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Carborundum Universal Ltd.

BSE: 513375 Sector: Engineering
BSE 00:00 | 09 Apr 525.60 1.15






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OPEN 515.95
VOLUME 13516
52-Week high 571.45
52-Week low 203.00
P/E 52.77
Mkt Cap.(Rs cr) 9,965
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 515.95
CLOSE 524.45
VOLUME 13516
52-Week high 571.45
52-Week low 203.00
P/E 52.77
Mkt Cap.(Rs cr) 9,965
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Carborundum Universal Ltd. (CARBORUNIV) - Director Report

Company director report

Your Directors have the pleasure in presenting the 66th Annual Reporttogether with the Audited Financial Statements for the year ended 31st March2020. The Management Discussion & Analysis Report which is required to be furnished asper SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as the Listing Regulations) has been included in the Directors' Report so asto avoid duplication and overlap.


Economic Overview

The year 2019 has been tumultuous for the global economy. Amidst unrelenting headwindsand macro uncertainties such as the US-China trade war rising protectionism tightermonetary policies (in the early part of the year) and a downturn in the automotiveindustry the global growth was recorded at a subdued 2.9 per cent. This follows the 3.6per cent global growth recorded in year 2018.

Overall measures of investment and industrial production remained weak acrosseconomies. The US-China trade tensions have impeded global trade which in turn sloweddown to 0.9 per cent in volume terms and from 3.7 per cent the year before. In addition toincreasing protectionism technological changes necessitated by tighter emission normsemerging trends (Electric and Autonomous vehicles) and behavioural changes (dubbed the‘Peak Car' phenomenon) have adversely impacted the global Automotive industry. TheIMF estimates China's growth at 6.1 per cent in 2019 over 6.7 per cent the previous year.Growth in the Euro region slowed to 1.2 per cent from 1.9 per cent the previous year. Somerespite came towards the end of the year as US-China trade negotiations progressed andadvanced economies eased monetary policies. Manufacturing and trade indicators showedearly signs of recovery and the IMF as late as January 2020 forecasts global growth at3.3 per cent.

However with the onset of the Covid-19 crisis IMF's growth narrative changeddiametrically - as of April 2020 it expects a 3 per cent contraction in global GDPgrowth. On this lower base for year 2020 global growth is projected to reach 5.8 per centby year 2021 aided by monetary and fiscal policies across the World. The institution pegsIndia's annual growth rate at 1.9 per cent in FY 2020 and 7.4 per cent in FY 2021. China'sannual growth rate is forecast to be 1.2 per cent in 2020 and 9.2 per cent the year after.The IMF forecasts the annual growth rate in Euro region to decline to 7.5 per cent in 2020and grow to 4.7 per cent in 2021.

The FY 2019-20 has been an equally if not more challenging year for the IndianEconomy. While the IMF in its April 2020 Outlook estimated India's growth at 4.2 percent in FY 20 following 6.1 per cent in FY 19 the forecast was slashed to 1.9 per cent forthe FY 21. The sharpest impact came from the domestic automotive industry which hasbeen seeing a prolonged slowdown since H1 of FY 19. On an already lower base sale ofpassenger vehicles fell by almost 18 per cent in FY 20. In parallel the onset of thecrisis in the infrastructure and real estate lending segments caused the NBFC liquiditycrunch thereby pushing the real estate sector into a slowdown. Several major projectshave been stalled alongside a sizeable inventory overhang.

The slowdown in the Construction and Automotive industries has had cascading effects onthe Steel and Cement industries. With demand remaining low major capex plans across coreindustries were deferred - even before the Covid crisis. With the onset of the Covidcrisis and subsequent imposition of the nation-wide lockdown in March 2020 economicactivity came to a grinding halt causing the Index of Industrial Protection (IIP) to crashby 16.7 per cent in the month of March. Overall in FY 20 industrial output contracted by0.7 per cent compared to a growth rate of 3.8 per cent the year before.

Company Performance


During the FY 2019-20 standalone revenues declined by 7 per cent and the consolidatedrevenues declined by 3 per cent. The Company witnessed several headwinds over the courseof the year especially in the domestic markets. The slowdown in Automobile sales whichcommenced in H2 of the FY 2018-19 intensified into a prolonged decline in FY 2019-20. TheBusiness was also impacted by the slowdown in the Construction sector which continues toail from liquidity crunch inventory overhang and stalled projects. Consequently thestandalone Abrasives Business recorded a decline of 12 per cent.

The slowdown in two of the core industries Automotive and Construction spread to othercore industries such as Iron and Steel Power and Mining. Consequently theElectrominerals Business which cater to the core industries saw a decline of 9 per cent.The Ceramics Business grew by 3 per cent largely driven by exports to customers in thepower generation and transmission segment. Major players in end-user industries haveeither pruned or deferred their capex spends due to the tepid economic situation.However the application and geographical diversification helped the Company and growth inexports countered some of the domestic slowdown.

Although some recovery was seen in the demand situation during the early months of Q4of FY 2019-20 the shutting down of operations consequent to the nation-wide lock downimposed by the Government of India further impacted the year-end performance. Thefollowing table summarises the standalone and consolidated revenues - both segment andgeography wise: Rs. million



% share Amount % share Amount %
Abrasives 50 8147 53 9209 (12)
Ceramics 32 5120 28 4985 3
Electrominerals 25 4109 26 4534 (9)
Eliminations (7) (1145) (7) (1209) 5
Total 100 16231 100 17519 (7)
India 76 12261 78 13657 (10)
Rest of the world 24 3970 22 3862 3
Total 100 16231 100 17519 (7)



% share Amount % share Amount %
Abrasives 39 9953 42 11243 (11)
Ceramics 24 6290 23 6044 4
Electrominerals 40 10258 38 10186 1
Power 1 237 1 187 26
IT Services 2 471 2 451 4
Eliminations (6) (1515) (6) (1555) 3
Total 100 25694 100 26556 (3)
India 51 13097 55 14534 (10)
Rest of the world 49 12597 45 12022 5
Total 100 25694 100 26556 (3)

The Company's consolidated revenues from India declined by 10 per cent and from rest ofthe world increased by 5 per cent. At a consolidated level Abrasives sales declined by 11per cent Ceramics sales grew by 4 per cent and Electrominerals sales marginally grew by 1per cent. The performance in the overseas Subsidiaries moderated the decline in theconsolidated revenues with the decline in growth registering 3 per cent.


The manufacturing team continued to play a vital role in focused production planningand order execution to create a faster growth momentum but the demand slowdown in theindustry impacted the overall performance reducing capacity utilisation levels. Continuedfocus on Total Productive Maintenance (TPM) helped the Company improve the quality of itsproducts operate plants efficiently while reducing the overall cost of operations.Capital expenditure across all geographies were directed at capacity expansionsfacilities for new products quality enhancement line balancing and generalinfrastructure.

Earnings & Profitability

The Company's standalone financial results are summarised in the table below:

Rs. million

As a % of Sales 2019-20 As a % of Sales 2018-19 Increase %
Sales 16231 17519 (7)
Other Operating Income 281 303 (7)
Revenue from Operations 16512 17822 (7)
Other Income 473 269 76
Total Income 16985 18091 (6)
Cost of material Consumed 39 6267 40 6990 (10)
Purchase of stock in trade 4 626 5 795 (21)
Movement of Inventory (2) (296) (2) (265) 11
Employee benefits expense 12 1959 10 1821 8
Finance Cost 0 4 0 9 (62)
Depreciation and amortisation 4 670 4 754 (11)
Power & Fuel 11 1809 11 1929 (6)
Other expenses 22 3551 20 3579 (1)
Total Expenses 90 14590 89 15612 (7)
Profit before tax 15 2395 14 2479 (3)
Profit after tax 12 1913 9 1661 15
Total Comprehensive Income 11 1740 9 1628 7

The decline in the top line impacted the profitability levels and the standalone profitbefore tax stood at Rs.2395 million as compared to Rs.2479 million in the previous year.The decline in the profitability was moderated by an increase in non-operating income andrigorous variable and fixed cost reduction initiatives undertaken during the year. TheCompany uses a variety of raw materials for its products - Bonds Yarn Grains CalcinedAlumina Tabular Alumina Brown fused Alumina White fused Alumina Silicon CarbideMullite Pet Coke Bauxite Zircon Sand amongst others. The sourcing is a prudent mix ofindigenous and imported materials. Aided by judicious sourcing and optimizing throughputin production material consumption continued to marginally improve during the year.

Other expenses marginally decreased from Rs.3579 million in the preceding year toRs.3551 million in the current year.

Power and fuel cost decreased from Rs.1929 million in the preceding year to Rs.1809million during the current year owing to reduction in the volume and better powergeneration from the Company's Hydel power unit in Maniyar which had been impacted by heavyfloods in Kerala during the FY 2018-19. Employee benefits expense increased by 8 per centduring the year which is a combination of both increase in head count and salary. Theoverall employee cost was at 12 per cent of the revenues.

Profit before finance cost and tax margin expanded at Ceramics and declined atAbrasives and Electrominerals Business on account of lower revenues.

Finance costs were at Rs.3.5 million compared to Rs.9.4 million in the previous year.Profit after tax of Rs.1913 million was higher compared to that of the previous yearRs.1661 million supported by the reduction in corporate tax rates during the year. TotalComprehensive Income increased from Rs.1628 million to Rs.1740 million.

The consolidated profit before tax (before share of profit from Associate and Jointventures) entity-wise is represented below:

Rs. million

2019-20 2018-19
CUMI standalone 2395 2479
Subsidiaries including step down subsidiaries:
Net Access India Limited 37 35
Southern Energy Development Corporation Limited 76 24
Sterling Abrasives Limited 100 133
CUMI (Australia) Pty Limited 185 166
CUMI International Limited 329 313
Volzhsky Abrasive Works 1119 1152
Foskor Zirconia (Pty) Limited (205) (212)
CUMI America Inc. 18 (24)
CUMI Middle East FZE 1 0
CUMI Abrasives & Ceramics Company Limited (8) (17)
Thukela Refractories Isithebe Pty Limited - -
CUMI Europe s.r.o. (0) (1)
Total of Subsidiaries 1652 1569
Inter Company Eliminations (719) (560)
Consolidated profit before tax 3328 3488
Consolidated profit after tax attributable to owners 2724 2477

On a consolidated basis the profit before tax (before share of profit from Rs.2477million to Rs.2724 from million mainly from reduction in the Associate and JointVentures) decreased from Rs.3488 million to Rs.3328 corporate tax. The performance of thesubsidiaries is detailed separately million. Profit after tax and non-controllinginterests has increased in this Report.

Financial Position

An overview of the Company's financial position - on a standalone and consolidatedbasis is given below:

Rs. million

Financial position



31.03.2020 31.03.2019 % change 31.03.2020 31.03.2019 % change
Net Fixed assets (including goodwill) 4344 4178 4 7870 7414 6
Investments - Non current 2458 2511 (2) 1212 1304 (7)
Other assets:
- Inventories 3263 3390 (4) 5076 5329 (5)
- Trade receivables 2593 3305 (22) 4016 5139 (22)
- Cash and cash equivalents 2231 1092 104 3595 1920 87
- Other assets 841 782 8 1147 1214 (5)
Total assets 15730 15258 3 22916 22320 3
Liabilities (Other than loans) 2059 2480 (17) 3261 3589 (9)
Net assets 13671 12778 7 19655 18731 5
Financial position



31.03.2020 31.03.2019 % change 31.03.2020 31.03.2019 % change
Sources of funding:
Total equity attributable to owner 13671 12769 7 18584 17241 8
Non - Controlling interest 455 523 (13)
Loan outstanding:
- Long term borrowings - 3 42 51 (17)
- Payable within one year - 6 21 48 (56)
- Short term borrowings - - 553 868 (36)
Total loans - 9 616 967 (36)
13671 12778 7 19655 18731 5
Loans (net of cash and cash equivalents) (2231) (1083) 106 (2979) (953) 213

On a consolidated basis the total equity attributable to owners as on 31stMarch 2020 was Rs.18584 million. There was an increase (net of dividend) to the extent ofRs.1343 million. Non-controlling interest was at Rs.455 million.

Liabilities (other than loans) was Rs.3261 million. The loans outstanding reduced fromRs.967 million to Rs.616 million. Net fixed assets (including goodwill) increased fromRs.7414 million in the last year to Rs.7870 million during the current year.

