Sri Chakra Cement Ltd.
|BSE: 518053||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE827D01020|
|BSE 05:30 | 01 Jan||Sri Chakra Cement Ltd|
|NSE 05:30 | 01 Jan||Sri Chakra Cement Ltd|
|BSE: 518053||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE827D01020|
|BSE 05:30 | 01 Jan||Sri Chakra Cement Ltd|
|NSE 05:30 | 01 Jan||Sri Chakra Cement Ltd|
We have pleasure in presenting this 39th Annual Report of the Companytogether with the Audited Statements of
Accounts Management Discussion and Analysis for the year ended 31st March2021.
During the year under review compared to the performance of previous year the clinkerproduction quantity has Increased by 22.43% cement production has Increased by 15.80% andcement sale quantity has Increased by 16.65%. The revenue from operations Increased by33.11% due to demand in market as well as increase in net price realisation. The PBDITincreased by Rs 24.56 Crores due to increase in Net realisation per Bag @ Rs.37.12.
Cement Industry Structure Developments and future outlook
During the year under review the world economy has shown a growth of over 3.5% a verypromising growth trajectory. However in the long term any positive growth will have to besubstantiated with suitable trade and investment policies. The Indian scenario has alsobeen promising and almost in line with the growth of the world economy. The Government hasannounced a setting up of affordable housing fund and Prime Minister Awas Yojana schemeconsequent to which the interest rates for housing sectors will come down providing reliefto many and thereby the aim of Government in infrastructure development will turnaround inthe demand and growth of the Cement Industry. However with this the additionalcapacities that have come up in various states both greenfield and brownfield havecreated a scenario of extreme competition in the Cement Industry. The excess supplysituation thus created would further adversely impact the price realisation. Theever-increasing cost of coal has also added to the stifling scenario in the CementIndustry. Without substantial increase in demand in the last few years the Cementindustry has been facing a twin fold blow by not being able to absorb its fixed costcompletely due to lower capacity utilizations and dealing with reducing price realization.
State Of Company's Affairs:
During the year under review compared to the performance of previous year the clinkerproduction quantity has increased by 22.43% cement production has increased by 15.80% andcement sale quantity has increased by 16.65%. The revenue from operations increased by33.11% due to demand in market as well as increase in net price realisation. The PBDITincreased by 24.56 Crores due to increase in Net realisation per Bag @ Rs 37.12. Duringthe year under review the Company's profitability is impacted due to heavy competitioncreated by the major players in the industry by way of addition of huge capacities in andaround the plant area. However in order to meet such competition your company hasinitiated efforts to reduce the cost of production on account of power and fuel as a partof which the Company has already setup captive solar power generation unit at Srikalahastiwith a total installed capacity of 5 MW for with an investment of about Rs 30 Crores
Management Outlook of Macro Economy And Industry:
There were positive signs of improvement observed in 4th quarter of 2020-21. But thesame was short lived as lockdown of the country due to COVID-19 virus halted the growthmomentum. The Government undertook unique measure of rationalizing income tax rates toboost fresh investments by corporates in the country. This measure is yet to yield itsresults. RBI on its part also undertook much needed measures of rationalizing its policyrates and increased the liquidity in the banking system. However this did not lead tomeaningful contraction of interest rates for majority of borrowers. On the external frontthe INR which remained mostly stable during most part of the year on the back of strongFDI flows and declining crude oil prices weakened towards close of the year due to impactof COVID-19 virus. Overall the Indian economy is expected to witness a growth rate ofaround 5% for the year 2021-22 which shall be the lowest witnessed since the Globalfinancial crisis in 2008-09. This is largely because of low performance by manufacturingconstruction and mining sectors. The lockdown imposed in the country as a result ofCOVID-19 virus has had an unprecedented impact on the entire economy of the country. Themonth of April 2020 was virtually a complete standstill. There is uncertainty as to howlong the impact of pandemic is expected to continue and when one can witness normalcyreturning to the economy. Overall outlook for the economy in the near term is notencouraging. However in past also Indian economy showed strong recovery in the face ofglobal financial crisis. With our robust and large consumer base expected fiscal stimulusfrom the Government and timely interventions from RBI India will soon be on rapidrecovery path. We therefore believe that in the medium to long term the Indian economywill emerge stronger from this crisis.
