BOARD'S REPORT Your Directors have pleasure in presenting their 51st Annual Report and the Audited Accounts of the Company for the year ended 31st March 2016. SHARE CAPITAL The paid-up capital of the Company is Rs. 8,66,63,060/- consisting of 8,66,63,060 shares of Rs.1/- each. DIVIDEND Your Directors at the Board Meeting held on 11-03-2016 have approved payment of Interim Dividend of Rs. 0.50/- per share on the Equity Capital of the Company. Your Directors recommend this to be the final dividend for the year. For the previous year, the Company had paid a dividend of Rs. 0.30/- per share. The total dividend for the year amounts to Rs. 433.32 lakhs as against Rs. 260 lakhs for the previous year. TAXATION An amount of Rs. 1.39 crore towards Current Tax and Rs. 7.07 crore towards reversal of Deferred Tax has been provided for the year under review. MANAGEMENT DISCUSSION AND ANALYSIS REPORT REVIEW OF OPERATION AND CURRENT TREDS (a) Fibre Cernent (FC) Sheets : During the year under review, the Sales quantity of FC Sheets de-grown by around 6% compared to previous year. Revival in demand pattern was increased by 7% in Eastern part of the country whereas the demand pattern in the rest of India remained sluggish. Decrease in volume could be attributed to poor monsoon in the year resulting in lower demand in retail sales. Moreover, net realisation decreased due to high transport costs for movements of materials from Plants located in South India to high demand areas in the North and East of the Country. Union Government's initiatives on Rural development and Prime Minister's Swachh Bharat Abhiyan scheme will be boost for fibre cernent products and trend may continue. Promotional efforts are vigorously taken to explore new potential areas with more customized products. (b) Calcium Silicate Boards (CSBs): Efforts are taken to increase Production and Sales during the year under review. New variants with superior features were well received in the Market. Persistent steps are being taken to improve the market of CSB in domestic and abroad. While there has been increase in production compared to last year, Sales also have been increased compared to last year. (c) Cernent Clinker Grinding (CCG) Plant at Kharagpur, West Bengal : The Plant had produced 1,16,077 M.T. of Cement during the year under review as against 1,37,867 M.T. of Cement during the previous year. Similarly, Sale of Cement also decreased from 1,37,398 M.T. during the last year to 1,17,137 M.T. during 2015-16. (d) Fibre Cernent Pressure Pipes: Operations of Pressure Pipes continued to be under pressure owing to the sluggish market. The Union Government's infrastructure initiatives are expected to increase the sale of this product. B. WINDMILLS: During the Financial Year 2015-16, the Wind energy was low compared to last year, from the existing 15 Wind Mills. Position regarding Wind Mills was as follows:- Total Capacity Installed : 16.73 MW Total Units generated : 214 lakh Units (P.Y: 244 lakh Units) Income earned : Rs. 1,198 lakhs (P.Y: X 1,330 lakhs) (by generation/sale of power) C. COTTON YARN DIVISION - SRI RAMCO SPINNERS: Production and Sales: During the year 2015-16, the Unit had produced 30.54 lakh Kgs. of Cotton Yarn as compared to 30.28 lakh Kgs. produced during the previous year. The Unit had registered its sale of Yarn at 34.31 lakh Kgs. (including traded yarn) during the year under review as against 30.81 lakh Kgs. during 2014-15. During the year under review, the performance of the Cotton yarn division was good when compared to previous year. The reduction in yarn selling price was partially offset by the reduction in cotton price. With the moderation in cotton prices & stability in yarn prices, your Directors are hopeful in achieving satisfactory results during the year 2016-17. D. OVERSEAS OPERATIONS OF SUBSIDIARIES - SRI RAMCO LANKA (PRIVATE) LIMITED AND SRI RAMCO ROOFINGS LANKA (PRIVATE) LIMITED, SRI LANKA : The production of FC plant of Sri Ramco Roofings Lanka (Private) Limited (SRRLPL), which commenced commercial production in 2012, was 59,732 M.T. and Sales was 61,371 M.T. during the year under review, compared to 49,729 M.T. and 48,776 M.T. of last year. In the backdrop of adverse conditions there is a considerable increase in Production by 19% and Sales by 26% against previous year. At a Consolidated level of both the Companies, the Net Sales were SLR 37,384 lakhs (INR 16,615 lakhs) as against SLR 30,872 lakhs (INR 14,408 lakhs) during the corresponding previous year. In accordance with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the Financial Statements of the subsidiaries is attached in Form AOC-1 as Annexure -1 to the Board's Report. The Company proposes to transfer an amount of Rs. 500 lakhs to the General Reserves. An amount of Rs. 5,580 lakhs is proposed to be retained in the statement of Profit and Loss. CONSOLIDATED FINANCIAL STATEMENTS: As per provisions of Section 129(3) of the Companies Act,2013 and Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI(LODR)], Companies are required to prepare Consolidated Financial Statements of its Subsidiaries and Associates to be laid before the Annual General Meeting of the Company. Accordingly, the Consolidated financial Statements