Your Directors take pleasure in presenting their 77th Annual Report of the companytogether with the Audited Financial Statements (Standalone and Consolidated) for thefinancial year ended 31st March 2018.
1. Financial Results:
Financial information Standalone and Consolidated
| ||For the year ended ||For the year ended |
|Particulars ||31/03/2018 ||31/03/2017 ||31/03/2018 ||31/03/2017 |
| ||Stand Alone ||Consolidated (GROUP) |
|Revenue from Operations ||105999 ||94899 ||151995 ||136171 |
|Profit for the year (EBDITA) ||19669 ||14871 ||25558 ||22890 |
|Less: a) Interest and Finance charges ||3529 ||4725 ||4234 ||4993 |
|b) Depreciation & Amortization ||4903 ||4861 ||7051 ||6259 |
|Profit before Tax ||11237 ||5285 ||14273 ||11638 |
|Tax Expense ||3110 ||1876 ||3112 ||1948 |
|Profit for the Year from Continuing Operations ||8127 ||3409 ||11161 ||9690 |
|Profit / (Loss) from Discontinued Operations || ||(36) ||- ||(36) |
|Less : Tax expense of Discontinued Operations || ||(8) ||- ||(8) |
|Profit / (Loss) from Discontinued Operations After Tax ||- ||(28) ||- ||(28) |
|Profit for the Year ||8127 ||3381 ||11161 ||9662 |
|Add : Share of Profit from Joint Veture || || ||105 ||100 |
|Less : Non-Controlling Share of Profit || || ||2315 ||2107 |
|Profit / (Loss) after Non controlling interest ||8127 ||3381 ||8951 ||7655 |
|Other Comprehensive Income (OCI) ||(27) ||(266) ||(363) ||(1178) |
|Add : Share of OCI from Joint Veture || || ||(30) ||5 |
|Less : Non-Controlling Share of OCI || || ||(102) ||(304) |
|OCI after Non controlling share ||(27) ||(266) ||(291) ||(869) |
|Total Comprehensive Income (TCI) ||8100 ||3115 ||10873 ||8589 |
|Less : Non-Controlling Share of TCI || || ||2213 ||1803 |
|Total Comprehensive income after non-controlling interest ||8100 ||3115 ||8660 ||6786 |
|Profit for the year ||8127 ||3381 ||8951 ||7655 |
|Add: Surplus brought forward from earlier year ||10952 ||7571 ||26792 ||19145 |
|Less: Dividend Paid (including DDT) ||2578 ||- ||2586 ||8 |
|Surplus at the end of the Year ||16501 ||10952 ||33157 ||26792 |
2. Indian Accounting Standards (IND AS)
The Ministry of Corporate Affairs (MCA) vide its notification in the Official Gazettedated February 16 2015 notified the Indian Accounting Standards (Ind AS) applicable tocertain classes of Companies in a phased manner. The Ind AS has replaced the existingIndian GAAP prescribed under Section 133 of the Companies Act 2013 read with Rule 7 ofthe Companies (Accounts) Rules 2014 and the Ind AS is applicable for our Company fromApril 1 2017 with a transition date of April 1 2016 and IGAAP as the previous GAAP.
The following are the areas which had an impact on account of transition to Ind AS :
Fair valuation of certain financial instruments
Employee costs pertaining to defined benefit obligations Discounting ofcertain long-term liabilities Loss allowance on certain financial assets Thereconciliation and description of the effect of the transition from IGAAP to IND AS havebeen provided in Note 1.5 and Note xx in the notes to accounts in the standalone andconsolidated financial statements respectively.
The Board has recommended for the approval of the shareholders at the ensuing Annualgeneral Meeting a dividend of Re 1/- per share (100% on paid-up share capital of theCompany).
4. Transfer to Reserves
The company has not transferred any amount to the reserves for the year ended March 312018.
