To the Shareholders
Your Directors have the pleasure in presenting the Annual Report on the business andoperations of your Company together with the audited financial statements of the Companyand its Subsidiaries for the year ended 31st March 2017.
The summarized standalone and consolidated results of your Company and its Subsidiariesare given in the table below :
| || || |
(Rs. in Crores)
|Particulars ||STANDALONE ||CONSOLIDATED* |
| ||31.03.2017 ||31.03.2016 ||31.03.2017 ||31.03.2016 |
|Revenue from Operations (Gross) ||3841.02 ||3761.59 ||4981.22 ||3761.59 |
|Total Revenue ||3985.55 ||3938.81 ||5127.76 ||3938.98 |
|Profit before Finance Costs Tax Depreciation Amortization and Exceptional items ||515.76 ||463.09 ||769.41 ||463.46 |
|Finance Costs ||139.23 ||82.26 ||276.79 ||82.26 |
|Profit before Tax Depreciation Amortization Minority Interest and Exceptional items ||376.53 ||380.83 ||492.62 ||381.20 |
|Depreciation and Amortization Expense ||147.19 ||148.47 ||255.50 ||148.76 |
|Exceptional items ||6.82 ||31.49 ||6.82 ||31.49 |
|Tax Expense (Net) ||8.52 ||33.19 ||10.83 ||33.22 |
| ||162.53 ||213.15 ||273.15 ||214.47 |
|Profit for the year ||214.00 ||167.68 ||219.47 ||167.73 |
|Surplus as per Financial Statements (Including Retained Earnings) ||373.72 ||342.65 ||371.17 ||340.05 |
|Appropriations : || || || || |
|Debenture Redemption Reserve ||15.83 ||10.00 ||15.83 ||10.00 |
|Dividend paid on Ordinary Shares ||46.20 ||46.20 ||46.20 ||46.20 |
|Corporate Div. Tax on Dividend ||9.41 ||9.41 ||9.41 ||9.41 |
|General Reserve ||150.00 ||71.00 ||150.00 ||71.00 |
|Net Surplus ||366.28 ||373.72 ||369.20 ||371.17 |
*The figures of the subsidiary Reliance Cement Company Private Limited have beenconsolidated from the date of its acquisition i.e. 22.08.2016.
Your Directors are pleased to recommend a dividend of Rs. 6.50 per share (i.e. 65%) on77005347 ordinary shares for the year ended 31st March 2017 aggregating to Rs. 60.24crores (including Corporate Dividend Tax of Rs. 10.19 crores) as compared to Rs. 55.61crores (including Corporate Dividend Tax of Rs. 9.41 crores) in the previous year.
Dividend Distribution Policy
Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formulated a Dividend DistributionPolicy. The Policy is annexed hereto and marked as "Annexure A" formingpart of the Directors' Report and is also uploaded on the Company's website athttp://www.birlacorporation.com/investors/policy/dividend-distribution-policy.pdf.
TRANSFER TO RESERVES
The Company proposes to transfer an amount of Rs.150.00 crores to the General Reserves.
The paid up Equity Share Capital as at 31st March 2017 stood at Rs. 77.01 crore.During the year under review the Company has not issued shares with differential votingrights nor has granted any stock options or sweat equity. As on 31st March 2017 none ofthe Directors of the Company hold instruments convertible into equity shares of theCompany.
ADOPTION OF IND AS :
As mandated by the Ministry of Corporate Affairs the Company has adopted the IND ASfor the Financial Year commencing from 1st April 2016. The estimates and judgmentsrelating to the Financial Statements are made on a prudent basis so as to reflect in atrue and fair manner the form and substance of transactions and reasonably present theCompany's state of affairs profits and cash flows for the year ended 31st March 2017.
CONSOLIDATED FINANCIAL STATEMENTS :
The Consolidated Financial Statements of the Company are prepared in accordance withrelevant IND AS issued by the Institute of Chartered Accountants of India and forms anintegral part of this Report.
MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisReport.
ACQUISITION OF CEMENT BUSINESS OF RELIANCE INFRASTRUCTURE LIMITED
Pursuant to signing of definitive share purchase agreement with Reliance InfrastructureLimited for acquisition of its entire cement business the Company completed the processof acquisition by acquiring 100% equity shares of Reliance Cement Company Private Limited(RCCPL) on 22nd August 2016. After this acquisition RCCPL became a wholly ownedsubsidiary of Birla Corporation Limited. The acquisition was funded through existing cashreserves and incremental debt.
This acquisition has provided the Company with the ownership of high-quality assetstaking its total capacity to 15.5 MTPA from 10 MTPA strengthening its presence in thehigh-growth Central region. The Company's expansion potential will also be enhancedsignificantly by valuable mineral concessions access to in several States in addition toMadhya Pradesh.
RCCPL has three cement Units an integrated cement plant at Maihar (Madhya Pradesh) andgrinding units at Kundanganj (Uttar Pradesh) and Butibori (Maharashtra) with an aggregatecapacity of 5.58 MTPA of cement and 3.3 MTPA of clinker. With the state of the arttechnology strategically located raw material sources captive coal mine and efficientoperating parameters it has already established the technical capability for producingtop-end quality product. The mining lease at Mukutban will enable the Company to set upclinkerization unit in foreseeable future. Since the take-over of RCCPL considerableefforts has been made by the management for improving its operational efficiencies whichhas led to significant improvement in all parameters across the board. The plants of RCCPLhave started performing at strong operating parameters which are comparable with thebenchmarks in the industry. This has helped the Company achieve EBIDTA in excess of Rs.1100 per ton during the fourth quarter which is among the highest in the industrydespite softness in some of its markets both in terms of volume and realization.
Measures being undertaken by us such as installation of Waste Heat Recovery System anddespatches by rail in its grinding unit in Uttar Pradesh are expected to aid in furtherreduction in cost and increasing volumes.
1.1 CEMENT DIVISION
(a) Industry Structure and Developments :
India is the second largest producer of cement in the world. India's cement industry isa vital part of its economy providing employment to more than a million people directlyor indirectly. Ever since it was deregulated in 1982 the Indian cement industry hasattracted huge investments both from Indian as well as foreign investors.
The country has a lot of potential for development in the infrastructure andconstruction sector and the cement sector is expected to largely benefit from it. India'scement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025. Thehousing sector is the biggest demand driver of cement accounting for about 67 per cent ofthe total consumption in India. The other major consumers of cement include infrastructureat 13 per cent commercial construction at 11 per cent and industrial construction at 9per cent. India has the largest homeless population in the world and the rural housingoffers a huge opportunity. The cement sector is slowly heading for a major consolidationas Greenfield projects are becoming difficult to set up due to increased impediments inareas like availability of limestone mineral concessions land acquisition andenvironmental and operational issues. This has led to consolidation in the cementindustry. Going forward the acquisition space in the industry is expected to gathersteam with organic growth becoming difficult and opportunities arising due to variouscompanies opting to liquidate assets to deleverage. New capacity addition continue to dipfor sixth straight year as players postpone capacity addition in view of the subdueddemand and low capacity utilization. The Industry continues to suffer due to over capacitywith pan India industry capacity utilization hovering around 70%.
(b) Review of Performance : Production of the Company :
The details of production of clinker and cement at various locations of the Companyare as follows :-
| ||2016-17 ||2015-16 ||Change |
| ||(Lac Ts.) ||(Lac Ts.) ||% |
|Clinker production || || || |
|Satna ||25.54 ||28.61 ||(10.73) |
|Chanderia ||26.41 ||22.52 ||17.27 |
|Total ||51.95 ||51.13 ||1.60 |
| ||2016-17 ||2015-16 ||Change |
| ||(Lac Ts.) ||(Lac Ts.) ||% |
|Cement production || || || |
|Satna ||21.47 ||24.27 ||(11.54) |
|Raebareli & Raebareli Hitech ||7.03 ||6.50 ||8.15 |
|Chanderia ||35.45 ||35.92 ||(1.31) |
|Durgapur ||14.84 ||14.70 ||0.95 |
|Total ||78.79 ||81.39 ||(3.19) |
|Blended Cement ||64.20 ||67.43 ||(4.79) |
|% of total cement production ||81.48 ||82.85 ||(1.37) |
Production of Reliance Cement Company Private Limited (wholly owned subsidiary) :
The details of production of clinker and cement of various Units of Reliance CementCompany Private Limited from 22nd August 2016 to 31st March 2017 are as follows :-
| ||(Lac Ts.) |
|Clinker production || |
|Maihar ||17.05 |
|Total ||17.05 |
|Cement production || |
|Maihar ||12.90 |
|Kundanganj ||8.25 |
|Butibori ||1.38 |
|Total ||22.53 |
During the year under review your Company has registered a Reduction of about 3% incement sales on standalone basis. In absolute terms the sale of cement has decreased to78.29 Lac tons compared to 80.36 Lac tons in the previous year. Reliance Cement CompanyPrivate Limited has sold 22.50 Lac tons of cement during the period from 22nd August 2016to 31st March 2017.
