TO THE MEMBERS OF ACC LIMITED
The Directors take pleasure in presenting the Seventy Eighth Annual
Report together with the audited financial statements for the year
ended December 31, 2013. The Management Discussion and Analysis has
also been incorporated into this report.
1. HIGHLIGHTS OF PERFORMANCE
Consolidated income for the year decreased by 2% to Rs. 11,389 crore as
compared to Rs. 11,621 crore in 2012. Consolidated profit before tax
in 2013 was Rs. 1,214 crore as against Rs. 1,441 crore in 2012.
Similarly, consolidated profit after tax was Rs. 1,095 crore as against
Rs. 1,059 crore in 2012.
2. FINANCIAL RESULTS
Rs. Crore Rs. Crore
2013 2012 2013 2012
Revenue from Operations(Net)
and other income 11,388.55 11,621.47 11,392.73 11,622.78
Profit Before Tax (PBT) 1,213.64 1,440.99 1,226.96 1,451.49
Provision for Tax 131.91 391.08 131.20 390.30
Profit After Tax (PAT) 1,094.67 1,059.28 1,095.76 1,061.19
Balance brought forward
from previous year 3,845.79 3,591.12 3,861.83 3,821.54
Adjustment pursuant to
Amalgamation - - - (216.29)
Profit available for
Appropriations 4,940.46 4,650.40 4,957.59 4,666.44
Interim Equity Dividend 206.52 206.52 206.52 206.52
Proposed Final Equity
Dividend 356.72 356.72 356.72 356.72
Tax on Equity Dividends 95.72 91.37 95.72 91.37
Previous Year Tax on
Equity Dividends 2.76 - 2.76 -
General Reserve 120.00 150.00 120.00 150.00
Surplus carried to the
next year''s account 4,158.74 3,845.79 4,175.87 3,861.83
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. 11/- per equity share of Rs. 10 each in August 2013.
The total dividend for the year ended December 31, 2013 would
accordingly be Rs. 30/- per equity share of Rs. 10 each which was the
same as the dividend declared for the year ended December 31, 2012. The
total outgo for the current year amounts to Rs. 658.96 crore, including
dividend distribution tax of Rs. 95.72 crore as against Rs. 654.61
crore including dividend distribution tax of Rs. 91.37 crore in the
previous year and Rs. 2.76 crore being the dividend distribution tax
pertaining to previous year.
4. ECONOMIC SCENARIO AND OUTLOOK
Indian economic growth in 2013 had slowed down to 4.5%-5% which is the
lowest in a decade. The high borrowing cost to combat inflation
coupled with lower private consumption, low investment in
infrastructure and other sectors were responsible for this. Although
agriculture and allied sectors had shown improvement following a good
monsoon and exports grew due to the depreciation in the value of the
Indian Rupee, the economic growth was mainly pulled down by the
contraction of the manufacturing sector.
The low economic growth appears to have bottomed out and a gradual
increase in economic activity is expected from the middle of 2014.
5. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
The Indian Cement Industry has an installed capacity of ~350 million
tonnes and the domestic consumption in the calendar year 2013 was ~260
million tonnes. Cement consumption had grown at the rate of 4% to 5% in
the calendar year 2013. Although, cement consumption is believed to
have a multiplying factor of 1.2 to the GDP growth, such lower than
expected consumption growth was mainly due to the high cost of
borrowing and low investment in the infrastructure and commercial
Your Company had a marginally negative volume growth during the last
calendar year as our large capacity in South and West could not be
placed in the market due to overcapacity in these regions and also on
account of negative consumption growth in our key markets of
Maharashtra and Karnataka. The sales volume was however, in line with
other large cement manufacturers in India.
The overall cement demand is estimated to grow at the rate of 4% to 5%
in the calendar year 2014. The consumption growth may pick up beyond
5% 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. Even with a modest increase in
the consumption growth, the cement industry will continue to have a
huge capacity surplus in 2014, particularly in the South. Your
Company''s continued focus on cost reduction under the
Institutionalizing Excellence programme, its thrust on increasing the
sale of its premium products and various other customer excellence
initiatives should help in presenting an improved performance.
