DIRECTORS' REPORT & MANAGEMENT DISCUSSION AND ANALYSIS
Your Directors have pleasure in presenting Seventeenth Annual Report of the Companytogether with the Audited Balance Sheet as at March 31 2018 and the Statement of Profit& Loss for the year ended on that date.
The highlights of the financial performance of the Company for the financial year endedMarch 31 2018 as compared to the previous financial year are as under:
| || || || ||( Rs. in Lacs) |
|Particulars ||Consolidated ||Standalone |
| ||2017-18 ||2016-17 ||2017-18 ||2016-17 |
|Net Sales / Income ||163349.21 ||155427.61 ||148759.25 ||134558.25 |
|Profit before Interest Depreciation and Tax ||52573.74 ||41076.99 ||32872.77 ||18259.92 |
|Interest & Finance Charges ||5245.74 ||7806.14 ||4343.37 ||5615.49 |
|Depreciation ||12068.65 ||11791.15 ||5745.45 ||4035.36 |
|Profit/(Loss) before Tax ||35259.36 ||21479.70 ||22783.95 ||8609.07 |
|Provision for taxation: || || || || |
|- Current Tax ||7326.93 ||4177.11 ||4877.74 ||1706.63 |
|- Deferred Tax ||(5685.62) ||(2787.28) ||(3171.44) ||(1100.00) |
|Net Profit after Tax ||33618.05 ||20089.87 ||21077.65 ||8002.44 |
|Other comprehensive income for the year net of tax ||(28.29) ||5.16 ||(13.18) ||9.10 |
|Total comprehensive income for the year ||33589.76 ||20095.03 ||21064.47 ||8011.54 |
|Net profit attributable to: || || || || |
|Owners of the company ||33065.62 ||19472.35 ||- ||- |
|Non-controlling interest ||552.43 ||617.52 ||- ||- |
|Total ||33618.05 ||20089.87 ||- ||- |
|Other Comprehensive Income attributable to: || || || || |
|Owners of the company ||(27.43) ||5.93 ||- ||- |
|Non-controlling interest ||(0.86) ||(0.77) ||- ||- |
|Total ||(28.29) ||5.16 ||- ||- |
|Total Comprehensive Income attributable to: || || || || |
|Owners of the company ||33038.19 ||19478.28 ||- ||- |
|Non-controlling interest ||551.56 ||616.76 ||- ||- |
|Total ||33589.76 ||20095.03 ||- ||- |
|Proposed Dividend: || || || || |
|Proposed Dividend @ RS.1/- per share ||4192.29 ||- ||4192.29 ||- |
INDIAN ACCOUNTING STANDARDS
As per notification dated 16th February 2015 issued by the Ministry of CorporateAffairs the Company has adopted the Indian Accounting Standards ("Ind AS")notified under the Companies (Indian Accounting Standards) Rules 2015 with effect from1st April 2017. Accordingly Financial statements for the year ended 31st March 2017have been restated to conform to Ind AS. The reconciliations and descriptions of theeffect of the transition from IGAAP to Ind AS have been provided in the notes to accountsin both the Standalone and Consolidated Financial Statements.
Despite challenges faced by the economy on account of introduction of Goods &Service Tax (GST) during first two quarters of the financial year your company has beenable to maintain the operational performance. During the year under review your Companyhas manufactured 515350
MT of Cement Clinker as against 567241 MT recorded during the FY 2016-17. Company'ssubsidiary M/s. Star Cement Meghalaya Limited produced 1541945 MT of Clinker as against1579345 MT during the FY 2016-17. On consolidated basis total clinker production duringthe year was at 2057295 MT as against 2146586 MT during FY 2016-17.
There has been recorded decrease in volume of sales but sharp improvement in profit.During the year under review the Company has received subsidies from the CentralGovernment under Capital Subsidy Scheme and the said amount has been utilized towardsprepayment of loan. It is expected that your Company will be a debt free Company in nextyear.
In terms of capacity utilization clinkerization unit of your Company was able toutilize 65.07% of its installed capacity as against 71.60% during the FY 2016-17.Similarly the capacity utilization of clinkerization unit of its subsidiary M/s. StarCement Meghalaya Limited was at 88.16% during FY 2017-18 as against 90.30% during the FY2016-17. On consolidated basis the capacity utilization of clinkerization units was at80.96% during the FY 2017-18 as against 84.48% during FY 2016-17.
Your Company has been able to maintain the performance on grinding front too. Duringthe year under review total cement production on consolidated basis was at 2407955 MT(including volume from hired grinding units) as against 2708430 MT during the FY2016-17.
Similarly your Company has been able to achieve sales volume of 2404423 MT of Cementas against 2737437 MT during the previous financial year. Due to sluggish market demanddevastating flood in Bihar Assam North Bengal and reverse sand availability in Biharthere was fall in volume of sales and under utilisation of capacity. However your Companyexpects to improve its operational performance during the ensuing financial year.