Power Plant :
The details of power generated at various plants of the Company are as under :
| ||2016-17 ||2015-16 ||Change |
| ||(Lac Units) ||(Lac Units) ||% |
|Thermal Power Plant : || || || |
|Satna ||1708.73 ||1845.26 ||(7.40) |
|Chanderia ||1981.31 ||1544.98 ||28.24 |
|WHRS : || || || |
|Satna ||635.43 ||860.83 ||(26.18) |
|Chanderia ||447.07 ||333.06 ||33.03 |
|Solar Power: ||27.18 ||29.00 ||(6.27) |
Cost and Profitability :
The profitability of the Company continued to be affected on account of suspension ofnormal mining operations (with blasting) at Chanderia the unit had to outsource limestoneat significantly higher prices. Though the unit raised substantial quantity of limestoneby mechanical means the same was still short of requirement.
The Company was able to maintain the profit during the year despite substantialincrease in borrowing cost and reduction in treasury income due to borrowings anddeployment of cash reserves for acquisition of Reliance Cement Company Private Limited.
This was a result of several initiatives taken by the Company for improving operationalefficiencies in various areas. Use of pet coke in the thermal plant at Chanderia andhigher usage at the kiln at Satna resulted in substantial savings. Alternate fuels wereused at both Satna and Chanderia resulting in reduction of fuel cost. The use of highpurity imported gypsum and higher use of additives such as fly ash and slag reduced thecost of production and improved the quality of cement. Other operational parameters at theplants also improved. All these contributed to better performance by the Cement Division.
Pet coke prices have almost doubled to $85-90 a tonne from $48 a tonne in March 2016.The Company benefited on account of the lower cost of pet coke during the first half ofthe financial year. The operating costs could be brought down as a result of operationalefficiencies a judicious fuel mix and lower fuel prices.
Freight costs another key cost for the industry also increased as railway imposedrailway surcharge and also raised tariffs. However the Company could economise the costof transportation by way of proactive intervention by the Management by optimization oflead distance of despatches and bringing in change in the rail-road mix.
Cement demand and prices :
After a spurt in the first quarter the Cement demand contracted in the second quarter.The core markets that the Company operates in were extensively affected by heavy monsoonswith many areas in Rajasthan and Madhya Pradesh hit by floods. Despite the adversescenario the Company maintained its market share in relevant geographies while improvingnet realization through a slew of initiatives such as geo-mix optimization focus onpremiums and distribution efficiencies through measures such as increasing directdispatches from plants with dedicated GPS-controlled vehicles.
The demand for cement suffered a setback during the third quarter on account ofdemonetization as a large portion of the cement trade in the secondary and tertiary marketparticularly in North and Central India where the operations of the Company areconcentrated were traditionally transacted in cash. The cement prices in February 2017were quoting below the average prices that prevailed in regional markets in October 2016before demonetisation. Towards the end of the fourth quarter the impact of demonetizationwas seen tapering off with the demand as well as the prices showing a rising trend.
The State elections in Uttar Pradesh in March 2017 saw new projects being postponed orput on hold. Construction activities in large projects were impaired by an embargo on sandand aggregates mining in large parts of the State. Owing to low demand prices remaineddepressed in all markets with competition intensifying and large volume playersundercutting on prices. In response to the adverse market conditions the Company on onehand focused on protecting market shares while working on measures to arrest slide inprice realization with a series of marketing and commercial initiatives.
The overall demand for cement improved though marginally during the year on the backof the seventh Pay Commission pay hike and various other policy initiatives announced bythe government.
During April' 2017 Average Pan-India cement prices continued to increase for thirdconsecutive month by 7.5% m-o-m at the fastest pace in last three years. The East Northand Central regions witnessed healthy price increase in the range of 5-7%.
(c) Premium Brand Cement :
(i) Birla Samrat Unique Cement :
Since the introduction of the premium quality Portland Slag Cement (PSC) brand BirlaSamrat UNIQUE in Eastern India in 2011 its market share has been witnessing steadyimprovement. Presented in pilfer and weather-proof packing the finer grains of UNIQUEgive higher compressive strength and larger surface area coverage. It has lower waterabsorption and silica-rich slag ensuring dense and durable concrete.
(ii) Birla Samrat Ultimate Cement :
The fly ash-based premium Portland Pozzolana Cement (PPC) brand Birla Samrat ULTIMATECement introduced in 2014 has received market acceptance in both eastern and centralregions. Based on the Complete Particle Size Distribution (CPSD) technology the"double refined" cement is being marketed in tamper-proof packaging. The productis corrosion-resistant cohesive and has low alkali properties. Trade associates havewelcomed the premium product since it has been catering to the demands of discerningconsumers.
Both UNIQUE and ULTIMATE cements being premium brands have been fetching higherprices than the Company's normal brands contributing to profitability.
(iii) M P Birla Cement CONCRECEM and Multicem PPC:
Keeping in view the rapid growth in infrastructure and projects the Company launchednew-age cement brands M P Birla Cement CONCRECEM (OPC 43 & 53 grades) and MULTICEM(fly ash-based PPC) in March 2017. These products are particularly suitable for largecommercial industrial infrastructural and real estate projects. CONCRECEM has beenengineered to offer strength durability and faster construction time. MULTICEM is aBIS-certified PPC cement specially engineered for infrastructural development. It ismanufactured using the latest cement manufacturing technology and ultra-modern techniques.
(iv) MP Birla Perfect Cement :
Reliance Cement Company Private Limited a wholly owned subsidiary of Birla CorporationLimited started the exercise of rebranding of the Reliance Perfect Cement' brand asMP Birla Perfect Cement' during the fourth quarter. The MP Birla Perfect Cementlaunch was supported by an extensive marketing communication on mass media and at thepoint of sale. A key differentiator was the technical services offered to customersthrough a large fleet of mobile laboratories equipped with latest construction testingequipments. The campaign has been well received in the markets and the transition of brandhas been seamless. The initiative is expected to provide impetus to increase volumes andmaintain the premium pricing of the brand in the trade segment.
(d) Mining operations at Chanderia :
The Mining operations (through blasting) at the Chanderia plant had been suspendedsince August 2011 owing to the Order of Jodhpur High Court (Rajasthan) which waschallenged by the Company before Hon'ble Supreme Court. As a partial relief the SupremeCourt had allowed mining operations beyond 2 kilometers from the Chittorgarh Fort by usingheavy earth moving machinery. The Hon'ble Supreme Court had further directed CentralBuilding Research Institute (CBRI) to submit a report after comprehensive study of allrelevant aspects and facets relating to full-scale mining operations and its impact ifany on the Chittorgarh Fort. The report of CBRI has concluded that vibrations and airpressures induced by mine of Birla Cement Works and adjoining mines are well within safelimits as per national and international standards and there is no damage to the Fort dueto the mining operations. The Company has filed an Interim Application seeking InterimRelief for blasting at the existing working pit. The matter was last heard in the month ofSeptember 2016 and thereafter no further Orders for listing has been passed.
In the meanwhile with a view to increase the mining capacity by mechanical means theCompany has taken measures to install additional equipments. However the process oflearning and stabilizing the operation with the use of new equipments is continuing sincethe process of mechanical mining of limestone is difficult being tried for the first timein India at such scale.
