The Directors take pleasure in presenting the 41st Annual Report togetherwith the Audited Financial Statements for the year ended 31st March 2020. TheManagement Discussion and Analysis has also been incorporated into this report.
1. FINANCIAL PERFORMANCE
A brief of financial performance for the year gone by and its comparison with previousyear is given below:
(Rs. in Crore)
|Particulars || |
| ||2019-20 ||2018-19 ||2019-20 ||2018-19 |
|Revenue from Operations ||11904.00 ||11722.00 ||12868.39 ||12554.65 |
|Other Income ||271.62 ||245.40 ||274.40 ||249.76 |
|Total Income ||12175.62 ||11967.40 ||13142.79 ||12804.41 |
|Total Expenditure ||8229.47 ||9069.18 ||9109.29 ||9760.97 |
|Profit Before Interest Depreciation & Taxes (PBIDT) ||3946.15 ||2898.22 ||4033.50 ||3043.44 |
|Finance Costs ||286.52 ||246.98 ||291.43 ||247.86 |
|Depreciation and amortization expenses ||1699.42 ||1391.68 ||1807.81 ||1471.81 |
|Exceptional Items ||- ||178.13 ||- ||178.13 |
|Profit Before Tax ||1960.21 ||1081.43 ||1934.26 ||1145.64 |
|Tax Expense ||390.03 ||130.38 ||390.20 ||130.59 |
|Profit After Tax ||1570.18 ||951.05 ||1544.06 ||1015.05 |
|Profit attributable to Owners of the Company ||- ||- ||1535.85 ||1006.39 |
|Profit attributable to Non-Controlling Interest ||- ||- ||8.21 ||8.66 |
Key Highlights (Standalone Performance)
Sales Volume (Cement and Clinker) during the year came down by 3.6% to 24.92Million Ton mainly because of lockdown announced during last days of Mar 20.
Revenue from Operations was up marginally 1.6% to Rs 11904.00 Crore mainlybecause of better cement price realization. This include power sales of Rs 515.24 Crorewhich was lower compared to Rs 801.88 Crore achieved last year.
During the year the power and fuel costs went lower due to soft petcoke andcoal prices. On Raw material cost Company was able to contain the cost by optimizing itsprocurement of fly ash and other materials. Company also continued its efforts on costoptimization through innovative and alternative methods across its operations.
EBITDA went up 36.2% to Rs 3946 Crore. This was mainly because of betterrealisation on account of company's strong brand portfolio including contribution comingin from premium cement brands launched by the company and several Cost optimizationmeasures undertaken during the year.
Last year Company launched Premium cement brands (Roofon and Bangur Power) inthe market. Both the premium brands have been well received by the markets. Company nowhas a complete range of brands to address all segments of cement consumers.
Key Financial Ratios
Key financial ratios of the Company in terms of showing the financial performance areas under:-
|Particulars ||2019-20 ||2018-19 ||% Change || |
|Operating Profit Margin (without other income) (%) ||30.87% ||22.63% ||36.41% || |
Higher due to increase in realisation and cost optimisation
|Net Profit Margin (%) ||13.19% ||8.11% ||62.64% |
|Return on Net Worth (%) ||11.77% ||9.61% ||22.48% |
|Interest Coverage Ratio ||13.77 ||11.73 ||17.39% ||No significant change |
|Debtors Turnover (Days) ||25.40 ||22.81 ||11.35% ||No significant change |
|Inventory Turnover (Days) ||43.78 ||49.48 ||(11.52)% ||No significant change |
|Current Ratio (Times) ||2.13 ||2.01 ||5.97% ||No significant change |
|Debt-Equity Ratio (Times) ||0.20 ||0.26 ||(23.08)% ||Lower due to capital raised during the year |
2. DIVIDEND AND RESERVES
During the year 2019-20 Company has paid Interim Dividend of Rs 110/- perequity share of Rs 10/- each for the Financial Year 2019-20 which includes Rs 70/- perequity share as normal dividend and Rs 40/- per equity share as additional dividend. Lastyear Company had paid total dividend of Rs 60/- per share (Rs 25/- per Share as InterimDividend and Rs 35/- per Share as Final Dividend).
Total dividend relating to the year 2019-20 amounts to Rs 478.47 Crore(including dividend distribution tax of Rs 81.58 Crore) as against Rs 251.98 Crore(including dividend distribution tax of Rs 42.96 Crore) for the year 2018-19.
During the year an amount of Rs 300.00 Crore was transferred to GeneralReserves.
The Board of Directors of the Company in line with SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 had approved Dividend Distribution Policy on 12thAugust 2016. The Policy is uploaded on Company's website and can be accessed at the linkhttps:// www.shreecement.com/pdf/dividend-policy.pdf.
3. MANAGEMENT OUTLOOK OF MACRO ECONOMY AND INDUSTRY
I. Indian Economy-Developments and Outlook
During 2019-20 the Indian economy has passed through a tough phase with declininggrowth rates. India witnessed a dismal 5.1% GDP growth during first 3 quarters of FY 19-20against 6.3% in the same period of FY19. There were positive signs of improvement observedin 4th quarter of 2019-20. But the same was short lived as lockdown of the country due toCOVID-19 virus halted the growth momentum.
