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ACC
BSE: 500410 | NSE: ACC | ISIN: INE012A01025 | Cement - Major
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Dec '07 |
The Directors hereby present the Seventy-second Annual Report on the
business and operations of your Company along with the audited
Financial Accounts for the year ended December 31, 2007.
1. 2007: A YEAR OF ENHANCING CAPABILITIES
During the year, your Company strengthened several organizational
processes across a wide range of functions with a view to enhance its
business capabilities.
A new approach to Business Planning helped provide a clear vision of
major corporate objectives, chart a long-term roadmap for the next five
years, identify key performance indicators and methods of monitoring
and evaluation. The Performance Management System was modified to link
individual performance indicators with corporate goals. This allows
each employee to understand his or her role in contributing to the
achievement of your Company’s objectives. Another significant
initiative to encourage team work, employee motivation and empowerment
was a fresh study that was undertaken to identify approaches to enrich
internal communications.
Learning and knowledge advancement was given special thrust during the
year under review. The ACC Academy, a state-of-the-art learning centre
was opened at Thane to facilitate training and development of
employees. The Sumant Moolgaokar Technical Institute at Kymore was
reopened with a new curriculum to upgrade the capabilities of
Industrial Training Institute (ITI) qualified students. Similarly, the
focus of our Regional Training Centre at Jamul in Chhattisgarh was
redirected to provide professional technical courses in the area of
Cement Manufacturing Technology. Your Company stepped forward to
partnering with Government and industry associations to improve some of
the ITI’s located near our cement plants. These measures will together
give special thrust to people development, sharing of knowledge and
employability among internal as well as external stakeholders.
Your Company also initiated purposeful steps in Sustainable Development
and Corporate Social Responsibility during the year. A Wind Energy Farm
was commissioned in Tamil Nadu to promote clean and green technologies
that will help reduce dependence on conventional fossil fuel energy. In
respect of Corporate Social Responsibility, your Company identified a
distinct approach to usher in self-sufficiency in the community that
lives around our cement plants and to contribute more fruitfully in
this direction through vocational guidance aimed at enhancing
livelihood of the underprivileged.
2. HIGHLIGHTS OF PERFORMANCE / EVENTS
- Production and sale of cement touched an all-time high of 19.92
million tonnes and 19.97 million tonnes respectively during the year
2007, growth of 6.4% and 6.1% respectively as compared to the
corresponding previous year
- Clinkering capacity and cement grinding capacity crossed 14 million
tonnes and 22 million tonnes respectively
- Total group income for the year 2007 at Rs 7189 crore, up 20% over
the corresponding previous year
- Profit before Exceptional Items and Tax for the year ended December
31, 2007 for the group was Rs 1716 crore against Rs 1473 crore in the
corresponding previous year
- Profit after Tax for the year ended December 31, 2007 for the group
was Rs 1427 crore against Rs 1240 crore in the corresponding previous
year
- Cement grinding capacities were enhanced at Tikaria, Kymore, Wadi and
Sindri
- Expansion of Lakheri Works capacity to 1.5 MTPA and setting up of 25
MW captive power plant was completed
- Projects for expansion of capacity of Bargarh and New Wadi with
satellite grinding units in Karnataka are on course
- Project for setting up of a new 7000 TPD clinker line at Chanda along
with 25 MW additional captive power plant was approved by the Board
- Engineering subsidiary Company ACC Nihon Casting Limited divested
- Ready Mixed Concrete business hived off to a subsidiary Company by
