DIRECTORS' REPORT To The Members, The Directors have pleasure in submitting the Annual Report together with the Statement of Accounts of your Company for the year ended 31st March, 2016. Transfer to Reserves The Company has transferred a sum of Rs. 3931.22 Lacs to General Reserve in the current year (previous year Rs. 3788.10 Lacs). Highlights / Performance of the Company Turnover of the Company for the year increased by 13.63% to Rs. 933.69 Cr. as compared to Rs. 821.67 Cr. previous year. Profit before tax for the year increased by 28.26% to Rs. 129.46 Cr. as compared to Rs. 100.93 Cr. previous year. Profit after tax for the year increased by 23.35% to Rs. 83.46 Cr. as compared to Rs. 67.66 Cr. previous year. The Directors are pleased to inform you that your Company has continued to grow despite adverse market conditions in 2015-16 due to its customer loyalty, distribution strength, product quality, brand equity and after-sales service. The well-entrenched distribution network of your Company is being supplemented with an array of CERA Style Studios and CERA Style Galleries in different towns, which showcase your Company’s Sanitary ware Unit During the year the plant had run at its optimum capacity. The focus products in an exclusive ambience. of your Company now is on premiumisation by producing more of high value items now onwards, thus maximizing its optimum capacity. Faucets ware Unit The new ranges and designs of Faucets have been well accepted by the market. The expansion plan of the Company has been attained in the year. Owing to this success, the Company has plans for premiumisation by producing more of high value items. Bath ware Unit Your Company has continued to market products like kitchen sinks and mirrors to its range besides products like shower cubicles, shower panels, steam cubicles, whirlpools and importing & marketing high-end wellness range under the brand name CERA. Tiles Unit Your Company has successfully launched CERA tiles in all markets. The exclusive tie up with manufacturers of tiles has helped your Company maintain its quality standards which distinguishes CERA tiles. Joint Ventures Your Company has entered into a Joint Venture with Anjani Tiles Limited at Andhra Pradesh with 51% Equity and 55.92% Preference Share holding amounting to Rs. 19.64 Cr. for producing Vitrified Floor Tiles of 10,000 Sq. Mtr. per day having total project cost of Rs. 68 Cr. The commercial production of tiles from this plant has started from 1st April, 2016. Green Energy Unit As a part of national policy and Green initiative, company has stabilized power cost by generation of electricity through nonconventional sources for captive use. The installed capacity of Non-conventional Energy unit of the Company now stands at 12.825 M.W. The non-conventional Wind and Solar Power has produced 2,03,37,139 KWH for captive use against 1,03,61,993 KWH in the previous year. Packaging Unit Your Company is also proposing to enter into Joint Venture for packaging unit for manufacture of corrugated boxes with an equity of 51%. The total project outlay will be Rs. 2.70 Cr. Conservation of energy, technology absorption and foreign exchange earnings and outgo Conservation of energy The Company has two sources of energy i.e. Natural Gas is being supplied by GAIL & Sabarmati Gas Ltd., for operating the plant. The pricing and quantity of the gas is based on the availability, international pricing and contract with the company. For energy conservation Company has installed fuel efficient burners to control gas consumption and every technological development is being taken care of. Second source of energy for running machineries is electricity supplied by local Discom. To compensate within the energy consumption by way electricity, the Company has set up Wind Turbines of 11.825 MW and 1.00 MW Solar Plant which will generate about 90% of the requirements and it will offset against monthly consumption of energy bill. Technology absorption and foreign exchange earnings and outgo The information on technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as a separate Annexure-I. Subsidiary Company The Company has one Subsidiary company namely Anjani Tiles Limited which became subsidiary of the company w.e.f. 23rd November, 2015. It has started commercial production from 1st April, 2016. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). Further there has been no material change in the nature of business of the subsidiary. Those Shareholders who are interested in obtaining a copy of the audited annual accounts of the subsidiary company may write to the Company. In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries is set out in the prescribed form AOC - 1, which is attached herewith as a separate Annexure - II. Particulars of contracts or arrangements with related parties All transactions entered into with Related parties as defined under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on an arm’s length basis and do not attract the provisions of Section - 188 of the Act. There were no materially significant related party transactions made by the Company with Directors, Key Managerial Personnel or other designated Persons which may have a Potential Conflict with the interest of the Company at large. All related party transactions were placed before the Audit Committee and also the Board for approval. The Policy on related Party transactions as approved by the Board is uploaded on the Company’s website i.e. www.ceraindia. com. The particulars of contracts or arrangements with related parties as per Section 188(1) of the Companies Act, 2013, including arm’s length transactions as per Form No.AOC-2 are enclosed as separate Annexure – III. Corporate Social Responsibility Your Company has always laid emphasis on progress with social commitment. We believe strongly in our core values of empowerment and betterment of not only the employees but also our communities. Following this principle the Company had laid the foundation of a comprehensive approach towards promoting and facilitating various aspects of our surrounding