DIRECTORS' REPORT TO THE MEMBERS Dear Members, Your Directors have pleasure in presenting their 32nd Annual Report for the Financial Year 2014-15 together with the Audited Balance Sheet as at 31st March, 2015 and the Profit & Loss Account for the year ended on that date Operations: The Financial year 2014-15, is proved a profitable year for the Company. Inspite the Company has suffered loss in the previous years, it manages to come strongly this year due to its ability to innovate its customer specific solutions, and the rigor in following strong internal processes. Company still manages to continue its strong growth momentum across major markets. Revenue growth in the year remained high. The Operating profit get increased and thereby increasing the net profit. The Overall revenue for the year 2014-2015 at Rs. 15410.17 Lakhs is higher by 22.14% (Rs. 12616.48 lakhs in 2013-2014), operating profit at 1044.32 lakhs is higher by 150.62% (Rs. -2063.05 Lakhs in 2013-2014) and the net profit for the year at Rs. 1886.55 Lakhs is higher by 204.55% (Rs. -1804.45 Lakhs in 2013-2014) Cement Division: Production of Cement and Clinker were 3,88,946 MTS and 3,72,780 MTS respectively during the twelve months ended 31st March, 2015 as against 3,95,268 MTS and 3,54,323 MTS respectively during the previous year. During the year under review 65% of the installed capacity of the Company was utilized. Wind Power: The Company has generated 29,48,120 units as against 35, 36,160 units during the previous year. Electronic Division: The Company has produced 1838 sq.mts of Printed Circuit Boards as against 2028 sq.mts during the previous year. Future prospects: CEMENT DIVISION: India's potential in infrastructure is vast and cement plays a vital role in the growth and development of the nation. India is the second largest producer of cement in the world. The cement industry has been expanding on the back of increasing infrastructure activities and demand from housing sector over the past many years. An investment allowance for infrastructure projects of Rs. 100 crore (US$ 16.05 million) and above has also been announced by the Government. In addition, cement production in India is expected to touch 407 million tonnes (MT) by 2020. As compared to the previous year when there was sudden burst in capacity expansion in the industry situated in southern region coupled with low demand growth led to fierce competition for market share which resulted in prices dropping to unremunerative levels, the situation is very good this year. The Company also continues to concentrate on cost reduction measures in all areas of production and distribution to protect and improve its profitability. However, exorbitant increase in input prices and frequent power holidays are the major constraints to sustain in the market. However, with the bifurcation of Andhra Pradesh into state of Telangana and residuary state of Andhra Pradesh, the construction of new capital and other development measures of both the states as specified in the Andhra Pradesh Reorganization Act 2013 shall spurt enormous demand for the cement and other infrastructure related products. As such, the coming year's performance is estimated to be good. Despite of few adverse conditions, your Directors are hopeful that the performance of the company would achieve satisfactory level. ELECTRONIC DIVISION: The improvement shown in the sales turn over of electronics division is satisfactory. Development of prototypes for new customers in the high-end automobile segment was done during the year. The division expects to improve its customer base in the automobile segment in the years to come. Supply of PCBs for Konkurs missile program is completed for the existing requirements and development of flexi cables for Invar missile program is underway. The division is exploring further opportunities in the defense sector to improve business in the near future. The division was identified as one of the potential vendors for developing Gas Electron Multiplier (GEM) foils by European Organization for Nuclear Research (CERN) for their Compact Muon Solenoid (CMS) division. Senior Executives of your company visited CERN, Switzerland during the year on CERN's invitation, for discussions. GEM foils are expected to be developed by electronics division in a time frame of two years. Apart from their present use in scientific experiments at CERN, GEMs are likely to find applications in medical imaging and other areas. SUGAR DIVISION: In view of the adverse market for sugar industry and since there is no progress in the division in particular, effective steps could not take be taken for furtherance of the business. DIRECTORS: a) In accordance with the provisions of Companies Act, 2013, Sri. J Sivarama Prasad Non Executive Director of the Company would retire by rotation and, being eligible, offer himself for re-appointment. b) In view of new legislative changes, the shareholders have reappointed Sri E Siva sankaram, Sri BV Subbaiah