5. Share Capital
The paid up Equity Share Capital as on March 31 2018 is Rs. 1289.21 Lakhs. The Companyhas neither issued shares with differential rights as to dividend voting or otherwise norissued shares (including sweat equity shares) to the employees or Directors of theCompany under any Scheme.
No disclosure is required under Section 67(3)(c) of the Act 2013 (Act) as theprovisions of the said Section are not applicable
6. Credit Rating
CRISIL has reaffirmed the ratings of the Company (The KCP Limited) bank loan facilitiesand other debt facilities as detailed below.
|Long Term Rating ||CRISIL A-/Stable (Reaffirmed) |
|Short Term Rating ||CRISIL A2 +(Reaffirmed) |
|Rs. 7000 lakhs Non- Convertible Debentures ||CRISIL A-/Stable (Reaffirmed) |
|Fixed Deposits ||FA/Stable (Reaffirmed) |
7. Fixed Deposits:
The total amount of Fixed Deposits outstanding as on 31st March 2018 was Rs.8740.48lakhs as compared to the figure of Rs.9231.02 lakhs as on 31-3-2017. As on 31st March2018 Fixed Deposits matured and remained unclaimed were Rs.1017.29 lakhs from 473depositors. As on the date of this report Fixed Deposits relating to 248 Depositorsamounting to Rs.755.15 lakhs have been renewed and Fixed Deposits of Rs.86.99 lakhs of 41depositors repaid.
Depositors have been intimated regarding the maturity of deposits with a request toeither renew or claim their deposits. As per the provisions of the Companies Act 2013deposits remaining unclaimed for a period of seven years from the date they became due forpayment have to be transferred to the Investor Education and Protection Fund (IEPF)established by the Central Government. Accordingly during the year an amount ofRs.187000/- towards unclaimed deposits and Rs.21000/- towards Stale cheque unclaimed ondeposits has been transferred to the IEPF.
8. Particulars of Loans Guarantees and Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in notes to the financial statements.
9. Management Discussion & Analysis report:
In terms of the provisions of Regulation 34(2) of the Listing Regulations theManagement Discussion and Analysis forms part of this Report and all matters pertaining toIndustry structure and developments opportunities and threats segment/product wiseperformance outlook risks and concerns internal control and systems etc are discussedin this report.
10. Line 2 Expansion of Brown filed cement project Muktyala:
Discussed in detail in Management Discussion & Analysis report
11. Related Party transactions:
The details of contracts or arrangements entered with the related parties along withthe Justification is provided in Form AOC 2 as Annexure- 6 of this report.
There were no materially significant related party transactions with PromotersDirectors Key Managerial Personnel or other designated persons which may have apotential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee for The policy onRelated Party Transactions as approved by the Board is available at www.kcp.co.in.
No whole time Director or Managing Director of the company is in receipt of any salaryor Commission from Subsidiary company in terms of Section 197(4) of the Companies Act2013.
12. Corporate Social Responsibility (CSR)
Aspartofitsinitiativesunder"CorporateSocialResponsibility (CSR) the Company hasundertaken projects in the areas of Education Livelihood Women empowerment HealthDrinking water and Sanitation. These projects are largely in accordance with Schedule VIIof the Companies Act 2013.
The Company is committed to identifying and supporting programmes aimed at:
Empowerment of the disadvantaged sections of the society through educationhealthcare drinking water & sanitation and eradicating hunger and poverty throughlivelihood generation and skill development;
Supporting environmental and ecological balance through afforestation soilconservation rain water harvesting conservation of flora & fauna and similarprogrammes;
Promotion of sports through training of sports persons;
Undertake rural development projects;
The Company has constituted a CSR Committee in accordance with Section 135 of theCompanies Act 2013. The CSR Committee has formulated and recommended to the Board a CSRPolicy indicating the activities to be undertaken by the Company which has been approvedby the Board. The CSR Policy may be accessed on the Company's website at www.kcp.co.in.