the name ACC Concrete Limited w.e.f January 1, 2008
- The first phase of Project Connect India implemented - SAP based
Enterprise Resource Planning system successfully implemented across ACC
- ACC invested in wind energy by commissioning a 9 MW wind farm in
Tamil Nadu
- ACC continues to pledge its support to the national effort against
HIV/AIDS
3. FINANCIAL RESULTS
Consolidated
Rs Crore
This year Previous Year
Sale of products and
services (net of excise duty)
and other income 7189.43 5984.56
Profit before depreciation ,
interest, exceptional items, tax
and minority interest 2053.16 1788.70
Depreciation 313.02 260.95
Interest 24.37 54.37
337.39 315.32
Minority Interest (0.19) (0.83)
Profit/(Loss) before exceptional
items and tax 1715.58 1472.55
Exceptional Items
Profit on sale of investment in
subsidiary and associates 8.42 -
Profit on sale of undertaking - 16.31
Profit on sale of land 201.43 144.60
Profit/(Loss) after exceptional
items and before tax 1925.43 1633.46
Profit from continuing operation
before taxation 1925.43 1633.46
Provision for Taxation
Current Tax (478.22) (373.11)
Deferred Tax (11.60) 4.05
Prior period tax expense - (18.86)
Fringe benefit tax (8.27) (5.94)
(498.09) (393.86)
Profit/(Loss) after taxation
from continuing operation(A) 1427.34 1239.60
Profit/(Loss) from discontinuing
operation before taxation - -
Current Tax - -
Deferred Tax - -
Fringe benefit tax - -
Profit/(Loss) after taxation
from discontinuing operation (B) - -
Profit/(Loss) after taxation and
exceptional items(A+B) 1427.34 1239.60
Balance brought forward from
previous year 1254.97 462.68
Debit balance of profit and loss
account of erstwhile
Tarmac (India) Limited as on
January 1, 2006 - -
Less:Adjusted from General Reserves - -
Transferred from Debenture Redemption
Reserve 166.63
Amount available for appropriation 2848.94 1702.28
Appropriations :
Previous Year Dividend 0.16 1.72
General Reserve 351.00 124.03
Amortisation Reserve 0.35 0.40
Interim Dividend 187.40 -
Dividend distribution tax
on above 31.85 -
Proposed Final Dividend 187.62 280.92
Dividend distribution tax
on above 33.19 40.24
791.57 447.31
Balance carried forward to the
next years account 2057.37 1254.97
Standalone
Rs Crore
This year Previous Year
7135.97 5945.13
2046.19 1764.87
305.07 254.25
23.94 52.03
329.01 306.28
1717.18 1458.59
11.68 -
- 16.31
201.43 144.60
1930.29 1619.50
1991.00 1616.84
(489.10) (366.18)
(15.01) 4.15
- (18.86)
(8.02) (5.70)
(512.13) (386.59)
1478.87 1230.25
(60.71) 2.66
16.35 (1.94)
4.28 1.02
(0.20) (0.15)
20.43 (1.07)
(40.28) 1.59
1438.59 1231.84
1248.94 462.72
- 4.25
- (4.25)
166.63 -
2854.16 1694.56
0.16 1.72
350.00 123.18
0.35 0.40
187.40 -
31.85 -
187.62 280.92
31.89 39.40
789.27 445.62
2064.89 1248.94
Your Company posted another record performance in fiscal 2007.
Consolidated profit before tax and exceptional items of the Company for
the financial year under review was Rs 1715.58 crore (previous year Rs
1472.55 crore) while consolidated profit after tax (including
extraordinary items) was Rs 1427.34 crore (previous year Rs 1239.60
crore).
4. DIVIDEND
In August 2007 your Company paid an interim dividend of Rs 10 per share
which involved an outgo (including the dividend distribution tax) of Rs
219.25 crore.
Your Directors now recommend a final dividend of Rs 10 per equity share
of Rs 10 each. Thus, the total dividend for the year 2007 would be Rs
20 per share (200 % on the par value of Rs 10) as against Rs 15 per
equity share for the year ended December 31, 2006.
The total dividend outgo for the current fiscal would amount to Rs
438.76 crore including dividend distribution tax of Rs 63.74 crore as
against Rs 320.32 crore including dividend distribution tax of Rs 39.40
crore in the previous year.
5. INDIAN ECONOMY AND BUSINESS OPPORTUNITIES
The Indian economy marches ahead as one of the fastest growing
economies in the world. Accelerated growth led by manufacturing and
services sectors have enabled the corporates to record strong
performances. In turn, tax collections have been buoyant, improving
state of the public finances.
