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Mangalam Cement Ltd.

BSE: 502157 Sector: Industrials
NSE: MANGLMCEM ISIN Code: INE347A01017
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VOLUME 12
52-Week high 479.55
52-Week low 178.00
P/E
Mkt Cap.(Rs cr) 669
Buy Price 246.65
Buy Qty 38.00
Sell Price 248.15
Sell Qty 68.00
OPEN 251.15
CLOSE 247.05
VOLUME 12
52-Week high 479.55
52-Week low 178.00
P/E
Mkt Cap.(Rs cr) 669
Buy Price 246.65
Buy Qty 38.00
Sell Price 248.15
Sell Qty 68.00

Mangalam Cement Ltd. (MANGLMCEM) - Director Report

Company director report

for the year ended 31st March 2017

Dear Members

The Directors have pleasure in presenting the 41st Annual Report of the Companytogether with the Audited Accounts for the year ended 31st March 2017. The summarizedFinancial Results are given below:

1. FINANCIAL RESULTS (` in Lacs)
Current Year ended Previous Year ended
31st March 2017 31st March 2016
Net Sales/ Income from operations 104885.70 96871.67
Operating Profit / (Loss) before interest Depreciation and Tax and other amortisations ("EBIDTA") 13827.71 5126.92
Less:
Depreciation and Amortisation Expenses 4031.46 3665.89
(Net of transfer from Revaluation Reserve)
Finance Costs 4748.94 4594.47
Tax Expenses (net) 1383.84 (987.23)
10164.24 7273.13
Net Profit / (Loss) for the year 3663.47 (2146.21)
Other Comprehensive Income (net of tax) (227.71) 41.91
Total Comprehensive Income (after tax) 3435.76 (2104.30)

2. DIVIDEND

We recommend a dividend of ` 0.75/- (Paisa Seventy-Five Only) per equity share of `10/- each for the year ended 31st March 2017. The total outgo in this respect will be `240.96/- Lacs including corporate dividend tax.

3. OVERALL PERFORMANCE

The Performance of the Company has been comprehensively covered in the ManagementDiscussion and Analysis which forms a part Directors' Report.

4. MANAGEMENT DISCUSSION & ANALYSIS

In term of the provision of Regulation 34 (2) (e) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Management Discussion and Analysis formsthe part of this Report.

5. RENEWABLE ENERGY

The Company owns 13 Wind Turbines with a total capacity of 13.65 MW. Total Generationfrom all the turbines together during the year was 170.79 lacs Kwh.

6. CAPTIVE THERMAL POWER PLANT

Your Company has a present requirement of 33MW of power and is 100% self-sufficientthrough its own generation. Total generation during the year was 1687 lacs Kwh.

7. NEW PROJECTS

The Company declared the commencement of commercial production of the new Grinding Unitof 0.75 Million Ton Per

Annum (MTPA) at Aligarh on 19th September 2016. The overall capacity of the Company isnow enhanced from 3.25 MTPA to 4.00 MTPA of cement.

8. FINANCE

In March 2017 the Company has issued Commercial Paper (CP) to the tune of ` 50.00Crores i.e. 1000 units of ` 5 lacs each. The instruments are rated "CARE A1+"by Credit Analysis & Research Ltd. the Credit Rating Agency.

9. RISK MANAGEMENT

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has developed a risk managementpolicy and identified risks and taken appropriate steps for their mitigation for moredetails please refer to the Management Discussion and Analysis set out in this AnnualReport.

10. CREDIT RATINGS

Your Directors are pleased to inform you that Credit Analysis & Research Ltd.(CARE) reaffirmed the rating of 'CARE AA-' (Double A minus) assigned for long termfacilities. The 'CARE AA' rating is considered to offer a high degree of safety regardingtimely servicing of financial obligations and indicates that such borrowings carry lowcredit risk. CARE assigns '+' or '-' signs to be shown after the assigned rating (wherevernecessary) to indicate the relative position within the band covered by the rating symbol.

Further CARE has re-affirmed its 'CARE A1+' (A one Plus) rating assigned to theCompany's short term facilities. This is the highest rating for short term facilities andindicates a strong capacity for timely payment of short term debt obligations and carriesthe lowest credit risk.