Your Directors are pleased to recommend a Final dividend @ 100% i.e. RS.1/- each perEquity Share of Face Value of RS.1/-each (exclusive of applicable Dividend DistributionTax) for the Financial Year ended 31st March 2018.The Final dividend subject to approvalof members at the ensuing Annual General Meeting will be paid within the statutoryperiod.
Your Company has taken a proposal for merger of Megha Technical & Engineers PrivateLimited a wholly owned subsidiary Company with the Company with effect from 1st April2018 i.e. the Appointed Date. The Scheme is subject to necessary statutory andregulatory approvals including approval of the Hon'ble National Company Law Tribunal.Since both the Companies are engaged in the business of cement manufacturing upon thescheme becoming effective the business of both the Company can be carried more efficientlyand economically as one entity.
INDIAN ECONOMY AND OUTLOOK AT A GLANCE
Indian economy has been appeared as the fastest growing economy in the world as perreport of Central Statistics Office and International Monetary Fund. Over the next 10-15years Indian economy is expected to be one of the top 3 economic powers of the world.With the Government's thrust to reform GDP have increased to 6.6% and it is expected togrow around 7.3% in 2018-19. There has been significant growth in tax collection figures.Foreign Direct Investment reached to USD 208.99 billion during April 2014-December 2017and foreign exchange reserve was USD 422.53 billion till week ended MarcRs. 23 2018. TheUnion Budget for the financial year 2018-19 mainly focused on strengthening agriculturalsector health care for under privileged sector infrastructure development and educationof the Country. There has been all time high budget allocations for rail and road sectorsand budgetary allocation for infrastructure sector has been set to H5.97 lakh crore.Government allocation of H4200 crore towards Green Energy Corridor Project alongwithother wind and solar power projects. Government initiatives for Make in India' andDigital India' attracts foreign companies for setting up their business in India.'Make in India' initiative boost the manufacturing sector as a result helping developmentof the country. Contributions from the manufacturing sector expected to rise to 25% of GDPfrom present level of 17%. With the initiatives of the Government by way of globaisationdigitization and reforms country's Gross Domestic Product is expected to reach USD 6trillion by the Financial Year 2027. For the reasons India is expected to be third largestconsumer economy in the world.
CEMENT INDUSTRY OVERVIEW
India is occupying second position amongst the cement producer countries in the worldand the industry plays a vital role in the development of the country's economy. Postderegulation sector attracted huge investment from the country and abroad and therebycreated a large number of direct and indirect employment. The country has a huge scope fordevelopment in cement sector as there are lot of potential for development in housing andconstruction sector. Government's initiatives for development of Smart cities' andHousing for all' will boost the development of the cement sector. Government's focusfor development of infrastructure sector is expected to grow cement industry in 6-7%.However country's per capital consumption of cements still at around 225 kg. TheGovernment has launched missions like the Pradhan Mantri Awas Yojana Atal Mission forRejuvination and Urban Transformation and Swachh Bharat Mission in order to ensure livinghabitation for poor. In view of increasing domestic demand in certain specified sectorlike industrial construction commercial construction and housing sector the capacity ofthe cement industry of the country is expected to reacRs. 500-600 MTPA by 2025.
NORTHEAST SCENARIO GATEWAY OF OPPORTUNITIES
The North Eastern Region of the Country comprising of eight states are very rich innatural resources. Post-independence era and after partition the region became land lockedand lost its easy access to ports and rest parts of the country. As a result it witnessedlack of development in comparison with other states of the country. The Government ofIndia has taken several measures to accelerate growth of the North East Region (NER).
On the infrastructure fonts long awaited attention has been given for the development.The total budgetary allocation for the NER for the financial year 2018-19 has been setH47994.88 crores which is significantly higher of H7023.19 crores for the financial year2017-18. The budget of Development of North Eastern Region (DoNER) Ministry has also beenhiked from H2737 crores for the financial year 2017-18 to H3060 crores. As a resultcertain mega infrastructure projects roads bridges expansion of existing power projectshave been undertaken in the region. A total of 20 major railway projects for laying of 13new rail lines gauge conversions laying of double tracks construction of new stationshave been initiated. The budget also provided RS.1014.09 crores under UDAN scheme forconstruction of new and expansion of present and revival of defunct airports heliportsand advanced landing grounds. Under the Bharatmala Pariyojana construction of 5301 km ofroads have been approved and out of which 3246 km road for development of EconomicCorridor in NER. Works for India-Myanmar-Thailand Trilateral Highway has been awarded inDecember 2017. New 92 routes will be opened under the UDAN Scheme. Educational andmedical facilities have improved a lot in the region during last few years. Connectivitywithin NER States and with rest of India has also improved with initiatives taken towardsinfrastructure development. This has resulted into improved purchasing power with peopleat large in the Region. The aforesaid developments and initiatives present a promisingfuture for cement industry in the North East Region.
