Your Directors have pleasure in presenting the 62nd Annual Report and AuditedStatements of Accounts for the year ended 31st March 2018:
| || ||(Rs. in lakhs) |
|Particulars ||Year ended 31 March st 2018 ||Year ended 31 March st 2017 |
|Revenue from Operations ||17454.86 ||24053.16 |
|Other Income ||1583.33 ||1411.53 |
|Total Revenue ||19038.19 ||25464.69 |
|Profit before Interest and Depreciation ||1155.97 ||3148.14 |
|Less: Interest and Finance charges ||3389.69 ||2377.21 |
|Less: Depreciation and Amortisation ||936.28 ||701.51 |
|Profit / (Loss) before Exceptional Items and Tax ||(-) 3170.00 ||69.42 |
|Add Exceptional Items on transfer of Wire Division Land ||26.24 ||23.29 |
|Property under Joint Development Agreement || || |
|Profit / Loss (-) before tax ||(-) 3143.76 ||92.71 |
|Less Provision for Income Tax for the year ||0 ||125.00 |
|Net Profit / (Loss) after tax ||(-) 3143.76 ||-32.29 |
|Net gains / (Loss) on FVTOCI equity securities ||70.79 ||(-) 1864.09 |
|Total Comprehensive Income for the period (TCI) ||(-) 3072.97 ||(-) 1896.38 |
The company has produced 458469 M.Tonnes of cement during the year 2017-18 asagainst 574882 M. Tonnes produced during the previous year. The performance of theCompany was satisfactory. The market conditions have continued at the same level as wasprevailing in the last year. The gross sales for the year under report was Rs. 21219.08lakhs as against Rs. 26655.42 lakhs in the previous year. The Net Loss after tax for theyear was Rs. 3143.76 lakhs as against Net Loss of Rs. 32.29 lakhs in the last year.
As stated in our last year's Annual Report the developer Greenage Griha Nirman PrivateLimited (formerly known as Bhimshankar Realtors Private Limited) has Completed the firstphase of construction consists of four blocks and the remaining six blocks in second phasehave also been completed. The Bangalore Development Authority has also issued therespective Occupancy Certificates to that effect.
MODERNISATION OF THE CEMENT UNIT:
As stated in our last year Annual Report the modernization works for improving theefficiency and productivity to reduce the operational costs and cutting down of logisticshas been put on hold to stabilize the operations of the unit.
The Close Circuit System for Cement Mills is under implementation which will reducethe power consumption and improve the Quality.
Your Directors regret their inability to recommend any dividend on Equity Shares inview of the carry forward losses. Consequently the payment of dividend in respect ofRedeemable "C" Cumulative Preference Shares held by the Financial Institutionsalso has been passed over.
The Company has not accepted any Fixed Deposit during the year and there are no fixeddeposits outstanding as on 31st March 2018.
The assets of the Company are adequately insured.
CURRENT YEAR PROSPECTS:
The management is making effort to improve the performance of the company. The growthin Cement Sector is expected to be around 8% in the financial year 2018-19 which isencouraging vis-a-vis growth over the last few years. The Government's un-relenting thruston bringing nation's infrastructure upto speed coupled with inclusive growth is the majorpush factor for the country. The out look for the sector is bright. Further we are seeinggreen shoots from the housing and real estate sectors driven by Government's initiativesin the infrastructure and construction sectors.
CONVERSION OF WARRANTS:
As already informed in the last year's Annual Report the Board of Directors of theCompany at their meeting held on 1st March 2017 have issued and allotted 843060 EquityShares to the said allottees subject to the approval of the same by the BSE. The companyhas already submitted an application to BSE for listing of the said shares and the same ispending before BSE
Company's Industrial Relations continue to be harmonious and cordial.
Your Directors wish to place on record their sincere appreciation of the whole-heartedco-operation extended and the valuable contribution made by the employees at all levels.
Pursuant to the provisions of Section 139 of the Act and the Companies (Audit andAuditors) Rules 2014 M/s. K.S.Rao & Co. Chartered Accountants Hyderabad (FirmRegistration No: 003109S) had been appointed as Statutory Auditors of your Company for aterm of five years commencing from the company's financial year 2017-18 to hold the officefrom the conclusion of the 61st Annual General Meeting till the conclusion of the 66thAnnual General Meeting to be held in 2021-22. In terms of the provisions of the Act yourratification to their appointment as Statutory Auditors of your Company is being sought atthe ensuing AGM and forms part of the Notice convening the AGM. The said StatutoryAuditors have confirmed that they are not disqualified to act as Auditors and are eligibleto hold office as Auditors of your Company.
As regards non-provision of gratuity superannuation and leave encashment liability onactuarial valuation it is provided on the retirement of employees on a consistent basisand the liability is not ascertained. As regards non remittance of undisputed statutorydues as mentioned in para vii(a) of Annexure to Auditors' Report and dues to banks asmentioned in para (ix) of the Annexure to the Report the Company is clearing thestatutory dues in a phased manner.