6. CEMENT BUSINESS - PERFORMANCE AT A GLANCE_
2013 2012 Change %
million tonnes 23.86 24.12 -1
Sales Volume -
million tonnes 23.93 24.11 -1
Sale Value -
(Rs. crore) 10,908.41 11,130.45 -2
Operating EBITDA -
(Rs. crore) 1,628.79 2,195.57 -26
Your Company''s constant focus on cost reduction through various
efficiency improvement measures taken at the plants and in the areas of
logistics under Institutionalizing Excellence programme helped in
partially covering the high cost of inflation.
Introduction of premium products such as F2R, Concrete , ACC Gold in
the retail segment in many of our markets proved to be successful. It
has been decided to replicate this success on an all India basis.
7. INSTITUTIONALIZING EXCELLENCE
In 2012, your Company had launched the Institutionalizing Excellence
programme across all functions to sustain overall performance
excellence so as to deliver superior value to customers and pursue cost
leadership. The programme helped the Company offset inflationary
pressure by managing its operating costs and enhancing customer value
through improvements in manufacturing, sales, logistics and procurement
processes. The Institutionalizing Excellence journey continues with a
strong focus on Occupational Health
In Manufacturing Excellence, some plants have already achieved and have
even surpassed their individual inspirational targets in respect of
plant performance such as clinker factor, thermal and electrical energy
efficiencies. Efforts are now directed towards raising the overall
efficiency parameters closer to the inspirational targets and pursue
further reductions in input costs of coal, gypsum, slag and flash.
The Customer Excellence programme continued to focus on measures 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 enable the creation of
modern infrastructure at our plants and warehouses. The RFID and GPS
modules which were successfully deployed at three plants are being
replicated at all plants of the Company in a phased manner.
The on-going Jamul project in Chhattisgarh, which comprises a new
state-of-the-art clinkering line of 2.79 million tonnes per annum
capacity and a grinding facility of 1.10 million tonnes per annum
capacity is progressing well and has reached its halfway mark. The
project will be completed in a phased manner by mid 2015. During the
year, work also commenced on the Sindri grinding unit in Jharkhand,
which will receive clinker from the new Jamul plant.
Your Company''s first Waste Heat Recovery Boiler plant, with an output
of ~7.5 MW, was commissioned at the Gagal Cement Plant in Himachal
9. READY MIXED CONCRETE (RMX)
The Company''s RMX business turned around during the year with its
operating EBITDA improving substantially to Rs. 19.61 crore from Rs.
2.1 crore in the previous year, though concrete sales volume increased
marginally. The improvement in profitability was mainly a result of
close monitoring of operating and logistic costs and offering our
customers value added products and solutions. Customer focus has been
sharpened by widening the customer base and by leveraging the cement
sales network to target the retail segment.
The RMX market in the country has become more fragmented and
competitive with many new entrants from the unorganized segment. Larger
investments are foreseen in real estate and infrastructure projects
across India in the coming year leading to growth in the construction
sector. The increased demand is expected to come from the markets of
Mumbai, Chennai and Bengaluru. The Company is taking suitable steps to
consolidate its RMX business by striving to increase volumes from its
existing assets, through on-site and commercial projects.
2013 2012 Change %
Lakh Cubic Meters 15.96 16.54 -4
Sales Volume -
Lakh Cubic Meters 18.00 17.97 -
Sale Value -
(Rs. crore) 655.91 617.06 6
Operating EBITDA -
(Rs. crore) 19.61 2.12 825
10. SUSTAINABLE DEVELOPMENT
Sustainability is an integral part of our business philosophy. The
Company is in the process of consolidating inputs for a new roadmap for
sustainable development for the period 2014- 2017.
