TO THE MEMBERS
Your Directors have pleasure in presenting their 35th Annual Report for theFinancial Year 2017-18 together with the Audited Balance Sheet as at 31st March 2018 andthe Profit & Loss Account for the year ended on that date.
1. FINANCIAL RESULTS:
| || ||(Rs. In Lakhs) |
|Particulars ||2017-18 ||2016-17 |
|Net Operational Income ||19259.33 ||19827.30 |
|Other income ||295.01 ||191.25 |
|Profit before interest and depreciation ||2925.46 ||3391.15 |
|Less: Interest ||691.63 ||702.34 |
|Less: Depreciation ||1058.25 ||878.76 |
|Profit/(Loss) before taxation ||1095.35 ||1810.05 |
|Less : Provision for taxation including deferred tax liability ||454.20 ||670.78 |
|Less: short provision of earlier years ||(154.16) ||- |
|Total Comprehensive Income ||763.39 ||1163.35 |
In the Financial year 2017-18 the Company continued its strong growth momentum due toits ability to satisfy its customers and the rigor in following strong internal processes.
Revenue growth in the year has increase because the Company has from July and onwardsstarted selling cement at F.O.R. rates (till June 2017 at ex-factory rate). The Operatingand the net profit is also satisfactory
The Overall revenue for the year 2017-2018 at Rs 19259.33 Lakhs is reduced by 2.86%(Rs. 19827.30 Lakhs in 2016-2017) operating profit at Rs. 1175.59 Lakhs is reduced by35.05% (Rs. 1810.05 Lakhs in 2016-2017) and the net profit (after other comprehensiveincome) for the year at Rs. 763.39 Lakhs is also reduced by 34.38% (Rs. 1163.35 Lakhsin 2016-2017).
Cement Division: Production of Cement and Clinker were 479663 MTS and 448635MTS respectively during the twelve months ended 31st March 2018 as against were 485637MTS and 440730 MTS respectively during the previous year ended 31st March2017.
During the year under review 81% of the installed capacity of the Company was utilizedas against 82% during the previous year ended 31st March 2017.
Wind Power: The Company has generated 2759112 units as against 3111983 unitsduring the previous year.
Electronic Division: The Company has produced 2096 sq. mts of Printed CircuitBoards as against 1796 sq. mts during the previous year.
CURRENT YEAR OUTLOOK:
India's Cement Industry is a vital part of its economy providing employment to morethan a million people directly or indirectly. India is the second largest producer ofcement in the world. Some of the recent major government initiatives such as developmentof 98 smart cities are expected to provide a major boost to the sector. A significant thissector is the ready availability of the raw materials for making cement such as limestoneand coal.
The housing sector is the biggest demand driver of cement accounting for about 67% ofthe total consumption in India. The other major consumers of cement include infrastructureat 13% commercial construction at 11% and industrial construction at 9%.
India's total cement production capacity is nearly 430 million tonnes as on 31stMarch 2018. The cement industry has registered a flat growth of 5% in 2018 because of thegovernment's focus on infrastructural development. The industry is currently producing 280MT for meetings its domestic demand and 5 MT for exports requirement. The country'sper capita consumption stands at around 225 kg.
This capacity addition is disproportionately high in South India. During the last 7years South Indian cement capacity alone has increased by approximately 80 million tons.This has resulted in significant on capacity utilization and price realization as well.
India's cement production capacity is expected to reach 550 million tonnes by 2025.Telangana is undertaking major irrigation projects and Andhra Pradesh is committed tobuilding a new capital city by FY 2019-20 which give a major boost to cement industries inSouthern India.
With the split of Andhra Pradesh into two states which required the establishment of anew government in the new state of Telangana demand has pick up and expected to pick upfurther and utilization to improve on the back of fresh demand for housing urban andinfrastructure development from the new states.
In the Hyderabad market the prices were on a declining trend and reached around Rs 265per bag in November 2017 after which they increased by Rs 20 per bag to Rs 285 per bag inDecember 2017 and sustained at the same level until February 2018. Your Company continuesto concentrate on cost reduction measures in all areas of production and distribution toprotect and improve its profitability. Despite of few adverse conditions your Directorsare hopeful that the performance of the company would achieve another level of milestonein producing the cement.
