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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

Sri Chakra Cement Ltd. (SRICHAKRACEM) - Director Report

Company director report

Dear Members

We have pleasure in presenting this 37th Annual Report of the Companytogether with the Audited Statements of Accounts Management Discussion and Analysis forthe year ended 31st March 2019.

Financial Results:

Particulars 201S-19 2017-18
Revenue from operations (Rs in Crs) 188.20 193.17
Profit Before Interest Depredation and Taxes 1.75 7.38
Profit before tax (5.59) 0.22
Tax Expense - 0.10
Comprehensive Income (0.07) 1201.88
Total Comprehensive Income (5.66) 1213.83

During the year under review compared to the performance of previousyear the clinker production quantity has gone up by 8.18% cement production wasincreased by 8.41% and cement sale quantity was increased by 9.01%. The revenue fromoperations was declined by 2.57% which is mainly due to low price realisation. The PBDITwas decreased by Rs 5.63 Crores due to increased coal cost power cost etc. During theyear 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 andfurther in the process of setting of wind power generation with an installed capacity of 6mw which would contribute to the increased profitability of the company in the nearfuture.

Cement Industry Structure Developments and future outlook

During the year under review the world economy has shown a growth ofover 3.5% a very promising growth trajectory. However in the long term any positivegrowth will have to be substantiated with suitable trade and investment policies. TheIndian scenario has also been promising and almost in line with the growth of the worldeconomy. The Government has announced a setting up of affordable housing fund and PrimeMinister Awas Yojana scheme consequent to which the interest rates for housing sectorswill come down providing relief to many and thereby the aim of Government ininfrastructure development will turnaround in the demand and growth of the CementIndustry. However having said this with the additional capacities that have come up invarious states both greenfield and brownfield have created a scenario of extremecompetition in the Cement Industry. The excess supply situation thus created would furtheradversely impact the price realisation. The ever increasing cost of coal has also added tothe stifling scenario in the Cement Industry. Without substantial increase in demand inthe last few years the Cement industry has been facing a twin fold blow by not beingable to absorb its fixed cost completely due to lower capacity utilizations and dealingwith reducing price realization.

Board of directors. Key managerial personnel and changes during theyear:

The Board is duly constituted and balanced as required under theCompanies Act 2013 and the Listing Regulations/Agreement read with the policy of theBoard of directors appointment and remuneration in terms of the provisions of Section134(3)(e) read with sub-section (3) of Section 178 of the Companies Act 2013. During theyear under review Sri N. Krishna Mohan and Smt. K.V.vNagalalitha Directors will beretiring at the ensuing Annual General Meeting and being eligible offer them selves forreappointment. Sri. N. Umashankar Company Secretary resigned as Company Secretary and inhis place Sri. P. Rajendra babu was appointed.

Performance Evaluation Of Board. Committees. Individual Directors AndFamiliarisation Programme For Independent Directors:

Board Evaluation:

During the year under review the Board carried out an annualevaluation of its own performance on the basis of criteria such as Board compositionstructure and effectiveness of the Board Processes information flow to the Board andfunctioning of the Board etc. Considering the requirements of the relevant statutes.

Evaluation Of Committees:

Performance of Committees of the Board was evaluated on the basis ofcomposition effectiveness of working and independence etc.

Evaluation Of Individual Directors:

The Board and nomination and Remuneration Committee evaluated theperformance of individual directors on the basis of criteria such as attendancecontribution of Directors at Board/Committee Meetings adherence to ethical standards andcode of conduct of the Company interpersonal relations with other directors meaningfuland constructive contribution and inputs in the Board/committee meeting etc.

Familiarisation Programme For Independent Directors: Adetailed presentation covering the role duties and responsibilities of the independentdirectors company objectives strategy operations organisation structure etc made atthe time of their appointment is sent to the existing independent directors every year.

In Accordance with section 149(7) of the Companies Act2013 each Independent Director has given declaration to the company confirming that hemeets the criteria of independence laid down in section 149(6) of the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Directors' responsibility statement:

Pursuant to Section 134 (5) of Companies Act 2013 the Board ofDirectors to the best of their knowledge and belief state that:

• In the preparation of annual accounts for the year ended 3lstMarch 2019 the applicable accounting standards had been followed along with properexplanation relating to material departures;

The directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and Fair view of the state of affairs of the company at the end of thefinancial year and the profit and loss of the company for that period.