North East Market as a strategy continued as focus market for your company. Cementdemand was good in 1st quarter but was impacted during the 2nd quarter afterimplementation of GST. Your company organized seminars for dealers and sub dealers givingtraining on GST and enabled them to understand the benefits of GST. The Second half of FY2017-18 was very positive and the Company recorded growth of approximately 7% YOY. Yourcompany was able to maintain volume in NER and closed a little higher compared to theprevious year. During the year under review your company was able to sell 1751508 MT ofcement in NER market as against 1739263 MT during the FY 2016-17. During the year underreview around 14 % of the total cement demand in NER was catered to by the industrythrough imports from other regions including Bangladesh and Bhutan.
Clinker demand was good in Eastern Nepal and Bhutan. Your company grabbed thisopportunity and has achieved export of 138508 MT Cement Clinker during the entire yearunder review as against 51406 MT recorded in previous year. As a market leader in NERyour company has further consolidated dealers and sub dealer's network. Sub dealers weregiven status as Rising Star' with a nominal security deposit. All such sub dealersare linked with a particular dealer. This exercise is yielding good results and furtherstrengthening our reach throughout our areas of operation. During the year under reviewyour Company has undertaken various marketing initiatives in order to make the brand"Star Cement" more visible and attain top of mind recall. A unique BrandCampaign named "Bhaag North East Bhaag" was launched in North East. This wasNorth East's first International Half Marathon and people in thousands participated in theevent with the Honourable Chief Minister of Assam Mr. Sarbananda Sonowal and BollywoodStar Bipasha Basu flagging off the event. The uniqueness was that all participants wereoffered 50% discounts on groceries to encourage people to participate. The Half Marathonalso has a social cause of "Clean India" associated with it. Other initiativesincluded retail and mass branding initiatives in the form of retail boards cuboidshoarding at shop TV Radio Print and OOH ads. To make the brand more visible in remoteareas a block level branding campaign was undertaken through wall wraps rural vans andrural theatres.
PRODUCTION AND COST DEVELOPMENTS
Your Company continued to promote environment friendly blended cement using fly ash andproduced 1701504 MT of Portland Pozzolana Cement (PPC) (including from hired grindingunits) on consolidated basis out of total production of 2407955 MT of cement during FY2017-18. Usage of fly ash in cement is not friendly to environment only but also providescost optimization. Your Company has been able to utilize the fly ash generated by powerplant of its subsidiary M/s. Meghalaya Power Limited and such close access to fly ashprovides competitive edge to your Company in term of cost. In addition your Company hasalso made arrangements with major power plants like NTPC Tata Power and few others toensure its long term requirement of fly ash.
During the year under review too your Company continued to source its powerrequirement for its Lumshnong unit from its subsidiary M/s. Meghalaya Power Limited underlong term arrangement for supply of quality power at competitive rates and thus has beenable to reduce dependency on grid power. To optimize the power cost and to reducedependency on State supplied grid power your Company has been able to source its powerrequirement of its Grinding Unit at Guwahati from Indian Energy Exchange (IEX) inaddition to sourcing of power from State Grid. The blend of sourcing has not only reducedpower cost for your Company but also its quality and dependability.
Logistics and Freight
Logistics function faced serious cost pressures during the year under review. Dieselprice increased by 17% during the year. Such cost pressures were braved out by re-aligningdistribution network resulting in 14% reduction in Wtd. Avg. Lead to 283 KM as against 329KM during previous year. Wtd. Avg. Freight marginally increase by 1.8% to RS.1133/- asagainst RS.1113/- during previous year.
As a new initiative cost effective "Inland Water Transport" was used as apilot project in collaboration with IWAI for transportation of cement from Guwahati plantto various destination. Inauguration of such maverick effort of IWAI and your company wasdone by The Union Transport Minister Sri Nitin Gadkari and The Chief Minister of Assam SriSarbananda Sonowal. Such efforts are being taken forward and more movement by Waterwaysare undertaken.
Construction of Railway Siding at Guwahati Grinding Unit is at very advance stage andexpected to commission by July'18. Once the private siding gets operational it would havea distinct cost advantage in logistic operations of the company.
KEY PERFORMANCE HIGHLIGHTS
Consolidated cement production (including purchase from hired grinding units)was at 24.07 Lac MT during the year as against 27.08 Lac MT during the previous financialyear.
Consolidated net sales at RS.1633.49 Crores during the year under review ascompared to RS.1554.27 Crores during the financial year 2016-17.
Consolidated EBIDTA was at H525.73 Crores during the year under review ascompared to H410.76 Crores during the immediate previous financial year.
Consolidated profit before tax during the year 2017-18 was at H352.59 Crores asagainst a profit of H214.79 Crores in the year 2016-17 registering a growth of 64%.
OPPORTUNITIES AND THREATS RISKS AND CONCERNS
India stood second position in cement producing countries in the world. Country'scement industry is expected to grow at CAGR of 9-10% during the financial year 2014-15 to2018-19. Per capita cement consumption is much lower than the world per capitaconsumption. Government several initiatives in the areas of development of Ports Roadsand Highways dedicated Freight Corridors Gauge conversion Projects undertaken byRailways development in the area of alternative source of energy viz. Hydro and SolarPower and other infrastructure projects is expected to boost Cement and Power Demand ofthe country. Make in India initiatives positive moves on the policy front in areasrelated to ease of doing business promoting start-ups rationalising the tax structureand administration and opening up more areas for foreign investment through the automaticroute will also increase the demand of cement and power.
