The Directors have pleasure in presenting their 71st Annual Report
together with the Audited Accounts for the financial year ended 31st
Brief summary of the Company''s financial performance (Stand Alone and
Consolidated) is as under:
(Rs. In Lacs)
Particulars For the year ended For the year ended
31-03-2012 31-03-2011 31-03-2012 31-03-2011
Stand Alone Consolidated (GROUP)
Revenue from operations 68,725 36,182 1,10,557 70,467
Profit for the year (PBDIT) 15,208 8,224 23,625 15,288
Less: a) Interest and
Finance charges 3,795 1,394 4,154 1,565
b) Depreciation 2,935 1,233 4,104 2,233
Profit before Tax 8,478 5,597 15,367 11,490
c) Current tax 1,675 1,118 1,983 1,529
d) Deferred Tax 1,701 1,361 1,685 1,380
e)Tax provision for
earlier years 28 - 28 -
f) Minority share of profit - - 2146 1,725
a) Refund of Income Tax 10 18 11 18
b) MAT Entitlement 1,070 751 1,070 751
c) Excess Provision of
income tax of earlier
years credited back - 248 - 248
Profit for the year 6,153 4,135 10,605 7,874
Add: Surplus brought
forward from earlier year 4,108 2,755 13,228 8,597
Amount available for
appropriations 10,261 6,890 23,833 16,471
Transfer to Preference
Capital Redemption Reserve 500 - 500 -
Transfer to General Reserve 2,000 1,000 2,119 1,033
Proposed Dividend -
Preference Shares 240 240 240 240
Proposed Final Dividend -
Equity Shares 322 322 322 322
Proposed Special Dividend -
Equity Shares 645 - 645 -
Interim Dividends Paid -
Equity Shares 967 967 4,074 1,396
Tax on Distributed Profits -
Equity Shares 314 214 314 214
Tax on Distributed Profits -
Preference Shares 39 39 39 39
Surplus at the
end of the year 5,234 4,108 15,580 13,227
Segment wise Sales performance
Particulars 2011-12 2010-11
Sales Value % to Total
Sales Sales Value % to Total
(Rs. In lacs) (Rs. In lacs)
Engineering 14,091 20.50% 13,067 36.12%
Cement 54,232 78.92% 22,375 61.84%
Power 56 0.08% 52 0.14%
Others 346 0.50% 688 1.90%
Total 68,725 100.00% 36,182 100.00%
Year in Retrospect Financial results
There has been a quantum increase in turnover of the company of about
90% consequent to the commissioning of the 1.52 MTPA green field cement
plant at Muktyala during the year under review. The Plant commenced
production with both Cement mills in operation in August 2011 and
during this period of stabilization, achieved an average capacity
utilization of around 49%. The quantity of cement produced from this
Plant was 5,48,991 MTs accounting for about Rs 26,300 lacs of the total
During the current year, the new plant has further increased its
capacity utilization and is expected to achieve a figure of about 70%
by the close of the year.
The Engineering Division maintained the turnover of the last year with
a marginal increase of about Rs. 1,024 lacs (8%). Dispatches'' continued
to be sluggish in view of the continuing slow recovery of the global
economy. With the weight of the European financial crisis looming
large, world industrial production has been slack with the capital
goods industry, as is natural, bearing the brunt as enterprises cancel
or delay expansions, additions and new ventures. Domestic demand
remained stable but active and contributed to a good portion of the
Overall Financial position
The Profit before Depreciation, Interest and Tax also increased by Rs.
6984 Lacs, that is about 85% over the previous year. The Net Profit of
Rs. 6153 Lacs against Rs. 4135 lacs accounts for an increase of 49%
largely due better cement realization and dividend from Subsidiary. The
continued healthy liquidity
position is a matter of considerable satisfaction even while the
company had to defray substantial amounts towards the New Cement Plant,
the upcoming Hotel Project etc. The income from investment in the
subsidiary, namely KCP Vietnam Industries Ltd in the form of dividend
substantially contributed to this position in addition to the increased
cash generation from operations.
The utilization of working capital limits with Banks was, however
higher on account of the necessity to maintain significant stock of
coal for both the cement units in the face of the uncertainty in its
Your Directors are confident that the current position will be
sufficient to meet the company''s obligations in completing the
on-going Projects, service capital and debt and also take care of
The various captive power generating units performed satisfactorily
during the year. Shareholders'' attention is drawn to the detailed
Management Discussions and Analysis.
Captive Power Plant at Muktyala
Your Directors are of the opinion that a Captive Power Plant is
essential to protect the large investment in the new cement plant by
ensuring uninterrupted supply of quality power.
