Your directors are pleased to present the 8th Annual Report on the businessand operations of the Company along with the audited financial statements for thefinancial year ended March 31 2019.
SUMMARY OF FINANCIAL PERFORMANCE
The financial performance of the Company for the financial year ended March 31 2019 issummarised below:
| || ||(र in Lacs) |
|Particulars ||2018-19 ||2017-18 |
|Gross Sales ||252216.93 ||231084.51 |
|Earnings before interest depreciation amortisation & taxation ||32600.94 ||32540.70 |
|Interest / finance costs ||11849.93 ||12920.96 |
|Profit before depreciation and taxation ||20751.01 ||19619.74 |
|Depreciation and amortization expenses ||13271.92 ||12616.62 |
|Profit before taxation ||7479.09 ||7003.12 |
|Taxation ||2723.92 ||2580.98 |
|Net profit ||4755.17 ||4422.14 |
|Profit brought forward from last year ||27934.35 ||24794.09 |
|Profit available for appropriations ||32689.52 ||29216.23 |
|Appropriations || || |
|Other Comprehensive Income ||(69.36) ||(49.01) |
|Dividend on equity shares ||1536.52 ||1024.34 |
|Corporate dividend tax ||315.84 ||208.53 |
|Balance carried to balance sheet ||30767.80 ||27934.35 |
|EPS ||2.32 ||2.16 |
BUSINESS AND FINANCIAL PERFORMANCE
Financial Year 2018 -19 was a difficult year for the cement industry in India and foryour Company. The year saw prices in our main markets of Maharashtra Telangana andKarnataka at very depressed levels for most of the year. While energy prices softenedsomewhat in the third quarter they have risen again since and have resulted inrelatively elevated costs of fuel and freight across the year. Your Company's resiliencein the face of above headwinds its efforts towards premiumisation and a relentless focuson efficiencies and costs have helped your Company deliver a creditable performancedespite this challenging market environment. In this backdrop the key business andfinancial highlights of your Company are as under:
Total sales volume for the year stood at 64 lac tonnes against 57 lac tonnes in2017-18 a growth of around 12%.
We continue to focus on PPC cement production in line with your Company'scommitment to environmental sustainability. Total PPC sale was 62% for the year.
Net Sales realization for the year was B3925 per ton as against B3858 duringlast year.
The overall capacity utilization stood at 81% for the year.
EBITDA for the year was B32601 lacs as against B32541 lacs during last year.
Net profit for the year B4755 lacs as compared to Net profit B 4422 lacsduring last year.
We are happy to inform that the Railway siding at Chittapur Plant has been commissionedduring the year. The township at Chittapur has also been completed during the year.
Your Directors are pleased to recommend a final dividend amounting to B0.75/- (75%) perequity share of face value of B1/- each for the year ended March 31 2019 subject toapproval of shareholders at the forthcoming annual general meeting of the Company asagainst dividend of B0.75 (75%) per equity share paid in the immediately preceding year.
The Register of Members and Share Transfer Books of the Company will remain closed fromFriday July 26 2019 to Thursday August 1 2019 both days inclusive for determiningthe entitlement of the shareholders to the final dividend for financial year 2018-19.
CHANGE IN THE REGISTRAR AND TRANSFER AGENT
The Company has appointed M/s. Karvy Fintech Private Limited having its office at 6F 025 6th Floor Karvy Selenium (Tower B) Gachibowli FinancialDistrict Nanakramguda Hyderabad 500 032 as the Registrar and Share TransferAgent (RTA) of the Company for handling the shares related matters both in physical aswell as dematerialized mode in place of the existing RTA M/s MCS Share Transfer AgentLimited with effect from April 25 2019.
BOARD OF DIRECTORS ITS COMMITTEES AND MEETINGS THEREOF
The Company has a professional Board with an optimum combination of executivenon-executive and independent directors (including two woman directors) who bring to thetable the right mix of knowledge skills and expertise. The Board provides strategicguidance and direction to the Company in achieving its business objectives and protectingthe interest of the stakeholders. The Board is also supported by five Committees ofDirectors viz. the Audit Committee the Nomination & Remuneration cum CompensationCommittee the Corporate Social Responsibility Committee the Stakeholders' RelationshipCommittee and the Risk Management Committee.
One meeting of the Board of Directors is held in each quarter. Additional meetings ofthe Board/Committees are convened as may be necessary for the proper management of thebusiness operations of the Company. A separate meeting of independent directors is alsoheld at least once in a calendar year to review the performance of non-independentdirectors the Board as a whole and the Chairman.
During the financial year ended March 31 2019 the Board of Directors met 5 (five)times viz. on May 3 2018 August 1 2018 November 5 2018 February 8 2019 and March22 2019. The intervening gap between the meetings was within the period prescribed underthe Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
A detailed update on the Board and its Committees' composition number of meetings heldduring the financial year 2018-19 and attendance of the directors at these meetings isprovided in the Report on Corporate Governance.
CHANGES IN DIRECTORS
In terms of the provisions of section 152 of the Companies Act 2013 and in terms ofthe Articles of Association of the Company Mr. Chandrakant Birla (DIN 00118473) anon-executive director of the Company is liable to retire by rotation at the ensuingAnnual General Meeting of the Company and being eligible offers himself forre-appointment. The Board of Directors recommends the re-appointment of Mr. ChandrakantBirla for the approval of the members of the Company at the ensuing Annual GeneralMeeting.