Cement demand is very much linked to the economic growth and development ofinfrastructure and housing sector. In case growth rates affected by any unforeseenreasons cement demand may also be affected. Cement and power industry being majorlydependent upon availability of raw materials at affordable cost. Policies of theGovernment as well as Central and State Laws may adversely affect the availability of limestone coal etc. Any major changes in Government's Environmental and Forest regulationsmay affect limestone availability to cement plants. Competition from the foreign playersmay lead to tougher competition to the domestic players. The Company enjoys varioussubsidies from the Government roll back of any subsidies may have a negative impact onthe profitability.
Your Company has evolved a risk management framework to identify assess and mitigatethe key risk factors of the business .The Board of Directors of the Company is keptinformed about the risk management of the Company.
LISTING OF SHARES AND SHARE CAPITAL
Your Company got listed with National Stock Exchange of India Limited and BSE Limitedwith effect from 16th June 2017.
Pursuant to merger of erstwhile Star Ferro and Cement Limited into the Company theAuthorized Share Capital of the Company has increased to H830000000 divided into830000000 Equity Shares of RS.1/- each. In line with terms of Scheme of Amalgamation295490077 (Twenty Nine Crore Fifty Four Lakh Ninety Thousand Seventy Seven) equityshares of the Company were allotted on 8th April 2017 to the shareholders of erstwhileStar Ferro and Cement Limited in the ratio of 1.33 equity shares of RS.1 each of theCompany for every 1 (one) equity share of RS.1 each of erstwhile Star Ferro and CementLimited held by them as on the record date i.e. 3rd April 2017. After the said allotmentthe total number of equity shares of the Company has aggregated to 419228997 of RS.1each.
The paid up Equity Share Capital of the Company as on March 31 2018 wasH419228997/- divided into 419228997 equity shares of RS.1/- each.. During the yearunder review the Company has neither issued any shares with differential voting rightsnor granted stock options or sweat equity shares.
EXTRACT OF ANNUAL RETURN
In terms of requirement of section 134 (3) (a) of the Companies Act 2013 the extractof the Annual return in form MGT-9 is annexed herewith and marked Annexure-1.
MEETINGS OF THE BOARD
During the year six (6) Board Meetings and four (4) Audit Committee Meetings wereconvened and held. The intervening gap between the Meetings was within the periodprescribed under the Companies Act 2013. The details of the Board meeting and theCommittee meeting are provided in the Corporate Governance Report.
MEETINGS OF INDEPENDENT DIRECTORS
During the year under review a meeting of Independent Directors was held on 06thMarch 2018 wherein the performance of the Non-Independent Directors and the Board as awhole was reviewed. The Independent Directors at their meeting also inter alia assessedthe quality quantity and timeliness of flow of information between the Company managementand the Board of Directors of the Company.
COMMITTEES OF THE BOARD
The composition and terms of reference of the Audit Committee Nomination andRemuneration Committee and Stakeholders Relationship Committee have been furnished in theCorporate Governance Report forming part of this Annual Report. There has been no instancewhere the Board has not accepted the recommendations of the Audit Committee and Nominationand Remuneration Committee.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has a Whistle Blower Policy/ Vigil Mechanism as required under Section 177of the Companies Act 2013 and as per Listing Obligations and Disclosures RequirementsRegulations 2015 formulated by Securities and Exchange Board of India (SEBI). The Vigil(Whistle Blower) mechanism provides a channel to the employees and Directors to report tothe management concerns about unethical behavior actual or suspected fraud or violationof the Code of Conduct or policy. The mechanism provides for adequate safeguards againstvictimization of employees and Directors to avail the mechanism and also provide fordirect access to the Chairman of the Audit Committee in exceptional cases. The said policymay be referred to at the Company's website at the web link:http://starcement.co.in/wp-content/uploads/Whistle-Blower-Policy.pdf
POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDSENIOR MANAGEMENT EMPLOYEES
The Board has framed a Remuneration Policy for selection appointment and remunerationof Directors Key Managerial Personnel and Senior Management Employees. The remunerationpolicy aims to enable the Company to attract retain and motivate highly qualified membersfor the Board and at other executive levels. The remuneration policy seeks to enable theCompany to provide a well-balanced and performance-related compensation package takinginto account shareholder interests industry standards and relevant Indian corporateregulations. The details on the same are given in the Corporate Governance Report. Thesaid policy may be referred to at the Company's website at the web link:http://starcement.co.in/wp-content/uploads/ Remuneration-policy.pdf
DIVIDEND DISTRIBUTION POLICY
In terms of Regulation 43A of the Listing Regulations your Board has framed andadopted a Dividend Distribution Policy. The object of the policy is to share profit of theCompany with the shareholders appropriately and also to ensure funds are available for thegrowth of the Company. The policy inter alia describes the circumstances under which theshareholders may or may not expect dividend the financial parameters that shall beconsidered while declaring dividend internal and external factors that shall beconsidered for declaration of dividend policy for utilization of retained earnings andthe parameters with respect to different classes of shares for the purpose of declarationof dividend. The said policy may be referred to at the Company's website at the web link:http:// starcement.co.in/wp-content/uploads/Dividend-policy.pdf
