DIRECTORS' REPORT To the Members of Hemadri Cements Limited, The Directors have pleasure in presenting the 33rd Annual Report of Hemadri Cements Limited together with the audited Financial Statements for the financial year ended 31st March 2015. COMPANY PERFORMANCE: The Company has achieved a new milestone by reaching the mark of above 2,60,000 tones of cement production since the inception of the Company. During the year under review your company achieved a total production of cement tonnage of 2,60,720 MT as against 2,49,048 MT during the previous year and a sales of 2,61,846 MT as against 2,48,250 MT during the previous year. The sale has increased by 18.80 % when compared to previous years by a value of Rs. 1337.67 Lakhs. Your Company has made a Net Profit of Rs. 681.00 Lakhs during the year, as against Net Profit of Rs. 55.81 Lakhs in the previous year. The transitional effect on depreciation re-computation to the extent of Rs. 18.89 lakhs as per Companies Act 2013, has been adjusted to General Resrve. The Cement industry scenario in India is encouraging and the "make in India" initiative by Govt and Infrastructure industry growth are favoring our company's future growth in the years to come. DIVIDEND: As the company is in need of resources to provide for up gradation of the production process to improve the product quality, your directors unable to propose the dividend for the year under review. MANAGEMENT DISCUSSION AND ANALYSIS: The Indian economy registered a growth rate of 7.4% for the year under review when compared to 6.9% for the year 2013-14. The Cement industry is line with the growth of the economy. The Government of India has undertaken various policy initiatives such as reallocation of coal blocks, enhancement of Infrastructure facilities and liberalized foreign direct investments. Many broad based set of initiatives aimed at encouraging "make in India" are expected to give an impetus to the manufacturing sector. It is expected that the benefits from various policy initiatives will have a positive impact on the manufacturing sector including Cement Industries in the coming years. Special Tax benefits to promote the industry in the Andhara Pradesh state and Telangana State in the Finance Bill 2015 is a supportive measure for our company. The construction activity has been growing very marginally during the year and the realty sector growth is. sporadic. Your Company may face the market more competitive due to this factor but the infrastructure growth will ease the situation in the positive direction in the near future. Bower continues to be another major threat and your Company being faced with a severe restriction in using the Grid Power as imposed by the APSEB. Your directors are confident of overcoming the adverse factors by appropriate decision and the stake holder support. DIRECTORS AND KEY MANAGERIAL PERSONNEL: The Board of Directors met four (4) times, oncein every quarter during the year, to review and consider the financial results and operation of the Company. More details are provided in the Corporate Governance Report which form part of this report. Pursuant to the provisions of the Companies Act, 2013, Shri. K. Gopi Prasad and Shri. P. Sathyanarayanan, Directors retire by rotation and are eligible for reappointment. The Board recommends their reappointment and accordingly resolution seeking approval of the members for their reappointment have been included in the notice of the forthcoming Annual General Meeting of the company along with their brief profile. Your Directors further recommend the appointment of Smt. R. Ananda Priya as an Independent Director of the Company. A brief profile and information are furnished in the notice, to consider her appointment. During the year under review, Mr. Velli Paramasivam was appointed as new Company Secretary in place of the retired Company Secretary Shri.K.Venkataramani. The Key Managerial Personnel of the company presently are Shri. P. Ravi Chairman, Shri. K. Gopi Prasad Managing Director, Shri. S.Vivek Director & CEO and Mr. Velli Paramasivam Company Secretary. DIRECTORS' RESPONSIBILITY STATEMENT: On the basis of internal financial controls and systems relating to compliance maintained by the company, work done by the internal, statutory and secretarial auditors, the reviews performed by the management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that that the company's internal financial controls were adequate and effective during the financial year 2014-15. Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, and based on the representations received from the management, the directors hereby confirm that: a) in the preparation of the Annual Accounts for the year 2014-15, the applicable accounting standards had been followed and there are no material departures; b) 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 state of affairs of the company at the end of the financial year 31st March 2015 and of the profit of the company for that period; c) the directors had taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities. d) the directors had prepared the annual accounts on a going concern basis; e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and operating effectively; f) 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. INDEPENDENT DIRECTORS DECLARATION: Shri G.Rajan, Shri D.B.N.Rao, Shri B.Ramachandra Rao and Shri R.A.Nadesan who are independent directors, have submitted a declaration that each of them meets the criteria of independence as provided in sub-section (6) of section 149 of the Act and revised clause 49 of the listing agreement. Further, there is no change in their status as independent director during the year. RISK MANAGEMENT POLICY: The Board periodically reviews the risk management plan of the company.The Risk Management Policy facilitates in identifying the risks associated with the operations of the company and in