To the Members
The Directors are pleased to present the 62nd Annual Report together with the auditedfinancial statements of HeidelbergCement India Ltd. (the Company) for the financial yearended 31st March 2021 (FY21).
THE YEAR IN RETROSPECT
The FY21 witnessed unprecedented turmoil as the novel Corona virus caused a majorhealth crisis posing the biggest ever threat of survival to the mankind in a century. Toprotect lives and to give a breather to the healthcare systems isolations lockdowns andwidespread closures were implemented by governments across the globe. In India at theonset of the pandemic an intense nationwide lockdown was enforced to contain the spread ofCOVID-19. The pandemic and the consequent lockdowns affected daily life of people and theeconomic activity in myriad ways. In India a vast number of migrant labourers were forcedto move from cities to their native places.
COVID-19 put brakes on the Indian economy that had started gaining momentum in thebeginning of Q1 -2020. Most of the initial predictions indicated a contraction of ~ 8% inIndia's GDP for FY21 comprising a steep decline in first half followed by a modestrecovery. To combat the situation the central government and RBI deployed a range ofpolicy tools such as Atmanirbhar Bharat economic stimulus package lowering key policyrates quantitative easing loan guarantees moratorium on loan repayments frequentreductions in repo rate reverse repo and CRR and measures to ease working capitalrequirements. Fresh insolvency proceedings under the Insolvency and Bankruptcy Code (IBC)were also suspended for a year. The recovery rate for the Scheduled Commercial Banksthrough IBC (since its inception) has been over 45%. Through these concerted efforts andresilience demonstrated by the India's citizens the economy bounced back and India onceagain became a preferred investment destination with FPIs pouring in money amidst globalasset shifts towards equities and prospects of quicker recovery in emerging economies.NIFTY-50 and BSE SENSEX scaled their new high on 16th February 2021. Just when the thingsseemed to be returning to normalcy India was unfortunately hit by a far more devastatingsecond wave of COVID-19. In a desperate move the state governments again resorted tocontainment measures such as night curfews weekend lockdowns and complete lockdowns.
COVID-19 pandemic had a catastrophic impact on many industries especially the globaloil and gas industry. Declining consumer demand and high levels of output made oil storagecapacities look dwarf resulting in brent crude slipping into negative territory for thefirst time ever in the global history. In India the GDP for FY21 contracted by 7.25%* andthe real GDP growth was -2.97%. The combined index of eight core industries stood at 143.1in March 2021 registering an increase of 24.1% over the previous year.
Except for the months of April and May 2020 the Indian cement industry reported robustproduction and sales volume on the back of emergence of pent up demand post COVID-19lockdown and resurgence in government infrastructure construction activities. India'scement manufacturing capacity was about 535 million tons as at the end of March 2021 anincrease of about 10 million tons or a ~2 percent capacity expansion over last year.
*Source: Economic Survey 2020-21.
FINANCIAL HIGHLIGHTS/REVIEW OF OPERATIONS
During FY21 the Company produced 4.53 million tonnes of cement compared to 4.69million tonnes during the financial year ended 31st March 2020 (FY20) a decrease of 3.4%.Cement sales during the year were 4.49 million tonnes compared to 4.71 million tonnes inFY20 a decrease of 4.7%. Net sales in FY21 were INR 21166.7 million compared to INR21696.2 million in FY20.
A snapshot of the Company's financial performance for FY21 vis-a-vis Fy20 is as under:
|Particulars ||FY 2021 ||FY 2020 |
|Income || || |
|Revenue from Operations ||21166.7 ||21696.2 |
|Other Income ||464.6 ||527.3 |
|Total Revenue ||21631.3 ||22223.5 |
|Earnings before Interest Tax Depreciation and Amortization (EBITDA) - Including other income ||5531.0 ||5805.2 |
|Depreciation and Amortization ||1110.3 ||1086.1 |
|Finance Cost ||508.5 ||738.5 |
|Profit before Tax ||3912.2 ||3980.6 |
|Total Tax expense ||762.7 ||1300.0 |
|Net Profit for the year ||3149.5 ||2680.6 |
FY 20-21 began with a ray of hope as the economic activity was gaining steam and thecommodity prices were also soft leading to visible procurement savings. However thatphase was short lived as the fear and uncertainty created by COVID-19 and subsequentlockdowns engulfed all the economic activities.