However, with the coal situation undergoing considerable changes since
the last report, it has been decided to limit the capacity of the Plant
to 18 MW only with provision for subsequent addition of another 18 MW
at an appropriate time. Power generated over and above the captive
requirement will be sold to third parties at reasonably profitable
The Project Cost and the loan component thereof have been suitably
Upcoming Hotel Project
The Hotel Project at Somajiguda in Hyderabad is progressing well and is
expected to be commissioned before the first half of the next financial
year that is by June 2013. The Hotel will be a four star business
category which has good business potential, under Management Agreements
with a leading international chain.
Replacement of cement Mills at Macherla
With the continuing improvement in production technologies as a result
of innovation on a global scale, to meet competition, eliminate
pollution and increase margins, the company has taken steps to replace
the existing four old grinding mills with a single mill with latest
technology at an estimated cost of Rs. 3400 lacs with a loan component
of Rs. 2100 lacs. The process of replacement is expected to be
completed during the current fiscal.
Outlook for the future
A detailed analysis on the various segments in which the company
operates has been furnished in the Management Discussions and Analysis.
Dividend from subsidiary
During the year under review the company received a dividend of Rs 2800
lakhs from its subsidiary, KCP Vietnam Industries Ltd, Vietnam on its
investment of Rs. 2371 lacs.
Investment in BGE Global Inc
As a strategic investment which would provide the Engineering Unit an
opportunity for growth and also establish an export base, the company,
during the year under review, has invested an amount of USD
9,00,000 equivalent to Rs. 462 Lacs as on 31.3.2012 in a US based
company BGE Global Inc. U S A mainly engaged in providing Engineering
and other related services and also offer key cement machinery and
equipment through its affiliates, The investment comprises USD 150,000
in Common Non Voting Stock of a face value of USD 0.01 per share and
USD 750,000 in Preferred Non Voting Stock of face value of USD 0.01
bearing a fixed dividend of about 2.5% per annum.
Your Directors are of the opinion that the strategic investment will be
beneficial in furthering the interests of its business prospects in the
coming years to meet global competition.
Dividend on Preference Share Capital
Your Directors recommend a dividend of 12% on the Preference Share
Capital of the company. The amount of such dividend is Rs 240 lacs for
Redemption of Preference Shares
Pursuant to the Share subscription agreement dated 23rd November, 2009,
entered with M/s Tata Capital Limited, 25% of the total subscription
amounting to Rs.500 lacs is due for redemption in December 2012. As
required under the Companies Act, 1956, a Preference Capital Redemption
Reserve of an equivalent amount has been allocated out of the profits
and created during the year under review.
Dividend on Equity Shares
Based on the continued good financial performance and working results
of the company during the last three quarters of the financial year
2011-12 and other relevant parameters, the Board had declared and paid
three interim dividends of 25% each during the financial year amounting
to 75 % (Rs 0.75 per share) as of date.
Your Directors are now pleased to recommend a final dividend of 25% (Rs
0.25 per share) making a total equity dividend of 100% (Rs 1/-per
share) for the year. The total amount of dividend paid on equity
capital excluding Dividend Distribution Tax thereon will be Rs 1,289
lacs, which is the same as in the previous year.
Special dividend on completion of 70th Year
Shareholders will be happy to know that the company has completed 70
years of its existence having been incorporated in 1941. During this
period, it has made consistent progress and taken great strides in
expansions, diversifications etc. to reach a record group turnover in
excess of Rs. 1000 crores. In appreciation of the continued support of
the shareholders and to commemorate the 70th year, your Directors have
considered it appropriate and fit to declare a Special Dividend of
Rs.0.50 per Share that is 50% on the paid up Equity Capital.
The dividend will be paid to members whose names appear in the
Register of Members as on 13th August,2012 and in respect of shares
held in dematerialised form, it will be paid to members whose names are
furnished by National Securities Depository Limited and Central
Depository Services (India) Limited, as beneficial owners as on that
Transfer to Reserves
Your Directors recommend the following appropriations from the profits
available for appropriation:
To Preference Capital Redemption Reserve
(under the provisions of
the Companies Act, 1956) - Rs. 500 lacs
To General Reserve - Rs.2000 lacs
This will leave Rs 5234 lacs in the Surplus Account to be carried
forward to the next year.
The total amount in General Reserve as on 31st March, 2012, after the
proposed appropriation, would stand at Rs.27000 lacs.
The total amount of Fixed Deposits outstanding as on 31st March, 2012
was Rs.6824.18 Lacs as compared to the figure of Rs.7624.61 Lacs as on
31-3-2011. As on 31st March, 2012, Fixed Deposits matured and remained
unclaimed were Rs.141.14 Lacs from 243 depositors. As on the date of
this report, Fixed Deposits relating to 57 depositors amounting to
Rs.28.62 Lacs have been renewed and Fixed Deposits of Rs.20.51 Lacs of
25 depositors repaid.