incorporating the accounts of Subsidiary Companies viz. (a) M/s. Sudharsanam Investments Limited, (b) Sri Ramco Lanka (Private) Limited, Sri Lanka and (c) Sri Ramco Roofings Lanka (Private) Limited, Sri Lanka and Associate Company viz. The Ramco Cements Limited along with Auditors' Report thereon, forms part of this Annual Report. The Annual Report containing the Audited Statement of Accounts for the Subsidiary Companies and Associate Company are available at the Company's website at the following link at <http://www.ramcoindltd.com/financial-performance.aspx> The Consolidated net profit of the Company amounted to Rs. 57.84 crore for the year ended 31st March, 2016 as compared to Rs. 36.22 crore of the previous year. DIRECTORS: Shri. P.R Venketrama Raja, was re-appointed as Vice Chairman and Managing Director(VCMD) of the Company for a period of 3 years starting from 01-04-2014 to 31-03-2017 at the Annual General Meeting held on 28-07-2014. Based on the recommendation of the Nomination and Remuneration Committee made at its meeting held on 19-05-2016, the Board of Directors at their meeting held on 20-05-2016 have re-appointed him as Vice Chairman and Managing Director of the Company for a further period of 3 years starting from 01-04-2017. Approval of the members has been sought for his re-appointment and remuneration payable in the Notice convening 51st Annual General Meeting. In accordance with the provisions of the Companies Act, 2013 and the Company's Articles of Association, Shri P R Ramasubrahmaneya Rajha (DIN: 00331357), Director, retires by rotation and is eligible for re-election. The Independent Directors hold office for a fixed term of 5 years and not liable to retire by rotation. No Independent Director has retired during the year. Pursuant to Rule 8 (5) (iii) of Companies (Accounts) Rules, 2014 it is reported that, other than the above, there have been no changes in the Directors or Key Managerial Personnel during the year. The Company has received necessary declarations from all the Independent Directors of the Company under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. All the three members of the Audit Committee are Independent Directors. Pursuant to Section 177(8) of the Companies Act, 2013 it is reported that there has not been an occasion, where the Board had not accepted any recommendation of the Audit Committee. In accordance with Section 178(3) of the Companies Act, 2013 and based upon the recommendation of the Nomination and Remuneration Committee, the Board of Directors has approved a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and Other Employees. The objective of the Nomination and Remuneration Policy is to ensure that the level and composition of remuneration is reasonable, the relationship of remuneration to performance is clear and appropriate to the long term goals of the Company. As required under Regulation 25(7) of SEBI (LODR) Regulations, the Company has programmes for Familiarisation for Independent Directors about the nature of the Industry, Business model, roles, rights and responsibilities of Independent Directors and other relevant information. As required under Regulation 46(2) of SEBI (LODR) Regulations the details of the Familiarisation Programme for Independent Directors are available at the Company's website, at the following link at <http://www.ramcoindltd.com/Familiarisation.aspx>. The details of the familiarization programme are explained in the Corporate Governance Report also. BOARD EVALUATION Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Regulation 17(10) of SEBI (LODR) Regulations, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters. Pursuant to Schedule II, Part D of SEBI (LODR) Regulations,the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of reappointment of Independent Director. MEETINGS The Board of Directors met five times during this financial year, the details of meetings of the Board and its various Committees are given in the Corporate Governance Report. PUBLIC DEPOSITS The Company had no fixed deposits. The Company has decided not to accept fresh deposits from 01.04.2014 and to avail the option provided under Section 74 of the Companies Act, 2013 and repaid all the existing deposits together with the accrued interest thereon by complying with the formalities required in this regard during the last year. ORDERS PASSED BYTHE REGULATORS Pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules, 2014, it is reported that no significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations in future. INTERNAL FINANCIAL CONTROLS In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls Policy by means of Policies and Procedures commensurate with the size & nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Details of Loans, Guarantees and Investments covered under the provisions of Section 186(4) of the Companies Act, 2013 are provided under Note No. 17(14), 17(17) and 17(18) respectively of Notes forming part of Standalone Financial Statements. AUDITS STATUTORY AUDIT At the 49th Annual General Meeting held on 28.07.2014 M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants and M/s. CNGSN & Associates LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company