(e) Threats Risks and Concerns :
The sector has witnessed rising input costs such as prices of pet coke and coal whichhave almost doubled since March 2016 while the increase in crude oil prices are alsolikely to lead to an increase in diesel prices. With regard to real estate sector nosignificant turnaround in demand in the near term is visible.
Setting up new cement capacity is becoming more challenging due to tougher mineralconcession acquisition process of auction land acquisition process increased gestationperiod and requirement of several regulatory clearances.
Lack of adequate availability of sand which is a key input for construction incertain parts of the country is one of the major concerns of the Industry which isimpacting demand of cement. Goods and Services Tax (GST) slated to be introduced w.e.f.1st July 2017 is expected to usher in a uniform tax regime which would play a criticalrole in the next level of growth and realise full extent of country's potential. It isestimated that India will gain $15 billion a year by implementing GST. In line with theGovernment's slogan of "One Nation One Tax" the culmination of all indirecttaxes under one GST bracket will facilitate seamless transfer of goods and services acrossthe country create a unified national market and help to mitigate the cascading effectsof taxes leading to reduced prices of the goods and services to the end users. Howeverthe high taxes administrative and compliance burden continues to remain a major concernfor cement industry cement along with steel constitute important raw materials forinfrastructure and real estate sector. As per the recent announcements made by GSTCouncil while the rate for Cement would be taxed at 28% the rate for steel has been keptlower at 18%. Currently there is no customs duty on cement import which is an area ofconcern as this provides encouragement for import of cement which impacts domesticindustry and adds to the demand and supply mismatch.
The manufacture of cement is an energy intensive process requiring large quantities ofthermal and electrical energy. Coal and pet coke are the principal fuels used by theIndian cement industry to produce thermal energy. The Company requires substantialquantity of coal and pet coke to meet the requirements of its kilns and captive powerplants. Linkage coal has continued to be in short supply leaving the Company to sourceits requirements at higher prices from the domestic open market and from imports. Inrecent years pet coke emerged as a viable substitute for coal on account of attractiveprices and supply. There is a likelihood that the prices of both coal and pet coke wouldincrease significantly. Availability of sand grit & bricks is a major area ofconcern. The Government Policies in this regard may also affect the construction activity.
(f) Opportunities and Outlook :
Various schemes of the Government such as assignment of infrastructure status toaffordable housing projects increased allocation to rural low-cost housing interestsubvention in housing loans up to certain limits in line with Government's aim to providehousing for all by 2022 are all expected to boost cement demand.
India's potential in infrastructure is vast and cement plays a vital role in growth anddevelopment of the nation. Cement companies are bullish about demand on account of thegovernment's focus on infrastructure and housing sector in the Union Budget. It isbelieved that a 38 per cent and 23 per cent increase in the allocation of funds towardsthe housing sector under Pradhan Mantri Awas Yojna and spending of the Ministry of RoadTransport and Highways to Rs. 230 billion and Rs. 649 billion respectively wouldincrease cement demand in Financial Year 2017-18. Cement comprised 30 per cent of the costof laying a road and the budgetary allocation would translate into a Rs. 194.70 billionopportunity for the sector.
In addition higher allocation to MNEGRA Scheme will increase rural income and have acatalytic effect on rural consumption. Measures such as increased planned outlay onrailways and Metro Rail increase in farm credit to indirectly support demand from ruralhousing infrastructure led investments and pick-up in housing (supported by interestincentives and industry status to affordable housing) will help the cement industry as itwill lead to increased and sustained levels of cement consumption.
If financial year 2017-18 experiences a normal monsoon GDP growth is likely to reboundin the second half of the year. Better liquidity and improves tax collections will enhancegovernment's ability to spend on infrastructure and other development projects leading tofaster growth. The overall prices of cement has also recently moved up to thepre-demonetization level following successive hikes across the western eastern andsouthern markets even as rates in the north have recently remained steady. This is onaccount of improvement in demand after an unexpected fall towards the end of 2016.
With continuing operation excellence programs combined with its segmented marketingand value added special cements products and building solutions the company is wellplaced to benefit from the plans being initiated by the Government. Increase in customerengagement through innovative marketing schemes (like Trade Loyalty Programme) andenhanced technical support activities are beginning to show results both in terms ofchannel preference and price positioning of the Company's brands in the market.
Demand growth is expected to accelerate in the medium term to 6-7% through 2020 drivenby numerous government led initiatives as per a leading research agency report.
1.2 JUTE DIVISION
(a) Industry Structure and Developments :
Jute Industry is concentrated in the State of West Bengal. It plays a vital role in theeconomy of the state. Jute Industry supports over 200000 workers and over 3 million farmfamilies. Jute Industry is principally dependent on the orders from the government foodgrains procuring agencies and over the previous few years dependence on the governmentorders is increasing and now it accounts for about 70% of its annual production. StandingAdvisory Committee constituted under Jute Packaging Materials (Compulsory use in PackingCommodities) Act 1987 in its latest meeting have decided to reduce compulsory use of jutebags for packaging of foodgrains each year by 5% so as to reach 50% norms by 2024-25. Thisrecommendation if accepted by Cabinet will result in substantial loss of demand of juteproducts unless alternate usage of jute product emerges.
(b) Performance :
Jute Division has reported excellent results during the year. It has reported highestever turnover and profit. The improved performance of the Jute Division is attributed tothe following factors : i) large investment made in recent past for modernization ii)continual improvement in productivity iii) emphasis on increasing share of value addedproduct market selection iv) managing raw jute stock in times of wide fluctuating marketprice etc.
|Production & Despatch || || || |
|PARTICULARS ||2016-17 ||2015-16 ||CHANGE % |
|Production of Jute ||37367 ||38024 ||-1.72% |
|Goods (MT) || || || |
|Dispatches of Jute || || || |
|Goods (MT) || || || |
|a) Domestic ||31753.12 ||34957.21 ||-9.17% |
|b) Export ||4691.58 ||4335.95 ||8.20% |
Since December 2015 the specification of B Twill bags has been changed and bag weighthas been reduced from 665 gram/bag to 580 gram/bag. Production during the current year islower due to above said reason because with same man and machine resource is required formanufacturing 580 grams bags as is required for 665 grams bags.
|Sales || || |
|PARTICULAR ||2016-17 ||2015-16 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Net Sales || || |
|a) Domestic ||27901.64 ||27253.42 |
|b) Export ||4364.81 ||3666.69 |
|FOB Value ||4266.29 ||3578.09 |
(c) Opportunities and Threats Risks and Concern :
Duty free imports from Bangladesh and Nepal have been a constant threat to the IndianJute Industry. However Anti-Dumping Duty (ADD) was imposed on jute products (namely JuteYarn/Twine Hessian fabric and Jute sacking bags) originating from these countries w.e.f5th January 2017. As a result imports of these products have reduced substantially.However the said ADD is being circumvented by export of sacking clothes which aresubsequently converted to bags.
Based on the current level of import the industry has estimated that this is likely togenerate up to 2 lacs MT of additional demand for jute goods to be met by the Indian juteindustry.
Jute manufacturing is a labour intensive process and requires huge labour force. Juteindustry was always dependent on labour availability from nearby states. Now migrationfrom the other states has virtually dried due to employment availability locally in thosestates. Further local people are getting alternate employment in lighter job likeembroidery masonry etc. Difficulty in getting worker for running the mills is resultingin lower capacity utilization causing increase in cost of production per unit.
(d) Outlook :
The increase in cost of jute bags has further widened the gap between prices ofsynthetic bags and jute bags. If this trend continues there is a strong concern thatpacking of many more commodities will shift to synthetic packaging material. Loss oftraditional market of jute to synthetic fabric is likely to cause major demand problem inthe industry.
However the Division is confident that the efforts and investments made in recent pastand continual emphasis on modernization and product diversification will help it to sailthrough the troubled times in an efficient manner.
1.3 VINDHYACHAL STEEL FOUNDRY
Steel Foundry produces iron & steel castings primarily for internal consumption.The total production of castings during the year has been 913 Ts. as against 1083 Ts. inthe previous year. The total sale of castings during the year was 824 Ts. (including 730Ts. inter departmental transfer) as against 1037 Ts. (including 884 Ts. inter departmentaltransfer) in the previous year.
