DIRECTORS' REPORT To The Members Your Directors have pleasure in presenting the 36th Annual Report together with the Audited Accounts for the year ended 31st March 2015. DIVIDEND Your Directors are pleased to recommend for your consideration a Dividend of Rs. 2.70 per equity share for the year ended 31.03.2015, as against Rs. 2.70 per equity share in the previous year aggregating an amount of Rs. 245.56 Lacs including Dividend Distribution Tax. PERFORMANCE OF THE YEAR UNDER REVIEW Cement Division: During the year under review, the Cement Division has produced 2,60,685 MT of cement as against 2,51,535 MT of cement for the previous year. The profit for the Division was Rs. 1319.13 Lacs as against Rs. 475.93 Lacs for the previous year. Sugar Division: The Sugar Division crushed 2,31,086 MT of sugarcane for the current season as against 2,20,815 MT for the previous season. The recovery rate was 10.48% compared to 10.20% for the previous season. The Loss for the Division was ^ 1971.50 Lacs as against profit of Rs. 1038.87 Lacs for the previous year. Power Division: During the year under review, the Power Division has generated 9,19,76,742 KWH against 8,54,62,160 KWH of power for the previous year. The Profit for the Division was Rs. 2063.38 Lacs as against Profit of Rs. 1446.99 Lacs for the previous year. CURRENT YEAR OUTLOOK: Cement Division: Rising input costs, Transportation costs, competitive selling prices are responsible for decreasing in margins. With the State Governments (Both Telangana & Andhra Pradesh) thrust on infrastructure and housing, demand for cement is expected to increase in the coming years. It is targeted to achieve 2,75,000 MT of cement production/sales during the year 2015-16. Sugar Division: Persistent fall in sugar prices coupled with unabated rise in sugar-cane prices resulted in huge losses in sugar division though there was an overall increase in the sugar production during the year. Sugarcane crop in the factory zone is likely to remain stable as last year. It is expected to crush Power Division: The matters relating to down ward revision of tariff by the APERC on the Power sales to APTRANSCO, and PLF ceiling, contested in the Courts by the Company are pending. Much depends on the power policy of the new government. INSURANCE: All the properties of the Company including its buildings, Plant and Machinery and Stocks wherever required have been adequately insured. NUMBER OF BOARD MEETINGS: The Board of Directors met 4 (four) times in the year 2014-15. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report. EXTRACT OF THE ANNUAL RETURN: The extract of the Annual Return in form MGT 9 is enclosed as annexure-2. DIRECTORS' RESPONSIBILITY STATEMENT: The Board of Directors of the Company hereby declares and states that - 1. In the preparation of annual accounts, the applicable accounting standards have been followed and there were no material departures therefrom. 2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the status of the Company as on 31st March, 2015 and Profit & Loss Account of the Company for the year ended as on 31st March, 2015. 3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities. 4. The accounts were prepared on a going concern basis. 5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. 6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. EVALUATION OF THE PERFORMANCE: BOARD'S In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, the performance evaluation of the Board was carried out during the year under review. More details on the same is given in the Corporate Governance Report. COMPOSITION OF AUDIT COMMITTEE: The Board has constituted the Audit Committee which comprises of Mr. C Madhusudana Rao as the Chairman and Mr. J S Rao, Mr. B V Subbaiah and Mr. T R C Bose as the Members. REMUNERATION POLICY: The Company follows a policy on remuneration of Directors and Senior Management Employees. The Policy is approved by the Nomination & Remuneration Committee and the Board. More details on the same is given in the Corporate Governance Report. DISCLOSURE AS PER SECTION197(12) Refer Annexure - 3 STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS: The independent Directors have submitted the declaration of independence as per the provisions of Section 149(7) of the Companies Act, 2013 stating that they meet criteria of independence as per Section 149(6) of the Companies Act, 2013. ENVIRONMENTAL PROTECTION: The Company consciously makes efforts to preserve the environment and control the pollution from time to time. Planting of saplings and seedlings in and around the factories and colonies is being done on a continuous basis, so as to develop green belt around the plant to improve the environment. AUDITORS: M/s. M. ANANDAM & CO., Chartered Accountants, Secunderabad, the Auditors of the Company retire at the conclusion of this Annual General Meeting and they are eligible for re-appointment. COST AUDIT: For the year ended 31st March 2015, with the approval of Central Government, M/s. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct the Cost Audit. In respect of financial year 2013-2014 Cost Audit Report was filed on 27.09.2014. In respect of 20142015 it will be filed before the due date i.e. 30th September 2015. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT: The Board had appointed Ms. Rekha Gadwal, Company Secretary in whole-time Practice, to carry out Secretarial Audit under the provisions of Section 204 of the Companies Act, 2013 for the financial year 2014-2015. The report is enclosed as Annexure-1. VIGIL MECHANISM/WHISTLE BLOWING POLICY: Fraud free and corruption free work culture has been core to the company. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the company has put an even greater emphasis to address this risk. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: a. Industry Structure And Developments: With the bifurcation of Andhra Pradesh in to two new states, and with a new capital for Andhra coming up, the coming years are likely to see an upswing in the infrastructure development. Further, with a new government at the centre, promising development, there is a positive expectation from the industry. Therefore, with efficient Management and sustained demand the outlook for next year is likely to be encouraging. Sugar being an agro-based industry needs good rainfall and irrigation facilities. However with the expectation of a reasonably good monsoon, we are optimistic about the availability of sugar cane and we are hopeful of sustaining last year's performance in terms of crushing quantity. As far as Power operations are concerned, with sustained performance in sugar cane crushing and adequate availability of bagasse, we look forward to sustained generation of power. However much depends upon the outcome of APERC's decision on revision of tariff and also the new government's policy on power. b. Opportunities and threats: The scenario for infrastructure looks encouraging with the formation of new capital in process. However, until the government funding actually starts on infrastructure and capital construction, we have to tackle the bottlenecks in terms of rising input costs, pressure on margin, etc. However with the forecasted demand for cement for the year 2014-2015, outlook for cement industry though challenging appears encouraging. c. Segment or product-wise performance: Segment-wise or product-wise performance has already been furnished elsewhere in this Report. d. Outlook: Division-wise outlook has already been furnished elsewhere in this Report. e. Risks and concerns: The Cement, Sugar and Power industries being core industries, there is no risk of product obsolescence or steep fall in demand by way of product substitution or otherwise and therefore, your Directors do not foresee any major risks and concerns, in the near future except as discussed elsewhere in this Report. f. Internal control systems and their adequacy: The Company has adequate internal control system. Apart from this, the Company also has independent internal auditors, who conduct periodical audit and their report is taken into account by the Audit Committee for its review and suggest remedial actions wherever required. g. Financial Performance with respect to operational performance: This has been already discussed elsewhere in this Report. h. Human Resources / Industrial Relations: The Company enjoys cordial industrial relations with employees and believes that human resources are an invaluable asset. The Board wishes to place on record its appreciation to all employees for their efforts and cooperation for the performance and growth of business during the year. i. Corporate Social Responsibility: During the financial year ended 31st March 2015 your Company supplied cement at concessional price to the State Government as part of its Indiramma Housing Welfare Scheme. A CSR committee of Directors has been set up to draw a policy and oversee its implementation. j. CAUTIONARY STATEMENT: Statements in this "Management Discussion & Analysis" may be considered to be "forward looking statements" within the meaning of applicable securities laws or regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand-supply conditions, increased installed capacity, finished goods prices, raw materials availability and prices, cyclical demand and pricing in the Company's markets, changes in Government regulations, tax regimes, besides other factors, such as litigations and labour negotiations. ACKNOWLEDGEMENTS: Your Directors appreciate the support and the cooperation received from the State Government, NEDCAP, APTRANSCO and the Central Government for the Company's growth and development. Your Directors would like to convey the deep appreciation to all the employees and workers of the Company for their sustained effort and wholehearted co-operation throughout the year. Your Directors thank the Distributors, Dealers and Suppliers for their continuous support and active involvement. Finally your Directors record their deep sense of gratitude to all the Shareholders for the abundant confidence reposed in the Board of Directors. For and on behalf of the Board P. Venkateswarlu Chairman & Managing Director DIN: 00276684 Place: Hyderabad Date :28th May 2015 |