A GDP growth of around 9% in consecutive years and robust domestic
consumption portend encouraging signs of continued growth. During the
year, the capital market overall did well despite some volatility. The
Rupee proved to be a sturdy and reliable currency with a surge in the
inflow of foreign direct investments and portfolio investments, as also
weakness exhibited by the US Dollar. Foreign exchange reserves
burgeoned. Amidst the backdrop of global volatility and incipient signs
of a global slowdown, India’s economy shows resilience, characterized
by healthy macro economic conditions. This along with other positive
factors such as a favourable demographic profile and rising income
levels holds out promise for furthering the consumption led growth.
Indeed, India looks poised to maintain its growth trajectory as a
country.
6. CEMENT INDUSTRY OUTLOOK AND OPPORTUNITIES
After a record growth of 11.6% in 2006, the cement industry witnessed a
muted growth of 7.1 % in calendar year 2007. Constraints in capacity
materialization and the high base of 2006 contributed to the lower
growth rate for the year under review. But the outlook for growth is
bright. Cement Industry is implementing major capacity additions over
the existing level of 173 million tonnes per annum. Several
manufacturers have embarked on significant capacity expansion plans.
While 7-8 million tonnes of capacity was added during the year 2007,
significant capacity is expected to be added during 2008. Cement
companies operated at high capacity utilization levels to meet the
increased demand. The pricing environment was stable during the year.
However, significant increases in costs - particularly in energy,
transportation and other inputs - have been a cause for concern. Cement
demand is likely to continue to be brisk, led by increased activity in
infrastructure and housing sectors.
7. RISKS AND CONCERNS
Though the Indian growth story continues to attract global attention,
there are worrying signs - lack of inclusive growth with a widening
urban/rural divide, inequitable sharing of gains of development among
various states, lacklustre performance of agriculture, yawning gaps in
infrastructure, delays in implementation of major infrastructural
projects and slowdown in merchandise and software exports due to Rupee
appreciation. The economic boom has not been preceded by scaling up of
our talent pool of human resources. Headline inflation though below 5%
is always a cause for concern in view of rising global oil prices and
needs continuous monitoring by the Government.
Escalating input and fuel costs are forcing manufacturers to tap new
supply sources and increase the quest for alternative fuels and raw
materials. Cement industry continues to battle the challenge to
optimize the utilization of scarce basic raw materials and fossil fuels
while simultaneously protecting the environment and maintaining
emission levels within acceptable limits. The need of the hour is to
reach higher levels of energy utilization efficiencies and sustain them
continuously.
Despite India having the third largest reserves of coal, there are huge
supply demand gaps on account of under-investment in mining capacity
and ever rising needs of the power, steel and cement industries. The
huge addition to cement capacity that is envisaged will also exert
pressure on limestone reserves which is concentrated in limited
geographical areas and pockets. It will also strain our rail and road
transportation network resulting in possible escalations in logistic
costs to the Cement Industry.
Cement continues to be one of the highest taxed items in the country,
despite being a basic essential commodity vital for growth. The Union
Budget 2007 introduced a differential excise duty structure for cement
linked to different slabs of Maximum Retail Price (MRP). Under this new
scheme, excise duty on cement based on the then prevailing retail
prices increased by upto Rs 200/- per tonne. Besides, factors such as
spiralling oil prices, transport bottlenecks etc. could adversely
affect the economic and Industry environment .
8. CEMENT BUSINESS - PERFORMANCE AT A GLANCE
2007 2006 Change %
Production-Million tonnes 19.92 18.73 6.4%
Sales volume-Million tonnes* 19.97 18.83 6.1%
Sales value - Rs crore ** 6639.93 5503.76 20.6%
EBITDA % 31% 32%
* Cement sales volume included sale to RMX and Trading Sales
** Sales value as per cement segment / activity (includes trading)
Operational Performance 2007 2006
Capacity utilization - % 91 95
Blended cement - % 90 87
Fuel consumption (Kcal/Kg of clinker) 752 736
Power consumption (Process) Kwh/T 89 88
Man hours per tonne of cement 1.14 1.36
9. MARKETING
Your Companys new corporate identity that was given a makeover in 2006
enjoyed good visibility. The brand was noticed as being more vibrant
and youthful. The Superbrands Council of India once again named ACC as
a “Consumer Superbrand.”