Mr. Desh Deepak Khetrapal (DIN 02362633) was re-appointed as Managing Director &CEO of the Company w.e.f April 1 2015 for a period of 5 (five) years. However hisremuneration was subject to revision every year. On the recommendation of the Nomination& Remuneration cum Compensation Committee the Board of Directors in their meetingheld on April 29 2019 recommended revision in Mr. Khetrapal's remuneration forshareholders' approval. The resolution seeking consideration of Mr. Khetrapal'sremuneration has been included in the Notice of the Annual General Meeting. The Board ofDirectors recommends the resolution for your approval.
During the financial year Mrs. Varsha Purandare (DIN 05288076) was appointed as anAdditional Director w.e.f. February 8 2019 in the category of Independent Woman Directorsubject to approval of shareholders in the forthcoming Annual General Meeting. Theappointment of Mrs. Varsha Purandare as an Independent Woman Director not liable to retireby rotation has been included in the Notice of the Annual General Meeting. The Board ofDirectors recommends the resolution for your approval.
During the financial year Mr. Vinod Kumar Dhall Independent Director of the Companyresigned from the Directorship of the Company with effect from March 23 2019 due to hispersonal reasons including professional preoccupation. Mr. Dhall has confirmed that thereare no other material reasons for tendering the said resignation.
Mr. Janat Shah was appointed as Independent Director of the Company with effect fromApril 30 2014 and Mr. Rajeev Jhawar and Mr. Rabindranath Jhunjhunwala were appointed asIndependent Directors with effect from August 9 2014 and in terms of the provisions ofsection 149(10) of the Companies Act 2013 their first term of five consecutive years isexpiring on April 29 2019 and August 8 2019 respectively. In terms of the provisions ofsection 149(10) Mr. Janat Shah Mr. Rajeev Jhawar and Mr. Rabindranath Jhunjhunwala areeligible for re-appointment as Independent Directors for another term of five years bypassing special resolution in this regard. The resolutions for re-appointment of Mr. JanatShah Mr. Rajeev Jhawar and Mr. Rabindranath Jhunjhunwala as Independent Directors notliable to retire by rotation have been included in the Notice of the Annual GeneralMeeting. The Board of Directors recommends the resolutions for your approval.
A brief profile and other details relating to the Directors are furnished in the AnnualReport.
None of the directors are disqualified under section 164(2) of the Companies Act 2013.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors of the Company have declared and confirmed that they meet thecriteria of independence as prescribed under section 149(6) of the Companies Act 2013 andRegulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
KEY MANAGERIAL PERSONNEL
During the year under review in terms of the provisions of section 203 of theCompanies Act 2013 Mr. Desh Deepak Khetrapal - Managing Director & CEO (DIN02362633) Mr. Sushil Gupta - Chief Financial Officer (FCA-044924) and Mrs. Nidhi Bisaria Company Secretary (FCS-5634) continue to hold their respective offices during thefinancial year 2018-19 as Key Managerial Personnel.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has formulated a vigil mechanism through a Whistle Blower Policy to dealwith instances of illegal practices unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct or Ethics Policy.
Adequate safeguards are provided against victimization to those who avail of themechanism. The details of the Whistle Blower Policy are explained in the CorporateGovernance Report. The Whistle Blower Policy is available on Company's website and can beaccessed through the web link: http:// orientcement.com/investors/.
The Company has a duly constituted Audit Committee in line with the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The primary objective of the Committee is to monitor and provideeffective supervision of the Management's financial reporting process to ensure accurateand timely disclosures with the highest level of transparency integrity and quality offinancial reporting. The Committee met four (4) times during the year. Detailedinformation pertaining to the Audit Committee has been provided in the Report on CorporateGovernance.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company endeavours to have an appropriate mix of executive non-executive andindependent directors so as to have independence on the Board and separate its functionof governance from that of management. The selection and appointments on the Board of theCompany are done on the recommendations of the Nomination & Remuneration cumCompensation Committee. The appointments are based on meritocracy and the candidates areconsidered against objective criteria having due regard to the benefits of diversity onthe Board. While evaluating the candidature of an independent director the Committeeabides by the criteria for determining independence as stipulated under the Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Incase of reappointment of directors the Board takes into consideration the results of theperformance evaluation of the directors.
The copy of the Nomination & Remuneration Policy for Directors KMPs and SeniorManagement is attached as Annexure I' to the Corporate Governance Report.
AWARDS AND RECOGNITIONS
In recognition of its constant quest for growth and achievement your Company has beenhonoured and recognised at various forums. The prominent awards are listed below for yourreference:
1. SEEM National Energy Management Gold Award - 2017 received from Society of EnergyEngineers & Managers (SEEM) at New Delhi on May 25 2018.
2. Apex India Excellence Award 2017 in the Category of "Platinum" forEnvironment "Gold" for Safety and "Gold" for Energy Efficiencyreceived on May 29 2018 at New Delhi.