Satna & Raebareli :
Projects for development of storage and transportation of alternative fuel commissionedin Satna Unit during the year.
Secondary air system was installed at Boiler No. 2 of 27 MW Thermal PowerProject at Satna.
At Satna unit Air Cooled Condenser system at 27 MW is expected to commission in2017-18.
Secondary crusher at Raw Ball Mill circuit at Birla Vikas Cement Satna isexpected to be commissioned in 2017-18.
Modification of Vertical Raw Mill (VRM) completed at Raebareli Unit during theyear.
Modification of Cement Mill Circuit was completed during the year.
Conventional Luminaries were replaced by LED lights.
Alternate fuel firing system was completed at Chanderia Cement Works.
Carbon Black feeding system feeding to coal VRM was installed at ChanderiaCement Works.
3 nos. hanging type truck loading machine were installed at Chanderia CementWorks.
Cross Belt analyzer of outsourcing Limestone completed during the year.
Various projects to meet the emission norms and for reduction of NOX will becompleted by March 2018.
Upgradation of Coal Mill and installation of Flyash at Steel Silo were completedduring the year at Durgapur Cement Works.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 as requiredunder Section 92 of the Companies Act 2013 is marked as "Annexure B"which is annexed hereto and forms part of the Directors' Report.
COMPOSITION NUMBER AND DATES OF MEETINGS OF THE BOARD AND COMMITTEES
The details of the composition number and dates of meetings of the Board andCommittees held during the financial year 2016-17 forms part of the Corporate GovernanceReport. The number of meetings attended by each Director during the financial year 2016-17also forms part of the Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act 2013 your Directors state that:(a) in the preparation of the annual accounts for the year ended 31st March 2017 theapplicable accounting standards have been followed with proper explanation relating tomaterial departures if any; (b) the accounting policies adopted in the preparation of theannual accounts have been applied consistently except as otherwise stated in the Notes toFinancial Statements and reasonable and prudent judgments and estimates have been made soas to give a true and fair view of the state of affairs of the Company at the end of theFinancial Year 2016-17 and of the profit for the year ended 31st March 2017; (c) properand sufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; (d) theannual accounts for the year ended 31st March 2017 have been prepared on a going concernbasis; (e) that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively; (f) that systems to ensurecompliance with the provisions of all applicable laws were in place and were adequate andoperating effectively.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
CRISIL has rated short term debt including Commercial Paper (CP) to the extent of Rs.300 crores as "A1+". Long Term Non-Convertible Debentures of the Company of Rs.280 crores has been rated as "AA" (Outlook: Negative) by CRISIL.
ICRA has assigned rating of "AA" (Outlook: Stable) for Long TermNon-Convertible Debentures of the Company of Rs. 400 crores. Further Credit Analysis andResearch Limited (CARE) has also rated "CARE AA" (Outlook : Stable) rating forthe Company's Long Term Bank facilities and "CARE A1+" (Outlook: Stable) for theCompany's Short Term Bank facilities aggregating to Rs. 1898 crores. The rating Committeeof CARE has assigned "CARE AA" (Outlook : Stable) for the outstandingNon-Convertible Debentures of Rs. 680 crores.
During the year the Company has repaid Secured Redeemable Non-Convertible Debenturesaggregating to Rs. 120 crores and has further raised Secured Redeemable Non-ConvertibleDebentures of Rs. 400 crores on private placement basis for the purpose of acquisition ofReliance Cement Company Private Limited.
Further the Company efficiently manages its surplus funds by investing in highly rateddebt securities fixed deposits and debt schemes of mutual funds considering safetyliquidity and return. The Company continuously undertakes review of liability managementso as to reduce cost.
The Company has complied with the Corporate Governance Code as stipulated under theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A separatesection on Corporate Governance along with certificate from the auditors confirming thecompliance of conditions of Corporate Goverance is annexed and forms part of the AnnualReport.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties during the financial year were on anarm's length basis and were in the ordinary course of business and the provisions ofSection 188 of the Companies Act 2013 are not attracted. 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 a potential conflict with the interest of the Company at large. Accordingly thedisclosure required under Section 134(3)(h) of the Act read with Rule 8(2) of theCompanies (Accounts) Rules 2014 in Form AOC-2 is not applicable to your Company.
All Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which areof a foreseen and repetitive nature. The transactions entered into pursuant to the omnibusapproval so granted along with a statement giving details of all related partytransactions are placed before the Audit Committee.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website and may be accessed at the link http:// www.birlacorporation.com/investors/related-party-transactions-policy.pdf.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
As required under provisions of the Companies Act 2013 and Rule 8(3) of Companies(Accounts) Rules 2014 details relating to Conservation of Energy Technology Absorptionand Foreign Exchange Earnings and Outgo are given in the "Annexure - C"which is annexed hereto and forms part of the Directors' Report.
Risk management is the process of identification assessment and prioritisation ofrisks followed by coordinated efforts to minimise monitor and mitigate/control theprobability and / or impact of unfortunate events or to maximise the realisation ofopportunities. The Company has laid a comprehensive Risk Assessment and MinimizationProcedure which is reviewed by the Audit Committee and approved by the Board from time totime. These procedures are reviewed to ensure that executive management controls riskthrough means of a properly defined framework. The major risks have been identified by theCompany and its mitigation process/measures have been formulated in the areas such asbusiness location quality market litigation logistics project execution financialhuman resources environment and statutory compliance.
AWARDS & RECOGNITIONS
During the year Company's Cement Unit: Chanderia Cement Works has received"Certificate of Excellence" in maintaining harmonious employer and employeerelation effective productivity levels and Corporate Social Responsibility by theEmployers' Association of Rajasthan Jaipur.
OCCUPATIONAL HEALTH & SAFETY
Employees of the Company play an important role in the industrial operation andcompany's growth and are considered as the most valuable assets and their personal andprofessional development along with their robust health and safety is one of the toppriorities of the organization. The Company is complying with all the Statutory Provisionsas required under the Factories Act. Competent persons carry out compulsory testing /examination of lifting tools pressure vessels cranes safety belts etc. as per statutoryrequirement. To get good results in the accident prevention we have included safetyprogrammes like investigation & analysis of all serious and fatal accidentsrecommendations / remedial measures to prevent similar accidents. Near- miss situation /incident with no injury is accorded serious consideration for planning of preventivemeasures. As a part of safety measures we are ensuring almost cent percent use ofPersonal Protective Equipment by developing voluntary safety culture. Various periodicalhealth check up programmes are conducted from time to time so as to monitor health hazardsif any.
Safety posters slogans are widely displayed in the conspicuous places at the factoryincluding work places canteen and plant gates to continuously remind everyone about safeworking practices and environment so as to inculcate a culture of safety amongst theworkers. Safety day / week celebration is being organized every year with a view to arouseand motivate safety consciousness amongst the employees.
CORPORATE SOCIAL RESPONSIBILITY
In line with the provisions of the Companies Act 2013 the Company has framed itsCorporate Social Responsibility (CSR) policy for the development of programmes andprojects for the benefit of weaker sections of the society and the same has been approvedby the CSR Committee and the Board of Directors of the Company. The Corporate SocialResponsibility (CSR) policy of the Company provides a road map for its CSR activities. Thepurpose of CSR Policy is to devise an appropriate strategy and focus its CSR initiativesand lay down the broad principles on the basis of which the Company will fulfill its CSRobjectives. As per the said policy the Company continues the strategy of discharging partof its CSR responsibilities related to social service through various trusts/ societiesin addition to its own initiatives and donations made to other non-governmentorganizations.
The CSR Policy has been uploaded on the Company's website and may be accessed at thelink http://www.birlacorporation.com/ investors/csr-policy.pdf.
