The Directors take pleasure in presenting the Seventy Ninth Annual
Report together with the audited financial statements for the year
ended December 31, 2014. The Management Discussion and Analysis has
also been incorporated into this report.
1. HIGHLIGHTS OF PERFORMANCE
* Consolidated income for the year increased by 5% to Rs. 11,995.42
Crore as compared to Rs. 11,431.10 Crore in 2013;
* Consolidated net sales for the year was
Rs. 11,480.31 Crore as compared to
Rs. 10,889.08 Crore in 2013, a growth of 5.4%;
* Consolidated profit before tax for the year was Rs. 1,119.54 Crore as
compared to Rs. 1,213.64 Crore in 2013;
* Consolidated Profit after tax for the year was Rs. 1,161.82 Crore
(including tax write back of Rs. 309.23 Crore) as compared to Rs.
1,094.67 Crore in 2013 (including tax write back of Rs. 216.74 Crore).
2. FINANCIAL RESULTS
Revenue from Operations(Net) and
other income 11,995.42 11,431.10
Profit Before Tax (PBT) 1,119.54 1,213.64
Provision for Tax (31.13) 131.91
Profit After Tax (PAT) 1,161.82 1,094.67
Balance brought forward from previous year 4,158.74 3,845.79
Profit available for Appropriations 5,320.56 4,940.46
Interim Equity Dividend 281.62 206.52
Proposed Final Equity Dividend 356.72 356.72
Tax on Equity Dividends 119.18 95.72
Previous Year Tax on Equity Dividends - 2.76
General Reserve 130.00 120.00
Surplus carried to the next year''s account 4,433.04 4,158.74
Revenue from Operations(Net) and
other income 12,006.49 11,435.28
Profit Before Tax (PBT) 1,135.20 1226.96
Provision for Tax (33.09) 131.20
Profit After Tax (PAT) 1,168.29 1,095.76
Balance brought forward from previous year 4,175.87 3,861.83
Profit available for Appropriations 5,344.16 4,957.59
Interim Equity Dividend 281.62 206.52
Proposed Final Equity Dividend 356.72 356.72
Tax on Equity Dividends 119.18 95.72
Previous Year Tax on Equity Dividends - 2.76
General Reserve 130.00 120.00
Surplus carried to the next year''s account 4,456.64 4,175.87
The Company proposes to transfer an amount of Rs. 130 Crore to the
General Reserves. An amount of Rs. 4,456.64 Crore is proposed to be
retained in the Statement of Profit and Loss.
Your Directors are pleased to recommend a final dividend of Rs. 19/-
per equity share of Rs. 10 each. The Company had distributed an interim
dividend of Rs. 15/- per equity share of Rs. 10 each in August 2014.
The total dividend for the year ended December 31, 2014 would
accordingly be Rs. 34/- per equity share of Rs. 10 each. The total
outgo for the current year amounts to Rs. 757.52 Crore, including
dividend distribution tax of Rs. 119.18 Crore as against Rs. 658.96
Crore including dividend distribution tax of Rs. 95.72 Crore in the
During the year, the unclaimed dividend pertaining to the 69th dividend
for the year ended December 31, 2006 and the 70th Interim dividend for
the year ended December 31, 2007 were transferred to the Investor
Education & Protection Fund after giving due notice to the Members.
4. SHARE CAPITAL
The paid up Equity Share Capital as on December 31, 2014 was Rs. 187.95
Crore. During the year under review, the Company has not issued shares
with differential voting rights nor granted stock options nor sweat
equity. As on December 31, 2014, none of the Directors of the Company
hold shares or convertible instruments of the Company.
Cash and cash equivalent as at December 31, 2014 was Rs. 1,686 Crore.
The Company continues to focus on judicious management of its working
capital. Receivables, inventories and other working capital parameters
were kept under strict check through continuous monitoring.
5.1 NON CONVERTIBLE DEBENTURES
During the year, the Non-Convertible Debentures aggregating Rs. 32
Crore were redeemed (Rs. 125 Crore were bought back/ redeemed in 2013).
Accordingly all the debentures stand extinguished.
The Company had discontinued its fixed deposit scheme in the financial
year 2001- 02. Despite efforts to identify and repay unclaimed deposits
the total amount of fixed deposits matured and remaining unclaimed with
the Company as on December 31, 2014 was Rs. 0.02 Crore. The Company has
not accepted deposit from the public falling within the ambit of
Section 73 of the Companies Act, 2013 and The Companies (Acceptance of
Deposits) Rules, 2014.
5.3 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
6. ECONOMIC SCENARIO AND OUTLOOK
Indian economic growth in 2014 rose to ~5.2% from 4.7% last year as a
result of the improving macro-economic situation. The wholesale and
consumer price inflation has fallen to ~4.2% and 7.4% from last year''s
6.3% and 10.1% on the back of a strong base effect. Falling oil prices,
lower food and commodity prices and the proactive measures taken by the
Government helped in containing inflation in 2014.
Contrary to expectations, agricultural growth was strong at ~4.5% in
2014. However, the slow pace of reforms, lack of impetus for
infrastructure projects, high interest rates and tightening of fiscal
policies adversely impacted the capital goods sector. Industrial
production / output was also sluggish.
The low economic growth appears to have bottomed out and a gradual
increase in economic activity is expected in 2015. The medium term to
long term growth prospects look positive in view of the Government''s
determination to bring in reforms. For the year 2015, the economy is
expected to grow at a higher rate than in 2014. The long term prospects
for the economy is optimistic.
7. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
The Indian Cement Industry has an installed capacity of ~360 million
tonnes and the domestic consumption in the calendar year 2014 was
~264 million tonnes. Cement consumption grew at the rate of ~6% in the
calendar year 2014.
The overall cement demand is estimated to grow at the rate of 6% in
2015. The consumption growth may go beyond 6% if investment is made in
the infrastructure segment. With the gradual reduction in fiscal
deficits and Consumer Price Index, it is expected that the interest
rates would gradually come down which would stimulate demand in the
housing sector. The Company''s continued focus on cost reduction, its
thrust on increasing the sale of premium products and various other
customer excellence initiatives should help in presenting an improved
8. CEMENT BUSINESS - PERFORMANCE AT A GLANCE
2014 2013 Change
Production - 24.24 23.86 1.59
Sales Volume- 24.21 23.93 1.17
Sale Value (Rs. Crore) 10,720.28 10,233.17 4.76
(Operating EBITDA 1,473.13 1,609.19 -8.45
Operating EBITDA 13.74 15.73
9. MARKET DEVELOPMENT
Domestic sales in 2014 increased by 1.5% to 24.14 million tonnes as
compared to 23.80 million tonnes achieved in 2013. Cement exports in
2014 reduced to 0.07 million tonnes as compared to 0.13 million tonnes
in 2013. Total cement sales (including exports) increased by 1.2% to
24.21 million tonnes as compared to 23.93 million tonnes achieved in
2013. The Company continues to focus on the Individual House Builder
segment for higher profitability.
The sale volumes of premium products in 2014 was 2.73 MT as against
1.55 MT in 2013.
9.2 Selling Price
Selling price of cement improved by 4% in 2014 over 2013.
10. COSTS - CEMENT BUSINESS
During the year 2014, the economy witnessed an upward movement in the
overall cost structure and the Company continued to focus on cost
improvements through its excellence programmes.
10.1 Cost of materials consumed
Cost of materials consumed accounted for 15% of total income from
operations (14.4% in 2013). Cost of material consumed increased by 11%
in 2014 over 2013. Slag prices were lower by 17% in 2014 as compared to
2013 while gypsum prices remained almost flat. Fly ash prices
increased by 11% in 2014 over 2013. The cost of material consumed
during the year increased on account of purchase of clinker as a result
of temporary suspension of limestone mining operation at Chaibasa and
10.2 Power & Fuel
The power and fuel spend was Rs. 2,441.82 Crore which constitutes 21%
of the total income from operations of the Company (Rs. 2,375.97 Crore
in 2013 i.e. 21% of the total income from operations of the Company).
The various initiatives taken such as the usage of industrial waste and
biomass as alternate fuels and optimization of fuel mix, has limited
the power and fuel costs increases to 2.8% in 2014 over 2013. Coal cost
for kilns increased by 3.6% in 2014 over 2013 mainly on account of a
drop in supply of linkage coal due to shortage of rakes and resultant
higher procurement of imported and e-auction coal. Use of imported coal
increased to 24% in 2014 (21% in 2013) while linkage coal availability
reduced to 57% in 2014 (67% in 2013). Coal cost for captive power
plants increased by 10% mainly because of limited availability of CPP
grade linkage coal and resultant higher procurement of market /
imported coal. Improved operating efficiencies of kiln and captive
power plants and benefits derived from Waste Heat Recovery System
(WHRS) operations had a positive impact in limiting cost increases.
The Company continues to focus on maximizing Alternative Fuels & Raw
Materials (AFR) consumption in the cement manufacturing process.
10.3 Freight & Forwarding expenses
Freight and forwarding expenses were Rs. 2,598.33 Crore which
constitutes 22% of total income from operations of the Company (Rs.
2,308.87 Crore in 2013 i.e. ~21% of total income from operations).
Freight and forwarding expenses went up by 12.5% in 2014 over 2013.
Freight on clinker transfer increased mainly on account of railway
freight increase, freight rationalization by Railways and long lead
inter unit movements of clinker.
Freight on cement despatches increased on account of higher cement sale
volumes as also on account of hike in rail and road freight. This
increase was partially offset by improvement in logistics operational
10.4 Other Expenditure
Other expenditure constitutes ~21% of total income from operations of
the Company. The increase in other expenditure was restricted to 3.5%
in 2014 over 2013.
Continued focus on reduction in fixed cost helped in restricting the
fixed cost increases to ~3% in 2014 on a YoY basis.
11. INSTITUTIONALIZING EXCELLENCE
In 2012, an Institutionalizing Excellence programme was launched across
all functions to sustain exceptional performance over time. The
programme is now central to the Company''s growth initiatives and the
whole organization is galvanized to accomplish targets. Over a period
of two years, the programme has yielded encouraging results and has
helped the Company balance inflationary pressures by improving
efficiencies. The Institutionalizing Excellence journey continues with
a strong focus on Safety.
In Manufacturing Excellence, two Plants, Chanda and Jamul, figured in
the top fifteen amongst all Holcim Plants globally in terms of
efficiency. Efforts are underway towards raising the Company''s overall
efficiency parameters closer to aspirational targets and to pursue
further reductions in input costs of coal, power generation and in
mineral components like gypsum, slag and fly ash. A manufacturing
academy was setup that drives continuous improvement in each Plant by
regular training and skill enhancement.