3. Mines Environment & Mineral Conservation Week 2017-18 Awards;
|Reclamation & Rehabilitation ||1st Prize |
|Waste Dump Management ||2nd Prize |
|Overall performance ||2nd Prize |
4. Mines Safety Week 2018 Awards under the aegis of DGMS
|Overall performance ||2nd Prize |
|Drilling & Blasting ||1st Prize |
|Swatch Bharat ||1st Prize |
|Best practices in mines ||1st Prize |
|Crusher & Belt conveyor ||2nd Prize |
5. Telangana Best Employer Brand Award 2018 on November 16 2018.
6. Organization with Innovative HR Practice 2018 by World HRD Congress received onSeptember 4 2018.
7. Apex India Excellence Award 2018 received on February 18 2019 at New Delhi in theCategory of "Platinum" for Environment "Gold" for Safety and"Gold" for Energy Efficiency.
8. Mines Environment & Mineral Conservation Week 2018 Awards:
|Overall performance ||1st Prize |
|Mineral Beneficiation ||1st Prize |
|Publicity and Propaganda ||1st Prize |
|Waste Dump Management ||2nd Prize |
|Mineral Conservation ||3rd Prize |
1. Safety awards from the Mines Safety Association Karnataka (MSAK) 2018-19
|Contractual Work and Safety is my responsibility ||1st Prize |
|cards || |
|Publicity & Propaganda and Innovation ||3rd Prize |
|Safety Management System ||1st Prize |
|Maintenance of Mining Machinery and Crusher ||1st Prize |
|Drilling and Blasting ||2nd Prize |
|Mine workings ||2nd Prize |
|Loading & Transportation ||3rd Prize |
|Overall performance (zonal level) ||1st Prize |
|Overall performance (state level) ||1st Prize |
2. Mines Environment & Mineral Conservation Week Awards 2018-19 by Indian Bureau ofMines
|Waste Dump Management ||1st Prize |
|Reclamation and Rehabilitation ||3rd Prize |
|Systematic and Scientific development ||2nd Prize |
3. State level award from department of factories boilers industrial safety &health Karnataka Govt. of Karnataka for the year 2018
Received 2nd prize under large category of industries.
4. Orient Cement Ltd. has been declared winner of "GOLD AWARD" in cementsector for outstanding achievement in "Environment Management & EnergyEfficiency".
1. Gold Award received from APEX for "Occupation Health and Safety 2018".
2. "Energy Efficient Unit" in 19th National Award for Excellencein Energy Management 2018 CII Hyderabad.
M/s S.R. Batliboi & Co. LLP Chartered Accountants (ICAI Firm Registration Number301003E/ E300005) was appointed as Statutory Auditors of the Company by the shareholdersat the Annual General Meeting held in the year 2014 to hold office as Statutory Auditorsfrom the conclusion of Annual General Meeting held in the year 2014 till the conclusion ofeighth Annual General Meeting of the Company to be held in the year 2019 subject toratification of their appointment at every Annual General Meeting. Prior to this M/s S.R.Batliboi & Co. LLP had been the Statutory Auditors from the first Annual GeneralMeeting held in the year 2012 till Annual General Meeting held in the year 2014.
Based on the recommendation of the Audit Committee and as per the provisions of section139(2) of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules2014 the Board of Directors of your Company propose the re-appointment of M/s S.R.Batliboi & Co. LLP Chartered Accountants (ICAI Firm Registration Number 301003E/E300005) as the Statutory Auditors of the Company for the balance term of two years tohold office as Statutory Auditors from the conclusion of this Annual General Meeting tillthe conclusion of tenth Annual General Meeting of the Company to be held in the year 2021.The resolution for their reappointment has been included in the Notice of the AnnualGeneral Meeting. The Board of Directors recommends the resolution for your approval.
The Company has received a letter from the Auditors confirming that they are eligiblefor re-appointment as auditors of the Company under section 139 of the Companies Act 2013and meet the criteria for appointment specified in section 141 of the Companies Act 2013.
Auditors' Report is self-explanatory and therefore does not require further commentsand explanation.
Further in terms of section 143 of the Companies Act 2013 read with the Companies(Audit and Auditors) Rules 2014 as amended notifications / circulars issued by theMinistry of Corporate Affairs from time to time no fraud has been reported by theAuditors of the Company where they have reason to believe that an offence involving fraudis being or has been committed against the Company by officers or employees of theCompany.
In terms of the section 148 of the Companies Act 2013 read with Companies (CostRecords and Audit) Rules 2014 the Company is required to maintain Cost Accountingrecords and get them audited every year. The Board appointed Mr. Somnath Mukherjee CostAccountant (M.No.-F5343) as Cost Auditors of the Company for the financial year 2019-20at a fee of B 85000/- (Eighty five thousand only) plus out of pocket expenses subject tothe ratification of the said fees by the shareholders at the ensuing Annual GeneralMeeting.
The Company has received a letter from him to the effect that his re-appointment wouldbe within the limits prescribed under section 141(3)(g) of the Companies Act 2013 andthat he is not disqualified for such re-appointment within the meaning of section 141 ofthe Companies Act 2013.
Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s Ranjeet Pandey andAssociates Company Secretaries (Registration No. F-5922) were appointed to conduct theSecretarial Audit of the Company for the financial year 2018-19.
The Secretarial Audit Report is annexed to this report as Annexure 1'. TheSecretarial Auditor's report is self-explanatory and therefore does not require furthercomments and explanation.