The Government undertook unique measure of rationalizing income tax rates to boostfresh investments by corporates in the country. This measure is yet to yield its results.RBI on its part also undertook much needed measures of rationalizing its policy rates andincreased the liquidity in the banking system. However this did not lead to meaningfulcontraction of interest rates for majority of borrowers.
On the external front the INR which remained mostly stable during most part of theyear on the back of strong FDI flows and declining crude oil prices weakened towardsclose of the year due to impact of COVID-19 virus.
Overall the Indian economy is expected to witness a growth rate of around 5% for theyear 2019-20 which shall be the lowest witnessed since the Global financial crisis in2008-09. This is largely because of poor showing by manufacturing construction and miningsectors.
The lockdown imposed in the country as a result of COVID-19 virus has had anunprecedented impact on the entire economy of the country. The month of April 20 wasvirtually a complete standstill. There is uncertainty as to how long the impact oflockdown is expected to continue and when one can witness normalcy returning to theeconomy.
Overall outlook for the economy in the near term is not encouraging. However in pastalso Indian economy showed strong recovery in the face of global financial crisis. Withour robust and large consumer base expected fiscal stimulus from the Government andtimely interventions from RBI India will soon be on rapid recovery path. We thereforebelieve that in the medium to long term the Indian economy will emerge stronger from thiscrisis.
II. Cement Industry - Development and Outlook
While challenging macro-economic conditions coupled with lower infra spending byGovernments impacted cement demand individual housing building segment continued to showgood traction.
The nation-wide lockdown due to COVID-19 pandemic however affected cement demandtowards last days of the close of the financial year 2019-20. Based on cement productiondata for 11 months upto Feb 20 and expected production for Mar 20 cement productionduring 2019-20 is expected to remain at around same level as that of 2018-19.
The COVID-19 pandemic has dented the cement demand because of nation-wide lockdown andresultant dip in the overall economic activities. The uncertainty around the continuationof the impact of the pandemic makes it difficult to make any proposition about the outlookfor the near future. While short term outlook is uncertain the long-term outlook of thecement industry continues to be positive on account of the various economic reformsincreasing aspirations sustained consumption momentum and persistent infra spending.
4. NEW / EXPANSION PROJECTS
During the year Company completed Clinker Grinding Unit having capacity of 2.5 MTPA atSeraikela- Kharsawan District in Jharkhand. Further Company has following on-goingprojects:
Clinker grinding unit of 3.0 MTPA at Athagarh Tehsil in Cuttack District ofOdisha which has got delayed and is now expected to be completed in second quarter of FY20-21.
Clinker Grinding Unit of 3.0 MTPA at Patas in Pune District of Maharashtra whichis scheduled to be completed by second quarter of FY 20-21.
5. QUALIFIED INSTITUTIONS PLACEMENT
During the FY19-20 the company raised Rs 2400 Crore by allotting 1243523 equityshares of Rs 10/- each at a price of Rs 19300/- on 23rd November 2019 throughQualified Institutions Placement. Consequently the Paid-up Equity share Capital of theCompany increased from Rs 34.84 Crore to Rs 36.08 Crore.
6. INTEGRATION OF CEMENT AND POWER SEGMENT
The Company is primarily engaged in the manufacture and sale of cement relatedproducts. From the current year the power segment is considered as part of cementbusiness for internal reporting purposes as majority of power is consumed for cementoperations. Hence as per Ind AS 108 'Operating Segments' no disclosures related tosegments are presented.
7. RISK MANAGEMENT
Company's risk management process is designed to identify and mitigate risks that havethe potential to materially impact our business objectives and maintains a balance betweenmanaging risk and exploiting the opportunities. Identification and management of risk issystematically achieved using an Enterprise Risk Management (ERM) system under which theBoard is responsible for overseeing the overall risk management framework of the Company.The Audit and Risk Management Committee of Board keeps an eye on execution of the riskmanagement plan of the Company and advises the management on strengthening mitigatingmeasures wherever required. The actual identification assessment and mitigation of risksare however done by key executives of the Company in a systematic manner through regularmeetings and dialogue and engagement / consultation with relevant stakeholders. The keyrisks identified by the Company and their mitigation measures are as under:-
(a) Over-Capacity in the Industry- Continued over capacity in the industry poses risk of underutilization of production capacities and prices falling to levels which arenonremunerative levels. For this purpose Company has invested in building customerloyalty through consistent high quality products faster delivery to consumers andcontinued customer engagement through its dedicated marketing teams. It also keeps addingcapacity in markets where demand-supply conditions are considered to be relativelyfavourable.
(b) Availability of Limestone and other resources- Limestone is the key rawmaterial for cement production and its availability for existing and future plantrequirements is essential. With limited reserves at existing mines and acquisition of newlimestone mines being uncertain due to regulatory and competition issues conservation oflimestone is quite important. Company has been making all efforts to optimize its usagethereby conserving the deposits and enhancing their life. To conserve the high gradelimestone Company blends marginal grade limestone with high quality limestone for clinkerproduction without compromising the Quality of its cement. Company's emphasis on enhancedproduction of blended cement has also helped conserve limestone significantly.