COMPLIANCE WITH THE SECRETARIAL STANDARDS
The Company has complied with the applicable Secretarial Standards as recommended bythe Institute of Company Secretaries of India.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to requirement of Section 134 (3) (c) read with Section 134 (5) of theCompanies Act 2013 the Directors hereby confirm and state that:
In the preparation of Annual Accounts the applicable Accounting Standards havebeen followed along with the proper explanation relating to material departures if any;
The Directors have selected such accounting policies and have applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at 31st March 2018and of the profit of the Company for the year under review;
The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
The Directors have prepared the annual accounts on going concern basis;
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
AUDITORS AND AUDITORS' REPORT
M/s. D. K. Chhajer & Co. Chartered Accountants (Firm Registration no. 304138E)Statutory Auditors of the Company have been appointed by the members at the SixteenthAnnual General Meeting and shall hold office for a period of 5 years from the date of suchmeeting held on 11th September 2017. The notes to the accounts referred to in theAuditors' Report are self-explanatory and therefore do not call for any furthercomments.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment
Rules 2014 the cost audit records maintained by the Company in respect of itsmanufacturing activity is required to be audited. Your Directors have on therecommendation of the Audit Committee re-appointed M/s. B. G. Chowdhury & Co. CostAccountants (Firm Registration number 000064) as Cost Auditors of the Company for thefinancial year ended 31st March 2018 in the Board Meeting held on 30th May 2017. Theremuneration proposed to be paid to them for the financial year 2017-18 as recommended byaudit committee was ratified in the meeting of shareholders held on 11th September 2017.M/s. B. G. Chowdhury & Co. Cost Accountants (Firm Registration number 000064) haveexpressed their willingness and confirmed their eligibility to be appointed as CostAuditors of the Company for ensuing financial year. The Board on recommendation of theAudit Committee has appointed M/s. B. G. Chowdhury & Co. Cost Accountants (FirmRegistration number 000064) as Cost Auditors of the Company for the financial year 2018-19subject to ratification of their remuneration by shareholders in the General Meeting ofthe Company.
The cost audit report for the Financial Year 2016-17 was filed with the Ministry ofCorporate Affairs on 23.09.2017.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. MKB & Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexedherewith and marked Annexure-2. The report is self-explanatory and do not call for anyfurther comments.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review your Company has not given any loan to any person fallingunder ambit of Section 186 of the Companies Act 2013.
Details of Guarantees and Investments covered under the provisions of Section 186 ofthe Companies Act 2013 and the loans received from the Directors of the Company are givenin the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
All related party transactions are entered on arm's length basis in the ordinarycourse of business and are in compliance with the applicable provisions of the CompaniesAct 2013. There are no materially significant related party transactions made by theCompany with Promoters Directors Key Managerial
Personnel or other designated persons which may have a potential conflict with theinterest of the Company at large. Accordingly no transactions are being reported in FormAOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts)Rules 2014. However the details of the transactions with the Related Party are providedin the Company's financial statements in accordance with the Accounting Standards.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions. A policy on Related Party Transactions' has been devised by theCompany which may be referred to at the Company's website at the web linkhttp://starcement.co.in/wp-content/ uploads/Related-Party-policy.pdf
During the year under review no amount was transferred to reserves.
ENERGY CONSERVATION TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated in section 134 (3) (m) of the Act and rules framed thereunder is mentioned below:
(A) Steps taken toward Conservation of energy:
Expansion joints of Pre-heater outlet raw mill inlet duct coal mill hot airand Coal Mill booster fan inlet replaced resulting in a saving of 1 Kwh /MT of Clinker.
Replacement of HPSV Light fitting with LED light fittings resultant saving of1.85 lacs Kwh Per year
Modification of EBC -05 Belt (Clinker feeding belt) leading to direct saving ofdrive Power of Clinker Bucket Elevator.
Modified the shale hopper for easy flow of material to minimize the qualityvariation.
Reduce Air requirement in raw mill discharge Bucket Elevator air slide byoptimizing air material ratio resulting one air blower stopped in the circuit.
Installation of capacitor 50 KVAR in all 3 compressors
Installation of 100 nos. LED for street lighting reducing wattage from 15 KW to5 KW
(B) Steps taken toward Technical Absorption:
National Counsel for cement and building material conducted diagnostic study forminimizing kiln builds ups Cement rotary kiln.
Online monitoring of all 3 Compressors parameter through Modbus on plant SCADA
The Company has developed a Research & Development cell for carrying outR&D Projects in the plant with specific objective of development of advanced systemsfor quality improvement. During the year under review your Company incurred Capitalexpenditure of H6.38 Lacs and Revenue Expenditure of H34.43 Lacs in Research &Development.