The Customer Excellence programme focuses on the customer and seeks to
achieve volume and price improvement and steps for the enhancement of
The Logistics Excellence journey saw visible and significant
initiatives to optimize cost-to- serve and time-to-serve, reduce lead
distances, eliminate multiple handling and initiate the creation of
modern infrastructure at the plants and warehouses. The Radio Frequency
Identification Device (RFID) and Global Positioning Systems (GPS)
modules which were successfully deployed at three plants are being
replicated at all plants of the Company in a phased manner.
The ongoing Jamul Project in Chhattisgarh, which comprises a new
state-of-the-art clinkering line of a capacity of 2.79 million tonnes
per annum and grinding facilities of a capacity of 1.10 million tonnes
at Jamul and of 1.35 million tonnes at Sindri are expected to be
commissioned during 2015.
The pre-processing and co-processing Alternative Fuel and Raw Materials
(AFR) platforms at Wadi in Karnataka and Kymore in Madhya Pradesh have
been commissioned in December 2014.
13. COAL BLOCKS
During the year 2009, the Company through its wholly owned subsidiary,
ACC Mineral Resources Limited (AMRL), had entered into four separate
Joint Venture Agreements (JVA) with Madhya Pradesh State Mining
Corporation Limited (MPSMC) for the development and operation of four
coal blocks with an equity participation of 49% by AMRL and 51% by
MPSMC. The coal from these four coal blocks was earmarked for supplies
to cement plants of the Company.
Out of the four coal blocks being developed, the Bicharpur Coal Block
in district Shahdol was in an advanced stage of development. The second
coal block Marki Barka in district Singrauli was also ready for
commencement of mine development activities with all its regulatory
clearances in place.
While the development of coal blocks was in progress, on September 24,
2014, the Hon''ble Supreme Court of India cancelled the allocation of
Coal Blocks by the Government of India to State and private sectors.
Consequently, allocation of Marki Barka, Semaria/Piparia and Morga IV
coal blocks to MPSMC stood cancelled with immediate effect. However, by
virtue of an advanced stage of development, the Bicharpur coal block is
liable for cancellation with effect from March 31,2015.
As of December 31, 2014, the amount incurred, invested and advanced
(including deposits / advances to MPSMC and other parties) by the
Company in this regard is ~ Rs. 153.79 Crore. Subsequently, the
Government promulgated The Coal Mines (Special Provisions) Ordinance,
2014, which intends to take appropriate action to deal with the
situation arising pursuant to the Hon''ble Supreme Court''s decision. The
Management, based on its understanding of it''s contractual rights under
its JV agreements, its interpretation of the Ordinance and on the basis
of legal advice, believes that the financial loss or operational impact
if any, will not be significant.
In addition to the above Moira Madhujore North and South Coal block
in the State of West Bengal was allocated to six companies by Ministry
of Coal in December 2009, wherein your Company holds equity of 14.37%.
The allocation of the said coal block has also been cancelled by the
aforementioned Order of Supreme Court. The Company has impaired its
investment amounting to Rs. 0.69 Crore made in this Joint Venture
14. LIMESTONE MINING - NEW REGULATORY CHANGES:
As a sequel to the Supreme Court''s Order dated May 16, 2014 in two
separate Public Interest Litigations, policy changes were made by the
Government with regard to renewal of mines and deemed mining rights.
As per the Supreme Court''s directive, such of the mines which were
hitherto operating under deemed renewal without any express orders of
renewal passed by the State Governments were not allowed to operate
until express orders were passed by the respective State Governments in
terms of Section 8(3) of the Mine and Mineral (Development and
Regulation) Act, 1957. Pursuant thereto, the Government of India
amended Sub Rule, 24A(6) of the Mineral Concession Rules which had the
effect of disallowing deemed renewal status for second and subsequent
mining leases and limiting the deemed renewal status even in case of
the first renewal application to only two years. This development has
temporarily impacted the mining operations at Bargarh and Chaibasa
which in turn affected the clinker production at the said Plants and
clinker was required to be procured from other sister plants as well as
from outside. The Government has since passed the Mines and Minerals
(Development and Regulation) Ordinance on January 12, 2015 in terms of
which the mining leases would stand extended from the date of their
last renewal upto March 31, 2030 in cases where the mines were being
operated for captive consumption, such as in the case of the Company.
15. READY MIXED CONCRETE (RMX)
Ready Mixed Concrete business continues to perform well despite the
fact that in 2014, the Industry witnessed the entry of more players and
increased liquidity issues. The RMX market is greatly fragmented and
with increased participation by the unorganized segments, there is
pressure on pricing. Against this backdrop, the Operating EBITDA
increased to Rs. 34.12 Crore in 2014 from Rs. 19.61 Crore in 2013.
Sales volume improved by 18%.
The growth in business is attributed to the efforts made to enhance
customer satisfaction. ACC Concrete is being perceived as a solutions
provider rather than merely as a concrete supplier. This was made
possible by continuous customer involvement in projects and by offering
various products and providing value added services for its
stakeholders. A new line of allied products which could be supplied in
the form of ready to use mortar were developed, produced and marketed.
The Centre of Excellence set up by the Company facilitates and supports
capability demonstration initiatives, helps in engaging with customers
and trains professionals in advanced construction techniques.
There is considerable focus by the Government on infrastructure
development and in the year 2015, the construction sector is expected
to grow at a higher rate than in 2014. Demand for RMX is expected to
revive in almost all markets across the country and is likely to be
stronger in metro markets like Mumbai, Bengaluru, Chennai, and Delhi.