The cement operations of your Company are certified under various
management systems for quality, environment and safety. In addition to
Corporate Social Responsibility (CSR), Human Resources (HR) and
Occupational Health & Safety (OH&S), which are addressed later in this
report, the important initiatives of your Company''s sustainable
development agenda include reduction in CO2 emissions, reduction in
stack and fugitive emissions, water management and biodiversity.
10.1 CO2 Emissions:
Your Company co-chaired the group involved in developing a Low Carbon
Technology roadmap for the Indian Cement Industry under the aegis of
the Cement Sustainability Initiative in India (CSI) of World Business
Council for Sustainable Development (WBCSD). The roadmap comprises a
comprehensive plan to achieve reduction in direct emissions leading
upto the year 2050. This is the first plan of its kind which is a
country-specific and sector-specific long term action plan to cut CO2
emissions and mitigate climate change risks. Keeping in mind these
reduction targets, your Company is working on the following levers
- increasing the use of Alternative Fuels and Raw materials (AFR).
- reducing Thermal Energy and Electrical Energy.
- reducing clinker factor by producing blended cements using industrial
waste materials like flash and slag.
- increasing the use of renewable energy.
- waste heat power generation from process waste heat.
Efforts in these areas helped your Company to maintain a leadership
position in reduction of CO2 emissions in the country, as illustrated
by the following:
- specific CO2 emissions for Portland Pozzolona Cement (PPC) during the
year was 529 kg CO2 / tonne of cement as compared to 545 kg CO2 / tonne
of cement in the previous year.
- specific CO2 emissions for Portland Slag Cement (PSC) during the year
was 352 kg CO2 / tonne of cement as compared to 367 kg CO2 / tonne of
cement in the previous year.
The above reduction helped the Company to maintain overall specific CO2
emissions, at 538 kg CO2 / tonne of cement despite increase in the
production of Ordinary Portland Cement.
10.1.1 Alternative Fuels and Raw Materials (AFR):
Your Company''s initiatives in utilizing Alternative Fuels and Raw
Materials (AFR) in the cement manufacturing process is gaining momentum
in an effort to mitigate the rising cost of conventional fossil fuels
and raw materials. Forty six co-processing trials of different waste
materials have so far been carried out after obtaining necessary
clearances from the concerned authorities at the State and Centre
levels. These trials have demonstrated that co-processing is
environmentally and ecologically a more sustainable technology for
managing waste than other technologies that are in practice today, such
as landfill and incineration. Our waste management services through
cement kiln co-processing are gaining wider acceptance.
Based on the demonstrated success of the suitability of co-processing
technology for waste streams, the Company has received clearances for
co-processing 127 different waste streams generated by diverse industry
segments such as automobiles, chemicals, engineering, power, steel,
refineries and petrochemicals. During the year under review, the
Company conducted seven co-processing trials of different waste
materials. Twenty three new industries accepted the co-processing
services offered by the Company as a result of which thirty two new
streams for co-processing have been added in various plants. Currently,
different types of waste streams are being co-processed from
industrial, agricultural and municipal sources as AFR.
During the year 2013, a quantum leap was achieved in the usage of AFR,
thereby enabling a Thermal Substitution Rate (TSR) of 4.36% against a
target of 4.12%. The focus on AFR, enabled your Company to reduce fuel
consumption in kilns, captive power plants and in dryers.
Your Company is also engaged in co-processing segregated non-recyclable
plastic waste from municipal solid waste, thereby assisting Society
with the disposal of plastic waste. Your Company is in an active
engagement with fifteen municipalities and local bodies in this regard
and has co-processed 433.38 tonnes of non- recyclable plastics during
To increase the AFR utilization substantially, three pre-processing
platforms are being set up at our plants which will prepare AFR
material of uniform quality from various kinds of wastes that have
different types of physical and chemical characteristics. Two of these
facilities are expected to be ready during the course of this year.
10.1.2 Reduction of Thermal Energy:
Many initiatives were taken to reduce specific thermal energy in the
manufacture of clinker as part of the Manufacturing Excellence
initiatives, which resulted in a reduction of 10 MJ specific thermal
energy / tonne of clinker as compared to 2012. In many plants, higher
percentage of petcoke is being used to reduce the cost of thermal
energy and coal costs.