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 cementdemand in the financial year 2020-21. Based on cement production data for 11 months uptoMar 2021 and expected production for Mar2022 cement production during 2021-22 is expectedto remain at around same level as that of 2020-21. The COVID-19 pandemic has dented thecement demand because of nation-wide lockdown and resultant dip in the overall economicactivities. The uncertainty around the continuation of the impact of the pandemic makes itdifficult to make any proposition about the outlook for the near future. While short termoutlook is uncertain the long-term outlook of the cement industry continues to bepositive on account of the various economic reforms increasing aspirations sustainedconsumption momentum and persistent infra spending.
Board of directors.
Key managerial personnel and changes during the year:
The Board is duly constituted and balanced as required under the Companies Act 2013and the Listing Regulations/Agreement read with the policy of the Board of Directorsappointment and remuneration in terms of the provisions of Section 134(3)(e) read withsub-section (3) of Section 178 of the Companies Act 2013. During the year Under reviewSri N. Krishna Mohan and Smt K.V. Naga Lalitha will be retiring at the ensuing AnnualGeneral Meeting and being eligible offer themselves for reappointment.
During the Financial year under review Sri K Sriram has been appointed as ExecutiveDirector of the Company w.e.f 19th December 2020.
Sri Anantham Parlapalli was appointed as an Additional Director by the Board witheffect from 19.04.2021. The Board recommends the appointment of Sri Parlapalli Anantham asa Professional Director.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to section 134(3) (c ) of the Companies Act 2013 the Directors confirm that:
? In the preparation of Annual Accounts the applicable accounting standards had beenfollowed and there are no material departures from the same.
? The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give true andFairview of the state of affairs of the company at the end of the financial year and theprofit and loss of the company for that period.
*1* Proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities.
? Annual accounts were prepared on a going concern basis. and
? Directors had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively.
? The proper system was devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
DECLARATION BY INDEPENDENT DIRECTORS:
The company has received necessary declaration from all independent Directors undersection 149(7) of the Companies Act 2013 that they meet the criteria of Independence laiddown in section 149(6) of the Companies Act 2013.
The Board met seven times during the year under review and the particulars of meetingheld and attended by each Director are detailed in the Corporate Governance Report.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION.
The company's policy lays down the criteria for determining qualifications positiveattributes Independence of a director and other matter as provided under sub-section (s)of section 178 of the Companies Act 2013.
The current policy is to have an appropriate mix of executive and independent directorsto maintain the independence of the Board in terms of the provisions of section 178. TheBoard consists of four executive directors and one non executive director and fiveindependent Directors. We affirm that the remuneration paid to the directors is as per theterms laid out in the nomination and remuneration policy of the company.
Pursuant to the provisions of section 177 of the of the Companies Act 2013 the companyboard constituted the audit committee with the following directors.
> Sri P Ramamoorthy Non-Executive Independent Director as Chairman.
> Sri N Gopal Non-Executive Independent Director
> Smt. K. V. Naga Lalitha Non-Executive Director.
? Statutory Auditors: At the 37th Annual General Meeting held on 23ndday of September 2019 M/s Satyanarayana & co Chartered Accountants were appointed asstatutory auditors of the company to hold office for a period of five years i.e. till theconclusion of 41st Annual General Meeting of the Company. In this regard thecompany has received a certificate from the auditors to the effect that if they arereappointed it would be in accordance with the provisions of section 141 of the of theCompanies Act 2013.
? Cost Auditors: M/s Bisati & Co Cost Accountants are the Cost Auditorsappointed by the company Board for auditing the cost accounts of the company for the yearended 2021-2022.
? Secretarial Auditor: M/s P. Jagannatham & Co. Company Secretaries inpractice are the Secretarial Auditors appointed by the board of directors of the companyfor the year 2021-22.
? Internal Auditors: M/s C Ramachandram and Co chartered Accountants have beenappointed to conduct the internal Audit and review of internal financial controls onfinancial statements and other matters for better performance of the company which isbeing implemented by your company from time to time.