The Board has re-appointed M/s Ranjeet Pandey and Associates Company Secretaries(Registration No. F-5922) as Secretarial Auditor of the Company for the financial year2019-20.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
During the financial year under review your Company has not given any loan orguarantee made investments and provided securities which are covered under the provisionsof section 186 of the Companies Act 2013.
RELATED PARTY TRANSACTIONS
The Company has adequate procedures for identification and monitoring of related partytransactions. All transactions entered into with related parties during the financial yearwere on an arm's length basis. All related party transactions were placed before the AuditCommittee and also the Board for approval wherever required. Prior omnibus approval ofthe Audit Committee and Board was obtained for the transactions that were of a foreseenand repetitive nature. These transactions were reviewed by the Audit Committee on aquarterly basis.
There were no materially significant related party transactions made by the Companywith promoters directors key managerial personnel or other designated persons which mayhave a potential conflict with the interest of the Company at large.
For details on related party transactions members may refer to the notes to thefinancial statements. The Policy on related party transactions as approved by the Board isavailable on the Company's website and can be accessed through the web link:http://orientcement.com/investors/.
Particulars of contract or arrangements with related parties referred to in section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is annexed as Annexure2' to the Report.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business of the Company during the year underreview.
The Company has constituted a Risk Management Committee to review the risk managementplan / process of the Company. The Risk Management Committee identifies potential risksassesses their potential impact and takes timely action to mitigate the same.
The Company has a Risk Management Policy which has been approved by the Board. The RiskManagement Policy acts as an overarching statement of intent and establishes the guidingprinciples by which key risks are managed across the organization. The Board monitors andreviews periodically the implementation of various aspects of the Risk Management Policythrough a duly constituted Risk Management Committee (RMC). The RMC assists the Board inits oversight of the Company's management of key risks including strategic andoperational risks as well as the guidelines policies and processes for monitoring andmitigating such risks under the aegis of the overall Business Risk Management Framework.
There are no risks identified by the Board which may threaten the existence of theCompany.
INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY
As per the provisions of section 134(5)(e) of the Companies Act 2013 the Directorshave an overall responsibility for ensuring that the Company has implemented robustsystems/ framework of internal financial controls to provide them with reasonableassurance regarding the adequacy and operating effectiveness of controls with regard toreporting operational and compliance risks. To enable the Directors to meet theseresponsibilities the management has devised systems/ frameworks which are operatingwithin the Company. In line with best practice the Audit Committee and Board regularlyreview the internal control system to ensure that it remains effective and fit for thepurpose. Where weaknesses are identified as a result of the reviews new procedures areput in place to strengthen controls and these are in turn reviewed at regular intervals.The systems/ frameworks include proper delegation of authority policies and procedureseffective IT systems aligned to business requirements internal audit framework ethicsframework risk management framework and adequate segregation of duties.
Your Company's management has established and maintained internal financial controlsbased on the internal control over financial reporting criteria established in theintegrated framework issued by the Committee of Sponsoring Organisations of the TreadwayCommission (2013 Framework) (the COSO criteria) which considers the essential componentsof internal control stated in the Guidance Note on Audit of Internal Financial Controlsover Financial Reporting issued by the Institute of Chartered Accountants of India. Basedon information provided nothing has come to the attention of Directors to indicate thatany material breakdown in the function of these controls procedures or systems occurredduring the year under review. The Internal Auditor of the Company reports functionally toAudit Committee of Board which reviews and approves risk based annual internal auditplan. Audit Committee periodically reviews the performance of internal audit function.
CORPORATE SOCIAL RESPONSIBILITY
The basic concept of Company's CSR is to serve the interest of society in a just andequitable manner along with taking the responsibility for the impact of businessactivities on various stakeholders in all aspects of Company's operations. Your Companyhas been taking several initiatives under Corporate Social Responsibility (CSR') forsociety at large well before it was prescribed through the Companies Act 2013.
The Board has constituted a CSR Committee and has a well-defined Policy on CSR as perthe requirement of section 135 of the Companies Act 2013 which covers the activities asprescribed under Schedule VII of the Companies Act 2013. Detailed information pertainingto the CSR Committee has been provided in the Report on Corporate Governance.
The CSR Policy laid down by the Company ensures that:
1. The CSR agenda is integrated with the business;
2. Focused efforts are made in the identified community development areas to achievethe expected outcome;
3. The Company contributes towards nation-building through its CSR activities. As partof its initiatives under CSR the Company has contributed towards healthcareinfrastructure development and education during the year under review.
Corporate Social Responsibility Report pursuant to section 134(3)(o) of the CompaniesAct 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules 2014 formspart of this Report as Annexure 3'
The CSR Policy of the Company is placed on the website of the Company and can beaccessed through the web link: http://orientcement.com/investors/.
PARTICULARS OF EMPLOYEES DIRECTORS AND KEY MANAGERIAL PERSONNEL
The information required pursuant to section 197 of the Companies Act 2013 read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as Annexure 4' forming an integral part of this Report.
During the year under review the Issued Subscribed and Paid up Share Capital of theCompany was 204868760 shares of B1/- each. There was no change in the capital structureof the Company.
EXTRACT OF THE ANNUAL RETURN
Pursuant to section 134(3)(a) and section 92(3) of the Companies Act 2013 read withRule 12 of the Companies (Management and Administration) Rules 2014 relevant extract ofannual return for the financial year 2018-19 is given as Annexure 5' to this Reportand can be accessed through the web link http://orientcement.com/investors/.