communities. The Board has approved a policy for Corporate Social Responsibility and same has been uploaded on the website i.e. www.ceraindia. com As required under Section 135 of the Companies Act, 2013 and to demonstrate the responsibilities towards Social upliftment in structured way, the Company has formed a Policy to conduct the task under CSR, during the year. The report on Corporate Social Responsibility (CSR) Activities along with Annexure as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as a separate Annexure – IV. Directors’ Responsibility Statement In compliance of Section 134 (5) of the Companies Act, 2013, the Directors of your Company confirm: that in the preparation of annual accounts, the applicable accounting standards have been followed and there are no material departures; that such accounting policies have been selected and applied 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 as on March 31, 2016 and of the Profit of the Company for the year ended on that date. 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; that the annual accounts have been prepared on a going concern basis. that internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and were operating effectively. that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Managerial Remuneration and Employees Details required pursuant to Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as a separate Annexure –V. Details of employees required pursuant to Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as a separate Annexure – VI. Company has not offered its shares to its employees under ESOS during the year under review. Company has not sanctioned loan to any of its employees for purchase of company’s shares under any scheme. Corporate Governance and Management Discussion and Analysis Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance along with the Auditors’ statement on its compliance and Management discussion and Analysis have been included in this Annual Report as per separate Annexure -VIII and Annexure-A respectively. Number of Meetings of the Board The Board of Directors, during the financial year 2015-16 duly met 5 times on 23.04.2015, 11.06.2015, 15.07.2015, 23.10.2015 and 02.02.2016 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose. Extract of Annual Return The details forming part of the extract of the annual return in Form No. MGT-9 is annexed herewith as a separate Annexure - VII. Particulars of Loans, guarantees or investments u/s 186. The loans if any, made by the Company are within the limits prescribed u/s 186 of the Companies Act, 2013 and no guarantee or security is provided by the Company. Details of Investments covered u/s 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Risk Management Policy The Board has approved and implemented risk management Policy of the Company including identification and element of risks. The Risk Management is overseen by the Audit Committee / Board of Directors of the Company on a continuous basis. The Committee oversees Company’s process and policies for determining risk tolerance and review management’s measurement and comparison of overall risk tolerance to established levels. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuous basis. For details please refer to the Management Discussion and Analysis enclosed as separate Annexure - A to this report. Audit Committee The Company has constituted Audit Committee. For details please refer Corporate Governance Report attached as a separate Annexure- VIII. Internal Control System and its adequacy The Company has internal control system commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditor are defined and reviewed by the Audit committee. The Internal Auditor reports to the Chairman of the Audit Committee. The Internal Auditor assesses opportunities for improvement of business processes, systems and controls, to provide recommendations, which can add value to the organization. Dividend Your Directors recommend a dividend of Rs. 9.00/- per share (180%) (Previous year Rs. 6.25/- per share) (125%) on 1,30,05,874 equity shares of Rs. 5/- each fully paid for the year ended 31.03.2016, to be paid subject to approval by the members at the ensuing Annual General Meeting. During the year, the unclaimed dividend pertaining to the financial year ending 2007-08 were transferred to the Investor Education and Protection Fund. Share Capital The paid up Equity Share Capital as on 31st March, 2015 was Rs. 650.29 lacs. During the year under review the Company has not issued any equity shares. As on 31stMarch, 2016 the Share Capital was Rs. 650.29 lacs. No shares with differential voting rights, stock or sweat equity shares Exchequer The Company has contributed Rs. 142.40 Crores to the exchequer were issued by the Company during the year under review. by way of excise duty, customs duty, service tax, income tax, VAT, sales tax and other fiscal levies. Deposits The Company has discontinued its Fixed Deposit Scheme from the Financial Year 2012-13. Despite efforts to identify and repay the unclaimed deposits, the total amount of Fixed Deposit matured and remaining unclaimed with the Company as on 31stMarch, 2016was Rs. 1.34 lacs. The Company has not accepted fixed deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. There have been no default in repayment of deposits or payment of interest thereon during the year. Finance During the year under review, the Company repaid loans of Rs. 890.30 Lacs to Financial Institutions and Banks. Directors Members at the Annual General Meeting held on 22-08-2014 have appointed Shri Ashok Chhajed, Shri Sajan Kumar Pasari, Shri Govindbhai P. Patel and Shri Lalit Kumar Bohania as Independent Directors of the Company to hold office for five consecutive years for a term up to 31st March, 2019 (they will not retire by rotation). 