Corporate Social Responsibility (CSR)
For a business to take responsibility for its actions, that business
must be fully accountable. Social accounting, a concept describing the
communication of social and environmental effects of a company''s
economic actions to particular interest groups within society and to
society at large, is thus an important element of CSR.
The rise in popularity of ethical consumerism over the last two decades
can be linked to the rise of CSR.
As global population increases, so does the pressure on limited natural
resources required to meet rising consumer demand (Grace and Cohen
2005, 147). Industrialization, in many developing countries,
is booming as a result of both technology and globalization. Consumers
are becoming more aware of the environmental and social implications of
their day-to-day consumer decisions and are therefore beginning to make
purchasing decisions related to their environmental and ethical
The company in its own way has been taking a number of initiatives in
supporting on-going long term projects while undertaking new ones.
With Corporate Social Responsibility in India having acquired a new
dimension and being discussed at Government levels as a formal
necessity for business in the recent years, your company has always
laid considerable stress on voluntary compliance in this regard. It
will be a repetition to state that long before CSR acquired its current
nomenclature, KCP has been actively engaged in setting up projects and
services to take care of surrounding community in its factory zones and
has made their life more meaningful. Education, Health care, Community
welfare measures are major areas in which it has laid its foundations
in the early years of its existence and carefully added to them in
A more detailed report on activities under Corporate Social
Responsibility is furnished separately in this Annual Report.
Sri. A. Ramakrishna and Sri V.H.Ramakrishnan, Directors of the Company,
retire by rotation and being eligible offer themselves for
reappointment at the ensuing Annual General Meeting in accordance with
the provisions of the Companies Act, 1956 and Company''s Articles of
Sri. Vijay Sankar had been appointed an Additional Director of the
Company effective from 7th November, 2011 and will hold office till the
conclusion of the ensuing Annual General Meeting. The Company has
presently received a notice in writing from a member, with the
requisite fee proposing the candidature of Sri Vijay Sankar as a
Director of the company subject to retirement by rotation, in terms of
Section 257 of the Companies Act, 1956 to be considered at the ensuing
Annual General Meeting.
A resume of the Directors seeking re-appointment/ appointment is
furnished along with the notice for the Annual General Meeting for the
information of shareholders.
Director''s Responsibility Statement
The Directors confirm that:
1. In the preparation of the Annual Accounts, the applicable
Accounting Standards have been followed and that no material departures
have been made from the same.
2. The selected accounting policies were applied consistently and the
Directors made judgments and estimates that are reasonable and prudent
so as to give a true and fair view of the state of affairs of the
company at the end of the financial year ended 31st March, 2012 and of
the profit of the Company for the year ended as on date.
3. They have taken proper and sufficient care for 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, and
4. They have prepared the Annual Accounts on a going concern basis.
M/s Brahmayya and Co, Chartered Accountants, Vijayawada, Auditors of
the company retires at the conclusion of the ensuing Annual General
Meeting. They are, however eligible for reappointment. They have
furnished a certificate to the effect that their appointment will be in
accordance with the limits specified in sub section (IB) of Section 224
of the Companies Act, 1956.
The Board recommends the reappointment of M/s Brahmayya & Co
Vijayawada, as Auditors of the company to hold office till the
conclusion of the next Annual General Meeting.
The Notes on Financial Statements referred to in the Auditors'' Report
are self-explanatory and do not call for any further comments.
The Central Government has approved the appointment of M/s
Narsimhamurthy and Co, Cost Accountants, Hyderabad the Cost Auditor for
the Cement units for the year 2011-12. The Cost Audit Report for the
year 2010-11 was filed by the Cost Auditor within the due date.
Pursuant to the Companies (Cost Accounting Records) Rules, 2011 M/s
Co Hyderabad has been appointed to conduct the Compliance audit for the
Biotech unit and M/s Mahadevan and Co, Chennai has been appointed to
conduct the Compliance audit for the Engineering unit of the company.
Revised Schedule VI
It has been notified that in the preparation of the Balance Sheet and
Profit and Loss Account for financial year commencing on or after 1st
April 2011, the Revised Schedule VI as prescribed shall be followed.
The accounts for the year have therefore been drawn in the new format.
The most significant requirement of the Revised Schedule VI is the form
of segregation of Assets and Liabilities to more effectively reflect
their Current and Non Current nature and would be one step toward the
achievement of IFRS.
Realising that human resources are the main assets of an enterprise,
the company follows a policy suited to train and retain talent,
recognise performance, provide motivation and opportunity for growth.