The PCB industries in India manufacture and market mainly single sided double sided& multi-layered PCBs. Keerthi Industries Limited (Electronic Division) is engaged inthe manufacturing of flexible rigid and rigid flex PCBs of double sided and multilayervarieties. The major market for your company for this division comes from the Healthcareand Defense Sectors. During the year 2017-18 the segment wise contributions to the totalPCB business is as under:
|Sl. No. Segment ||Contribution (In Rs.) ||% of total contribution |
|Automobile ||811304 ||1.00% |
|Defense ||13939904 ||17.27% |
|Health Care ||61010048 ||75.59% |
|Consumer Electronics and telecom products ||4948724 ||6.13% |
|Total ||80709980 ||100% |
Further the industry is witnessing sizeable growth in the market for PCBs for consumerelectronics and telecom products. In the coming years the market in these segments isexpected to grow around 40% to 50% as compared to the current scenario. Your companyintends to reap benefits from this growth and accordingly the turnover of PCB businessmay increase.
The sales turnover of electronics division is satisfactory. Development of prototypesfor new customers in the telecom and defense sectors was done during the year. Thedivision expects to improve its customer base in different segments in the years to come.Supply of PCBs for BDL Konkurs missile program is completed and repeat order was placed toincrease the quantities. The division is exploring further opportunities in the defensesector to improve business in the near future.
In view of the adverse market for sugar industry and since there is no progress in thedivision in particular effective steps could not be taken for furtherance of thebusiness.
a) The Company's Board of Directors have been constituted in compliance with theprovisions of Companies Act read with the SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015 ("SEBI (LODR) Regulation". The Composition ofthe Board is as under:
1. Smt. J. Triveni
Executive Chairperson & Whole-time Director
2. Sri. J. S. Rao
3. Sri. J. Sivaram Prasad
4. Sri. K. Harishchandra Prasad
5. Sri. Boddu Venkata Subbaiah
b) In accordance with the provisions of Companies Act 2013 Sri. J. S. Rao theManaging Director of the Company would retire by rotation and being eligible offerhimself for re-appointment. The Board of Directors recommends his re-appointment at theensuing Annual General Meeting.
c) As required under Section 134 (3) (d) of the Companies Act 2013 All independentdirectors have given declarations to the Company that they meet the criteria ofindependence as laid down under section 149 (6) of the Companies Act 2013.
d) Other Disclosure
Pursuant to Section 178 (2) of the Companies Act 2013 the Nomination and RemunerationCommittee has evaluated the performance of individual Directors in its duly convenedmeeting. Pursuant to Section 134 (3) (p) of the Companies Act 2013 and Regulation 4 (2)(f) (ii) (9) of the ("SEBI (LODR) Regulation 2015 the Board has carried out anevaluation of its own performance as well as the evaluation of the Committees of theBoard. The manner in which the evaluation has been carried out has been explained in theCorporate Governance Report.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Remuneration Policy is stated in the Corporate Governance Report.
During the year Four (4) Board Meetings and Four (4) Audit CommitteeMeetings were convened and held. The details of which are given in the CorporateGovernance Report. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013.
3. DETAILS OF WHOLE-TIME KEY MANAGERIAL PERSONAL (KMP)
During the period under review Sri. J. S. Rao Managing Director Smt. J. TriveniExecutive Chairperson & Whole-time Director Sri. Y. Sadasiva Rao Chief FinancialOfficer and Ms. Akriti Sharma Company Secretary & Compliance Officer are theWhole-Time Key Managerial Personal of the Company.
Sri. J. S. Rao the Managing Director has been given additional charge of CFO w.e.f.28.01.2017 untill a suitable candidate is appointed in the office of CFO. Sri. J. S. Rao(Managing Director and CFO) has resigned from the office of CFO w.e.f. 31-03-2018 and isacting as Managing Director w.e.f. 31.03.2018. Sri. Y. Sadasiva Rao has been appointed asCFO w.e.f. 30.04.2018
Further. Mr. Rajesh Kumar Yadav has been resigned as Company Secretary and ComplianceOfficer of the Company w.e.f. 30.06.2018 and Ms. Akriti Sharma has been appointed asCompany Secretary and Compliance Officer w.e.f 09.08.2018
(a) 9% Cumulative Redeemable Preference Shares
Your Board has recommended payment of final dividend @ 9% on 9% Cumulative RedeemablePreference Shares for the financial year 2017-18. The same is tabulated hereunder:
|Sl. No ||No of 9% Cumulative Preference Share ||Per share (in Rs.) ||Total amount of Dividend entitle to receive ||% of dividend per share ||Dividend Per share (In Rs.) |
|1. ||500000 ||70/- ||3150000 ||9% ||6.30/- |
|2. ||270100 ||100/- ||2430900 ||9% ||9.00/- |
|3. ||268340 ||81.37/- ||1965134 ||9% ||7.32/- |
|Total ||1038440 || ||7546034 || || |
(b) Equity Shares
During the financial year ended 31 st March 2018 your directors have recommended adividend @ 9% i.e. Rs. 0.90/- per equity shares of Rs. 10/- each amounting Rs. 86.92 Lakhsincluding dividend tax of Rs. 14.77 Lakhs as against a dividend of NIL in the previousyear.
