods || || || || |
|Megha Technical & Engineers Private Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||2292.02 |
|Star Cement Meghalaya Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||11.45 |
|Meghalaya Power Limited ||Subsidiary ||Ongoing ||Based on transfer pricing guidelines ||21.61 |
|Century Plyboards (I) Limited ||Associate ||Short Term ||Based on transfer pricing guidelines ||6.79 |
Note: The long term contracts entered into by the Company were ratified in the BoardMeeting and Advances paid have been adjusted against billings wherever applicable.
FORM AOC -1
(Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 ofCompanies (Accounts) Rules 2014)
Statement containing salient features of the financial statement of subsidiaries
Part "A": Subsidiaries
| || || || || || |
(Rs. in Lacs)
|Sl. No. ||Name of the subsidiary ||Megha Technical & Engineers Pvt Ltd ||Star Cement Meghalaya Ltd ||Meghalaya Power Ltd ||NE Hills Hydro Ltd |
|1 ||Reporting period for the subsidiary concerned if different from the holding company's reporting period ||N.A ||N.A ||N.A ||N.A |
|2 ||Reporting currency and Exchange rate as on the last date of the relevant Financial year in the case of foreign subsidiaries. ||N.A ||N.A ||N.A ||N.A |
|3 ||Share capital ||2734.64 ||2981.78 ||1713.06 ||7.00 |
|4 ||Reserves & surplus ||21137.40 ||36235.10 ||8081.47 ||- |
|5 ||Total Assets ||27525.10 ||80569.72 ||28921.13 ||7.12 |
|6 ||Total Liabilities ||27525.10 ||80569.72 ||28921.13 ||7.12 |
|7 ||Investments ||2983.33 ||- ||- ||2.70 |
|8 ||Turnover ||19691.78 ||49067.72 ||10334.13 ||- |
|9 ||Profit before taxation ||1902.67 ||4912.38 ||1287.39 ||- |
|10 ||Provision for taxation ||7.97 ||152.19 ||(742.73) ||- |
|11 ||Profit after taxation ||1910.64 ||5064.58 ||544.66 ||- |
|12 ||Proposed Dividend ||- ||- ||- ||- |
|13 ||% of shareholding ||100.00 ||87.49 ||51.00 ||100.00 |
The following information shall be furnished:-
1 Names of subsidiaries which are yet to commence operations : NE Hills Hydro Limited
2 Names of subsidiaries which have been liquidated or sold during the year : N.A
Part "B": Associates and Joint Ventures
|Sl. No. ||Name of Associates / Joint Ventures || |
|1 ||Latest audited Balance Sheet Date ||NA |
|2 ||Shares of Associate / Joint Ventures held by the Company on the year end: ||NA |
| ||Number || |
| ||Amount of Investment in Associates/Joint Venture || |
| ||Extend of Holding % || |
|3 ||Description of how there is significant influence ||NA |
|4 ||Reason why the associate/joint venture is not consolidated ||NA |
|5 ||Net worth attributable to Shareholding as per latest audited Balance Sheet ||NA |
|6 ||Profit / Loss for the year ||NA |
| ||i. Considered in Consolidation || |
| ||ii. Not Considered in Consolidation || |
The following information shall be furnished:-
1 Names of associates or joint ventures which are yet to commence operations : N.A
2 Names of associates or joint ventures which have been liquidated or sold during theyear : N.A
| ||For and on behalf of the Board of Directors |
|Place: Kolkata ||Dilip Kumar Agarwal ||Sajjan Bhajanka |
|Date: 28th April 2015 || |
Chief Financial Officer
Chairman & Managing Director
| || ||(DIN: 00246043) |
| ||Manoj Agarwal ||Rajendra Chamaria |
| || |
Vice-Chairman & Managing Director
| || ||(DIN: 00246171) |