Ensuring that the right person is assigned to the job best suited to
his background and experience, the potential to grow and contribute
towards organisational excellence has been encouraged and nurtured for
mutual benefit. Stability of the workforce and meeting their
aspirations is the foremost objective of the company and to this end
the company has being taking a series of measures which includes
training and development at different levels, merit-based promotions
and other incentives. The families of employees are also brought into
the overall fold in the form of periodical cultural meets, friendly
get-togethers and other welfare measures. The Company has developed a
unique KCPeers culture which binds employees together and keeps
them happy resulting a high engagement level in the company.
The total number of employees as on date was 1233. Particulars of
Information as per Section 217 (2A) of the Companies Act, 1956 read
with Companies (Particulars of Employees) Amendment Rules, 2011 is
provided in Annexure - 1 forms part of this report.
The Company has fulfilled all the conditions prescribed under Sec 212
(8) of the Companies Act 1956 read with General Circular 2/2011 dated
8th February, 2011 to avail exemption from publishing the Balance Sheet
and other statements of its subsidiary company, M/s KCP Vietnam
Industries Ltd. Vietnam for the financial year 2011-12. However, a
statement giving certain information as required in the said circular
is included in the Annual Report.
The company will provide to any shareholder, on request and without any
cost, the Balance Sheet and other particulars and statements of
accounts of the subsidiary company, M/s KCP Vietnam Industries Ltd.
Vietnam. The said Annual Accounts of the subsidiary Company will also
be available for inspection at the Registered/Corporate Office of the
Consolidated Financial Statements
Pursuant to the requirements of Accounting Standard - 21 and the
Listing Agreement with National Stock Exchange Ltd, financial
statements consolidating those of its subsidiary KCP Vietnam Industries
Ltd and its Joint Venture company, Fives Cail K C P Ltd, considering
the minority interest in them and duly audited have been attached to
this Directors'' Report.
Conservation of Energy, Technology absorption, Foreign Exchange Earning
The particulars as prescribed under 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 attached as Annexure
2 to this report.
Occupational Health and Safety
We have well defined health and safety policies which are widely
circulated internally to ensure appropriate attention to health and
safety hazards and to build a safe working environment. All the
manufacturing plants have medical facilities with qualified doctors.
Annual medical check-up is mandatory for all employees of the Company.
Training related to safety aspects is provided to all employees prior
to engaging them in respective jobs.
The company insists their lab our contractors to adopt similar
Occupational Health and Safety practices while engaging them for
There is a system of periodical review of the activities done in the
area of health, hygiene and safety and to address challenges in these
Regular personal development sessions like Art of living etc. are
also conducted with a view to maintain work life balance.
Transfer of amounts to Investor Education and Protection Fund (IEPF)
Pursuant to the provisions of Section 205A (5) of the Companies Act,
1956, relevant amounts which remained unpaid or unclaimed for a period
of 7 years have been transferred by the Company to the Investor
Education and Protection Fund.
Corporate governance is a term that refers broadly to the rules,
processes, or laws by which businesses are operated, regulated, and
controlled. The term can refer to internal factors defined by the
officers, stockholders or constitution of a corporation, as well as to
external forces such as consumer groups, clients and government
regulations. India''s SEBI Committee on Corporate Governance defines
corporate governance as the acceptance by management of the
inalienable rights of shareholders as the true owners of the
corporation and of their own role as trustees on behalf of the
shareholders. It is about commitment to values, about ethical business
conduct and about making a distinction between personal and corporate
funds in the management of a company.
Corporate Governance has always been at the core of the company''s
management philosophy aimed at bringing about a managerial style of
functioning which reflects transparency coupled with efficiency so as
to benefit the larger interests of all stakeholders. The theme of
management is to provide for sufficient internal checks and balances to
ensure professional decision-making in the day-to-day affairs of the
company with minimum exposure to risks. All Directors and employees are
bound by Code of Conduct that
sets out the financial standards to be followed in all actions carried
out on behalf of the company.
A Detailed Report on matters relating to Corporate Governance as
statutorily required is annexed as part of this Annual Report together
with the report of the Auditors on its compliance.
Your Directors wish to thank the Central and State Governments,
Financial Institutions, Banks,
Government authorities, customers, vendors and shareholders for their
continued co-operation and support extended. Your Directors wish to
whole heartedly thank our employees for their sincere and devoted
contribution to the company''s continued good performance.
Ladies and gentlemen, your involvement as shareholders is deeply
valued. Your Directors look forward to your continued support in all
Endeavour''s for stability, growth and prosperity for the company.
Place: Chennai For and on behalf of the Board of Directors
Date: 28th May, 2012 VL DUTT
Chairman and Managing Director