DIRECTORS REPORT Your Directors take pleasure in presenting the Thirty First Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2015 2. DIVIDEND Your company has made profits during the current year, however keeping in view the expansion/ growth plans of the company it was decided to reinvest the profits back into the company for better returns to the Shareholders in the future. 3. TRANSFER TO RESERVES During the year the Company has issued Non-Convertible Debentures amounting to Rs. 6,000 lakhs. Pursuant to the provisions of Section 71(4) of the Companies Act, 2013 the company has created a Debenture redemption Reserve of Rs. 500 lakhs out of the profits of the company for the financial year ended 31st March, 2015. 5. OPERATIONS This is covered under the topic Management Discussion and Analysis. 6. MANAGEMENT DISCUSSION AND ANALYSIS • Economy and Developments While the leading economies in the world are still reeling under a mood of pessimism and uncertainty, India is among the few resilient economies that has sustained its growth habit even though it cannot be termed as significant. But the progress over the last couple of years show that India is definitely into the path of stable recovery. The industrial sector has shown a growth in excess of 2% mainly contributed by Electricity, Coal and Cement. The Indian economy grew at more than 7 per cent in 2014-15 and Inflation has again come down to 4% levels. The Government's focus on investments in infrastructure development which is still at its nascent stage considering the magnitude of development potential and rising demand from real estate segment (especially in rural housing and Tier I and II cities) augurs well for the Cement Industry. Further the Government initiative of promoting concrete roads in place of bitumen roads would be a great impetus to the Cement Industry at the same time improve the longevity of the road infrastructure and minimal maintenance cost. The demand for Cement in India is still driven primarily by housing sector followed by Industry and lastly the Infrastructure. The vast potential for growth of Cement Industry lies in Industry and Infrastructure. With the economy showing signs of stability, it may not be far when infrastructure and Industry will be the main demand drivers for Cement Sector propelling its Annual Growth rate. Opportunities, Threats, Risks, Concerns and Outlook Cement being the backbone of any infrastructure development plays an integral part in the economic development of a nation. India is the second largest cement manufacturing country in the world but its per capita consumption of Cement at around 190 kgs is still among the lowest in the world which more than indicates the potential for this Industry to grow in our country. The local market scenario also points towards increased demand in the form of Industrial Development and Infrastructure development from the newly emerged state of Telangana. This will ensure that your company, which operates primarily in Telangana, would have a higher revenue growth rate than those of their competitors in other regions. The Management of the Company is desirous of having a broader outlook of the various areas involved in the overall progress and performance of the company, hence the management of the company has undertaken a SWOT analysis. Keeping in view the various aspects involved in the analysis, the management has identified the opportunities, threats, risks and concerns. Various opportunities identified by the Management include improving sales in Telangana and neighboring states through wider network, increasing sales volume in High realisation areas, improving sales in the institutional sector. Operational and financial efficiency is the key to sustenance in the competitive environment of Cement Industry. Your company under the new management is a pioneer in cost effective production of Cement and the improvement in cost efficiency is a continuous process which the company undertakes from year to year. Segment wise or Product Performance The Company has only one business segment and that is manufacturing and sale of cement .Given below are the variety - wise production figures for the financial year 2014-15 Internal Control System and their adequacy The Company has got an adequate system of internal control in place commensurate with the size of its operation and is properly designed to protect and safeguard the assets of the company. There is a proper system for recording all transactions which ensures that every transaction is properly authorized and executed according to norms. The company has also appointed M/s M. Bhaskara Rao & Co., Chartered Accountants as Internal Auditors to conduct the Systems and Compliance Audit of the Company. Financial Performance in comparison to Operational Performance The Company has produced a quantity of 6, 55,896 MT cement during the current financial year as compared to the previous year production of 8, 01,105 MT of cement reflecting a decrease of 18 %. The quantity of cement sold during the year under review stands at 6, 50,198 MT compared to 8, 01,020 MT during the previous financial year showing a decrease of 19% mainly due to sluggish demand. However due to the better market realization, the Gross Turnover for cement during the year under review decreased only marginally and stood at Rs. 29,147.33 lakhs as against Rs. 30,480.98 lakhs during the previous financial year, a decrease of 4.4%. But the excellent Cost and Operational management of the new Promoters coupled with financial restructuring of the organization led to the company making a Net Profit of Rs. 1,671.26 lakhs during the financial year 2014-15 as compared to a Net Loss of Rs. 1,934.84 lakhs in the previous year, signifying a growth of 186.38 % year on year. Material Development in Human Resources/Industrial Relations front, including number of people employed The Industrial relation during the current year has been cordial and contributed to mutual development. Various Seminars, counselling sessions, training etc, were conducted to improve the quality of manpower available thereby increasing the productivity and efficiency of the personnel employed in the company. The number of personnel in direct employment of the company are - 301. 