10.1.3 Clinker Factor:
Clinker Factor in both varieties of blended Cements viz. Portland
Pozzolana Cement (PPC) and Portland Slag Cement (PSC) was reduced
through product innovation and research efforts.
Your Company''s blended Cement initiatives is one of the biggest Clean
Development Mechanism (CDM) project of its kind in the Indian Cement
Industry. Continuous efforts to control clinker content in PPC has
helped in reducing CO2 emissions over a period of four years in four
plants and this is currently under review for issuance of 8,46,313 CERs
(Certified Emission Reductions) by United Nations Framework Convention
on Climate Change (UNFCCC).
10.1.4 Renewable Energy:
Your 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. Cumulatively, a total of 23.53
million units of wind power has been generated. These units helped the
Company meet its non-solar renewable purchase obligation for Madukkarai
and Lakheri Plants.
In Maharashtra, the Company was issued Renewable Energy Certificates
(RECs), besides meeting the power needs of our Thane complex and part
of the requirement of our Subsidiary Company, Bulk Cement Corporation
(India) Limited at Kalamboli. The non-solar renewable power
obligations of other plants viz. Wadi, Kymore, Bargarh, Tikaria and
Jamul were met by purchasing RECs.
The Tamil Nadu Wind Mill Project realized 21,745 CERs from UNFCCC.
10.1.5 Waste Heat Power generation from process waste heat:
The Waste Heat Recovery System at Gagal is expected to reduce 44,180
tonnes of CO2 per annum. This is an important milestone in the
Company''s sustainable development journey.
10.2 Stack Emissions and Fugitive Emissions:
The Company has implemented various initiatives/measures for improving
the environmental performance of its Plants. The current average Kiln
Stack emissions are <30mg/Nm3, as against the regulatory compliance
requirement of 30mg/Nm3. The specific kiln dust emissions per tonne of
cement have decreased by ~18% as compared to the previous year. This
was achieved through various measures like conversion of Electrostatic
Precipitators (ESPs) to Baghouse and installation of
Polytetrafluoroethylene (PTFE) membrane filter bags in place of
conventional filter bags. Many initiatives were undertaken to minimize
fugitive as well as stack emissions across all Plants. These include
installation of dust suppression systems, dust extraction systems for
material handling, loading, unloading areas of raw materials,
intermediate and finished products. In some plants, covered storage has
been provided to prevent fugitive emissions. On- line continuous
ambient air quality monitoring stations were installed in some plants
to monitor environment parameters.
10.3 Water-positive initiatives:
Your Company has adopted a two pronged strategy i.e. working
simultaneously on reducing fresh water intensity by reducing water
demand in process / non-process needs and waste water recycling after
treatment, whilst simultaneously working on rain water harvesting in
plants, mines, housing colonies and community areas.
During the year 2013, the Company''s specific water consumption per
tonne of cement was reduced by 2%. As part of its water-positive
initiatives, the Company has taken up many water harvesting schemes
during the year. Installation of water metering systems and increasing
the usage of recycled water will help the Company to become
water-positive in the near future.
As part of your Company''s overall objective to create a positive impact
on biodiversity, a risk assessment exercise of all mines has been
carried out and various initiatives are being undertaken in this
regard. The green belt area in all cement plants is being increased to
maintain at least 33% as green coverage. During the year 2013,
approximately 1 lakh trees were planted under forestation programmes
across all plants.
11. COMMUNITY DEVELOPMENT
The Board of Directors constituted a Corporate Social Responsibility
(CSR) Committee which reviewed and restated the Company''s CSR policy in
order to make it more comprehensive and aligned with the activities
specified in Schedule VII of the Companies Act, 2013. The new policy
statement emphasizes the purpose of delivering superior and sustainable
value to our stakeholders and simultaneously indicates key performance
areas and specific deliverables mainly in respect of education, health
& sanitation and sustainable livelihoods.