(C) Foreign Exchange Earnings And Outgo
During the period under review Foreign Exchange Earning was NIL (Previous Year NIL) and the Foreign Exchange Outgo was H914.60 Lacs (Previous Year RS.1203.01 Lacs).
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES (CSR)
As a responsible corporate citizen Company's CSR initiatives have been playing asignificant role in bringing steady transformation of the society with special focus onmarginalized and underprivileged section. Business decisions of the company have alwayslinked to the ethical values of "do good for the community" and respect forpeople communities and environment around the operational area and in nearby localities.Under the CSR purview your Company along with its subsidiaries had prioritized need ofthe community under the following verticals:
Your company has taken up sustainable livelihood programs in village areas whereemployment opportunities barely exist. These programmes were initiated to enhance thesource of secondary income of individual households in Meghalaya and Assam. The componentbroadly includes the following interventions for ensuring sustainable livelihood for farmfamilies
Bee keeping project has been taken up in Sonapur and Lumshnong area as skilloriented initiative with low investment and high employment potential.
Pig rearing project was initiated in Lumshnong and Sonapur area. Beneficiaryhouseholds were supported with low cost pigsty in a shared value mode with distribution ofhigh breed piglets (at free of cost) including training and veterinary support to enablethe farmers for earning substantial income.
Support to Eri Silk farmers in Assam with scientific trainings linkages withprovision of seed seedling and eggs for silk worm production
Training in Tailoring and Embroidery were offered to unemployed needy women ofSonapur and Lumshnong area in technical collaboration with M/s Usha International Ltd. forproviding professional training.
Development of backyard ponds to develop as fisheries under Fishery Project ofSonapur area as a source of food security and sustainable livelihood.
HEALTH AND SANITATION
Your Company as a good corporate citizen provided basic health care services in andaround plant location.
Periodic Health camps were organised to diagnose health problems and patientswere supported with basic drugs for minor ailments needed for taking care of essentialhealth needs of men women and children. Company had taken up necessary measures to rendereye care services in Assam and Meghalaya where free medicines spectacles were distributedto the needy patients. Surgeries were carried out free of cost for proper eye care to theneighboring needy people in Assam and Meghalaya.
Company has made drinking water supply system to the households of ChamataPathar village
Your Company had made necessary contribution in the area of education by extending thenecessary support to the educational institutes in nearby plant areas of Assam andMeghalaya:
Supporting one teacher School i.e. Ekal Vidyalaya for augmenting primaryeducation for children of remote areas. The projects aims to reach the education to everydoorstep of the country. The Company has contributed to the Gyan Sagar Foundation.
Company had rendered necessary financial support for hiring teachers.
Company had taken up students support program targeting to encourage thestudents to attend their classes on regular basis. Under Students Support Program studentswere supported with exercise books dictionaries and pencil boxes etc.
To promote quality education in and around plant operational area your companyhas organised remedial classes for HSLC appearing students
Company has initiated for developing a computer fitted Bus for ensuring computerliteracy among students and youths during journey.
Your Company has supported the flood affected people by providing foods drinkingwater medicines etc. in Assam North Bengal as a part of flood relief programme. AnnualReport on CSR as required to be annexed in terms of requirement of Section 135 ofCompanies Act 2013 and rules framed thereunder is annexed herewith and marked
EVALUATION OF THE BOARD'S PERFORMANCE
In accordance with the requirements of the Companies Act 2013 the performanceevaluation of the Board was carried out during the year under review. The Board follows aformal mechanism for the evaluation of the performance of the Board as well as Committee.The evaluation reflected the overall engagement of the Board and the Committee. Astructured questionnaire was prepared after taking into consideration inputs received fromthe Directors covering various aspects of the Board's functioning such as adequacy of thecomposition of the Board and its Committees Board culture execution and performance ofspecific duties obligations and governance.
The Nomination and Remuneration Committee at its meeting established the criteria basedon which the Board evaluate the performance of the Directors.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board on parameters such as level of engagement andcontribution independence of judgment safeguarding the interest of the Company and itsminority shareholders etc. The performance evaluation of the Non-Independent Directorsand Board as a whole was also carried out by the Independent Directors. The Directorsexpressed their satisfaction over the evaluation process and results thereof.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Manindra Nath Banerjee resigned as Independent Director with effect from 6thSeptember 2017. The Board places on record its appreciation for the services rendered byMr. Banerjee during his tenure with the Company. On the recommendation of the Nominationand Remuneration Committee the Board of Directors at its meeting held on 13th November2017 appointed Mr. Pramod Kumar Shah (DIN: 00343256) as Additional Director in theIndependent category with effect from 13th November 2017 for a term of 3 years subject toregularization/approval of the shareholders in the ensuing Annual General Meeting.