The pandemic impacted almost every business and your Company was no exception. Incompliance with the directions issued by the Central and State Governments the Companysuspended operations in its plants in last week of March 2020. Guided by the phraseSurvival of the fittest' your Company chalked out plans to ensure safety of itsemployees upkeep of plants securing supply of fuels raw materials spares consumablesand packing bags. The proactive approach enabled us to quickly restart our plantoperations as soon as the lockdown restrictions were partially relaxed by the government.The operations resumed since 20th April 2020 with reduced manpower and under stringentguidelines to mitigate the risk of COVID-19.
The Company also reviewed its Risk Control Matrix to counter the emerging challengesarising from the unprecedented situation. A continuous process of coordination with allstakeholders is in place to assess the risks and take corrective measure to mitigate thesame.
During the lockdown we renegotiated fuel contracts and focused on spot purchases tonullify the price fluctuations. We procured best available grades of fuels whileconstantly changing the fuel mix towards cost optimization. All services and manpowercontracts were reviewed and renegotiated to bring down the costs by 10% through bundlingconsolidation of contracts and restructuring of manpower. We deferred contractsrenegotiated the annual agreements that contributed for additional savings. Fixed termcontracts were extended by 3 months without adverse impact on the cost. Despite theshortage of fly-ash due to frequent shutdown of power plants we ensured its continuousavailability from alternate locations. During the year we also successfully replaced 16.8kms belt of Overland Belt Conveyor (OLBC) and the remaining to be replaced in first halfof following financial year.
In the wake of challenges posed by COVID-19 pandemic your Company as a responsiblecorporate citizen stands fully committed to the wellbeing of its employees and thesociety at large and is doing everything within its capacity to support the Government inovercoming the serious challenge faced by our Nation.
DEBENTURE REDEMPTION RESERVE
The Company had allotted 10.4% Non-Convertible Debentures aggregating to INR 3700million on 16th December 2013. These debentures are redeemable in three instalments at theend of 6th7th and 8th year from the date of allotment. The 1st and 2nd redemptioninstalments of INR 1250 million each were paid on 16th December 2019 and 16th December2020 respectively through internal accruals. The Company has adequate bank balance torepay the last and final instalment of INR 1200 million that would fall due on 16thDecember 2021.
The Debenture Redemption Reserve (DRR) stood at INR 710.1 million as on 31st March2020. In view of relaxation granted by the Ministry of Corporate Affairs to listedcompanies from creation of DRR it has been decided not to transfer any amount to DRRduring FY21. Accordingly the DRR remains unchanged at INR 710.1 million as on 31st March2021. The credit rating in respect of the aforesaid debentures has been reaffirmed as"IND AA+" (with stable outlook) by India Ratings and Research Pvt. Ltd.
RELOCATION OF REGISTERED OFFICE
The Company has relocated its Registered Office within Gurugram from "9th FloorInfinity Tower-C DLF Cyber City Phase-II Gurugram Haryana-122002" to "2ndFloor Plot No. 68 Sector-44 Gurugram Haryana-22002" with effect from 1st April2021. Requisite intimations regarding relocation of Registered Office have been given tothe Ministry of Corporate Affairs Stock Exchanges Depositories and other statutoryauthorities.
The Board has recommended a dividend of INR 8 per share (80%) for Fy21 subject to theapproval of the shareholders in the ensuing AGM (Dividend paid during FY20 was INR 7.5 pershare). The proposed dividend for FY21 will absorb INR 1812.9 million. In accordance withthe provisions of the I ncome Tax Act 1961 the proposed dividend will be taxable in thehands of shareholders but liable for Tax Deduction at Source (TDS) by the Company at theapplicable rates.
