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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 38th Annual Report of the Companytogether with the Audited Statements of Accounts Management Discussion and Analysis forthe year ended 31st March 2020.

Financial Results: ^ in Crs

Particulars 2019-2020 2018-2019
Revenue from operations (Rs in Crs) 140.90 188.20
Profit Before Interest Depreciation and Taxes (4.71) 1.75
Profit before tax (13.46) (5.59)
Tax Expense 1.69 -
Comprehensive Income (0.06) (0.07)
Total Comprehensive Income (11.83) (5.66)

State Of Company's Affairs:

During the year under review compared to the performance of previous year cementproduction was decreased by 24.66% and cement sale quantity was decreased by 24.87%. Therevenue from operations was down by 25.13% which is mainly due to low price realisation.The PBDIT was decreased by Rs 6.46 Crores due to increased operational expenditure etc.During the year under review the Company's profitability is impacted due to heavycompetition created by the major players in the industry by way of addition of hugecapacities in and around the plant area.

Management Outlook Of Macro Economy And Industry:

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 ofrationalizing income tax rates to boost fresh investments by corporates in the country.This measure is yet to yield its results. RBI on its part also undertook much neededmeasures of rationalizing its policy rates and increased the liquidity in the bankingsystem. However this did not lead to meaningful contraction of interest rates formajority of borrowers. On the external front the INR which remained mostly stable duringmost part of the year on the back of strong FDI flows and declining crude oil pricesweakened towards close of the year due to impact of COVID-19 virus. Overall the Indianeconomy is expected to witness a growth rate of around 5% for the year 2019-20 which shallbe the lowest witnessed since the Global financial crisis in 2008-09. This is largelybecause of poor showing by manufacturing construction and mining sectors. The lockdownimposed in the country as a result of COVID-19 virus has had an unprecedented impact onthe entire economy of the country. The month of April 2020 was virtually a completestandstill. There is uncertainty as to how long the impact of lockdown is expected tocontinue and when one can witness normalcy returning to the economy. Overall outlook forthe economy in the near term is not encouraging. However in past also Indian economyshowed strong recovery in the face of global financial crisis. With our robust and largeconsumer base expected fiscal stimulus from the Government and timely interventions fromRBI India will soon be on rapid recovery path. We therefore believe that in the mediumto long term the Indian economy will 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 towards last days of the close of the financial year 2019-20. Based on cementproduction data for 11 months upto Feb 20 and expected production for Mar 20 cementproduction during 201920 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.

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 withsubsection (3) of Section 178 of the Companies Act 2013. At the ensuing Annual GeneralMeeting Sri K Vijay Kumar and Sri V V S R Anjaneyulu Directors will be retiring at theensuing Annual General Meeting and being eligible offer themselves for reappointment.

The Board has reappointed Sri K P Patnaik Sri P Ramamoorthy & Dr A S Narayana asindependent Director for 5 years w.e.f the date of this Annual General Meeting subject tothe approval of Members.

The Board has reappointed Sri N Krishna Mohan as Managing Director Sri K Vijay Kumaras Joint Managing Director and Mr V V S R Anjaneyulu as Executive Director for a period offive years w.e.f 1st October 2019 subject to approval of members at ensuingAnnual General Meeting. The resolution for ratification of remuneration and term of Sri KVijay Kumar from 1st April 2019 to 30th September 2019 is also putfor approval of members at the ensuing Annual General Meeting.

The Board Recommends the appointment / re appointment of the above Directors.

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.

? Proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the company andfor 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.

BOARD MEETINGS:

The Board met four 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 three executive directors and one non executive non independent directorand four independent Directors. We affirm that the remuneration paid to the directors isas per the terms laid out in the nomination and remuneration policy of the company.

AUDIT COMMITTEE:

Pursuant to the provisions of section 177 of the Companies Act 2013 the company boardconstituted 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.

AUDITORS:

? Statutory Auditors: At the 37h Annual General Meeting held on 23rdday of September 2019 M/s Satyanarayana & co Chartered Accountants were appointed asstatutory auditors of the company to hold office till the conclusion of 41stAnnual General Meeting of the Company. In this regard the company has received acertificate from the auditors to the effect that if they are reappointed it would be inaccordance with the provisions of section 141 of the of the Companies Act 2013.

? Cost Auditors: M/s Bisati & Co Cost Accountants are the Cost Auditors appointedby the Board for auditing the cost accounts of the company for the year ended 2019-20.

? Secretarial Auditor: M/s P.Jagannatham & Co. Company Secretaries in practice arethe Secretarial Auditors appointed by the board of directors of the company for the year2019-20.

? 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 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 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.

Other Disclosures

? 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 is 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 N 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 year2019-2020.

? Contracts Or Arrangements With Related Parties:

All related party transactions that were entered into during the financial year 2019-20were on an arm's length basis and in the ordinary course of business and were incompliance with the applicable provisions of the Companies Act 2013 and the listingregulations. 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 disclosure inform AOC-2 is not applicable.

? Vigil Mechanism/ Whistle Blower Policy:

The Company has adopted a whistle blower policy and has established a clear vigilmechanism and directors to report concerns unethical 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 and PPCgrade cement and captive solar power generation. During the year under review the companyhas 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 to the legal andstatutory requirements is given utmost importance as also to ensure efficiency inoperations/ reporting and controls. All parameters in operations/ activities are monitoredregularly 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 level Committee"Corporate Social Responsibility Committee" in terms of section 135 and ScheduleVII of the Companies Act 2013 read with the provisions of the listing agreement/regulations. CSR activities as detailed in a separate annexure to this annual report asrequired under Companies (Corporate Social Responsibility Policy) Rules 2014 videAnnexure 1 and the same may also be accessed on the company'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 2019-20 which is attached to this Directors'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 theStatutory Auditors of the company M/s. Satyanarayana & co Chartered Accountantsconfirming the compliance with the conditions of Corporate Governance as stipulated underabove regulations is included as part of this report vide ANNEXURE-6.

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.

> 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 2019-20 and the date of this report.

Disclosure of Remuneration: A Statement as required under section 197 of Companies Act2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is enclosed as Annexure 6.

Cautionary Statement:

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.

Acknowledgement:

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 For Sri Chakra Cement Limited

Sd/- Sd/-
Place: Hyderabad N Krishna Mohan K Vijay Kumar
Date: 31.07.2020. Chairman Joint Managing Director
DIN: 00698772 DIN: 00769568

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