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Udaipur Cement Works Ltd.

BSE: 530131 Sector: Industrials
NSE: JKUDYOG ISIN Code: INE225C01029
BSE LIVE 15:52 | 18 Aug 31.70 -0.50
(-1.55%)
OPEN

31.90

HIGH

32.00

LOW

31.15

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 31.90
PREVIOUS CLOSE 32.20
VOLUME 145922
52-Week high 39.20
52-Week low 15.50
P/E
Mkt Cap.(Rs cr) 936
Buy Price 31.70
Buy Qty 549.00
Sell Price 0.00
Sell Qty 0.00
OPEN 31.90
CLOSE 32.20
VOLUME 145922
52-Week high 39.20
52-Week low 15.50
P/E
Mkt Cap.(Rs cr) 936
Buy Price 31.70
Buy Qty 549.00
Sell Price 0.00
Sell Qty 0.00

Udaipur Cement Works Ltd. (JKUDYOG) - Director Report

Company director report

DIRECTORS' REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

Dear Members

Your Directors have pleasure in presenting the 20 Annual Report along with the Auditedfinancial statements of the Company for the Financial Year ended 31st March 2016.

DISCHARGE FROM BIFR

During the year under review the Company has come out of BIFR purview. Based on thepositive net worth of the Company as on 31st March 2015 Hon'ble Appellate Authority forIndustrial & Financial Reconstruction (AAIFR) vide its order dated 22nd January 2016has discharged the Company from the purview of SICA.

FINANCIAL RESULTS

(Amount in Rs. Lacs)
Particulars 31st March 2016 31st March 2015
(12 months) (12 months)
Sales & Other Income 10056.03 10566.66
Profit / (Loss) before Interest & Depreciation 131.67 297.96
Profit / (Loss) before Depreciation 38.94 (76.29)
Depreciation 267.69 265.87
Profit / (Loss) before Exceptional Items & Tax (228.75) (342.16)
Exceptional Items - Net Income 244.27 126.04
Deferred Tax (1186.85) (1211.28)
Profit after Tax 1202.37 995.16

PERFORMANCE

During the year the Company's overall performance has been satisfactory. It hasachieved cement production of 3.00 Lac tonnes and sales of 2.96 Lac tonnes. The Companycontinues to lay emphasis on Cost optimization at all levels.

PROGRESS OF THE PROJECT

After commissioning the Cement Mill in July 2013 the Company has been making steadyprogress on civil construction work as a part of setting up of clinkerisation facility.About 95% work upto Pyro Section has been completed. Most of the equipments have arrivedat site and around 65% erection work has also been done. The Project is expected to becommissioned by December 2016. The Company has so far spent Rs. 419.50 Crore as Capex onthe above including modernization and upgradation of the Plant. Civil work for secondCement Mill has also been started.

INDUSTRY SCENARIO

The Cement Industry currently having a capacity of more than 400 million tonnes perannum is gradually moving towards consolidation largely driven by acquisitions. Newcapacity additions are expected to be considerably lower over the next few years mainlydue to higher cost of acquisition of new mining leases & land and increased regulatoryrequirements.

In the year 2015 India for the first time in its recent history surpassed China toemerge as top FDI destination in the world. It attracted more than 40 Billion US $ ofinvestment during April to December 2015. With the Indian economy growing at current paceand with other favorable micro indicators such as inflation budget & trade deficitexchange & interest rates growth of non-food credit etc. there are huge expectationsof significant turn-around in the industry fortunes in FY 2016-17.

The Prime Minister in the recent past has laid considerable emphasis on the schemes andpolicies such as 'Smart Cities' 'Swacch Bharat' 'AMRUT' and most ambitiously 'Housingfor All by 2022'. These schemes when fully implemented are expected to revive the cementconsumption all over the country. Further increase of 46% in the budget allocations forinfrastructure segment in the Union Budget for FY 17 and the emphasis being laid by thepresent Government on the Highway Projects and Concrete Roads construction augurs well forcement consumption on a sustainable basis.

