DIRECTORS' REPORT TO THE SHAREHOLDERS, The Directors present the Twenty-third Annual Report together with the audited Statement of Accounts of the Company for the year ended March 31, 2015. DIVIDEND In view of inadequate profits, the Directors have not recommended any dividend for the financial year ended March 31, 2015. OPERATIONS The gross sales and other income for the year ended March 31, 2015 was Rs.6,064.56 crores as against f 5,505.86 crores for the previous year. The Company incurred a loss before tax of Rs.10.75 crores and profit after tax of Rs. 14.70 crores during the year ended March 31, 2015 as against loss before tax of Rs. 127.83 crores and loss after tax of Rs. 81.65 crores during the year ended March 31, 2014. For the year ended March 31, 2015, the consolidated profit after tax of the Company and its subsidiary companies amounted to Rs. 2.62 crores as against a loss after tax of Rs. 86.20 crores for the previous year. COAL BLOCK Subsequent to the Order dated September 24, 2014 of the Honourable Supreme Court on de-allocation of all coal mines including Sial Ghogri coal mine of the Company in Madhya Pradesh with effect from March 31, 2015 and promulgation of the Coal Mines (Special Provisions) Ordinance, 2014 and Coal Mines (Special Provision) Rules, 2014 (the Rules), the Central Government has completed bidding process. The Nominated Authority appointed under the Rules has passed Vesting Order dated March 23, 2015 and as a result thereof, with effect from April 1, 2015, the coal mine including lands, in or adjacent to the coal mines and mine infrastructure got vested in favour of the successful bidder. In compliance of the Vesting Order, the Company has handed over possession of the mine and the assets listed in the Vesting Order to the successful bidder. Vide email dated March 26, 2015, the Nominated Authority has communicated to the Company that a sum of Rs. 32.49 crores has been determined as compensation payable to the Company. The Company has inter-alia disputed quantum of compensation and has preferred a Writ before the Hon'ble High Court of Judicature, Delhi and the Company has lodged claim of Rs. 72.86 crores. The aggregate exposure of the Company on account of Coal Mine Development expenses, Mining Surface Rights, Land, Other infrastructure for mine, Capital work-in-progress relating to buildings under construction and other related matter is around Rs. 47.49 crores (including geological survey expenses written off in the books of accounts of Rs. 6.22 crores). Since the matter is sub-judice and pending settlement of the claim, no adjustment has been made in the accounts. SHARE CAPITAL The paid-up Equity Share Capital was Rs.503.36 Crores as on March 31, 2015. During the year under review, the Company has not issued shares with differential voting rights neither granted stock options nor sweat equity. The Company does not propose to issue any preference shares in the future. It is, therefore, proposed to reclassify the existing unissued Preference Shares into Equity shares of the Company. Attention of members is drawn to Item No. 5 of the Notice of the Annual General Meeting. The Company has repaid loans of Rs. 1,087.42 crores during the year and tied-up fresh loans of Rs. 1,149.78 crores, including Rs. 750 crores by way of Secured Redeemable Non-convertible Debentures, to finance, inter alia, its ongoing long term working capital and capital expenditure during the year. The total borrowings of the Company stood at Rs. 1,896.58 crores as on March 31, 2015. The loans were used for the purpose they were sanctioned for by the respective banks/financial institutions. FIXED DEPOSITS The Company accepted fixed deposits aggregating to Rs. 13.46 crores during the year ended March 31, 2015. Out of the total 8,970 deposits of Rs. 37.14 crores from the public and the shareholders as at March 31, 2015, 426 deposits amounting to Rs. 1.28 crores had matured and had not been claimed as on that date. Since then, 72 of these deposits aggregating to Rs. 0.45 crores have been claimed. There has been no default in the repayment of the deposits or payment of interest thereon during the year under review. All deposits accepted by the Company are in compliance with the requirement of the Companies Act, 2013 and the Rules there under. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND During the year, the Company has transferred a sum of f 0.96 crores to the Investor Education and Protection Fund in compliance with provisions of the Companies Act, 2013 which represents unclaimed dividend and unclaimed fixed deposits and unclaimed interest on the fixed deposits. SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES The performance and financial performance of each of the Company's subsidiaries, associate and joint venture companies included in the consolidated financial statements is presented below : Subsidiaries • Raheja QBE General Insurance Company Limited (RQBE), the general insurance subsidiary continued building upon the existing capabilities as well as seizing profitable opportunities during the year under review. During the year, the Company has booked gross written premium of Rs. 29.03 crores as against Rs. 31.63 crores in the previous year. The net earned premium stood at f 19.52 crores. The total income from investment for the year under review was Rs. 20.94 crores as against Rs. 19.88 crores in the previous year. RQBE's profit after tax increased to Rs. 10.67 crores from a profit after tax of Rs.6.42 crores in the previous year. • Silica Ceramica Private Limited (Silica) has