DIRECTORS' REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS Dear Members, We are pleased to present our report together with Management Discussion and Analysis for the year ended on 31st March, 2016. In order to comply with requirement of Section 2(41) of the Companies Act, 2013, the Company has closed its financial year 2015-16 on 31st March 2016 and as a result the Company's financial year 2015-16 is of 9 months only 2. DIVIDEND During the year, Company has paid two Interim Dividends of Rs. 12/- per share each. The total dividend payment works out to 7 24/- per share for year 201516 (9 months) as against Rs. 24/- per share for the year 2014-15 (12 months). The total outgo on dividend payment for the year 2015-16 amounts to Rs. 100.63 crore including dividend distribution tax of Rs. 17.02 crore as against Rs. 99.46 crore including dividend distribution tax of Rs. 15.85 crore for the year 2014-15. 3. MANAGEMENT OUTLOOK OF MACRO ECONOMY AND INDUSTRY I. Indian Economy-Developments and Outlook As per the Advance Estimates of National Income released by Central Statistics Office (CSO) of Government of India, the growth rate of Gross Domestic Product (GDP) at constant (2011-12) prices for the year 2015-16 is estimated to be 7.6% as compared to the growth of 7.2% for 201415. Set against the backdrop of a turbulent global economic landscape and two back to back weak monsoons with deleterious effects on farm production, this GDP growth rate is encouraging. Inflation was also well under control as reflected in Consumer Price Index which was range-bound at around 5% and Wholesale Price Index which recorded in negative all throughout the year. Aided by improved tax buoyancy on account of higher indirect taxes on petroleum products, fiscal deficit was also maintained within projected levels of 3.9% of GDP. There are however some concerns also. The industrial production as measured by general Index of Industrial Production (IIP) recorded growth of 2.4% during 2015-16 which is not encouraging. Similarly, the new assets creation in the economy as reflected by estimated Gross Fixed Capital Formation as a percentage of GDP came down from 31.2% to 29.3% during 2015-16. All in all while the macro-economic situation appears comforting, the visible recovery in terms of demand growth across sectors is yet to be witnessed. Various initiatives and schemes as announced by the Central Government are yet to show their impact on ground. Off late, however, there are some signs of improvement witnessed in the economy. Some of the positive developments are as under: - • Infrastructure activity has picked up pace with enhanced public investments. The road sector has shown speedier award of projects. • Work on various Railways projects particularly the Dedicated-freight corridor has also gathered pace. • Sectors such as Ports, Civil Aviation, Power, Metro-Railways, Urban infrastructure and Inland waterways are also witnessing pick up in activities. • With the easing of inflation, RBI has cut its repo rate by 1.25% since 15th January 2015 but its actual transmission by banks in terms of proportionate reduction in lending rates was not done. This resulted in actual interest costs to be still high. The Central Govt. has recently announced reduction in interest rates on small savings schemes. This has led Banks to start transmitting full benefit of RBI rate cuts to borrowers. • El Nino, which was mainly responsible for the deficient monsoon for the last two consecutive years, is unlikely to repeat this year and as forecast by the India Meteorological Department, there is likelihood of normal monsoon rains this year. All these developments augur well for the industry in general and cement in particular. Cement industry - Development and Outlook While macro-economic parameters reflect a healthy picture, the cement production did not grow in the same proportion. Cement production grew at close to 4.6% in 2015-16 (April to March). Total production was approx. 282.5 million tons during FY 2015-16 vis-à-vis 270.0 Million tons last year. The poor growth in cement demand is attributable to slower progress in infrastructure projects and low off-take from housing and industrial user segments. While rural demand was affected by less-than-normal monsoon, the demand from real estate market in urban areas was also poor because of frail market conditions. Cement demand from I ndustri al capi tal expenditure was adversely affected due to existence of excess capacities across various industrial sectors. The supply side on the other hand continued to reflect over-capacity leading to lower capacity utilization levels by cement companies. Drop in commodity prices especially coal however helped cement companies in rationalizing their cost of production. Going forward, the revival signs in the Indian economy are visible. Overall pick-up observed in the infrastructure spending by the Government and downward trend in the interest rates is expected to revive the demand across sectors. While implementation of recommendation of 7th Pay Commission is likely to adversely affect the Government exchequer, it will also aid in demand creation for various sectors. Government thrust on affordable housing for realizing its vision of "Housing for All" by 2022 and Smart City program should also help in demand growth for cement. The new capacity additions has also slowed down considerably. Therefore, the outlook for the cement sector looks better. iii. Power Sector - Development and Outlook Over the years, with significant capacity additions, both in public and private sector, the situation of Power supply in India has improved