The Board of Directors of your Company have on the recommendation of the AuditCommittee appointed M/s.Aruna Prasad & Co. Cost Accountants Chennai as Cost Auditorsof the Company to conduct the cost audit of your company for the financial year ending31st March 2019 at a remuneration as mentioned in the Notice convening the AnnualGeneral Meeting. As required under the Act the remuneration payable to cost auditors hasto be placed before the members at a general meeting for ratification . Hence aresolution seeking your ratification for the remuneration payable to the Cost Auditorsforms part of the Notice of the ensuing Annual General Meeting.
The Board has appointed M/s. GMVDR Associates Practising Company Secretaries toconduct Secretarial Audit for the FY 2017-18. The Secretarial Audit Report for thefinancial year ended March 31 2018 is annexed to this Report as Annexure III. Thequalification/remarks made in the Secretarial Audit Report are self-explanatory.
In terms of the Articles of Association of the Company Sri V. Suresh Kumar and Sri V.Ramnath will retire by rotation at the ensuing Annual General Meeting and being eligibleoffer themselves for re-appointment.
The Company has received necessary declaration from all the Independent Directors underSection 149(7) of the Companies Act 2013 that they meet the criteria of independencelaid down in Section 149(6) of the Companies Act 2013.
The Board evaluated the effectiveness of its functioning and that of the Committees andindividual Directors by seeking their inputs on various aspects of Board/CommitteeGovernance.
The aspects covered in the evaluation included the contribution to and monitoring ofcorporate governance practices participation in the long term strategic planning and thefulfillment of Directors' obligation and fiduciary responsibilities including but notlimited to active participation at the Board and Committee Meetings.
The Chairman of the Board has one-on-one meetings with the independent directors andthe Chairman of the Nomination and Remuneration Committee had one-on-one meetings with theExecutive and Non-Executive Directors. These meetings were intended to obtain Directors'inputs on effectiveness of Board/Committee processes.
The Board considered and discussed the inputs received from the Directors.
Further the independent Directors at their meeting reviewed the performance of BoardExecutive and Non-Executive Directors.
The Vigil Mechanism of the Company which also incorporates a whistle blower policy interms of the Listing Agreement includes an Ethics and Compliance Task Force comprisingSenior Executives of the Company Protected disclosures can be made by a whistle blowerthrough an e mail or a letter to the Task Force or to the Chairman of the Audit Committee.The Policy on Vigil Mechanism and whistle blower policy may be accessed on the company'swebsite at the link http://www.panyamcements.com.
APPOINTMENT OF WOMAN DIRECTOR
To comply with the requirements of Section 149(1) of the Companies Act 2013 read withlisting Agreement executed with BSE Limited Mrs. V. Aravinda Rani was appointed as aNon-Executive Woman Director on the Board of the Company with effect from August 13 2014.
KMPS OTHER THAN DIRECTORS:
In accordance with the provisions of the Companies Act 2013 and Listing Agreement withthe Stock Exchange
Sri S. Sreedhar Reddy Managing Director and Sri S. Nageswara Reddy Chief FinancialOfficer have been designated as the KMPs of the Company.
MEETINGS OF THE BOARD
The Board of Directors of your company met seven times during the year to deliberate onvarious matters. Further details on the Board of Directors are provided in the CorporateGovernance Report forming part of this Annual Report.
The Audit Committee was reconstituted with the following members Sri P. Jayarama ReddySri V. Ramnath and Sri S. Panduranga Rao. The Committee comprises of majority ofindependent Directors with Sri P. Jayarama Reddy being the Chairman. Sri S. SreedharReddy Managing Director and Sri S. Nageswara Reddy Chief Financial Officer are thepermanent invites. Further details relating to the Audit Committee are provided in theCorporate Governance Report forming part of this Annual Report.
During the year all the recommendations made by the Audit Committee were accepted bythe Board.
CORPORATE SOCIAL RESPONSIBILITY
In terms of the provisions of Section 135 read with Companies (Corporate SocialResponsibility Policy) Rules 2014 the Board of Directors of your Company has constituteda Corporate Social Responsibility("CSR") Committee which is Chaired by Sri V.Suresh Kumar. The other members of the Committee are Sri P. Jayarama Reddy IndependentDirector and Sri V. Ramnath Non-Executive Director. Your company also has in place a CSRPolicy which is accessible on your Company's website: viz.panyamcements.com.
The Company has taken various Corporate Social Responsibility (CSR) activity around thefactory site since its inception. The Company has taken appropriate steps to the possibleextent to implement CSR activities for the development of areas surrounding the company inparticular and other areas in general.
In view of the in adequate net profits during the last three years the company couldnot spent any amount on CSR activities.
Your Directors reaffirm their continued commitment to good corporate governancepractices. During the year under review your company was in compliance with theprovisions of Listing Regulations relating to Corporate Governance as set out bySecurities Exchange Board of India.
A separate report on Corporate Governance is incorporated along with a certificate fromthe Auditors of the Company regarding compliance of the conditions of Corporate Governanceand are given separately as a part of the Directors' Report. Further as a part of thereport "Management Discussion and Analysis" has also been furnished.