11. INSURANCE

Adequate insurance cover has been taken for the properties of the Company includingbuildings plant and machinery and inventories.

12. EXTRACT OF THE ANNUAL RETURN

The Extract of Annual Return in Form MGT-9 as required under Section 134(3)(a) of theCompanies Act 2013 is set out at Annexure-1 which forms part of this report.

13. DETAILS OF BOARD MEETINGS

The Board of Directors met 4 times in the year 2016-17. The details of the boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.

14. DIRECTORS

In accordance with the provision of Section 152 (6) and pursuant to the Articles ofAssociation of the Company Shri Kamal Chand Jain Non-Executive Director of the Companyretires by rotation at the ensuing Annual General Meeting and being eligible offershimself for re-appointment. The Board recommends his re-appointment. Details of theproposal for his appointment are given in the Notice of the Annual General Meeting.

The Board of Directors at their meeting held on 11th February 2017 subject to theapproval of the shareholders at the ensuing Annual General Meeting considered andapproved the re-appointment of Shri A. V. Jalan and Smt. Vidula Jalan as Whole TimeDirectors (designated as Executive Directors) of your Company for a further term of three(3) years commencing from 1st April 2017.

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence prescribed under subsection (6) ofSection 149 of the Companies Act 2013.

The details of programmes for familiarisation of independent Directors with theCompany their roles rights responsibility in the Company nature of the industry inwhich the Company operates and other related matters are put on the website of the Companyat the link: http://www.mangalamcement.com /pdf/familiarisation_programme.pdf.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of Section 134 (5) of the Companies Act 2013 and to thebest of their knowledge & belief and according to the information and explanationsobtained your Directors state that:

a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and proper explanations provided relating to material departures if any;

b) such accounting policies have been selected and applied consistently and judgmentsand estimates made that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company at the end of the financial year and of the profit ofthe Company for that period;

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual accounts have been prepared on a going

concern basis;

e) internal financial controls were followed by the Company and they are adequate andare operating effectively; and

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

16. KEY MANAGERIAL PERSONNEL

The following employees were the Key Managerial Personnel

of the Company during the year under review:

(i) Smt. Vidula Jalan Executive Director

(ii) Shri Anshuman Vikram Jalan Executive Director

(iii) Shri Yaswant Mishra President (Corporate) & CFO and

(iv) Shri Swadesh Agrawal Asst. Vice President & Company

Secretary

17. REMUNERATION TO DIRECTORS & KEY MANAGERIAL PERSONNEL

(i) The Ratio of the remuneration of each Director to the median remuneration ofemployees of the Company for the year ended 31st March 2017 are: -

Sr No. Name of Director/CEO/CFO/ Company Secretary Designation Ratio of remuneration to median remuneration of the Employee of the Company Percentage increase in the remuneration for the Financial Year 2016-17
1 Smt. Aruna Makhan Independent and Non- 2.77 227%
Executive Director
2 Shri Amal Ganguli Independent and Non- 2.31 261%
Executive Director
3 Shri N. G. Khaitan Independent and Non- 2.24 476%
Executive Director
4 Shri Gaurav Goel Independent and Non- 2.20 433%
Executive Director
5 Shri K. C. Jain Non-Executive Director 2.38 447%
6 Smt. Vidula Jalan Executive Director 34.72 92%
7 Shri Anshuman Vikram Jalan Executive Director 33.46 91%
8 Shri Yaswant Mishra President (Corporate) & CFO NA 18%
9 Shri Swadesh Agrawal Asst. Vice President & NA 20%
Company Secretary

Median remuneration of the Employees of the Company during the financial year: ` 4.37lacs.

(ii) Percentage increase in the median remuneration of employees in the financial year2016-17 is 12.17 %.

(iii) As on 31st March 2017 there are 1067 Permanent Employees on the rolls of theCompany.

(iv) Explanation w.r.t average increase in remuneration and Company's performance:

Net Profit for the financial year ended March 31 2017 was ` 3435.77 lacs as comparedto Net Loss of

` 2104.29 lacs in the previous year. The increase in median remuneration was 12.15%.