Pursuant to the requirement under Section 135 of the Companies Act 2013 and Rules madethereunder a Report on CSR activities and initiatives taken during the year in theprescribed format is given in "Annexure - D" which is annexed hereto andforms part of the Directors' Report. The Company is actively associated with varioussocial and philanthropic activities undertaken on its own as well as by different Trustsand Societies. As a constructive partner in the communities in which it operates theCompany has been taking concrete action to realize its social responsibility objective.The Company has been playing a pro-active role in the socioeconomic growth and hascontributed to all spheres ranging from health education empowerment of women ruralinfrastructure development environment conservation etc. In the past nine decades theCompany has supported innumerable social initiatives in India touching the lives ofthousands of people positively by supporting environmental and health-care projects andsocial cultural and educational programs.
Health Educational and Social Initiatives :
The Company provides active assistance financial as well as managerial to varioushospitals and educational and philanthropic institutions set up by trusts and societies.The Company is financially and otherwise contributing to M/s Madhav Prasad PriyamvadaBirla Apex Charitable Trust for construction of a 200 beds multi speciality Hospitalnamely "M. P. BIRLA HOSPITAL & RESEARCH CENTRE" which is situated near thecement plant of the Company at Chittorgarh Rajasthan. The total built up area of thehospital and housing building is approximately 2.00 lacs Sq. ft. and has basement groundand 4 floors. The hospital has a separate 4 floors residential building for the residenceof doctors and nurses who will be engaged in hospital duty.
The agencies engaged for Civil Electricals Plumbing & Fire Fighting HVAC (AirConditioners) Elevators DG Sets UPS Medical Gas Pipe Line Systems Central SterileServices Department Modular Operation Theatre Solar Water Heater and other such agenciesrequired for the construction of the Hospital are working simultaneously andsatisfactorily. The Interior & Furniture Contractors are also doing their job alongwith other agencies engaged for the project. Almost 75% of the construction and finishingwork have been completed.
Initiatives are being taken to invite quotations for Equipment for the Hospital.Measures are being taken for appointment of Doctors Technicians and paramedical Staff. Itis expected that the hospital shall start operation in the later half of 2017.
With a capacity of up to 200 beds the hospital will initially commence operations with100 beds and would have in phases diagnostic and treatment facilities for departmentslike Emergency Imaging Pathology Pharmacy Blood Bank OPD Operation Theatre ICCUBurn Unit Orthopaedics Gynaecology & Obstetrics NICU & Child Care UrologyNephrology Cardiology Neurology Dental ENT Dermatology Ophthalmology amongst others.
This apart the CSR activities undertaken include:
01] Health care activities :
The Company supports various social development activities in the area of healthcare byway of providing free medical check up and administer free treatment and medicines for theneedy people organised free eye camps in rural areas including eye surgery in ruralareas organised health awareness camps wellness clinic stress management camp carriedout free treatment of Asthma and Cancer provided 1000 nos. baby kits for newly bornbabies to improve health hygiene and reducing death rate. Doctors team from Company'sdispensary regularly visit nearby villages at our plant every month for medical check upfree treatment and medicines.
02] Education :
The Company provides financial and infrastructural support to the schools located closeto the Company's plants by way of repairing and renovating the buildings providingfurniture wherever required. School dresses winter clothes books and stationery schoolbags and other materials are also provided free of cost to the needy students. The Companyalso provides scholarships and conducts other educational programme including vocationaland summer training to management engineering and other students on regular basis.Computer training is also being provided to the students. Students from variousinstitutions are allowed to visit the plant and study the system as a part of theireducation.
03] Empowerment of women :
With a view to bring advancement development and empowerment of women and also toelevate their economic condition the Company has taken various initiatives to promoteskill building and income generating schemes for women in surrounding villages of factoryand mining area. The initiatives include income generating activities such as SewingTraining Programmes' and educating them about the stitching and distribution of sewingmachines free of cost. Necessary training and support is provided to women self-helpgroups under the projects to make them self reliant. The Company also organises RuralWomen Sports Meet in which women of various villages surrounding Company's mining areaparticipate.
04] Animal welfare and livestock development :
The Company launched Livestock development and improved agricultural programme with thesupport of M/s. BAIF Development Research Foundation Pune in the villages nearby themining areas of the Company. The programme aims to provide livelihood support and improvesocioeconomic condition of the local people and initiate various rural developmentprojects e.g. to help in developing high yielding breeds of cattle and small ruminantssuch as goats and sheep improve agricultural practices by providing good quality of seedsand training on best practices to the farmers by agriculture specialists. Promotion oforganic vegetable and seasonal crops in our mining areas was initiated. Use ofagricultural waste in terms of energy conservation and renewable energy development wereundertaken. Several sanitation and hygiene programme are organised in schools and villagesnearby our factory and mining areas.
05] Promotion of rural sports :
The Company provides financial support in organizing various State level sports meetincluding State level Kabaddi. The Company also provides sports material to the prisonersof Central Jail.
06] Other Social Initiatives :
The Company undertakes other social welfare activities and rural development projectsincluding providing drinking water facility water cooler in villages near its plantcontribution to mass marriages repairing of hand pumps and submersible pumps renovationof temple and public parks deepening and cleaning of ponds white washing in hospitalproviding ambulance construction of Stop Dam. The Company has made contribution towardsvarious art and cultural activities including that of Meera Mahotsav and Dashera Mela.Also contributed installing solar lights and arranged proper lightening facilities on theroads of villages. The Company also financially supported construction activitiesincluding those for community hall boundary wall and rooms for villagers.
07] Environmental sustainability :
The Company believes in sustainable development by promoting clean and pollution freeenvironment and making the environment eco friendly. Accordingly various initiatives havebeen taken for Clean Development Mechanism (CDM) and pollution prevention. Sustainabledevelopment and environmental dimension forms an integral part of the Company's businessdecisions. The Company has started using Alternative Fuel and Raw Material Feeding System(AFRS) for higher use of alternative fuel on continuous basis at its clinker manufacturingunits. This pioneering move had ensured the availability of alternative fuel throughoutthe year and has resulted in reduction of fuel cost and also helped in reducing the carbonfootprint.
Extensive eco friendly plantations and beautifications of plant and residentialcolonies have been undertaken. Regular inspection and maintenance of pollution equipmentare done and emission levels are maintained within the statutory limits. Measures havebeen taken during the year for further improving the environmental performance such asinstallation of Bag Dust Collectors and new water spray system for controlling dust &NOX gas analyzer in kiln stack has been installed emission. SO2 for closemonitoring. Sheds are constructed for maintaining good house keeping inside the plantpremises. Measures have also been taken for conservation of limestone reserves. Watertankers pumps rain guns and water spray system have been provided for pressurized sprayin order to control dust pollution around mining area and roads. The Waste Heat RecoverySystem at Satna and Chanderia plants of the Company uses the waste hot gases coming out ofthe preheater and clinker cooler to generate substantial power thereby reducing GreenHouse Gas (GHG) emissions into the atmosphere. Grinding aid is introduced in all the unitsto improve consumption of Fly Ash and Slag. Further to protect the environment theCompany has consumed 10.15 lac tonnes of Fly ash during the year 2016-17 at various cementplants of the Company. This has resulted in reduction of clinker usage which in turnreduced GHG emissions at our plants without compromising on the quality and strength ofcement.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as required under Regulation 34(2) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms an integral partof this Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Retirement by Rotation
Shri Harsh V. Lodha (DIN: 00394094) Chairman retires from the Board by rotation andbeing eligible offers himself for reappointment. The above is subject to the approval ofthe shareholders in the ensuing Annual General Meeting of the Company.
Key Managerial Personnel (KMP)
The following are the Key Managerial Personnel of the Company:
1. Shri B.R. Nahar: Managing Director
2. Shri P. Majumdar: Wholetime Director designated as Chief Management Advisor
3. Shri A. Saraogi: Chief Financial Officer
4. Shri G. Sharma: Company Secretary
DECLARATION BY INDEPENDENT DIRECTORS
Shri Vikram Swarup Shri Anand Bordia Shri Brij Behari Tandon Shri Dhruba NarayanGhosh Dr. Deepak Nayyar and Smt. Shailaja Chandra are Independent Directors on the Boardof the Company. The Independent Directors hold office for a fixed term of five years andare not liable to retire by rotation.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Board of Directors of the Company based on the recommendation of the Nominationand Remuneration Committee has formulated a Remuneration Policy. The remuneration policyof the Company inter alia includes the aims and objectives principles of remunerationguidelines for remuneration to Executive Directors and Non-Executive Directors fixed andvariable components in the remuneration package criteria for identification of the Boardmembers and appointment of senior management. The criteria for identification of the BoardMembers including those for determining qualification positive attributes independenceetc. are summarily given hereunder:
The Board member shall possess appropriate skills qualificationcharacteristics and experience. The objective is to have a Board with diverse backgroundand experience in business government academics technology human resources socialresponsibilities finance law etc. and in such other areas as may be considered relevantor desirable to conduct the Company's business in a holistic manner.