The Annual Report on CSR activities is annexed herewith as "Annexure- 3".
Details of various social projects and initiatives undertaken as part of our CorporateSocial Responsibility are given in report on CSR activities which forms part of thisAnnual Report.
13. Risk Management
The Company has a robust Risk Management framework to identify evaluate business risksand opportunities. This framework seeks to create transparency minimize adverse impact onthe business objectives and enhance the Company's competitive advantage. The business riskframework defines the risk management approach across the enterprise at various levelsincluding documentation and reporting.
The Board of Directors of the Company has formed a Risk Management Committee (eventhough it is not mandatory) to monitor the risk management plan for the Company andensuring its effectiveness. The key risks identified by the Company and their mitigationmeasures are as under:
The financial risk for your Company emanates from fluctuations in interest rateexchange rate and commodity prices. Your Company has well defined policies for foreignexchange treasury investments interest rate and imported coal hedging. The policies arereviewed periodically to align with the changes in financial market practices andregulations.
The Cement Industry is becoming intensely competitive with the foray of new entrantsand some of the existing players adopting inorganic growth strategies. To mitigate thisrisk the Company is leveraging on its expertise experience and it's created capacitiesto increase market share enhance brand equity / visibility and enlarge product portfolioand service offerings.
Risks Concerns and Threats
The Company has formulated a Risk Management Policy which is available on companywebsite www.kcp.co.in. .
14. Internal controls system and their adequacy
The company has designed and implemented a process driven framework for InternalFinancial controls within the meaning of the explanation to Section 134(5)(e) of theCompanies Act 2013 and the necessary control systems considering the businessrequirements scale of operations geographical spread and applicable statues of thecompany are in place in the organisation. The systems include policies and procedures ITsystems delegation of authority segregation of duties internal audit and reviewframework etc.
The Audit Committee reviews the plan for internal audit significant internal auditobservations and functioning of the Company's Internal Audit department on a periodicbasis.
Revenue and capital expenditures are governed by approved budgets and the levels aredefined by a delegation of authority mechanism. Review of capital expenditure isundertaken with reference to benefits expected in line with the policy for the same.
Major Investment decisions are approved by the Board of Directors on therecommendations of the Investment committee of the company.
The Company has a formal system of internal financial control to ensure the reliabilityof financial and operational information regulatory & statutory compliances andreporting processes resulting in financial discipline and accountability.
Company has designed the necessary internal financial controls and systems with regardto adherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors accuracy and completeness of the accounting records andthe timely preparation of reliable financial information.
15. Human resources / industrial relations
Our Company continuously focus on people related programmes aimed at attractingdeveloping and retaining talent within organisation by way of:
a) Employee Engagement - Company enjoys high engagement levels from its employees whichis reflected in its consistently improving performance and continuously aims to enhancethe engagement levels of its people by ensuring that its business practices are inalignment with the holistic growth and development of its people which drives them to beactively engaged with the Company.
b) Talent Management - Company is continuously working on strengthening and buildingtalent in its Human Resources management team for supporting its growth.
c) Work Environment - Company provides a congenial work atmosphere where every employeeenjoys his work and It works on creating people practices which makes it the best place towork for everyone.
d) Occupational Health and Safety:
Safety of employees and workers is of utmost importance to the Company. To reinforcethe safety culture in the Company it has identified occupational Health & Safety asone of its focus areas. Various training programmes have been conducted at the plants.
Company regularly conducts Safety Audit to identify and eliminate potential safetyrisks through an objective assessment of various equipments. Further Mock drills onemergency preparedness are conducted to meet any contingency.
Employee Relations at all the Units and divisions of the company remained cordial.
Company's sustainability initiatives are focussed on low carbon emission use ofalternate fuels water & resource conservation and environment management and isrecognised as one of the most efficient cement manufacturing organisation.
17. Vigil Mechanism / Whistle Blower Policy
The Company has a vigil mechanism named Whistle blower Policy to deal with instance offraud and mismanagement if any.
