DIRECTORS' REPORT DEAR MEMBERS, The Directors present the 57th Annual Report, Audited Accounts and Auditors Report for the Financial Year ended on the 31st of March, 2015. THE YEAR UNDER REVIEW The economy and cement production showed signs of improvement. The cement production during 2014-15 grew by about 5.6 percent as against less than 4 percent during the previous year. Similarly, consumption of cement in our home market of Gujarat increased by about 6 percent resulting in improved sales and prices, profitability as compared to the previous year. The international prices of coal were lower than previous year. However the taxes by way of Royalties on minerals, excise duties and sales tax continued to be high and further increased in the budget of 2014-15. Additional Customs duty and CVD was also imposed on coal imports. PERFORMANCE REVIEW Production and Sales The production of clinker for the year ended March 2015 was 1.32 million tonnes, which is 107 percent of the rated capacity of the production unit and is also more than clinker production of 1.31 million tonnes for the year ended in March, 2014. The cement production for the year ended March, 2015 was 1.47 million tonnes, which is higher by 11 percent than the cement production of 1.33 million tonnes in the previous year ended in March 2014. The overall sale (cement and clinker) during the year ended March 2015 was 1.48 million tonnes, which is higher than the overall sale of 1.46 million tonnes in the previous year ended in March 2014. Exports The export of cement for the year ended March 2015 was 0.207 million tonnes, which is almost similar to 0.213 million tonnes during the previous year ended in March 2014. However, the export of clinker was nil as compared to the previous year of 0.193 million tonnes. DIVIDEND In view of the carry forward losses, your Directors do not recommend any Dividend for the year. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report on the Operations of the Company is provided in a separate section and forms a part of this Report as Annexure A. Consolidated Financial Statements As required under Clause 32 of the Listing Agreement with the Stock Exchange and Section 136 of the Companies Act, 2013, the Consolidated Financial Statement has been prepared by the Company in accordance with the requirements of Accounting Standard 21 'Consolidated Financial Statements' issued by 'The Institute of Chartered Accountants of India'. The Audited Consolidated Financial Statements together with Auditors' Report thereon forms a part of the Annual Report. The Consolidated Net Profits of the Company and its subsidiaries amounted to Rs. 6760.82 lacs for the Financial year ending 31st March, 2015. SUBSIDIARY COMPANIES The Company has five subsidiaries. Section 136 of the Companies Act 2013 has exempted the listed companies from attaching the financial statements of the Subsidiary companies to the Annual Report of the company. In accordance with Section 129(3) of the Companies Act, 2013 read with the rules made thereunder; statement containing the salient features of the Financial Statement of the Company's Subsidiary Companies is disclosed separately in this Annual Report under Form AOC 1. The Company will make available the Annual Accounts of the subsidiary companies to any member on their request and shall also be kept open for inspection by any member at the Registered office of the Company. The statements are also available at the website of the company at http://scl-mehtagroup.com/investors/financials. Directors' Responsibility Statement To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 (3) (c) of the Companies Act, 2013. (a) that in the preparation of the annual financial statements for the year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; if any; (b) that the accounting policies as mentioned in Note No.1 to the Financial statements have been selected and applied consistently and judgments 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 at the end of the financial year and of the profit and loss of the Company for that period; (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 a going concern basis; (e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and (f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Corporate Governance A separate report on the Compliance with Clause 49 of the Listing Agreement with the Stock Exchanges on Corporate Governance along with a Certificate of Compliance from the Statutory Auditors forms a part of this Report as Annexure B. The Company is committed to maintain the highest standards of Corporate Governance and adhere to Corporate Governance requirements set out by SEBI. The report on Corporate Governance as stipulated under clause 49 of the Listing Agreement forms an integral part of this Report. Also a certificate of Compliance from the Auditors of the Company confirming compliance with the conditions of Corporate Governance forms a part of this Report. A declaration by CEO and CFO that Board and senior members have complied with the Code of Conduct of the Company also forms a part of this Report. RELATED PARTY TRANSACTIONS All related party transactions are on arms