During the year 2013, the Company''s community development efforts
successfully touched the lives of almost 6 lakh people spanning ~130
villages across the country. Overall CSR expenditure incurred during
the year was Rs. 22.76 crore.
Efforts to enhance the quality of education in the plants neighborhood
schools benefitted approximately 18,000 students during the year.
Scholarships were awarded to 650 meritorious students from weaker
sections of society to help them continue their education. Technology
aided education initiatives like smart classes and interactive kiosks
in rural schools reached out to about 12,700 rural children to keep
pace with modern methods of learning. Specific support was provided to
revive education to about 850 girl children who had dropped out of
school. The Company continued to support
7 Government run ITIs 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 about 2,500 youth
get job placements in various manufacturing and service sector
enterprises. Your Company supported the formation of 737 Self Help
Groups (SHGs) and their strengthening through structured training
activities. Members of these SHGs saved close to Rs. 1.50 crore which
helped them to secure matching grants from banks and other financial
institutions to start micro-enterprises.
In matters of health and nutrition, your Company''s initiatives
benefitted more than 1 lakh people. Support to 102 anganwadi centers
helped approximately 3,000 children get access to better health and
nutrition. Nearly 1,500 HIV/AIDS affected persons were supported
through counseling, testing and treatment.
Your Company supported the process of Aadhaar enablement of the local
communities to enhance their access to government subsidies and
entitlements. A substantial part of the people living around our plants
now have Aadhaar identification cards.
Your Company has also been engaged in leadership roles in CSR at
various platforms. ACC has been nominated as an Industry representative
in the Global Fund for India''s Country Co-ordination Mechanism on
Health. The Company has also been appointed in the CII''s Sanitation
Committee to promote initiative of Government of India on better
sanitation coverage in India.
Your Company was quick to respond in providing timely relief to the
people affected in two major disasters that struck the nation in 2013.
The Chief Minister of Uttarakhand acknowledged the prompt efforts and
unstinted help rendered by the Company''s employees to the victims of
the landslide and flash floods in June 2013.
12. 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. Accordingly, the Endeavour in 2013 was to instill OH&S as our
license to lead. Through widely communicated initiatives such as
Suraksha Laher, efforts were directed to create an appropriate
infrastructure, improve OH&S systems to make them more robust by
identifying and addressing deficiencies and by building OH&S
capabilities of line and functional personnel.
There was a new thrust on visible leadership in creating a structure
within plants that ensures accountability and incorporates a concept of
Zone ownership. A Centre of Excellence has been created to implement
safety processes and systems uniformly at all plants, for capability
building and for sharing experiences and best practices. The centre has
three fulltime executives to implement OH&S priority areas. It is also
intended to involve and engage Shop Floor Associates (SFAs) and
contract workers to identify their safety concerns and execute safety
projects with a view to achieve focused improvements in their
respective work areas. The behavior based safety initiative ACC
Chetna, launched in 2012, continued to form part of the basic
behavior expected as a practice from employees to prevent incidents.
Reaching beyond plant operations, your Company also addressed the
subject of Logistics Safety to prevent vehicle related incidents. This
programme included carefully planned interventions in people
development and training in safe driving for drivers. Plant-level
health and safety checks have been initiated in phases with the help of
external consultants. The safety checks include examination of factors
influencing vehicular safety such as overall plant layout, packing
house layout, truck parking yards, inward and outward flow of traffic,
storage areas and infrastructure for road and rail transport.
Various steps were taken to demonstrate that health constitutes an
essential part of Occupational Health & Safety. The focus on
occupational health in the areas of health surveillance, up gradation of
emergency medical response and pro-wellness programmes helped save
valuable lives while reducing health risk factors.
13. HUMAN RESOURCES
Success of any organization depends upon the engagement and motivation
levels of its employees. In Human Resources, our emphasis was to give
autonomy to people at different levels and create a sense of ownership
in order to unleash their potential.