considerably. However, the financial health of Distribution Companies continues to remain weak due to multitude of issues. The transmission and distribution losses in the system continue to be very high. Many states have set up generation projects which have suffered high cost and time over-runs resulting in very high generation cost. As a result, they are continuously facing cash flow issues resulting in poor off-take of power. While long term power off-take has virtually stopped, the demand in short term market is also low and erratic leading to poor realizations for generators. There is however hope that the government's recent initiative of UDAY (Ujwal DISCOM Assurance Yojana) and other measures will help improve financial position of State owned DISCOMs and in turn will improve their off-take of power going forward. Cement Business Company registered yet another year of strong growth in its sales volume during 2015-16. The cement production at 140.99 Lac tons for 9 months of 201516 reflected an annualized growth of 18.07%. This was largely on account of enhanced volumes from its plant in Bihar, new plants commissioned in Chhattisgarh and Uttar Pradesh as well as clinker grinding unit at Panipat in Haryana which was acquired from Jaiprakesh Associates last year. The price realizations were down by about 2% over last year. It was cost rationalization that helped the Company maintain its margins. As a result, EBITDA from the cement business went up during the year to Rs. 1120 Crore registering 21.01% increase on an annualized basis over the previous year. Company lays significant emphasis on efficiency and productivity improvements. It continued its efforts for rationalizing costs across its operations to maintain its competitiveness. The developments on the cost front were as under: - • Raw Materials costs remained almost same as that of previous year. During the year, Limestone cost went up by about 10% mainly because of provision made for contribution of Rs. 25.60 per ton of limestone towards District Mineral Foundation and National Mineral Exploration Trust with effect from 12th January, 2015 in terms of requirement of Mines and Mineral (Development and Regulation) Amendment Act, 2015. Cost of other components of Raw Material costs such as Gypsum, Slag and Fly Ash, etc. came down in different proportions. Also, considering overall cost benefit, Company continued with its strategy of procuring part of the clinker requirement for its Bihar unit from market which forms part of the Raw Material cost. • Power & Fuel costs came down by about 14% during the year mainly because of drop in fuel prices during the year. The efforts on conserving the energy in every little area has played well because of which Company could bring down its Power consumption from 73.8 units to 72.1 units. Likewise, ratio of fuel consumption to clinker production also showed fair amount of improvement. • Logistics costs came down by 8% during the year mainly because of low diesel prices and rationalization in lead distance. • Staff cost on a per ton basis also showed decline mainly because of volume growth. Power Business The aggregate net power generation from all the power plants during the year was 2611 Million Units showing a 16.55% annualized growth over previous year. Most parts of the country have been witnessing demand-supply mismatch with supply exceeding demand. As a result, prices in the short term bilateral market as well as Power Exchange were down during the year. Even though the market conditions were challenging, Company improved its sale of surplus power which stood at 1739 Million Units recording a growth of 23.01% on an annualized basis over the previous year. Consequently, the revenues from sale of surplus power were also up by 12.40% on an annualized basis to Rs. 595 Crore. EBITDA from Power Business (including power trading) went up to Rs. 200 Crore mainly because of decline in fuel prices and high sales volumes. New / Expansion Projects Over the last few years, Company has laid significant emphasis on setting up clinker grinding units at locations close to its major consumption centers. These units not only help serve customers more efficiently, reliably and faster but are also cost effective and environment friendly in operation. As of 31st March 2016, Company has split grinding units at 7 places and integrated units at 3 places. During 2015-16, Company added a grinding unit of 2.0 Million Ton Per Annum (MTPA) capacity at Bulandshahr in Uttar Pradesh. With this addition, the total cement capacity of the Company stands at 25.6 MTPA as on 31st March, 2016. Company is currently in advanced stages of completing expansion project of its Bihar Grinding Unit which will increase the capacity of Bihar Grinding Unit from current 2.0 MTPA to 3.6 MTPA. Company has decided to further expand its capacity. It has undertaken expansion project of increasing its clinker capacity at Raipur in Chhattisgarh by 2.8 MTPA. Coupled with this project, Company is in the process of finalizing locations in neighboring states for setting up split grinding units which will source clinker from Raipur Clinker unit. Company has also started work on setting up an integrated cement plant with clinker capacity of 2.4 MTPA and cement grinding capacity of up to 4.0 MTPA in the State of Karnataka. RISK MANAGEMENT Company considers risk management as a tool to identify risks as well as opportunities and has imbibed it as an integral part of its overall business strategy. Company has a well-documented risk management framework in place which helps timely identification and assessment of risks as