Mr. Manoj Agarwal resigned as Company Secretary and Key Managerial Personnel witheffect from 2nd August 2017. The Board places on record its appreciation for the servicesrendered by Mr. Agarwal during his tenure as Company Secretary. On the recommendation ofthe Nomination and Remuneration Committee the Board of Directors at its meeting held on3rd August 2017 appointed Mr. Debabrata Thakurta as Company Secretary and Key ManagerialPersonnel of the Company. Mr. Dilip Kumar Agarwal resigned as Chief Financial Officer andKey Managerial Personnel with effect from 13th November 2017. The Board places on recordits appreciation for the services rendered by Mr. Agarwal during his tenure with theCompany. On the recommendation of the Audit Committee and Nomination and RemunerationCommittee the Board of Directors at its meeting held on 13th November 2017 appointed Mr.Manoj Agarwal as Chief Financial Officer and Key Managerial Personnel of the Company.
The tenure of Mr. Sajjan Bhajanka Mr. Rajendra Chamaria and Mr. Sanjay AgarwalManaging Directors of the Company were due to expire on 31st March 2018. The Board at itsmeeting held on 6th February 2018 on the recommendations of Nomination and RemunerationCommittee reappointed Mr. Sajjan Bhajanka Mr. Rajendra Chamaria and Mr. SanjayAgarwal as the Managing Directors of your Company for further period of three years witheffect from 1st April 2018 subject to necessary approvals of the shareholders at theensuing Annual General Meeting.
In accordance with the provisions of Companies Act 2013 and in terms of the Memorandumand Articles of Association of the Company Mr. Prem Kumar Bhajanka will retire byrotation and being eligible offer himself for re-appointment. In view of his considerableexperience your Directors recommend his re-appointment as Director of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013. Mr. MangilalJain Mr. Pramod Kumar Shah Mr. Santanu Ray Mrs. Ibaridor Katherine War and Mrs.Plistina Dkhar are Independent Directors on the Board of your Company. In the opinion ofthe Board and as confirmed by these Directors they fulfill the conditions specified insection 149 of the Act and the Rules made thereunder about their status as IndependentDirector of the Company.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
In order to enable the Independent Directors to perform their duties optimally theBoard has devised a familiarization programme for the Independent Directors to familiarizethem with the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company etc. They areperiodically updated about the development which takes place in the Company. At the timeof appointment of an Independent Director the Company issues a formal letter ofappointment setting out in detail the terms of appointment duties responsibilities andcommitments etc. The familiarization program is available on the Company's website underthe web link: http://starcement.co.in/wp-content/uploads/Familiarization-Programme.pdf
SUBSIDIARIES AND ASSOCIATE COMPANY
M/s. Star Cement Meghalaya Limited M/s. Megha Technical & Engineers PrivateLimited M/s. Meghalaya Power Limited M/s. NE Hills Hydro Limited and Star Century GlobalCement Private Limited continue to remain subsidiaries of the Company.
Star Cement Meghalaya Limited is engaged in manufacturing of Cement Clinker and has aClinkerization plant with an installed capacity of 1.75 MTPA. During the year underreview the Company manufactured 1541945 MT of clinker as against 1579345 MT in FY2016-17.
Megha Technical & Engineers Private Limited is engaged in the manufacture ofcement. During the year under review the Company produced 33004 MT of Cement.
Meghalaya Power Limited is engaged in generation of Power. During the year under reviewthe Company generated 1901 KWH Lac units of power.
NE Hills Hydro Ltd. wholly owned subsidiary of your Company is currently notoperational.
Star Century Global Cement Private Limited a wholly-owned subsidiary in Myanmar is yetto commence its operations.
AUDITED FINANCIAL STATEMENTS OF THE COMPANY'S SUBSIDIARIES
Pursuant to sub-section (3) of section 129 of the Act the statement containing thesalient features of the financial statement for the year ended March 31 2018 for each ofthe Company's subsidiaries viz. Star Cement Meghalaya Limited (SCML) Megha Technical& Engineers Private Limited (MTEPL) Meghalaya Power Limited (MPL) NE Hills HydroLimited (NHHL) and Star Century Global Cement Private Limited (SCGCPL) are annexed in theForm AOC 1 and marked as Annexure-4.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company have been prepared in accordanceto the requirement of Indian Accounting Standards as prescribed by the Institute ofChartered Accountants of India and has been included as a part of this Annual Report.
The detailed financial statements and audit reports of each of the subsidiaries of theCompany are available for inspection at the Registered Office of the Company during officehours between 11 A.M. and 1 P.M. The Company will arrange to send the financial statementsof the subsidiaries upon written request from a shareholder to the registered address ofthe said shareholder.
During the year under report the Company has not accepted any deposits from public orfrom any of the Directors of the Company or their relatives falling under ambit of Section73 of the Companies Act 2013.
CHANGES IMPACTING GOING CONCERN STATUS AND COMPANY'S OPERATIONS
During the year under review there have been no material orders passed by theRegulators/Courts impacting materially the going concern status or future operations ofthe Company. There were no material changes and commitments affecting the financialposition of the Company during the period under review.
Your Company enjoys a sound reputation for its prudent financial management and itsability to meet financial obligations. ICRA Limited has upgraded the Company's short termrating to [ICRA]A1+ (pronounced ICRA A one plus) and reaffirmed the long term rating at[ICRA]A+ (pronounced ICRA A plus). The outlook on the long-term rating has been revisedfrom Stable' to Positive'.