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. The company keeps informed independent directors about changes in the Companies Act, 2013 and rules from time to time and their role, duties and responsibilities. Smt. Deepshikha Khaitan is due to retire at the end of the ensuing Annual General Meeting and being eligible, offers herself for reappointment. Brief resume of Smt. Deepshikha Khaitan as required as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the notice convening the Annual General Meeting of the Company. Shri Ashok Chhajed ceased to be a director of the company w.e.f. 23.04.2016 on his resignation. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Rules made thereunder, Schedule - IV of the Act and SEBI (LODR) Regulations, 2015, the Board has carried the evaluation of its own performance, Individual Directors, its Committees, on the basis of attendance, contribution and various criteria as recommended by the Nomination and Remuneration Committee of the Company. The performance of each of the non-independent directors (including the chair person) was also evaluated by the Independent Directors at the separate meeting held of Independent Directors of the Company. Policy on Directors appointment and remuneration Criteria determining the qualifications, positive attributes and independence of Directors Independent Directors • Qualifications of Independent Director An Independent director shall possess appropriate skills, qualifications, experience and knowledge in one or more fields of finance, law, management, marketing, administration, corporate governance, operations or other disciplines related to the Company’s business. • Positive attributes of Independent Directors An independent director shall be a person of integrity, who possesses knowledge, qualifications, experience, expertise in any area, integrity, level of independence from the Board and the Company etc. Independent Directors are appointed on the basis of requirement of the Company, qualifications & experience, association with the Company etc. He should also devote sufficient time to his professional obligations for informed and balanced decision making; and assist the company in implementing the best corporate governance practices. • Independence of Independent Directors An Independent director should meet the requirements of Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Other Directors and Senior Management The Nomination and Remuneration Committee shall identify and ascertain the qualifications, expertise and experience of the person for appointment as Director or at Senior Management level and recommend to the Board his / her appointment. The Company shall not appoint or continue the employment of any person as Whole-time Director or Senior Management Personnel if the evaluation of his performance is not satisfactory. Other Details are disclosed in the Corporate Governance Report under the head Nomination and Remuneration Committee and details of Remuneration (Managing Director / Whole Time Director and Non- Executive Directors). Remuneration / commission from Holding or Subsidiary Company Managing Director or Whole Time Director is not receiving any remuneration / commission from any Holding Company or Subsidiary Company. Remuneration Policy It is separately disclosed in the Corporate Governance Report attached as a separate Annexure - VIII to this Report. Auditors and their Observations: H.V. Vasa & Co., Statutory Auditors of the company retire at the end of forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment at the ensuing Annual General Meeting. The Auditors’ Report and Secretarial Audit Report to the members for the year under review does not contain any qualification, reservation or adverse remarks or disclaimer. The Statutory Auditors have not reported any fraud during the year under review. Cost Auditors Company has appointed K. G. Goyal & Co., as Cost Auditors for Secretarial Audit Pursuant to provisions of Section 204 of Companies Act, 2013 and conducting cost audit for the year 2016-17. rules made there under, the Company has appointed Umesh Parikh and Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the year 2016-17. The Secretarial Audit Report given by Umesh Parikh and Associates, Company Secretaries in practice is annexed with this report. Insurance Your Company has adequately insured all its properties including Plant and Machinery, Building and Stocks. Industrial Relations Your Company’s relations with its employees remained cordial throughout the year. The Directors wish to place on record their deep appreciation for the services rendered by workers, staff members and executives of the Company. Your Company has taken adequate steps for the health and safety of its employees, as required under the Gujarat Factories Rules, 1963. The Company has not received any complaint under The Sexual Harassment of women at Workplace (prevention, prohibition and redressal) Act, 2013 and the Company has organized three workshops under the said Act. Material Changes Affecting Financial Position of the Company No material changes or commitments, affecting the financial position of the Company have occurred between the end of the financial year of the company to which the financial statements relate, i.e. 31st March, 2016 and the date of the Board’s Report. Change in nature of business No changes has been made in nature of business carried out by the company during the financial year 2015-16. Orders passed by Regulatory Bodies or Courts No regulatory body or court or tribunal has passed any significant and material orders impacting the going concern status and operations of the Company. Vigil Mechanism The company has implemented Vigil Mechanism. For details please refer Corporate Governance Report attached as a separate Annexure - VIII. Appreciation Your Directors thank the Financial Institutions and Bankers for extending timely assistance in meeting the financial requirements of the Company. They would also like to place on record their gratitude for the co-operation and assistance given by State Bank of India, Yes Bank Ltd., Kotak Mahindra Bank Ltd. and various departments of both State and Central Governments. For and on behalf of the Board of Directors, Vikram Somany Chairman and Managing Director Date : 3rd May, 2016 Place : Kolkata. |