The details of the Whistle blower Policy is explained in the Corporate GovernanceReport and also posted on the website of the Company www.kcp.co.in.
18. Report under the Prevention of Sexual Harassment Act
Pursuant to the Prevention of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and Rules framed there under Company has implementeda policy on prevention prohibition and redressal of sexual harassment at the workplaceAll women permanent temporary or contractual including those of service providers arecovered under the policy and an Internal Complaints Committee has been formed to redressthe complaints. There were no complaints reported during the year.
19. Directors and Key Managerial Personnel (KMP)
As per the provisions of section 152 of the Companies Act 2013 read with the Articlesof Association of the Company
Smt.Kavitha Dutt Chitturi Director (DIN : 00139274) retires by rotation at theforthcoming Annual General Meeting and being eligible offers herself for reappointment andthe requisite details in this connection is contained in the notice convening the meetingand the Corporate Governance Report.
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under section 149(6) of theCompanies Act 2013 and also comply with Regulations 16 & 25 of the SecuritiesExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations).
A brief resume of the Director proposed to be re-appointed the nature of her expertisein specific functional areas names of companies in which she has held Directorshipscommittee memberships/ chairmanships her shareholding etc. are furnished in theexplanatory statement to the notice of the ensuing AGM.
The Directors recommend her re-appointment at the ensuing AGM.
None of the Directors of the Company have resigned as Director of the Company.
During the year there was no change (appointment or cessation) in the office of KMP.
20. Board Evaluation
In accordance with the Companies Act 2013 and Listing Regulations the Board hascarried out evaluation of its own performance the performance of Committees of the Boardand also the directors individually. The manner in which the evaluation was carried outand the process adopted has been given in the Corporate Governance Report.
21. Disclosure on Audit Committee
The Audit Committee as on March 31 2018 comprises of the following Directors:
Sri. O. Swaminatha Reddy (Chairman) Smt. Kavitha Dutt Chitturi Joint ManagingDirector Sri V.H. Ramakrishnan Sri. Vijay Sankar Sri. P.S. Kumar and Sri. M.Narasimhappa are members of the committee.
All recommendations of Audit Committee were accepted by the Board of Directors.
22. Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this report.
Pursuant to the provisions of Section 139 of the Companies Act 2013 M/s. K.S. Rao& Company Chartered Accountants (Firm Registration No.003109S) Hyderabad have beenappointed as Statutory Auditors of the Company for a term of five consecutive years tohold office from the conclusion of the 74th Annual General Meeting until the conclusion of79th Annual General Meeting of the Company on such remuneration as may be decided by theBoard on the recommendations of Audit Committee of the Company.
Report of Statutory Auditors
The Auditors M/s. K.S. Rao & Company Chartered Accountants (Firm RegistrationNo.003109S) Hyderabad have submitted their Report on the Financial Statements of theCompany for the FY 2017-18 which forms part of the Annual Report.
The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments.
24. Cost Auditors and their Report
As per Section 148 of the Companies Act 2013 read with Rules framed there under M/sNarsimhamurthy & Co Cost Accountants Hyderabad and Mahadevan & Co Chennai asthe Cost Auditors for the Cement and Engineering units for the year 2017-18 werere-appointed as Cost Auditors for the financial year 2018-19 to conduct cost audit of theaccounts maintained by the Company in respect of the various products prescribed under theapplicable Cost Audit Rules. The remuneration of Cost Auditors has been approved by theBoard of Directors on the recommendation of Audit Committee. The requisite resolution forratification of remuneration of Cost Auditors by members of the Company has been set outin the Notice of ensuing annual general meeting. The Cost Auditors have certified thattheir appointment is within the limits of Section 141(3)(g) of the Companies Act 2013 andthat they are not disqualified from appointment within the meaning of the said Act.