well as ensures timely implementation of appropriate mitigation measures. The framework on one hand allows regular review of the risks and their mitigation measures so as to ensure their relevance and on other hand help identify existence of any new risks. The Audit and Risk Management Committee monitors the risk management plan of the Company for ensuring its effectiveness and reviews the risks inventory from time to time. The key risks identified by the Company and their mitigation measures are as under: a) Demand slowdown and Supply Overhang in the Industry - The slackness in demand growth and supply overhang due to continual capacity addition pose risk of under-utilization of cement capacities and fall in prices to un-remunerative levels. Company has adopted measures like multi-brand strategy, expanding market base, faster delivery to consumers and consistent quality to contain this risk. It also keeps adding capacity in markets where demand-supply conditions are considered to be relatively favourable. Its cement plant in Bihar commissioned in FY 2014-15 has already helped it garner good market share in Eastern India. The new cement plant in Chhattisgarh commissioned in May, 2015 further helped to quickly gain extra market share. The acquisition of Panipat grinding unit in Haryana and new plant in Bulandshahr, UP will enable the Company to step up its market share in North India. All these measures have helped the Company in increasing its market share and better capacity utilization rates. b) Availability of Water and Other Resources - Because of constant increase in demand and depletion of traditional resources of water, availability of ground water has been shrinking over the years. Company's plants in Rajasthan are located in water deficient areas and as such conserving water becomes more important. Realizing this, Company installed Air Cooled Condensers (ACC) in all its power plants which though involve additional capital expenditure, h a ve h e lp ed Com pa n y re d u ce wa te r consumption significantly. This is quite significant as hardly any other power plant in the State has installed ACC in its plant. Also, the Company has installed Waste Heat Recovery systems in its cement plants which use waste hot gases as their input thereby eliminating the need for cooling of such gases and thus saving water. There is Company-wide awareness at all levels to conserve water. Secondly, conservation of limestone which is a key input for cement production is quite important. While Company has adequate limestone deposits at its existing operational sites, it has been making all efforts to optimize its usage thereby conserving the deposits and enhancing their life. Additionally, Company continuously undertakes exploratory activities at its existing deposits areas to find more reserves. To conserve the high grade limestone, Company is mixing the same with low grade limestone and mines rejects and using it for clinker production. c) Fuel Cost - Company sources fuel from open market and hence is exposed to volatility of market prices of the fuel. Company has deployed multi-fuel usage strategy as well as best technology which allows it to use différent fuels and use the most economical fuel among a basket of different fuels as per prevailing trends in the market. Additionally, Company has invested in Waste Heat Recovery Power Plants which have reduced its fuel requirement and thereby cushioned it partly from fuel price volatility to that extent. d) Power Prices - Company sells its surplus power after captive consumption, hence does not have any long term power sale arrangements which exposes it to price volatility in this segment. The Company is therefore managing this risk by increasing its captive consumption and ensuring advance sale contracts for part of the capacity and keeping the balance for running the same with market volatility. 6. INTERNAL CONTROLS SYSTEM AND THEIR ADEQUACY In order to ensure orderly and efficient conduct of business, Company has put in place necessary internal control systems commensurate with its business requirements, scale of operations, geographical spread and applicable statutes. The systems include policies and procedures, IT systems, delegation of authority, segregation of duties, internal audit and review framework etc. Company has designed the necessary internal financial controls and systems with regard to adherence to company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. Company has documented Standard Operating Procedures (SOPs) for procurement, human resources, sales and marketing, logistics, finance and treasury, financial reporting, compliances and other areas of its operations. The compliance to these controls and systems including SOPs is periodically reviewed by the Internal Audit function and exceptions are reported. It also has in-house Internal Audit department manned by qualified professionals to carry out audit activities. All material audit observations and follow-up actions thereon are reported to the Audit and Risk Management Committee. The Committee holds regular discussions with the auditors to ensure adequacy and effectiveness of the internal control systems and monitors implementation of audit recommendations. 