length basis at prevailing market prices. The other details as required under Clause 49 of the Listing Agreement and Section 134 (3) of the Companies Act, 2013 as detailed in the Corporate Governance report. Particulars of Contracts or Arrangements with Related Parties: The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto is Annexed herewith at Annexure C in Form No. AOC-2. CORPORATE SOCIAL RESPONSIBILITY The Company has been committed towards various social measures and has taken initiatives to cater to the needs of the society. Pursuant to introduction of Section 135 of the Companies Act, 2013 and the rules made thereunder the Company has constituted a CSR committee. The Board of Directors have based on the recommendation of the committee, formulated a Corporate Social Responsibility Policy for welfare ofthe society. The policy is available atthe following link: http://scl.mehtagroup.com/policy/csr-policy. In view ofthe carryforward losses, the Company was not required to spend on the Corporate Social Responsibility activities under Section 135 ofthe Companies Act, 2013. The constitution and functions of the Corporate Social Responsibility Committee are provided under the Corporate Governance Report. Company has taken certain initiatives under Corporate Social responsibility (though not required under Section 135 ofthe Companies Act, 2013) and the same have been detailed under the Management Discussion and Analysis Report. RISK MANAGEMENT A formal Risk Management System is being implemented on an Enterprise Risk Management (ERM) as a part of strengthening and institutionalizing the decision making process and monitoring the exposures that are faced by the Company. Managing Risk is a skill that is sought to be strengthened through this process and an effort at making decision making more consistent in a way that the business objectives are met most of the times. The ERM process seeks to provide greater confidence to the decision maker and thus enhance achievement of Objectives. Pursuant to the requirements of Clause 49 of the Listing Agreement the Company has constituted a Risk Management Committee and has also adopted a Risk Management Policy, the constitution ofthe committee along with principles pertaining to the management of risk are set out in the Corporate Governance Report of the Company. DIRECTORS AND KEY MANAGEMENT PERSONNEL Appointment During the year, India Debt Management Private Limited nominated Mr. Navin Sambtani (DIN: 01811472) as their Nominee on the Board of the Company who was appointed as a Nominee Director with effect from 6.11.2014. Cessation of Directors Mr. Denys Firth (DIN: 00031942) and Mr. Susheel Kak (DIN:03612592) Nominee Directors of India Debt Management Private Limited (IDM) resigned from the Board of the Company as IDM had withdrawn their nomination during the year and ceases to be the Directors. Mr. Alexander Shaik (DIN: 00031975) and Mr. Navin Sambtani (DIN:01811472) Nominee Directors of India Debt Management Private Limited (IDM) resigned from the Board ofthe Company as IDM had withdrawn their nomination with effect from 12th May, 2015 and ceases to be the Directors as the Company has repaid all outstanding dues to IDM under various loans and other debt instruments. The Board has placed on record its appreciation for the contribution made by the above Directors. Reappointment of Directors In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Hemnabh Khatau (DIN: 02390064), will retire by rotation at the ensuing Annual General Meeting and being eligible, offer himself for reappointment. Brief resume of Director seeking reappointment along with other details as stipulated under Clause 49 of the Listing Agreement, are provided in the Notice for convening the Annual General Meeting. The Board of Directors at its meeting held on 14th May, 2015, has reappointed Mr. Jay Mehta as Executive Vice Chairman and Mr. M. S. Gilotra as Managing Director for a further period of five years from 1st January, 2016 to31st December, 2020 and remuneration payable over a period of 3 years from 1st January, 2016 to 31st December, 2018, subject to the approval of the Members and the Central Government. The resolutions seeking approval of the Members for the appointment and remuneration of Mr. Jay Mehta and Mr. M. S. Gilotra have been incorporated in the Notice of the forthcoming Annual General Meeting of the Company along with brief details about them. The Board recommends their re appointments. Board Evaluation : In accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors evaluated the performance ofthe Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of the Board as a whole based on various criteria. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory. Declaration by Independent directors All the Independent Directors have furnished declarations stating that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Appointment / Change in Key Management Personnel : Mr. M. S. Gilotra, Managing Director ofthe Company was also designated as Key Managerial Personnel with effect from 1st October, 2014. Mr. Rakesh Mehta was appointed as Chief Financial Officer of the Company with effect from 1st October, 2014. Ms. Anupama Pai was appointed as Vice President (Legal) and Company Secretary of the Company with effect from 1st October, 2014 and resigned with effectfrom 30th November, 2014. Ms. Sonali Sanas was appointed as Vice President (Legal) and Company Secretary of the Company with effect from 2nd March, 2015. AUDITORS AND AUDITORS REPORT Statutory Auditors: M/s. Bansi S. Mehta & Co, Chartered Accountants, the Statutory Auditors of the Company, who hold office upto the conclusion of the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013 who are eligible for re-appointment are recommended for re-appointment to audit the Accounts of the Company for the Financial Year 2015-16. As required under the provisions of the Companies Act, 2013, the Company has received written confirmation from M/s. Bansi S. Mehta & Co, Chartered Accountants that their appointment, if made, will be in conformity with the limits specified in the Section 143(1)(g) of the Companies Act, 2013. Secretarial Auditors M/s Ragini Chokshi & Company, Practicing Company Secretaries were appointed by the Board of Directors as the Secretarial Auditor of the Company to carry out Secretarial Audit under the provisions of Section 204 ofthe Companies Act, 2013 for the Financial Year 2014-15. The report of the Secretarial Auditor is annexed as Annexure D to this report. The Board of Directors of the Company on the recommendation of the Audit Committee appointed M/s. Ragini Chokshi & Company, Practicing Company Secretaries as Secretarial Auditor of the Company for the Financial Year 2015-16. Tax Auditors The Board of Directors on the recommendation of the Audit Committee appointed M/s. Bansi S. Mehta & Co, Chartered Accountants to carry out the Tax Audit for the Assessment Year 2015-16. Internal Auditors: The Board of Directors on the recommendation of the Audit Committee appointed M/s. Haribhakti & Co. LLP Chartered Accountants, to carry out the Internal Audit of the Company for the Financial Year 2015-16. Cost Auditors In accordance with the provisions of Section 148 of the Companies Act, 2013, M/s. V. J. Talati & Co, Cost Accountants, have been appointed by the Board as Cost Auditor of the Company for the Financial Year 2015-16 and a certificate of eligibility under Section 148 of the Companies Act, 2013 has been received. DISCLOSURES: Audit Committee The Company has an Audit Committee and details of its constitution, terms of reference are set out in the Corporate Governance Report. Nomination & Remuneration Committee and Policy The Company has a Nomination & Remuneration Committee and has also adopted Nomination & Remuneration Charter and Remuneration/Compensation Policy. The constitution of the Committee along with the terms of reference to the Committee and are set out in the Corporate Governance Report. Vigil Mechanism The Company has established a Vigil Mechanism / Whistle Blower Policy and the directors and employees of the Company can approach the Audit Committee when they suspect or observe unethical practices, malpractices, non-compliances ofcompany policies. Number of Board Meetings During the year under review, four meetings ofthe Board of Directors were held on 30th May, 2014, 4th August, 2014, 6th November, 2014 and 9th February, 2015. Energy Conservation, Technology Absorption & Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134 (3) of the Companies Act, 2013 are provided in Annexure E forming a part of this Report. Extract of the Annual Return The extract of the Annual Return in Form No. MGT - 9 forms a part of this report as Annexure F. Particulars of Employees The disclosures in terms ofthe provisions of Section 197 read with rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014forms a part of this report as Annexure G. Sexual Harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013 The Company has in place, a formal policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace. Detailed note is set out in the Corporate Governance report. There were no cases filed under this act during this financial year. GENERAL Listing of Equity Shares The Company's equity shares are listed on the Bombay Stock Exchange Ltd (BSE). Listing fees have been paid up to 31st March, 2016. Staff Relations Industrial relations at our Factory and Offices remained cordial. Deposits The Company has not invited and/or accepted any deposits, during the year. There are no deposits unpaid or unclaimed as at the end of the year. There has been no default in repayment of deposits or payment of interest thereon during the year. Acknowledgement The Directors wish to thank the Honourable Board of Industrial & Financial Reconstruction (BIFR), the Honourable Appellate Authority for Industrial & Financial Reconstruction (AAIFR), Central Government, Government of Gujarat, Financial Institutions, particularly India Debt Management Pvt. Ltd., Bankers, Shareholders, Employees, Stockists, Dealers and all other stakeholders associated with its operations for the co-operation and encouragement extended to the company. On behalf of the Board of Directors M. S. Gilotra Managing Director Jay Mehta Executive Vice Chairman Place: Mumbai Dated : 14th May, 2015 |