The Cost Audit Report for the financial year 2016-17 issued by M/s Narsimhamurthy& Co Cost Accountants Hyderabad and Mahadevan & Co Chennai as the CostAuditors in respect of the various products prescribed under Cost Audit Rules was filedwith the Ministry of Corporate Affairs within the due date.
25. Secretarial Auditors and their Report
Smt.Sobana Pranesh Company Secretary in practice was appointed as SecretarialAuditors of the Company for the financial year 2017-18 pursuant to Section 204 of theCompanies Act 2013.
The Secretarial Audit Report submitted by her in the prescribed form MR- 3 is attachedas `Annexure- 7` to this Report.
There are no qualifications or observations or adverse remarks or disclaimer of theSecretarial Auditors in the Report issued by them for the financial year 2017-18.
Smt.Sobana Pranesh Company Secretary in practice has been re-appointed to conduct theSecretarial Audit of the Company for the year 2018-19.
26. Details in respect of frauds reported by Auditors other than those which arereportable to the Central Government
The Statutory Auditors Cost Auditors or Secretarial Auditors of the Company have notreported any frauds to the Audit Committee or to the Board of Directors under Section143(12) of the Companies Act 2013 and rules made there under.
27. Subsidiary Company:
Pursuant to Section 129 (3) of the Companies Act 2013 and Ind-AS 110 ConsolidatedFinancial Statements presented by the Company include the financial statements of itssubsidiaries.
In terms of provisions of Section 136 of the Companies Act 2013 separate auditedaccounts of the subsidiary companies shall be available on its website at www.kcp. co.in.The Company will make available physical copies of these documents upon request by anyshareholder of the Company interested in obtaining the same.
These documents shall also be available for inspection at the registered office of theCompany during business hours up to the date of ensuing AGM.
Your Company does not have any Indian Subsidiary company.
The Audit Committee and Board review the financial statements significanttransactions working and the financial results of the subsidiary company in Vietnam KCPVietnam Industries Limited.
There is no material change in the nature of the business of the subsidiary and JointVenture. A statement containing brief financial details of the subsidiaries is included inthe Annual Report in Form AOC 1 as Annexure 5.
No company ceased to be its Subsidiary joint venture or associate company during theyear
28. Policy on Directors' Appointment and Remuneration and Other Details (Pursuant toSection 134(3)(e) and Section 178(3) of the Companies Act 2013)
The Board has on the recommendation of the NRC framed a policy for selection andappointment of Directors Senior Management and their remuneration and also framed thecriteria for determining qualifications positive attributes and independence ofdirectors. The Remuneration Policy and criteria for Board nominations are available on theCompany's website at www.kcp.co.in
Composition of the Board shall be in compliance with the SEBI Regulations. Majority ofthe Directors shall have specialised knowledge/experience in the areas like BankingAccountancy Finance etc.
The Executive Chairman Managing Director Joint Managing Director and TechnicalDirector are paid remuneration as approved by the Shareholders as per the applicableprovisions of the Companies Act 2013 and rules made there under but are not paid sittingfees.
The Executive Chairman Managing Director Joint Managing Director and TechnicalDirector Company Secretary and Chief Financial Officer shall be the Key ManagerialPersonnel (KMPs) of the Company.
All persons who are Directors / KMPs members of Senior Management and all otheremployees shall abide by the Code of Conduct. Independent Directors are not entitled forESOPs.
Directors/KMPs shall not acquire any disqualification and shall be persons of soundintegrity and honesty apart from knowledge experience etc. in their respective fields.
29. Number of Meetings of the Board
5 (Five) Meetings of the Board of Directors were held during the year the details ofwhich are given in the Corporate Governance Report.
30. Corporate Governance
The report on corporate governance along with a certificate from the Statutory Auditorsas required under the Listing Regulations is annexed to this Report. The report alsocontains the details required to be provided on the board evaluation remuneration policyimplementation of a risk management policy whistleblower policy /vigil mechanism etc.