for three consecutive years being their remaining eligible period in terms of Rule 6 of Companies (Audit and Auditors) Rules, 2014. The matter relating to their appointaient for the third year of their term is being placed before the Members for ratification at the ensuing Annual General Meeting in accordance with requirements of Section 139(1) of the Companies Act, 2013. The Auditors have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Companies Act, 2013 and that they are not disqualified for re-appointment. The report of the Statutory Auditors for the year ended 31st March, 2016 does not contain any qualification, reservation or adverse remark. COST AUDIT The Board of Directors had approved the appointment of M/s.Geeyes & Co., Cost Accountants as the Cost Auditors of the Company to audit the Company's Cost Records relating to manufacture of Fibre Cement Products (FCP) & Calcium Silicate Boards (CSB), Cement Clinker Grinding for three years, viz. 2014-15, 2015-16 and 2016-17 and Cotton Yarn for two years viz. 2015-16 and 2016-17. The appointment and the remuneration of the cost auditor is required to be ratified by the members in accordance with the provisions of Section 148(3) of the Act and Rule 14 of Companies (Audit and Auditors) Rules, 2014. Accordingly, the matter relating to remuneration had been ratified by the Members at the 50th Annual General Meeting held on 23.09.2015. The Cost Audit Report for the financial year 2014-15 due to be filed with Ministry of Corporate Affairs by 27-09-2015, had been filed on 25-09-2015. The Cost Audit Report for the financial year 2015-16 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period. SECRETARIAL AUDIT M/s S.Krishnamurthy & Co., Company Secretaries, has been appointed to conduct the Secretarial Audit of the Company. Pursuant to the provisions of Section 204 (1) of the Companies Act, 2013 the Secretarial Audit Report submitted by the Secretarial Auditors for the year ended 31st March, 2016 is attached as Annexure - 2. The report does not contain any qualification, reservation or adverse remark. EXTRACT OF ANNUAL RETURN In accordance with Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of Companies (Management and Administration) Rules 2014, an extract of the Annual Return in Form MGT -9 is attached herewith as Annexure - 3. CORPORATE GOVERNANCE The Company has complied with the requirements regarding Corporate Governance as stipulated in SEBI (LODR) Regulations. As required under Schedule V (C) of SEBI (LODR) Regulations, a report on Corporate Governance being followed by the Company is attached as Annexure -A. As required under Schedule V (E) of SEBI (LODR) Regulations, a Certificate from the Statutory Auditors of the Company confirming the compliance is attached as Annexure -5. CORPORATE SOCIAL RESPONSIBILITY POLICY In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy which is based on the philosophy that "As the Organisation grows, the Society and Community around it also grows." The Company has undertaken various projects in the areas of education, health, rural development, water and sanitation, promotion and development of traditional arts, protection of national heritage, livelihood enhancement projects etc., largely in accordance with Schedule VII of the Companies Act, 2013. The CSR obligation pursuant to Section 135(5) of the Companies Act, 2013, for the year 2015-16 is Rs. 46.68 lakhs. As against this, the Company has spent Rs. 38.03 lakhs on CSR leaving a shortfall of Rs. 8.65 lakhs. Because of want of identification of projects, the shortfall had occurred. However, the Company had spent a sum of Rs. 48.73 lakhs on other social causes which do not qualify under the classifications listed out in Schedule VII of the Companies Act,2013. The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - 6. VIGIL MECHANISM/ WHISTLE BLOWER POLICY In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, the Company has established Vigil mechanism as per the Whistle Blower Policy of the Company. The details of the Whistle Blower Policy is hosted on the Company's website. RISK MANAGEMENT POLICY Pursuant to the requirements of Section 134 (3) (n) of the Companies Act, 2013 and Regulation 17(9) of SEBI (LODR) Regulations, the Company has designed and implemented the Risk Management Policy. The policy envisages identification of risk and procedures for assessment and minimisation of risk thereof. RELATED PARTY TRANSACTIONS Prior approval / ombibus approval is obtained from the Audit Committee for all transactions with related parties entered into by the Company and the transactions are also periodically placed before the Audit Committee for its approval. The particulars of contracts entered into by the Company during the year as per Form AOC 2 is enclosed as Annexure - 7. The members at their Extra Ordinary General Meeting held on 19.03.2012 had approved the re-appointment of Raja Charity Trust (RCT) as the sole selling Agent for 5 years from 3.05.2012 to 2.05.2017. The Central Government accorded its approval for the sole selling agency up to 31.03.2014 and stated that their approval would not be required from 01.04.2014 in view of the Companies Act,2013 coming into effect. However, in terms of