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Shiva Cement Ltd.

BSE: 532323 Sector: Industrials
NSE: N.A. ISIN Code: INE555C01029
BSE 16:01 | 17 Sep 9.75 -0.05
(-0.51%)
OPEN

9.74

HIGH

9.94

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9.55

NSE 05:30 | 01 Jan Shiva Cement Ltd
OPEN 9.74
PREVIOUS CLOSE 9.80
VOLUME 121383
52-Week high 22.50
52-Week low 6.25
P/E
Mkt Cap.(Rs cr) 190
Buy Price 9.75
Buy Qty 1940.00
Sell Price 9.93
Sell Qty 650.00
OPEN 9.74
CLOSE 9.80
VOLUME 121383
52-Week high 22.50
52-Week low 6.25
P/E
Mkt Cap.(Rs cr) 190
Buy Price 9.75
Buy Qty 1940.00
Sell Price 9.93
Sell Qty 650.00

Shiva Cement Ltd. (SHIVACEMENT) - Director Report

Company director report

Dear Members

On behalf of the Board of the Directors it gives great pleasure to present the 32ndAnnual Report for the financial year ended on 31st March 2018. The operationalperformance during the year was historically low for various reasons as noted below.

Financial Performance (` lakhs)

Particulars

FY 2017-18

FY 2016-17

Turnover

2603.95

2391.15

Operating EBIDTA

(834.55)

(564.44)

Other Income

28.01

21.05

Finance Cost

1377.06

776.63

Depreciation & Amortization

794.11

594.40

Profit/(Loss) before exceptional item

(2977.71)

(1914.42)

Exceptional Items

1011.41

1109.54

Profit (Loss) before Taxation

(3989.12)

(3023.96)

Tax Expense/benefits

(879.67)

(974.24)

Profit (Loss) after Taxation

(3109.45)

(2049.72)

Financial year 2017-18 threw up challenges in terms of improving the productionperformance refund of entire bank borrowings repaying all public deposits and vendordues. During the year the Company launched new brand "Mahabal" replacingexisting brand "Sumangal"with improved quality of cement.

During the year the Company has overhauled/ refurbished its major plant &equipment under its annual maintenance contract in the third quarter where in it incurredrevenue expenses amounting to `150.11 lakhs and capital expenditureamounting to `85.37 lakhs. After this refurbishment the Company hasimproved its operational efficiency resulting decrease in frequent equipment break downsin subsequent months.

This year the company has utilized 49% of total installed capacity and produced 64695MT of cement which is 20% more than the last years cement production. Similarly duringthe year the Company has produced 42974 MT of clinker which is 38% more than the lastyear's clinker production.

Exceptional item for the year ended 31st March 2018 amounting to `1011.41lakhs represents settlement of old quality claims and disputed interest on securitydeposits under long term supply agreement of cement.

The Company has repaid its entire term borrowing from IDBI Bank & Canara Bankshortterm borrowing from IDBI Bankold unsecured loans from body corporates & others andhas fully repaid its public deposits along with interest.

The Company has borrowed a sum of ` 12403 lakhs from its HoldingCompany JSW Cement Limited and incurred interest cost amounting to ` 913.59lakhs. The borrowed fund has been utilized in the repayment ofloans/borrowings/deposits availed by the Company and capital expenditure/advance to thetune of `919.96 lakhs.

Economic Scenario & Out look

India's economy is on a growth trajectory and is expected to strengthen further andbecome one of the top three in the world over the next decade. The implementation of GSTis expected to boost corporate investments productivity and growth by creating a singlemarket and reducing the cost of capital. Increase in private investments will furthersupport the plan to recapitalise public banks.

India moved into the top 100 in the World Bank's Ease of Doing Business global rankingsin FY 2017 and is the only country to have achieved such a significant shift in a year.The Government has made significant progress towards implementing dynamic business reformsensuring growth for the economy. Growth in employment opportunities education avenuesdevelopment of the infrastructure and industrial sectors will give further impetus to theeconomy.

However the health of the banking sector has not been great with bad loans coming intofore. This has led to the trimming of growth projections for the next year. Digitising theeconomy and improving the tax compliance structure are expected to boost tax revenue inthe medium term.

Cement Industry Outlook & Opportunities

India is the world's second-largest cement market and plays a major role in theeconomic growth of the nation. Cement is an integral product for the development ofindustries and infrastructure sectors providing employment to large number of people andcontributing directly to the nation's GDP.