The Human Resources Division has played a significant role in achieving
the overall business objectives by creating a common vision, building
capability amongst people and more importantly, involve and engage
employees in improvement programmes across the functions for achieving
higher results. This process of engagement and involvement through
special projects has created learning opportunities for the employees.
To support business, processes were re-engineered to bring about
various changes in systems in order to provide proactive support. Some
of the initiatives are as under:
- Recruitment and On-Boarding - Right-fit talent is hired and exposed
to a year-long induction programme in newly created On- Boarding
- Employee Engagement Programmes - Employee feedback through various
surveys conducted show that the employees are experiencing a greater
sense of engagement. This has been achieved through various on-
the-job engagement initiatives.
- Organization Excellence - The Company has carried out a variety of
initiatives in this regard, after benchmarking Indian and Global
best-in-class organization designs.
- Skill Enhancement - A plan has been put in place for upgrading the
skills of SFAs through training and engaging them in a variety of
improvement programmes to enable them to align with business and
perform better. The unions and other stakeholders are highly
appreciative of this initiative.
- Capability Building - Your Company believes that capability can be
built by hands-on experience and exposure. Series of programmes are
being conducted where under a large number of middle and senior level
leaders are assigned various turnaround projects. A continuous
monitoring as well as a recognition and reward model has also been
created around this initiative to encourage and recognize people in
- Creating a future leadership pipeline - With a view to motivating and
retaining talent and providing growth opportunities for them in their
respective work areas, identified talent has been given new challenges
through engagement, mobility and special projects.
- Proactive Industrial Relations - A great deal of time is spent in
engaging Unions and sharing relevant information with them to enable
them to participate in the growth journey.
Your Company''s cash and cash equivalent as at December 31, 2013 was Rs.
2,621 crore. The Company continues to focus on judicious management of
its working capital. Receivables, inventories and other working capital
parameters are kept under strict check through continuous monitoring.
The Company''s debt programme continues to enjoy an AAA rating from
CRISIL. During the year under review, the Company had given an option
of premature redemption of Non-Convertible Debentures to the holders of
its Privately Placed Debentures.
Non-Convertible Debentures of the aggregate value of Rs. 105 crore,
stand prematurely redeemed whilst debentures of the aggregate value of
Rs. 20 crore, stand redeemed on maturity as on December 31, 2013.
As on date, Non-Convertible Debentures aggregating Rs. 32 crore remain
15. FIXED DEPOSITS
Despite efforts to identify and repay unclaimed deposits, the total
amount of fixed deposits matured and remaining unclaimed as on December
31, 2013 was Rs. 0.02 crore.
16. SUBSIDIARY COMPANIES
16.1 ACC Mineral Resources Limited (AMRL)
The wholly owned Company ACC Mineral Resources Limited is a Joint
Venture Partner in four Coal Blocks allotted by the Madhya Pradesh
State Mining Corporation Limited (MPSMC).
Preliminary and pre-development activities in the three Coal Blocks out
of four are in progress. The Bicharpur Coal Block in the Shahdol
District is in an advanced stage of development and will cater to the
coal requirement of some of your Company''s cement plants when it
becomes operational. Various clearances for Marki Barka Coal Block in
Singrauli are in an advanced stage and a detailed project report for
the Block is under preparation. The exploration activity in Morga IV
Coal Block is expected to take place after the clearance from the
Ministry of Environment & Forests.
In January 2013, the Semaria Piparia Coal Block was de-allocated by the
Ministry of Coal on the grounds of non-receipt of forest and
environmental clearances from the Ministry of Environment and Forests,
in view of the block''s proximity to the National Tiger Reserve at
Bandhavgarh. On a Writ Petition filed by MPSMC and the Semaria Joint
Venture Company, partial relief in the matter has been granted by the
High Court at Jabalpur.