and Sri K Harishchandra Prasad non executive directors as Independent directors of the Company in the previous Annual General meeting in accordance with Section 149 of the Companies Act, 2013 and clause 49 of the listing agreement for a period of five years. c) Smt. J. Triveni has been appointed as Executive Chairperson and Whole-time Director for a period of 3 years and Sri. J. S. Rao has been appointed as Managing Director for a period of 3 years vides postal ballot resolution dated 23rd April, 2015. They shall be liable to retire by rotation. d) As required under Section 134 (3) (d) of the Companies Act, 2013, All independent directors have given declarations 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. e) Other Disclosure Board Evaluation Pursuant to Section 134 (3) (p) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Meetings During the year Five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DETAILS OF KEY MANAGERIAL PERSONAL (KMP) During the period under review, Sri. Y. Venkateswara Rao DGM (Accounts) has been appointed as Chief Financial Officer of the Company w.e.f. 31st March, 2015. Sri. R. Srinivasa Rao, Company Secretary has, owing to seeking of extended opportunities in his career, tendered his resignation w.e.f. 2nd April, 2015. Mr. Rajesh Kumar Yadav has been appointed as Company Secretary & Compliance Officer w.e.f. 29th May, 2015. DIVIDEND: In view of inadequate profits, your Board could not recommend any dividend for the financial year 2014-2015. SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY: There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company's future operations. POSTAL BALLOT During the period under review, the Company has successfully completed the process of obtaining approval of its Members on 23rd April, 2015 on the following resolution through Postal Ballots: (i). Extension of date of redemption of 770100 - 9% cumulative redeemable preferential shares of Rs. 100/- each by 5 (five) more years In respect of first tranche of 500000 redeemable preferential shares, the existing 12th and 13th year of redemption has been deferred to till 17th and 18th Years from the date of allotment and in respect of 2,70,100 redeemable shares, the existing 11th, 12th and 13th year of redemption has been deferred to till 16th, 17th and 18th Years from the date of allotment through postal ballot resolution agreed by the preferential shareholder i.e Hyderabad Bottling company Ltd on 23rd April, 2015. The Company through postal ballot resolution has extended the period to 5 more years. (ii). Approval of Borrowing limits of the Company The Company has, in suppression of the earlier resolution, approved the borrowing limits upto 400 Crore by special resolution passed under Section 180(1)(c) of the Companies Act, 2013. (iii). Creation of Charges on the assets of the Company The Company has, in suppression of the earlier resolution, assented to create charge, mortgage or hypothecation on such movable and immovable properties for securing borrowing for the purpose of business of the Company, by special resolution passed under Section 180(1)(c) of the Companies Act, 2013,. (iv). Ratification of remuneration of Cost Auditor In accordance with Section 148 of the Companies Act, 2013 and Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the shareholders had ratified the remuneration so payable to the Cost Auditors. (v). Re-appointment and fixation of remuneration of Smt. J. Triveni as Executive Chairperson and Whole time Director. The shareholders has approved the re-appointment of Smt. J. Triveni as Executive Chairperson and Whole time Director for a period of 3 years w.e.f. 10th May, 2015 on the terms and condition as laid down in the Notice of Postal Ballot. (vi). Re-appointment and fixation of remuneration of Sri. J. S. Rao as Managing Director. The shareholders have approved the re-appointment of Sri. J. S. Rao as Managing Director for a period of 3 years w.e.f. 10th May, 2015 on the terms and condition as laid down in the Notice of Postal Ballot. DEMAT OF SHARES: The Equity Shares of your Company have been admitted by CDSL/NSDL for dematerialization. All the Shareholders whose shares are in physical mode are requested to dematerialize their share holding through their depository participants so that it will improve the liquidity of our stock. The Board pleased to inform that in compliance with clause 5A of the listing agreement entered with Bombay Stock Exchange Limited, the unclaimed equity shares were dematerialized and the same are lying in the DEMAT suspense account. Shareholders are requested to claim their shares in DEMAT form by submitting their claims to the Company/ RTA. DIRECTORS' RESPONSIBILITY STATEMENT: In pursuance of Section 134(5) of the Companies Act, 2013, your directors confirm: (a) That the directors in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures. (b) That 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 and of the profit and loss of the Company