Company's plants in Rajasthan are located in water deficient areas and as suchconserving water becomes very important. Realizing this Company installed Air CooledCondensers (ACC) in all its power plants which though involve additional capitalexpenditure have helped Company reduce water consumption significantly. Company hasinstalled Waste Heat Recovery Systems in its cement plants thereby eliminating the needfor cooling of waste hot gases and thus saving water. Water harvesting reservoirs havealso been constructed within plant and mines area.
(c) Fuel Cost- Company sources fuel from open market and hence is exposed tovolatility of market prices of the fuel. Company has deployed multi-fuel usage strategy aswell as state of the art technology which allows it to use different fuels and use themost economical fuel among a basket of different fuels as per prevailing trends in themarket. Company participates in auctions for securing coal linkage for meeting the fuelrequirements of its Raipur Chhattisgarh plant. Additionally to reduce reliance onconventional fuel for its captive thermal power plants Company has extensively investedin Waste Heat Recovery Power Plants thereby cushioned itself from fuel price volatilityto that extent. Additionally to reduce reliability on conventional fuel company iscontinually investing in setting up of renewable energy power plants.
(d) Economic shocks due to external factors- The
COVID-19 virus has shattered the world economy. The industry in general will have tobrace itself for the economic shocks of such nature. The Companies will have to preparecontingency plans such as work from home enhanced safety measures strategies forcontinuity of business and rapid restoration of operations. Company has taken the risks ofsuch external shocks into its business strategy and have taken necessary steps in terms ofdevising plans for mitigating such risk.
(e) Cyber Security- Considering the increasing importance of digitisation tobusiness majority of business activities of the Company have been seeing digitaltransformations including logistics marketing and manufacturing. Significant advantagesof digitisation reflect in faster customer servicing enhanced process efficiency bettercontrols and speedy decision making. Digitisation is however fraught with risk of cybersecurity. This could be misuse of hardware and software cyber-attacks unauthorisedaccess etc. In addition to data loss the same can impact business operations.
Company has taken necessary measures like systematic back-up procedures firewallsystems better monitoring & control mechanism to mitigate any risks arising due todigitisation.
(f) Climate Change- Global warming and consequent impact in the form of erratic andfrequent climate change has emerged as a major risk across globe. This impacts ouroperations also as cement manufacturing releases CO due to calcination process andcombustion of fuels. Efforts to address climate change by reducing emissions of greenhousegases (GHG) through national state and regional laws and regulations as well asinternational agreements will bring about various regulatory requirements affecting ouroperations and creates uncertainties for our business. New legislative or regulatorycontrols may pose risks which could include costs to purchase allowances or credits tomeet GHG emission caps costs required to procure advanced equipment to reduce emissionsto comply with GHG limits or required technological standards or higher production costs.In addition physical risks arising from extreme weather or high temperatures may impactany manufacturing sector in terms of property damage and disruption to operations. We haveintegrated sustainability as core to our operations and are thus prepared to meet newregulatory and legislative requirements resulting from climate change risks.
8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
In order to ensure orderly and efficient conduct of business Company's management hasput in place necessary internal control systems commensurate with its businessrequirements scale of operations geographical spread and applicable statutes. TheCompany has an in-house Internal Audit department manned by qualified professionals and anexternal firm acting as independent internal auditors that reviews internal controls andoperating systems and procedures on a regular basis. Company's internal control systemsinclude policies and procedures IT systems delegation of authority segregation ofduties internal audit and review framework etc. Company has designed the necessaryinternal financial controls and systems with regard to adherence to company's policiessafeguarding of its assets prevention and detection of frauds and errors accuracy andcompleteness of the accounting records and timely preparation of reliable financialinformation. Company keeps documented Standard Operating Procedures (SOPs) for all itsmajor operations. The compliance to these controls and systems including SOPs areperiodically reviewed by the Internal Audit function and exceptions are reported. Allinternal audit observations are discussed by the senior management team for promptremedial actions and addressal. All material audit observations and follow up actionsthereon are reported to the Audit and Risk Management Committee. The Committee holdsregular discussions with the auditors to ensure adequacy and effectiveness of the internalcontrol systems and monitors implementation of audit recommendations.
9. HUMAN RESOURCES / INDUSTRIAL RELATIONS
(a) Employee Engagement and Talent Management- It is the people that make anorganisation. With human resources department being the custodian of all people relatedprocesses it becomes the critical success factor in organisational success. The HR workswith an objective of aligning the aspirational needs of the people with the organizationalobjectives of sustained growth market leadership and cost competitiveness. Its sole aimis to build Shree as an exemplary organisation that inspires excellence every day.
Developing Talent for Excellence: People development has been a constant focus ofHR. This year we took a step forward to make it more inclusive and targeted. As much as95% of the Middle to Senior Management participated in a study designed on the SCLCompetency Framework - the eight Critical Success Factors that propel us towardsexcellence. The study was carried out through an online assessment process and its outcomewas a detailed report and Development Plan for each participant which is being used forthe learning plan for this year.
Inclusive Employee Experience: To make learning more inclusive we also launchedSTEPS (School for Training Education and Personal Success) - an online platform that usesArtificial Intelligence to curate personalised learning programme.