Your Company is committed to become a more customer focussed and
service oriented organization. A forum has been created for sharing
knowledge and best practices to achieve excellence in sales and
marketing. The customer service team, now numbering over 200 personnel,
is able to respond to customer needs. ACC Help Centres, established to
assist the retail customer and individual home-builders in smaller
cities and towns, have proved to perform a valuable service, not
offered by others. Accordingly, plans are afoot to add more such
centres. Mobile on-site services of this group have been enhanced with
a fleet of 100 vans that now operate across the country.
10. READY MIXED CONCRETE
Your Companys Ready Mixed Concrete (RMX) business has 23 plants as at
December 2007.
Production and sales of RMX stood at 1.11 million cubic meters and 1.23
million cubic metres which was higher by 4.7% and 9.8% respectively as
compared to the previous year. Sales value stood at Rs 367.02 crore
which is 22.4% higher than that in the previous year. Profitability of
RMX operations was adversely affected due to higher cost of input mix
and higher overhead costs.
Ready Mixed Concrete business holds huge potential and is poised for
significant growth in coming years. In view of this, your Company sees
this business as a key channel for delivery of cement to customers of
tomorrow.
RMX industry functions quite differently from cement, characterized by
relatively lower capital intensity, lack of entry barriers and higher
focus on customer servicing and efficient logistics. The Directors
therefore thought it fit to spin off this business to a separate
subsidiary which would be better equipped to grow this business. The
Directors approved sale and transfer of RMX business to a new wholly
owned subsidiary company incorporated with the name of ACC Concrete
Limited. Accordingly, approval of the shareholders under Section 293
(1)(a) of the Companies Act, 1956 was secured by a Postal Ballot for
the transfer of RMX business to ACC Concrete Limited. The RMX business
is accordingly transferred to ACC Concrete Limited with effect from
January 1, 2008.
It is hoped that this new arrangement will allow the new subsidiary
company to enjoy the flexibility of operating as an independent entity
that can then pursue its intensive growth agenda and stand out as one
of the major players in this high growth industry.
11. OVERSEAS BUSINESS
The contract with Yanbu Cement Company, Saudi Arabia for the management
and operation of their cement plant at Yanbu in the Kingdom of Saudi
Arabia (KSA) crossed twenty-eight years of successful operation and has
been renewed up to February 28, 2011.
The contracts with Dangote Group of Nigeria for providing project
management and consultancy services for establishing 2 new cement lines
of 7,000 TPD capacity each at Obajana, Nigeria and expansion and
modernization of 2 lines from 1,500 TPD to 4,000 TPD each at Benue,
Nigeria are on track. The agreements signed with the Group for
providing operations and management support for both the plants are
under execution.
The contract with Mugher Cement Enterprises for providing project
engineering and consultancy services for a 3,000 TPD greenfield
clinkering line at Mugher, Ethiopia along with a satellite grinding and
packing plant at Tatek near Addis Ababa is progressing satisfactorily.
Contracts signed with IHI, Japan for providing assistance in plant
commissioning at Qassim Cement Plant (KSA) and Amran Cement Plant
(Yemen) and back office engineering support to the New Bimson Cement
Plant (Vietnam) are nearing closure.
12. TECHNICAL SUPPORT SERVICES (TSS)
Technical Support Services (TSS), housed at our Thane complex, was
established to pursue technical excellence and provide expert support
to your Company’s cement plants. All corporate manufacturing support
departments of your Company which were hitherto providing technical and
operational support as well as support to expansion and upgradation
projects have now been brought under the umbrella of TSS.