Major demand is expected to come from large investments in
infrastructure and development of real estate across India in proposed
future cities. Reduction in lending rates by banks and restructuring of
loans should ease the liquidity position and help boost sales and
profitability. Ready Mix Concrete is expected to maintain the momentum
and contribute to the overall business with enhanced participation.
2014 2013 Change
Production - Lakh 19.65 15.96 23.12
Sales volume - Lakh 21.24 18.00 18.00
Sale value - (Rs. Crore) 760.77 655.91 15.99
Operating EBITDA - 34.12 19.61 73.99
Operating EBITDA 4.48 2.99
16. SUSTAINABLE DEVELOPMENT
Sustainability has been deeply embedded into the Company''s business and
has become an integral part of its decision making process while
considering social, economic and environmental dimensions. During the
year 2014, a Sustainability Development road map for the period
2014-2017 was developed with a focus on the following areas:
(a) Reduction of Specific CO2 emissions;
(b) Enhancing Thermal Substitution Rate (TSR);
(c) Reducing specific water consumption;
(d) Reduction of specific total energy intensity (Thermal &
(e) Improving CSR footprint focusing on inclusive business projects.
The Company''s cement operations retained its certifications under
various management systems for quality, environment, energy and safety.
16.1 CO2 Emissions:
The Company continued in its efforts towards achieving the commitments
of Low Carbon Technology Roadmap for the Indian Cement Industry under
the umbrella of the Cement Sustainability Initiative (CSI) in India of
the World Business Council for Sustainable Development (WBCSD).
The various initiatives taken resulted in reducing the specific CO2
emissions per tonne of cement to 526 Kg CO2/tonne of cement from 538 Kg
CO2/tonne of cement. The CO2 emission per tonne of cement including
emissions from on site power generation has been reduced to 617 Kg CO2/
tonne of cement from 641 Kg CO2/tonne of cement.
16.2 Alternative Fuels and Raw Materials (AFR):
The Company provides co-processing and waste management services to
over a hundred customers which facilitates disposal of a wide range of
hazardous and non-hazardous industrial waste streams in the form of
solids, sludges and liquids.
The pre-processing and co-processing platforms which were commissioned
during the year at Kymore and at Wadi will add momentum to
co-processing of larger volumes of wastes in an efficient manner. The
AFR feeding and storage systems have also been ramped up in these
plants to the required levels.
16.3 Reduction of Thermal Energy
Many initiatives for process optimization were taken to reduce specific
thermal energy in the manufacturing of clinker. These efforts resulted
in reduction of 16 MJ of specific thermal energy / tonne of clinker to
3050 MJ in 2014 as compared to 3066 MJ in 2013. Other measures such as
enhancing the usage of industrial waste and biomass as alternative
fuels and optimization of fuel mix has helped to contain the energy
costs to some extent.
16.4 Clinker Factor
Through research and product innovation, the Company has been able to
reduce clinker factor in both varieties of blended cements viz.
Portland Slag Cement and Portland Pozzolana Cement. The use of slag and
fly ash in cement manufacture helps the steel industry and power plants
to dispose of their waste in an environmentally friendly manner.
The Company''s blended cement production activities at Wadi, Kymore,
Chanda and Tikaria are registered with United Nations Framework
Convention on Climate Change (UNFCCC) as a Clean Development Mechanism
(CDM) Project. The blended cement project is one of the biggest CDM of
its kind in the Indian Cement Industry.
16.5 Renewable Energy:
The Company''s renewable energy portfolio consists of 19 MW in the form
of wind farms across three states viz. 9 MW in Tamil Nadu, 7.5 MW in
Rajasthan and 2.5 MW in Maharashtra. These helped the Company meet its
non-solar renewable purchase obligations for Madukkarai and Lakheri
Various options are being evaluated to enhance the renewable energy
portfolio such as setting up new assets of renewable energy and by use
of renewable energy through the Power Purchase Agreement route.
16.6 Waste Heat Power generation from process waste heat
During the year 2014, the Waste Heat Recovery System (WHRS) at Gagal
Cement Works became fully operational and produced 46.64 million kWh of
16.7 Dust Emissions
The Company''s average kiln stack dust emissions were well below the
statutory norms fixed by the States in which the Company operates. This
has been achieved through various controls and maintenance measures
which were implemented on a continuous basis. The Company has also
implemented various measures across all its operations to control
16.8 Water Initiatives:
Multiple initiatives were taken in process and non process areas to
improve the water performance which resulted in 15.6% reduction of
specific water consumption/ tonne of cement.
* Increased use of recycled water for process and non-process
* Minimizing leakages and wastages;
* Implementing water metering systems for accurate measurement of water
consumption/withdrawal and to initiate more intense and focused
measures for conserving water;
* Implementing rain water harvesting measures in mines, plant, colony
and surrounding communities.
A biodiversity risk assessment of all mines of the Company has been
carried out. Afforestation and biodiversity conservation programmes
have been initiated / implemented across all the Company''s plants and
mines. The Company has become a member of Indian Business Biodiversity
Initiative (IBBI) a collaborative initiative of Confederation of Indian
Industry (CII) and Ministry of Environment Forest and Climate Change
(MoEF & CC) and Leaders for Nature (LfN), an initiative led by
International Union for Conservation of Nature (IUCN) India. It has
agreed to their charters and is in the process of implementing various
16.10 Green Products
The Company made efforts to promote and increase sales of various
innovative cement products like ACC-Gold, ACC- F2R, ACC Plus, ACC
Coastal and concrete products such as Permecrete, Stampcrete and
Imprincrete, ready to use mortar, Thermocrete and Hi-densecrete which
have lower environmental footprint.
