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Anjani Portland Cement

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Directors Report Year End : Mar '16    Mar 15

. FINANCIAL RESULTS:

(Rs, in Lakhs)

Current Year Ended 31/03/2016

Previous Year Ended 31/03/2015

Revenue from Operations(Gross)

35,174.72

29,771.93

Profit before Interest, Depreciation

8,157.04

5,236.31

Less: Interest

1,580.33

2,779.87

Less: Depreciation

2,308.08

1,059.37

Profit/(Loss) Before Tax

4,268.63

1,397.07

Provision for Taxation including deferred Tax

2,391.60

(274.19)

Profit/(Loss)after Taxation

1,877.03

1,671.26

Appropriations

Debenture Redemption Reserve

500.00

500.00

2. DIVIDEND

Your company has made a profit of Rs,1877.03 lakhs during the current year, however keeping in view the ongoing projects and the expansion/growth plans of the company it has been decided to reinvest the profits back into the company for better returns to the Shareholders in the future.

3. TRANSFER TO RESERVES

The company has transferred an amount of Rs, 500 lakhs out of the profits of the company for the financial year ended March 31, 2016 to Debenture redemption Reserve.

4. PERFORMANCE OF THE COMPANY

PRODUCTION in M.T

SALES in M.T

Cement

7,57,229

7,60,107

5. OPERATIONS

This is covered under the topic Management Discussion and Analysis.

6. MANAGEMENT DISCUSSION AND ANALYSIS

- Economy and Developments

As has been the case in the last few years the global economy continues to be extremely gloomy and volatile and the effects in the market are only palpable. The biggest task in which India has been continually excelling is the one of insulating its economy from the ramifications of global economic uncertainties. India continues to be among the most stable and growth oriented economies in the world. While the Global economy reels under a growth of less than 4%, the Indian economy stands strong at around 7% growth. Sustenance is the key and the fact that India can still do better by reducing the Corporate Debt and improving credibility only shows that a long term growth vision of 8-10% growth is not over optimistic.

Being just short of 400 Million Tonnes capacity, India is the second largest cement producer in the world. The demand for cement in the last year has once again failed to reach the expected levels due to the sluggish real estate sector and the industrial demand not picking up. The major demand for cement is largely from the housing sector, however the industry did not see the spurt in demand as anticipated.

The industry currently stands at crossroads wherein the production capacities have been increased in anticipation of the infrastructural development creating a huge demand supply inequality. However once the infrastructure projects take off we can expect this inequality to be considerably reduced

- Opportunities, Threats, Risks, Concerns and Outlook

Cement is indispensable for nation building and despite the current slowdown; the demand for cement is expected to rise considering the slew of infrastructural and other projects that the Government has visualized to execute.

The Government has in the current budget announced a 100 per cent deduction for profits to an undertaking in housing project for flats up to 30 sq. metres in four metro cities and 60 sq. metres in other cities, approved during June 2016 to March 2019 and completed in three years. This continued emphasis that the Government has been giving the housing sector will in the years to come give a definitive impetus to the Cement Sector.

Currently both the demand for cement as well as prices of coal and fuel is at its lowest. The production process of cement being fuel intensive, any increase in fuel and Coal prices coming along with an increase in demand for cement would impact the price realization substantially. This is a risk and concern constantly confronted by the Cement Industry.

Though India is the second largest producer of Cement in the World, its per capita consumption still ranks among the lowest in the world. So there is huge scope for improvement and outlook is always positive.

The Central Government has announced additional allocation for Smart City development and Pradhan Mantri Gram sadak yojana to the tune of over Rs, 25000 crores. The various State Government''s have also made substantial schemes and provisions for infrastructural development in their respective budgets. Any activity of infrastructural development is good news for the prospect of Cement Industry and its future outlook.

The Government''s impetus for affordable housing will also give a boost to the cement sector.

Although the current scenario seems bleak, but the Government''s continued efforts to improve the infrastructure condition will definitely lead to a boost in the cement sector.

- Segmentwise or Productwise Performance

The Company has only one business segment , that is manufacture and sale of cement. Given below are the varietywise production figures for the financial year 2015-16.

Grades of Cement

Quantity in M.T

OPC-43 grade and 53 grade

5,44,445

PPC

2,01,859

RHPC

10,925

- Internal Control System and their adequacy

The Company has got an adequate system of internal control in place commensurate with the size of its operation and is properly designed to protect and safeguard the assets of the company. There is a proper system for recording all transactions which ensures that every transaction is properly authorized and executed according to norms.