Cash Flow

The Company's cash flow is healthy. The following table summarizes the Company'sconsolidated and standalone cash flows for the current and previous year:

Rs. million

Cash flow



2019-20 2018-19 2019-20 2018-19
Cash flow from 2921 Operations 2037 5061 3218
Taxes paid (610) (820) (992) (1200)
Cash flow from operating activities 2311 1217 4069 2018
Capital Expenditure (Net of disposal) (677) (511) (1226) (949)
Cash flow from other investing activities 369 236 296 150
Cash flow from investing activities (308) (275) (930) (799)
Cash flow from financing activities (864) (590) (1346) (1091)
Net increase/(Decrease) in Cash & Cash equivalents 1139 352 1793 128
Net Cash and Cash equivalents at the beginning of the year 1092 740 1921 1847
Effect of exchange rate changes on the balances of cash and cash equivalents held in foreign currencies - - (118) (54)
Cash and Cash equivalents at the end of the year 2231 1092 3596 1921

On a standalone basis net cash generation from operations was Rs.2311 million in FY2019-20 compared to previous year's Rs.1217 million. Net cash outflow on account ofinvesting activities was Rs.308 million majorly towards addition of property plant andequipment. Net cash outflow on account of financing activities was Rs.864 million which isattributable primarily to repayment of borrowings and dividends paid. The net increase incash and cash equivalents was Rs.1139 million against Rs. 352 million in FY 2018-19.

On a consolidated basis net cash generation from operations was Rs. 4069million in FY 2019-20. Net cash outflow on account of investing activities was Rs.930million. Net cash outflow on account of financing activities was Rs.1346 million which isattributable primarily torepayment of borrowings and dividends paid. The net increase incash and cash equivalents was Rs.1793 million against Rs.128 million in FY 2018-19.

Key Financial Ratios (on a standalone basis)

Parameter 2019-20 2018-19 Favourable/ (Adverse) in % Comments
R O C E % 18.14 20.32 (10.7) Reduction is due to lower revenue and marginal increase in average capital employed.
Debt Equity (times) - 0.001 100.0 The Company has become debt free during the year.
PBT % to Sales 14.76 14.15 4.3 Marginal increase is mainly due to higher 'Other income'.
Asset turnover (times) 1.33 1.52 (12.5) Reduction is due to lower revenue and marginal increase in average Total assets.
Receivable turnover (days) 66 68 2.9 Supported by effective collection efforts.
Parameter 2019-20 2018-19 Favourable/ (Adverse) in % Comments
Inventory Turnover (days) 75 62 (21.0) Higher number of days is due to increase in average inventory.
Interest Coverage Ratio (times) 871.79 345.68 152.2 Due to significant reduction in finance cost.
Current Ratio (times) 4.65 3.72 25.0 Due to increase in Current assets mainly cash and cash equivalent as well as decrease in Current liabilities - Creditors.
Operating Profit Margin (%) 11.86 12.67 (6.4) Reduction is due to lower revenue and product mix.
Net Profit Margin (%) 11.79 9.48 24.4 Increase is mainly due to reduction in corporate tax rate.
Return on Net Worth (%) 14.47 13.58 6.6 Increase is on account of higher profit after tax.


The paid up equity share capital as on 31st March 2020 was Rs.189.41million. The capital increased during the year by Rs.0.26 million consequent to allotmentof shares upon exercise of Stock Options by employees under the Company's Employee StockOption Scheme 2007.


Considering the past dividend payout ratio the current year's operating profit as wellas the prevailing global pandemic situation the Board has considered it appropriate torecommend to the shareholders of the Company the confirmation of the interim dividend ofRs.2.75 per equity share of Rs.1/- each paid in March 2020 as final dividend for the yearended 31st March 2020. The dividend of Rs.2.75 per equity share of Rs.1 eachpaid is the same as that of the dividend paid last year. The Company's Dividend Policy isavailable at The dividend paidfor the year ended 31st March 2020 is in line with this policy.


An amount of Rs.500 million has been transferred to the General Reserve of the Companyas at 31st March 2020.


The business profile market developments and current year performance are elaboratedin the following sections:

Abrasives Business Profile

This SBU is in the business of engineering surfaces. It manufactures and distributesrigid and flexible abrasives and adjacent products that are used in the generation ofprecision functional or enduring surfaces. The key product segments are Bonded AbrasivesCoated Abrasives Metal Working Fluid Super Abrasives and allied products.

Rigid or Bonded Abrasives products grind clean scour abrade or remove solid materialthrough a rubbing action. Bonded Abrasives are made using Glass Bonds (vitrified) orPhenolic Resin Bonds. Coated Abrasives are basically hard synthetic minerals coated on topaper fibre cloth or film and finally formed into different shapes sizes and typesaccording to application needs. Abrasive materials and Abrasive products are utilised inseveral end user industries such as Automobiles Auto Ancillary Metalworking Building andConstruction Wood Working Railways Aerospace and General Engineering.

This Business has more than sixty years of experience in Abrasives manufacturingapplication engineering and distribution. Strong Research & Development backed byapplication engineering and supported by third generation channel partners are thestrengths of this Business. Over the years it has built world class facilities withstrong processes which gives it a cutting edge. This has been reinforced with thecommissioning of an automated world-class coated Maker plant at Sriperumbudur duringMarch 2020 thereby doubling the installed capacity of Coated Abrasives which is expectedto cater to the growing demand for coated products in the domestic and internationalmarkets. The competitive advantage of the Business comes from its raw materials sourcedfrom the Electrominerals Business of the Company and from the best suppliers within Indiaand across the world. These inputs are then formulated and the products are designed basedon a deep understanding of the end-use applications that is exhibited by the veryexperienced team of application engineers across the globe.

Cost competitiveness is the overarching strategy for the Business while ensuring thatthe supply requirements and changing needs of the market are met in full.

The Business has ten manufacturing plants located across India Russia and Thailand.The marketing entities in North America Middle East China and distributors across theglobe provide strong market reach in India and over 55 markets globally.

Industry Scenario

The global Abrasives market is segmented based on region. Asia Pacific represents thelargest and the fastest growing market for the Abrasives industry and China continues tobe the largest producer of Abrasive materials and Abrasive products. The growing demandfor various types of Abrasives from industries such as transportation building andconstruction and other durable goods industries is expected to drive the Asia PacificAbrasives market. United States which is the world's second largest market for Abrasivesis expected to deliver good growth. Europe represents another high potential market builtaround Transportation Steel and Bearing industries. The market is dominated by leadingplayers operating across the globe.

The Indian Abrasives market has many manufacturers serving customers across diverseindustries. Imports are predominantly restricted to price sensitive segments along withsome international brands present in high performance precision applications. The Indianmarket has been continuously witnessing a shift from manual grinding methods to mechanisedprocesses ushering in opportunities for new products in the Coated Abrasives segment. TheBonded Abrasives segment constitutes a key consumable in the Construction andTransportation industries which has demonstrated high growth in the past decade due torapid urbanisation and increase in disposable income. During the year however decline ingrowth was witnessed across certain segments of the market led by the Auto and AutoAncillaries industries. The unorganised market constitutes about 30 per cent of overallmarket. This segment of the market is predominantly price driven with commensurateperformance requirement.

Sales Overview

The focus for the Abrasives Business during the year was to grow topline at betterthan the market growth rate facilitated by greater penetration in existing markets andentering new markets. However during the year segments such as Auto Auto AncillariesFabrication and General Engineering witnessed decline in growth. This was more prominentin the Bonded Abrasives segment. Also during the last quarter of the year businessactivities were impeded by the global spread of the Corona virus and imposition of thelockdown in India. The Coated Abrasives Business continued at the same level as that ofthe previous year with Stainless Steel Fabrication Wood working industries doing well.With the new capacity the focus was on developing new products for the domestic andexport markets and increasing the efficiencies of manufacturing operations.

Business also continued to make steady progress in building distribution leadership akey strategic pillar for the Company's growth. During the year the Business appointed newchannel partners and expanded its dealer network both in India and abroad. The Businessmade a conscious effort in entering new and under-represented markets with a specialsupply chain structure to service remote customers suitably. Retail development and marketstorming initiatives were conducted for better market penetration. New products weredeveloped and introduced in the mass market after studying the needs of customers. Therewas focus on customer engagement through customer and industry specific seminars.

The sale of Abrasives in Russia was impacted by the slowdown in the Auto-industry. Thelower demand in Automobile industry and a mixed kharif crop season resulted in a declinein growth for Sterling Abrasives.


The segment continued its focus on products made with high performance grains byworking in coordination with the Electrominerals Business. This helped to buildcompetitive advantage by developing and establishing new range of products. Businesscontinued to focus on introducing new products to gain significant competitive advantageand offering superior Coated technical products with high performance Zirconia and Ceramicgrains. Conscious efforts were taken to increase indigenous sourcing and lowering the gapbetween exports & imports to de-risk and improve profitability. To improve value chainperformance in Bonded Abrasives the manufacturing process was reviewed and redefined.Product gaps are addressed through alliances and strategic sourcing in select productsegments.

As stated earlier Business has invested in expanding its Coated Abrasivesmanufacturing capacity through an additional Maker line at Sriperumbudur to cater to theincreasing demand. The project has been completed within stipulated timelines and budget.Initial product trials have been conducted successfully and commercial production hascommenced to cater to the market demand. The Business is also working on buildingadditional conversion facilities to increase the availability of technical products. Thenew Maker is equipped with state-of-the-art IOT enabled process monitoring and improvementfeatures for real-time monitoring ultimately enhancing the quality and volume. Driven bythe volatility in demand there has been cost push from the Markets over the year. Tomitigate this Value Stream Mapping tools in integration with Total Productive Managementtools has been absorbed as a way of optimizing the resources and improving productivity.In order to develop competitive products and to cater the need of customer quality hasbeen enhanced by imbibing the voice of customer through Quality Function Deploymenttechniques.

The Business has placed special focus on adopting elements of Industry 4.0 in its dayto day operations to leverage the gains of IOT and data analytics. Several digitalinitiatives are being pursued to remain competitive. Considering the changing landscape ofmanufacturing technologies the Business would continue its effort to build capabilitiesin newer fields and technologies. Horizontal deployment of such steps is likely to give ita competitive advantage in the changing landscape.

Key Financial Summary

Rs. million




2019-20 2018-19 Change (%) 2019-20 2018-19 Change (%)
Revenue 8147 9209 (12) 9953 11243 (11)
Segment results (PBIT) 1083 1297 (17) 1129 1401 (19)
Capital employed 3469 3441 1 5008 5182 (3)
Share to total revenue of CUMI (%) 50 53 39 42
(without eliminations)
Share to segment results (PBIT) of CUMI (%) 45 52 33 39


Business Profile

The Ceramics business comprises of the Industrial Ceramics and the Refractories productgroups.

Industrial Ceramics

Industrial Ceramics Business offers Alumina Zirconia and Silicon Carbide products oftechnical ceramic grades addressing wear and corrosion protection electrical insulationthermal protection and ballistic protection applications. The key user industries forCeramics Business are Power Generation and Transmission Coal washeries Grain handlingSanitary tiles and Sanitary ware Ballistic protection Cement Non-ferrous metals Ironand Steel industries Carbon black Insulators Furnace building Glass Petrochemicalsand Construction.

The operations are carried out through manufacturing/service facilities located inIndia Australia and the US. The subsidiaries in North America Middle East and China alsosupport this Business in terms of market reach.

The Industrial Ceramics Business based out of India is largely a global business andmajority of the sales volumes are through exports. The Company is one of the major playersin India Australia and Europe and in specific product groups in Japan and China.


Refractory is a material that retains its shape and chemical identity when subjected tohigh temperatures up to 2000 degrees Celsius and is used in applications that requireextreme resistance to heat such as furnace linings.

The Company is a leading player in complex shaped high temperature-applicationRefractories Cements and Monolithic and pre-cast pre-fired Castables. The key userindustries for Refractory Business are Iron & Steel Secondary steel Glass meltingCement kilns Carbon black reactors Rocket launch pads Ceramics Petrochemicals Thermalpower plants Non-ferrous melting Foundry Heat treatment furnaces.