5. RESERVE AND SURPLUS
During the financial year 2017-18 Rs.50 Lakhs has been transferred to CapitalRedemption Reserve Account.
6. SHARE CAPITAL:
(a) No Change in Authorized Capital:
During the year under review there was no change in the Authorized Capital of theCompany. The Authorized Capital of the Company is Rs. 380000000/- (Rupees Thirty EightCrores only) divided into 27300000 Equity shares of Rs. 10/- each aggregating Rs.273000000/- and 1070000 9% Cumulative Redeemable Preference Shares of Rs. 100/- eachaggregating Rs. 107000000/-.
(b) Change in Paid up Shares Capital:
During the period under review the 1st Installment of Rs. 50.00 lakhs hasbeen redeemed against the 268340 9% Cumulative Redeemable Preference Shares of Rs. 100/-each. The Paid up share Capital of the Company as on 31st March 2018 is Rs.164011380/- divided into 8016738 Equity shares of Rs. 10/- each aggregating Rs.80167380/- and 1070000 9% Cumulative Redeemable Preference Shares (500000 of Rs. 70each 270100 of Rs. 100 each and 268340 of Rs. 81.37 each) aggregating Rs. 83844000/-.
7. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS OF THE COMPANY:
During the period under review there are no significant the Regulators or Courts orTribunals which would impact the going concern status and the Company's future operations.
8. DEMAT OF SHARES:
The Equity Shares of your Company have been admitted by CDSL / NSDL fordematerialization. All the Shareholders whose shares are in physical mode are requested todematerialize their share holding through their depository participants so that it willimprove the liquidity of our stock. The Board pleased to inform that in compliance withRegulation 39 of the SEBI (LODR) Regulation 2015 entered with Bombay Stock ExchangeLimited the unclaimed equity shares were dematerialized and the same are lying in theDEMAT suspense account. Shareholders are requested to claim their shares in DEMAT form bysubmitting their claims to the Company / RTA.
9. DIRECTORS' RESPONSIBILITY STATEMENT:
In pursuance of Section 134(5) of the Companies Act 2013 your directors confirm:
(a) That the directors in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanations relating tomaterial departures.
(b) That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the Company for that period.
(c) That the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and deleting fraud and otherirregularities.
(d) That the directors had prepared the annual accounts on the going concern basis.
(e) That the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operating andmaterial orders passed by effectively.
(f) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
10. PUBLIC DEPOSITS:
Your Company has not accepted any deposits within the meaning of Section 73 or 74 ofthe Companies Act 2013 and Companies (Acceptance of Deposits) Rules 2014.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.
12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAuditor reports to the Chairman of the Audit Committee of the Board & to theChairperson & Managing Director.
The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant observations and recommendations along withcorrective actions thereon are presented to the Audit Committee of the Board.
13. INTERNAL FINANCIAL CONTROL:
The Company has in place adequate internal financial control commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.
The Company has adopted accounting policies which are in line with the AccountingStandards and the Act. These are in accordance with generally accepted accountingprinciples in India.
The Company has a robust financial closure certification mechanism for certifyingadherence to various accounting policies accuracy of provisions and other estimates.
14. RELATED PARTY TRANSACTIONS:
All transactions entered by the Company with audit related party were in the ordinarycourse of the business. The Audit Committee granted approval of the same. There were nomaterially significant transactions with Related Parties during the financial year 2017-18which were in conflict with the interest of the Company.