7. HUMAN RESOURCES / INDUSTRIAL RELATIONS Attracting, developing and retaining talented employees are integral to Company's achievement of business objectives. During the year, Company has continued its focus on people related programs aimed at attracting, developing and retaining talent within organization. a) Employee Engagement - An engaged employee is the Company's biggest asset. Company has enjoyed high engagement levels from its employees which is reflected in its consistently improving performance over the years. To enhance the employee engagement, Company has made efforts in the field of training and development, congenial work environment, providing challenging work opportunities, etc. Focus is given on maintaining work-life balance and increasing social engagement of the employee. Unique 'Shree Family' culture which is hallmark of Company's human resource practices has made pivotal contribution in more engaged and happy employees of the Company. A new initiative 'Kutumb Utsav' has started recently which endeavors to make families part of work life of employees. Under this program, family of an employee is invited for a day at his/her workplace and have glimpses of his/her work life. b) Talent Management - By its unique HR practices, Company has continuously made efforts on strengthening and building people talent for achieving its business objectives. Initiatives to develop leadership lines as well as enhance technical and functional capability with special focus on nurturing young talent are taken. Young managers are groomed by providing higher responsibilities. Focus remains on gaining cross functional knowledge to enable meaningful participation of employees all across of the Company in innovation and process improvement. With the Company entering in next phase of growth, the nurtured talent pool will enable smooth transition to new growth trajectory. c) Occupational Health and Safety - Safety and health of employees at the workplace has always been a focus area for the Company. Company continuously undertakes various initiatives aimed at providing a healthy and safe workplace to its people (full-time employees as well as contract workers). To strengthen its people's commitment towards safety, Company organises a 'Safety Meeting' on first day of each month at all its plant sites. This occasion brings all employees and workers of a unit at a common platform and provides a great opportunity for sharing of safety related aspects and exhorting all to always adopt safe work practices in their respective areas of operations. To ensure that the 'safety first' culture continues to grow; Company has developed a practice of periodically organising various safety related events viz. Road Safety Week, National Safety Day, Workshops by experienced Safety Professionals, etc. Such regular events give an opportunity for the Company's Safety Team to create excitement amongst people and thereby boost their awareness and keenness to adopt safe practices in their everyday life. To ensure a safe work environment, Company engages all its people (including contract workers) to highlight any observed unsafe working conditions in the plant so that the same can be suitably and timely corrected. For the same, Company has developed a 'Safety Observation Portal' in which any person can report any observed unsafe condition which then gets shared with the concerned to ensure immediate and appropriate redressal. Company continues to adopt practices like 'Toolbox Talks' (wherein prior to commencement of any maintenance activity, engineers hold an informal talk with the group of workers to discuss and highlight the safety hazards in the job to be undertaken), Safety Audits (undertaken by internal and external experts so as to identify and eliminate potential safety risks), Mock drills (to build on emergency preparedness to meet any contingency). All these initiatives have resulted in strengthening of safety systems and improving people welfare. During the year Company voluntarily invited a team of auditors from 'National Safety Council-Mumbai' (an autonomous body set up by Ministry of Labour and Employment-Government of India) to conduct an 'Occupational health and safety audit' of its cement and power plants at its Beawar and Ras sites. While appreciating Company's existing practices, the team has shared valuable inputs and best practices, which the Company is now working upon to further build on its 'Safety First' culture across the organization. It is also worth mentioning that Whitehopleman, an international benchmarking agency which rates cement plants across the world, in its latest report has given five star rating to the safety practices of the Company by appreciating its safety performance during the review period. d) Industrial Relations - Employee Relations remained cordial during the year. This has enabled Company to build healthy relationship and resolve issues through dialogue and discussions. Total no. of employees as on 31st March, 2016 were 5142. 8. SUSTAINABILITY Sustainability is an intrinsic part of the Company's business model and is vital to its long term growth strategy. Sustainability is manifested in its operating practices and systems which are geared towards conservation of resources, environment management, innovation and people motivation to create value for all stakeholders. Company's sustainability initiatives are focused on low carbon emission, use of alternate fuels, water & resource conservation and environment management. Sustainability matters are regularly discussed at Board level. Sustainability Initiatives - During the year, the initiatives on sustainability continued with improved performance on several parameters of operations. Some of the initiatives taken on the environment front during the year are as under:- a) Power Generation from Waste Heat Recovery Plants - Company considers waste heat recovery power plants as a potent source of renewable energy due to the various benefits of these plants which include conservation of