16.11 Green Building Material Centres:
During the year 2014, four new Green Building Material Centres were
setup in different parts of India. These centres provide a one-stop
solution in housing expertise and building materials required for high
quality low cost housing. These centres also offer architectural
services, skilled masons for housing construction. The building
material supplies include bricks, blocks, tiles, cement etc. These
materials are produced from local resources and incorporate waste
material like fly ash which help in reducing CO2 emissions. This
initiative received global recognition for its environment and social
benefits. The Company is planning to scale up these centres in the
17. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As part of its initiatives under Corporate Social Responsibility
(CSR), the Company has undertaken projects in the areas of Education,
Livelihood, Health, Water and Sanitation. These projects are largely in
accordance with Schedule VII of the Companies Act, 2013.
During the year 2014, the Company''s community development efforts
successfully touched the lives of almost 5,00,000 people spanning ~150
villages across the country. Providing quality education initiatives in
the plants'' neighborhood schools benefited ~29,000 students during the
year. Scholarships were awarded to ~500 meritorious students from
weaker sections of the society to help them continue with their
education. Technology aided education initiatives like smart classes
and interactive kiosks reached out to students in ~26 rural schools to
keep pace with modern methods of learning. Specific support was
provided to revive education for ~750 girl children under ACC ki
Ladli Project. The Company continued to support 7 Government- run
Industrial Training Institutes under the Public Private Partnership
Schemes with Ministry of Labour and Employment, Government of India.
Skill development training programmes were imparted to unemployed youth
in partnership with specialized NGOs, which helped ~3,800 youth get job
placements in various manufacturing and service sector enterprises. The
Company supported the formation of 486 Self Help Groups (SHGs) and in
their strengthening through structured training activities. In matters
of health and nutrition, the Company''s initiatives benefitted more than
1,00,000 people. Support to 134 anganwadi centers helped ~8,000
children get access to better health and nutrition. A Centre for
awareness, prevention and treatment of Sexually Transmitted Infections
(STI) was established at Tikaria Cement Works. Nearly 3042 HIV/ AIDS
affected persons were supported through counselling, testing and
treatment through Anti Retroviral Therapy (ART) and STI Centers.
Sanitation, being a national agenda, the Company has developed four
affordable prototypes of toilets through the Green Building Center. It
has also led the forum of Confederation of Indian Industries(CII)
Sanitation Committee to promote the sanitation initiative of Government
of India and has also actively participated in forums on Public Health
The Annual Report on CSR activities is annexed herewith as Annexure
18. OCCUPATIONAL HEALTH & SAFETY (OH&S)
In pursuit of ensuring No harm anywhere to anyone associated with
ACC, Occupational Health & Safety (OH&S) remains the Company''s top
priority. In continuation with the Surakhsha Laher initiative which
was launched in 2013, Suraksha Laher 2 and Suraksha Laher 3
initiatives were launched. The Suraksha Laher 2 aimed at building
Line Ownership and OH&S Competency, establish forums for improving
communication and focused on Fatality Prevention. Under this initiative
Suraksha Samvad forum was set up for improving bottom up
communication. This initiative successfully involved and positively
engaged all levels of personnel on the shop floor including Shop Floor
Associates (SFA) and the Company''s business partners in the process of
identification and closure of hazards. Another major contribution of
Suraksha Laher 2 was the OH&S Leadership Training Program for improving
OH&S capabilities of Middle Management level employees. The Zone
ownership structure was further enhanced to improve visible leadership
with performance targets and reviews being conducted in the plant.
Suraksha Laher 3 aimed at revisiting the implementation of some of the
important Fatality Prevention Elements (FPEs) such as working at
heights, isolation and lockout with a view to close the gaps identified
during audit assessments.
With regard to contractor safety, two key areas of focus identified
were Facility Management for the contractors'' employees and Equipment,
Tools & Material Management. The Facility Management initiative was
implemented to ensure adequate welfare facilities for contract labour
such as washrooms with bathing facilities, rest rooms, availability of
drinking water etc. The Equipment, Tools & Material Management program
ensured that the tools used by contractors were safe. The process of
screening of contractors was made more stringent to ensure that the
contractors were aligned with the Company''s objectives to ensure ''Zero
18.1 Logistics Safety
The focus on Logistics Safety continued with a view to prevent vehicle
related incidents through various planned interventions viz.:
* Defensive Driving training for drivers;
* vehicle inspection at plants;
* segregation of pedestrian and vehicular traffic inside plants;
* ''Suraksha Kawach'' campaign for seat belt usage aimed at truck
* installation of GPS in dedicated trucks in a phased manner for
* entering into MOU''s on logistics safety with our authorized road
* engagement sessions with truck drivers and felicitating safe drivers.
A programme for improving safety in the warehouses has also been
initiated. The Company was declared as Holcim''s Regional Award Winner
for South Asia/ASEAN in recognition of its Logistics Safety Improvement
18.2 Occupational Health
In 2014, the Emergency Medical Response (EMR) capabilities in mines
were further improved. Each mine site has an ALS ambulance, appropriate
stretchers, Automated External Defibrillator (AEDs) units and proper
first aid facilities. In each of the plants, at least 50% of the shift
supervisors have been trained in basic life support techniques and a
total 2000 shift supervisors have been trained in this regard.