giving suitable measures/solutions to mitigate the same. Risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. CORPORATE SOCIAL RESPONSIBILITY: As per the provisions of the Companies Act 2013, the Corporate Social Responsibility Committee was formed towards CSR Activities. Being the first year, the company took some time in ensuring that the programs were carefully chosen but, could not spend the required amount, for the reasons which are explained in detail disclosed in Annexure V to this Report. Your Company will meet the statutory compliance of 2014-15 and 2015-16 on CSR Activities during the current year 2015-16. BOARD EVALUATION: The performance evaluation of the Board, its Committees and individual directors was conducted and the same was based on questionnaire and feedback from all the Directors on the Board as a whole, committees and self-evaluation. Directors, who were designated, held separate discussions with each of the Directors of the company and obtained their feedback on overall Board effectiveness as well as each of the other directors. Based on the questionnaire and feedback, the performance of every director was evaluated in the meeting of the Nomination and Remuneration Committee (NRC) and it will be improved based on the suggestion. Important key criteria for Directors performance evaluation are as follows, Attendance at Board or Committee Meetings Contribution at Board or Committee Meetings Guidance/support to management outside Board/Committee meetings. AUDITORS: Statutory Auditors: In accordance with the provisions of Section 139 the Companies Act, 2013, and the rules framed thereunder, M/s. B. Purushottam & Co., Chartered Accountants, Chennai having Reg No: 002828S were appointed as statutory auditors of the company from the conclusion of the 32nd Annual General Meeting of the company held on 8.9.2014 till the conclusion of the 37th Annual General Meeting (AGM) to be held in the year 2019, subject to ratification of their appointment at every AGM.The Board recommend for their reappointment for the financial year 2015-16. Internal Auditor: M/s DPV & Associates, Chartered Accountants, Chennai, has been appointed as an internal auditor to conduct the internal audit for the company during the year under review. Their scope of work includes review of processes for safeguarding the assets of the company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas. Internal auditor's findings are discussed with the concerned senior officials and suitable actions taken as directed by the Audit Committee on a regular basis to improve efficiency in operations. Cost Auditor: The appointment of Cost Auditor is not mandatory as per the applicable statutory provisions Secretarial Auditor: Mr.G.Porselvam, Practicing Company Secretary Chennai has been appointed as the Secretarial Auditor to conduct the Secretarial audit for the company during the year under review. The Secretarial Audit Report provided by him, form part of this report. LISTING: The equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE). The shares are not quoted in the BSE because the criteria in terms of Minimum paid up capital and Net worth,for trading are not met by the Company. The Secretarial Auditor has mentioned in his report on non trading of Company equity shares in BSE. Your company initiated to resolve the issue or to avail SME scheme or other suitable measures upon experts advise on the issue. CORPORATE GOVERNANCE: The Company has been practicing the principles of good Corporate Governance over the years and lays strong emphasis on transparency, accountability and integrity. A separate section on Corporate Governance annexed which form part of this Annual report. PUBLIC DEPOSIT: The Company has not accepted any fixed deposits under the provisions of the Companies Act, 2013. DISCLOSURES: A. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013, read with the Companies (Accounts) Rules,2014 are given in the Annexure I and forms part of this report. B.EXTRACT OF THE ANNUAL RETURN Extract of Annual return in the prescribed Form fvlGT - 9 is given as Annexure II to this report, in terms of the requirement of section 134(3)(a) of Act 2013 read with the Companies (Accounts) Rules, 2014. C. PARTICULARS OF EMPLOYEES REMUNERATION The information required under section 197( 12) of the Act, read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished in this report. No employee had drawn remuneration during the year 2014-15 more than the amount prescribed under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. D.TRANSACTIONS WITH THE RELATED PARTIES: The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 are furnished in Form AOC-2 to this report, as Annexure III. E. DETAILS OF LOANS / GUARANTEES / INVESTMENTS MADE: The details of loans / guarantees / investments under section 186 of the Act 2013 read with (Meeting of Board and its Powers) rules 2014 for the financial year 2014-2015 are given as Annexure IV to this report. F. OTHER LAWS: During the year under review, there were no cases filed pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. There were no significant and material orders passed by the regulators or courts or tribunals affecting the going concern status and future operations of the company. ACKNOWLEDGEMENTS Your directors would like to place on record their appreciation for the guidance and support received from various departments of State and Central Governments. Banks and Financial Institutions have shown cordial understating and support and your Directors place on record their appreciation for the same Your directors also place on record their appreciation of the services rendered and co-operation extended by all the employees of the Company. The Directors also thank the investors and stake holders for their continued support to the Company. For and on behalf of the Board P. Ravi Chairman Place : Chennai Date : 12.08.2015 |