The Government of India has a strong focus on developing the infrastructural force ofthe nation along with making housing available to people across India. This along withprojects like Housing for All Smart cities etc. will boost the cement output in the nearand long term. By 2025 India's cement production capacity is expected to reach 550million tonnes and industry will grow at 5-6% CAGR until FY 2020. There are multipleattractive opportunities for the sector which will boost demand and help increaseinvestment avenues in the industry. The North-East is a potential market for the cementindustry as the region is investing heavily towards infrastructure growth. The industryalso has a positive future because there are minimum threats from substitute markets.

In FY 2018 cement consumption is expected to grow by 5.0-5.5% on the back of increasedspends on roads and railways push towards affordable housing by the Central Governmentand materialisation of pent-up demand.

Awards & Recommendations

The Company was awarded with First Prize for "Swachh Khadaan Sarvekshan" inthe 55th Annual Mines Safety Week Celebration 2017.

Human Resource

The Company is maintaining cordial and healthy relations with its employees. Employeesat all levels are extending their full support. The Company has strong faith in potentialof human resources. It believes in the creative abilities of the people; those work forthe Company. It believes in the participatory management.

Internal Control Systems

The Company has an internal management audit team to commensurate with the size of theCompany. It carries out desired level of audit of various activities of the Company. Thisis with an aim to ensure that the laid down system and procedures are followed. Auditreports are presented to Audit committee of the Board which meets at periodic intervals.

Environmental & Social Obligation

The Company had applied for extension of validity of Environment Clearance (EC) forexpansion of Cement plant toThe Ministry of Environment Forest and ClimateChange(MoEF&CC). The proposal was appraised by Expert Appraisal Committee ofMoEF&CC and recommended for validity extension of EC for further 3 years i.e. uptoMay 2021. The Company also applied for Consent to Establish (CTE) and CTE was accorded byOdisha State Pollution Control Board (OSPCB) on 08-03-2018 valid till 07-03-2023. The NOCfor extraction of 700 m3/day of groundwater to Central Ground Water Authority (CGWA) hasbeen applied and currently the application is under process.

Renewal applications of Consent to Operate (CTO) for plant & mines were submittedto Odisha State Pollution Control Board(OSPCB). CTO for Mines has been issued inMarch 2018 valid upto March 2020 whereas CTO for cement plant is under process.As per therequirement of Central Pollution Control Board(CPCB) Online Continuous EmissionMonitoring System (OCEMS) has been installed in Raw mill Coal mill & Cement millstacks with online data connectivity to CPCB & OSPCB.Electronic display ofenvironmental parameters at factory main gate in compliance to statutory requirement.

Dividend

Keeping in view of the ongoing expansion plans and working capital requirements of theCompany your directors have not recommended any dividend for the year under review.

Listing at Stock Exchange & Public offer

The equity shares of the Company continues to be listed on Bombay Stock Exchange andCalcutta Stock Exchange. We sincerely express our thanks to all shareholders for imposingtheir faith in the Company despite of delay in implementation of the expansion plan.

Finance

During the year under review the Company has repaid the entire high cost secured andunsecured debt of `68.56 crore availed from IDBI Bank Tata CapitalFinancial Services Canara Bank etc. The Company has a working capital limit of `12crore from IDBI Bank for availing cash credit facility. However the same is notbeing utilized by the Company in view of the adequate cash accruals from the operations.

Board Meeting

During the year under report the Board of Directors have met 6 (six) times. TheDetails of board meetings and the attendance of the Directors are provided in theCorporate Governance Report.

Directors and Key Managerial Personnel:

The Company has a mix of Executive Non-Executive and Independent Directors. As atMarch 31 2018 the Board comprises of 8 Directors. Out of which one is ExecutiveDirector and seven are Non-Executive Directors including three Independent Directors andone Nominee Director. All Directors are persons of eminence and bring a wide range ofexpertise and experience to the Board thereby ensuring the best interest of stakeholdersand the Company.

None of the Directors are related to any other Director on the Board in terms of thedefinition of "relative" as defined in section 2(77) of the Companies Act 2013.

During the year under review Ms. Sutapa Banerjee (DIN- 02844650) was appointed asAdditional Directors with effect from 23rd April 2017 Mr. Manoj Kumar Rustagi (DIN-07742914) was appointed as Whole-Time Director with effect from 26th June 2017 and Mr.Rajendra Prasad Gupta was re-designated as Non-Executive Director with effect from 26thJune 2017.