Dividend Distribution Policy
Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 requires top 1000 listed companies based on market capitalization to formulate aDividend Distribution Policy. In compliance with the said requirement the Board ofDirectors had formulated a Dividend Distribution Policy in FY17 and the same is posted onthe Company's website. The web-link to access the said policy is as follows:
The respective due dates on which unclaimed amounts of dividends pertaining to theprior years will be transferred to 'Investor Education and Protection Fund' (IEPF)constituted by the Ministry of Corporate Affairs are given below:
|S. No. ||Financial Year ||Dividend Per Share (INR) ||Date of declaration ||Date of transfer to IEPF |
|1 ||FY2016-17 ||2.00 ||22nd September 2017 ||28th October 2024 |
|2 ||FY2017-18 ||2.50 ||21st September 2018 ||27th October 2025 |
|3 ||FY2018-19 ||1.00 (Interim) ||25th October 2018 ||30th November 2025 |
|4 ||FY2018-19 ||3.00 (Final) ||19th September 2019 ||24th October 2026 |
|5 ||FY2019-20 ||1.50 (Interim) ||23rd November 2019 ||28th December 2026 |
|6 ||FY 2019-20 ||6.00 (Final) ||18th September 2020 ||21st October 2027 |
Sowing the seeds for a greener future is no longer a moral responsibility but abusiness imperative for a long-term selfsustenance. We follow a three-pronged approach tofulfil our commitment towards sustainability: Prevention Mitigation and Compensation.Committed to deliver on our Sustainability Goals 2030 we strive to excel in environmentprotection by reducing our footprints on water air and land and simultaneouslyfacilitating a circular economy by recycling and reusing waste materials. We remaincommitted to engage and deliver in the following key domain areas:
Driving Economic Strength & Innovation
Achieving excellence in Occupational Health and Safety
Reducing our Environment Footprint
Enabling Circular Economy
Being a Good Neighbour
Ensuring Compliance and Transparency
All plants of the Company are ISO 14001 (Environment Management System) certified. TheCompany consumed ~34.8% of fly ash in producing cement thus reducing limestoneconsumption preserving limestone reserves for posterity. During FY21 the Companygenerated 60693 Mega Watt (MW) of power from Waste Heat Recovery Power Plant atNarsingarh - another green initiative. The work relating to setting up of a solar powerplant of 5.5 MW at Patharia Limestone Mines is at an advanced stage and the same will becommissioned shortly. We have invested in alternative fuels feeding system which is alsoexpected to be commissioned shortly. It will facilitate in increasing the usage ofalternative fuels in kilns.
Sustainable practices form the core of our mining operations. Through a series ofwell-calibrated pre and post mining measures the Company strives to reverse theoperational impact and at the same time add value to the economy and community. Our miningoperations include soil management pollution control biodiversity conservationmaintaining water balance and promoting safe mining practices. Post mining the land isreclaimed through back-filling and afforestation by planting trees like Rain TreeBaniyan Arjun Golden Bamboo Pilkhan (timber) Neem Indian Rosewood etc. Some of themined areas have been developed into large water reservoirs that have become a boon forthe villagers since the harvested rainwater not only recharges the groundwater leading tosignificant improvement in water table of the area but also serves their irrigation needs.As a result of these actions Patharia limestone mines has been consistently winning 5Star Rating from the Indian Bureau of Mines.
Development of greenbelt in the plants and mines provides several benefits to theenvironment and the society at large in terms of release of oxygen absorption of carbondioxide and prevention of soil erosion. The green cover extends to over 38% of the factoryarea. Water bodies too have been developed to support plantation. These water bodies andtrees are home to a variety of flora and fauna. The enriched biodiversity provides shelterto numerous species of animal and birds indirectly helping in improving the happinessquotient of our employees.