Prodorite branded Anti-corrosive material is used in highly acidic or basicenvironment. The Company is a major player in this industry serving a wide range ofChemical process industries and other industries dealing with treatment of effluents. TheCompany's product range include Acid resistant wall bricks Carbon bricks Tiles LiningPU Flooring Screeding PU and Epoxy Coatings Piping Sealants and Water proofconstruction chemicals. The Company's Poly Concrete Cells are also used in Copper and Zincextraction units across the world.


Composites are primarily Glass Fibre reinforced polymer products manufactured throughVacuum infusion Pultrusion Filament winding Grating and hand lay-up methods. Theproduct range includes large Chemical storage tanks Chimneys Flue Gas Desulphurisation(FGD) spray headers Abrasion resistant Anti-corrosive pipes & Gratings windmillnacelle covers Automotive and Railway body panels Gratings Pallets Cable traysFlooring Chequered plates Roof sheets Chimney ladders Platforms Bridges LouversFencing etc.

The operations are carried out through manufacturing/service facilities located inIndia (Ranipet Serkadu & Jabalpur) and Russia.

Industry Scenario Industrial Ceramics

The Industrial Ceramics Business has two verticals with Wear Ceramics making WearResistant Materials and Engineered Technical Ceramics making high end Engineered ceramicsand Metallized ceramics.

Under Wear Ceramics - the Company offers Wear resistant materials iron free grindingmedia for Ceramics and Ceramic lined equipment for both custom built and repairapplications in a wide range of process industries.

In the Wear protection industry in India newer application like paper manufacturingdredging dispersion of pigments in paints waste recycling facilities offeropportunities.

In Australia the Company is a major player offering Wear Protection Solution forcritical abrasive & erosive material handling applications for industries like MiningCoal Based Thermal Power Steel Non-Ferrous and Bulk Material Transfer of Ore &Grains and is among the leading companies in this space.

Further the Company is expanding into America Russia Commonwealth of IndependentStates and Japan becoming the preferred supplier of Wear Resistant solutions to some ofthe demanding customers in these countries. The Company's Wear solutions include wearaudits superior design and simulation techniques like Digital Elevation Model andComputational Fluid Dynamics and onsite installation services to enhance equipmentperformance and productivity complemented by a range of ceramics and composites.

Under Technical Ceramics the Company is the only manufacturer of Metallized Cylindersin India for high voltage power transmission and distribution and caters to leadingcustomers globally.

In the Engineered Ceramics sector the Business supplies Structural Ceramics for SolidOxide Fuel Cell (SOFC) applications and Ceramic Insulators for manufacture of Spark Plugsto the Automobile sector. In addition the Engineered Ceramics sector caters to a widerange of applications like Fluid Handling Battery Tooling Non-Ferrous and FerrousMetallurgy. The Business has started working on building a facility for the manufacture ofSintered Silicon Carbide which would open up new avenues in Fluid Handling Armour andother applications.

In the Metallized Cylinders segment a project on further expanding the capacity byaddition of a Continuous Metallization Furnace was undertaken and will be commissioned inin FY 2020-21. With this the Business is fully geared to meet the increasing market demandglobally.


With respect to Refractories the recent trend of consolidation within the Steelindustry through acquisition of distressed assets has led to higher bargaining poweramongst buyers. Players in the Carbon black industry have been undertaking capacityincreases driven by the demand in the tyre industry. Simultaneously few tyremanufacturers and feed stock supplying Steel industries are investing in carbon blackreactors as backward integration. The Refractories Business which saw good growth over thefirst half of the year slowed down over the second half as the impact of the economicslowdown spread to core industries such as steel and cement. Export customers looking todiversify their sourcing strategy have increased access to European Markets.

The Anti-corrosives Business has launched construction chemical products for waterproofing hygiene grade Polymer and Polyurethane flooring products for Hospitals Pharmaand Food industry. Business has also launched industrial adhesives for variousapplications.

The Composites Business is comprised of Project-based and standard product segments.Standard products have grown significantly through introduction of Abrasion resistantgratings Chequered plates Automotive panels; in addition to the pre-existing productbasket of pipes tanks and other products. Business also undertakes production of windmillnacelle covers and Flue Gas Desulphurization spray headers.

Sales Overview

Revenues of the Ceramics Business grew by 3 per cent on standalone basis from Rs.4985million to Rs.5120 million. The profitability of Ceramic Business increased owing tohigher volume and selective price increase.

Industrial Ceramics

Metallized Cylinders and Wear Ceramics Business continued the marketing efforts intargeting newer markets and partnering with global customers. Selective price increaseswere taken for majority of the products to mitigate cost push. Significant efforts inconverting conventional wear resistant materials to Ceramic Wear Resistant Materials wasdone in repair and maintenance segment of domestic sector in Steel Mineral Handling andCement Industry. The Business established entry into Japanese markets throughqualifications at OEM's for supply of Ceramic lined bend assemblies. New products withbacking materials were developed for addressing high impact applications. The Businessparticipated in Industry specific expos like Hannover Messe Paris Airshow GIFARenewable Expo Australia Defence Expo Lucknow IFEX Foundry Expo Japan Fine CeramicsExpo UGAL Coal Mine Expo Russia POWERGEN 2019 Malaysia etc. to increase visibilitybusiness development and for keeping abreast with the changing technologies.


The performance of the Refractory Business was relatively better in the first half ofthe year; however by the second half the slowing automotive and Construction sectorssoon caught up with dependent industries such as Steel Carbon Black Cement and Glass.Consequently demand for Refractories softened in the later part of the year and severalmajor end-users have deferred their Capex plans thus impacting project orders in theBusiness. The onset of Covid and uncertainty in economic revival has made major end-usersmore cautious with projects and expansion plans.

Manufacturing Industrial Ceramics

The second Metallized Cylinder manufacturing line installed in the previous year hasbeen stabilised. As stated earlier further capacity expansion through the addition of aContinuous Metallization furnace was initiated the year. In addition a project on SmartManufacturing has been initiated in the Business. The Industrial Ceramics Business alsoreceived the prestigious CSIR Diamond Jubilee Technology Award for the year 2018 fordevelopment of global-scale technologies. The award was presented in September 2019 inpresence of the Hon'ble President of India and the Hon'ble Minister of Science andTechnology.

The Industrial Ceramics Business started its TPM journey in 2014-15 and has receivedthe coveted Category A TPM Excellence award in March 2018 from JIPM. The Business is nowpreparing for achieving JIPM TPM Consistency Award. Continuing its quest for manufacturingexcellence the rolled throughput yield has been on a continuous upward trajectory since2015-16. Overall Equipment Effectiveness parameter also registered a new high during theyear. The Business developed processes for near net shape moulding and has commissioned aCeramic Injection Moulding line. Producing the raw material for wear technical andmetalized ceramics in-house at its Electrominerals Business ensured quality and timelyavailability. With a focus on Industry 4.0 the Business implemented a series ofautomation projects including data analytics. The SBU's pilot plant for Tape Casting andSputtering Facility is operational and samples of substrates and sensors used in variousapplications such as Space and Electronics are under trial.


Refractories Business has developed few customer specific products for Glass Industrywhich has been approved by major players in the industry. Further a superior boiler tileproduct for Waste heat incinerator was introduced in international markets. FurtherBusiness has obtained "Significant Achievement Award of TPM" from CII for TPMPractices implemented in the manufacturing facility. The Manufacturing team hasestablished paperless operation through interactive workstation panels which gives theaccess to the Production and planning process thus contributing to a sustainableenvironment. The Anti-corrosives and Composites Business has added capabilities includingDesign R&D Manufacturing Inspection and Testing.

Key Financial Summary

Rs. million




2019-20 2018-19 Change (%) 2019-20 2018-19 Change (%)
Revenue 5120 4985 3 6289 6044 4
Segment results (PBIT) 1001 817 22 1317 1082 22
Capital employed 3159 3149 0 4160 4050 3
Share to total revenue of CUMl (%) (without eliminations) 32 28 24 23
Share to segment results (PBIT) of CUMI(%) 42 33 39 30


Business Profile

The Mineral Business of the Company spans India Russia and South Africa with eightmanufacturing facilities covering product groups - Fused Alumina (comprising Brown andWhite Alumina) Silicon Carbide (crude macro and fine) Fused Zirconia and Composites ofAlumina Zirconia and Silicon carbide. The Company also manufactures a range of‘specialties' like Semi Friable Alumina Surface and thermally treated grains AzureS Specialty Alumina and Ceramic fine powders for niche markets. To enhance itsoperational competencies the Business operates its own Bauxite and sand mines and a 12 MWHydel power plant to insulate it from fluctuations in power tariffs.

The Business focusses on aggressive growth in the domestic and export market whilecatering to the requirements from internal customers. With a diversified productportfolio the Electrominerals Business provides customers with application specificproducts and solutions aimed at attaining improved product performance value andprofitability. For this the Business ensures speedy execution of projects enhanced assetutilisation and undertakes joint product development programs with customers.

The Business continues to pursue its focus on new and emerging areas of opportunitieslike Graphene battery materials and related areas through tie ups for technology and bycommissioning pilot scale plants. The Graphene facility started functioning during theyear and the products are being adapted/functionalized for various applications.

Key user industries for this Business are Abrasives Refractories Steel Brakelinings Nuclear energy Wooden Laminates Friction composites Diesel Particulate FilterSemiconductor and others.

Industry Scenario

The domestic market saw a revival of demand from the Refractory customers while theAbrasive segment was flat or down due to poor performance of Auto industries since H2 ofFY 2019. The focus on containing environmental emissions has affected the automobilesector across the world and the diesel vehicles particularly. This has significantlyaffected the fine powder Business of the Diesel Particulate Filter (DPF) application. Aslowdown is noticed in the composites market requirements for Alumina Zirconia.

The global Fused Alumina markets continue to bank on the large capacities in China andraw material resources. The Company is largely a local player with customers based inIndia Europe and Middle

East. The wide product portfolios and technological advantages gives the Company anedge over its domestic competitors. Apart from the domestic players imported productshave a visible share in the Indian market. Market has seen volatility on many occasions inthe price and availability of Calcined alumina the key raw material for White FusedAlumina. The Business could narrow down the impact of Alumina price variations byresorting to bulk sourcing of alumina from international suppliers.

In Silicon Carbide (SiC) China plays the lead role in production and supply in theworld. With the change in wire sawing technology from SiC to diamond wires demand for SiCin production of Silicon wafers for the Photovoltaic industry in China had droppeddrastically resulting in excess capacities and impacting the prices of SiC world over.CUMI's subsidiary Volzhsky Abrasive Works (VAW) Russia with a capacity of 0.08 milliontons is one of the largest single location capacities in the world and caters mainly tothe CIS and European markets. The volatility in availability of zircon sand and qualityhas resulted in a strained performance of its Zirconia operation in South Africa. TheBusiness has converted its Zirconia bubble facility in India into a White Fused Aluminafusion facility in order to overcome the adverse market it conditions and challenges inraw material availability. The Company continues to retain its position as one of thereputed manufacturers of Silicon Carbide Fused Alumina and Fused Zirconia.

Sales Overview

The Electrominerals Business on a standalone basis recorded revenue of Rs. 4109 millioncompared to Rs.4534 million in the previous year.

The decline in the domestic Business was impacted by the decline in domestic Abrasivesand Refractories which are the biggest consumers of Electrominerals. The demand for BrownFused Alumina (BFA) was flat or down mainly due to the slowdown in Automobile andConstruction sectors.

However the White Fused Alumina Business of the Company registered . a moderate growthwith the volume going up in the domestic and international market in line with demand pullfrom the Refractory customers though the product realisation was strained. The finepowder business was affected due to the lower demand for diesel vehicles in Europe whichhas resulted in a lower off take of Silicon Carbide fine powders by Diesel ParticulateFilter customers. The demand from semiconductor applications was moderate. The demand forother micro powders especially from laminates has helped the Business marginally.

The Russian subsidiary ran at near full capacity. Higher demand for Refractory gradematerials aided the growth.


Manufacturing strategies focused mainly on improving efficiencies through TPMinitiatives and value creation through grain treatments. Continued focus on innovation andTPM measures enabled the Business to be competitive and efficient in control of cost as anunderlining measure to attain the targeted production volumes. The focused JointDevelopment Programs in selected areas with customers brought faster scaling up andco-solutions.

The Business was successful in establishing its new synthetic Alumina variant ABV+ as areplacement for ABV. This helped the Business in augmenting the production and salesvolume of Alumina from the new facilities while satisfying the additional demand fromAbrasives Business of the Company.