To reduce health risk factors among employees and their families,
various programmes were launched and implemented with the assistance of
health peers selected and trained from Shop Floor Associates and
through the extensive use of the Company''s intranet portal
19. HUMAN RESOURCES
Many initiatives have been taken to support business through
organizational efficiency, process change support and various employee
engagement programmes which has helped the Organization achieve higher
productivity levels. A significant effort has also been undertaken to
develop leadership as well as technical/ functional capabilities in
order to meet future talent requirement.
The Company''s HR processes such as hiring and on-boarding, fair
transparent online performance evaluation and talent management
process, state-of-the-art workmen development process, and market
aligned policies have been seen as benchmark practices in the Industry.
These state-of-the-art HR processes within the Organization, have
enabled the Company to earn the No. 1 position of being the Best
Company to work for in Cement Sector by Fortune India Magazine in 2014.
During the year under review, the following Human Resources initiatives
received greater focus:
* Employer of Choice: The Company has positioned itself with leading
educational institutes as one of the best companies to work for.
Employees have an option to work with world class cement technology and
have the flexibility to pursue different functions. Employees are
encouraged to express their views and are empowered to work
independently. Employees are given the opportunity to learn through
various small projects which make them look at initiatives from
different perspectives and thus provide them with a platform to become
result oriented. This has helped greatly in overall development of the
employee and has significantly arrested the attrition rate.
* Leadership Development: As a part of leadership development ~40
talented employees have been seconded to the senior leadership team to
mentor them and prepare them for the next higher role. Apart from this,
a large number of senior, middle and other employees are sent for
leadership programmes or are assigned to small independent projects
which are planned for identified talent.
* Industrial Relations: The Company''s Industrial Relations policy has
been benchmarked by the manufacturing sector. The Company shares
relevant business information with the Unions in order to enlighten
them and make them sensitive towards business requirements. This has
helped to build a healthy relationship and resolve issues through
* A unique dual educational program has been developed on the lines of
the Swiss German vocational educational and training program (VET). The
program has been successfully implemented in one of the Company''s
20. BUSINESS RISK MANAGEMENT
Pursuant to the requirement of Clause 49 of the Listing Agreement, the
Company has constituted a Business Risk Management Committee. The
details of Committee and its terms of reference are set out in the
Corporate Governance Report forming part of the Board''s Report.
The Company has a robust Business Risk Management (BRM) framework to
identify, evaluate business risks and opportunities. This framework
seeks to create transparency, minimize adverse impact on the business
objectives and enhance the Company''s competitive advantage. The
business risk framework defines the risk management approach across the
enterprise at various levels including documentation and reporting. The
framework has different risk models which help in identifying risks
trend, exposure and potential impact analysis at a Company level as
also separately for business segments viz. cement and RMX. Risk
management forms an integral part of the Company''s Mid-Term Planning
The key business risks identified by the Company and its mitigation
plans are as under:
The Cement Industry is capital intensive in nature. Its Compound Annual
Growth Rate (CAGR) for the next five years is expected to be ~6.5 %. In
the execution of large projects which are highly capital intensive in
nature, there could be exposure to time and cost overruns. To mitigate
these risks, the project management team and the project accounting and
governance framework has been further strengthened. Whilst the Company
continues to draw on Holcim''s expertise, a separate Organization
structure at Project sites with defined roles and accountability is put
in place for large projects.
The Cement Industry is becoming intensely competitive with the foray of
new entrants and some of the existing players adopting inorganic growth
strategies. To mitigate this risk, the Company is leveraging on its
expertise, experience and its created capacities to increase market
share, enhance brand equity / visibility and enlarge product portfolio
and service offerings. It would also leverage on its Infrastructure,
Commercial and Institutional Sales team to offer value to large
Safety of employees and workers is of utmost importance to the Company.
To reinforce the safety culture in the Company, it has identified
Occupational Health & Safety as one of its focus areas. Various
training programmes have been conducted at the plants and sales units
such as behavior based safety training program, Visible Safety
Leadership program, Logistics Safety program etc. The accountability
structure has also been strengthened with the introduction of a Zone
Ownership concept and by integrating OH&S competencies into the job
descriptions of all Top Management, Line Management and Safety
21. 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 (IA) function is defined in the Internal Audit Charter.
To maintain its objectivity and independence, the Internal Audit
function reports to the Chairman of the Audit Committee of the Board.
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 and its subsidiaries. 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 corrective actions thereon are presented to the Audit
Committee of the Board.
22. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism named Fraud Risk Management Policy
(FRM) to deal with instance of fraud and mismanagement, if any. The
details of the FRM Policy is explained in the Corporate Governance
Report and also posted on the website of the Company.
23. SUBSIDIARY COMPANIES
23.1 ACC Mineral Resources Limited (AMRL)
AMRL had entered into a Joint Venture Agreement with Madhya Pradesh
State Mining Corporation Limited (MPSMC) for development of four coal
blocks viz. Bicharpur, Marki Barka, Simaria Piparia and Morga IV.
Pursuant to the Supreme Court''s Order as discussed in para 13 above,
the allocation of three coal blocks to MPSMC viz. Marki Barka, Simaria
Piparia and Morga IV were immediately cancelled. The fourth coal block
viz. Bicharpur is liable for cancellation w.e.f. March 31, 2015. While
work on Bicharpur Coal Block has been temporarily suspended following
the Supreme Court''s Order, the safety and security of the block is
being maintained and will continue to be maintained till the vesting of
the coal block in accordance with the The Coal Mines (Special
Provisions) Ordinance, 2014.
