MANAGEMENT DISCUSSION &ANALYSIS
Your Directors are pleased to present the 21st Annual Report together withthe Audited financial statements of the Company for the Financial Year ended 31stMarch 2017.
During the year the Company's overall performance has been satisfactory. It hasachieved cement production of 2.71 Lac tonnes and sales of 2.75 Lac tonnes. The Companycontinues to lay emphasis on cost optimization at all levels. The Company has successfullycompleted its Revival and Rehabilitation Scheme with start of its commercial productionfrom 31st March 2017 at its integrated Cement plant at Udaipur. The dispatchesof cement & clinker have since begun.
|Particulars ||2016-17 ||2015-16 |
|Sales & Other Income ||9770.95 ||10056.03 |
|Profit / (Loss) before Interest & Depreciation ||385.23 ||133.21 |
|Profit / (Loss) before Depreciation ||369.90 ||(94.52) |
|Depreciation ||489.20 ||554.22 |
|Profit / (Loss) before Exceptional Items & Tax ||(119.30) ||(648.74) |
|Exceptional Items - Net Income ||404.12 ||244.27 |
|Deferred Tax ||- ||(1186.85) |
|Other comprehensive Income ||(10.82) ||(1.54) |
|Total Comprehensive Income ||274.00 ||780.84 |
The Company has commissioned its 1.24 MTPA clinkerisation facility in March 2017 makingthe unit an integrated cement plant with cement grinding capacity of 1.60 MTPA. TheCompany has so far spent' 763 Crores towards revival and rehabilitation of the Companywith modernization and upgradation of its Cement Plant.
During the year though India has been able to retain its place amongst the fastestgrowing major economy in the world the pace of growth slowed down a bit in the last twoquarters of the year owing to majordisruption caused by sudden demonetization of highvalue currency in circulation by the government on 8th Nov. 2016. This move; ata single stroke sucked nearly about 86% of money in circulation and greatly impacted thecash dependent sectors of the economy.
The current year too is also going to see yet another major disruption; though also amuch awaited tax reform in form of rolling out of unified Goods & Services Taxeffective 1st July 2017. We can expect some turbulences on account of thistransition as the transition to such a magnitude is bound to create some issues related tocompliances especially in small businesses and informal sectors of the economy.
On other fronts the government seems to be committed in its resolve to improving theranking of the country in terms of ease of doing business. E-governance is transformingthe way business and industry was dealing with the government departments and agencies.More and more systems and processes are being brought online which do not require any faceto face interactions and involvement of any intermediaries. Transparent allocation ofnatural resources through public auctions is one such step. One can see a vast improvementin availability of information related to government sponsored schemes & programs inpublic domain.
Overall we may see the positive results of all the efforts and disruptions eithertowards the end of the current financial year or from the next financial year. Till suchtime though as a country we may remain among the top growing economies in the world butwould fall short of much anticipated and talked about double digit growth.
INDUSTRY SCENARIO & OUTLOOK
After the amendment of the Mines and Minerals (Development and Regulation) Act 1957which allows transfer of captive mining leases not granted through auction consolidationgathered speed in Indian cement sector and number of such deals were seen in the lastcouple of years. The Cement sector posted decent earnings till second quarter of theFinancial Year 2016-17 and post monsoon it was expected that the cement demand will bounceback. Announcement of Demonetization Scheme by the Union Government however led to demanddestruction and deferment in the near term. Primary drivers: Real Estate andInfrastructure segment which accounts for about 80% of total cement demand in India alsogot impacted by demonetization.
The Union Government in the Budget for the current fiscal year has paved growth pathfor the industry with increased allocation for Infrastructure sector specially developmentof roads & highways including those in rural areas and by granting Infrastructurestatus for 'Affordable Housing'. Accordingly it is expected that cement demand willwitness satisfactorily growth in the coming years on account of pickup in constructionactivities from new infrastructure projects like smart cities and dedicated freightcorridors development of metro rail projects modernization and expansion of airportsrapid urbanization and improvement in rural demand on backdrop of possible favourablemonsoon as predicted by India Meteorological Department.
Further implementation of the Real Estate (Regulation and Development) Act 2016(RERA) and relaxation in rules for listing of Real Estate Investment Trusts (REIT) andInfrastructure Investment Trusts (IIT) by SEBI making their listing easier will bringmuch needed transparency in a Real Estate (which is largely unregulated) and open moreavenues for cement demand in future.