7. NEW PROJECTS INSTALLATION OF PROPOSED CAPTIVE POWER PLANT The Company, keeping in view major constraints in the production process due to lack of continuous power supply, has decided to initiate the process of installing a Captive Thermal power plant at the Factory at Chintalapalem Village, Nalgonda. The capacity of the proposed Plant will be 16 MW. The Captive Thermal power plant will cater to the entire power requirement of the company at its full capacity and any surplus can be sold in the market. With a view to finance the project, the company proposes to Issue Equity Shares on Rights basis for a quantum not exceeding Rs. 75 crores. 8. ISSUE OF NON CONVERTIBLE DEBENTURES The Company had on Private Placement basis, issued and allotted 600 Secured Non-Convertible Debentures of the Face Value of Rs. 10,00,000 each at par aggregating to Rs. 60 crores on the 14th November, 2014. The said Debentures have been issued in two tranches of 300 Debentures each. Each tranche of the Debentures is redeemable after 36 months and 42 months from the Date of Allotment. In line with the provisions of the Companies Act, 2013, the Company had appointed IDBI Trusteeship Services Limited as Debenture Trustees for the said Debenture issue. The above mentioned Debentures are listed on the Bombay Stock Exchange limited 9. SHIFTING OF REGISTERED OFFICE FROM THE STATE OF HYDERABAD, TELANGANA TO MUMBAI, MAHARASHTRA. e During the year Financial Year 2014-15, the Company had initiated the process of shifting of its ce Registered Office from the State of Telangana (Hyderabad) to the State of Maharashtra (Mumbai), an in pursuance of which the company received the order from Regional Director, Southern Region, Ministry of Company Affairs dated 26th February 2015, following which the confirmation order from : the Registrar of Companies, Mumbai, Maharashtra was received on 9th June, 2015. Mumbai being a commercial hub of the country, for better client visibility and administrative convenience the above change in the Registered Office was considered to be in the best interest of the company and its stakeholders. The Registered Office address of the company pursuant to this change is as follows, 306 A, The Capital, 3rd Floor, Plot No C-70, G-Block, Bandra Kurla Complex, Bandra East, Mumbai 400051 em 10. FIXED DEPOSITS: Your Company has not accepted any deposits from the public, or its employees during the year under review and there are no outstanding Fixed Deposits at the end of the financial year 2014-15. 11. REPORT ON CORPORATE GOVERNANCE: As per the provisions of the listing agreement with the Bombay Stock Exchange where the Company's A Equity shares are listed, a report on Corporate Governance is given in Annexure - 4 to this Report. 12. STATUTORY AUDITORS: The Auditors, M/s Ramanatham & Rao, Chartered Accountants (Firm Registration No S-2934) retire at the ensuing Annual General Meeting and are eligible for reappointment. M/s Ramanatham & Rao have given their consent to act as Auditors and have confirmed that the appointment, if made, would be in compliance with Section 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014. 13. COST AUDITORS: Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its cement activity is required to be subject to Cost Audit. Your Directors have appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad to audit the cost records of the Company for the financial year 2015-16 on a remuneration of Rs. 1,75,000/- (Rupees One Lakh Seventy Five Thousand Only) lakhs. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in the Annual General meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad is placed in the ensuing Annual General Meeting. The Cost Audit Report for the Financial year 2013-14 due to be filed with Ministry of Corporate Affairs within a period of 180 days from the close of the financial year, had been filed on 27th September 2014 The Cost Audit Report for the Financial year 2014-15 would be filed within the period mentioned in the Companies (Cost Record and Audit) Rules 2014. 