Independent director shall be person of integrity and possess expertise andexperience and/or someone who the Committee/Board believes could contribute to the growth/philosophy/strategy of the Company.
In evaluating the suitability of individual Board members the Committee takesinto account many factors including general understanding of the Company's businessdynamics global business social perspective educational and professional background andpersonal achievements.
Director should possess high level of personal and professional ethicsintegrity and values. He should be able to balance the legitimate interest and concerns ofall the Company's stakeholders in arriving at decisions rather than advancing theinterests of a particular constituency.
Director must be willing to devote sufficient time and energy in carrying outtheir duties and responsibilities effectively. He must have the aptitude to criticallyevaluate management's working as part of a team in an environment of collegiality andtrust.
The Committee evaluates each individual with the objective of having a groupthat best enables the success of the Company's business and achieve its objectives.
The Board has carried out an annual evaluation of its own performance the Directorsindividually as well as the evaluation of the functioning of various Committees. TheIndependent Directors also carried out the evaluation of the Chairman and theNon-Independent Directors.
CRITERIA FOR EVALUATION OF DIRECTORS
For the purpose of proper evaluation the Directors of the company have been dividedinto 3 (three) categories i.e. Independent Non-Independent & Non-Executive andExecutive.
The criteria for evaluation includes factors such as engagement strategic planning andvision team spirit and consensus building effective leadership domain knowledgemanagement qualities team work abilities result/ achievements understanding andawareness motivation/ commitment/ diligence integrity/ethics/ values andopenness/receptivity.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
During the year under review Reliance Cement Company Private Limited (RCCPL) hasbecome a wholly owned material subsidiary of the Company w.e.f. 22nd August 2016. As on31st March 2017 the Company is having 7 (seven) subsidiary companies along with 2 (two)associate companies.
Since the acquisition of RCCPL on 22nd August 2016 considerable efforts have beenmade for improving the operational efficiencies of RCCPL. The plants of RCCPL have startedperforming at strong operating parameters which are comparable with the benchmarks in theindustry. Measures are being taken to further improve operational efficiencies whichinclude installation of Waste Heat Recovery System (WHRS) and removal of infrastructuralbottlenecks. This will enable the Company obtain greater synergy benefits. The threesubsidiary companies namely Thiruvaiyaru Industries Limited Birla North East CementLimited and Birla Corporation Cement Manufacturing PLC Ethiopia are under the process ofvoluntary winding up. In view of the aforesaid these subsidiaries have not beenconsidered in preparing the consolidated Balance Sheet.
No company has become a joint venture during the financial year 2016-17.
Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of the Companies(Accounts) Rules 2014 a statement containing salient features of the financialstatements of Subsidiaries/Associate Companies/Joint Ventures is given in Form AOC-1forming part of the consolidated financial statement and hence not repeated here for thesake of brevity.
During the year under review the Company has not accepted deposits from the publicfalling within the ambit of Section 73 of the Companies Act 2013 and the Rules framedthereunder.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS COURTS ANDTRIBUNALS
No significant and material order has been passed by the regulators courts tribunalsimpacting the going concern status and company's operations in future.
INTERNAL CONTROL AND SYSTEMS
The Company has adequate internal control procedures commensurate with its size andnature of business. The objective of these procedures is to ensure efficient use andprotection of the Company's resources accuracy in financial reporting and due complianceof statutes and corporate policies and procedures. Internal Audit is conductedperiodically across all locations by firms of Chartered Accountants who verify and reporton the efficiency and effectiveness of internal controls. The adequacy of internal controlsystems are reviewed by the Audit Committee of the Board in its periodical meetings.
INTERNAL FINANCIAL CONTROL SYSTEM
The Company has a robust and comprehensive Internal Financial Control systemcommensurate with the size scale and complexity of its operations. The system encompassesthe major processes to ensure reliability of financial reporting compliance withpolicies procedures laws and regulations safeguarding of assets and economical andefficient use of resources. The policies and procedures adopted by the company ensures theorderly and efficient conduct of its business and adherence to the company's policiesprevention and detection of frauds and errors accuracy and completeness of the recordsand the timely preparation of reliable financial information. The Internal auditors andthe Management Audit Department continuously monitors the efficacy of Internal FinancialControl system with the objective of providing to the Audit Committee and the Board ofDirectors an independent objective and reasonable assurance on the adequacy andeffectiveness of the organisation's risk management with regard to the Internal FinancialControl system.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has framed a Vigil Mechanism/Whistle Blower Policy to deal with unethicalbehaviour actual or suspected fraud or violation of the company's code of conduct orethics policy if any. The Vigil Mechanism/Whistle Blower Policy has also been uploaded onthe website of the Company.
DETAILS RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND EMPLOYEES
Disclosure 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 is marked as "Annexure E" which is annexed hereto and forms part of the Directors' Report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of the Companies Act 2013 and Rule 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementcomprising the names of top 10 (ten) employees in terms of remuneration drawn and everypersons employed throughout the year who were in receipt of remuneration exceeding theprescribed limit forms an integral part of Directors' Report.
The above Annexure is not being sent along with this Annual Report to the Members ofthe Company in line with the provision of Section 136 of the Companies Act 2013. Memberswho are interested in obtaining these particulars may write to the Company Secretary atthe Registered Office of the Company. The aforesaid Annexure is also available forinspection by Members at the Registered Office of the Company 21 days before and up tothe date of the ensuing Annual General Meeting during the business hours on working days.
HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS
Human Resource functions in the organization has seen a paradigm shift and evolved toembody modern day practices with proper use of technology and automation. This has had aprofound impact on the morale and motivation of the employees who are the prime-movers.Thus the symbiotic relationship of the employees and the management is leading towardstransformation of the organization.
There is a well-calibrated reward and recognition mechanism bringing in meritocracy.Learning and development initiative for employees are greatly emphasized to enable allround good performance by individuals.
Encouraging cordial working relation and maintaining good industrial relations havebeen the philosophy and endeavour of the HR Department. On the whole industrial relationscenario has been good. Statutory compliances related to labour laws have been followedwith due emphasis.
The Company had 5978 permanent employees on its rolls at the close of business hours on31st March 2017. Industrial relations continued to remain cordial throughout the year atall the units. Suspension of Operation continues at Soorah Jute Mills Auto Trim DivisionBirlapur and at Birla Vinoleum Birlapur. Workers of Auto Trim Division at BirlapurChakan Gurgaon and Birla Vinoleum at Birlapur have availed separation.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
As required by the Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013 the Company has formulated and implemented a policy onprevention of sexual harassment at the workplace with a mechanism of lodging complaints.During the year no complaints were reported to the Board.
AUDITORS & AUDITORS' REPORT
Statutory Auditor :
Pursuant to the provisions of Section 139 of the Companies Act 2013 and Rules madethereunder the term of office of Messrs H.P Khandelwal & Co. Chartered Accountantsthe Statutory Auditors of the Company will conclude from the conclusion of the ensuingAnnual General Meeting (AGM) of the Company. The Board of Directors places on record itsappreciation to the services rendered by Messrs H.P Khandelwal & Co. as StatutoryAuditors of the Company. Subject to the approval of the Members the Board of Directors ofthe Company has recommended the appointment of Messrs. V. Sankar Aiyar & Co.Chartered Accountants (Firm Registration No.109208W) as Statutory Auditors of the Companyfor a term of 5 consecutive years from the conclusion of the ensuing AGM till theconclusion of the 102nd AGM to be held in 2022 subject to ratification of theirappointment by Members at every subsequent AGM till the conclusion of their tenure. TheCompany has received written consent and certificate of eligibility in accordance withSections 139 141 and other applicable provisions of the Companies Act 2013 and Rulesmade thereunder (including any statutory modification(s) or re-enactment(s) thereof forthe time being in force) from Messrs. V. Sankar Aiyar & Co. Further Messrs. V. SankarAiyar & Co. Chartered Accountants have confirmed that they hold a valid certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India asrequired under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. Accordingly the Board recommends the resolution in relation to appointment ofStatutory Auditors for the approval by the shareholders of the Company. There is no auditqualification for the year under review.