To increase the green cover we are continuously motivating our business associates toplant trees in their region under our "friends of Earth" programme. It is a steptowards our commitment to make the world a better place to live for our generations tocome.
MAKING A DIFFERENCE THROUGH CSR
The Company is committed to the three pillars of ecology economy and socialresponsibility. We are working for the benefit of the communities around our plants withthe spirit of being "partners in progress".
We encourage community participation at all levels from planning and implementation tomonitoring and maintenance of assets created under CSR projects. While discharging ourresponsibilities as a good corporate citizen we are looking at all aspects ofdevelopment. Our CSR initiatives have wide coverage ranging from education skilldevelopment health & hygiene infrastructure development and sports. During FY21 theCompany has spent INR 66.00 million on various CSR projects/programmes exceeding theobligations pursuant to Section 135 of the Companies Act 2013.
In the wake of COVID-19 pandemic the Company maintained continuous interaction withlocal panchayats and village representatives to assess their needs and provide themsupport to the extent possible. The Company distributed face masks and sanitizerdispensers in nearby villages to mitigate the risk of spread of COVID-19. Sanitizationdrive was also carried out in some villages that were identified as high-risk areas. TheCompany also launched 'Annam Programme' for distributing grocery items to the local peoplein need. All these tasks were executed in close coordination with the officials ofdistrict administration. A new project has been initiated for upgradation of rural healthsub-centres. At Damoh three rural health sub-centres were upgraded and handed over to theDistrict Health Department. In Jhansi District Hospital a ward was renovated. We providedhealthcare services to underserved sections of the society by organising rural healthcamps in the nearby villages.
In association with District Women & Child Development Department of Damoh we haveconverted 15 Anganwadi centres into Model Anganwadi centres. These centres have beenproperly renovated and equipped with furniture and playing items to serve over 1200children.
We are working on transformation of rural schools. In Damoh & Jhansi basicinfrastructure of 16 government schools was upgraded benefitting over 5000 students and142 teachers. In some nearby schools new classrooms were constructed while in few othersextensive repair and renovation work was undertaken. Scholarships are given to meritoriousstudents to facilitate their higher education. Educational kits and uniforms were alsodistributed to students.
Complimenting Government's "Skill India" Mission we have set up skilldevelopment centres known as"Sakshamta Vikas Kendra" at Jhansi & Damoh. Toenhance the quality of training in tailoring we have made arrangement with UshaInternational Ltd to conduct three months certificate courses. We have commenced trainingof rural youth in repair of domestic electrical appliances.
To make cattle farming an alternate source of rural livelihood cattle breedimprovement project has been started in Damoh through engagement of BAIF Institute.Through this project facilities such as cattle rearing vaccination artificialinsemination are provided to villagers who have register to avail the same.
Villages require basic facilities to improve the standard of living such as good roadsproper drainage potable water streetlights proper waste disposal cleanliness etc.Therefore we are attempting to provide these facilities and develop a few model villages.
The Report on CSR activities in the format prescribed by the Ministry of CorporateAffairs is annexed herewith as 'Annexure - A'.
OCCUPATIONAL HEALTH & SAFETY
Safety of employees and all stakeholders being paramount importance to us it hasbecome a part of our business DNA. "Someone is waiting for you at Home" is themessage that's emphasized most during meetings with workmen. Driven by this philosophy weendeavor to provide a safe and healthy working environment. HeidelbergCement Group'scardinal norms guidelines standards and legal requirements along with stipulations underISO 45001 -Occupational Health and Safety Management System are being strictly adhered toat all the plants.
The management activated its "Contingency Management and Business ContinuityPlan" in March 2020 to counter the onslaught of COVID-19 pandemic. The priorityenvisaged by the business continuity team was to create awareness amongst the employeesabout corona virus and the means to safeguard against it. Therefore variouscommunications were initiated including online awareness sessions were conducted to makeemployees aware about the impending risk. Posters in local languages were also put atprominent locations to educate workmen.