The Company has in place an internal control procedures and has established internal controls system designed to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory provisions.

The company has also appointed M/s M. Bhaskara Rao & Co., Chartered Accountants as Internal Auditors to conduct the Systems and Compliance Audit of the Company.

- Financial Performance in comparison to Operational Performance

The Company has produced a quantity of 7,57,229 MT cement during the current financial year as compared to the previous year production of 6,55,896 MT of cement reflecting an increase of 15%.

The quantity of cement sold during the year under review stands at 7,60,107 MT compared to 6,50,198 MT during the previous financial year showing a increase of 17%.

The gross turnover for cement during the year under review increased and stood at Rs, 35,167.70 Lakhs an increase of 23 % from the last year.

The company has made a Net Profit of Rs, 1,877.03 lakhs during the financial year 2015-16 as compared to a Net Profit of Rs, 1,671.26 lakhs in the previous year, signifying a growth of 12.31% year on year.

- Material Development in Human Resources/Industrial Relations front, including number of people employed

The Industrial relation during the current year has been cordial and contributed to mutual development.

The number of personnel in direct employment of the company are -289

7. FIXED DEPOSITS:

Your Company has not accepted any deposits from the public, or its employees during the year under review and there are no outstanding Fixed Deposits at the end of the financial year 2015-16.

8. ISSUE OF SHARES ON A RIGHTS BASIS

The Company came out with a Rights Issue of 68,96,099 Equity shares at the rate of Rs,108.75 per Equity Share (including a Premium Rs,98.75 per equity share ) for an amount not exceeding Rs, 75 crores, to be issued to the existing Shareholders of the company as on the Record Date, in the ratio of 3 shares for every 8 shares held by the existing Shareholders of the company, to part fund the installation of Captive Thermal Power Plant at the factory premises of the company in Chintapalem Village, Mellacheruvu Mandal, Nalgonda District, Telangana. The Rights Issue opened on May 25,2016 and closed on June 8,2016 The Issue was oversubscribed to the extent of 1.16 times. The allotment of Shares to the eligible applicants was completed by June 17, 2016. The funds from the rights issue are being used towards commissioning of the captive Thermal Power plant at the Factory at Chintalapalem Village, Nalgonda District, Telangana.

9. CAPTIVE POWER PLANT

The work towards setting up of the Power Project is proceeding as per the anticipated timelines . The electricity generated is intended to be used for captive consumption at our Company''s cement factory situated at Survey No. 226, Chintalapalem Village, Mellacheruvu, Nalgonda District, Telangana. The power generated by the Power Project would supplement the power that our Company currently purchases from the Telangana State Electricity Board.

As per the Implementation Schedule the commissioning of the Captive Thermal Power Plant should be completed by end of October and the company should be able to accrue benefits of the same in the long run.

10. PRODUCT LAUNCH

The company in a constant quest to meet the ever changing demand of customers launched rapid hardening Portland cement in the month of September 2015, by the name of ANJANI PRATHISTTA.

This is the first of its kind product launched in the state of Telangana and the customer response to the same has been extremely positive. Anjani Prathistta is most ideal for dense concreting and has superior resistance to sulphide and chloride attacks. It is also highly durable and highly preferable for high speed setting.

11. REPORT ON CORPORATE GOVERNANCE:

A report on Corporate Governance is given in Annexure to this Report.

12. STATUTORY AUDITORS:

The Auditors, M/s Ramanatham & Rao, Chartered Accountants (Firm Registration No S-2934) retire at the ensuing Annual General Meeting and are eligible for reappointment. M/s Ramanatham & Rao have given their consent to act as Auditors and have confirmed that the appointment, if made, would be in compliance with Section 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014.

13. COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 201 4, the cost audit records maintained by the Company in respect of its cement activity is required to be subject to Cost Audit. Your Directors have appointed M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad to audit the cost records of the Company for the financial year 2016-17 on a remuneration of Rs,1,75,000/- (Rupees One Lakh Seventy Five Thousand Only) . As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in the Annual General meeting for their ratification. Accordingly, a Resolution seeking Member''s ratification for the remuneration payable to M/s Narasimha Murthy & Co., Cost Accountants, Hyderabad is placed in the ensuing Annual General Meeting.

The Cost Audit Report for the Financial year 2014-15 due to be filed with Ministry of Corporate Affairs within a period of 180 days from the close of the financial year, had been filed on September 24, 2015 The Cost Audit Report for the Financial year 2015-16 would be filed within the period mentioned in the Companies(Cost Record and Audit) Rules 2014.