AMRL has neither operating nor trading activity. The Consolidated Other
Income of Rs. 1.74 Crore represents the interest received on the loans
advanced by it to its Joint Venture Companies. The Consolidated loss
after depreciation, amortization and tax for the year ended December
31, 2014 was Rs. 5.85 Crore.
23.2 Bulk Cement Corporation (India) Limited (BCCI)
During the year under review, BCCI handled cement volumes of 10.30 lakh
tonnes as against 9.60 lakh tonnes in 2013. The profit after tax for
the year 2014 is Rs. 432.99 lakhs as against Rs. 270.94 lakhs in the
23.3 As regards the other three Subsidiary Companies i.e. Lucky Minmat
Limited, National Limestone Company Private Limited and Singhania
Minerals Private Limited, these are limestone deposit companies and are
currently not operational.
23.4 Audited financial statements of the Company''s Subsidiaries
The audited financial statements, the Auditors Report thereon and the
Board''s Report for the year ended December 31, 2014 for each of the
Company''s subsidiaries viz. ACC Mineral Resources Limited, Bulk Cement
Corporation (India) Limited, Lucky Minmat Limited, National Limestone
Company Private Limited and Singhania Minerals Private Limited are
The Board of Directors had appointed Mr Arunkumar Gandhi and Mrs
Falguni Nayar as Additional Directors of the Company in the category of
Independent Directors with effect from April 24,2014. Thereafter, at
the Extraordinary General Meeting (EGM) of the Company held on
September 10, 2014, the Members of the Company appointed the said
Directors as Independent Directors under the Companies Act, 2013 for a
period of 5 years with effect from April 24, 2014.
At the said EGM held on September 10, 2014, the Members had also
appointed the existing Independent Directors viz. Mr N S Sekhsaria, Mr
Shailesh Haribhakti, Mr Sushil Kumar Roongta, Mr Ashwin Dani, Mr
Farrokh Kavarana as Independent Directors under the Act each for a term
of five years with effect from July 24, 2014.
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.
The Board of Directors had on the recommendation of the Nomination &
Remuneration Committee appointed Mr Harish Badami as Chief Executive
Officer & Managing Director (CEO & MD) Designate for the period August
1,2014 till August 12, 2014 and thereafter as the CEO & MD of the
Company for a period of 5 years with effect from August 13, 2014. The
Members of the Company had at the aforesaid EGM also approved the said
appointment and terms of remuneration of Mr Harish Badami as CEO & MD.
Mr Kuldip Kaura former CEO & MD retired from the services of the
Company with effect from August 13, 2014.
Mr M L Narula, a Non Executive Director of the Company retired from the
Board of Directors with effect from July 25, 2014.
The Board has placed on record its appreciation for the outstanding
contributions made by Mr Kuldip Kaura and Mr M L Narula during their
respective tenures of office.
In accordance with the provisions of the Companies Act, 2013 and in
terms of the Memorandum and Articles of Association of the Company, Mr
Bernard Fontana and Mr Aidan Lynam retire by rotation and are eligible
24.1 Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the directors individually as well
as the evaluation of the working of its Audit, Nomination &
Remuneration and Compliance Committees. The manner in which the
evaluation has been carried out has been explained in the Corporate
24.2 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.
A calendar of Meetings is prepared and circulated in advance to the
During the year six Board Meetings and six 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.
25. 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
a. that in the preparation of the annual financial statements for the
year ended December 31, 2014, the applicable accounting standards have
been followed along with proper explanation relating to material
departures, if any;
b. that such accounting policies as mentioned in Note 2 of the Notes
to the Financial Statements have been selected and applied consistently
and judgement 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 as at December 31, 2014 and of the profit of the Company
for the year ended on that date;
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 on a going
e. that proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all
applicable laws were in place and were adequate and operating
26. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the
financial year were on an arm''s length basis and were in the ordinary
course of business. There are no materially significant related party
transactions made by the Company with Promoters, 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 are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained on a quarterly basis for the transactions which
are of a foreseen and repetitive nature. The transactions entered into
pursuant to the omnibus approval so granted are audited and a statement
giving details of all related party transactions is placed before the
Audit Committee and the Board of Directors for their approval on a
quarterly basis. The statement is supported by a Certificate from the
CEO & MD and the CFO. The Company has developed a Related Party
Transactions Manual, Standard Operating Procedures for purpose of
identification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company''s website.
None of the Directors has any pecuniary relationships or transactions
vis-a-vis the Company.
27. TECHNOLOGY & KNOWHOW AGREEMENT
An Ordinary Resolution was passed by the Members of the Company by
means of a Postal Ballot approving the Technology and Know-how
Agreement with Holcim Technology Limited (HTL) which, inter alia,
provided for the payment of technology and knowhow fees @ 1% of the net
sales of the Company to HTL. Whilst the Agreement was valid for a
period of five years, the technology and know-how fee was to remain in
force for a period of two years with effect from January 1,2013. The
Members had authorized the Board of Directors to review the technology
and knowhow fee rate before the end of the financial year 2014.