Disclosure of particulars of employees and related matters:
The information required pursuant to Section 197 of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managing Personnel) Rules2014 and Companies (Particulars of Employees) Rules 1975 in respect of employees of theCompany and Director is given in a separate annexure to this Report. Particulars ofemployees as per the Rule-5(2) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are not applicable to the company.
Statutory auditors comment in the independent auditors' report and reply:
With regard to the observations of the Statutory Auditors regarding the confirmationsfrom some of the parties it is hereby clarified that the company has obtainedconfirmations from major accounts and some minor accounts the Board felt that it wasrequired as there is no impact on the accounts.
? Board Committees:
The details of composition terms of Reference meetings and attendance particulars ofvarious committees of Board such as Audit Committee Nomination and RemunerationCommittee Corporate Social Responsibility Committee Stakeholders Relationship CommitteeShare Transfer Committee are provided in the Corporate Governance Report vide annexureNo 5 to this Directors report. The intervening gap between the meetings of theCommittees are within the prescribed period under the Companies Act 2013 and the listingregulations. The Audit Committee consists of 2 independent directors i.e. Sri PRamamoorthy and Sri Nemani Gopal and one non executive director i.e Smt K V Nagalalitha.
? Loans Guarantees or Investments:
There were no loans/guarantees given by the company during the financial year2020-2021.
? Contracts Or Arrangements With Related Parties:
All related party transactions that were entered into during the financial year 2020-21were on an arms-length basis and in the ordinary course of business and were in compliancewith the applicable provisions of the Companies Act 2013 and the Listing Regulations.There were no material related party contracts or arrangements or transactions made by thecompany. The Company has adopted a related party transactions policy duly approved by theBoard Details of the related party disclosures (transactions) are provided in theaccompanying financial statements. The disclosure in form AOC-2 is not applicable.
? Vigil Mechanism/ Whistle Blower Policy:
The Company has adopted a whistle blower policy ad has established a clear vigilmechanism and directors to report concerns un ethical behaviour. The policy provides foradequate safeguards against victimisation of employees who avail of the mechanism and alsoprovides for direct access to the chairman of the audit committee. The whistle blowerpolicy may be accessed on the website of the company.
? Prevention of Sexual Harassment at Workplace:
The Company has adopted a policy on prevention prohibition and redressal of sexualharassment at the work place in line with the provisions of the "The SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013 andRules made there under your Company has constituted Internal Complaints Committee (ICC).The Committee has four members and is chaired by a senior women member of theorganisation. It is stated that there are no such complaints received by thecommittee/company during the year under review.
? Material Changes after close of the financial year:
There have been no material changes and commitments which have occurred after the closeof the year till date
of this report effecting the financial position of the company.
? Segment-wise or product-wise performance:
The Company is mainly engaged in the business of manufacturer of OPC 53/ 43 andPPC grade cement and captive solar power generation. During the year under review thecompany has Single Reportable Segment i.e. Cement.
? Risk and concerns:
The risks and concerns which are applicable to all industries and specially to cementindustry can be said to be prevalent in the case of your company as well. Few of the majorrisks are given below. Periodical increases in the cost of inputs leading to impact onmargins
Uncertainty in coal supplies and increases in the prices.
Failure or deficiency in the monsoon which may lead to reduction/ loss ofrevenue due to reduction in demand for cement
Changes in Government policy impact the costs demand and supply.
? Internal control systems and their adequacy:
The Company's internal control system in place has a process designed to take care ofvarious controls and audit requirements. It ensures effectiveness in the operations andprotection of the company's assets from any possible loss and unauthorised use. It alsoensures proper and correct data being recorded. The design of the transactions is suchthat there is an adequate appropriate and need based control on the activities/ businessprocesses of the company. The Internal control system is augmented by an establishedinternal audit system which is carried out by outside chartered accountants of the reputeand experience. Regular reviews of internal audit are carried out to ensure robustness ofthe systems and control environment. The internal auditors submit their reports to theaudit committee of the Board of Directors for their review. It is also ensured that theinternal audit scope is adequate and their reviews are well directed to achieve thedesired objectives. The committee also reviews the adequacy and effectiveness of theinternal control systems and suggests improvements from time to time. The Compliance tothe legal and statutory requirements is given utmost importance as also to ensureefficiency in operations/ reporting and controls. All parameters in operations/ activitiesare monitored regularly to ensure desired results.