EMPLOYEES STOCK OPTION SCHEME
The Company has in place the Employees Stock Option Scheme 2015 (ESOS-2015')which provides for grant of Stock Options to eligible employees of the Company.
During the financial year 2018-19 no options were granted under ESOS-2015. Theapplicable disclosures under SEBI (Share Based Employee Benefits) Regulations 2014("SEBI Regulations") as at March 31 2019 has been uploaded on the website ofthe Company and can be accessed through the web link http://orientcement.com/investors/.There is no change in the ESOS scheme of the Company during the financial year.
Certificate from M/s S.R. Batliboi & Co. LLP Chartered Accountants (ICAI FirmRegistration Number 301003E/ E300005) Statutory Auditors of the Company confirming thatthe scheme has been implemented in accordance with the SEBI Regulations would be placedat the ensuing Annual General Meeting of the Company for inspection by the members.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder. The Companyhas constituted Internal Complaints Committee which is responsible for redressal ofcomplaints related to sexual harassment.
As per the provisions of section 21 and 22 of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 the report on the details ofthe number of cases filed under Sexual Harassment and their disposal during the calendaryear 2018 is as under:
|Number of cases pending as on the beginning of the calendar year ||Nil |
|Number of complaints filed during the calendar year ||Nil |
|Number of cases pending as on the end of the calendar year ||Nil |
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed Management Discussion and Analysis Report ispresented in a separate section forming part of the Annual report.
Corporate Governance ensures fairness transparency and integrity of the management. Asa part of its strategy the Company believes in adopting the best practices' thatare followed in the area of Corporate Governance. The Company emphasizes the need for fulltransparency and accountability in all its transactions in order to protect the interestsof its stakeholders. The Board considers itself a trustee of the Company's shareholdersand acknowledges its responsibilities towards them for creating and safeguarding theirwealth. The Company is committed to high levels of ethics and integrity in all itsbusiness dealings that avoids conflicts of interest. In order to conduct business withthese principles the Company has created a corporate structure based on business needsand maintains a high degree of transparency through regular disclosures with a focus onadequate control systems.
A detailed report on Corporate Governance forms an integral part of Annual Report andis set out as separate section therein.
The certificate of M/s S.R. Batliboi & Co. LLP (ICAI Firm Registration Number301003E/ E300005) Chartered Accountants the Statutory Auditors of the Company certifyingcompliance with the conditions of corporate governance as stipulated in the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed with the Report onCorporate Governance. The Auditors' certificate for financial year 2018-19 does notcontain any qualification reservation or adverse remark.
PERFORMANCE EVALUATION OF BOARD COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board its Committees the Chairman andthe individual directors was carried out for the financial year 2018-19. The performanceevaluation was done using individual questionnaires covering amongst others compositionof Board receipt of regular inputs and information functioning performance andstructure of Board Committees skill set knowledge and expertise of directorspreparation and contribution at Board meetings leadership etc. The performance evaluationof the respective Committees and that of independent and non-independent directors wasdone by the Board excluding the director being evaluated.
The performance evaluation of non-independent directors the Chairman and the Board wasdone by the independent directors.
LISTING WITH STOCK EXCHANGES
The Equity Shares of the Company are listed on National Stock Exchange of India Limitedand BSE Limited. The annual listing fees for the financial year 2019-20 have been paid tothese exchanges.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to section 134(3)(c) of the Companies Act 2013 the Board of Directors herebystate that:
1. In the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
2. They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on March 31 2019 and of the profit and loss ofthe Company for the year ended on that date;
3. They have taken proper and sufficient care 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;
4. They have prepared the annual financial statements on a going concern basis;
5. They have laid down internal financial controls to be followed by the Company andthat such internal financial controls were adequate and were operating effectively.
6. They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year of the Company to which the financialstatements relate and till the date of this Report.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The Company values the significance of conservation of energy and technology absorptionand remains conscious about the environment impact of its business operations. During thefinancial year the Company undertook a variety of energy conservation measures across allits plants making continuous efforts for judicious use of energy at all levels ofoperations by utilizing energy efficient system and processes. Some steps taken towardsenergy conservation are the result of technology absorption. Our new integrated cementmanufacturing unit at Chittapur has been equipped with new state of the art technology andlatest energy efficient equipment.
The particulars required under section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 regarding conservation of energytechnology absorption are enclosed as Annexure 6' forming part of this Report.
FOREIGN EXCHANGE EARNINGS AND OUTGO
During the financial year the Company has not earned any foreign exchange.
The total foreign exchange outgo during the year was B4067.30 lacs.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES
During the financial year 2018-19 the Company had no Subsidiary Associate or JointVenture company.
During the financial year under review the Company did not accept deposits coveredunder Chapter V of the Companies Act 2013.
SIGNIFICANT AND MATERIAL ORDERS
No significant and material orders have been passed by any regulator or court ortribunal against the Company impacting the going concern status and Company's operationsin future.
BUSINESS RESPONSIBILITY REPORT
In compliance with the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Business Responsibility Report is presented in a separate sectionforming part of the Annual report.