The year saw highest volatility in the availability and price of critical raw materialslike Bauxite Alumina and Raw Petroleum Coke (RPC) in international and domestic market.To counter the shortage of Alumina and counter higher prices Business has started bulksourcing of Alumina from international sources.

Foskor Zirconia which is into production of Monoclinic Zirconia was also affected dueto volatile input pricing. Business has successfully produced Graphene from its newfacility on trial basis. Business would start marketing the products once itsfunctionalization for various applications are through. Business has also set up a pilotscale facility for graphite and the same would be on stream in the next year.

The Russian plant ran at full capacity in the current year without any productiondisruption. While demand from the DPF segment was impacted by tightening of globalemission norms offtake from Refractory customers remained good. Input costs werecontained by way of prudent sourcing strategies. The Business continued in its journey ofintroducing application specific product variants. Global players looking to reducesourcing dependence on China can present opportunities for the Minerals Business.

Key Financial Summary

Rs. million




2019-20 2018-19 Change (%) 2019-20 2018-19 Change (%)
Revenue 4109 4534 (9) 10258 10185 1
Segment results (PBIT) 217 444 (51) 1042 1279 (19)
Capital employed 2575 2893 (11) 5656 6062 (7)
Share to total revenue of CUMI (%)(without eliminations) 25 26 40 38
Share to segment results (PBIT) of CUMI (%) 9 18 31 36


During the year the Company generated Rs.2311 million cash surplus from its operationson a standalone basis.

All debts have been serviced on time. The Company's long and short term borrowings ason 31st March 2020 stands Nil. The capital expenditure program of Rs.739million was financed from internal accruals.

The Company continued to have a healthy cash generation during the year due to prudentcapital expenditure and efficient working capital management. The surplus has been parkedin liquid schemes of mutual funds. The Company continues to be debt free. On similarlines the debt at a consolidated level has come down by 36 per cent compared to theprevious year from Rs.967 million to Rs.616 million. The cash and cash equivalent level(net of borrowings) at a consolidated level stands at Rs.2979 million.

The debt equity ratio for the Company is Nil at a standalone level and 0.03 at aconsolidated level. The Company's Balance Sheet remains robust and it augurs well for thegrowth in the prevailing conditions. The credit ratings of the Company ‘A1+' forshort-term borrowings and

‘AA+Stable' for long-term borrowings were re-affirmed by CRISIL. Over the yearsthe Company has been resorting to a prudent mix of rupee and foreign currency borrowingsto finance its operations and achieve reduction in financing cost. The Finance Cost at astandalone level is at Rs.4 million compared to Rs.9 million last year. The Company earnedRs. 61.4 million by investing surplus cash available for short term.

At a consolidated level the finance cost has come down from Rs.85 million to Rs.63million. The repayment of loans has helped in bringing down the finance cost. The capitalexpenditure program of Rs.1291 million was financed majorly out of internal accruals.

With the Indian entity enjoying a significant natural hedge a cautious approach wasadopted to hedge the remaining exposures. The Company adopts prudent tax managementpolicies.

There are no material changes and commitments affecting the financial position of theCompany which have occurred between 31st March 2020 and the date of thisreport.


The Company its Subsidiaries Joint Ventures and Associate in India adopted lndAS with effect from 1st April 2016 pursuant to the Companies (Indian AccountingStandard) Rules 2015 notified by Ministry of Corporate Affairs on 16thFebruary 2015.


The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The controls have been designed and categorised based on thenature type and the risk rating so as to effectively ensure the reliability of operationswith adequate checks and balances.

The Internal Audit team evaluates the effectiveness and adequacy of internal controlscompliance with operating systems policies and procedures of the Company and recommendsimprovements if any. Significant audit observations and the corrective/preventive actiontaken or proposed to be taken by the process owners are presented to the Audit Committee.Periodic review of adherence to the agreed action plan is carried out. The scope ofInternal Audit is annually determined by the Audit Committee considering the inputs fromthe Statutory Auditor and the Management.

Capital and revenue expenditures are monitored and controlled with reference toapproved budgets. Investment decisions are subject to detailed evaluation and formalapproval according to schedule of authority in place. Periodical review of capitalexpenditure with reference to benefits forecasted is done. Physical verification of assetsis also periodically undertaken.

The Audit Committee reviews the overall functioning of Internal Audit on a periodicalbasis. The Committee also discusses with the Auditors periodically on their views on thefinancial statements including the financial reporting system compliance with accountingpolicies & procedures adequacy and effectiveness of the Internal Control Systems inthe Company.

During the year the Board with the recommendation of the Audit Committee appointedM/s. Deloitte Haskins and Sells LLP as Internal Auditors of the Company for the periodfrom 1st July 2019 to 30th June 2020.


Internal Control is a process effected by an entity's Board of Directors Managementand other personnel designed to provide reasonable assurance regarding the achievement ofobjectives relating to operations reporting and compliance - as defined by the Committeeof Sponsoring Organisations (COSO) of the Treadway Commission (appointed by SEC USA).

As per Section 134 of the Companies Act 2013 the term ‘Internal FinancialControls' (IFC) means the policies and procedures adopted by the Company for ensuring:

(a) orderly and efficient conduct of its business including adherence to company'spolicies;

(b) safeguarding of its assets;

(c) prevention and detection of frauds and errors;

(d) accuracy and completeness of the accounting records; and

(e) timely preparation of reliable financial information.

The three key components of IFC followed by the Company are:

i. Entity Level controls (ELC) that the Management relies on to establish theappropriate "tone at top" relative to financial reporting are - Code of ConductEnforcement of Delegation of Authority Hiring and Retention practices Whistle blowermechanism and other approved policies and procedures.

ii. Process Level controls (PLC) to ensure that processes are predictable stable andconsistently operating at the targeted level of performance with only a normal variationare classified into Manual or IT - Dependent or Automated Controls. They are alsoclassified as Preventive or Detective.

iii. General IT Controls to ensure appropriate functioning of IT applications andsystems built by the Company to enable accurate and timely processing of financial dataare - User Access rights management and Logical access; Change management controls;Password policies and practices; Patch management and License management; Backup andRecovery of data.

The adequacy of Internal Financial Controls is ensured by:

• Documentation of the risks and controls associated with the major processes;

• Validation and classification of existing controls to mitigate risks;

• Identification of improvements and upgrades to the controls;

• Improving the effectiveness of controls on residuary risks through dataanalytics;

• Performing testing of controls by the independent Internal Audit;

• Implementation of sustainable solutions to Audit observations.

• The Audit Committee periodically reviews Internal Financial Controls to ensurethat they are adequate and operating effectively.


To cope with the evolving need of a Manufacturing 4.0 world characterized by rapidtechnology changes the HR strategy remains focused on reskilling and transforming itsglobal diverse workforce by providing a stimulating environment which is flexible andproactive nurturing social contract fostering innovation and building a result-orientedhigh performance culture. Progressive policies continual investment in upgradingemployees' skills and the philosophy of empowering individuals have always been hallmarksof the Company's employee philosophy. The HR outlook encompasses more than just the viewof manpower ensuring that the environmental context and risks are assessed businesscontinuity planned so that timely interventions can be made to ensure that employees arein alignment with the larger purpose of the organization. The key HR imperatives for theyear were culture building to drive a culture of innovation and high performance; buildWorkforce 4.0 by enhancing capabilities in functions such as Sales Manufacturing R&Dand Application engineering; partner with business for cost leadership initiatives;establish Safety Excellence model; and lay the groundwork for an organizationrestructuring exercise in FY 2020-21. As the business performance in the last two quarterswas challenging the focus was to build on fixed cost efficiency and employee costreduction.

In March 2020 as the COVID-19 pandemic spread to India actions were taken to enhanceemployee awareness on health and safety with also ensuring business continuity. Acrossthe Businesses communication and awareness sessions on COVID-19 were held sensitizingemployees on the importance of social distancing norms sanitization hand wash usage ofpersonal protective equipment etc. Protocols on visitors meetings travel etc. were drawnup and communicated with a review on a weekly basis. As the lockdown brought a suddenstoppage of operations work from home become a sudden reality and quick transition towork from home was initiated and implemented. The impact of the pandemic and the firstlockdown necessitated contingency planning for prolonged lockdown. Extensive BusinessContinuity Planning and scenario planning were done for the evolving business realities.

Employee Safety and Health

Safety remains the core focus area for the Company with the adoption of behavior basedtraining. The Behavior based safety model was piloted in a few plants of the Company. Theannual health check system in the Company continues to be implemented keeping the healthof the every employee at the fore-front. The Internal Complaints committee set up underthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013 was reconstituted during the year and also had its first committee meeting on thetheme of enhancing awareness about the policy. E-learning modules on this policy wererolled out across the Company while at the unit level a poster and mailer campaign inregional language was carried out to raise employee awareness about the policy complaintmechanism and redressal process. During the year no referrals or complaints were receivedunder the Policy for prevention of sexual harassment.

Capability Building

In continuation of the 5 Pillar approach to Learning and Development the year saw aslew of programs being conducted across various groups of employees. These five pillarsare categorized as - needs based on the PMS system training to manage a specific businessrequirement execution excellence skill-based training and innovation. YOLO workshops forManagement and Graduate Trainees were conducted with additional modules of Analytics usingPower BI. Considering the transition in the senior leadership workshops were facilitatedto bring in collective focus on the shared vision and collaborative management to realizethe Company's objectives.

As part of the "Reimagining HR" projects in the space of Capability Buildingthe Industrial Ceramics team worked on mapping out key technical competencies required andinterventions that could aid upskilling. The introduction of the Performance EnhancementProcess in the Abrasives Business has also developed goal setting and feedbackcapabilities of people managers across the business. To enhance IR competencies and builda HR team that can handle the new generation of millennial blue-collar workforceAssessment programmes were conducted in association with the Murugappa ManagementDevelopment Centre. Plant HR personnel have undergone a certification program with theTata Institute of Social Sciences and are being trained by experts through webinars spacedover several months. The Catalyst mentoring framework was recognized with a CII award inthe south zone. This mentoring initiative has grown in strength with over thirtyengagements over the year. This is a flexible self-directed program and employees candirectly sign up to be mentored by any of the 29 mentor volunteers for any duration oftime without the intervention by HR. With the focus on growth for exports all exportmanagers from all SBUs were exposed to a management development programe in partnershipwith the Indian Institute of Foreign Trade (IIFT) focusing on export marketidentification market development risk management logistics and value chain management.This year also saw the launch of SHAPE - Sales HR for Abrasive Performance and Engagementwhich involved assessment of both frontline sales engineers and managerial team. The firstlevel of assessment for development was completed.

Employee Engagement

Focus remained on findings from 2018 Voices Engagement survey in the themes ofRecognition Innovation HR Practices and Career opportunities which continue to be afocus area with projects such as SHAPE - Sales HR for Performance and Engagement beingimplemented to meet specific needs of certain sections of employees. Across BusinessUnits focus group discussions on the survey results have led to greater clarity emergingon employee satisfaction indicators and the regional teams have worked on correctiveactions on expressed concerns. The focus group discussions related to the Survey atCorporate office resulted in quarterly communication meetings from December 2019.

The Rewards and Recognition program at CUMI was supplemented at regions with energizingchampions to propagate online rewards and recognition.


In continuation of the launch of CuMind in 2017-18 business leaders were exposed toDOT workshops which is based on design thinking methodology. SPLASH workshops have beenheld in two units covering over three hundred employees using art as a medium to innovate.Projects have been taken up post these workshops on business process re-engineering andjoint development using by-products which resulted in significant cost saving in theCoated Abrasives.

Employee Relations

Cordial relationships have been maintained with employees and unions and thesettlements have all brought in greater flexibility in operations adherence to TPMpractices and high standards of productivity.

Talent Acquisition

The focus continued to be acquisition of talent through lateral hires and graduate andmanagement trainees at entry level as a pipeline for middle management roles. Recruitmentwith a greater emphasis on referrals job boards and internal transfers has resulted inlowered sourcing costs.

Cost focus

With the challenging business developments in H2 of FY 2019-20 the focus was oncontrolling fixed cost which resulted in many initiatives i.e. zero based budgetingassessing span of control identifying redundant roles and restructuring of businesses.Though this initiative was started in 2019-20 the impact of this will be seen across FY2020-21.