ADEQUACY OF INTERNAL FINANCIAL CONTROL
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations ifany along with corrective actions thereon are presented to the Audit Committee of theBoard.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The Companyhas policies and procedures in place for ensuring proper and efficient conduct of itsbusiness the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timely preparationof reliable financial information.
MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES
The disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of Companies Act 2013 read with Rule 5 (1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 along with a statementcontaining particulars of employees as required under Section 197 of Companies Act 2013read with Rule 5 (2) and (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith and marked Annexure-5 and forms part of thisreport.
POLICY ON PREVENTION OF SEXUAL HARASSMENT
The Company values the integrity and dignity of its employees. The Company has put inplace a Policy on Prevention of Sexual Harassment' as per the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 ("SexualHarassment Act"). We affirm that adequate access has been provided to anycomplainants who wish to register a complaint under the policy. No complaint was receivedduring the year.
The Company has complied with the corporate governance requirements as stipulated underthe Listing Obligations and Disclosures Requirements Regulations 2015 formulated bySecurities and Exchange Board of India (SEBI). A separate section on corporate governancealong with a certificate from the auditors confirming the compliance is annexed and formspart of the Annual Report. This certificate will be forwarded to the Stock Exchanges alongwith the Annual Report of the Company.
CHIEF EXECUTIVE OFFICER (CEO) /CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION
As required under Regulation 17(8) of the Listing Obligations and DisclosuresRequirements Regulations 2015 formulated by Securities and Exchange Board of India(SEBI) the CEO/ CFO certification has been submitted to the Board and a copy thereof iscontained in this Annual Report.
Risk management refers to the practice of identifying potential risks in advanceanalyzing them and taking precautionary steps to reduce the risk. The Company has evolveda risk management framework to identify assess and mitigate the key risk factors of thebusiness. The Board of the Company is kept informed about the risk management of theCompany.
HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS
Ever since the inception Star Cement has been a benchmark of unprecedented successover the past decade and the voyage has been momentous with glorious milestones andincredible feats. The company today is not only the market leader and the most preferredbrand in North Eastern India but is also the fastest growing company in Eastern India.Our dedicated Human Capital best of its kind Practices and Innovative Processes are thecornerstones which have contributed in paving the path to the zenith of success thusmaking Star Cement one of the most sought after places to work in the cement sector inEastern India. With an objective to develop a strong employer value proposition andenhance the brand awareness and reputation hiring at leadership positions is being donefrom other leading Cement Companies .Campus recruitment from some of the Best B Schools ofEastern India including IIM Shillong IIM Ranchi and IIM Bodh Gaya also plays an integralrole to help in differentiating the employer brand. It has been a constant endeavor ofHuman Resource Department of Star Cement to create a high performing organization. Astructured and robust Performance Management System has helped in aligning the workforcebuilding competencies improving employee performance and development and driving betterbusiness results. It has also created a work environment that empowers employees to workto the best of their abilities. Over the years people have grown and evolved with theorganization and has been bestowed with the best of rewards accolades compensation andbenefits both fixed and variable.
Another area is the blue collared workforce management especially the Local employeesin our Plants has witnessed transformational changes in their existing People Practicesand gives a whole new dimension to employee life cycle management. Several interventionsin the areas of Performance tracking and enhancement Training Performance Coaching forlocal employees and dedicated Counseling have led to a dynamic change in the culture ofthe organization and mindset of local employees resulting in a marked improvement in theproductivity and overall engagement levels.
During the year under review there has not been any material changes in humanresources and industrial relations.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
Ministry of Corporate Affairs has permitted Companies to send copies of Annual reportNotices etc. electronically to the email IDs of shareholders. Your Company has arrangedto send the soft copies of these documents to the registered email IDs of theshareholders wherever applicable. In case any shareholder would like to receive physicalcopies of these documents the same shall be forwarded upon receipt of written request inthis respect.
Statements in this report describing the Company's objectives expectations orpredictions may be forward looking within the meaning of applicable securities laws andregulations. Actual results may differ materially from those expressed in the statement.Important factors that could influence the Company's operations include: global anddomestic demand and supply conditions affecting selling prices new capacity additionsavailability of critical materials and their cost changes in Government policies and taxlaws economic development of the country and other factors which are material to thebusiness operations of the Company.
Your Directors take this opportunity to express their deep sense of gratitude to BanksCentral and State Governments and their departments and the local authorities customersvendors business partners/associates for their continued guidance and support. YourDirectors would also like to place on record their sincere appreciation for thecommitment dedication and hard work put in by every member of the Company and dedicatesthe credit for the Company's achievements to them. Last but not least your Directorsexpress their gratitude to the shareholders of the Company for reposing their confidenceand faith in the Management of the Company.
| ||For and on behalf of the Board of Directors |
| ||Sajjan Bhajanka |
|Place: Kolkata ||Chairman |
|Date: 17 May 2018 ||(DIN: 00246043) |