Automating for better interface with employees: We believe that continuousimprovements in our HR processes can result in positive user experience fasterturn-around time and cost efficiency. This year we launched a chat-bot to answer employeequeries about policies that answers frequently asked questions thereby reducingdependence on HR representatives. We observed that people who retire or resign from theCompany face various issues in settlement of their claims. To address this we automatedthe exit claims settlement process which thereby reduced the response time by 30%. Aarohan- an internal job application process was launched to automate the process of internalapplications to any job opening. This has helped us increase transparency and reduce theresponse time.
Assessing for Success: We believe that unless we measure our performance we willnot be able to identify our weaknesses. Its only then we can work upon bringing aboutimprovements. This year we got the people processes audited by Confederation of IndianIndustries (CII). As a result of which Shree Cement was awarded "Strong Commitmentto HR Excellence". The audit process was intensive which included analysis ofquantitative and qualitative data. It was followed by multiple rounds of virtual Q&Aand was closed with a detailed on-site audit by Industry Experts. This is the first timethat we undertook this process and Shree Cement is among the 20% companies that securedthe "Strong Commitment to HR Excellence" in its first attempt. As part of theprocess we also learnt the areas we need to further improvise upon.
Certified Great Place To Work: One step a day can take us further in the future andhelp us build a stronger foundation as compared to excellence in one day. That is thepower of habit. Through all these years we have been taking baby steps to make theorganisation more inclusive more-friendly and more open. The efforts have paid off. ShreeCement was recognised among India's Great Places to Work for the year 2020-21 with thescores comparable to India's Top 100 organisations. Excellence is a consistent work inprogress and our focus is to keep moving forward and keep raising the bar higher and thefeedback of our stakeholders is the fuel that propels us.
(b) Occupational Health and Safety- Following a 'Safety First' approach health andsafety are a top priority area of the Company. To institutionalize the organisation-widefocus on Occupational Health and Safety Company has built a robust safety managementsystem based on the globally recognised and practised OHSAS 18001 standard.
'Safety Committees' have been formed at all manufacturing units with equalrepresentation from both management and non-management categories. These committees play apivotal role in achieving the objective of 'Safety First' by undertaking assessment ofsafety issues on an ongoing basis and implementing suitable initiatives and programs forthe same. To transform the way workers look at safety and make them aware and adopt bestpractices related to safety these Committees periodically organize trainings mentoringand coaching with the help of internal and external safety experts. This has helped bringabout a positive change to the workers' safety performance. Such interactions also helpthe plant level Safety Committees get feedback from workers and thereby identify hazardsand minimize the recurrence of the same. Company has established a structured hazardidentification and risk assessment process which helps us identify potential risks whichcould have resulted in production disruptions and liabilities.
To provide our employees and contractual workers access to quality healthcare servicesCompany has established 'Wellness Management Centers (WMC)' at all the locations. WMCs areequipped with qualified doctors and modern facilities which help carry out day to dayhealth-care services and also conduct Annual health check-ups for employees & contractworkers. Health talks by experts and specialists are also organized to propagate awarenesson chronic and lifestyle diseases.
All our safety initiatives and employee engagement programs have been designed toensure their continuous review and monitoring. Through a regular internal audit protocolwe assess the overall safety performance and examine the existing procedures systems andcontrol measures for fire & safety hazards. Observations and recommendations wereimplemented by concerned departments within set timelines. As part of the process monthlysafety performance of all grinding units are reviewed and discussed with all safetyprofessionals for implementation of common safety system and practices.
(c) Industrial Relations- Employee Relations remained cordial during the year. Thishas enabled Company to build healthy relationship and resolve issues through dialogue anddiscussions.
Total number of employees as on 31st March 2020 were 6185.
It has been a constant endeavour of the Company to formulate adopt and improve itsbusiness model embracing both sustainability and growth agenda. This model helps us buildefficiencies to achieve sustainable business performance and give us necessary edge tostay ahead of the competitors. As part of our sustainability agenda we focus onconservation of environment natural resources and energy efficiency. Our operationalstrategy is built on a long term commitment to experiment and implement new ideas forimproving efficiencies and minimizing the use of input resources. Our continued endeavourstowards improving productivity and efficiency of all processes equipment and systems aswell optimization measures have made the Company as one of the most efficient player interms of energy consumption and resource utilization. With sustained efforts towardsgreening our operations we have been able to keep our direct CO2 emissionintensity at one of the lowest levels in the cement industry. Some of the sustainabilityinitiatives which were taken during the year were as follows:-
(a) Generation of Power from Renewable Resources- Focus on renewable energycontinues to remain a thrust area in our sustainability agenda. This has helped Company inconserving precious natural resources mitigating GHG emissions and controlling fugitiveemission. Over the years the Company has been steadily ramping up its RE power generationcapacity spanning across Waste Heat Recovery Solar and Wind power plants. The Companycontinues to have largest WHRP capacity in World Cement Industry excluding China. Thisapart in terms of operational efficiency of WHRP Company is regarded as one of the bestin the industry. Its total RE capacity including Wind and Solar power plants at the end ofFY 2019-20 stood at 234 MW.
(b) Energy Conservation- Energy conservation has been another focus area of theCompany. As part of "Perform Achieve & Trade" (PAT) scheme of the Govt. ofIndia Company has in PAT Cycle II applicable for 2016-19 has yet again realized morethan its allotted target reduction of its energy consumption. As a result the Company hasclaimed 105594 (Nos) ESCerts which are under assessment by Ministry of Power (MoP) andBureau of Energy Efficiency (BEE). It is worth noting that in the first cycle 2012-2015also the Company had over-achieved its targets and was awarded the 'Best Performer' awardfor energy saving under PAT Cycle I by BEE.