According to the provisions of the Companies Act 2013 and Articles of Association ofthe Company Mr. Narinder Singh Kahlon is liable to retire by rotation and being eligiblehe has offered himself for re-appointment. The Board has recommended his reappointment asDirector.

Share Capital:

There was no change in the authorized share capital of the Company during the yearunder review.The issued subscribed and paid up equity share capital of the Company as on31st March 2018 was `3900.00 Lakhs comprising of 1950 Lakh Equity sharesof `2/ - each.

Disclosure under section 149(7) of the Companies Act 2013:

Mr. Kashi Prasad Jhunjhunwala Mr. Bimal Kumar Mangaraj and Mr. Mahendra Singh theIndependent Directors of the Company have given their declarations under section 149(7)ofthe Companies Act 2013.

Disclosure under section 43(a)(ii) of the Companies Act 2013:

The Company has not issued any shares with differential rights and hence noinformation pursuant to section 43(a)(ii) of the Companies Act 2013 read with Rule 4(4)of the Companies (Share Capital and Debentures) Rules 2014 is furnished.

Disclosure under section 54(1)(d) of the Companies Act 2013:

The Company has not issued sweat equity shares during the year under review and henceno information as pursuant to section 54(1)(d) of the Companies Act 2013 read with Rule8(13) of the Companies (Share Capital and Debentures) Rules 2014 is furnished.

Audit Committee

Pursuant to the provisions of Section 177 of the Companies Act 2013 the AuditCommittee was formed by the Board of Directors to look after the internal control systemof the Company and to review the financial statements. The said Committee wasre-constituted in the Board Meeting dated 26thJune 2017 and thereafter the Committeecomprises of the following directors of the Company.

Sri K. P. Jhunjhunwala - Chairman
Sri B.K. Mangaraj - Member
Sri Mahendra Singh - Member
Sri. Manoj Kumar Rustagi - Member

The details of the Audit Committee meeting have been mentioned in the CorporateGovernance report.

Statutory Auditors

M/s. M.K Thebaria & Associates Chartered Accountants Rourkela (FRN 321180E)resigned from the Company. The copy of resignation letter received from the StatutoryAuditors was placed before the Board in its meeting held on 26thJune 2017.

In view of aforesaid the Board of Directors of the Company appointed M/s Shah Gupta& Co. Chartered Accountants Mumbai as Statutory Auditors in Casual Vacancy. Furthersuch appointment was approved in the 31st AGM of the Company held on 21st September2017.

At the AGM held on 21st September 2017 M/s. Shah Gupta and Co. Chartered Accountantshave been appointed as Statutory Auditors of the Company for a period of five years i.e.from 31st AGM till the conclusion of 36th AGM.

The observations made by the Statutory Auditors in their report for the financial yearended March 31 2018 read with the explanatory notes therein are self-explanatory andtherefore do not call for any further explanation or comments from the Board under section134(3) of the Companies Act 2013.

Secretarial Auditors

Pursuant to the provisions of Section 204 of Companies Act 2013 read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshave appointed M/s.Prakash Sahoo & AssociatesPracticing Company SecretariesRourkelaOdisha to undertake Secretarial Audit of Company for the FY 2017-18. The report ofSecretarial Audit forms a part of this Board's Report in "Annexure –A".

Evaluation of Board Committees and Board Members pursuant to provisions of theCompanies Act 2013

Good Governance requires Boards to have effective processes to evaluate theirperformance. The evaluation process is a constructive mechanism for improvingeffectiveness of Board maximizing strengths and tackling weaknesses which l eads to animmediate improvement in performance throughout the organization.

Evaluation by Independent Director

In terms of the Code for Independent Directors (Schedule IV) the IndependentDirector(s) on the Board of the Company shall evaluate performance of the Non-IndependentDirector(s) Board as a whole and review performance of Chairperson. Broad parameters forreviewing performance are based on the structured questionnaires related to composition ofBoard Function of Board Meeting attended by Board Members conflict of interestparticipation in discussion time contribution Governance and ethical problem etc.

Evaluation by Nomination and Remuneration (NRC) Committee

Nomination and Remuneration committee constituted under section 178 of the CompaniesAct 2013 has been made responsible for carrying out evaluation of every Director'sperformance. The evaluation of individual Director focuses on contribution to the work ofBoard.