shown gradual improvement in performance during the financial year. Silica has started utilising its full available capacity and has achieved substantial reduction of process losses resulting in increase in production of premium quality Tiles. Value added products in the form of 600x600 mm GVT were introduced during the financial year. With continuous availability of Natural Gas from ONGC during the last quarter of 2014-15, Silica has been able to achieve a profit of Rs. 8.84 crores before interest in the last quarter of financial year. The gross revenue from operations for the year under review was Rs. 248.14 crores (previous year : Rs.198.36 crores) and the loss after tax was Rs. 32.77 crores (previous year Rs. 24.69 crores). • H. & R. Johnson (India) TBK Limited, the wholly-owned subsidiary of the Company in the field of tile, bath and kitchen retailing, has presence in the state/union territories of Maharashtra, Madhya Pradesh, Telangana, Andhra Pradesh, Delhi, Chandigarh, Punjab, Himachal Pradesh, Karnataka, Uttar Pradesh. The Company and its Joint Ventures have 28 showrooms of House of Johnson and 13 showrooms of Johnson Corners as at March 31, 2015. For the year ended March 31, 2015, gross revenue from operations was Rs. 139.76 crores (previous year : Rs. 142.17 crores) and loss after Tax was Rs. 3.57 crores (previous year : Rs. 1.32 crores). • Milano Bathroom Fittings Private Limited (Milano), the wholly-owned subsidiary of the Company manufacturing bathroom fittings and accessories, has performed well during the year. Improved capacity utilisation at its Samba Unit in Himachal Pradesh, improved product portfolio and cost efficient manufacturing has contributed to the growth of Milano. For the year ended March 31, 2015, gross revenue from operations was Rs. 44.67 crores (previous year : Rs.40.44 crores) with profit after tax of Rs. 3.03 crores (previous year : Rs.1.44 crores). • RMC Readymix Porselano (India) Limited is a wholly-owned subsidiary of the Company and is yet to commence operations. • TBK Venkataramiah Tile Bath Kitchen Private Limited, a wholly-owned subsidiary of H. & R. Johnson (India) TBK Limited, is in the field of tile, bath and kitchen retailing, The gross revenue from operations was Rs. 1.93 crores (previous year : Rs. 2.53 crores) and loss after tax was Rs.0.28 crores (previous year : profit Rs. 0.06 crores) Associate • Prism Power and Infrastructure Private Limited is an associate of the Company and is yet to commence operations. Joint Ventures (JV) • Ardex Endura (India) Private Limited (AEIPL), the joint venture with the German group Ardex, which manufactures and markets tile adhesives, grouts, flooring, waterproofing and allied products has performed satisfactorily during the year. For the year ended March 31, 2015, AEIPL achieved gross revenue from operations of Rs. 101.49 crores (previous year : Rs. 92.52 crores) and profit after tax of Rs. 4.11 crores (previous year : Rs. 4.14 crores). AEIPL is in the process of setting-up a new plant in West Bengal near Durgapur and project implementation activities commenced during the year. • Sentini Cermica Private Limited (Sentini), the mid-segment glazed floor tile JV Company in Andhra Pradesh, has performed satisfactorily during the year. With the implementation of the Coal Gassifier Plant and availability of CNG, Sentini has been able to achieve reduction in cost of production during the financial year. The production and sales of 600x600 mm Digital Floor Tiles have also contributed towards higher profitability. For the year ended March 31, 2015, Sentini achieved gross revenue from operations of Rs. 159.62 crores (previous year : Rs. 115.90 crores) and profit after tax of Rs. 3.54 crores (previous year loss after tax : Rs. 2.25 crores). • Antique Marbonite Private Limited, the vitrified tile JV Company in Gujarat, has achieved gross revenue from operations of Rs. 288.86 crores (previous year : Rs. 261.05 crores) and profit after tax of Rs. 9.89 crores (previous year : Rs. 3.95 crores). • Spectrum Johnson Tiles Private Limited (Spectrum), the mid-segment wall tiles JV Company in Gujarat, has performed satisfactorily during the year. The increase in production and sales of 300x200 mm and 375x250 mm digital tiles have contributed towards increase in profitability during the financial year. For the year ended March 31, 2015, Spectrum achieved gross revenue of Rs. 91.79 crores (previous year Rs. 82.98 crores) and profit after tax of Rs.5.20 crores (previous year : Rs. 2.37 crores). • Small Johnson Floor Tiles Private Limited (Small), the mid-segment floor tiles JV Company in Gujarat, has performed satisfactorily during the year. For the year ended March 31, 2015, Small achieved gross revenue from operations of Rs. 66.77 crores (previous year : Rs.65.16 crores) and profit after tax of Rs.2.24 crores (previous year : Rs. 2.21 crores). CONSOLIDATED FINANCIAL STATEMENT The audited consolidated financial statements of the Company, its subsidiaries, joint ventures and associates prepared in accordance with the Companies Act, 2013 and the applicable Accounting Standards form part of this Annual Report. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC - 1 is attached to the Accounts. The separate audited financial statements in respect of each of the subsidiary companies shall be kept open for inspection at the Registered Office of the Company during working hours for a period of 21 days before the date of the Annual General Meeting. The Company shall also provide a copy of the Annual Report and other related information of its subsidiary companies as required under Section 136 of the Companies Act, 2013 to the shareholders of the Company and the subsidiaries upon their written request. The separate audited financial statements in respect of each subsidiary company is also available on the website of the Company at www.prismcement.com/investors/FinancialResults DIRECTORS Mr. S. Ramnath resigned from the Board of Directors of the Company on February 4, 2015 due to personal reasons. The Board wishes to place on record its appreciation of the valuable contributions made by Mr. Ramnath during his tenure with the Company. Pursuant to Section 152 of the Companies Act, 2013, Mr. Rajesh Kapadia retires by rotation at the forthcoming Annual General Meeting of the Company and is eligible for re-appointment. In accordance with the requirements of the Companies Act, 2013, the shareholders, at the 22nd Annual General Meeting of the Company held on July 31, 2014, have appointed the Independent Directors - Mr. J. A. Brooks, Ms. Ameeta A. Parpia and Mr. Shobhan M. Thakore for a term of five consecutive years up to July 30, 2019. The Company has received declarations from Mr. Brooks, Ms. Parpia and Mr. Thakore, Independent Directors of the Company, confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The details of familiarisation programme for Independent Directors have been disclosed in the Report on Corporate Governance and on the website of the Company www.prismcement.com/AboutUs/Policies As required, the requisite details of the Director seeking re-appointment are included in this Annual Report. Meetings The Board of Directors met thirteen times during the year ended March 31, 2015. Additionally, several Committee Meetings were held including the Audit Committee, which met seven times during the year. Details of the meetings are included in the Report on Corporate Governance. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation during the year under review. Details on the same is given in the Report on Corporate Governance. Remuneration Policy The policy on Director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Director and also remuneration for Key Managerial Personnel and other employees forms part of Report on Corporate Governance. KEY MANAGERIAL PERSONNEL COMPOSITION OF AUDIT COMMITTEE The Board has constituted an Audit Committee, details of the same is stated in the Report on Corporate Governance. VIGIL MECHANISM/WHISTLE BLOWER POLICY The Company has established a vigil mechanism by adopting a Whistle Blower Policy to report concerns about unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct, if any. The details of the Policy is explained in the Report on Corporate Governance and also posted on the website of the Company at www.prismcement.com/AboutUs/Policies RISK MANAGEMENT The Company works across a wide range of products i.e. Cement, Tiles, Bath and Kitchens products, Readymixed concrete. Several of the product lines have their own unique business and operating models. These businesses operate in an evolving and challenging business environment. The ability to create sustainable value is dependent on recognising and effectively addressing key risks that exist in this environment. To facilitate this, each of the Company's businesses has adopted a robust risk management programme. The risk management programme does not aim at eliminating risks, as that would simultaneously eliminate all chances of rewards/opportunities. It is instead focused on ensuring that risks are known and being addressed proactively through a well-defined framework. The Risk Management Policy framed by the Company details the objectives and principles of risk management along with an overview of the risk management process, procedures and related roles and responsibilities. The risk management process includes identifying types of risks and its assessment, risk handling and monitoring and reporting. Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set in the Report on Corporate Governance. CORPORATE SOCIAL RESPONSIBILITY (CSR) CSR is a conscious commitment of the Company to contribute to economic development while improving the quality of life of the underprivileged and their families as well as of the local community in the geographies in which the Company operates and the society at large. The Company has adopted a CSR Policy based on which its future CSR initiatives shall be developed and implemented. The Company policy is focussed on CSR initiatives in areas such as water, health and sanitation, energy conservation, pollution-free atmosphere, clean technologies and primary health care for the villagers in the vicinity of the plants. The Policy is available on the Company's website at www.prismcement.com/AboutUs/Policies In view of the average net profits of the three preceding financial years being in the negative, the Company was not required to spend on CSR activities for the FY 2014-15. Requisite disclosure including composition of the CSR Committee has been made in the prescribed form annexed herewith as Annexure 'A'. LOANS, GUARANTEES AND INVESTMENTS The particulars of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Annexure 'B' annexed herewith. RELATED PARTY TRANSACTIONS All Related Party Transactions are placed before the Audit Committee as also the Board, wherever required, for prior approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related party transactions entered into pursuant to the omnibus approval is placed before the Audit Committee for their review on a quarterly basis. The statement