(c) Alternative Fuels and Raw Materials- In line with our goal to increase usage ofalternative raw materials and fuels during the year we continued experiments with wastesof various industries such as Pharma Chemical Sponge Iron as alternate fuel andcommenced their commercial usage. To supplement this we have undertaken necessarymodification in the design and system of plant and machinery. In area of alternative rawmaterials we continue to step-up reuse of low grade limestone and quarry rejects in acost effective manner. This has helped us significantly reduce our environmental impactsand economic costs without compromising on our product's quality and output.
(d) Water Conservation- Water is increasingly becoming a scarce and preciousnatural resource. We therefore give utmost priority in our sustainability initiatives. Wehave been working on our two pronged approach of conserving usage of water as well asincreasing availability of water through water harvesting and recharging. In our waterconservation efforts our macro level initiatives such as installing Air Cooled Condensersin all our thermal power plants has been a great success. There are several micro levelinitiatives that are implemented regularly in all our operations that help us reduce usageof water. For increasing the availability of water around our operating sites and reducedependence on ground water while we regularly work on constructing rain water harvestingstructures we also undertake detailed assessment of water flows around our plants toidentify potential areas which are most suited for water harvesting and recharge. Thisapart Sewage Treatment Plants (STP) are installed for treatment of domestic waste waterat different plant sites of the Company. The Company has been continuously exploringopportunities to increase use of recycled water and reduce water consumption in itsoperations.
(e) CDP disclosure- The Company has been participating consistently in the CarbonDisclosure Project to assess its performance on carbon emission. It has been ranked 'B' inCDP Climate Change Disclosure 2019 which is higher than the Asia regional and Globalaverage Rank C. We have been continuously working upon to further improve our performanceby implementing various measures and recommendations.
(f) Sustainability Reporting- During the year Company released its 15thannual corporate sustainability report for the reporting period 2018-19 titled"Expanding the Sustainability Horizon" which manifest Company's commitment toembed sustainability not just in our operations but going beyond and sowing the seeds ofsustainability across our value chain.
The said report was prepared in accordance with the GRI Standards - ComprehensiveOption and assured by an independent certifying agency. The Company has also consistentlyissued its Business Responsibility Report as part of Annual Report since year 2012-13disclosing our performance of various Business Responsibility principles.
During the year Company was awarded and recognised for its various initiatives towardssustainable development a few which are as under:-
Corporate Governance & Sustainability Vision Award 2020- The Awardwas instituted by the Indian Chamber of Commerce and given in recognition of its overallgovernance environmental economic & social performance.
Greentech Environment Award-2019- The award was given in recognition ofexcellence in overall environmental performance through effective emission controlalternative waste utilization green belt development and climate change mitigation by theGreentech Foundation.
Global Sustainability Award-2019-
Company has been conferred on the Global Sustainability Award 2019 by the Energy andEnvironment Foundation. The award was given in recognition of Company's excellence inoverall governance environmental economic & social performance.
Supply Chain and Logistic Excellence (SCALE) Award 2019 - Company hasbeen awarded with "Supply Chain & Logistics Excellence Award-2019" forexcellence in supply chain strategies to increase efficiency through innovation and costoptimization. The award was instituted by Confederation of Indian Industry (CII).
11. CORPORATE GOVERNANCE
Your Directors reaffirm their continued commitment to good corporate governancepractices. During the year under review Company was in compliance with the provisionsrelating to corporate governance as provided under the Listing Regulations. The compliancereport is provided in the Corporate Governance section of this Annual Report. TheAuditor's Certificate on Corporate Governance is enclosed at Annexure-1.
12. BUSINESS RESPONSIBILITY REPORTING
Company is also releasing Business Responsibility Report (BRR) as part of this AnnualReport covering its compliances towards the Business Responsibility Principles enunciatedby the Securities and Exchange Board of India as required under Regulation 34(2)(f) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
13. CORPORATE SOCIAL RESPONSIBILITY
As part of its triple bottom-line approach to its business Company has alwaysconsidered the community as its key stakeholder. It believes that the community around itsoperations should also grow and prosper in the same manner as does its own business.Accordingly Corporate Social Responsibility is an integral part of the Company'sbusiness. In order to oversee all its CSR initiatives and activities the Company hasconstituted a Board level Committee - "Corporate Social and Business ResponsibilityCommittee" (CSBR Committee). The major thrust areas of the Company includehealthcare education women empowerment infrastructure support integrated ruraldevelopment and conservation of natural resources. The Annual Report on CSR activities ofFY 2019-20 with requisite details in the specified format as required under Companies(Corporate Social Responsibility Policy) Rules 2014 is enclosed at Annexure-2 andforms part of this report. The CSR Policy of the Company may be accessed on website of theCompany at link https:// www.shreecement.com/ pdf/shree_csr_policy_final.pdf.