Evaluation by Board

The purpose of Board Evaluation is to achieve persistent and consistent improvement inthe governance of the Company at Board level with an intention to establish and followbest practices in Board Governance in order to fulfill fiduciary obligation to theCompany. The Board believes the evaluation will lead to a working relationship amongBoard members greater efficiency using the Board's time and increased effectiveness ofthe Board as governing body. A structured questionnaire was prepared covering all aspectsof the Board's and Committee's functions for the evaluation of the Board and Committees.The evaluation of the Independent Directors was based on the range of the criteria likeindependent judgment strategy performance and risk management; skill knowledge andfamiliarity about the Company professional advice attendance in Board and Committeemeeting etc.

Vigil Mechanism

Pursuant to the provisions of Section 177 (9) of Companies Act 2013 the Board ofDirectors have established a committee to provide adequate safeguard against victimization& to protect interest of the directors and employees to report their genuine concerns.The Company has uploaded the code of conduct in relation to the employees &directorson its website (www.shivacement.com).

Disclosure under section 67(3) of the Companies Act 2013:

The Company has not passed any special resolution pursuant to Section 67(3) of theCompanies Act 2013 hence no disclosure is required to be made.

Material Change and Commitments:

In terms of section 134(3)(l) of the Companies Act 2013 except as disclosed elsewherein this report no material changes and commitments which could affect the company'sfinancial position have occurred between 31st March 2017 and the date of the report.

Significant and material orders passed by the regulators:

There were no significant material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.

Foreign Exchange Earnings and Outgo

There have been no Foreign Exchange earnings during the year. However the company haspurchased imported coal from the domestic market.

Conservation of Energy Technology Absorption

A statement containing necessary information as required under the Companies Act 2013is annexed hereto in Annexure-"B".

Corporate Social Responsibility and Governance Committee

Your directors have re-constituted the Corporate Social Responsibility (CSR Committee)comprising of Mr. Manoj Kumar Rustagi Mr. Narinder Singh Kahlon and Mr. Mahendra Singh.

The said Committee has been entrusted with the responsibility of formulating andrecommending to the Board a Corporate Social Responsibility Policy (CSR Policy)indicating the activities to be undertaken by the Company monitoring the implementationof the framework of the CSR Policy and recommending the amount to be spent on CSRactivities.

Nomination and Remuneration Committee & Stakeholder Relationship Committee:

During the year under report pursuant to the provisions of Section 178 of CompaniesAct 2013 the Nomination and Remuneration Committee & Stakeholder RelationshipCommittee has been functioning in order to protect the interest of the shareholder of theCompany.

The Committee has been re-constituted and comprises of Mr.Mahendra Singh Mr. B. K.Mangaraj and Mr. Narinder Singh Kahlon.

Related Party Transactions:

All the Related Party Transactions that were entered into during the financial yearwere on arm's length and in the ordinary course of business. Hence provisions of section188 of the Companies Act 2013 are not applicable.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013:

The Company has a policy on Prevention of Sexual Harassment at workplace. Thepolicy has been framed as per "The Sexual

Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013" and an internal Committee has been constituted for redressal of the complaints.

Particulars of Loans Guarantees Investments and Securities:

Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the notes to financial statements.

Extract of Annual Return:

Pursuant to the provisions of Section 92(3) of the Companies Act 2013 an Extract ofthe Annual Return in Form MGT-9 forms part of this Report as Annexure-C.

Particulars of Employees:

The provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are notapplicable as none of the employees were in receipt of remuneration exceeding the limitsspecified therein.

Directors' Responsibility Statement:

In terms of the provisions of section 134(3)(c) of the Companies Act 2013 we confirmthat:-

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

c. the directors had taken proper care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

e. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

f. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

Corporate Governance:

Pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a report on Corporate Governance and the compliance certificate thereonfrom the auditors of the Company is attached to this report.

Acknowledgements

Your directors place on record their appreciation of the assistance and supportextended by government authorities Bankers NBFCs consultants shareholders employeessuppliers & contractors of the Company.

Cautionary Statement:

Statements in the directors' report and the management discussion & analysisdescribing company's objectives expectations or predictions may be forward-lookingstatement within the meaning of applicable laws and regulations. Although we believe ourexpectation is based on reasonable assumption actual results may differ materially fromthose expressed in the statement. Important factors that could influence the company'soperations include: global and domestic demand and supply conditions affecting sellingprices new capacity additions availability of critical materials and their cost changesin government policies and tax laws economic development of the country and such otherfactors which are material to the business operations of the company.

For and on behalf of the Board of
Shiva Cement Limited
Sd/- Sd/-
Mr. Manoj Kumar Rustagi Mr. R. P. Gupta
Whole Time Director Director
DIN: 07742914 DIN : 01325989

Rourkela - 769 004

Dated : 21st April 2018