During the year under review the Company allotted 600 5% Cumulative RedeemablePreference Shares of' 1 Lac each (CRPS Series B) aggregating to' 6 Crores to JK LakshmiCement Ltd. Holding Company/Promoter of the Company on Private Placement basis proceedswhereof were inter alia utilized for redemption of 5095230 Zero Coupon PreferenceShares of ' 10 each (ZCPS) aggregating to ' 5.10 Crores. The said ZCPS were redeemed atpar on 31st March 2017 pursuant to the Rehabilitation Scheme of the Companysanctioned by the Hon'ble BIFR vide its Order dated 13th January 2012.
HUMAN CAPITAL MANAGEMENT
Your Company is focused on developing competencies of its employees and maximizing itsproductivity through great Workplace Practices and improving the quality of life of itsemployees. HR interventions including Suggestion Scheme Quality Circles (QC) CrossFunctional Teams (CFT) People Management Award Scheme (PMAS) etc. have been introduced.
Giving emphasis on Lean organization planning is done from beginning to achieve highproductivity with least manpower cost. Corporate Social Responsibility activitiesundertaken in and around the Plant include blood donation camps medical check-up andexamination of employees extending support to nearby villages for enhancing theiremployability and awareness on health hygienic linked with Swachh Bharat Abhiyaan innearby area.
Occupational health safety and environment has attracted special attention of highermanagement right from the beginning. It is worth highlighting that ever since plantrevival your Company has maintained Zero accident scenario; applying bench mark safetypractices. INDUSTRIALRELATIONS
The industrial relations at our plant continued to remain peaceful throughout the year.Our engagement with the workforce has improved the work environment quality of lifeproductivity andskill.
The Company has in place an adequate budgetary control system and internal financialcontrols with reference to financial statements. No reportable material weaknesses wereobserved in the system during the year. Further the Company has laid down internalfinancial control policies and procedures which ensures accuracy and completeness of theaccounting records and the same are adequate for safeguarding of its assets and forprevention and detection of errors and frauds commensurate with the size and nature ofoperations of the Company. The policies and procedures are also adequate for orderly andefficient conduct of business of the Company. The Company also has a robust ManagementInformation System for the timely preparation of correct and accurate financialinformation.
An extract of the Annual Return as on 31st March 2017 in the prescribed formMGT-9 is attached 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 Members are aware the Company has been receiving technical and financialsupport from both JK Lakshmi Cement Ltd. the Holding Company (JKLC) and HansdeepIndustries & Trading Company Ltd. the Fellow Subsidiary (HITCL). The Company alsodoes sourcing of its requirements of clinker & sale of cement/clinker etc. from theabove companies. All the contracts or arrangements or transactions entered into by theCompany with the said Related Parties were in the ordinary course of business and on arms'length basis and were in compliance with the applicable provisions of the Companies Act2013 (Act) and the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015. A statement showing particulars of contracts or arrangements entered into with JKLC& HITCL in the prescribed Form AOC-2 pursuant to Section 134(3)(h) of the Act isattached as Annexure'B'.
The Board has recommended resolutions for approval of the Members at the forthcomingAnnual General Meeting in respect of Material Related Party Transactions to be enteredinto with JKLC in the ordinarycourse ofbusiness and on arm's length basis.
The Related Party Transaction Policy approved by the Board is available on the websiteof the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to Section 152 of the Companies Act 2013 (Act) Shri Rohni Kumar Guptaretires by rotation and being eligible offers himself for re-appointment at theforthcoming Annual General Meeting (AGM). The Board of Directors of the Company has alsore-appointed Shri Gupta as Wholetime Director of the Company for a term of one yearw.e.f. 1st April 2017 subject to requisite approval of Members of the Companyat the forthcoming AGM. The Board recommends his re-appointment(s) asstatedabove.
Ms. Kumud Pahuja Independent Director resigned from the Directorship of the Companywith effect from 18th March 2017 owing to personal reasons. The Board places onrecord its appreciation for the valuable services rendered by Ms. Pahuja during her tenureas the Independent Director of the Company.