14. SUBSIDIARY COMPANIES
The Company has following subsidiaries:
|SN Name of Subsidiaries || |
Nature of Interest
|1. Shree Global FZE Jebel Ali Free Zone Emirate of Dubai U.A.E. || |
Wholly Owned Subsidiary
|2. Raipur Handling and Infrastructure Private Limited Baloda Bazar Chhattisgarh |
|SN Name of Subsidiaries || |
Nature of Interest
|3. Shree Enterprises Management Ltd Dubai International Financial Centre Emirate of Dubai U.A.E. || |
|4. Shree International Holding Ltd Dubai International Financial Centre Emirate of Dubai U.A.E. ||Step-down |
|5. Union Cement Company PrJSC Emirate of Ras- Al-Khaimah U.A.E. ||Subsidiaries |
|6. Union Cement Norcem Co. Ltd. LLC Emirate of Ras-Al-Khaimah U.A.E. || |
As required under Section 129(3) of the Companies Act 2013 Statement showing thesalient features of the financial statements of the Subsidiary Companies in Form AOC-1forms part of the Consolidated Financial Statements of Company. The shareholders who wishto receive a copy of Annual Accounts of the Subsidiary Companies may request the CompanySecretary for the same. The policy for determining material subsidiaries as approved bythe Board can be accessed on the website of the Company at link https://www.shreecement.com/pdf/Shree-material- subsidiary-policy.pdf.
15. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company are prepared as required in termsof provisions of Companies Act 2013 and Listing Regulations by following the applicableAccounting Standards notified by the Ministry of Corporate Affairs and forms part of theAnnual Report.
16. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of their knowledge and belief and according to the information and explanationsobtained by them state that:
In the preparation of the annual accounts for the year ended 31stMarch 2020 the applicable accounting standards have been followed and there are nomaterial departures from the same;
They have selected such accounting policies judgments and estimates that arereasonable and prudent and have applied them consistently so as to give a true and fairview of the state of affairs of the company as at 31st March 2020 and of thestatement of Profit and Loss as well as Cash Flow of the company for the year ended onthat date;
Proper and sufficient care has been taken 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;
The annual accounts have been prepared on a going concern basis;
Necessary internal financial controls have been laid down by the Company and thesame are commensurate with its size of operations and that they are adequate and wereoperating effectively; and
Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
17. PERFORMANCE EVALUATION OF BOARD ITS COMMITTEES & INDIVIDUAL DIRECTORS
In terms of requirements of Listing Regulations and provisions of Companies Act 2013Nomination cum Remuneration Committee of the Board of Directors of the Company specifiedthe manner for effective evaluation of performance of Board its Committees and IndividualDirectors. Based on the same the Board carried out annual evaluation of its ownperformance performance of its Committees Individual Directors including IndependentDirectors during the year. Company had adopted the evaluation parameters as suggested byICSI and SEBI with suitable changes from Company's perspective. The performance of theBoard was evaluated by the Board on the basis of criteria such as Board composition andstructure effectiveness of Board processes information flow to Board functioning of theBoard etc. The performance of Committees was evaluated by the Board on the basis ofcriteria such as composition of Committees effectiveness of Committee workingindependence etc. The Board evaluated the performance of individual Director on the basisof criteria such as attendance and contribution of Director at Board/Committee Meetingsadherence to ethical standards and code of conduct of the Company interpersonal relationswith other Directors meaningful and constructive contribution and inputs in theBoard/Committee meetings etc.
For the above evaluation the Board members completed questionnaires providing feedbackon different parameters as already stated above including on performance of Board /Committees / Directors engagement levels independence of judgment and other criteria.This is followed with review and discussions at the level of Board.
The results of evaluation showed high level of commitment and engagement of Board itsvarious committees and senior leadership.
In a separate meeting of the Independent Directors performance evaluation ofNon-Independent Directors the Board as a whole and performance evaluation of Chairman wascarried out taking into account the views of Executive and Non-Executive Directors. Thequality quantity and timeliness of flow of information between the Company Management andthe Board which is necessary for the Board to effectively and reasonably perform theirduties were also evaluated in the said meeting.
The Independent Directors well appreciated the functioning of the Board of DirectorsWorking Directors as well as Committee of the Board. They were also highly satisfied withleadership role played by the Chairman.
Company appointed an External Facilitator for the purpose of carrying out theperformance evaluation in a fair and transparent manner.
18. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act 2013 and Article 112 of theArticles of Association of the Company Shri Prashant Bangur (DIN: 00403621) Director ofthe Company will retire by rotation in the ensuing Annual General Meeting and beingeligible offers himself for reappointment. Item seeking approval of members for the sameis included in the Notice convening the 41st Annual General Meeting (AGM). TheBoard recommends the re-appointment of Shri Prashant Bangur.
The Board of Directors of the Company vide Circular Resolution passed on 11thNovember 2019 (on the recommendation of Nomination cum Remuneration Committee) appointedMs. Uma Ghurka (DIN: 00351117) as Additional Director of the Company w.e.f. 11thNovember 2019. She holds office as Additional Director up to the date of the ensuingAnnual General Meeting. The Board further appointed her as Independent Director of theCompany for five years w.e.f. 11th November 2019 subject to approval of themembers.