DIVIDEND DISTRIBUTION POLICY
Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 requires top 500 listed Companies based on the market capitalization to formulateDividend Distribution Policy. In compliance of the said requirement the Company hasformulated the Dividend Distribution Policy. The Dividend Distribution Policy of theCompany is enclosed as Annexure 7' to this Report and is also placed on thewebsite of the Company. This can be accessed through the web link:http://orientcement.com/ investors/.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Board Meetings and General Meetings.
OTHER STATUTORY DISCLOSURES
Your Directors state that no disclosure or reporting is required with respect to thefollowing items as there were no transactions related to these items during the year underreview:
1. Issue of equity shares with differential rights as to dividend voting or otherwise.
2. Issues of sweat equity shares.
3. Provision of money for purchase of its own shares by employees or by trustees forthe benefit of employees.
Your Directors place on record their appreciation for assistance and cooperationreceived from various Ministries and Departments of Government of India and other StateGovernments banks shareholders of the Company etc. Your Directors wish to place onrecord their sincere appreciation for the dedicated efforts and consistent contributionmade by the employees at all levels to ensure that the Company continues to grow andexcel.
| ||By order of the Board of Directors |
| ||For Orient Cement Limited |
| ||CK. Birla |
|Place: New Delhi ||Chairman |
|Date: April 29 2019 ||(DIN 00118473) |
Details pertaining to remuneration
As required under section 197 (12) of the Companies Act 2013 read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014
(i) The percentage increase in remuneration of each Director Chief Financial Officerand Company Secretary during the financial year 2018-19 and ratio of the remuneration ofeach Director to the median remuneration of the employees of the Company for the financialyear 2018-19:-
|S. No. ||Name of the Director/ KMP and Designation ||Remuneration of Director/ KMP for financial year 2018-19 (H) ||% Increase/ (Decrease) in remuneration in the financial year 2018-19 ||Ratio of remuneration of each Director/ to median remuneration of employees |
|1. ||Mr. CK. Birla Chairman ||900000 ||6% ||1.13 times |
|2. ||Mr. Desh Deepak Khetrapal - Managing Director & CEO ||99485085 ||18% ||124.82 times |
|3. ||Ms. Amita Birla-Director ||900000 ||6% ||1.13 times |
|4. ||Mr. Vinod Kumar Dhall- Director (resigned w.e.f. 23-3-2019) ||900000 ||6% ||1.13 times |
|5. ||Mr. Rabindranath Jhunjhunwala-Director ||900000 ||6% ||1.13 times |
|6. ||Mr. Rajeev Jhawar- Director ||900000 ||6% ||1.13 times |
|7. ||Mr. Janat Shah-Director ||900000 ||6% ||1.13 times |
|8. ||Mr. Swapan Dasgupta- Director ||900000 ||6% ||1.13 times |
|9. ||Mr. I. Y. R. Krishna Rao- Director ||900000 ||6% ||1.13 times |
|10. ||Ms. Varsha Vasant Purandare Director (appointed w.e.f. 8-2- 2019) ||200000 ||- ||- |
|11. ||Mr. Sushil Gupta- Chief Financial Officer ||19487563 ||9% ||- |
|12. ||Ms. Nidhi Bisaria Company Secretary (appointed w.e.f. 23-11- 2017) ||2500012 ||N.A. ||- |
1. For this purpose sitting fees paid to the directors have not been considered asremuneration.
(ii) The median remuneration of employees of the Company during the financial year wasB7.97 lac p.a.
(iii) In the financial year there was an increase of 8% in the median remuneration ofemployees.
(iv) There were 893 permanent employees on the rolls of the Company as on March 312019.
(v) Average percentile increase made in the salaries of employees other than themanagerial personnel in the last financial year i.e 2018-19 was 8.91%. Keeping in view theduties and responsibilities cast on the Managing Director & CEO and considering hisknowledge of various aspects relating to the Company's affairs the percentile increase inthe managerial remuneration for the same financial year was 18%.
(vi) It is hereby afirmed that the remuneration paid is as per the Remuneration Policyfor Directors Key Managerial Personnel Senior Management Personnel and other employees.
(vii) Details of employees employed throughout the year and were in receipt ofremuneration at the rate of not less than one crore and two lac rupees per annum and thedetails of top ten employees in terms of remuneration drawn:
|Name of Employee ||Designation of the employee ||Remuneration received* ||Qualifications ||Experience ||Date of commencement of employment ||Age ||The last employment held by such employee before joining the Company |
| || ||(H) || ||(No. of years) || ||(years) || |
|Desh Deepak Khetrapal ||Managing Director and CEO ||95613165 ||B Com (H) MBA ||43 ||02.04.2012 ||63 ||Jumbo Electronics Dubai as Group CEO |
|Shyam B Asawa ||President - Projects ||21165560 ||B.E. (Mechanical) Diploma In Business Management ||37 ||01.11.2012 ||59 ||Reliance Cement Company Pvt. Ltd. as Director - Projects |
|Sushil Gupta ||Chief Financial Officer ||19427196 ||CA ||28 ||21.07.2014 ||52 ||Essar Offshore Sub-Sea Limited as CFO & Director (Finance) |
|Shiva Kant Pandey ||President - Works ||18962927 ||B. E - Electrical ||35 ||21.07.2014 ||56 ||Heidelberg Cement as Additional Director (Technical) & Unit Head |
|Rajendra Mishra ||Chief Operating Officer ||16721138 ||B.E Electrical & Electronics ||29 ||01.11.2017 ||52 ||Sterlite Technologies Ltd. as Chief Technology Officer |
|Manish Dua ||President Sales & Marketing ||16804500 ||MBA Marketing ||28 ||16.11.2017 ||49 ||Kesoram Industries Ltd. as Chief Sales & Marketing Officer |
|Rahul Bhandari ||Head - Strategy ||12716543 ||B. E Electronics PGDM ||18 ||10.09.2015 ||38 ||J.P. Morgan and Mitsubishi UFJ based in London and Hong Kong |
|N S Srinivas ||Senior Vice President - Human Resources ||11876160 ||MSW - HRM LLB ||23 ||13.02.2014 ||46 ||KEC International Limited as Vice President Human Resources |
|Avinash Joshi ||Senior Vice President - Central Procurement ||10942716 ||B. E Civil ||36 ||13.10.2016 ||58 ||Heidelberg Cement as Director Procurement |
|Y Srinivasa Rao ||Senior Vice President -Marketing ||8273615 ||M. Tech- Civil MBA ||25 ||05.09.2011 ||51 ||Bharathi Cement Corporation Pvt. Ltd. as Chief General Manager- Marketing |
(viii) Employed for a part of the financial year was in receipt of remuneration at therate of not less than eight lac and fifty thousand rupees per month.