The directors had taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of this Act forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities

• The director had prepared and annual accounts on a going concernbasis. and

In the case of listed company directors had laid down internalfinancial controls to be followed by the company and that such internal financial controlsare adequate and were operating effectively.

• The director had devised proper system to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Auditors:

Statutory Auditors: The present statutory auditors haveresigned on 14.08.2019 on account of their inability to carry out the audit works sincethey were located at Nizamabad. The Board has recommended the appointment of M/sSatyanarayana & Co. Chartered Accountants Secunderabad for a period of 5 years w.e.f2019-20

• Cost Auditors: M/s Bisati & Co Cost Accountants are theCost Auditors appointed by the company Board for auditing the cost accounts of the companyfor the yea tended 31.03.2019.

• Secretarial Auditor: M/s K. Swamy & Co. CompanySecretaries in practice are the Secretarial Auditors appointed by the board of directorsof the company for the year 2018-19.

• Internal Auditors: M/s C Ramachandram and Co charteredAccountants have been appointed to conduct the internal Audit and review of internalfinancial controls on financial statements and other matters for better performance of thecompany which is being implemented by the your company from time to time.

Disclosure of particulars of employees and related matters:

The information required pursuant to Section 197 of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagingPersonnel) Rules 2014 and Companies (Particulars of Employees) Rules 1975 in respect ofemployees of the Company and Director is given in a separate annexure to this Report-.Particulars of employees as per the Rule-5(2) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are not applicable to the company.

Statutory auditors comment in the independent auditors' report andreply:

With regard to the observations of the Statutory Auditors regarding theconfirmations from some of the parties it is hereby clarified that the company hasobtained confirmations from major accounts and some minor accounts the Board felt that itwas required as there is no impact on the accounts.

Other Disclosures

Board Committees:

The details of composition terms of Reference meetings and attendanceparticulars of various committees of Board such as Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee StakeholdersRelationship Committee Share Transfer Committee are provided in the Corporate GovernanceReport vide annexure No 5 to this Directors report. The intervening gap between themeetings of the Committees are within the prescribed period under the Companies Act 2013and the listing regulations. The Audit Committee consists of 2 independent directors i.e.Sri P Ramamoorthy and Sri Nemani Gopal and one non executive director i.e Smt K VNagalalitha.

Loans. Guarantees or Investments:

There were no loans/guarantees given by the company during thefinancial year 2018-19.

Contracts Or Arrangements With Related Parties:

All related party transactions that were entered into during thefinancial year 2018-19 were on an arms length basis and in the ordinary course of businessand were in compliance with the applicable provisions of the Companies Act 2013 and thelisting regulations. There were no material related party contracts or arrangements ortransactions made by the company. The Company has adopted a related party transactionspolicy duly approved by the Board Details of the related parties disclosures(transactions) are provided in the accompanying financial statements. The disclosureinform AOC-2 is not applicable.

Vigil Mechanism/ Whistle Blower Policy:

The Company has adopted a whistle blower policy ad has established aclear vigil mechanism and directors to report concerns un ethical behaviour. The policyprovides for adequate safeguards against victimisation of employees who avail of themechanism and also provides for direct access to the chairman of the audit committee. Thewhistle blower policy may be accessed on the website of the company.

Prevention of Sexual Harassment at Workplace:

The Company has adopted a policy on prevention prohibition andredressal of sexual harassment at the work place in line with the provisions of the"The Sexual Harassment of Women at Workplace (Prevention Prohibition &Redressal) Act 2013 and Rules made there under your Company has constituted InternalComplaints Committee (ICC). The Committee has four members and is chaired by a seniorwomen member of the organisation. It is stated that there are no such complaints receivedby the committee/company during the year under review.

Material Changes after close of the financial year:

There have been no material changes and commitments which have occurredafter the close of the year till date of this report effecting the financial position ofthe company.

Segment-wise or product-wise performance:

The Company is mainly engaged in the business of manufacturer of OPC53/ 43 and PPC grade cement and captive solar power generation. During the year underreview the company has Single Reportable Segment i.e./Cement.