(v) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company: The total remuneration of Key Managerial Personnel (KMP)increased by 56%. Net Profit was ` 3435.77 lacs as compared to Net Loss of ` 2104.29 lacsin the previous year. Increase in remuneration of KMP (net) is collective result of talentbought to table Company's business interest industry standards and applicable regulatoryframework.

(vi) Variations in the market Capitalization of the Company and PE Ratio

a. The market capitalization as on 31st March 2017 was 85780 lacs. (` 58620 lacs as on31st March 2016.)

b. Price Earnings ratio of the Company as at 31st March 2017: 23.42 (as at 31st March2016: Nil) c. Percent increase over / decrease in the market quotations of the shares ofthe company as compared to the rate at which the company came out with the last publicoffer in the year: The company has not made any public issue or rights issue of securitiesin the recent past so comparison have not been made of current share price with publicoffer price. The Company's shares are listed on BSE Ltd. and National Stock Exchanges ofIndia Ltd.

(vii) Average Percentile increase in the Salaries of the Employees other thanManagerial Personnel in financial year 2016-17 is 13.79% as compared to 15.40% increase inthe Managerial Remuneration for the same period.

Increase in salary in FY 2016-17 is mainly due to increase in headcounts at managerial& higher paid levels and annual increment.

(viii) Key Parameters for any variable component of remuneration availed by theDirectors are considered by the Board of Directors based on the performance of theCompany recommendations of the Nomination and Remuneration Committee as per theRemuneration Policy for Directors Key Managerial Personnel and other Employees.

(ix) The ratio of the remuneration of the highest paid Director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year is 108.89%.

(x) It is hereby affirmed that the remuneration paid is as per the Remuneration Policyfor Directors Key Managerial Personnel and other Employees.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to Section 135 (4) and Rule 8 of the Companies (Corporate SocialResponsibility Policy) Rules 2014 a report on CSR containing particulars in thespecified format is attached at Annexure-2.

The Composition of the Corporate Social Responsibility Committee (CSR) is as under:

Name of the Member Category
Smt. Vidula Jalan Chairperson Executive Director
Shri A. V. Jalan Executive Director
Shri Gaurav Goel Independent & Non
Executive Director

The Corporate Social Responsibility (CSR) Policy as approved by the Board is uploadedon the Company's website at the web link:http://www.mangalamcement.com/pdf/policy/corporate_social_responsibility_policy.pdf

19. AUDITORS' REPORT

The Auditors' Report to the shareholders does not contain any qualificationreservation or adverse remark.

20. STATUTORY AUDITORS

M/s. Jain Pramod Jain & Co. Chartered Accountants (Firm Registration No.016746N) are the Statutory Auditors of the Company for more than 10 years. As M/s JainPramod Jain & Co. have completed their tenor of two terms of five years consecutiveand also an additional period of 3 years as stipulated under Section 139 of the CompaniesAct 2013 and shall be in the office of the Statutory Auditors only upto the conclusion ofthe forthcoming Annual General Meeting.

Your Company is proposing to appoint M/s Singhi & Co. (Firm Registration Number:302049E) Chartered Accountants as the Statutory Auditors of the Company for a period of5 years commencing from the conclusion of the 41st Annual General Meeting of the Company.They have confirmed their eligibility under section 141 of the Act and the rules framedthereunder for their appointment as the Auditors of the Company. They have furtherconfirmed that they are not disqualified to be appointed as statutory auditors in terms ofthe provisions of the proviso to Section 139(1) Section 141(2) and Section 141(3) of theAct and the provisions of the Companies (Audit and Auditors) Rules 2014.

21. COST AUDITOR AND COST AUDIT REPORT

In terms of the provisions of Section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 the Board of Directors of your Companyhave on the recommendation of the Audit Committee appointed M/s. J. K. Kabra & Co.Cost Accountants New Delhi as Cost Auditors to conduct the cost audit of your Company.The Company has recommended their remuneration to shareholders for their ratification atthe ensuing Annual General Meeting.

Your Company has maintained cost audit records pursuant to section 148 of the CompaniesAct 2013 read with The Companies (Cost Records and Audit) Rules 2014 in respect of themanufacturing activities are required. The cost audit report for the financial year2015-16 was filed with the Ministry of Corporate Affairs on 28.09.2016.