14. REQUIREMENT UNDER THE COMPANIES ACT, 2013

A. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. K.V Vishnu Raju and Mr. P V R. L. Narasimha Raju resigned from the Board of Directors with effect from September 28, 2015. The Board of Directors placed on record their appreciation for the invaluable contribution and guidance provided by them

B. DISCLOSURE AS PER SEXUAL HARRASMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013.

Your company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention, Prohibition and Redressal) Act 2013 and the rules framed there under. The details of the Policy are uploaded in the investor section on the Company''s website at http://www.anjanicement.com.

C. EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under Sub-Section (3) of Section 92 of the Companies Act, 2013 ( the Act) is enclosed as an Annexure in the prescribed form MGT-9 and forms part of this Report.

D. NUMBER OF MEETINGS OF THE BOARD

5 meetings of the Board of Directors of the Company were held during the year. For details of the meetings, please refer to clause 3 of the Corporate Governance Report, which forms part of this Report.

E. INDEPENDENT DIRECTORS'' DECLARATION

The Board has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

F. POLICY OF DIRECTORS'' APPOINTMENT AND REMUNERATION

Company''s policy on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act are covered in the Corporate Governance Report which forms part of this Report. Further, information about elements of remuneration package of individual directors is provided in the extract of Annual Return as provided under Section 92(3) of the Act, is enclosed in the prescribed form MGT-9 and forms part of this Report. The Nomination and Remuneration Policy of the company is available in the investor section on the Company''s website at http://www. anjanicement.com.

G. AUDITORS AND SECRETARIAL AUDITORS REPORT

There are no disqualifications, reservations or adverse remarks or disclaimers in the Auditors and Secretarial Auditors Report. The Report of the Secretarial Auditor as conducted by Mrs. Shailashri Bhaskar, Practising Company Secretary is given as an Annexure which forms part of this report.

H. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has not given any loans, guarantees or made any investments under Section 186 of the Act during the financial year 2015-16.

I. RELATIONSHIP BETWEEN DIRECTORS

None of the Directors are related to each other within the meaning of the term relative as per Section 2(77)of the Act.

J. TRANSACTIONS WITH RELATED PARTIES

The Company has entered into contract / arrangements with the related parties in the ordinary course of business and on arm''s length basis. Thus provisions of Section 188 (1) of the Act are not applicable in respect of these transactions.

K. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT

The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Directors and Senior Management of the Company.

L. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL YEAR RELATE AND THE DATE OF THE REPORT

The Company issued 68,96,099 Equity shares to its shareholders on rights basis. Owing to the issue of Rights shares, the share capital of the Company has increased from Rs, 18,38,95,970 to Rs, 25,28,56,960.

M. RISK MANAGEMENT POLICY

The Company has a risk management policy. The management of the company is spearheaded by the Managing Director and risk assessment and mitigation, forms a concurrent part of the management procedures. Periodical reviews of various operational, marketing and legal parameters affecting the company is conducted and risk management and mitigating procedures are adopted on a continuous basis.

There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

N. POLICY ON CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility Policy has been approved by the Board of Directors of the Company. The same is available on the website of the Company i.e. www.anjanicement.com.

The company was not required to spend any amount in CSR activities during the financial year 2015- 16, as per the provisions of 135(5) of the Companies Act, 2013, on account of the average profits being negative.

O. PARTICULARS OF REMUNERATION

The information required under Section 197 of the Act and the Rules made there-under, in respect of employees of the Company, is as follows:-

a) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;

Directors

Ratio to Median Remuneration

Non-Executive Directors

Mr. P. Gopal

-

Mr. V. Subramanian

-

Dr.(Mrs.) S.B. Nirmalatha

-

Executive Directors

Mr. A. Subramanian

10.58 times

Mr. K.V Vishnu Raju 1

-

Mr. PV.R.L. Narasimha Raju **

-

**Mr. PV.R.L. Raju and Mr. K. V Vishnu Raju resigned from the Board of Directors on September 28,

2015

The median remuneration of the employees of the company for the financial year 2015-16 is Rs, 2.86 lakhs.

b) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year;

Name of Person

Percentage Increase in Remuneration

Non-Executive Directors

Mr. B. Ramesh

-

Mr. P. Gopal

-

Mr. V Subramanian

-

Dr. (Mrs.) S. B. Nirmalatha

-

Mr. K.V Vishnu Raju

-

Mr. PV.R.L. Narasimha Raju

-

Executive Directors

Mr. A. Subramanian 2

-

CFO and CS

Mr. M.L. Kumavat

17.93

Mrs. Anu Nair

30.00

d) The number of permanent employees on the rolls of company;

289

e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.