16.2 Bulk Cement Corporation (India) Limited (BCCI) During the year
under review, BCCI handled cement volumes of 9.60 lakh tonnes as
against 9.20 lakh tonnes in 2012. The profit after tax for the year
2013 is Rs. 270.94 lakhs as against Rs. 179.81 lakhs in the year 2012.
16.3 Audited Financial Statements of Subsidiary Companies
As required under Section 212 of the Companies Act, 1956, the audited
financial statements along with the report of the Board of Directors
relating to 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 together with the respective Auditors'' Reports thereon
for the year ended December 31, 2013 are annexed.
The Board has appointed Mr Farrokh K Kavarana as an Additional Director
of the Company with effect from May 3, 2013. In accordance with Section
161 of the Companies Act, 2013 (corresponding to Section 260 of the
Companies Act, 1956), Mr Kavarana holds office upto the date of the
forthcoming Annual General Meeting of the Company and his candidature
for appointment as a Director has been included in the Notice convening
the forthcoming Annual General Meeting of the Company.
The Board has appointed Mr Bernard Terver as an Additional Director of
the Company with effect from December 4, 2013. In accordance with
Section 161 of the Companies Act, 2013 (corresponding to Section 260 of
the Companies Act, 1956), Mr Terver holds office upto the date of the
forthcoming Annual General Meeting of the Company and his candidature
for appointment as a Director has been included in the Notice convening
the forthcoming Annual General Meeting of the Company.
At the request of Life Insurance Corporation of India, the Board has
appointed Mr V K Sharma, Managing Director, Life Insurance Corporation
of India, as an Additional Director of the Company with effect from
February 6, 2014. In accordance with Section 161 of Companies Act,
2013 (corresponding to Section 260 of the Companies Act, 1956), Mr
Sharma holds office upto the date of the forthcoming Annual General
Meeting of the Company and his candidature for appointment as a
Director has been included in the Notice convening the forthcoming
Annual General Meeting of the Company.
The Board has re-appointed Mr Kuldip Kaura as Chief Executive Officer &
Managing Director for a period of one year with effect from January 1,
2014. The Members of the Company had approved of the aforesaid
re-appointment and the terms of remuneration of Mr Kaura by way of a
postal ballot, pursuant to which the Company has entered into an
agreement with Mr Kaura detailing therein his terms of re- appointment
In accordance with the provisions of the Companies Act, 1956, and in
terms of the Memorandum and Articles of Association of the Company, the
following Directors, viz. Mr Aidan Lynam, Mr Sushil Kumar Roongta and
Mr M L Narula retire by rotation and are eligible for re-appointment.
18. 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 IA function reports
to the Chairman of the Audit Committee of the Board.
The Internal Audit Department monitors and evaluates the efficacy and
adequacy of the internal control system in the Company, its compliance
with operating systems, accounting procedures and policies at all the
Company''s locations, 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.
19. BUSINESS RISK MANAGEMENT
Your Company has a robust process to identify and assess business risks
and opportunities. The Business Risk Management (BRM) activity is
monitored both at the Corporate and at regional levels. Risks and
opportunities so identified are integrated into the business plan and a
detailed action plan to mitigate identified risks is drawn up and its
implementation monitored. Key business risks identified by the Company
fall into areas of fuels, projects, competition and OH&S. These risks
together with plans for their mitigation are as under:
Cement production is an energy-intensive process that requires large
quantities of coal to meet its kiln and captive power generation
requirements; hence, consistent supply of this fuel at reasonable and
stable prices is a major concern for the Company. Erratic supplies of
coal due to domestic production constraints and price fluctuations
would adversely impact the input costs for an industry as dependent on
coal as the Cement Industry. The Company is gradually increasing the
use of alternative fuels and is optimizing its coal mix. To hedge this
risk, your Company has through its Subsidiary Company ACC Mineral
Resources Limited, entered into Joint Venture with Madhya Pradesh State
Mining Corporation Limited for developing four coal block as earlier
indicated. The Bicharpur Coal Block when developed would partly meet
the coal requirement of some of the Company''s Cement Plants.