TSS has commenced playing a vital role of supporting improvements in
functions critical to cement plants such as project execution,
maintenance, process technology, product optimization, quality
assurance, energy sourcing and operations of power plants. The Centre
will help drive ACC’s future growth plans through capital expenditure
planning, project implementation and management as well as ensure long
term availability of Raw Materials and Fuels for existing and future
operation of your Company. In addition to in-house talent, TSS draws on
expertise available from the Holcim group as well as from its other
group company in India, Ambuja Cement Limited.
13. CONNECT INDIA
The first phase of your Company’s ambitious Enterprise Resource
Planning model based on a SAP package was implemented seamlessly and
has since stabilized. Implementation of the second phase of this
project covering Production Planning, Product Costing and Plant
Maintenance is scheduled to go live from February 1, 2008. Besides the
above, the first phase of SAP – HR of your Company will go live in
March-April 2008 which will include Organisation Management, Time
Management and Personnel Administration. Your Company has plans to
implement the Project Systems and Investment Management modules of SAP
which will together enable effective planning, monitoring and control
of our capital expenditure programme.
14. MODERNISATION / EXPANSION PROJECTS
Your Company continued to pursue the policy of strengthening its
presence in its strategic markets by judicious brownfield expansion of
its existing cement plants.
The project for expansion of Bargarh Work’s capacity to 2.14 million
tonnes per annum together with 30 MW captive power plant is underway
and scheduled to be completed by early 2009.
The implementation of the projects for augmenting grinding capacity at
Madukkarai by 0.22 million tonnes per annum and New Wadi by 0.60
million tonnes per annum are also expected to materialize this year.
During the year, work was commenced on the expansion of New Wadi Plant
in Karnataka which together with two grinding plants will augment our
cement capacity in the state of Karnataka by 3 million tonnes per
annum. These projects will go on stream in middle of 2009.
Your Directors have approved the setting-up of a new clinker line with
a capacity of 7000 TPD at Chanda in Maharashtra equivalent to about 3
million tonnes per annum. It is also proposed to establish a new 25 MW
captive power plant to meet the increased power requirement at Chanda.
The total project outlay is likely to be of the order of Rs 1450 crore
and expected to go on stream in 2010.
The total cement capacity of ACC as on December 31, 2007 was 22.4
million tonnes.
The proposed capacity additions in the next three years can be
summarized as below:
Madukkarai grinding augmentation (in 2008) : 0.22 million tonnes
New Wadi grinding augmentation( in 2008) : 0.60 million tonnes
Bargarh expansion (in 2009) : 1.18 million tonnes
New Wadi expansion (in 2009) : 3.00 million tonnes
Chanda new line (in 2010) : 3.00 million tonnes
Thus, with the projects at hand, the total capacity of ACC would stand
enhanced to about 30.4 million tonnes per annum by the end of 2010.
15. ACQUISITIONS / DIVESTMENTS
With the view to further improve its market share and presence in
Orissa market, your Company acquired 14.3% equity stake in Shiva Cement
Limited (SCL), Rourkela. SCL has an integrated cement plant with a
clinker capacity of 350 tonnes per day and cement grinding capacity of
100,000 tonnes per annum. Your Company has entered into a marketing
agreement through which the entire production of SCL is marketed by
ACC.
In order to augment limestone reserves of Lakheri Works, your Company
has acquired 100% of the equity stake of Lucky Minmat Private Limited
for Rs 35 crore. This company holds lime stone mines in the Sikar
District of Rajasthan.
The Company divested its entire stake in its engineering subsidiary ACC
Nihon Castings Ltd. during the year under review. Your Company also
divested its entire equity stake in Almatis ACC Limited to the Almatis
group during the year.
With the view to unlock the value of its surplus assets, your Company
sold the land and immovable assets of its erstwhile Bhupendra Cement
Works. The profit before tax of Rs 201.43 crore arising out of this
transaction has been included as a part of the exceptional item in the
Profit and Loss Account for the year under review.