fossil fuels and water, elimination of GHG emissions, controlling fugitive emission, etc. Company has invested in this renewable energy source as a long term environment management plan. During the year, Company expanded its waste heat recovery power plants capacity to 111 MW by completing waste heat recovery power plant at its new site at Raipur in Chhattisgarh. Company continues to have the distinction of implementing the largest such capacity in World Cement Industry outside China. These plants help in reducing Company's dependence on fossil fuel for power generation and consequently will cut down the carbon emissions. b) Alternative Fuels and Raw Materials - Our dedicated team continued its experiments during the year for working out solutions to use alternative fuels and raw materials in the operations to reduce the consumption and usage of natural resources. Usage of other alternative fuels like paint sludge and industrial wastes was increased during the year. Company's synthetic gypsum plant and FGD plant further continue to reduce its dependence on natural mineral gypsum. c) Energy Conservation and Environment Management - Energy conservation and environment management is a focus area for the Company and is driven at the lowest operational level. Company's dedicated "Energy Cell" continued to find out innovative solutions of energy saving and improvement. Several measures like installation energy efficient equipments, optimization of processes, modifying/ improvising design engineering of the equipments, etc. were carried out to improve the energy efficiency in the operations. On environment management front, measures were undertaken to control/reduce the emissions. In our plants, Continuous Emission Monitoring System has been installed for monitoring and reporting of emission levels on a real time basis on websites of regulatory authorities. Company is also reporting its carbon emission performance on Carbon Disclosure Project (CDP). d) Conservation of Water - Water being a scarce and precious resource, finds upmost priority in the Company's sustainability initiatives. During the year, Company has created rainwater harvesting systems at Raipur plant with few more under development. This apart, two Sewage Treatment Plants (STP) were installed for treatment of domestic waste water. In addition, newly installed Waste Heat Recovery plant at Raipur plant will further reduce the water consumption. At Ras plant also, 25 nos. of rain water harvesting systems within and outside plant premises have been created for rain water harvesting. e) Sustainability Reporting - During the year, Company released its 11th Corporate Sustainability Report for year 2014-15 detailing its efforts towards sustainability following GRI G4 guidelines. The report was awarded the highest level of certification by an independent third party verifying agency. Company is also releasing Business Responsibility Report (BRR) as part of its Annual Report covering its co m p l i a n ce s to wa rd s th e B u si n ess Responsibility Principles enunciated by the Ministry of Corporate Affairs/ Securities and Exchange Board of India. 9. CORPORATE SOCIAL RESPONSIBILITY Company has always considered Corporate Social Responsibility (CSR) as a voluntary activity and a part of its long term vision of creating value for all its stakeholders. Company believes that giving back to society is not a mandate but something which is integral to its beliefs. Accordingly, Corporate Social Responsibility is an integral part of the Company's business. In order to oversee all its CSR initiatives and activities, the Company has constituted a Board level Committee - "Corporate Social and Business Responsibility" Committee (CSBR Committee). The major thrust areas of the Company include healthcare, education, women empowerment, integrated rural development and conservation of natural resources. The Annual Report on CSR activities of FY 2015-16 with requisite details in the specified format in Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached at Annexure - 1 and forms part of this report. The CSR Policy of the Company is attached at Annexure - 2 to the Directors' Report and forms part of the Annual Report. The same may also be accessed on the website of the Company at link <http://www.shreecement.in/pdf/Shree-csr->policy.pdf. L0. SUBSIDIARY COMPANIES The Company has a 100% subsidiary i.e. Shree Global Pte. Ltd., Singapore. There have been no operations in the subsidiary during the year. The Company is not having any Associate Company or Joint Venture. The shareholders, who wish to receive a copy of Annual Accounts of the Subsidiary Company, may request the Company Secretary for the same. As required by Section 129(3) of the Companies Act, 2013 statement showing the salient features of the financial statements of the Subsidiary Company in Form AOC-1, forms part of the Consolidated Financial Statements of Company. The policy for determining material subsidiaries as approved by the Board can be accessed on the website of the Company at link <http://www.shreecement.in/pdf/Shree-material->subsidiary-policy.pdf. L1. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements of the Company are prepared as required in terms of provisions of Companies Act, 2013 and Listing Regulations by following the applicable Accounting Standard notified by the Ministry of Corporate Affairs and form part of the Annual Report. L2. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief state that: a) in the preparation of the annual accounts for the year ended 31st March, 2016 the applicable accounting standards have been followed and there are no material departures from the same; b) they have 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 state of affairs of the company as at 31stMarch, 2016 and of the profit and loss of the company for the period ended on that date; c) they have taken proper and sufficient care 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) they have prepared the annual accounts on a going concern basis; e) they have laid down necessary internal financial controls to be followed by the company commensurate with its size of operations and that such internal financial controls are adequate and were operating effectively; and f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 13. DIRECTORS AND KEY MANAGERIAL PERSONNEL • Board of Directors of the Company in their meeting held on 2nd February, 2016 have re-appointed Shri H. M. Bangur as Managing Director of the Company for a period of five years w.e.f. 1st April, 2016 subject to approval of the Members in the ensuing Annual General Meeting. • Board of Directors of the Company in their meeting held on 2nd February, 2016 re-designated Shri Prashant Bangur from Whole-time Director to Joint Managing Director w.e.f 2nd February, 2016 for remaining period of his tenure i.e. up to 22nd August, 2017 without change in other terms & conditions including remuneration as approved earlier by the Members in the Annual General Meeting of the Company, subject to approval of the Members in the ensuing Annual General Meeting. • In accordance with the provisions of the Companies Act, 2013 and Article 112 of the Articles of Association of the Company, Shri Prashant Bangur, Joint Managing Director will retire by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Independent Directors hold office for a fixed term of 5 years and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act, 2013 each Independent Director has given a declaration to the Company confirming that he/she meets the criteria of independence as specified under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 4. PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEE AND INDIVIDUAL DIRECTORS During the year, the Board carried out an annual evaluation of its own performance, performance of its Committees including the evaluation of individual Directors. The performance of the Board was evaluated by the Board on the basis of criteria such as Board composition and structure, effectiveness of Board processes, information flow to Board, functioning of the Board, etc. The performance of Committees was evaluated by the Board on the basis of criteria such as composition of Committees, effectiveness of Committee working, independence, etc. The Board and Nomination cum Remuneration Committee evaluated the performance of individual Director on the basis of criteria such as attendance and contribution of Director at Board/Committee Meetings, adherence to ethical standards and code of conduct of the Company, interpersonal relations with other Directors, meaningful and constructive contribution and inputs in the Board/Committee meeting, etc. In a Separate meeting of the Independent Directors, performance evaluation of Non-Independent Directors, the Board as a whole and performance evaluation of Chairman was carried out, taking into account the views of Executive and Non-Executive Directors. The quality, quantity and timeliness of flow of information between the Company Management and the Board which is necessary for the Board to effectively and reasonably perform their duties was also evaluated in the said meeting. Company appointed an External Facilitator for the purpose of carrying out the performance evaluation in a fair and transparent manner. 5. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS A detailed presentation is given to the Independent Directors of the Company at the time of their appointment which covers their role, duties and responsibilities, Company's strategy, business model, operations, markets, organization structure, products, etc. The said presentation is also sent to existing Independent Directors every year. As part of Board discussions, presentation on performance of the Company is made to the Board during its meeting(s). Plant visits are also arranged for Independent Directors from time-to-time for better understanding of the Company's operations. The details of such familiarization programmes for Independent Directors are posted on the website of the Company and can be accessed at <http://www>. shreecement.in/pdf/Shree-familiarization-programme-for-independent-directors.pdf. 16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS / OUTGO The particulars relating to conservation of energy, technology absorption, foreign exchange earnings / outgo, as required to be disclosed under the Companies Act, 2013 is set out at Annexure-3 which forms part of this report. 17. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosures pertaining to remuneration and other details as required under 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 provided at Annexure-4. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits as provided in the said rules are set out in the Directors' Report as an addendum thereto. However, in line with the provisions of the first proviso to Section 136(1) of the Act, the Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. 