Re-Imagining HR

Across the Murugappa Group HR teams have been working on "Reimagining HRProcesses" to make HR more relevant in world of work and workers and improveeffectiveness while keeping in mind the business and social context to work changes. Ofthe nine areas chosen at the Group level the Company piloted projects in five areas - HRStructure & Effectiveness Capability building for organization PerformanceManagement Employee Relations and Safe working environment.

Of these the Performance Enhancement Process (PEP) was piloted in the AbrasivesBusiness last year involving goal setting cascades frequent feedback mechanism and achange in rating scales for performance metrics.


The year 2019-20 continued to be a year of recognition for the Company in variedfields.

The Industrial Ceramics Business Hosur received the CSIR Diamond Jubilee Technology2018 Award for the technology of Metallization of Alumina Ceramics from the Council forScientific & Industrial Research.

The Electrominerals Business Kochi won the prestigious Excellence Award in Silvercategory at the Society of Engineers and Managers (SEEM) National Energy Management Award2019. The Abrasives Business was Certificateat the recipient of Indian Machine Gold ToolsManufacturers Association (IMTMA) Productivity Competition during the year. The Company'sSuper Refractories Business at Serkadu Tamil Nadu received the ‘TPM SignificantAchievement Award' in recognition of its achievement towards Manufacturing Excellence.

The Russian subsidiary of the Company Volzhsky Abrasive Works was recognized as the‘Best Organization in the Volgograd Region' by the Governor of Volgograd.

The CUMI Centre for Skill Development Hosur was declared as the ‘BestEstablishment of the Region' by the National Skill Training Institute.

Further the Electrominerals Business Kochi was awarded the Rotary Award for CSRprojects for its initiatives in the area of Child development. The ElectromineralsBusiness also received the IEI Centenary Excellence Award 2019 from the Institution ofEngineers (India) under the Engineering Manufacturing & Processing category.

The Company's Annual Report for the FY 2017-18 which had earlier won the prestigiousaward by the Institute of Chartered Accountants of India Awards for Excellence inFinancial Reporting for the year 2017-18 under the Manufacturing Category during theyear was selected by the South Asian Federation of Accountants and conferredManufacturing Sector category. As a the Certificate reinforcement of the Company's strongcommitment to strong ethics corporate governance and excellence in financial reportingthe Company's Annual Report was felicitated second time in a row by conferment of theSilver Shield under Category VIII - Manufacturing by the Institute of CharteredAccountants of India Awards for Excellence in Financial Reporting for the year 2018-19.

The Company's Maniyar Hydel power plant received the ‘Safety Award 2019' forsafety performance in Industrial Safety from the Kerala State Factories & BoilersDepartment. The Maniyar Hydel power plant and the Electrominerals Business at Cochin SEZalso received the Sreshta Suraksha Pursaskar from National Safety Council under the‘Small Factories Category'. The Company's Human Resource department had won the firstplace in Young HR Managers Competition for the Southern Region instituted by theConfederation of Indian Industry under the category - Employee Engagement for theCompany's Catalyst - CUMI Mentoring Platform.

The Company also received the Pride of Murugappa Awards instituted by the MurugappaGroup across 8 award categories viz. Customer Centricity Finance Environment Health& Safety Maintenance & Tooling HR practises and Marketing & Communications.In the Murugappa Group Shine awards that celebrates role models of the Spirit of theMurugappa Group - 5 Lights CUMI employees received awards in the Quality Passion andRespect categories.

The total staff on rolls of the Company (including Joint Ventures and Subsidiaries) ason 31st March 2020 was 5172 with 3416 employees in India (previous year 5144with 3407 employees in India).


The Russian subsidiary recorded sales of RUB 5994 million from RUB 5860 million theprevious year. Growth was driven by the SiC and Refractory Business. The entity startedthe year with good volumes for the DPF market which subsequently softened in line withthe general slowdown in the global Automotive industry and due to lower demand for dieselvehicles. Towards the second half of the year the Business realigned its product mix toincrease its share of Refractory-grade SiC. The Business was thus able to run at near-fullcapacity and achieve volume growth.

Foskor Zirconia South Africa recorded sales of ZAR 213 million compared to ZAR 215million in last year. The entity's loss reduced to ZAR 43 million as against ZAR 49million in last year. Raw Material scarcity and soft realisations impacted the margins ofthe Business. Considering that its liabilities have exceeded its assets the subsidiary'sAuditors' have in their report made an observation on material uncertainty relating togoing concern. Hence the Auditors of the Company have reproduced the same in theirconsolidated Audit Report without modifying their opinion. Considering the challengingbusiness conditions in South Africa the Board of Foskor Zirconia Pty Limited is reviewingthe business for initiating suitable measures in due course.

In CUMI Australia the Business in Lined Equipment continued to be good. Sales grewfrom AUD 20.8 million to AUD 21.8 million. Despite the impact of the bush fires on theeconomy the Business was able to record a growth of 5 per cent. Profit after tax grewfrom AUD 2.3 million to AUD 2.7 million.

Sterling Abrasives reported a sales of Rs.799 million compared to the last year'ssales of Rs.901 million. Profit after tax decreased from Rs.94 million to Rs.80 million.The Business was impacted by the slowdown in the domestic Automotive industry as well asa mixed kharif crop season this year.

CUMI Abrasives and Ceramics Company the subsidiary based in China had a sales of CNY18 million for the year compared to CNY 21 million last year.

The sales of CUMI America recorded a good growth at USD 10 million from USD 9.3 milliondriven by the increase in sales of both Bonded Abrasives and Industrial Ceramicsachieving profit before tax of USD 0.3 million against loss of USD 0.3 million in theprevious year. The American entity was able to on-board several new institutionalcustomers this year.

For CUMI Middle East sales increased from USD 1.7 million to USD 2.7 million. Profitfor the year was at USD 0.008 million against a profit of USD 0.002 million during theprevious year.

Southern Energy Development Corporation Limited (SEDCO) the gas based power generationsubsidiary recorded a sale of Rs.237 million as against Rs.187 million last year. Thegain in revenue was due to adverse cyclone impact in the southern part of Tamil Nadu in2018-19 because of which the production was disrupted for 3 months. The profit after taxgrew from 19 million to 55 million backed by recoveries from insurance companies for2018-19 cyclone impact.

Net Access India which provides IT facilities management and other allied servicesincreased its sales from Rs.451 million to Rs.471 million. The profit after tax marginallygrew from 26.7 million to 27.2 million.

CUMI International Limited Cyprus recorded a revenue of USD 5.24 million representingmainly dividend income as against last year's income of USD 5.04 million.

CUMI Europe s.r.o based out of Europe which is not in operation made a loss of CZK 0.1million.

Performance of Associate and Joint Ventures are given in note no. 6A and 6Brespectively of the consolidated financials. Consolidated Financial Statements(incorporating the financial results of the Company its Subsidiaries and Associate/JointVenture) have been provided in the Annual Report. Other than the Associate/Joint Venturecompanies referred in the Annual Report there are Associate/Joint Venture within themeaning of Section 2(6) of the Companies Act 2013. A statement containing the keyfinancial highlights of each subsidiary based on the financial statements prepared bythem under applicable local regulations is also provided in the Annual Report.


The Company has been able to continuously add value the summary of which is givenbelow:

Rs. million

Particulars 2019-20 2018-19 2017-18 2016-17 2015-16
Generation of Gross Value added 5044 5072 4550 3959 3789
Breakup on Application of Value added
Payment to employees and directors 1979 1838 1760 1549 1429
Payment to shareholders (on payment basis) 757 520 330 189 377
Payment to Government 709 946 732 543 564
Payment to Lender - - - 33 64
Towards replacement and expansion 1599 1768 1728 1645 1355
5044 5072 4550 3959 3789


- Gross value added is Revenue Less Expenditure (excluding depreciation + expenditureon employees & directors service + Long term interest)

- Payment to Government is Current tax+ Dividend distribution tax

- Towards replacement and expansion is Retained earnings + Depreciation + Deferred tax


The Company has constituted a Risk Management Committee aligned with the requirementsof the Companies Act 2013 and Listing Regulations. The details of the Committee and itsterms of reference are set out in the Corporate Governance Report forming part of thisReport. The Company has a robust business risk management process to identify evaluateand mitigate risks impacting business including those which may threaten the existence ofthe Company. This framework seeks to create transparency minimise adverse impact on thebusiness objectives and enhance the Company's competitive advantage. This also defines therisk management approach across the enterprise at various levels including documentationand reporting. The framework has different risk models which help in identifying risktrends exposure and potential impact analysis at a Company level as also separately forthe business segments. The Company also has developed a structured risk management policyencompassing the risk management objectives principles process responsibility forimplementation maintenance of risk registers review of risk movements risk reportingframework etc. Risk management also forms an integral part of the Company's business Plan.During the year the Company also conducted a penetration assessment testing on internetfacing applications considering the growing significance of addressing cyber risks. TheCompany operates across various technology platforms and product verticals built over theyears. Relative advantages and disadvantages of such technologies are studied and advancesare tracked. Any new technology may impact the performance of the Company in the long run.The Company seeks to address these technology gaps through continuous benchmarking of theexisting manufacturing processes with developments in the industry and in this connectionhas made arrangements with technical research institutions and technology consultants. TheCompany has been making investments in the next level of Industry 4.0 in select modules.Industry 4.0 is the current trend of automation and data exchange in manufacturingtechnologies.

The requirements of power for the Company is driven by the requirements of theElectrominerals Business. The power requirement is partly met out of own generation fromthe Maniyar Hydroelectric plant. The entire production of power from Maniyar is utilisedby the Electrominerals business. Apart from this electricity is generated at theCompany's subsidiary SEDCO and consumed at all its locations in Tamil Nadu. The rest ofthe requirement of electricity is managed by purchase from respective State ElectricityBoards. Utilisation of power remains one of the key factors which can impact theprofitability either favourably or adversely based on the changes in the power cost. Aspart of its strategy to build competitiveness the Company continues to look foropportunities to add to its captive power generation. In Russia the Silicon Carbideoperations which also consumes large quantities of power sources it from local utility.The requirement of fuel is driven by the high temperature processes in the Abrasives andCeramics Businesses. Any increase in the cost of fuel impacts the profitability. Hencethe Company has put in place plans and implement energy conservation measures to improveits competitiveness.

The Company uses various raw materials such as Bauxite Calcined Alumina Zirconiasand Raw Pet coke Quartz and Graphite which have high price volatility. This isaddressed through annual contracts to cover volatality due to price fluctuations and alsomitigated through programs to identify alternative sources. The Company deals withmultiple currencies and is thus exposed to exchange risk on account of adverse currencymovements. Foreign Exchange risk in foreign denominated loans imports and exports aremitigated by adopting a country-based forex policy periodic monitoring and use of hedginginstruments. Efforts are being taken to manage both exports and imports to ensure that ata Company level there is a natural hedging mechanism.

As a risk mitigation measure to address cyber security threat and in continuation ofthe IT security review plan during the previous year the Company had included logmanagement and vulnerability assessment with Security Information and Event Management(SIEM) a continuous monitoring process to identify any surge/incident at the network andapplication systems. The security threat awareness is published and promoted periodicallyto create awareness among stakeholders on handling the risk proactively. The securityprocess is included as an important step in the IT strategy of the Company. There isconsiderable amount of work undertaken on scoping of information specific to the roledefined to prevent any data or information leak.

The Company's input materials are not commoditised and does not warrant for anyspecific hedging to be undertaken. With respect to output materials adverse impact ofchanges in commodity prices on user industries could impact the sales which are mitigatedby development of alternate products establishing new range of applications etc. asdetailed above. The other mitigation measures for dealing with increase in fuel costsnon-availability of raw materials etc. have been dealt separately in above paragraphs.

The risks associated with COVID-19 has been dealt with in the section below.


The outbreak of the COVID-19 pandemic developed into a global crisis in the lastquarter of the FY 2019-20 forcing countries globally to impose lock down conditions on allactivities impacting the economy at large. At the onset of the pandemic spread in Indiathe priority for the Company was the safety and health of all its employees and otherstakeholders with minimal disruption to operations. In adherence to the Governmentadvisories and considering the well-being of our stakeholders all the plants of theCompany were shut down in a safe manner following due protocols. However consideringthat most of our plants have operations involving continuous processes at hightemperature as a safeguard measure minimal essential staff required for safety andmaintenance were deployed in such locations after undertaking due health and hygieneprecautions.