16. SUSTAINABLE DEVELOPMENT
Alternate Fuels & Raw Materials : As part of its environmental
responsibility, your Company continued with its quest for Alternate
Fuel and Raw Materials. In addition, your Company vigourously promoted
its waste management services, mapping waste generation around the
cement plants, establishing nexus with industrial associations and
individual waste generators, creating awareness and lobbying with
authorities to promote co-processing. The AFR group has successfully
finalised contracts with several waste generators for the co-processing
of both hazardous and non-hazardous waste from different industrial
processes. The group has commenced the co-processing of materials such
as Spent Activated Carbon and Calcium Sludges and is also in the
process of finalising plans for extending co-processing solutions to
about 250 industries for their “difficult to treat” wastes.
Clean Development Mechanism (CDM) : In the area of CDM credits all ACC
plants have completed a cycle of baseline monitoring in co-ordination
with SGS India, an agency approved by the Pollution Control Board. This
agency is ISO 17025 certified. Various other initiatives and CO2
mitigation projects are being explored.
Wind Energy : Your Company successfully commissioned its first Wind
Energy Farm as part of an effort to adopt environment–friendly
technologies and to reduce dependence on energy obtained from
conventional fossil fuel based sources. The wind farm, comprising six
wind turbines of capacity 1.5 MW each, is located at Udayathoor in the
Tirunelveli district of Tamil Nadu. Wind power generated here is
supplied to the Madukkarai Cement plant in Coimbatore through a
wheeling arrangement with the State grid. Wind energy projects are also
eligible for CDM benefits under certain specific conditions.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
During the year Corporate Social Responsibility received prominence
when it was identified as a thrust area for the Company. Several
initiatives were taken to meet the requirements of various stakeholder
groups, beginning with Community Needs Assessment studies for those
living in the vicinity of our Plants. ACC’s effort to participate in
the national effort against HIV/AIDS included the establishment of a
treatment centre at Wadi, and partnership with Christian Medical
College, Vellore both of which address the challenges of two States
where this disease is most prevalent. An important partnership was
forged with Development Alternatives, a reputed NGO, to help launch a
Sustainable Community Development programme for communities around our
Wadi Plant. The Company signed another Memorandum of Understanding with
Development Alternatives to create a Centre of Excellence to pursue
solutions for sustainable housing and rural infrastructure. Significant
steps were also taken in the area of knowledge development.
18. OCCUPATIONAL HEALTH & SAFETY (OH&S)
Occupational Health and Safety was accorded renewed focus during the
year with significant inputs and learnings from the Holcim group. The
Apex OH&S Committee constituted by the Managing Director which monitors
proper implementation of the Company’s OH&S policies at each of its
establishments meets quarterly. The policies for OH&S and Cardinal
Rules have been widely publicized.
Safety Audits are being conducted by the National Safety Council based
on Five Star Auditing System of British Safety Council and second party
baseline audit for OH&S Pyramid has been introduced for all plants. The
Safety Management Systems are constantly being improved and upgraded to
reduce possibilities of accidents. The work places are well-equipped
with medical facilities and qualified doctors are made available in
case of emergency. Mechanisms for monitoring activities related to
health, hygiene and safety have been set up at every plant. Gagal Plant
received OHSAS 18000 certification while Wadi Plant received BIS 18000
certification during the year.
Your Company is also providing for special emphasis on the safety of
contract labour in all the major project expansion programmes to ensure
a harm-free work environment.
19. HUMAN RESOURCES
Your Company has a strength of over 10,000 permanent employees, making
up its most valuable asset. Your Company conducted surveys across
various categories of employees at all its units in the country to
gauge the level of employee satisfaction. The surveys indicated a high
degree of respect for the Organisation while highlighting some areas of
concern. Based on the feedback, appropriate initiatives were launched
and actions were initiated. The Corporate Human Resources Department is
committed to improve employee satisfaction at all levels and create a
motivated, responsive and accountable Organization.