Cost Auditors :
The Board of Directors on the recommendation of the Audit Committee appointed M/s.Shome & Banerjee (Firm Registration No. 000001) Cost Accountant as the CostAuditors of the Company for the financial year 2017-18 for auditing the cost recordsrelating to Cement Jute Goods and Steel products manufactured by the Company. Theremuneration proposed to be paid to the Cost Auditor is subject to ratification by theshareholders of the Company at the ensuing AGM.
M/s. Shome & Banerjee has confirmed that they are free from any disqualificationsspecified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) andall other applicable provisions of the Companies Act 2013 and their appointment meets therequirements of Section 141(3)(g) of the Companies Act 2013. They have further confirmedtheir independent status and arm's length relationship with the Company. The Board ofDirectors places on record its appreciation to the services rendered by Shri SomnathMukherjee Cost Accountant who were Cost Auditor of the Company for the financial year2016-17.
The Company submits its Cost Audit Report with the Ministry of Corporate Affairs withinthe stipulated time period.
Secretarial Auditor :
The Board had appointed Ms. Mamta Binani Practising Company Secretary to conductSecretarial Audit of the Company for the Financial Year 2016-17. The Secretarial AuditReport for the Financial Year ended 31st March 2017 is annexed herewith and marked as"Annexure - F". The Report is self-explanatory and do not call for anycomments.
None of the Auditors of the Company have reported any fraud as specified under thesecond proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force).
Statements in this Report particularly those which relate to Management Discussion& Analysis describing the Company's objectives projections estimates expectationsor predictions may be forward looking statements' within the meaning of applicablelaws or regulations. Actual results could however differ materially from those expressedor implied. Important factors that could make a difference to the Company's operationsinclude global and domestic demand-supply conditions finished goods prices raw materialsand fuels cost & availability transportation costs changes in Government regulationsand tax structure economic developments within India and the countries with which theCompany has business contacts and other factors such as litigation and industrialrelations.
We wish to place on record our appreciation for the continued assistance andco-operation extended to the Company by the Government of India State GovernmentsFinancial Institutions and Banks Dealers and Customers Shareholders and to all otherswho are continuing their assistance to the Company.
| ||For and on behalf of the Board of Directors |
| ||Harsh V. Lodha ||Bachh Raj Nahar |
| ||Chairman ||Managing Director |
|Kolkata ||(DIN : 003940943 ||3DIN : 000498953 |
|Dated the 26th day of May 2017 || |
ANNEXURE TO DIRECTORS' REPORT
ANNEXURE A' DIVIDEND DISTRIBUTION POLICY
In terms of Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 (Listing Regulations')the Company is required to formulate a Dividend Distribution Policy which shall bedisclosed in its Annual Report and on its website.
To comply with the above requirement and with an endeavor to maintain a consistentapproach to dividend pay-out plans the Board of Directors (Board') of BirlaCorporation Limited (the Company') adopts this Dividend Distribution Policy(Policy').
The objective of this Policy is to :
(i) specify the parameters (including internal and external factors) that shall beconsidered while declaring the dividend;
(ii) lay down the circumstances under which the shareholders of the Company may or maynot expect dividend; and
(iii) provide for the manner of utilization of retained earnings.
The Policy shall become effective from the date of its adoption by the Board i.e. 8thFebruary 2017.
PARAMETERS/ FACTORS AFFECTING DIVIDEND DECLARATION :
The Board of Directors of the Company shall inter alia consider the followingParameters for recommendation / declaration of Dividend:
External Factors :
Macroeconomic conditions: In the event of uncertain or recessionaryeconomic and business conditions the Board may consider retaining a larger part of theprofits to have sufficient reserves to absorb unforeseen circumstances;
Statutory requirements: Statutory requirements regulatory conditions orrestrictions as applicable including tax laws the Companies Act 2013 and SEBIregulations etc;
Agreements with Lending Institutions: The Board may consider protectivecovenants in a bond indenture or loan agreement that may include leverage limits &restrictions on payment of cash dividends in order to preserve the Company's ability toservice its debt;
Capital Markets: In favourable market scenarios the Board may considerliberal payout. However it may resort to a conservative dividend pay-out in case ofunfavourable market conditions.
Taxation Policy: The tax policy of the country may also influence thedividend policy of the Company. The rate of tax directly influences the amount of profitsavailable to the Company for declaring dividends.
Any other factor as may be deemed fit by the Board.
Internal Factors :
Apart from the various external factors the Board shall take into account variousinternal factors including the financial parameters while declaring dividend which interalia will include :
Financial performance including profits earned (standalone) availabledistributable reserves etc;
Impact of dividend payout on Company's return on equity while simultaneouslymaintaining prudent and reasonably conservative leveraging in every respect e.g. Interestcoverage DSCR (Debt Service Coverage Ratio) Debt: EBITDA and Debt: Equity includingmaintaining a targeted rating domestically and internationally;
Alternate usage of cash viz. acquisition/Investment opportunities or capitalexpenditures and resources to fund such opportunities/ expenditures in order to generatesignificantly higher returns for shareholders;
Leverage profile liabilities and liquidity position of the Company;
Fund requirement for contingencies and unforeseen events with financialimplications;
Past Dividend trend including Interim dividend paid if any; and
Any other factor as deemed fit by the Board.
CIRCUMSTANCES UNDER WHICH THE SHAREHOLDERS MAY OR MAY NOT EXPECT DIVIDEND
The circumstances under which shareholders may not expect dividend/or when the dividendcould not be declared by the Company shall include but are not limited to the following:
The Company is in higher need of funds for acquisition/ diversification/expansion/ investment opportunities/ deleveraging or capital expenditures;
The Company has incurred losses or in the stage of inadequacy of profits.
Significantly higher working capital requirements adversely impacting free cashflow;
Due to operation of any law in force;
The Shareholders of the Company may expect dividend only if the Company is havingsurplus funds after providing for all the expenses as may be statutorily required undervarious legislations applicable to the Company.
In addition to the above the Board of Directors of the Company may also considerdeclaration of any special dividend on special occasions as and when they may deem fitsubject to the provisions of the Companies Act 2013 and rules made thereunder and otherrelevant requirements if any.
Further the Board may also take into consideration such other circumstances as it mayin its absolute discretion think fit.
UTILIZATION OF RETAINED EARNING
The Board may retain its earnings in order to make optimum utilisation of the availableresources and enhance the shareholder's value. The retained earnings of the Company can beused for acquisitions expansions diversifications or for meeting the working capitalrequirements other liabilities of the Company or for any other object covered inMemorandum of Association; or may be retained for its business purpose in accordance withthe applicable provisions of the Companies Act 2013 read with the Rules framedthereunder if any the Listing Regulations other applicable legislations governingdividends and the Memorandum and Articles of Association of the Company as in force andas amended from time to time. The decision of distributing dividend or utilisation of theretained earnings shall be taken after having due regard to the parameters laid down inthis Policy.
PARAMETERS THAT SHALL BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARE
Presently the issued share capital of the Company comprises of only one class ofShares i.e. equity shares. In the event of the Company issuing any other class(es) ofshares it shall consider and specify the other parameters to be adopted with respect tosuch class(es) of shares.
The Company shall disclose the Policy on the Company's website and a web link theretoshall be provided in the Annual Report.
REVIEW & AMENDMENT
The Policy shall be reviewed as and when required to ensure that it meets theobjectives of the relevant legislation and remains effective. The Board has the right toamend or modify this Policy in whole or in part at any time without assigning any reasonwhatsoever.