DIRECTORS' RESPONSIBILITY STATEMENT:
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013:-
i. That in the preparation of the annual Accounts the applicable accounting standardshad been followed with proper explanation and that there were no materials departures.
ii. That the Directors had selected such accounting policies applied consistently andmade judgment and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theloss of the Company for the year.
iii. That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
iv. That the annual financial statements have been on a going concern basis.
v. That proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively.
vi. That systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has zero tolerance towards sexual harassment at the work place 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 there under.
The Company has no such cases of sexual harassment at workplace.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING/OUTGO:
Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningsand Outgo required under section 134 (3) (m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are set out in the Annexure I and forms part of thereport.
Please refer to Form No. AOC-2 in Annexure V for the details of related party contractsor arrangements.
The Securities and Exchange Board of India (SEBI) on September 2 2015 issued SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 with the aim toconsolidate and streamline the provisions of the Listing Agreement for different segmentsof capital markets to ensure better enforce ability. The said regulations were effectiveDecember 1 2015. Accordingly all listed entities were required to enter into the ListingAgreement within 6 months from the effective date. The Company entered into ListingAgreement with BSE Limited on 29th February 2016 wherein the Equity Shares andNon-Convertible Bonds issued by the Company are listed.
The Equity/Preference Shares of the Company are listed on the BSE Limited and theannual listing fee was paid to the said Stock Exchange for the financial year 2017-18 on7th April 2017.
A Special Team with Senor Executives has been formed which has been entrusted with theresponsibility to assist the Managing Director in (a) Over seeking and approving theCompany's enterprise risk management frame work and (b) Overseeking that all the risksthat the operation faces such as strategic financial credit market liquidity securityproperty IT legal regulatory reputational and other risks have been identified andassessed and there is an adequate risk management infrastructure in place capable ofaddressing those risks.
The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's managementsystems organizational structures processes standards code of conduct and behaviorstogether form the Management and business the Company.
The Company has introduced several improvements to Integrated Enterprise RiskManagement Internal controls Management and Assurance frameworks and processes to drivea common integrated view of risks optimal risk mitigation responses and efficientmanagement of internal control and assurance activities. This integration is enabled byall three being fully aligned across country wide Risk Management Internal Control andInternal Auditor methodologies and processes.
CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:
All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and at an arm's lengthbasis. During the year the Company had not entered into any contract/ arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of related party transactions.
There are no materially significant related party transactions that may have potentialconflict with interest of the Company at large. Please refer to Form No. AOC-2 in AnnexureV for the details of related party contracts or arrangements.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company is not having any Subsidiaries Joint Ventures and Associated Company.
EXTRACTION OR COMMENTSON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS OR DISCLOSURESMADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS
Statutory Auditors of the Company and the Practicing Company Secretary who haveconducted statutory audit and Secretarial Audit who have conducted Statutory Audit andSecretarial Audit have not made any adverse comments on the activities of the company forthe financial year 2017-18. The remarks made in the Auditor' Report and Secretarial AuditReport are self-explanatory.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES.
The Nomination and Remuneration Committee has been constituted by the Board in itsmeeting held on 30th March 2015 to ensure the appointment of persons having vide exposurein their fields having independence as defined in the Act to be available for appointmentas Director (The Committee always keeps a list of eminent persons having independenceavailable for the Company's requirement depending upon vacancy on the Board). As regardsremuneration payable to Whole time Directors including Chairman and Managing Director theBoard will take collective decision within the parameter of various statutes includingCompanies Act 2013 and Listing Agreement. The Committee will follow the Company's policyto discharge its duties whenever necessity arises. It will not be out of place to mentionthat the set policy being followed since inception of the Company to ensure transparency.
INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICHTHE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There were no material changes and commitments if any affecting the financialposition of the company which have occurred between the end of the financial year of thecompany to which the financial statements relate and the date of the report.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
ANNUAL RETURN IN FORM MGT-9 FORMAT:
In terms of the provisions of Section 92(3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return ofyour company for the financial year ended 31st March 2018 is given in Annexure IV.
Statements in the Management Discussion and Analysis Report describing the Company'sobjectives expectations or predictions may be "forward looking statements"within the meaning of applicable securities laws and regulations. Actual results coulddiffer materially from those expressed or implied. Important factors that could make adifference to your company Company's operations include demand supply conditions finishedgoods prices cyclical demand and pricing in your Company's principal markets change inGovernment regulations tax regimes economic developments within India within in whichyour company conducts business and other factors such as litigation and labournegotiations. Your company is not obliged to publicly amend modify or revise any forwardlooking statements on the basis of any subsequent development information or events orotherwise.
Your Directors are happy to acknowledge the financial assistance given to the Companyby the Banks Institutions Debenture Holders Stakeholders and business associates. YourDirectors also express their thanks to the Central and State Government Departments fortheir co-operation and support and look forward to their continued support in future. Wethank our employees for their contribution to your company's performance. We applaud themfor their super levels of competence dedication and commitment to your company.