Accordingly, the Board of Directors had at its Meeting held on December
10, 2014 reviewed the rate of technology and know-how fee payable to
HTL and have decided that the rate be retained @ 1% of the net sales
till the end of the period of the agreement, i.e. upto and including
28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations. Pursuant to a complaint filed before the
Competition Commission of India (CCI) by the Builders Association of
India against some of the cement manufacturers including the Company,
the CCI had in June 2012 held that the cement manufacturers had
contravened the provisions of Section 3(3)(a) and 3(3)(b) read with
Section 3(1) of the Competition Act, 2002. The CCI had accordingly
imposed a penalty on the cement manufacturers aggregating Rs. 6,300
Crore. The penalty imposed on the Company is Rs. 1,147 Crore. The
cement manufacturers including the Company has filed an Appeal before
the Competition Appellate Tribunal (COMPAT) and the matter is
sub-judice. COMPAT has directed the cement manufacturers including the
Company to deposit 10% of the penalty amount. Accordingly, the Company
has deposited Rs. 114.7 Crore in the form of a bank fixed deposit with
a lien in favour of COMPAT. Based on expert legal advice, the Company
believes that it has a good case and expects a favourable decision in
the appellate proceedings.
29.1 Statutory Auditors
The Company''s Auditors, Messrs S R B C & CO. LLP, Chartered
Accountants, Mumbai who retire at the ensuing Annual General Meeting of
the Company are eligible for reappointment. They have confirmed their
eligibility under Section 141 of the Companies Act, 2013 and the Rules
framed thereunder for reappointment as Auditors of the Company. As
required under Clause 49 of the Listing Agreement, the auditors have
also confirmed that they hold a valid certificate issued by the Peer
Review Board of the Institute of Chartered Accountants of India.
Members'' attention is invited to the observation made by the Auditors
under Emphasis of Matter appearing in the Auditors Reports.
29.2 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 audited. Your Directors had, on the
recommendation of the Audit Committee, appointed Messrs N I Mehta & Co.
to audit the cost accounts of the Company for the financial year 2014
on a remuneration of Rs. 10 lakhs. As required under the Companies Act,
2013, the remuneration payable to the cost auditor is required to be
placed before the Members in a general meeting for their ratification.
Accordingly, a Resolution seeking Member''s ratification for the
remuneration payable to Messrs N I Mehta & Co., Cost Auditors is
included at Item No. 6 of the Notice convening the Annual General
29.3 Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and The Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs Pramod S Shah
& Associates, a firm of Company Secretaries in Practice to undertake
the Secretarial Audit of the Company. The Report of the Secretarial
Audit Report is annexed herewith as Annexure B.
During the year under review, your Company received many awards and
felicitations conferred by reputable organizations for achievements in
different areas such as Safety, Manufacturing Excellence and
Environment Management. ACC ranked as India''s Most Admired Companies
in Cement Sector in a Fortune India - Hay Group Survey for the second
consecutive year. Your Company''s Annual Report for 2013 won the Gold
Shield from the prestigious Institute of Chartered Accountants of India
for Excellence in Financial Reporting.
31. ENHANCING SHAREHOLDERS VALUE
Your Company believes that its Members are among its most important
Accordingly, your Company''s operations are committed to the pursuit of
achieving high levels of operating performance and cost
competitiveness, consolidating and building for growth, enhancing the
productive asset and resource base and nurturing overall corporate
reputation. Your Company is also committed to creating value for its
other stakeholders by ensuring that its corporate actions positively
impact the socio-economic and environmental dimensions and contribute
to sustainable growth and development.
32. CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate section on corporate governance practices followed by the
Company, together with a certificate from the Company''s Auditors
confirming compliance forms an intergal part of this Report.
33. BUSINESS RESPONSIBILITY REPORTING
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility Reporting forms an intergal
part of this Report.
34. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards (AS) viz. AS 21, AS 23
and AS 27 issued by the Institute of Chartered Accountants of India
form part of this Annual Report.
35. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information on conservation of energy, 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 Annexure C.
36. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure D.
37. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule, 5 of
The Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company up to the date of
the ensuing Annual General Meeting. If any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary in this regard.
Your Directors thank the various Central and State Government
Departments, Organizations and Agencies for the continued help and
co-operation extended by them. The Directors also gratefully
acknowledge all stakeholders of the Company viz. customers, members,
dealers, vendors, banks and other business partners for the excellent
support received from them during the year. The Directors place on
record their sincere appreciation to all employees of the Company for
their unstinted commitment and continued contribution to the Company.
39. CAUTIONARY STATEMENT
Statements in the Board''s Report and the Management Discussion &
Analysis describing the Company''s objectives, expectations or forecasts
may be forward-looking within the meaning of applicable securities laws
and regulations. Actual results may differ materially from those
expressed in the statement. Important factors that could influence the
Company''s operations include global and domestic demand and supply
conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other factors such as
litigation and industrial relations.
The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated
April 4, 2014 clarified that the financial statements and the documents
required to be attached thereto, the Auditor''s and Boards'' Report in
respect of the financial year under reference shall continue to be
governed by the relevant provisions of the Companies Act, 1956,
schedules and rules made thereunder. Accordingly, whilst the financial
statements and the Auditor''s Report as aforesaid are prepared as per
the requirements of the Companies Act, 1956, the Company, as per its
commitment to transparency and good governance, has to the extent
possible provided the information in the Board''s Report and the
Corporate Governance Report as per the Companies Act, 2013.
For and on behalf of the Board of Directors
N S Sekhsaria
February 3, 2015