To protect against COVID-19 thermal scanning of employees and visitors has been mademandatory at entry gates of our plants. In addition to the usual Personal ProtectiveEquipment (PPE) COVID-19 protection has also been made mandatory while working in theplant premises. Sanitizer dispensing machines and handwashing facilities have beenprovided or enhanced at relevant places and social distancing norms are being strictlyfollowed.
Plant premises have been segmented into "Safety Zones" and headed by a SafetyChampion with cross functional members. Safety conversations and safety zones are beingeffectively used for employee engagement and nurturing safety culture in all aspects ofoperations. A schedule of twenty-four most critical safety hazards relevant to the cementindustry has been compiled. Each of these safety themes is adopted for each month and keyaspects relating to the hazard are dwelt upon throughout the month so that the do's anddon'ts get firmly instilled in the minds of the workmen. National Safety week was observedfrom 4th to 11th March 2021 across all the plants. Monitoring of the workplace for noiseparticulate matter free silica enhanced illumination levels etc. are being done as perthe regulatory norms. All the plants are ISO 45001 certified.
We are happy to inform that the Company has achieved safe business year with nofatality and Lost Time Incidents Frequency Rate (LTIFR) of 0.15.
AWARDS AND ACCOLADES
The Company continues to pursue excellence in all areas of its operations as evidentfrom the recognition in the form of awards and honours.
Jhansi Plant receivedGold Award' in Cement Sector' from Apex IndiaFoundation for its outstanding achievements in safe workplace.
Jhansi Plant received National Energy Management Award 2020' fromConfederation of Indian Industry for being an energy efficient unit.
Golden Peacock Awards CSR 2020' for the project Transformation &Facility Enhancement in Rural Educational Institutions'.
CSR Times Award 2020' - Silver Award' for being the Best Corporatein Education Category.
National Award for Excellence in CSR & Sustainability' in thecategory Best Education Improvement' awarded by World CSR Day and WorldSustainability.
CSR Leadership Award' in the category Infrastructure (CommunityAsset)'awardedby World CSR Day.
Certificate of Recognition awarded by India CSR Awards 2020' fortransformation in rural education.
The essence of Corporate Governance lies in promoting and maintaining integritytransparency and accountability. The Company believes in creating and nurturingrelationships based on trust and transparency with all its stakeholders. The governanceframework enjoins the highest standards of ethical and responsible conduct. All Directorsand employees consider governance as their personal responsibility and conduct themselvesin accordance with the Code of Conduct set out by the organization.
The Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 have reinforced the governance regime in India. The Company is compliantwith the corporate governance requirements as prescribed under the said regulations. TheCompany has also ensured compliance with applicable Secretarial Standards issued by theInstitute of Company Secretaries of India pursuant to Section 118(10) of the CompaniesAct 2013.
In terms of Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a Corporate Governance Report pertaining toFY21 forms part of this Annual Report. Pursuant to the provisions of the listingregulations a certificate from M/s. Nityanand Singh & Co. a firm of CompanySecretaries in Practice confirming compliance with the conditions of Corporate Governanceis also annexed to the Corporate Governance Report.
A certificate furnished by Mr. Jamshed Naval Cooper Managing Director and Mr. AnilKumar Sharma Chief Financial Officer in respect of the financial statements and the cashflow statement for the financial year ended 31 st March 2021 is annexed as Annexure ' B'to this Report.
Management Discussion and Analysis Report is also given as an addition to this Report.
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Business Responsibility Report forms part of thisAnnual Report.
Retirement by rotation
Mr. Sushil Kumar Tiwari Director retires by rotation at the ensuing AGM and beingeligible has offered himself for reappointment. His brief profile is given in the Noticeof AGM. The Board hereby recommends his reappointment.