22. SECRETARIAL AUDIT

Pursuant to Section 204 of the Companies Act 2013 read with Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 Company had appointed M/s. P. Pincha& Associates Company Secretaries Jaipur as Secretarial Auditor of the Company forthe Year 2016-17.

The Secretarial Audit Report for the financial year 2016-17 forms part of this reportas Annexure - 3. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.

The Board has re-appointed Mr. Pradeep Pincha of M/s P Pincha & AssociatesPracticing Company Secretary as secretarial auditor of the Company for the financial year2017-18.

23. LOANS GUARANTEES OR INVESTMENT

Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes forming part of the financialstatements.

24. PARTICULARS OF CONTRACT OR ARRANGEMENT WITH

RELATED PARTIES

All the related party transactions are entered into at arm's length in the ordinarycourse of business and are in compliance with the applicable provisions of the Act and theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. There are nomaterial significant related party transactions made by the Company with PromotersDirectors or Key Managerial Personnel etc. which may have a potential conflict with theinterests of the Company.

The Related Party Transaction Policy as approved by the Board is uploaded on theCompany's website at the web link:http://www.mangalamcement.com/pdf/policy/related_party_transaction_policy.pdf

25. PARTICULARS OF EMPLOYEES

The information required under Section 197(12) of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedthe name and other particulars of employees are to be set out in the Directors' Report asan addendum or annexure thereto.

However in line with the provisions of Section 136(1) of the Act the Report andAccounts as set out therein are being sent to all Members of your Company and othersentitled thereto excluding the aforesaid information about the employees. Any Member whois interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company.

26. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

A Statement containing the information required by Section 134(3)(m) of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 is set out in the statement at Annexure-4hereto and forms part of this Report.

27. CORPORATE GOVERNANCE

Your Directors reaffirm their continued commitment to good corporate governancepractices. During the year under review your Company was in compliance with theprovisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015relating to corporate governance.

A report on Corporate Governance is enclosed at Annexure-5 hereto and forms partof this Annual Report. The Auditors certificate on compliance with the provision of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 relating to CorporateGovernance is annexed to the Report on Corporate Governance.

28. COMPOSITION OF AUDIT COMMITTEE

In line with the provisions of Section 177 (8) of the Companies Act 2013 thecomposition of the Committee is as below:

Name of Member Category
Shri N. G. Khaitan – Independent & Non-
Chairman Executive Director
Smt. Aruna Makhan Independent & Non
Executive Director
Shri Gaurav Goel Independent & Non-
Executive Director
Shri K. C. Jain Non-Executive Director

29. VIGIL MECHANISM

The Company has formulated a Whistle Blower Policy to establish a vigil mechanism forDirectors and employees of the Company to report concerns about unethical behavior actualor suspected fraud or violation of the Company's code of conduct or ethics policy. Themechanism under the policy has been appropriately communicated within the organization.The Whistle Blower Policy is available on the website of the Company.

30. PERFORMANCE EVALUATION

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015read with provisions of the Companies Act 2013 the Board has carried out an evaluationof its own performance and that of the individual Directors as well as of its Committees.The evaluation criteria inter-alia covered various aspects of the Board's functioningincluding its composition execution and performance of specific duties obligations andgovernance.

The performance of individual directors was evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders time devoted etc. The Directors expressed theirsatisfaction with the evaluation process.

The Independent Directors met on 11th February 2017 to review the performanceevaluation of the Non - Independent Directors and the entire Board of Directors. TheIndependent Directors are well satisfied with the functioning of the Board its variouscommittees and of the performance of the other Non-Executive and Executive Directors.

31. KEY PARAMETERS FOR APPOINTMENT OF DIRECTORS & KEY MANAGERIAL PERSONNEL

The Nomination and Remuneration Committee has formulated a detailed policy forappointment of directors key managerial personnel and senior management personnel whichis designed to attract motivate and retain best talent.

This policy applies to directors senior management including its Key ManagerialPersonnel (KMP) and other employees of the Company. The compensation strategy revolvesaround getting the "best talent in the market". The remuneration of theExecutive Directors and KMPs including the senior management personnel of the Company isrecommended by the Nomination and Remuneration Committee based on the Company'sremuneration structure taking into account factors such as level of experiencequalification and suitability. The Company generally pays remuneration by way of salaryperquisites and allowances (fixed component) incentive remuneration and/or commission(variable components).