14. REQUIREMENT UNDER THE COMPANIES ACT, 2013 A. DIRECTORS AND KEY MANAGERIAL PERSONNEL Mrs. Geetha Muthiah resigned from the Board of the Company with effect from 20th December 2014. The Directors place on record their appreciation for the invaluable contribution and guidance provided by Mrs. Geetha Muthiah. Mr. B. Ramesh, Non- Executive Director resigned from the Board of the Company with effect from 15th April 2015. Mr. A. Subramanian was appointed as Additional Director and Managing Director of the Company with effect from 19th January 2015. Mr. A. Subramanian retires at the ensuing Annual General Meeting and a Notice has been received under Section 160 of the Companies Act 2013 proposing his re-appointment at the 31st AGM. Dr. (Mrs.) S.B Nirmalatha has been appointed as Additional Director with effect from 10th February, 2015. Dr. (Mrs.) S.B Nirmalatha retires at the ensuing Annual General Meeting and a Notice has been received under Section 160 of the Companies Act 2013 proposing her re-appointment at the 31st AGM. Mr. K.V. Vishnu Raju retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Mr. P.V.R. L Narasimha Raju retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Mr. M.L. Kumavat has been appointed as Chief Financial Officer with effect from 10th February 2015. B. DISCLOSURE AS PER SEXUAL HARRASMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013. Your company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act 2013 and the rules framed thereunder. The details of the Policy are uploaded on the website of the company. C. EXTRACT OF ANNUAL RETURN The extract of Annual Return as provided under Sub-Section (3) of Section 92 of the Companies Act, 2013 ( the "Act") is enclosed in Annexure -2 in the prescribed form MGT-9 and forms part of this Report. D. NUMBER OF MEETINGS OF THE BOARD 8 meetings of the Board of Directors of the Company were held during the year. For detail of the meetings, please refer to clause 3 of the Corporate Governance Report, which forms part of this Report. E. INDEPENDENT DIRECTORS' DECLARATION Mr. V Subramanian and Mr. P Gopal 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 Agreements. Further, there has been no change in the circumstances which may affect their status as independent director during the year. F. POLICY OF DIRECTORS' APPOINTMENT AND REMUNERATION Company's policy on Directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act are covered in clause no. 4.2 B and 4.2 C of Corporate Governance Report which forms part of this Report. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section 92(3) of the Act, is enclosed in the prescribed form MGT-9 and forms part of this Report. The Nomination and Remuneration Policy of the company is available on the company's website. G. AUDITORS AND SECRETARIAL AUDITORS REPORT There are no disqualifications, reservations or adverse remarks or disclaimers in the Auditors and Secretarial Auditors Report. The Report of the Secretarial Auditor as conducted by M/s IBH & Co, is given in Annexure-3 which forms part of this report. H. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS There have been no loans, guarantees and investments under Section 186 of the Act during the financial year 2014-15. I. RELATIONSHIP BETWEEN DIRECTORS None of the Directors are related to each other within the meaning of the term "relative" as per Section 2(77) of the Act and clause 49(VIII)(E)(2) of the revised listing agreements. J. TRANSACTIONS WITH RELATED PARTIES The Company has entered into contract / arrangements with the related parties in the ordinary course of business and on arm's length basis. Thus provisions of Section 188 of the Act are not applicable in respect of these transactions. K. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company. L. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL YEAR RELATE AND THE DATE OF THE REPORT There are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year and the date of this report M. RISK MANAGEMENT POLICY The management of the company is spearheaded by a Whole Time Managing Director and risk assessment and mitigation, forms a concurrent part of the management procedures. Periodical reviews of various operational, marketing and legal parameters affecting the company is conducted and risk management and mitigating procedures are adopted on a continuous basis. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. The overall risk tolerance is reviewed on a regular basis. N. POLICY ON CORPORATE SOCIAL RESPONSIBILITY Pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, The Corporate Social Responsibility Policy has been approved by the Board of Directors of the Company. The same is available on the website of the Company i.e. www.anjanicement.com The company is not required to spend any amount in CSR activities during the financial year 201415, as per the provisions of 135(5) of the Companies Act, 2013, on account of the average profits being negative. However the company has made contributions to the upliftment of the villages around its factory as part of its commitment towards the society. O. PARTICULARS OF REMUNERATION The information required under Section 197 of the Act and the Rules made there-under, in respect of employees of the Company, is follows:- 3. The percentage increase in the median remuneration of employees in the financial year 8.91% 4. The number of permanent employees on the rolls of company; 301 5. The explanation on the relationship between average increase in remuneration and company performance; On an average, employees received an increase of 9.58%. The increase in remuneration is in line with the market trends. 9. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. On an average, employees received an increase of 9.58%. The increase in remuneration is in line with the market trends, however due to the change in control, and change in management of the company, the percentile increase in managerial remuneration is not ascertainable. However if a comparison has to be made for the managerial remuneration paid in the year 2013-14 as compared to the managerial remuneration paid in 2014-15 there has been a decrease of 1.23% 11. The key parameters for any variable component of remuneration availed by the directors; Members at the AGM of the Company held on 10th September, 2014 approved payment of remuneration by way of commission to the Managing Director within the ceiling of 5% of the net profits of the Company as computed under the applicable provisions of the Companies Act 2013 12. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; Not applicable. 13. Affirmation that the remuneration is as per the remuneration policy of the Company The Company affirms that remuneration is as per the remuneration policy of the Company. P FORM FOR DISCLOSURE OF PARTICULARS OF ONTRACTS/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 ARM'S LENGTH TRANSACTIONS UNDER THIRD PROVISO THERETO. All related party transactions entered into by the company are on arm's length basis and it has not entered into any material contracts or arrangements or transactions with related parties. Q. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY REGULATORS, COURTS, TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN THE FUTURE There is no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations. R. BOARD EVALUATION The Board evaluated the performance of the Board, Committees and Individual Directors based on the under mentioned parameters EVALUATION OF THE BOARD • Development of suitable strategies and business plans at appropriate time and its effectiveness; • Implementation of robust policies and procedures; • Size, structure and expertise of the Board; • Overview of the Financial Reporting Process, including Internal Controls; • Willingness to spend time and effort to learn about the Company and its business; and • Awareness about the latest developments in the areas such as corporate governance framework, financial reporting, industry and market conditions. EVALUATION OF THE COMMITTEES • Discharge of its functions and duties as per its terms of reference; • Process and procedures followed for discharging its functions; • Effectiveness of suggestions and recommendations received; • Size, structure and expertise of the Committee; and • Conduct of its meetings and procedures followed in this regard. EVALUATION OF THE INDIVIDUAL DIRECTORS The performance evaluation of the Director mentioned below was done by the entire Board excluding the person being evaluated. • Display of leadership qualities i.e. correctly anticipating business trends, opportunities, and priorities affecting the Company's prosperity and operations; • Establishment of an effective organization structure to ensure that there is management focus on key functions necessary for the organization to align with its mission; and • Managing relationships with the Board, management team, regulators, bankers, industry representatives and other stakeholders • Participation at the Board / Committee meetings; • Commitment (including guidance provided to senior management outside of Board/ Committee meetings); • Effective deployment of knowledge and expertise; • Integrity and maintaining of confidentiality; • Independence of behaviour and judgment; S. STATEMENT PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31, 2015. There are no employees in the Company falling within the definition mentioned above T. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars as prescribed under 134 (3)(m) of the Companies Act, 2013 and the Rules prescribed thereunder are set out in Annexure -1 to this report. U. SUBSIDIARY COMPANIES: Your company has no subsidiaries within the meaning of Section 2(6) of the Companies Act, 2013. V. DIRECTORS RESPONSIBILITY STATEMENT: As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same. b) Appropriate accounting policies have been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for the period; c) 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; and d) The annual accounts have been prepared on a going concern basis. e) Appropriate Internal Financial Controls have been laid down and followed and such internal financial controls are adequate and operating effectively. f) Proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. 15 CAUTIONARY STATEMENT: Statements made in this report, including those stated under the caption "Management Discussion and Analysis" describing the company's objectives, expectations or projections may constitute "forward looking statements" within the meaning of applicable securities laws and regulations. Important factors that could influence Company's operations include global and domestic supply and demand conditions affecting the selling price of finished goods, availability of inputs and their prices, changes in government regulations, tax laws, economic developments within the country and outside and other factors such as litigations and Industrial relations. The Company assumes no responsibilities in respect of the forward looking statements which may undergo changes in the future on the basis of subsequent developments, information or events. 16. ACKNOWLEDGEMENT: The Board of Directors wish to thank all the shareholders statutory bodies and departments of the State and Central Government and Bankers, Suppliers, Customers and all employees for their valuable support to the company. On Behalf of the Board of Directors A. Subramanian Managing Director V. Subramanian Director Date: 5th August 2015 Place: Chennai |