During the year your Company has entered into following Related Party Transactions asper Section 188 (1) of the Companies Act 2013:
|S. No ||Nature of Transactions ||Amount (In Rs.) ||Legal Framework ||Legal Requirements ||Date of prior Approval obtained ||Date of Contract ||Amount of discount (In Rs.) |
|1. ||Sell of Cement to DCS Sporting Pvt Ltd ||94500 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||23.10.2017 ||11250 |
|2. ||Sell of Cement to DCS Sporting Pvt Ltd ||90000 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||15.11.2017 ||11250 |
|3. ||Sell of Cement to DCS Sporting Pvt Ltd ||92250 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||28.11.2017 ||11250 |
|4. ||Sell of Cement to DCS Sporting Pvt Ltd ||92250 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||15.12.2017 ||11250 |
|5. ||Sell of Cement to DCS Sporting Pvt Ltd ||92250 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||10.03.2018 ||11250 |
|6. ||Sell of Cement to DCS Sporting Pvt Ltd ||94500 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||28.03.2018 ||11250 |
|7. ||Sell of Cement to DCS Sporting Pvt Ltd ||90000 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||11.04.2018 ||11250 |
|8. ||Sell of Cement to DCS Sporting Pvt Ltd ||90000 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||22.04.2018 ||11250 |
|9. ||Sell of Cement to DCS Sporting Pvt Ltd ||90000 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||02.05.2018 ||11250 |
|10 ||Sell of Cement to DCS Sporting Pvt Ltd ||90000 ||Regulation 23 (2) of SEBI Listing Regulation and Sec-188 (1) (a) of Companies Act 2013 ||Prior approval of Audit Committee and Board ||Omnibus approval of Audit Committee dated 14-09-2017 Board Approval 14-09-2017 ||14.05.2018 ||11250 |
| ||TOTAL ||915750 || || || || ||112500 |
15. COST AUDITORS:
Cost Audit records have been maintained by the company for the F.Y.2017-18. Pursuant tothe directives of the Central Government and provisions of Section 148 of the CompaniesAct 2013 qualified Cost Auditors have been appointed to conduct the cost audit for theF.Y. 2018-19.
The Company had on its 34th AGM held on 31st August 2017appointed M/s. Brahmayya and Co. as Statutory Auditor for 5 years i.e. to hold officeuntil the conclusion of 39 th AGM.
17. ADDITIONAL INFORMATION:
Information pursuant to Section 134 (3) (l) & (m) of the Companies Act 2013 isannexed herewith as (Annexure II) which is detailed in Form A and Form B.
18. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:
Your Company has duly constituted CSR Committee on 29-05-2014. The Annual Report on CSRactivities is annexed herewith as: (Annexure III)
19. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hadappointed M/s VCSR & Associates Company Secretaries in Whole-time Practice to carryout Secretarial Audit for the financial year 2017-2018. The Secretarial Audit report isannexed herewith as "(Annexure IV)" & "(Annexure IV.I)"
20. EXTRACT OF ANNUAL RETURN:
The details forming part of the Annual Return in form MGT-9 is annexed herewith as"(Annexure V)"
21. DISCLOSURE AS PER SECTION 197(12)
Refer "(Annexure VI)".
22. HEALTH AND SAFETY/ INDUSTRIAL RELATIONS:
The company continues to accord high priority to health and safety of employees atmanufacturing locations. During the year under review the company conducted safetytraining programmes for increasing disaster preparedness and awareness among all employeesat the plants. Training programmes and mock drills for safety awareness were alsoconducted for all employees at the plants. Safety Day was observed with safety competitionprogrammes with aim to imbibe safety awareness among the employees at the plant.
During the year under review your Company enjoyed cordial relationship with workersand employees at all levels.
23. RISK MANAGEMENT:
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of theListing Regulation the company has constituted a risk management committee on is BoardMeeting held on 29th May 2015. The details of the committee and its terms ofreference are set out in the corporate governance report forming part of the Boardsreport.
At present the company has not identified any element of risk which may threaten theexistence of the company.
24. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS
The Corporate Governance and Management Discussion & Analysis Report which form anintegral part of this Report are discussed separately together with the CertificatePracticing Company Secretary of the Company regarding compliance with the requirements ofCorporate Governance as stipulated SEBI (LODR) Regulations 2015.
Your Directors are thankful to Canara Bank MID Corporate Branch Somajiguda AndhraBank SCF Branch and Indian Bank Main Branch Koti for their continued support during theyear under review and acknowledge with gratitude the help extended by the CentralGovernment and Government of Telangana & Andhra Pradesh. Your directors also wish toplace on record their appreciation of the services rendered and co-operation extended bythe Workmen Staff Dealers Customers and other concerned.