The Executive Chairman and the Chief Financial Officer have submitted a certificate tothe Board regarding the financial statements and other matters as required underRegulation 17(8) read with Schedule II of Part B of the Listing Regulations.
31. Transfer to the Investor Education and Protection Fund
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 ("the Rules") allunpaid or unclaimed dividends are required to be transferred by the Company to the IEPFestablished by the Central Government after the completion of seven years. Furtheraccording to the Rules the shares in respect of which dividend has not been encashed bythe shareholders for seven consecutive years or more shall also be transferred to thedemat account created by the IEPF Authority. Accordingly the Company has transferred theunclaimed and unpaid dividends. Further the corresponding shares also be transferred asper the requirements of the IEPF rules details of which are provided on our website www.kcp.co.in.
32. Particulars of Employees
Particulars pursuant to Section 197(12) and the relevant Rules
The information required under Section 197(12) of the Companies Act 2013 and the rulesmade there under as amended has been given in the annexure appended hereto and formspart of this report as Annexure 1.
a) The ratio of the remuneration of each director to the median employee'sremuneration for the financial year and such other details as prescribed is as givenbelow:
|Name of the Director ||Director remuneration ||Median employee's remuneration ||Ratio |
| ||(Rs. Lakhs) ||(Rs. Lakhs) || |
|Dr.V.L.Dutt || || || |
|- Executive chairman ||498.64 ||4.6 ||108:1 |
|Dr. V.L. || || || |
|Indira Dutt ||373.98 ||4.6 ||81:1 |
|- Managing Director || || || |
|Smt.Kavitha || || || |
|Dutt Chitturi - ||186.99 ||4.6 ||40:1 |
|Joint Managing Director || || || |
|Sri.V.Gandhi || || || |
|- Technical Director ||186.99 ||4.6 ||40:1 |
b) The percentage increase/ (decrease) in the median remuneration of employees inthe Financial Year: (6.61)
c) The number of permanent employees (Management staff) on the rolls of company:568
d) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and any exceptionalcircumstances for increase in the managerial remuneration:
Average increase in managerial remuneration is at par with increase in remuneration ofEmployees other than Managerial Personnel and there is/are no exceptional circumstancesfor increase in the managerial remuneration.
e) If remuneration is as per the remuneration policy of the company: Yes
33. Extract of Annual return
The details forming part of the extract of the Annual Return in form MGT 9 isannexed herewith as "Annexure 4".
34. Significant and Material orders passed by the Regulators or Courts
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
35. Conservation of energy technology absorption foreign exchange earnings and outgo
The particulars relating to conservation of energy technology absorption research anddevelopment foreign exchange earnings and outgo as required to be disclosed under Section134 (3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts)Rules 2014 are given in Annexure- 2 to this Report.
36. Director's Responsibility Statement
To the best of our knowledge and belief and according to the information andexplanations obtained by us your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:
(a) in the preparation of the annual financial statements for the year ended 31stMarch 2018 the applicable accounting standards read with requirements set out underSchedule III to the Act have been followed and there are no material departures from thesame;
(b) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of financial year and theprofit and loss of the Company for the period;
(c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors have prepared the annual accounts on a going concern' basis;
(e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
(f) the Directors have devised proper systems to ensure compliance with provisions ofall applicable laws and that such systems are adequate and operating effectively.
The Board of Directors wishes to place on record their gratitude to the CentralGovernment State Governments Company's Bankers Customers dealers and other businessassociates for the assistance co- operation and encouragement they extended to theCompany. Your Directors wish to whole heartedly thank the employees for their sincere anddevoted contribution to the company's continued performance. Your Directors are thankfulto the shareholders and deposit holders for their continued patronage.
| ||For and on behalf of the Board of |
| ||Directors |
|Place: Chennai ||(V.L. DUTT) |
|Date: 28th May 2018 ||Executive Chairman |