|Name of Employee ||Designation of the employee ||Remuneration* received (र) ||Qualifications ||Experience (No. of years) ||Date of commencement of employment ||Age (years) ||The last employment held by such employee before joining the Company |
| || || || || || ||-- ||-- |
*Remuneration for this purpose has been calculated on actual receipt basis and excludesany benefit accrued but not paid.
1. The remuneration (vii viii) does not include the provision made for gratuity andleave benefits as they are determined on an actuarial basis for the Company as a whole.
2. Nature of employment is contractual in all the cases.
3. No such employee is a relative of any director or manager of the Company.
4. No employee was in receipt of remuneration in the financial year which in theaggregate or as the case may be was at a rate which in the aggregate is in excess ofthat drawn by the Managing Director and holds by himself or along with his spouse anddependent children not less than two per cent of the equity shares of the Company.
| ||By order of the Board of Directors |
| ||For Orient Cement Limited |
| ||CK. Birla |
|Place: New Delhi ||Chairman |
|Date: April 29 2019 ||(DIN 00118473) |
Conservation of Energy and Technology Absorption
|A) Conservation of energy: || |
|(i) The steps taken or impact on conservation of energy ||Devapur: |
| ||Installation of VFD in Kiln-1 Swirl air Fan & cooler fan |
| ||Installation of GRR for Kiln-1 Cooler ESP |
| ||Optimization of Kiln cooler fans by increasing the fan pulley size. |
| ||Optimization of Coal mill-1 CA fan in Line-1 |
| ||Energy saving in dust collectors by modifying their motor and fan pulleys. |
| ||Polycom Rawmill-1 Bag filter damper removed. Jalgaon: |
| ||Removal of dampers from VFD driven Bag Filters fans |
| ||Optimization of compressed air line route and pipe size. |
| ||Direct feeding of fly-ash from silo to mill discharge bucket elevator. |
| ||Modification of Clinker feeding belt conveyor width for reducing the run hours and enhancing the feed rate. |
| ||Saving in material unloading power consumption by replacement of Flyash unloading compressor. |
| ||Chittapur: |
| ||P H Fan outlet draft vs Bag house fan Rpm PID put in auto mode. |
| ||Coal Mill booster fan taken in circuit and get enough flow for mill for reduction in Mill power. |
| ||Power saving due to PH fan optimize according to O2 level |
| ||Cyclone V two way feed put in circuit Secondary air temperature improved by stopping Cooler back blaster. |
| ||Kiln coating & Lining life increased from 268 days to 338 days by Burner Pipe put inside 100 mm. |
| ||Cooler ESP take off duct coating minimize with adjustment of water nozzle and hood draft to reduce cooler power. |
| ||Raw Meal silo blending optimized. |
| ||Raw Mill fan power consumption reduces from 3.5 to 2.3 kWh/T by static gap adjustment. Provided weigh feeders discharge grill in all additive to control the feed size. |
| ||Electrical vibrator fixed in additive hoppers. |
| ||Cement mills fan RPM reduced from 98% to 85% resultant power saving 3.51 kWh/Mt Cement mill-2 roller and table profile build up done |
| ||Cement mills grinding aid dosing point changes from feed chute to table through water spray. |
| ||Cement mills main bag house purging sequence off time increased from 20 sec to 60 sec and compressor air consumption reduced to 70%. |
| ||Fly ash unloading air pressures reduced and operate one compressor with two unloading points which saves power 1.5 kWh/Mt in fly ash unloading. |
| ||Permanent magnets installed on both cement mills reject belt conveyors. |
| ||New venting/suction line connection given from clinker hopper top bag filter to cement mill-1 bag filter. |
| ||Chittapur CPP: |
| ||Achieved Energy Saving of 800kWh/day by introducing VFD for turbine Condensate Extraction Pump (CEP). |
| ||Achieved Energy Saving of 1800 kWh/day by utilising instrument air for Ash conveying instead of service air by inter connecting both. |
| ||Energy saving of 432kWh/day by introducing VFD for Auxiliary Cooling water Pumps (ACW). |
| ||Energy Saving of 144kWh/day by Replacing Motor driven Roof extraction fans with Turbo ventilators in STG Building. |
| ||Energy saving of 1200kWh/day by introducing Control Valve trimming & replacement of attemperator Control Valves for one boiler. |
|(ii) The steps taken by the Company for utilising alternate sources of energy; ||Devapur: |
| ||Usage of alternative fuels in all three Kilns in plants. |
| || Carbon Black |
| || Organic Residue |
| || Agro Waste |
| ||Usages of Agro waste in CPP |
| ||Start using Super Poly Diesel in place of HSD for Kiln Firing. |