ANNEXURE C' The conservation of energy technology absorption foreignexchange earnings and outgo in the manner as prescribed in Rule 8(3) of the Companies(Accounts) Rules 2014
| ||Cement ||Jute ||Steel Foundry |
|A. Conservation of Energy || || || |
|i) a) Energy Conservation measures taken ||A special cell has been formed with an objective of identifying areas of Energy savings by way of modifications/ improvements and replacement of equipments ||Rationalisation of load on transformer. Installed 1 no transformer of 1250 KVA which replaced to 2 nos old transformer of 750KVAand 500 KVA Replacement of incandesent lights with ||Energy Conservation is a continuous exercise hence we regularly monitor the trends of energy consumption and initiate remedial measures to improve energy efficiency. Our focus is to yield improvement through |
| ||1. Installation of02 nos. motorized dump valves in place of manual diverting gates to avoid the cement mill stoppage during silo change-over at BCW. ||CFL lights / LED lights Installation of capacitor bank with individual capacitor ||optimum use of energy hence we started a exothermic feeding system in moulding process. We have avoided excess super heat of liquid |
| ||2. Automation of BCW pump house. Pumps are running in auto according to the level in hot and cold water tank. Cooling tower fans are in auto mode with cold water temp. Saving in electricity by optimum running of Pumps and cooling tower fans at BCW. || ||metal during melting through proper monitoring oftemperature. Efficiency improvement in compressed air through proper distibution of air by screw compressor. Improvement in lighting system in foundry. |
| ||3. OptimizationofrawVRMatCCW. || || |
| ||4. CentralizedOperationof Compressors through PLC for optimum running of compressors at CCW. || || |
| ||Prevention of false air ingress at Kiln ESP fan (ESP Inlet to ESP Fan Outlet) at SCW. || || |
| ||5. Replaced PC firing blowers with Energy Efficient turbo blowers at BVC. || || |
| ||6. Replaced GRR by MV drive (VFD) for PH fanatSCW. || || |
| ||7. Turbo blower installed at SCW CF Silo Aeration BVC Flyash Extraction System BVC Kiln Feed Mixing Bin Aeration Kiln Feed Mixing Bin Aeration & BVC CF Silo Aeration. || || |
| ||8. Turbo blower installed at SCW CF Silo Aeration BVC Flyash Extraction System BVC Kiln Feed Mixing Bin Aeration Kiln Feed Mixing Bin Aeration & BVC CF Silo Aeration. || || |
| ||9. Optimisation of 27 MW TPP by O2 desired level by the installation of secondary air system at Satna. || || |
| ||10. Optimisation of DCW reduce coal consumption from 1.26 to 1.06% Furnace oil from 5.28 to 4.55 Ltr/ton slag. || || |
| ||11. L/T Slag and reduction in PSC spc from 50.95 to 47.48 u/t PCS. || || |
| ||12. The productivity of RBL cement mills increase after stabilisation of V- Separator in VRPGM circuit thereby reduced u/t cement. || || |
| ||13. Replaced old conventional light fittings by latest generation CFL & LED light fittings. || || |
|b) Impact on conservation of Energy ||Saving in power consumption @ 1.0 KwHr/T of raw grinding due to optimization of raw VRM. ||Reduction in power consumption and increase power factor ||Power consumption has been optimised and product quality improved with betteryield and minimum wastages. |
| ||Power factor improvement-in the year 20162017 rebate of ? 87.41 lacs was availed on AVVNL Electricity bill on account of better || || |
|ii) Steps in utilisation of alternate sources of Energy ||power factor. In the Year 2015-16 power factor rebate was 25 lacs. As a result of better power factor the energy loss also reduced due to reduction in transmission losses. Replacement of conventional lights with energy efficient LED lights- Replaced lights in CCW CM section and saved 11 KW. Capacity optimization and reduction of fuel power GHG Emission energy consumption Fossil Fuel and consequently reduction in the cost of production of Cement. Less fossil fuel conservation through biomass and other alternative fuels etc. Starteduslng Carbon Black&AFR Cultivation of Biomass in vaccant Land || || |
|ill) Capital investment on energy conservation equipments ||? 277.37 Lacs ||NIL ||- |
|B. Technology Absorption || || || |
|Research & Development 1) Specification of Technology absorption and/or R&D ||1. Installation of cross belt analyzer on LSB- 2 belt conveyor for continuous analysis of outsourced limestone ||Centralised Lubrcatlng system at softner machine resulted proper oil application and reducing wastage of lubrication ||- |
| ||2. Installation of 3 nos. hanging type semiautomatic truck loading machine in place of manual loading system at BCW ||Damping M/c coupled with calendering machine resulted reduction in hands and Increase production || |
| ||3. Installation of 02 nos. platform mounted truck loading machines for packer no. 5 at CCW in place of manual loading system ||Modification of bobbin stand and holder at cone / mack roll winding machine resulting reduction of hands as well as thread wastage || |
| ||4. Installation of carbon black / un-burnt fly-ash feeding system to CCW coal VRM. ||43/4" SD spinning frames of 100 spindles Coverted to 110 spindles resulting || |
| ||5. Installation under progress for SNCR system for reduction of NOx at CCW and BVC ||Increase production Modification creel of S4A beaming machine resulted Increase production. || |
| ||6. Modification of ESPs to meet latest emission norms of CPCB || || |
| ||7. Installation of NOx bypass duct to reduce NOx level at BVC || || |
|2) Benefit ||Increase of use of Alternate fuel (Bio Mass Industlal Non-Hazardous Plastic & FMCG Waste) in Kilns & Power Plant for saving of coal which results in conservation of natural resources. ||Conservation of Energy ||Conservation of Energy |
C. Foreign Exchange Earning & Outgo
i) Total Foreign Exchange used - Rs. 17442.04 Lacs.
ii) Total Foreign Exchange earned (including export in Indian Currency) - Rs. 7626.60Lacs.
| || |
For and on behalf of the Board of Directors
| ||Harsh V. Lodha ||Bachh Raj Nahar |
| ||Chairman ||Managing Director |
|Kolkata ||(DIN : 003940943 ||3DIN : 000498953 |
|Dated the 26th day of May 2017 || || |
DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014
(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2016-17 and ratio of the remuneration ofeach Director to the median remuneration of the employees of the Company for the financialyear 2016-17:
|Sl. No. ||Name of Director/ KMP and Designation ||Remuneration of Director/ KMP for financial year 2016-17 ||% increase in Remuneration in the financial year 2016-17 ||Ratio of remuneration of each Director/to median remuneration of employees* |
| || ||(Rs. in lacs) || || |
|01. ||Shri Bachh Raj Nahar ||386.47 ||16.67 ||224:1 |
| ||Managing Director || || || |
|02. ||Shri Pracheta Majumdar ||70.98 ||18.58 ||41:1 |
| ||Wholetime Director designated as Chief Management Advisor || || || |
|03. ||Shri Aditya Saraogi ||105.49 ||42.97 ||N.A. |
| ||Chief Financial Officer || || || |
|04. ||Shri Girish Sharma ||67.01 ||72.86 ||N.A. |
| ||Jt. President (Indirect Taxes) & Company Secretary || || || |
Note : No other Director other than the Managing Director and Wholetime Directorreceives any remuneration other than sitting fees during the financial year 2016-17.
*The median remuneration of employees of the Company during the financial year wasRs.1.73 lacs.
ii) There was an increase of 25.24% in the median remuneration of employees during thefinancial year 2016-17.
iii) There were 5978 permanent employees on the rolls of Company as on 31st March2017.
iv) Average percentage increase made in the salaries of employees other than theManagerial Personnel in the last financial year i.e. 2016-17 was 13.23% whereas theincrease in the managerial remuneration for the same financial year was 25.95%.
Average increase in the remuneration of the employees other than the ManagerialPersonnel and that of the Managerial Personnel depends upon the factors like industrystandards individual performance performance based incentives etc. during the year.
v) It is hereby affirmed that the remuneration paid during the year ended 31st March2017 is as per the Remuneration Policy of the Company.
| ||For and on behalf of the Board of Directors |
| ||Harsh V. Lodha ||Bachh Raj Nahar |
|Kolkata ||Chairman ||Managing Director |
|Dated the 26th day of May 2017 ||(DIN : 003940943 ||3DIN : 000498953 |