These initiatives will help to absorb the excess capacity to the extent of 40 to 50% incertain regions and above 25% for the country on the whole.

OUTLOOK

The last quarter of FY 2015-16 has seen some upsurge in cement demand in certainpockets of the country with corresponding improvement in prices and margins. With theexpectations of overall GDP growth of above 7.5% the Industry is hopeful of seeing atleast 8% growth in cement demand in the FY 2016-17 with a possible 2% upside on account ofthe policies and schemes announced by the Government.

In this backdrop your Directors are fairly optimistic about the future of the industryin general and the Company in particular. It is hoped that the Company will be in aposition to take full advantage of the revival of cement demand and these opportunities oncommissioning of its clinkerisation facility and the second Cement Mill in December 2016.

HUMAN RESOURCES

Your Company is focused on developing its competencies and maximizing its productivitythrough great Workplace Practices and improving the quality of life of its employees. HRinterventions including Suggestion Scheme Quality Circles (QC) Cross Functional Teams(CFT) etc. have been introduced.

People are the key assets that are instrumental in improving Company's performance yearon year. They have shown commitment sense of ownership and team work in implementation ofthe Company's Rehabilitation Scheme and the ongoing modernization and upgradation of theCompany's Plant. Focus is kept on functional and technical skill up-gradation of specificteam members through customized need based training programme. The Company strives tooffer a positive supportive open and high performance work culture where innovation andrisk taking is encouraged. Performance is recognised and employees are motivated torealize their full potential.

INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference tofinancial statements and no material reportable weakness was observed in the system.Further the Company has in place adequate internal financial controls commensurate withthe size and nature of its operations. The Company also has robust Budgetary ControlSystem and Management Information System (MIS) which are backbone of the Company forensuring that your Company's assets and interests are safeguarded.

COMPLIANCE OF MPS REQUIREMENT

Members are aware that due to induction of funds by the Promoters towardsimplementation of the Scheme of Rehabilitation of the Company sanctioned by Hon'ble BIFRthe Equity Shareholding of the Promoters in the Company increased to 89.18%. The Companysought extension of time from SEBI upto December 2015 to comply with the requirement ofmaintenance of Minimum Public Shareholding of 25% (MPS) in the manner specified by SEBI.The Promoters made Offers for Sale during the year whereby the Company has becamecompliant of the aforesaid MPS requirement w.e.f. 29 December 2015.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return as on 31st March 2016 in the prescribed form MGT -9 isattached as Annexure 'A' to this Report and forms part of it.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The particulars of loans guarantees or securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the financialstatements.

RELATED PARTY TRANSACTIONS

As the Shareholders are aware that the Company has been receiving technical andfinancial support from both JK Lakshmi Cement Ltd. the Holding company of the Company(JKLC) and Hansdeep Industries & Trading Company Ltd. Fellow subsidiary of theCompany (HITCL) besides sourcing of its requirements of clinker & sale of cement. Allthe contracts or arrangements or transactions entered into by the Company with the RelatedParties were in the ordinary course of business and on arm's length basis and were incompliance with the applicable provisions of the Companies Act 2013 (the Act) and theSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. A statementshowing particulars of contracts or arrangements entered into with JKLC & HITCL in theprescribed Form AOC-2 pursuant to Section 134(3)(h) of the Act is attached as Annexure'B'.

The Board has recommended resolutions for omnibus approval of the Shareholders inrespect of material Related Party transactions entered into/to be entered into with JKLC& HITCL in the ordinary course of business and on arm's length basis for the FinancialYear 2016-17 and onwards upto the specified limits.

The Related Party Transaction Policy approved by the Board is available on the websiteof the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year Shri S.K. Kinra Nominee Director of Hon'ble Board for Industrial& Financial Reconstruction has ceased to be Director on the Board w.e.f. 31st July2015 after having attained the age of 70 years. Shri Vinit Marwaha retires by rotationand being eligible offers himself for reappointment at the ensuing AGM.