Risk and concerns:

The risks and concerns which are applicable to all industries andspecially to cement industry can be said to be prevalent in the case of your company aswell. Few of the major risks are given below. Periodical increases in the cost of inputsleading to impact on margins

• Uncertainty in coal supplies and increases in the prices.

• Failure or deficiency in the monsoon which may lead toreduction/loss of revenue due to reduction in demand for cement

• Changes in Government policy impact the costs demand andsupply.

Internal control systems and their adequacy:

The Company's internal control system in place has a process designedto take care of various controls and audit requirements. It ensures effectiveness in theoperations and protection of the company's assets from any possible loss and unauthoriseduse. It also ensures proper and correct data being recorded. The design of thetransactions is such that there is an adequate appropriate and need based control on theactivities/ business processes of the company. The Internal control system is augmented byan established internal audit system which is carried out by outside chartered accountantsof the repute and experience. Regular reviews of internal audit are carried out to ensurerobustness of the systems and control environment. The internal auditors submit theirreports to the audit committee of the Board of Directors for their review. It is alsoensured that the internal audit scope is adequate and their reviews are well directed toachieve the desired objectives. The committee also reviews the adequacy and effectivenessof the internal control systems and suggests improvements from time to time. TheCompliance to the legal and statutory requirements is given utmost importance as also toensure efficiency in operations/ reporting and controls. All parameters in operations/activities are monitored regularly to ensure desired results.

Human resources development and industrial relations:

The main focus of the company is to attract develop and retaintalented employees in order to achieve the business objectives. The company has madeefforts in the field of training and development congenial work environment providingchallenging work opportunities etc. The Company has framed HR practices in order tostrengthen and building people talent for achieving the business objectives. Initiativesto develop leadership lines as well as enhance technical and functional capability withspecial focus on nurturing young talent are taken. Young managers are groomed by providinghigher responsibilities Focus remains on gaining cross functional knowledge to enablemeaningful participation 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 level Committee " CorporateSocial Responsibility Committee" in terms of section 135 and Schedule VII of theCompanies Act 2013 read with the provisions of the listing agreement/ regulations. CSRactivities as detailed in a separate annexure to this annual report as required underCompanies (Corporate Social Responsibility Policy) Rules 2014 vide Annexure 1 andthe same may also be accessed on the company's website.

Conservation of energy technology absorption foreign exchangeearnings and outgo:

The information relating to the conservation of energy technologyabsorption foreign exchange earnings/outgo as required under the Companies Act 2013 andthe rules made there under is set out in Annexure 2 which forms part of this AnnualReport.

Secretarial Audit Report:

The Company's Secretarial Auditors M/s K Swamy and CO has issued theirReport for the year 2018- 19 which is attached to this Directors' Report vide Annexure-3Extract of Annual Return:

The Annual Return of the Company has been placed at the Website of thecompany and can be accessed athttp://www.srichakracement.eom/Admin/Files/SCCL-Annual%20Return.pdf the details in FormMGT-9 is at Annexure-4 Corporate Governance Report:

Pursuant to the Listing regulations the company has complied with theguidelines and a statement on the corporate governance report for the year 2018-19 isattached to this Report vide Annexure-5. Disclosure of Remuneration:

A Statement as required under section 197 of Companies Act 2013 andRule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is enclosed as Annexure 6.

Cautionary Statement:

Statements made in this report describing the Company's projectionsestimates expectations or predictions may be 'forward looking predictions within themeaning of applicable securities laws and regulations. Actual results may differ from suchestimates projections etc. whether expressed or implied. Factors which would make asignificant difference to the Company's operations include availability of quality rawmaterials market prices in the domestic and overseas markets changes in Govt.Regulations and tax laws economic conditions affecting demand/ supplies and otherenvironmental factors over which the Company does not have any control.

Acknowledgement:

Your Directors take this opportunity to express their sincereappreciation for the support and cooperation received from the various departments of theGovernment Bankers Suppliers Customers and Shareholders.

The Directors also wish to place on record their appreciation for thecommitted services of the company's Employees..

For and behalf of the
For Sri Chakra Cement Limited
Place: Hyderabad N. Krishna Mohan K Vijay Kumar
Date: 14.08.2019 Chairman Joint Managing Director