For a Company with a legacy of over 6 decades operating on a model of working out ofplants and offices a seamless transition to remote working was made swiftly by puttingin place a policy framework for operating from home with well-established protocols. Therobust IT platform of the Company enabled significant personnel to continue to performtheir services remotely in a safe and secured manner. Some of the plants especially thoselocated in green zones resumed operations quickly by mid-April after ensuring receipt ofrequisite permissions from the local authorities and in adherence to the standardoperating procedures laid down by the Ministry of Home Affairs from time to time. Thisadherence was ensured not only from a regulatory compliance perspective but by keeping inmind the well-being of our employees customers and other stakeholders. Since then as ondate of this report almost all plants of the Company have resumed operations withpermitted workforce and necessary steps are being taken by the Company to meet thecustomer demand globally reinforcing their confidence in the Company amidst theseunprecedented and challenging conditions.

The COVID-19 pandemic has caused unprecedented disruption in business and operationmodels globally. This has cascading uncertainties making market and business conditionsvolatile. Even prior to the COVID-19 the slowdown in the Automotive sector and other coresectors started to reverse the growth momentum the Company had during the first half ofthe financial year 2019-20. However with a sound financial position including efficientliquidity management supported by diversified global operations reliable supply chainpartners passionate and dedicated employees and the inherent resilience built over 65years the Company believes it will be able to navigate through these challenges for asustainable growth in future. With respect to material changes or commitments impactingthe financial position of the Company in respect of events occurring after end of the yearbut before the date of this report the Board is of the opinion that no materialadjustments in the accounting entries or estimates accounting policies are relevant tothe financial statements for the year ended 31st March 2020.

The key risks identified owing to COVID-19 which could impact the future performance ofthe Company are given below:

Business disruption and uncertainty Operations of the Company could be impacted due to the continuing pandemic situation incapacitating with restrictions on manpower logistical hindrances or delays low customer demands etc. leading to decline in growth and profitability. Rigorous review of the business plan as well as contingency plan based on scenario planning put in place and being closely monitored by the Business Group Management Committee (BGMC) duly supported by the operating teams with timely and relevant information.
Continuous engagement with customers and updating them on the status of operations and assuring them of delivery and performance.
Prudent cash management and efficient working capital management with sharp focus on collections and payments cost reduction and management.
Based on the robust safety measures deployed as well as prevailing demand position wherever permissible approvals relaxing the manpower requirements are being sought.
Exploring new opportunities in emerging sectors post COVID-19. Technological and digital advancement proposals to keep up with the transformation in the operations model and product offerings.
Employee Risk Growth momentum could be lowered due to any employee or his/her family being exposed to the infection emotional stress and impact on their wellbeing during quarantine or lockdown conditions employees not being able to adapt to remote working or not being able to carry out their functions or operations where remote working is not feasible owing to logistical contractual or security issues non- availability of migrant labour. Right from the onset of the pandemic dedicated clear communication and awareness programmes to sensitise the employees on the cause and effect of the disease is being continuously conducted.
Dedicated periodic calls to enquire about the health status of the employee and his or her family including neighborhood are being made.
Dedicated Task forces for taking concerted and quick decision on matters relating to COVID-19 have been set up under the supervision of Head-HR.
In certain factories preliminary health checkups are being undertaken before a worker resumes duty.
Continuous guidance on social distancing norms and hygiene given.
Contractual emotional and operational guidance on remote working being given periodically.
Separate helplines 24*7 to counsel employees who require customized guidance or information has been set up.
Online learning and development programmes rolled out to keep employees engaged and up skilled during the lock down.
Automation of routine and repeated processes to minimize the dependency on manual processes being explored continously.
Supply chain risk Non-availability of raw materials and services to continue operations. Regular coordination with key suppliers as well as identification of alternate suppliers for expediting the services/materials critical for operations.
Regulatory or legal risk Non-adherence to the Government Advisories Standard Operating Procedures etc. exposing the Company to legal and compliance risks including those arising out of force majeure obligations. Closely monitoring the information on government circulars notifications advisories and instantly disseminating the same to the operating team for implementation as well as monitoring adherence through robust compliance management system.
Cyber security risk As more digital our operations become we are prone to cyber threats causing havoc in operations and reputation. Robust IT security policy implementation with a periodic review mechanism.

With the Company's strong track record and value focus we expect the competitivenessto increase in future and with ongoing risk assessment and minimization efforts weanticipate to suitably minimise the impact. However the forecast for growth depends onthe pandemic being brought under control.


As stated in the Economic Overview section India is expected to grow 1.9 per cent inFY 21 and 7.4 per cent in FY 22. This would make India the fastest growing major economyin FY 2021 with even many advanced economies being forecast with a decline in growth. IMFhas warned the pandemic "worst recession since the Great Depression" likely todwarf the economic damage caused by the global financial crisis a decade back. India andChina have been identified the only two major economies likely to register growth withall others contracting. However the recovery forecast for 2021 depends critically on thepandemic being brought under control in the second half of 2020 allowing containmentefforts to be gradually scaled back and restoring consumer and investor confidence.

The Govt. of India's Rs.20 trillion economic stimulus package (Aatmanirbhar Initiative)is expected to kick-start economic activity in the country again with focus on Make inIndia. Interventions under the scheme aimed at MSMEs NBFCs DISCOMs and the Mining sectorare expected to provide a boost to Industrial activity. Specifically positive effects onInfrastructure (through MNREGA allocations); Construction (by improving liquidity to NBFCsand Welfare funds); Mining (reducing the import dependency in Coal) are expected to havepositive effects on our businesses. Notwithstanding the same the Company continues toexplore and identify alternate and new opportunities for its various product segmentsacross all its businesses in sectors including healthcare digital defence etc. toleverage growth during these unprecedented times.


The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014 and no amount of principal or interest was outstanding as on the Balance Sheet date.


The particulars of loans guarantees and investments covered under Section 186 of theCompanies Act 2013 are given below:

Description As on 31.03.2019 Movement (Net of Deletions) As on 31.03.2020
Loans given by the Company - - -
Corporate guarantee given by the Company 1784.98 1234.22* 550.76
Investments made by the Company 2511.46 (53.04)** 2458.42


*Release of Corporate Guarantee towards loan availed by CUMI International LimitedCyprus (wholly owned subsidiary of CUMI) amounting Rs.1203.58 and balance is due toExchange difference

**On account of fair valuation

Current Investments - investment in mutual funds and fixed deposits as on 31.03.2020was Rs.616.02 million and Rs.1579.26 million respectively.


The Company as per the requirements of the Companies Act 2013 and Regulation 23 of theListing Regulations has a Policy for dealing with Related Parties.

In line with its stated policy all Related Party transactions are placed before theAudit Committee for review and approval. Prior approval of the Committee is obtained on aquarterly basis for transactions which are of foreseen and repetitive nature. Omnibusapprovals in respect of transactions that cannot be foreseen or envisaged are alsoobtained as permitted under the applicable laws. The list of Related Parties is reviewedand updated periodically as per the prevailing regulatory conditions.

The details of transactions proposed to be entered into with Related Parties are placedbefore the Audit Committee for approval on an annual basis before the commencement of thefinancial year. Thereafter a statement containing the nature and value of thetransactions entered into by the Company with Related Parties is presented for quarterlyreview by the Committee. Further revised estimates or changes if any to the proposedtransactions for the remaining period are also placed for approval of the Committee on aquarterly basis. Besides the Related Party transactions entered during the year are alsoreviewed by the Board on an annual basis.

All transactions with Related Parties entered during the financial year were in theordinary course of business and on an arm's length basis and hence not requiringparticulars to be entered in the Form AOC-2. Further all transactions entered into withRelated Parties during the year even at arms' length basis in the ordinary course did notexceed the thresholds prescribed under the Companies (Meetings of Board and its Powers)Rules 2014 or Listing Regulations or the Company's Policy in this regard and hence nodisclosure was required to be made in Form AOC-2. Accordingly there are no contracts orarrangements entered into with Related Parties during the year to be disclosed underSections 188(1) and 134(h) of the Companies Act 2013 in Form AOC- 2.

There are no materially significant Related Party transactions made by the Company withits Promoters Directors Key Managerial Personnel or their relatives which may have apotential conflict with the interest of the Company at large.

The Company's policy on dealing with Related Parties as approved by the Board isavailable on the Company's website in the following link the year in line with the regulatory changes in the Listing Regulations andthe Companies Act 2013 & the rules referred therein the policy on dealing withRelated Parties was amended and approved by the Board. None of the Directors and KMPs hadany pecuniary relationship or transaction with the Company other than those relating toremuneration in their capacity as Directors/Executives and corporate action entitlementsin their capacity as shareholders of the Company.


The Murugappa Group is known for its tradition of philanthropy and community service.The Group's philosophy is to reach out to the community by establishing service orientedphilanthropic institutions in the field of education and healthcare as the core focusareas. The Company being a constituent of the Group has been upholding this tradition byearmarking a part of its income for carrying out its social responsibilities.

The Company continues to engage in Corporate Social Responsibility (CSR) activitiesdirectly as well as through implementation agencies in line with its stated CSR policy.

The Company set up the CUMI Centre for Skill Development (CCSD) in the year 2012 atHosur to build a skill bank of a technically competent and industry ready work force fromthe less privileged sections of the society. During the FY 2015-16 the Company replicatedthis model in Edapally Cochin. During the FY 2018-19 the Company along with its JointVenture - Murugappa Morgan Thermal Ceramics Limited has replicated this model in RanipetTamil Nadu. CCSD provides specialised training based on National Council on VocationalTraining syllabus for the rural youth drawn from socially and underprivileged sections ofthe society. Three year training is imparted with a stipendiary payment and free boardingfacilities thus enabling the enrolled students to earn while they learn. The job orientedskill training enhances their employability and aids in uplifting their socio-economicstatus. The technically trained students can be employed by any industrial entity oncethey complete the training programme. The Company continues to harness the potential ofCCSD centres so far established. The Company takes pride in informing that few studentshave earned accolades at national/regional level for their par excellence performance inacademic and technical areas. During the year the CUMI Centre for Skill Developmentstationed at Hosur was declared as the ‘Best Establishment of the Region' by theNational Skill Training Institute. Owing to the successful functioning of the CCSD Hosurand it yielding benefits to the student community as a part of its expansion plan astate of the art building for imparting training to students of CCSD was inauguratedduring the year by the Board on 29th January 2020.

In addition to the CCSD the Company has also been contributing to the cause of healthand education by making grants to AMM Foundation. Further during the year grants werealso made to Shri A M M Murugappa Chettiar Research Centre (MCRC) for research in ruraldevelopment. AMM Foundation an autonomous charitable trust is engaged in philanthropicactivities in the field of education and healthcare since 1953. The Company's focus areasfor grants to implementing agencies continued to be in the education and health sector.The grant to AMM Foundation for the education sector was through contributions to VellayanChettiar Higher Secondary School Tiruvottiyur (VCHSS) - which has been making adifference in the field of education for the past 50 years. The school runs with thevision - To provide Quality Education with good virtues for the underprivileged andmarginalised communities around Tiruvottiyur. The Company's contribution to VCHSS throughAMM Foundation during the year was towards the formation of a new basketball court andstrengthening of the south side wall. Further the Company has also provided the studentsof the VCHSS a playground (football ground) developed with adequate facilities forexcelling in sports. During the year the Company also made a contribution to the AMMFoundation Corpus Fund for continuance of the existing activities seamlessly and alsoundertaking new initiatives that is directly relatable to a subject covered under ScheduleVII of the Companies Act 2013.

With respect to healthcare a grant to AMM foundation was made for establishing andoperating a mobile health van at Jhabera Uttarakhand in order to provide free primaryhealthcare at doorstep diagnosis of diseases if any through the mobile health labproviding treatment through free medicines and creating awareness on the importance ofhealthcare in the nearby communities.

MCRC is a non-Governmental voluntary research organisation working on devices andtechnologies for rural application of eco-friendly technologies to combat pollution. MCRCis recognised by Department of Scientific and Industrial Research Government of India asa Scientific and Industrial Research Organisation to conduct research in various areas andis approved by the University of Madras Chennai to offer Ph.D. programmes in the areas ofEnergy Bioenergy and Biomass for rural development. During the year a grant was made toMCRC for research and development on biological waste water treatment using MicrobialEnzymes etc. for rural villages.