Shri Sanjiv Krishnaji Shelgikar (DIN: 00094311) was appointment as Independent Directorof the Company to hold office for a term of 5 (five) years w.e.f. 5th August2015. His term will be completed on 4th August 2020. Based on therecommendations of the Nomination cum Re mu n e ra ti o n Co m mi ttee th e B o a rd ofdirectors of the Company in its meeting held on 8th May 2020 proposed tore-appoint Shri Sanjiv Krishnaji Shelgikar as Independent Director of the Company forsecond consecutive term of 5 years effective 5th August 2020.
Further in the opinion of the Board Ms. Uma Ghurka and Shri Sanjiv KrishnajiShelgikar are persons of high integrity expertise and experience and thus qualify to beappointed as Independent Directors of the Company. Further as required under section150(1) of the Companies Act 2013 they have registered themselves as Independent Directorsin the independent director data bank. They shall pass the proficiency self-assessmenttest in due course in terms of Companies (Appointment and Qualifications of Directors)Rules 2014 (as amended).
The resolutions seeking approval of members for appointment of Ms. Uma Ghurkaandre-appointment of Shri Sanjiv Krishnaji Shelgikar as Independent Directors of the Companyform part of Notice convening the 41st Annual General Meeting. The Boardrecommends their appointment.
Dr. Leena Srivastava (DIN: 00005737) ceased as Independent Director of the Companyw.e.f. close of Business Hours on 31st August 2019 consequent upon completionof her term.
During the year under review Shri Ratanlal Gaggar (DIN: 00066068) Shri Om PrakashSetia (DIN: 00244443) Dr. Yoginder Kumar Alagh (DIN: 00244686) Shri Nitin Dayalji Desai(DIN: 02895410) and Shri Shrikant Somany (DIN: 00021423) were re-appointed as IndependentDirectors for second term of 5 years w.e.f. 1st September 2019.
In accordance with Section 149(7) of the Companies Act 2013 and Regulation 25(8) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 eachIndependent Director has given a declaration to the Company confirming that he/she meetsthe criteria of independence as specified under Section 149(6) of the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Profile and other information of the aforesaid Directors as required under Regulation36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andSecretarial Standard - 2 forms part of the Notice convening the 41st AnnualGeneral Meeting.
19. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
In order to acquaint the new directors with the Company a detailed presentation isgiven to them at the time of their appointment which covers their role duties andresponsibilities Company's strategy business model operations markets organisationstructure products etc. A detailed presentation along similar lines is sent to existingIndependent Directors every year to keep them apprised of the above details.
As part of Board discussions presentation on performance of the Company is made to theBoard during its meeting(s). Plant visits are also arranged for Independent Directors fromtime-to-time for better understanding of the Company's operations. The details of suchfamiliarization programmes for Independent Directors are posted on the website of theCompany and can be accessed at linkhttps://www.shreecement.com/pdf/familiarization-programme-for-independent-directors.pdf.
20. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS / OUTGO
The particulars relating to Conservation of Energy Technology Absorption and ForeignExchange Earnings & Outgo as required to be disclosed under the Companies Act 2013is set out at Annexure-3 which forms part of this report.
21. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided at Annexure-4.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 a statement showing the names of employees and other particularsof the top ten employees and employees drawing remuneration in excess of the limits asprovided in the said rules are set out in the Board's Report as an addendum thereto.However in terms of provisions of the first proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report is being sent to the members of the Company excluding theaforesaid information. The said information is available for inspection at the RegisteredOffice of the Company during working hours and any member interested in obtaining suchinformation may write to the Company Secretary and the same will be furnished on request.
I. Statutory Auditors
M/s. Gupta & Dua Chartered Accountants (Firm Registration No. 003849N) wereappointed as Statutory Auditor of the Company in the Annual General Meeting held on 31stJuly 2017 for a consecutive term of five years from the conclusion of 38thAnnual General Meeting till the Conclusion of 43rd Annual General Meeting. Theyhave given their report on the Annual Financial Statements for Financial Year 2019-20. TheAudit Report does not contain any qualification reservation or adverse remark.
II. Secretarial Auditors
The Board had appointed M/s. P. Pincha & Associates Company Secretaries asSecretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year2019-20. They have submitted their report in prescribed format and the same is enclosed atAnnexure-5. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.
III. Cost Auditors
In terms of the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors of theCompany appointed M/s. K. G. Goyal & Associates Cost Accountants Jaipur (FirmRegistration No. 00024) to conduct the cost audit for the financial year ending 31stMarch 2021 at a remuneration as stated in the Notice convening the 41st AnnualGeneral Meeting of the members. As required under the Companies Act 2013 theremuneration payable to cost auditors has to be placed before the Members at a generalmeeting for ratification. Hence a resolution seeking ratification of remuneration by theMembers payable to the Cost Auditors forms part of the Notice of the ensuing 41stAnnual General Meeting.
23. OTHER DISCLOSURES
(a) Composition of Audit and Risk Management Committee: The Committee comprises ofShri O. P. Setia as Chairman Shri R. L. Gaggar Dr. Y. K. Alagh Shri Nitin Desai ShriShreekant Somany and Shri Sanjiv Krishnaji Shelgikar as other Members. More details aregiven in the Corporate Governance Report. All the recommendations made by the Audit andRisk Management Committee were accepted by the Board.
(b) Details of Meetings of Board and its Committees: The Board of Directors of yourCompany met 4 times during the year to deliberate on various matters. The meetings wereheld on 18th May 2019 9th August 2019 19th October2019 and 14th February 2020. Further details are provided in the CorporateGovernance Report forming part of this Annual Report. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013 and the ListingRegulations.