| ||Chittapur: |
| ||Usage of alternative fuels in Kiln |
| || LAFR |
| || Carbon Black |
| || Organic Residue |
| || Dolachar |
| ||Usages of Agro Waste in CPP. |
| ||Purchased & used 52 lac/kwh Wind power during year i.e. 3.5% of consumption. |
| ||Start using Super Poly Diesel in place of HSD for Kiln Firing. |
|(iii)The capital investment on energy conservation equipments ||Jalgaon: |
| ||26.40 lacs |
| ||Fly ash unloading system of B |
| ||Chittapur: |
| ||Installed Liquid AFR System to use the AFR cost B96.65 Lac |
| ||VFD installed for Auxiliary Cooling water Pumps (ACW) B10 Lac at CPP |
| ||Replacement of Control Valve Trim Set for Boiler FCV and attemperator Control Valves for one boiler B19 Lac |
|(B) Technology absorption: || |
|(i) The efforts made towards technology absorption ||Devapur: |
| ||Adoption of Nano Technology for Roller profiling. |
| ||Fog spray system introduced |
| ||Chittapur: |
| ||Installation of Selective Non Catalytic reaction (SNCR) system for Kiln. |
|(ii) The benefits derived like product improvement cost reduction product development or import substitution ||Devapur: |
| ||Enhance life & reliability of roller for cement mill by using Nano Technology. |
| ||Fog spray system introduced to control fugitive emissions Chittapur: |
| ||Installation of Selective Non Catalytic reaction (SNCR) system to neutralize the Nitrogen oxide (Nox) of Kiln. |
|in case of imported technology (imported during the last three years reckoned from the beginning of the financial year)- || |
|(a) the details of technology imported || |
|(b) the year of import ||Not Applicable |
|(c) whether the technology been fully absorbed || |
|(d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and || |
|(iv) the expenditure incurred on research and development ||Chittapur: Establishment of Concrete Lab For research on the impact of cement ratio for making different types of concrete and establish the optimum end use by investment of B14.93 Lac |
Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014)
Form for disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto.
1. Details of contracts or arrangements or transactions not at arm's lengthbasis----Nil
(a) Name(s) of the related party and nature of relationship
(b) Nature of contracts/arrangements/transactions
(c) Duration of the contracts / arrangements/transactions
(d) Salient terms of the contracts or arrangements or transactions including the valueif any
(e) Justification for entering into such contracts or arrangements or transactions
(f) Date(s) of approval by the Board
(g) Amount paid as advances if any:
(h) Date on which the special resolution was passed in general meeting as requiredunder first proviso to section 188
2. Details of material contracts or arrangement or transactions at arm's length basis
(a) Name(s) of the related party and nature of relationship
|Orient Paper & Industries Limited ||-Director of the Company along with his relatives holding more than 2% shares in Orient Paper & Industries Limited |
|Orient Electric Limited ||-Director of the Company along with his relatives holding more than 2% shares in Orient Electric Limited |
|Khaitan & Co. LLP New Delhi ||-Director is partner in Khaitan & Co. LLP |
|Khaitan & Co. LLP Kolkata ||-Director is partner in Khaitan & Co. LLP |
|Talwar Thakore & Associates (TT&A) ||-Director is associated through collaboration Agreement |
(b) Nature of contracts/arrangements/transactions
|Orient Paper & Industries Limited ||- Rent |
|Orient Electric Limited ||- Purchase of goods |
|Khaitan & Co. LLP New Delhi ||- Professional fees |
|Khaitan & Co. LLP Kolkata ||- Professional fees |
|Talwar Thakore & Associates (TT&A) ||- Professional fees |
(c) Duration of the contracts / arrangements/transactions:
|Orient Paper & Industries Limited ||-Perpetual |
|Orient Electric Limited ||-Need based |
|Khaitan & Co. LLP New Delhi ||-Need based |
|Khaitan & Co. LLP Kolkata ||-Need based |
|Talwar Thakore & Associates (TT&A) ||-Need based |
(d) Salient terms of the contracts or arrangements or transactions including the valueif any:
|Orient Paper & Industries Limited ||Rs. 1200000/- |
|Orient Electric Limited ||Rs.1768000/- |
|Khaitan & Co. LLP New Delhi ||Rs. 600000/- |
|Khaitan & Co. LLP Kolkata ||Rs.100000/- |
|Talwar Thakore & Associates (TT&A) ||Rs. 321357/- |
(e) Date(s) of approval by the Board if any: Not required as all transactions were atarms' length price and were in ordinary course of business.
(f) Amount paid as advances if any:-Nil
By order of the Board of Directors
For Orient Cement Limited
Place: New Delhi
Date: April 29 2019