Since mid of March 2020 the novel Corona Virus pandemic 2019 (COVID-19) has posed anunparalleled and enormous challenge to the nation and world at large resulting in alockdown situation. Having been declared a ‘pandemic' by the World HealthOrganization it has caused massive disruption not only to business operations but also tonormal life. Hence in order to support the efforts of the Governments (Centre &State) to combat the ongoing crisis and also aid the Government to deal with emergency ordistress situation posed by COVID-19 the Company made a contribution of Rs.20 million tothe PM Cares Fund in April 2020.

Further in order to support the community at Hosur Tamil Nadu wherein the Company'splants are situated to deal with the distress situation posed by COVID-19 the Companymade a contribution of Rs.1 million to Hosur Industrial Association in March 2020 forsetting up COVID-19 ward in ESIC hospital. During the times of need the Company'scanteens at various factory locations have been functioning as community kitchens to servethe needy during the nationwide lockdown. At various locations where the Company issituated contributions to combat or contain the spread of the disease has been mademostly in the form of supplies and materials.

Besides the above the Company also actively pursued local community assistanceprogrammes in and around its plant and office locations anchored by its employees. TheElectrominerals Business conducted sessions on Child rights & parenting terracefarming for women importance of waste management & environment sanitation. TheRefractories Business continued its project titled "The Adolescent Girl ChildProgram" targeted at imparting education on Good Touch Bad Touch and menstrualhygiene for adolescent girls of villages in and around Vellore district. The Company alsosponsored pediatric cardiac surgery wherein services surgery and consultation areprovided totally free of cost for children suffering from heart diseases.

During the year the Company's Electrominerals Business received the Corporate SocialResponsibility Award from Rotary International for the initiatives undertaken. Therecognitions for the Company's corporate social responsibility initiatives are drivers forthe Company to contribute more to the society and community at large. The Company's CSRpolicy is available on the Company's website at the following link The Annual report on the CSR activities inthe prescribed format is annexed hereto as Annexure B and forms part of this Report.


The Company's ethical and responsible behaviour complements its corporate culture.Being a public listed company the Company recognises that its accountability is notlimited only to its shareholders from a financial perspective but also to the largersociety in which it operates. During 2016-17 consequent to the mandatory reporting of itsbusiness responsibility initiatives under the Listing Regulations the Company hadformulated a consolidated policy on Business Responsibility which lays down the broadprinciples guiding the Company in delivering its various responsibilities to itsstakeholders. The policy is intended to ensure that the Company adopts responsiblebusiness practices in the interest of the social set up and the environment so that itcontributes beyond financial and operational performance. A copy of the policy isavailable at and the BusinessResponsibility Report for the year ended 31st March 2020 in terms of Regulation34 of the Listing Regulations is annexed to this Report as Annexure C.


Board of Directors and Key Managerial Personnel

As at 31st March 2020 the Board of the Company comprised eight Directors ofwhich majority (five) are independent.

Mr. T L Palani Kumar Independent Director who was appointed for a term of five yearsat the 60th Annual General Meeting held on 1st August 2014 retiredon 31st July 2019. Mrs. Bharati Rao Independent Director who was appointed fora term of four years at the 61st Annual General Meeting held on 3rdAugust 2015 retired on 2nd August 2019. The Board places on record itsappreciation for the services rendered by

Mr. T L Palani Kumar and Mrs. Bharati Rao during their tenure as Directors of theCompany including as members of the various Committees of the Board.

Mr. Sanjay Jayavarthanavelu and Mr. Aroon Raman Independent Directors were re-appointedfor a second term of five years and their re-appointment was approved by the shareholdersvide special resolution at the 65th Annual General Meeting. During the yearMrs. Soundara Kumar was appointed as an Additional Director with effect from 3rdAugust 2019 by the Board at its meeting held on 31st July 2019. In the opinionof the Board Mrs. Soundara Kumar satisfies the independence criteria prescribed in theAct and Rules made thereunder for appointment as an Independent Director of the Companyand that she is independent of the Management. Hence the Board has recommended herappointment as an Independent Director of the Company for a term of five years commencingfrom 3rd August 2019 to the shareholders. Notice in this regard under Section160 has been received from a Member.

Mr. K Srinivasan who was re-appointed as the Managing Director by the shareholders atthe Annual General Meeting held on 31st July 2017 for a period of two yearsfrom 23rd November 2017 superannuated from the services of the Company witheffect from close of business hours on 22nd November 2019. Mr. K Srinivasan wasassociated with the Company and the Murugappa Group for over three decades and wasinstrumental in placing the Company in the global map. The Board places on record itsappreciation for Mr. K Srinivasan's significant dedicated services to the Company duringhis long association with the Company. The Board at its meeting held on 26thApril 2019 based on the recommendation of the Nomination and Remuneration Committeeappointed Mr. N Ananthaseshan as an Additional Director and Managing Director (Designate)of the Company with effect from 26th April 2019 to succeed Mr. K Srinivasan asthe Managing Director for 3 years commencing from 23rd November 2019. Mr.Ananthaseshan's appointment as the Managing Director (Designate) with effect from 26thApril 2019 and as the Managing Director with effect from 23rd November 2019 wasapproved by the shareholders at the 65th Annual General Meeting held on 31stJuly 2019. After Mr. K Srinivasan's retirement Mr. N Ananthaseshan took over as theManaging Director with effect from 23rd November 2019. Consequent to thechanges in the Board composition the constitution of various Committees were alsoreviewed and revised more fully detailed in the Corporate Governance section of theReport.

Mr. M A M Arunachalam retires by rotation at the forthcoming Annual General Meetingand being eligible has offered himself for re-appointment. A proposal for hisre-appointment is included in the Notice convening the 66th Annual GeneralMeeting for consideration and approval by the shareholders.

The Company has received declarations from all its Independent Directors confirmingthat they meet the criteria of independence prescribed both under the Companies Act 2013and the Listing Regulations. In the opinion of the Board all the Directorsappointed/re-appointed during the year are persons with integrity expertise and possessrelevant experience in their respective fields. All the Independent Directors of theCompany have registered their names in the Independent Directors Databank as requiredunder the Companies Act 2013 and the Rules referred therein. The Independent Directorsare also required to take up an online proficiency self-assessment test within one yearfrom the date of inclusion of their name in the Independent Directors databank with anexemption provided to Directors fulfilling the criteria prescribed under the Act and theRules referred therein. While the requirement of completion of the online proficiencyself-assessment test is exempt for few of the Company's Independent Directors consideringthe one year time available from the date of inclusion of the name in the databank therequired Independent Directors would complete the assessment within the prescribed time.Hence considering the time available for the Independent Directors to complete the onlineproficiency test the requirement for the Board to provide its opinion on the experienceof the Independent Directors with specific reference to proficiency ascertained frompassing of the online proficiency self-assessment test does not arise.

During the year Mr. Jagannathan Chakravarthi Narasimhan resigned from the services ofthe Company with effect from 29th October 2019. The position of Chief FinancialOfficer is vacant since then and the Company is in the process of identifying suitablecandidate(s) for filling up the vacancy.

The COVID-19 pandemic situation across the country has impeded the identification andselection process for the Chief Financial Officer ofcontribution and Company which will befilled up in due course of time. The Company will continue to take the requisite steps inthis regard endeavoring to fill up the position.

Mr. N Ananthaseshan Managing Director and Ms. Rekha Surendhiran Company Secretary arethe Key Managerial Personnel of the Company as per Section 203 of the Companies Act 2013.

Board Meetings

During the year seven Board Meetings were held the details of which are given in theCorporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard carried out an annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of its various Committees as per theevaluation framework adopted by the Board on the recommendation of the Nomination andRemuneration Committee. Structured assessment forms were used in the overall Boardevaluation comprising various aspects of the Board's functioning in terms of structureits meetings strategy governance and other dynamics of its functioning besides thefinancial reporting process internal controls and risk management. The evaluation of theCommittees was based on their terms of reference fixed by the Board besides the dynamicsof their functioning in terms of meeting frequency effectiveness of contribution etc.

Separate questionnaires were used to evaluate the performance of individual Directorson parameters such as their level of engagement and contribution objective judgement etc.The Managing Director's evaluation was based on leadership qualities strategic planningcommunication engagement with the Board etc.

The Chairman was also evaluated based on the key aspects of his role. The performanceevaluation of the Independent Directors was carried out by the entire Board. Theperformance evaluation of the Chairman the Board as a whole and the Non-IndependentDirectors was carried out by the Independent Directors at their separate meeting heldduring the year.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act 2013 the Nomination and RemunerationCommittee of the Board has formulated the criteria for Board nominations as well as thepolicy on remuneration for Directors and employees of the Company.

The criteria for Board nominations lays down the qualification norms in terms ofpersonal traits experience background and standards for independence besides thepositive attributes required for a person to be inducted into the Board of the Company.Criteria for induction into Senior Management positions have also been laid down.

The Remuneration policy provides the framework for remunerating the members of theBoard Key Managerial Personnel and other employees of the Company. This Policy is guidedby the principles and objectives enumerated in Section 178(4) of the Companies Act 2013and reflects the remuneration philosophy and principles of the Murugappa Group to ensurereasonableness and sufficiency of remuneration to attract retain and motivate competentresources a clear relationship of remuneration to performance and a balance betweenrewarding short and long-term performance of the Company. The policy lays down broadguidelines for payment of remuneration to Executive and Non-Executive Directors within thelimits approved by the shareholders. Further details are available in the CorporateGovernance Report.

The Board Nomination criteria and the Remuneration policy are available on the websiteof the Company at https://www.cumi-murugappa. com/policies-disclosure/.

Composition of Audit Committee

The Audit Committee of the Board comprises only Independent Directors.

Mr. Sanjay Jayavarthanavelu is the Chairman and other members are Mr. Aroon Raman Mr.Sujjain S Talwar and Mrs. Soundara Kumar. Consequent to the retirement of Mr. T L PalaniKumar and Mrs. Bharati Rao with effect from 31st July 2019 and 2ndAugust 2019 respectively Mr. Aroon Raman and Mrs. Soundara Kumar were inducted into theCommittee with effect from 1st August 2019 and 3rd August 2019respectively. Mr. Sanjay Jayavarthanavelu was elected as the Chairman of the Committeewith effect from 1st August 2019. During the year five Audit Committeemeetings were held the details of which are provided in the Corporate Governance Report.

Statutory Auditors

In line with the requirements of the Companies Act 2013 the Company with theapproval of the shareholders at the Annual General Meeting held on 31st July2017 appointed M/s. Price Waterhouse Chartered Accountants LLP (Reg. No. FRN012754N/N500016) (PwC) as the Statutory Auditors of the Company to hold office from theconclusion of 63rd Annual General Meeting until the conclusion of the 68thAnnual General Meeting ratificationby the shareholders at subject to annual every AGM ifrequired under the relevant provisions of the Act at a remuneration to be decided by theBoard based on the recommendation of the Audit Committee. However as the Companies(Amendment) Act 2017 has dispensed with the requirement of annual ratification of theStatutory Auditor's appointment there is no requirement to seek an annual ratification oftheir appointment this year.

As required under Regulation 33 of the Listing Regulations the Auditors have confirmedthat they hold a valid certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India.

The Report given by M/s. Price Waterhouse Chartered Accountants LLP on the FinancialStatements of the Company for the year ended 31st March 2020 is provided in thefinancial section of the Annual Report.

There are no qualifications reservations adverse remarks or disclaimers given by theAuditors in their report. During the year under review the Auditors have not reported anymatter under Section 143(12) of the Companies Act 2013 and hence there are no details tobe disclosed under Section 134(3)(ca) of the Act.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Rules 2014 and amendments thereof the Company is required to maintain costaccounting records in respect of products of the Company covered under CETA categorieslike Organic and Inorganic chemicals Electrical or Electronic machinery Steel Plasticand Polymers Ores and Mineral products other Machinery Base Metals etc. Further thecost accounting records maintained by the Company are required to be audited.

The Board on the recommendation of the Audit Committee had appointed M/s. S Mahadevan& Co. (firmno. 000007) Cost Accountants Chennai to audit the cost accounting recordsmaintained by the Company under the said Rules for the FY 2019-20 on a remuneration ofRs.450000/-. Further the same firm has also been appointed by the Board to conduct thecost audit for the FY 2020-21 at the same remuneration The Companies Act 2013 mandatesthat the remuneration payable to the Cost Auditor is ratified by the shareholders.Accordingly a resolution seeking the shareholders' ratification of the remunerationpayable to the Cost Auditor for the FY 2020-21 is included in the Notice convening the 66thAnnual General Meeting.