People Development : Notable steps have been taken in respect of the
critical area of knowledge building by giving special thrust to people
development, learning, sharing of knowledge and best practices. The
Sumant Moolgaokar Technical Institute in Kymore completed 50 years in
2007. SMTI was reopened with a fresh curriculum seeking to complement
the education of Industrial Training Institute (ITI) qualified students
and groom them for technical and supervisory positions in Electrical,
Instrumentation, Diesel and Fitting trades in India’s Cement
manufacturing sector. The programmes at the Regional Training Centre in
Jamul are being revamped to offer professional technical courses also
relevant to manufacturing sectors such as cement. A state-of-the-art
learning Centre called “ACC Academy” was opened at the Thane complex.
Your Company has stepped forward to work with Government and industry
associations to upgrade ITI’s located near our Plants. Already plans
for partnerships with 6 ITI’s have received approval from respective
State Governments.
20. FINANCE
In spite of considerable capital expenditure incurred by the Company,
the borrowings of your Company dipped to Rs 314.70 crore (Standalone Rs
306.41 crore) as of December 31, 2007. In fact, net of its investments
in short term investments and fixed deposits with banks, the Company is
debt free as of December 31, 2007.
Your Company’s rating for long term borrowing and term loan from banks
has been upgraded to AAA by CRISIL. ICRA has retained its prime rating
A1+ for Company’s short term borrowing programme.
21. SHARE CAPITAL
During the year under review your Company received notices from the
Foreign Currency Convertible Bondholders about their exercising the
conversion option in respect of 1350 bonds. Accordingly, the Company
allotted 1,63,124 Equity Shares of the face value of Rs 10 each to
these bondholders at the conversion price of Rs 374.42 per share. With
this, the entire Foreign Currency Convertible Bonds issued by the
Company in 2004 stands converted. Further, the Company allotted
1,83,172 Equity Shares of the face value of Rs 10 each consequent to
exercise of stock options by its employees.
Details of Employees’ Stock Option Schemes as required under the SEBI
Guidelines are set out in Annexure C to the Directors’ Report.
22. FIXED DEPOSITS
Your Company had discontinued its fixed deposits scheme in financial
year 2001-02 and as at December 31, 2007, the total amount of fixed
deposits held by your Company was Rs 0.33 crore, which represent the
unclaimed deposits that have matured.
23. PERFORMANCE OF SUBSIDIARY COMPANIES
Bulk Cement Corporation (India) Limited (BCCI): BCCI which is located
at Kalamboli near Mumbai, handled 7.60 lakh tonnes of bulk cement
during the year as compared to 7.16 lakh tonnes in the previous year.
The capacity utilization during the year was 151% as compared to 142%
in the previous year. BCCI reported a net profit of Rs 1.07 crore
during the year, as compared to the net profit of Rs 2.69 crore
reported during the previous year.
BCCI is implementing a project to handle and grind fly ash to blend PPC
to meet the growing demand in its market.
ACC Machinery Company Limited (AMCL): This Company continued to perform
well in 2007. Sales turnover in 2007 was Rs 63.24 crore, as compared to
Rs 48.25 crore during the previous year. Net profit during the year was
Rs 9.75 crore as against Rs 8.49 crore in the previous year. With a
comfortable order position, the outlook for this company continues to
be good.
ACC Nihon Castings Limited (ANCL) was divested during the year 2007.
As required under Section 212 of the Companies Act, 1956, the audited
statements of accounts, along with the report of the Board of Directors
relating to the Company’s subsidiaries, ACC Machinery Company Limited,
Bulk Cement Corporation (India) Limited, ACC Concrete Limited, Lucky
Minmat Private Limited and The Cement Marketing Company of India
Limited and respective Auditors’ Report thereon for the year ended
December 31, 2007 are annexed.
24. MANAGEMENT
After a distinguished career spanning over four decades, Mr M L Narula
demitted office as Managing Director with effect from March 31, 2007.
He was appointed as a Non Executive Director with effect from April 1,
2007 by the Shareholders at the last Annual General Meeting held on
March 28, 2007.
Pursuant to the approval accorded by the shareholders at the last
Annual General Meeting, Mr Sumit Banerjee has been appointed as
Managing Director of the Company with effect from April 1, 2007 till
December 31, 2011.