Reappointment of Whole time Director
The members of the Company at the AGM held on 19th September 2019 had reappointed Mr.Sushil Kumar Tiwari as Whole time Director of the Company for a term of two years from10th June 2019 until 09th June 2021. The Board at its meeting held on 28th May 2021 hasreappointed Mr. Sushil Kumar Tiwari as Whole time Director for a further term of one yearfrom 10th June 2021 until 09th June 2022 subject to the approval of the members in theensuing AGM. The Board has recommended the resolution for reappointment of Mr. Tiwari asprovided at Item No. 4 of the Notice of AGM for approval of the members.
Appointment of new Independent Director
The Board of Directors at its meeting held on 18th August 2021 has appointed Ms. JyotiNarang as an Additional Director in the category of Non-Executive Independent Directorwith effect from 18th August 2021. In the capacity of an Additional Director she holdsoffice up to the date of the ensuing Annual General Meeting. The Company has receivednotice under section 160(1) of the Companies Act 2013 from a member proposing hercandidature for the office of the Director at the ensuing AGM. The brief profile of Ms.Narang is given in the Notice of AGM. Ms. Narang has submitted declaration to the Companythat she fulfils the criteria of independence as laid down under Section 149(6) of theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Board recommends the appointment of Ms. Narang by the members inthe ensuing AGM for a term of five years from 18th August 2021 to 17th August 2026.
Declaration of Independent Directors
Ms. Akila Krishnakumar Mr. Ramakrishnan Ramamurthy and Ms. Jyoti Narang IndependentDirectors on Board have submitted declarations to the Company that they fulfill thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
The Board of Directors based on the declarations received from the IndependentDirectors has verified the veracity of such declarations and confirms that theIndependent Directors fulfill the conditions of independence specified in the SEBI(Listing Obligations and Disclosure Requirements) Regulations 201 5 and they areindependent of the management of the Company.
DISCLOSURES UNDER COMPANIES ACT 2013
Number of Board Meetings:
During FY21 four Board Meetings were held. The details of the same are given in theCorporate Governance Report.
Composition of Audit Committee:
The Audit Committee of the Company as on 31st March 2021 comprised three membersnamely Mr. Ramakrishnan Ramamurthy (Chairman of the Committee) Ms. Akila Krishnakumarand Ms. Soek Peng Sim.
In accordance with the provisions of the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried out anannual evaluation of its own performance that of the directors individually and that ofall the Committees constituted by it namely the Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee StakeholdersRelationship Committee and Risk Management Committee. The manner in which the performanceevaluation has been carried out has been explained in the Corporate Governance Report.
Policy for appointment and remuneration of directors:
The Board has on the recommendation of the Nomination and Remuneration Committeeframed a Nomination and Remuneration Policy. The policy inter alia lays down the criteriafor determining qualifications attributes and independence of potential candidates forappointment as directors and determining their remuneration. The brief details of thePolicy have been provided in Corporate Governance Report. The said Policy has been postedon website of the Company and the weblink to access the said policy is as follows:http://mycemco.com/sites/default/files/2020/HCIL-Nomination-and-Remuneration-Policy.pdf
The Board has also adopted a 'Board Diversity Policy' which requires the Board toensure appropriate balance of skills experience and diversity of perspectives in its owncomposition.
The Annual Return of the Company for FY20 filed with the Ministry of Corporate Affairs(MCA) and the draft Annual Return for FY21 are available on the website of the Company andthe weblink to access the same is as follows:https://www.mycemco.com/investor-relations/financial-results.
After the filing of Annual Return for FY21 with MCA the draft will be replaced withthe final version.
Key Managerial Personnel:
No changes took place in the Key Managerial Personnel (KMP) during FY21. The followingpersons continue to be the KMP of the Company:
Mr. Jamshed Naval Cooper Managing Director;
Mr. Sushil Kumar Tiwari Whole-time Director;
Mr. Anil Kumar Sharma Chief Financial Officer; and
Mr. Rajesh Relan Legal Head & Company Secretary.