is supported by a Certificate from the Managing Director, Executive Directors and the Chief Financial Officer. The policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company at www.prismcement.com/AboutUs/Policies There are no material significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. The Company has provided Corporate Guarantees to financiers of its subsidiary - Silica Ceramica Private Limited to facilitate fund raising. Details of the said transactions pursuant to sub-section (1) of Section 188 of the Companies Act, 2013 are given in the prescribed Form AOC - 2 annexed herewith as Annexure 'C'. Attention of the members is drawn to the disclosure of related party transactions set out in Note No. 44 of the Standalone Financial Statements forming part of this Annual Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013, to the best of their knowledge and belief and according to the information and explanations obtained by them, the Directors confirm : a. That in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. That such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date; c. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. That the annual financial statements have been prepared on a going concern basis; e. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; f. That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. EMPLOYEE REMUNERATION The ratio of remuneration of each Director to the median employees' remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 'D'. The information required under Section 197 of the Companies Act, 2013 and Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report and is available for inspection by the members at the Registered Office of the Company during business hours on working days upto the date of the ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of the statement may write to the Company's Registered Office at Hyderabad or to its Corporate Office at Mumbai. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, is given in Annexure 'E' forming part of this Report. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report. CORPORATE GOVERNANCE As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance together with a certificate from the Company's Auditors confirming compliance forms part of this Annual Report. INTERNAL FINANCIAL CONTROL SYSTEMS The Company has established set of standards, processes and structure which enables it to implement adequate internal financial controls and that the same are operating effectively. The Company has in place systematic measures such as reviews, checks and balances, methods and procedures to conduct its business in an orderly and efficient manner. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company towards ensuring management effectiveness and efficiency and reliable reporting. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. AUDITORS The shareholders at the 22nd Annual General Meeting appointed M/s. G. M. Kapadia & Co., Chartered Accountants, Mumbai as the Company's Auditors upto conclusion of the 26th Annual General Meeting of the Company, subject to ratification of the appointment by the members at every AGM, to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder. As required under Clause 49 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Report given by the Auditors on the financial statements of the Company are part of the Annual Report. There is no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Secretarial Auditor The Company has appointed M/s. Savita Jyoti Associates, Practising Company Secretaries, Hyderabad to undertake the Secretarial Audit of the Company for the year 2014-15 pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. There were no qualification, reservation or adverse remarks given by Secretarial Auditors of the Company. The Report of the Secretarial Auditor is annexed herewith as Annexure 'F'. Cost Auditors As per the requirements of the Companies Act, 2013, the Company's cost records for the year ended March 31, 2015 are being audited by M/s. N. I. Mehta & Co., Cost Accountants, Mumbai. The Board of Directors of the Company has, at its meeting held on May 14, 2015, appointed M/s. N. I. Mehta & Co. as the Cost Auditors for the year ending March 31, 2016. ANNUAL RETURN The extract of the Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Annexure 'G' attached to this Report. GENERAL 1. No significant and material orders were passed by the Regulators or courts or tribunals impacting the going concern status and Company's operations in future. 2. The Company offers equal employment opportunity and is committed to creating a healthy working environment that enables employees to work without fear of prejudice, gender bias and sexual harassment. The Company has also framed a policy on Prevention of Sexual Harassment of Women at workplace. There were no cases reported during the year under review under the said Policy. 3. No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which the financial statements relate and the date of this report. ACKNOWLEDGEMENTS The Directors thank the shareholders, various Central and State Government departments/agencies, banks and other business associates for their valuable services and continued support during the year under review. The Board also takes this opportunity to express its sincere appreciation of the contribution and dedicated work of all the employees of the Company. For and on behalf of the Board of Directors RAJESH G. KAPADIA Chairman Date : May 14, 2015 Place : Mumbai |