18. AUDITORS Statutory Auditors M/s. B. R. Maheswari & Company, Chartered Accountants, who are the Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting. They have given their report on the Annual Accounts for Financial Year 2015-16. The Audit Report does not contain any qualification, reservation or adverse remark. M/s. B. R. Maheswari & Company are eligible for re-appointment for next year and have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. The Board, on the recommendati on of Aud i t and Ri sk Management Committee proposes to re-appoint them as Statutory Auditors of the Company from the conclusion of the ensuing Annual General Meeting till the conclusion of the Annual General Meeting to be held thereafter. Secretarial Auditors The Board had appointed M/s. P. Pincha & Associates, Company Secretaries, Jaipur as Secretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year 2015-16. They have submitted their report in prescribed format and the same is attached at Annexure - 5. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Cost Auditors The Board has appointed M/s. K. G. Goyal & Associates, Cost Accountants, Jaipur (Registration No. 000024) as Cost Auditors of the Company to conduct Cost Audit for the Financial Year 2015-16. 9. OTHER DISCLOSURES I. Audit and Risk Management Committee: The Committee comprises of Shri O. P. Setia as Chairman, Shri Prashant Bangur, Shri R. L. Gaggar, Dr. Y. K. Alagh, Shri Nitin Desai, Shri Shreekant Somany and Shri Sanjiv Krishnaji Shelgikar as other Members. All the recommendations made by the Audit and Risk Management Committee were accepted by the Board. ii. Details of Board and its Committees: Details of the composition of the Board and its Committees, Meetings held and attendance of the Directors at such Meetings, are provided in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations. iii. Extract of the Annual Return: Extract of Annual Return of the Company is annexed at Annexure - 6 which forms part of this report. iv. Particulars of Loan, Guarantees or I n vestments: There were no loan/ guarantees given by the Company during the financial year 2015-16. The investments made under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the financial statements. v. Particulars of Contracts or Arrangements with Related Parties: All Related Party Transactions that were entered into during the financial year were on an arm's length basis and in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. There were no material Related Party Contract/ Arrangement/ Transactions made by the Company during the year that would have required Shareholders' approval under Section 188 or of the Listing Regulations. The Company has adopted a Related Party Transactions Policy duly approved by the Board, which is uploaded on the Company's website and may be accessed on the link <http://www.shreecement.in/pdf/Shree->related-party-transction-policy.pdf. Details of the Related Parties disclosures (transactions) are provided in the accompanying financial statements. vi. Deposits from Public: The Company has not accepted any deposits from public covered under Chapter V of the Companies Act, 2013 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet. vii. Vigil Mechanism / Whistle Blower Policy: The Company has adopted a whistle blower policy and has established the necessary vigil mechanism for employees and Directors to report concerns about unethical behaviour. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit and Risk Management Committee. The whistle blower policy may be accessed on the website of the Company at li nk <http://www.shreecement.in/pdf/Shree->whistle-blower-policy.pdf. viii. Remuneration Policy: Company firmly believes that its people are its real assets. A people friendly and conducive work environment is therefore, essential to attain conti n u ed su ccess a nd resu l ts. I ts remuneration policy is therefore designed to achieve this vision. The policy has been approved by the Board on the recommendati on of Nomi nati on cum Remuneration Committee. The policy is applicable to Directors, Key Managerial Personnel and other employees. The policy provides that while nominating appointment of a Director, the Nomination cum Remuneration Committee shall consider the level and composition of remuneration which is reasonable and sufficient to attract, retain and motivate the Directors for delivering high performance. ix. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace: The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. Company has formed an 'Internal Complaints Committee' for prevention and redressal of sexual harassment at workplace. The Committee has four members and is chaired by a seni or women member of the organization. The Company has not received any complaint of sexual harassment during the financial year 2015-16. x. Material Changes after the Close of Financial Year: There have been no material changes and commitments which have occurred ater the close of the year till the date of this Report, affecting the financial position of the Company. xi. Significant and Material Orders passed by the Regulators or Courts: No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. 20. ACKNOWLEDGEMENT The Directors take this opportunity to place on record their sincere appreciation for the commitment, hard work and high engagement level of every member of the Shree family which has made Company to achieve exemplary performance year ater year. The Directors would like to thank its lenders, Central and State Governments and their departments and the local authorities for their continued co-operation and support. They also thank various stakeholders of the Company i.e. customers, dealers, supplies, transporters, advisors, local community, etc. for their continued committed engagement with the Company. For and on behalf of the Board B. G. Bangur Chairman Date: 26th May, 2016 Place: Kolkata |