LOANS GUARANTEES SECURITY AND INVESTMENTS
During FY21 with the prior approval of the shareholders obtained by way of a specialresolution passed at the Annual General Meeting held on 18th September 2020 the Companyhas given a term loan of INR 1500 million to Zuari Cement Limited (a fellow subsidiary ofthe Company) for setting up a Waste Heat Recovery based Power Generation Plant at itsYerraguntla Plant in Andhra Pradesh. The particulars of such loan are given in the notesto financial statements.
The Company has not given any guarantee or security or made any investment pursuant tothe provisions of section 186 of the Companies Act 2013.
General: The Directors state that no disclosure or reporting is required in respectof the following items as there were no transactions with respect to these items duringFY21:
Details relating to deposits covered under Chapter V of the Companies Act 2013.
Issue of equity shares with differential rights as to dividend voting orotherwise.
Issue of stock options or sweat equity shares.
No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and the Company's operations in future.
Transfer to General Reserve.
INTERNAL FINANCIAL CONTROLS
The Company has in place relevant internal controls policies and procedures to ensureorderly and efficient conduct of its business. Standard Operating Procedures (SOPs) andRisk Control Matrix (RCM) have been designed for critical processes across all operations.The internal financial controls are tested for operating effectiveness throughmanagement's ongoing monitoring and review processes and independently by the internalauditors. In our view the internal financial controls are adequate and are operatingeffectively.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them and based on the assessment of the management the Board ofDirectors makes the following statements in terms of Section 134 of the Companies Act2013:
(a) that in the preparation of the annual accounts for the financial year ended 31stMarch 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
(b) that such accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March 2021 and of theprofit of the Company for the financial year ended on that date;
(c) that 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 and for preventing and detecting fraud and otherirregularities;
(d) that the financial statements for the financial year ended 31st March 2021 havebeen prepared on a 'going concern' basis;
(e) that proper internal financial controls were in place and that such internalfinancial controls were adequate and were operating effectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All transactions entered between the Company and its related parties during thefinancial year ended 31st March 2021were in the ordinary course of business and on anarm's length basis. The particulars of such transactions have been disclosed in notes tothe financial statements for FY21. During the year under review the Company has notentered in any related party transaction exceeding the threshold limit provided under theCompanies Act 2013/Rules made thereunder and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. A statement of all the related party transactions isplaced before the Audit Committee on a quarterly basis specifying the nature and value ofthe transactions.
The Company has in place a Policy on Related Party Transactions and a framework for thepurpose of assessing the basis of determining the arm's length price of relevanttransactions. The said policy and the framework are annually reviewed by the AuditCommittee and the Board of Directors. The same have been posted on the Company's website.The web-link to access the said policy and framework is as follows:https://www.mycemco.com/sites/default/files/Related%20Party%20Transaction%20Policy.pdf
One of the factors that distinguishes a Company's journey to create sustainable valuesfor its shareholders is its ability to manage the business risks. Many risks exist in theoperating environment and may emerge from time to time. The Risk Management processes ofthe Company ensure that the risks are identified well in time and addressed proactively.
The business risks have been classified under the broad heads - strategic operationalfinancial and legal & compliance risks. The Company's Risk Management Policy laysdown a bottom-up process comprising risk identification analysis and evaluationtreatment and controlling. Risk owners identify and analyse all risks in their area ofoperations. The business risks are reviewed by the Senior Management and the critical onesare placed before the Risk Management Committee/Board of Directors for review.
The amended Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 requires the top 1 000 listed companies based on market capitalizationto constitute a Risk Management Committee. Accordingly the Board of Directors hasconstituted a Risk Management Committee. The details relating to composition of theCommittee and its functions are provided in Corporate Governance Report.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established a vigil mechanism/whistle blower policy to deal with theinstances of unethical behaviour fraud conflict of interest mis-management andviolation of the Code of Conduct. During FY21 no complaint was received under the VigilMechanism. The details of the vigil mechanism are given in the Corporate Governance Reportand a copy of the Policy has been posted on the Company's website. The web link to accessthe same is as follows:http://www.mycemco.ccm/sites/defaut/fles/W'e.f.%201.4.2019%20HQL%2CWhste%20Bow3r%20Fblicypdf
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Company is compliant with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 which aims to protect womenat workplace against any form of sexual harassment and prompt redressal of any complaint.During FY21 no complaint was received by the Company in this regard.