25. DIRECTORS
Mr. Anil Singhvi who was appointed on the Board of Directors of this
Company on February 17, 2006 resigned as a Director with effect from
July 19, 2007. The Board has placed on record its warm appreciation of
the valuable services rendered by Mr Singhvi during his tenure as
director of the Company.
In accordance with the provisions of the Companies Act, 1956, and the
Articles of Association, Mr S M Palia, Mr Naresh Chandra, Mr D K
Mehrotra and Mr R A Shah retire by rotation and are eligible for
reappointment.
26. DIRECTORS’ RESPONSIBILITIES
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,
1956:
i) that in the preparation of the annual accounts for the year ended
December 31, 2007 the applicable accounting standards have been
followed along with proper explanation relating to material departures,
if any.
ii) that such accounting policies as mentioned in Note 1 of the Notes
to the Accounts have been selected and applied consistently, and
judgements 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, 2007 and of the profit of the Company for
the year ended on that date.
iii) 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.
iv) the annual accounts have been prepared on a going concern basis.
27. AUDIT
M/s S R Batliboi & Associates who are the Statutory Auditors of the
Company hold office up to the forthcoming Annual General Meeting and
are recommended for reappointment to audit the accounts of the Company
for the financial year 2008. As required under the provisions of
Section 224(1B) of the Companies Act, 1956, the Company has obtained
written confirmation from M/s S R Batliboi & Associates that their
appointment if made would be in conformity with the limits specified in
the said Section.
As per the requirement of Central Government and pursuant to Section
233B of the Companies Act, 1956 your Company carries out an audit of
cost records relating to cement every year. Subject to the approval of
the Central Government, the Company has appointed M/s N I Mehta & Co.
to audit the cost accounts for the financial year 2008.
28. 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
report.
29. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Group are attached. The
net worth of the Group as at December 31, 2007 is Rs 4125.55 crore as
against Rs 3162.53 crore as at the end of the previous year.
30. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of conservation of energy, technology absorption and foreign
exchange earnings and outgo in accordance with the provisions of
Section 217 (1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of the Board of Directors )
Rules, 1988 are given in Annexure ‘A’ to the Directors’ Report.
31. PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure ‘B’ to
the Directors’ Report.
32. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company’s Management Audit Department is headed by Head – Internal
Audit assisted by a team of highly qualified financial and engineering
professionals who function independently to ensure smooth operations of
the Organization. The Department closely monitors and evaluates the
efficacy and adequacy of internal control systems, their compliance
with operating systems and accounting procedures and policies at all
Company’s locations including Subsidiaries. The Department is
authorized to make suggestions on various business aspects like
operations, finance and risk management. The Management Audit
Department has been accredited with the ISO 9001:2000 Quality Systems
Procedures Certification. It is also equipped to perform audits under
the SAP framework.
33. ENHANCING SHAREHOLDERS VALUE
Your Company’s strategic vision statement accords top position to value
creation. All the Company’s operations are guided and aligned towards
maximizing shareholders value. New projects for capacity expansion are
taken up to enhance growth in sales and profitability. During the year
your Company divested its remaining non-core assets to unlock value. A
new performance evaluation system was put in place to further align
individual performances in line with the overall corporate objectives.
Motivation and encouragement to employees of ACC to contribute towards
achieving higher operational efficiencies and profitability is a
continuous process. Besides, cost-effectiveness and innovation are
placed at the forefront of all activities.
34. CAUTIONARY STATEMENT
Statements in the Directors Report & Management Discussion and Analysis
describing the Company’s objectives, expectations or predictions 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.
35. ACKNOWLEDGEMENT
Your Directors wish to convey their appreciation to the Banks, dealers
and other business associates for the excellent assistance and
co-operation received and the shareholders for their continued trust
and support and all the employees of the Company for their outstanding
contribution to the operations during the year.
For and on behalf of the Board
N. S. Sekhsaria
Chairman
Mumbai : January 31, 2008
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| Source : Religare Technova | |
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