The Board has appointed Ms. Poonam Singh as an Additional (Independent) Director of theCompany for a term of five consecutive years with effect from 14th February2017 subject to the approval of Members of the Company at the forthcoming AGM. In termsof Section 161 of the Act Ms. Poonam Singh shall hold office as Director up to the dateof the forthcoming AGM. The Company has received a notice in writing together withrequisite deposit from a Member of the Company proposing her candidature as a Director.The Board recommends the appointment of Ms. Poonam Singh as an Independent Director of theCompany.
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 Act andRegulation 16 of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015.
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.
The Company has neither invited nor accepted any deposits from the public.
(a) Statutory Auditors and their Report
M/s Om Prakash S. Chaplot & Co. Chartered Accountants were appointed as Auditorsof the Company for a term of three consecutive years to hold the office from conclusion ofthe 18th Annual General Meeting (AGM) held in the year 2014 till the conclusionof its 21st AGMto be held in the year 2017 being the maximum permissible term.Accordingly pursuant to Section 139 (2) of the Companies Act 2013 (Act) they will not beeligible for re-appointment as the Auditors of the Company at the forth coming AGM.
The Board of Directors places on record its appreciation of the valuable servicesrendered by M/s Om Prakash S. Chaplot & Co. as the Auditors of the Company. Theobservations of the Auditors in their report on Accounts and the financial statementsread with the relevant notes are selfexplanatory.
Subject to the approval of the Members the Board of Directors of the Company hasrecommended the appointment of M/s Bansilal Shah & Co. Chartered Accountants (FirmRegistration Number: 000384W) as the Auditors of the Company for a period of two yearscommencing from the conclusion of 21st AGM till the conclusion of 23rdAGM pursuant to Section 139 of the Act. Requisite Resolution regarding their appointmentis included in the Notice of forthcoming AGM forapproval by the Members.
(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 2016-17. 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 notcontain anyqualification reservation or adverse remark.
(c) Cost Auditorand Cost Audit Report
M/s. HMVN & Associates Cost Accountants Delhi conducted the audit of cost recordsof the Company for the Financial Year ended 31st March 2016 and as requiredCost Audit Report was duly filed with the Ministry of Corporate Affairs Government ofIndia.
The Audit of the cost accounts of the Company for the Financial Year ended 31stMarch 2017 is being conducted by thesaid firm and their Reportwill also be filed.
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 above Rules formpart of this Report. However in terms of provisions of Section 136 of the said Act theReport and Accounts are being sent to all the Members of the Company and others entitledthereto excluding the said particulars of employees. The said information is availablefor inspection at the Registered Office of the Company during business hours on workingdays of the Company upto the forthcoming AGM. Any Member interested in obtaining suchparticulars maywrite to the Company Secretary.
SIGNIFICANTAND MATERIAL ORDERS PASSED BY THE REGULATORS ORCOURTS ORTRIBUNALS
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 futureoperations.
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 ofthis Report. The Corporate Governance Reportalso covers thefollowing:
a) Particulars of the four 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.
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 forthatperiod;
(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.
Your Directors wish to place on record their appreciation for the continued support andcooperation received from various Government Authorities Lending Institutions andBusiness Associates. Your Directors also thank our valued customers and the esteemedMembers for their trustandpatronage.
Your Directors also wish to place on record their appreciation of the contribution madeby the Company's employees at all levels whose hard work solidarity and indomitablespirit have made the Company's revival possible. A special thanks to JK Lakshmi CementLimited our Holding company and Hansdeep Industries & Trading Company Limited aFellow subsidiary to whom the Company owe a great deal of gratitude without whose supportfinancial turnaround and revival of the Company would not have been possible.
The Directors' Report & Management Discussion and Analysis Report containsforward-looking statements which may be identified by the use of words in that directionor connoting the same. All statements that address expectations or projections about thefuture including but not limited to statements about your Company's strategy for growthproduct development market positions expenditures and financial results are forwardlooking statements.
Your Company's actual results performance of achievements could thus differ materiallyfrom those projected in such forward looking statements. The Company assumes noresponsibility to publicly amend modify or revise any forward-looking statements on thebasis of any subsequent development information orevents.
| ||On behalf of the Board of Directors |
|New Delhi ||(Onkar Nath Rai) |
|Date: 10th May 2017 ||Chairman |