On an average, employees received an increase of 11.64%. The increase in remuneration is in line with the market trends and the remuneration policy of the company.

However if a comparison has to be made for the managerial remuneration paid in the year 2014-15 as compared to the managerial remuneration paid in 2015-16 there has been an increase of 47.50%

f) The key parameters for any variable component of remuneration availed by the directors; Nil

g) Affirmation that the remuneration is as per the remuneration policy of the Company

The Company affirms that remuneration is as per the remuneration policy of the Company.

P. FORM FOR DISCLOSURE OF PARTICULARS OF CONTRACTS/ARRANGEMENTS ENTERED INTO BY THE COMPANY WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013 INCLUDING CERTAIN ARM''S LENGTH TRANSACTIONS UNDER THIRD PROVISO THERE TO.

All related party transactions entered into by the company are on arm''s length basis and it has not entered into any material contracts or arrangements or transactions with related parties.

Q. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY REGULATORS, COURTS, TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATION IN THE FUTURE

There is no significant and material order passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations.

R. BOARD EVALUATION

The Board based on the parameter provided by the Nomination & Remuneration Committee evaluated the performance of the Board, Committees and Individual Directors based on the under mentioned parameters

EVALUATION OF THE BOARD

- Development of suitable strategies and business plans at appropriate time and its effectiveness;

- Implementation of robust policies and procedures;

- Size, structure and expertise of the Board;

- Overview of the Financial Reporting Process, including Internal Controls;

- Willingness to spend time and effort to learn about the Company and its business; and

- Awareness about the latest developments in the areas such as corporate governance framework, financial reporting, industry and market conditions.

EVALUATION OF THE COMMITTEES

- Discharge of its functions and duties as per its terms of reference;

- Process and procedures followed for discharging its functions;

- Effectiveness of suggestions and recommendations received;

- Size, structure and expertise of the Committee ;and

- Conduct of its meetings and procedures followed in this regard.

EVALUATION OF THE INDIVIDUAL DIRECTORS

The performance evaluation of the Director mentioned below was done by the entire Board excluding the person being evaluated.

- Display of leadership qualities i.e. correctly anticipating business trends, opportunities, and priorities affecting the Company''s prosperity and operations;

- Establishment of an effective organization structure to ensure that there is management focus on key functions necessary for the organization to align with its mission; and

- Managing relationships with the Board, management team, regulators, bankers, industry representatives and other stakeholders.

- Participation at the Board / Committee meetings;

- Commitment (including guidance provided to senior management outside of Board/ Committee meetings);

- Effective deployment of knowledge and expertise;

- Integrity and maintaining of confidentiality;

- Independence of behavior and judgment;

S. STATEMENT PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 FORMING PART OF THE DIRECTORS'' REPORT FOR THE YEAR ENDED MARCH 31, 2016.

There are no employees in the Company falling within the definition mentioned above

T. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as prescribed under 134 (3) (m) of the Companies Act, 2013 and the Rules prescribed there under are set out as an Annexure to this report.

U. SUBSIDIARY COMPANIES:

Your company has no subsidiaries within the meaning of Section 2(6) of the Companies Act, 2013. V. DIRECTORS'' RESPONSIBILITY STATEMENT:

As required under Section 134(5) of the Companies Act, 2013, the Directors hereby confirm that

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same.

b) Appropriate accounting policies have been selected and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for the period;

c) 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; and

d) The annual accounts have been prepared on a going concern basis.

e) Appropriate Internal Financial Controls have been laid down and followed and such internal financial controls are adequate and operating effectively.

f) Proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

15 CAUTIONARY STATEMENT:

Statements made in this report, including those stated under the caption Management Discussion and Analysis describing the company''s objectives, expectations or projections may constitute forward looking statements within the meaning of applicable securities laws and regulations.

Important factors that could influence Company''s operations include global and domestic supply and demand conditions affecting the selling price of finished goods, availability of inputs and their prices, changes in Government regulations, tax laws, economic developments within the country and outside and other factors such as litigations and Industrial relations.

The Company assumes no responsibilities in respect of the forward looking statements which may undergo changes in the future on the basis of subsequent developments, information or events.

16. ACKNOWLEDGEMENT:

The Board of Directors wish to thank all the shareholders statutory bodies and departments of the State and Central Government and Bankers, Suppliers, Customers and all employees for their valuable support to the company.

On Behalf of the Board of Directors

Place: Chennai A. Subramanian V. Subramanian

Date: August 11, 2016 Managing Director Director

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