(c) Extract of the Annual Return: Extract of Annual Return of the Company is enclosedat Annexure-6 which forms part of this report and same is also placed at website of theCompany at www.shreeecement.com.
(d) Particulars of Loan Guarantees or Investments: During the year 2019-20 there wereno loans or guarantees given by the Company which attract the provisions of Section 186 ofthe Companies Act 2013. The details of investments made by the Company in terms ofSection 186 of the Companies Act 2013 are given in the Notes forming part of StandaloneFinancial Statements.
(e) Particulars of Contracts or Arrangements with Related Parties: All Related PartyTransactions during the financial year 2019-20 were on arm's length basis and in ordinarycourse of business and were in compliance with the applicable provisions of the CompaniesAct 2013 and the Listing Regulations. All such transactions are placed before the Auditand Risk Management Committee for review/ approval. The necessary omnibus approvals havebeen obtained from Audit and Risk Management Committee wherever required. There were nomaterial Related Party Contract/Arrangement/Transactions made by the Company during theyear that would have required Shareholders' approval under provisions of Section 188 ofthe Companies Act 2013 or of the Listing Regulations. The Company has adopted a RelatedParty Transactions Policy duly approved by the Board which is uploaded on the Company'swebsite & may be accessed at link https://www.shreecement.com/ pdf/rpt_policy_as_amended.pdf.
Further in terms of SEBI (Listing Obligations and Disclosure Requirements) (Amendment)Regulations 2018 the transactions with person / entity belonging to thepromoter/promoter group holding 10% or more shareholding in the Company are as under:
|Name ||% Holding ||Amount ||Nature |
|of the ||in the ||(' Cr.) ||of Transac- |
|Entity ||Company || ||tion |
|Shree Capital Services Ltd. ||24.90% ||0.24 ||Payment of office rent |
(f) Deposits from Public: The Company has not accepted any deposits from public coveredunder Chapter V of the Companies Act 2013 during the year and as such no amount onaccount of principal or interest on deposits from public was outstanding.
(g) Vigil Mechanism/ Whistle Blower Policy: The Company has adopted a whistle blowerpolicy and has established the necessary vigil mechanism for employees and Directors toreport concerns about unethical behaviour. The policy provides for adequate safeguardsagainst victimization of employees who avail of the mechanism and also provides for directaccess to the Chairman of the Audit and Risk Management Committee. The whistle blowerpolicy may be accessed on the website of the Company at link https:// www.shreecement.com/pdf/whistleblower_policy.pdf.
(h) Remuneration Policy: Company firmly believes in nurturing a people friendlyenvironment which is geared to drive the organization towards high and sustainable growth.Each and every personnel working with Company strives to achieve the Company's vision ofbeing the best in the industry. Its remuneration policy is therefore designed to achievethis vision. The policy has been approved by the Board on the recommendation of Nominationcum Remuneration Committee. The policy is applicable to Directors Key ManagerialPersonnel and other employees. The policy provides that while nominating appointment of aDirector the Nomination cum Remuneration Committee shall consider the level andcomposition of remuneration which is reasonable and sufficient to attract retain andmotivate the Directors for delivering high performance. The Remuneration Policy can beaccessed on the website of the Company at link https://www.shreecement.com/pdf/remuneration_policy_new.pdf.
(i) Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace:The Company has complied with the provisions of the constitution of the Internal Committeeunder the Sexual Harassment of Women at the Workplace (Prevention Prohibition andRedressal) Act 2013 and has adopted a Policy on Prevention Prohibition and Redressal ofSexual Harassment at the Workplace in line with the provisions of the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rules madethereunder. Company has formed an 'Internal Complaints Committee' for prevention redressalof sexual harassment at workplace. The Committee has four members and is chaired by asenior woman member of the organization. The Company has not received any complaint ofsexual harassment during the financial year 2019-20.
(j) Material Changes after the Close of Financial Year: There have been no materialchanges and commitments which have occurred after the close of the year till the date ofthis Report affecting the financial position of the Company.
(k) Significant and Material Orders passed by the Regulators or Courts: No significantmaterial orders have been passed by the Regulators or Courts or Tribunals which wouldimpact the going concern status of the Company and its future operations.
(l) Maintenance of Cost Records: Company is required to maintain cost records asspecified by the Central Government under sub-section (1) of section 148 of the CompaniesAct 2013 accordingly such accounts and records are made and maintained by the Company.
(m) Compliance with Secretarial Standards:
Company has complied with the Secretarial Standards issued by Institute of CompaniesSecretaries of India (ICSI) on Board Meetings (SS- 1) and General Meetings (SS-2).
The Directors take this opportunity to express their deep sense of gratitude to itslenders Central and State Governments and the local authorities for their continuedco-operation and support. They also would like to place on record their sincereappreciation for the commitment hard work and high engagement level of every member ofthe Shree family without which the exemplary performance of the Company year after yearwould not have been possible. The Directors would also like to thank various stakeholdersof the Company including customers dealers supplies transporters advisors localcommunity etc. for their continued committed engagement with the Company. Lastly theDirectors would also like to thank you the Members of the Company for the confidence andtrust reposed in them.