revised Clause 49 VII of the erstwhile Listing Agreement the sales arising out of the orders procured by Raja Charity Trust is classified as Material transaction with the Related party as it exceeds 10% of annual Consolidated turnover. The members at their 50th Annual General Meeting held on 23.09.2015 had approved the material transactions with Raja Charity Trust from 01.04.2014 to 2.05.2017 by resolution. Now the approval of shareholders of the Company is being sought by resolution for the related party transactions to be entered with Raja Charity Trust arising out of their re-appointment as the sole selling Agent for 5 years from 3.05.2017 to 2.05.2022 at a commission of 1% of the sale of Company's products by them. Since the sale of products through RCT may be more than 10% of the Consolidated Turnover of the Company, amounts to "Material transaction" with the related party and requires the approval of shareholders of the Company by Resolution. Except the above said transaction, no transaction with the related party is material in nature, in accordance with Company's "Related Party Transaction Policy" and Regulation 23 of SEBI (LODR) Regulations, 2015. In accordance with AS-18, the details of transactions with the related parties are set out in the Disclosures forming part of Financial Statements. As required under Regulation 46(2)(g) of SEBI (LODR) Regulations, the Company's Related Party Transaction Policy is disclosed in the Company's Website and its weblink is -"<http://www.ramcoindltd.com/Shareholders/> Policies". As required under 46(2)(h) of SEBI (LODR) Regulations, the Company's Material Subsidiary Policy is disclosed in the Company's website and its weblink is -"http://www.ramcoindltd.com/Shareholders/ <httpPolicies". INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS The Ministry of Corporate Affairs vide its notification dated 16th February 2015 has notified the Companies (Indian Accounting Standard) Rules, 2015. In pursuance of this notification, the Company, its subsidiary and associate company has adopted IND AS with effect from 01-04-2016. For Company's financial results for periods commencing on or after 01-04-2016, the corresponding previous periods' figures will also be recast in accordance with IND AS. FUTURE OUTLOOK Indian rural economy is under stress due to poor monsoon and draught in many states resulting to slowdown of industry. The thrust given in the Union Budget 2016-17 for agriculture growth and expected good monsoon in the coming year we foresee revival of rural demand for our products. The investments in infrastructure by Government of India are expected to give a boost to the construction activities. The moderate inflation will encourage investments in housing sector. The Government's commitment to reforms and its initiatives relating to "Make in India" and ease of doing business are expected to make the GDP grow in excess of 8%. All these will positively impact the demand for Building Products in future. As all our plants are fully equipped and modernized with supporting logistics facilities, our Company will be able to take full advantage of the economic momentum in the coming years. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014 the information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is attached as Annexure - 8. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration are provided in Annexure - 9. INDUSTRIAL RELATIONS & PERSONNEL Industrial relations continue to be cordial and harmonious at all the Units. Employees at all levels are extending their fullest co-operation for the various cost reduction measures of the Company. SHARES The Company's shares are listed in BSE Limited and National Stock Exchange of India Limited and the Annual Listing Fees have been paid for the F.Y. 2016-17 respectively. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Companies Act, 2013 the Directors confirm that (a) They had followed the applicable accounting standards along with proper explanation relating to material departures, if any, in the preparation of the annual accounts for the year ended 31st March,2016; (b) They had selected such accounting policies and applied them consistently and made judgements 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 on 31st March, 2016 and of the profit of Company for the year ended on that date; (c) They had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) They had prepared the annual accounts on a going concern basis; (e) They had laid down Internal financial controls to be followed by the Company and that such financial controls are adequate and were operating effectively; (f) They had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. RESEARCH AND DEVELOPMENT EFFORTS During the year, the company continued with research and development efforts in respect of economical mix and non-conventional fibres in production technology for manufacture of fibre cernent sheets, calcium silicate boards, fibre cernent boards and non-asbestos roofing sheets. ACKNOWLEDGEMENT The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution. On behalf of the Board of Directors For RAMCO INDUSTRIES LIMITED P.R.RAMASUBRAHMANEYA RAJHA CHAIRMAN Place : CHENNAI Date : 20th May, 2016 |