The Board has re-appointed Shri Rohni Kumar Gupta as Whole-time Director of theCompany for a term of one year w.e.f. 1st April 2016 subject to the approval of theMembers of the Company at the ensuing AGM. The Board recommends his re-appointment.

All the Independent Directors of the Company have given requisite declarations thatthey meet the criteria of independence as provided in Section 149(6) of the Companies Act2013 and also Regulation 16 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 is annexed to this Report as Annexure 'C' and forms part of it.

DEPOSITS

The Company has neither invited nor accepted any deposits from the public.

AUDITORS

(a) Statutory Auditors and their Report

M/s. Om Prakash S. Chaplot & Co. Chartered Accountants have been appointed asAuditors of the Company to hold the office from the conclusion of the 18 Annual GeneralMeeting held on 18th August 2014 until the conclusion of the 21st Annual General Meetingto be held in the year 2017 subject to ratification of their appointment by the membersat the respective AGMs to be held in the years 2015 and 2016. Accordingly being eligiblematter relating to the appointment of the Auditors will be placed for ratification bymembers at the forthcoming Annual General Meeting. The observations of the Auditors intheir Report on Accounts and the financial statements read with the relevant notes areself-explanatory.

(b) Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2015-16. TheReport given by him for the said financial year in the prescribed format is annexed tothis Report as Annexure 'D'. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

(c) Cost Auditor and Cost Audit Report

The Cost Audit for the financial year ended 31st March 2015 was conducted by M/s. HMVN& Associates Cost Accountants Delhi and as required Cost Audit Report was duly ledwith Ministry of Corporate Affairs Government of India. The Audit of the cost accounts ofthe Company for the financial year ended 31st March 2016 is being conducted by the saidfirm and their Report will also be led.

CORPORATE SOCIAL RESPONSIBILTY

The requirement of Corporate Social Responsibility in terms of Section 135 of theCompanies Act 2013 is not applicable to the Company.

PARTICULARS OF REMUNERATION

Disclosure of the ratio of the remuneration of each director to the median employee'sremuneration and other requisite details pursuant to Section 197(12) of the Companies Act2013 (Act) read with Rule 5 (1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended is annexed to this Report as Annexure'E'. Further Particulars of Employees pursuant to Rule 5(2) & (3) of the aboveRules form part of this Report. However in terms of provisions of Section 136 of thesaid Act the Report and Accounts are being sent to all the members of the Company andothers entitled thereto excluding the said particulars of employees. Any memberinterested in obtaining such particulars may write to the Company Secretary. The saidinformation is available for inspection at the Registered office of the Company duringworking hours.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the financial year under review there were no significant and material orderspassed by the Regulators or Courts or Tribunals which would impact the going concernstatus of the Company and its future operations.

CORPORATE GOVERNANCE - including details pertaining to Board Meetings Nominationand Remuneration Policy Performance Evaluation Risk Management Audit Committee andVigil Mechanism

Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to Regulation 34 of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 a Management Discussion and Analysis CorporateGovernance Report and Auditors Certificate regarding compliance of conditions of CorporateGovernance are made a part of this Report. The Corporate Governance Report also covers thefollowing:

(a) Particulars of the five Board Meetings held during the financial year under review.

(b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofDirectors.

(c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.

(d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.

(e) Details regarding Risk Management.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:-

(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the Profit andloss of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and

(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their appreciation for the continued support andcooperation received from various Central and State Government Authorities Hon'ble Boardfor Industrial & Financial Reconstruction Appellate Authority for Industrial &Financial Reconstruction lending institutions Employees and the esteemed Shareholders ofthe Company. Your Directors also express their gratitude towards valuable contributionsmade by JK Lakshmi Cement Limited and Hansdeep Industries & Trading Company Limited inRehabilitation and growth of the Company.

On behalf of the Board of Directors
New Delhi Onkar Nath Rai
Date: 11th July 2016 Chairman