In accordance with the provisions of Section 139(1) of the Companies Act 2013 themembers at the 58th Annual General Meeting (AGM) of the Company held on 22nd September2017 had appointed S.N. Dhawan & Co. LLP. Chartered Accountants as statutoryauditors of the Company to hold office up to the conclusion of the 63rd AGM i.e. forconducting statutory audits commencing from FY2017-18 until FY 2021 -22.
The observations of the Auditors in their report on Financial Statements read with therelevant notes are self-explanatory. The Independent Auditors' Report does not contain anyqualification reservation or adverse remarks.
The Company is maintaining cost records in accordance with the provisions of Section148 of the Companies Act 2013 and the Rules made thereunder. The Cost Audit for FY20 wasconducted by M/s. R.J. Goel & Co. Cost Accountants Delhi. The Cost Audit Report wasduly filed with the Ministry of Corporate Affairs Government of India. The Audit of thecost accounts of the Company for FY21 was also conducted by the said firm and the Reporthas been filed with the Ministry of Corporate Affairs.
In accordance with Section 148 of the Companies Act 2013 and the Companies (CostRecords and Audit) Rules 2014 the Board of Directors has on the recommendation of theAudit Committee appointed M/s. R.J. Goel & Co. Cost Accountants as Cost Auditor ofthe Company for FY22 on a remuneration of INR 250000. Pursuant to Section 148(3) of theCompanies Act 2013 a resolution seeking member's ratification for the remunerationpayable to M/s. R.J. Goel & Co. Cost Accountants for FY22 is included in the Noticeconvening the AGM. The Board recommends the aforesaid resolution for approval of themembers.
The Board had appointed M/s. Nityanand Singh & Co. a firm of Company Secretariesin Practice as Secretarial Auditor for carrying out secretarial audit of the Company forthe financial year ended 31st March 2021 in accordance with the provisions of Section 204of the Companies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014. The Report of the Secretarial Auditor is annexed herewith asAnnexure 'C'. The Secretarial Audit Report does not contain any qualification reservationor adverse remarks.
Secretarial Compliance Report:
SEBI had vide its circular dated 8th February 2019 made it mandatory for listedcompanies to annually submit a Secretarial Compliance Report to stock exchanges. M/s.Nityanand Singh & Co. has furnished Secretarial Compliance Report for FY21. The saidReport does not contain any qualification reservation or adverse remarks. The saidReport has been placed on website of the Company and the web link to access the same is asunder:
PARTICULARS OF EMPLOYEES
The particulars of employees required pursuant to Section 197 of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 form part of this Report and are annexed as Annexure 'D'. Inaccordance with the provisions of Section 136 of the Act the Board's Report and thefinancial statements for the financial year ended 31st March 2021 are being sent to themembers and others entitled thereto excluding the details to be furnished under Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 whichare available for inspection by the members at the Registered Office of the Company duringbusiness hours on all working days up to the date of the ensuing Annual General Meeting.If any member desires to have a copy of the same he may write to the Company Secretary inthis regard.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 form part of this Report andare annexed as Annexure ' E'.
Your Directors are thankful to all stakeholders including Customers BankersSuppliers Distributors Dealers and Contractors for their continued assistanceco-operation and support. The Directors wish to place on record their sincereappreciation to all employees for their commitment and continued contribution to theCompany. The Directors are grateful for the confidence faith and trust reposed by theshareholders in the Company. We are thankful to various agencies of the Central and StateGovernment(s) for their continued support and co-operation.
| ||For and on behalf of the Board |
|Place: Bengaluru ||Akila Krishnakumar |
|Date: 18th August 2021 ||Chairperson |