Secretarial Audit

M/s. R Sridharan & Associates Practising Company Secretaries Chennai wasappointed as the Secretarial Auditor to undertake the Secretarial Audit of the Company forthe FY 2019-20. The report of the Secretarial Auditor is annexed to and forms part of thisReport (refer Annexure F). There are no qualifications reservations adverse remarks ordisclaimers given by the Secretarial Auditor in the Report.

In terms of Regulation 24A of the Listing Regulations there is no material unlistedsubsidiary incorporated in India. Material unlisted subsidiary for the purpose of thisRegulation is a subsidiary whose income/net worth exceeds 10 per cent of the consolidatedincome/net worth respectively of the Company and its Subsidiaries in the immediatelypreceding accounting year. Hence there is no requirement for a Secretarial audit to beconducted for any of the Company's Subsidiaries in India.

Compliance Management

The Company migrated to KOMRISK a new compliance management system from its in housecompliance management system during the year. The compliance management system trackscompliances across the various factories and offices of the Company. This tool has acomprehensive coverage of the various applicable laws including auto updation based on theregulatory changes from time to time.

Corporate Governance

In terms of Regulation 34(3) read with Schedule V of the Listing Regulations aseparate section on Corporate Governance including the certificate from a PractisingCompany Secretary confirming compliance is annexed to and forms an integral part of thisReport.

CEO/CFO Certificate

Mr. N Ananthaseshan Managing Director has submitted a certificate the Board on theintegrity of the Financial Statements and other matters as required under Regulation 17(8)of the Listing Regulations.


Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act 2013the Board to the best of its knowledge and belief and according to the information andexplanations obtained by it confirms that:

• in the preparation of the annual accounts for the financial year ended 31stMarch 2020 applicable accounting standards have been followed and no material departureshave been made from the same;

• the accounting policies mentioned in Note 3 of the Notes to the FinancialStatements have been selected and applied consistently and judgments and estimates thatare reasonable and prudent have been made so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit of theCompany for that period;

• proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company for preventing and detecting fraud and otherirregularities;

• the annual accounts have been prepared on a going concern basis;

• that internal financial controls to be followed by the Company have been laiddown and that such internal financial controls are adequate and operating effectively;

• proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.


The extract of the Annual Return in the prescribed form MGT 9 is annexed to and formspart of this Report (refer Annexure E) and the Annual Return in Form MGT-7 is available inwww.cumi.murugappa. com.


The Company is in compliance with the Secretarial Standards on Meetings of the Board ofDirectors (SS-1) and Secretarial Standards on General Meetings (SS- 2).


The information on Energy Conservation Technology Absorption Expenditure incurred onResearch & Development and forex earnings/ outgo as required under Section 134(3)(m)of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 isannexed to and forms part of this Report (refer Annexure D).


There are no significant and material orders passed by the regulators or to courts ortribunals impacting the going concern status of the Company and its future operations.


The information on employees and other details required to be disclosed under Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed to and forms part of this Report (refer Annexure A).

Under the Company's Employee Stock Option Scheme 2007 no Option grants have been madesince February 2012. The Employee Stock Option Plan 2016 (ESOP 2016) was implemented inFebruary 2017 with the approval of the shareholders and currently governs the grant ofOptions to employees. During the year 2019-20 a grant of 278528 Options was made toeligible employees. The disclosures with respect to Options granted under the ESOP 2007and ESOP 2016 are contained in the Corporate Governance Report. Further the disclosuresrelating to Stock Options as per Securities and Exchange Board of India (Share basedEmployees Benefits) Regulations 2014 read with the circular issued by SEBI on 16thJune 2015 has been provided on the Company's website and is available in the link Both the ESOP Scheme 2007 and ESOP 2016 are in compliancewith the SEBI (Share Based Employee Benefits) Regulations 2014.


The Board gratefully acknowledges the co-operation received from various stakeholdersof the Company viz. customers investors channel partners suppliers governmentauthorities banks and other business associates during the year. The Board also places onrecord its sincere appreciation of all the employees of the Company for their commitmentand continued contribution to the Company.


All information furnished in the annexures relates to Carborundum Universal LimitedIndia as a standalone entity


Statement of Employees' Remuneration

A. The details of top ten employees (employed throughout the year) in terms ofremuneration drawn during the financial year 2019-20 as per Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 duly amended by theCompanies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 areas follows (listed in alphabetical order):

Name and Age Designation/Nature of duties Gross remuneration paid (Rs.) Qualification & experience (years) Date of commencement of employment Previous employment
1 2 3 4 5 6
Ananthaseshan N (57) Managing Director 14709649 M.Sc (Applied Science) M.Tech Material Science (34) 19.02.1986(f) -
Jayan P S (60) Executive Vice President - EMD 7825504 B.Sc & B.Tech (32) 30.11.1985(f) -
Padmanabhan P (52) Vice President and Chief Accounts Officer 5300025 B.Com Grad CWA ACA PGDFM (32) 01.07.1994(f) -
Rajendran V G (50) Senior Vice President - Refractories and Prodorite 8886573 BE (Metallurgy) and PGD in Management (31) 25.10.2017 C.O.O.- Foundry Division Mahindra CIE Automotive Limited
Rajkumar Arul (52) Senior Vice President- HR 7107711 B.Sc MA(SW) PG in Management (30) 17.09.2018 Eden associates - HR consultancy firm
Shyam S Rao (57) Senior Vice President - Industrial Ceramics 8574396 B. Tech Metallurgy MS Material Science PhD Material Science (26) 07.05.1999 Widia India Limited
Sivakumaran M V (48) Vice President Abrasives 5325518 M.Sc MBA & M.Tech (23) 01.07.1996(f) -
Sridharan Rangarajan (54)(d) President- Corporate 17886467 B Com ACA Grad CWA (34) 22.06.2011 CFO Indian Operations - TIMKEN
Srikanth C (54) Senior Vice President - Marketing Abrasives 6680908 BE Mechanical Engineering & MBA Marketing (33) 05.09.1992 Cutfast Abrasives Tools Limited
Vijayalakshmi D (54) Vice President - Corporate Communications 6122037 B.Sc Physics (31) 21.01.2010 Ogilvy Public Relations

B. Details of employees who were employed for part of the year and earning eight lakhand fifty thousand rupees per month apart from the Top ten employees:

Name and Age Designation/Nature of duties Gross remuneration paid (Rs.) Qualification & experience (years) Date of commencement of employment Previous employment
1 2 3 4 5 6
Srinivasan K (62) Managing Director (c) 30302790 B Tech (Mech) (40) 30.01.2002 Vice President - Wendt (India) Limited
M Muthiah (60) Executive Vice President - HR(C) 7979104 MA (SW) and PG Dip in Management (35) 15.10.2003 Plant HR Head Hyundai Motor India Limited
Jagannathan Chakravarthi Narasimhan (47) Chief Financial Officer (c) 7059205 B Com ACA Grad CWA (21) 23.07.2018 CFO Mindtree Limited
Ninad M Gadgil (49) President - Abrasives(C) 4768123 BE (Electronics) & PGDBM (Marketing) 04.11.2019 Country Business Leader - Healthcare 3M India Limited


(a) Remuneration as shown above includes salary allowances Company's contribution toprovident superannuation and gratuity funds medical facilities and perquisites valued asper income-tax rules. During the year no Options were granted under the Employees StockOption Scheme 2007. During the year eligible employees were granted in aggregate 278528Options under the Employee Stock Option Plan 2016. The employee-wise grant details areavailable in the disclosure under SEBI (Share Based Employee Benefits) Regulations 2015uploaded in the website of the Company. The Employee Stock Options granted to employees inthe earlier period are accounted based on fair value as per Indian Accounting standards.

b) The employment of the above persons is whole time in nature and terminable with 3months' notice on either side.

c) Mr. K Srinivasan retired as Managing Director effective 22nd November2019 and Mr. M Muthiah retired as Executive Vice President - HR effective 31stMay 2019. Mr. Jagannathan Chakravarthi Narasimhan resigned from the services effective 29thOctober 2019. The remuneration above includes their superannuation and settlementbenefits. Mr. Ninad M Gadgil President - Abrasives joined the Company effective 4thNovember 2019.

d) Effective 18th January 2018 Mr. Sridharan Rangarajan has been deputed toMurugappa Management Services Limited.

Mr. N Ananthaseshan was appointed as Managing Director (Designate) effective 26thApril 2019 and he succeeded Mr. K Srinivasan as the Managing Director on 23rdNovember 2019 after Mr. Srinivasan's retirement. The appointment of Mr. Ananthaseshan as aDirector in executive capacity was approved by the shareholders at the 65thAnnual General Meeting held on 31st July 2019. Prior to induction into theBoard Mr. Ananthaseshan was holding the position of President - Abrasives and theremuneration disclosed above includes the remuneration received in that capacity from 1stApril 2019 to 25th April 2019.

e) The above mentioned employees are not relatives (in terms of the Companies Act2013) of any Director of the Company. Further no employee of the Company is covered bythe Rule 5(2) (iii) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (employee holding by himself or with his family shares of 2% ormore in the Company and drawing remuneration in excess of the Managing Director). Hencethe details required under Rule 5(3) (viii) is not applicable.

f) Date of joining as graduate engineer trainee / management trainee.

g) The remuneration details are for the year 2019-20 and all other particulars are ason 31st March 2020.

h) None of the employees of the Company other than those listed above were in receiptof remuneration for the FY 2019-20 in excess of Rupees one crore and two lakh rupees peryear or eight lakh and fifty thousand rupees per month.

C. The details of remuneration during the year 2019-20 as per Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended bythe Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016are as follows:

(i) Ratio of remuneration of each Director to the median remuneration of the employeesof the Company for the financial year:

Name Designation Ratio
Mr. M M Murugappan Chairman 20.36
Mr. Sanjay Jayavarthanavelu Independent Director 3.12
Mr. Aroon Raman Independent Director 3.22
Mr. P S Raghavan Independent Director 3.05
Name Designation Ratio
Mr. Sujjain S Talwar Independent Director 2.94
Mrs. Soundara Kumar Independent Director 1.98
Mr. M A M Arunachalam Non-Executive Director 2.72
Mr. Ananthaseshan Managing Director 27.54

(ii) Percentage increase in the remuneration of each Director Chief Executive OfficerChief Financial Officer Company Secretary in the financial year:

Name Designation Increase (%)
Mr. M M Murugappan Chairman 1.76
Mr. Sanjay Jayavarthanavelu Independent Director 46.54
Mr. Aroon Raman Independent Director 58.94
Mr. P S Raghavan Independent Director 66.31
Mr. Sujjain S Talwar Non-Executive Director 46.34
Mrs. Soundara Kumar* Independent Director NA
Mr. M A M Arunachalam Independent Director 44.79
Mr. Ananthaseshan** Managing Director 18.54
Mrs. Rekha Surendhiran Company Secretary 8.37

*Joined the Board during 2019-20 hence not comparable. **Appointed as an ExecutiveDirector w.e.f. 26th April 2019.

The Directors remuneration comprises commission and sitting fees for attending themeetings of the Board. The increase in remuneration to the Non-Executive Directors was onaccount of increase in sitting fees effective 25th October 2019 and Commissionpayable to them for the FY 2019-20.

In computing the % increase in remuneration for the FY 2019-20 perquisite value hasbeen duly adjusted factoring the asset transfer under Company car scheme forming part ofthe remuneration policy of the Company.

Mr. K Srinivasan Managing Director superannuated on 22nd November 2019 andhence the details of his managerial remuneration has not been considered for the purposesof the disclosure under Section C.

(iii) Percentage increase in the median remuneration of employees in thefinancial year: 0.35 per cent (employees who were in employment for the whole of FY2019-20 & whole of FY 2018-19 considered for this purpose in the respective financialyears).

(iv) Number of permanent employees on the rolls of the Company as on 31stMarch 2020: 2272.

(v) The average annual increase in salaries of employees was 9.84% compared to adecrease in managerial remuneration of 6%. Hence the confirmation with respect toexceptional circumstances for increase in managerial remuneration does not arise.

(vi) The Company affirms that the remuneration is in compliance with its Remunerationpolicy.