The Cement Industry is capital intensive in nature. Its Compound Annual
(CAGR) for the next five years is expected to be ~7 %. 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 Company has strengthened its project management team as well as its
project accounting and governance framework. Whilst the Company
continues to draw on Holcim''s expertise, a separate organizational
structure at Project sites with defined roles and accountability has
been 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 its
capacities to increase market share, enhance brand equity and
visibility, enlarge product portfolio and service offerings. It would
also leverage on its Infrastructure, Commercial and Institutional Sales
teams to offer value to large customers.
The Cement Industry is labor intensive and hence the 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 a focus area of overriding importance.
The Company already has a robust approach to tackle this risk through
various programmes in all its Plants and Sales Units as detailed in
para 12 of this Report.
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. Your Company was recognized as one of India''s
most sustainable companies and was presented the CII-ITC Sustainability
Prize under the category of large manufacturing companies which is a
21. ENHANCING SHAREHOLDERS'' VALUE
The processes of the Secretarial & Compliance Division, Share
Department and ISD Support, comply with ISO 9001:2008 as certified by
Det Norske Veritas AS for the robustness of quality management
Your Company believes that its Members are among its most important
stakeholders. Accordingly, your Company''s operations are committed in
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.
22. 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 statement in terms of Section 217(2AA) of the Companies Act,
- that in the preparation of the annual accounts for the year ended
December 31, 2013, the applicable accounting standards have been
followed along with proper explanation relating to material departures,
- that such accounting policies as mentioned in Note 2 of the Notes to
the Financial Statements have been selected and have been applied
consistently and judgment 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 on December 31, 2013, 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, 1956, 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.
The Company''s Auditors Messrs S R Batliboi & Co LLP, Chartered
Accountants, who are the Statutory Auditors of the Company and who hold
office upto the date of the Annual General Meeting, have, arising out
of their internal restructuring, expressed their inability to continue
as Auditors of the Company.
Messrs S R Batliboi & Co LLP, were appointed as Auditors of the Company
in 2012. The Board has placed on record its appreciation of the
services rendered by the Auditors.
The Members are requested to appoint S R B C & CO LLP (ICAI Firm
Registration No. 324982E) one of the four firms in the overall S R
Batliboi & Co network, as the Auditors of the Company for the year 2014
and to authorize the Board of Directors to fix their remuneration as
per Item 6 of the Notice. S R B C & CO LLP have confirmed their
eligibility under Section 224 of the Companies Act, 1956, for
appointment as Auditors of the Company.
As per the requirement of the Central Government and in pursuance of
Section 233B of the Companies Act, 1956, your Company carries out an
audit of cost records relating to cement each year. Subject to the
approval of the Central Government, your Directors have appointed
Messrs N I Mehta & Co to audit the cost accounts of the Company for the
financial year 2013.
24. 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, is set out in the Annexure forming part of this
25. BUSINESS RESPONSIBILITY REPORTING
As per Clause 55 of the Listing Agreement with the Stock Exchanges, a
separate section on Business Responsibility forms part of this Annual
26. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company prepared in
accordance with relevant Accounting Standards viz. AS 21, AS 23 and AS
27 issued by the Institute of Chartered Accountants of India form part
of this Annual Report.
27. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 217(1)(e)
of the Companies Act, 1956, are furnished in Annexure ''A'' to the
28. PARTICULARS OF EMPLOYEES
The information required under Section 217 (2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975 as
amended, in respect of the employees of the Company, is provided in the
Annexure forming part of this Report. In terms of Section 219(1)(b)(iv)
of the Act, the Report and Accounts are being sent to the Members and
others entitled thereto, excluding the aforesaid Annexure which is
available for inspection by the Members at the Registered Office of the
Company during business hours on working days of the Company upto 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,
shareholders, 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 ACC for
their unstinted commitment and continued contribution to the Company.
30. CAUTIONARY STATEMENT
Statements in the Directors'' 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.
For and on behalf of the Board of Directors
N S Sekhsaria
February 6, 2014