? Human resources development and industrial relations:
The main focus of the company is to attract develop and retain talented employees inorder to achieve the business objectives. The company has made efforts in the field oftraining and development congenial work environment providing challenging workopportunities etc. The Company has framed HR practices in order to strengthen and buildingpeople talent for achieving the business objectives. Initiatives to develop leadershiplines as well as enhance technical and functional capability with special focus onnurturing young talent are taken. Young managers are groomed by providing higherresponsibilities Focus remains on gaining cross functional knowledge to enable meaningfulparticipation of employees all across of the company in innovation and processimprovement. With the company entering in next phase of growth the nurtured talent poolwill enable smooth transition to new growth trajectory. During the year employee relationsremained cordial. This has enabled company to build healthy relationship and resolveissues through dialogue and discussions.
Annexures to the Directors' Report
Corporate Social Responsibility: The company has constituted a Board levelCommittee "Corporate Social Responsibility Committee" in terms of section 135and Schedule VII of the Companies Act 2013 read with the provisions ofthe listing agreement/ regulations. CSR activities as detailed in a separate annexure tothis annual report as required under Companies (Corporate Social Responsibility Policy)Rules 2014 vide Annexure 1 and the same may also be accessed on thecompany's website.
Conservation of energy technology absorption foreign exchange earnings and outgo:
The information relating to the conservation of energy technology absorption foreignexchange earnings/outgo as required under the Companies Act 2013 and the rules madethere under is set out in Annexure 2 which forms part of this Annual Report.
Secretarial Audit Report: The Company's Secretarial Auditors M/s P. Jagannatham& Co has issued their Report for the year 2020-21 which is attached to thisDirectors' Report vide Annexure-3
Extract of Annual Return: The Annual Return of the Company has been placed at theWebsite of the company and can be accessed atwww.srichakracement.com/admn/files/sccl-annual%20return.pdf the details in Form MGT-9 isat Annexure-4
CORPORATE GOVERNANCE REPORT:
Your Company has taken adequate steps to adhere to all the stipulations laid down in 27of the SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015. A reporton the Corporate Governance is included as a part of this report. Certificate from theSecretarial Auditors of the company M/s. Puttaparthi Jagannatham & co CompanySecretaries confirming the compliance with the conditions of Corporate Governance asstipulated under above regulations is included as part of this report vide ANNEXURE-5.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as they are not apprised there were no transactions on these items duringthe year under review.
> Details relating to deposits covered under chapter 5 of the Act.
> No significant or material orders were passed by the Regulators or courts ortribunal which impact the going concern status and the company's operations in future.
> No cases were filed pursuant to the sexual harassment of women at workplace(prevention prohibition and Redressal) Act 2013 as per the internal complaints committee(ICC).
> No Dividend was recommended by the Board.
> No Issue of equity shares with differential rights as to Dividend voting orotherwise.
> No Issue of shares to employees of the company under any revenue.
> There is no change in the nature of the business of the company during the yearunder report. I
> There were no such companies which have come or ceased to be the company'ssubsidiaries joint ventures or associate companies during the year.
> There were no significant material events occurred between the closure of thebooks of accounts for the year 2020-21 and the date of this report.
Disclosure of Remuneration: A Statement as required under section 197 ofCompanies Act 2013 and Rule 5(1) of Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is enclosed as Annexure 6.
Statements made in this report describing the Company's projections estimatesexpectations or predictions may be 'forward looking predictions within the meaning ofapplicable securities laws and regulations. Actual results may differ from such estimatesprojections etc. whether expressed or implied. Factors which would make a significantdifference to the Company's operations include availability of quality raw materialsmarket prices in the domestic and overseas markets changes in Govt. Regulations and taxlaws economic conditions affecting demand/ supplies and other environmental factors overwhich the Company does not have any control.
Your directors take this opportunity to express their sincere appreciation for thesupport and co-operation received from the various departments of the Government BankersSuppliers Customers and Shareholders.
The Directors also wish to place on record their appreciation for the committedservices of the company's Employees.
For and behalf of the Board
For Sri Chakra Cement Limited