Remuneration by way of commission to the Non-Executive Directors is decided by theBoard as permitted by the Companies Act 2013 in line with the approval granted byshareholders.

32. NOMINATION AND REMUNERATION POLICY

The Company has in place a formal Nomination and Remuneration Policy formulated as perthe provisions of Section 178(3) of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015. The extract of the policy is attached at Annexure- 6 to this Report.

33. INTERNAL FINANCIAL CONTROL

The Company has in place internal financial control systems commensurate with the sizeand complexity of its operations to ensure proper recording of financial and monitoringof operational effectiveness and compliance of various regulatory and statutoryrequirements.

34. ENVIRONMENT HEALTH AND SAFETY

Environment Health and Safety (EHS) is one of the primary focus areas for yourCompany. Your Company's EHS policy is to consider compliance to statutory EHS requirementsas the minimum performance standard and is committed to go beyond and adopt stricterstandards wherever appropriate.

Your Company have planted over 9930 saplings to ensure a dense green belt around theplant and mine areas. Company encourage its employees and their families to activelyparticipate in our plantation drives.

Your Company conducted regular health camps to monitor the health of farmers andeducate them about disease prevention and care. Company also provided financial assistanceto several hospitals and also adopted CHC Morak under a scheme of the Government ofRajasthan and assisted its maintenance and refurbishment. Your Company organisedhealthcare camps for specially-abled people. A team of specialised doctors incollaboration with the Government of Rajasthan made the event successful.

Activities No. of Patient(s)
OPD 22420
Periodic Health Check Up 885
Pulse Polio Drive 766
Audiometry 218

In your Company safety is of utmost importance and a culture of safety is brought innot just for the Company's staff but also for contract workers raw material suppliers andtransporters etc. through training programs /communications.

38. TRANSFER TO INVESTOR EDUCATION AND PROTECTION

FUND

The Company has transferred a sum of Rs. 1150881/- during the financial year 2016-17to the Investor Education and Protection Fund established by the Central Government incompliance with section 125 of the Companies Act 2013. The said amount representsunclaimed dividends which were lying with the Company for a period of 7 years from theirrespective due dates of payment. Prior to transferring the aforesaid sum the Company hassent reminders to the shareholders for submitting their claims for unclaimed dividend.

39. PUBLIC DEPOSITS

Your Company has neither invited nor accepted any deposits from the public within themeaning of section 2(32) and 74 of the Companies Act 2013 during the year and as such noamount of principal or interest on deposit was outstanding as of the balance sheet date.

40. CASH FLOW ANALYSIS

In conformity with the provision of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a cash flow statement for the financial year ended 31stMarch 2017 forms part of the audited accounts.

41. AWARDS

Your Directors are pleased to inform that the Company has received the following awardsduring the year 2016-17;

l Star Rating of Mines (4 Star) awarded by the Hon'ble Finance Minister Union of Indiaand Hon'ble Chief Minister of Chhattisgarh at the National Conclave on Mines and Minerals.

l SAP Ace Award for Running Real Time and Live Enterprise under the Innovation DrivenTechnology Adoption.

l The CFO innovation award 2016 awarded to Shri Yaswant Mishra for excellence in ERPTransformation on Asia's Platform.

l Awarded First Prize in large cement sector Rajasthan at Rajasthan EnergyConservation Award 2016.

l Awarded First Prize in Reclamation and Rehabilitation and Third Prize in Publicityand Propaganda at the 27th Mines Environment & Mineral Conservation Week 2016-17.

l Recognition for Skill Development Initiatives awarded by the Union Minister of Statein Finance & Corporate Affairs.

42. ACKNOWLEDGEMENTS

Your Directors wish to convey their gratitude and place on record their appreciationfor all the employees at all levels for their hard work solidarity cooperation anddedication during the year.

Your Directors sincerely convey their appreciation to customers shareholders vendorsbankers business associates regulatory and government authorities for their continuedsupport.

Aruna Makhan Director
N G Khaitan Director
Gaurav Goel Director
K C Jain Director
New Delhi Vidula Jalan Executive Director
13th May 2017 A V Jalan Executive Director