for that period. (c) That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safe guarding the assets of the company and for preventing and deleting fraud and other irregularities. (d) That the directors had prepared the annual accounts on the going concern basis. (e) That the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. (f) That 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. PUBLIC DEPOSITS: Your Company has not accepted any deposits within the meaning of Section 73 or 74 of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were in the ordinary course of the business. The material significant related party transactions made by the company with Promoters, Key Managerial Personnel or other persons has been discussed in this report elsewhere. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is finalized and professional mandate is yet to be issued. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Chairperson & Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Conduct for Prevention of unfair Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. COST AUDITORS: Cost Audit records have been maintained by the company for the F.Y.2014-15. Pursuant to the directives of the Central Government and provisions of Section 148 of the Companies Act, 2013, qualified Cost Auditors have been appointed to conduct the cost audit for the F.Y.2014-15. REPLY TO AUDITOR'S COMMENT: Regarding Auditor's emphasis matter on confirmation of balances from Sundry Debtors, Sundry Creditors and for Loans and Advances, the same were subsequently collected, adjusted and paid. AUDITORS: M/s. K.S. Rao & Co., Chartered Accountants, Hyderabad, the present Auditors, has been appointed for three consecutive years (Subject to the ratification by the shareholders at each AGM held after the previous AGM) by the shareholders at the previous AGM. The Board of Directors recommends the ratification of appointment of M/s. K.S. Rao & Co., Chartered Accountants, at the ensuing Annual General Meeting. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES: Your company has been contributing generously for upliftment of poor and needy people within and immediate vicinity of the factory for their development in education, cultural, vocational and philanthropic activities. Moreover, your company has been providing on job training to students of Engineering collages at free of cost. As the company has been incurring losses for the last two years, the rules in connection with spending of money on specified projects under corporate social responsibility rules as envisaged under section 135 of the Companies Act, 2013 are not applicable to the Company. As a listed company, necessary measures have been taken to comply with the listing agreements of Stock Exchanges. The Annual Report on CSR activities is annexed herewith as: (Annexure C) SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s VCSR & Associates, Company Secretaries in Whole-time Practice, to carry out Secretarial Audit for the financial year 2015. The Secretarial Audit report is annexed herewith as "(Annexure D)" & "(Annexure D1)" EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "(Annexure E)". HEALTH AND SAFETY/ INDUSTRIAL RELATIONS: The company continues to accord high priority to health and safety of employees at manufacturing locations. During the year under review, the company conducted safety training programmes for increasing disaster preparedness and awareness among all employees at the plants. Training programmes and mock drills for safety awareness were also conducted for all employees at the plants. Safety Day was observed with safety competition programmes with aim to imbibe safety awareness among the employees at the plant. During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. ADDITIONAL INFORMATION: Information pursuant to Section 134 (3) (l) & (m) of the Companies Act, 2013 is annexed herewith as (Annexure B), which is detailed in Form A and Form B. RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a risk management committee on is Board Meeting held on 29th May, 2015. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. At present the company has not identified any element of risk which may threaten the existence of the company. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as separate Annexures, together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. ACKNOWLEDGEMENTS: Your Directors are thankful to Canara Bank, Somajiguda Branch, Andhra Bank, SCF Branch and Indian Bank, Main Branch, Koti for their continued support during the year under review and acknowledge with gratitude the help extended by the Central Government and Government of Telangana & Andhra Pradesh. Your directors also wish to place on record their appreciation of the services rendered and co-operation extended by the Workmen, Staff, Dealers, Customers and other concerned. By Order of the Board of Directors Sd/-(J. Triveni) Executive Chairperson Place: Hyderabad Date: 29-05-2015 |