Madras Cements

The Directors have pleasure in presenting their 50th Annual Report and
 the Audited Accounts of the Company for the year ended 31st March 2008.
 
 FINANCIAL RESULTS
                                             Year ended      Year ended
                                             31-03-2008      31-03-2007
                                           (Rs. in lacs)   (Rs. in lacs)
 
 Operating Profit: Profit before Interest,
 Depreciation and Tax (PBIDT)                    76176         56349
 
 Less: Interest                                   5170          2283
 
 Profit before Depreciation and Tax (PBDT)       71006         54066
 
 Less: Depreciation                               9327          7190
 
                                                 61679         46876
 
 Add: Prior period & extraordinary items (net)       1         (-)19
 
 Net Profit before Tax                           61680         46857
 
 Less: Provision for Tax
 
 Current Tax                                      6971         12950
 
 Deferred Tax                                    13761          3000
 
 Fringe Benefit Tax                                120           105
 
 Net Profit After Tax                            40828         30802
 
 Add: Balance Profit from last year               1979          1670
 
                                                 42807         32472
 
 Add: Debenture Redemption Reserve written back    990           990
 
 Surplus for Appropriation                       43797         33462
 
 Appropriations:
 
 1. Transfer to General Reserve                  36000         28000
 
 2.1st Interim Dividend                           1210           907
 
 3.2nd Interim Dividend                           1209           907
 
 4.  Golden Jubilee Dividend                      1192            -
 
 5.  Final Dividend                               1192          1209
 
 6. Tax on Dividends                               816           460
 
 Balance carried over to Balance Sheet            2178          1979
 
 TOTAL                                           43797         33462
 
 
 
 BUY-BACK OF SHARES
 
 Based on the approval of the Board of Directors, the Company bought
 back 1,79,481 shares through stock exchange route. The average cost per
 share bought was Rs.3,592/- and the total cost was Rs.64.47 crores.
 After the completion of the buy-back, the paid up capital of the
 Company has come down from Rs.12,07,78,500/- to Rs.11,89,83,690/-.
 
 DIVIDEND
 
 Your Directors have pleasure in recommending a final dividend of
 Rs.10.00 per share (PY:Rs.10.00 per share), in addition to the 1st
 Interim dividend of Rs.10.00 per share(PY:Rs.7.50 per share) and 2nd
 Interim dividend of Rs.10.00pershare(PY:Rs.7.50 per share) paid during
 the year.
 
 In view of the Golden Jubilee of the Company, your Directors have
 pleasure in recommending a Golden Jubilee Dividend, Issue of Bonus
 Shares and Sub-division of Shares as follows:
 
 a. GOLDEN JUBILEE DIVIDEND
 
 Your Directors have pleasure in recommending a Golden Jubilee Dividend
 of Rs.10.00 per Equity Share. Inclusive of this, the total dividend for
 the year is Rs.40.00 per share (PY:Rs.25.00 per share).
 
 b. ISSUE OF BONUS SHARES
 
 Your Directors have also pleasure in recommending issue of bonus shares
 to the holders of Equity Shares in the ratio of 1:1 by capitalizing the
 reserves of Rs.11,91,55,190/-, subject to the approval of the Members
 at the Annual General Meeting.
 
 C. SUB-DIVISION OF SHARES
 
 Presently the share capital of the Company consists of shares of
 Rs.10/-each. Your Directors have pleasure in recommending sub-dividing
 each share into 10 shares of Re.1/- each.
 
 TAXATION
 
 An amount of Rs.69.71 Crores towards Current Tax, Rs.137.61 Crores
 towards Deferred Tax, Rs.1.20 Crores towards Fringe Benefit Tax and
 Rs.8.16 Crores towards Dividend Tax has been provided for the year
 under review.
 
 MANAGEMENT DISCUSSION & ANALYSIS REPORT CEMENT DIVISION
 
 PRODUCTIONS SALES                            2007-2008      2006-2007
                                            (000 tonnes)   (000 tonnes)
       
 Ramasamyraja Nagar (TN) Factory
 
 Clinker Produced                                774            805
 
 Cement Produced                                1216           1294
 
 Cement Sold                                    1211           1288
 
 Jayanthipuram (AP) Factory
 
 Clinker Produced                               1178           1032
 
 Cement Produced                                1427           1341
 
 Cement Sold                                    1416           1330
 
 Alathiyur (TN) Factory
 
 Clinker Produced                               2212           2034
 
 Cement Produced                                2949           2785
 
 Cement Sold                                    2940           2800
 
 Mathodu (Karnataka) Factory
 
 Clinker Produced                                192            179
 
 Cement Produced                                 254            248
 
 Cement Sold                                     248
 
 During the year under review, except RR Nagar, all the units viz.,
 Alathiyur in Tamil Nadu, Jayanthipuram in Andhra Pradesh and Mathodu in
 Karnataka had shown increase in production of cement compared to the
 previous year. At RR Nagar, there was stoppage of Kiln 1 for two weeks
 due to breakdown and after repairs, the kiln was being operated at
 marginally less than its optimum capacity.
 
 SALES
 
 The sale of cement including self-consumption had registered an
 increase from 56.67 lac tonnes to 58.21 lac tonnes. This represents a
 growth of 3%.
 
 With the increase in production and sale and growth in realisation, the
 total revenue for the year, net of Central Excise and Sales Tax had
 also increased to Rs.2021 Crores as against Rs.1582 Crores of the
 previous year. This is the first time, the Company s turnover has
 crossed deux mille milestone. It is gratifying to report that at the
 50th Annual General Meeting, the Company has achieved this milestone.
 The Company reached the Rs.100 crore mark on completion of 30 years;
 the Rs.1000 crore mark on completion of 48 years and it has taken only
 2 more years to reach the Rs.2000crore mark.
 
 EXPORTS
 
 The Company has not done any export during the year under review. With
 effect from 11-04-2008, the export of cement and clinker has been
 banned by Government of India.
 
 COST
 
 During the year, there was steep increase in the prices of diesel and
 coal, leading to an all-round increase in the manufacturing and
 distribution costs. Optimum use of rail and road transport and
 logistics planning have helped the Company to have the transportation
 cost under effective control.
 
 Due to increase in the furnace oil cost, the cost of power using
 captive generator sets had increased, making their usage uneconomical.
 To reduce the power cost, the Company has utilized the generation from
 its wind farms for RR Nagar and Mathod and has utilized the generation
 from its captive thermal power plants for Alathiyur and Jayanthipuram.
 
 PROFITABILITY
 
 The operating profit before interest, depreciation and tax was higher
 at Rs.761.76 Crores as against Rs.563.49 Crores of the previous year,
 showing 35% increase. The net profit after tax was also higher at
 Rs.408.29 Crores as against Rs.308.02 Crores of the previous year,
 showing 33% increase.  The increase in capacity utilization and better
 realization due to buoyant demand had accounted for the increase in the
 net profits for the year.
 
 READY MIX CONCRETE DIVISION
 
 The Division has produced 56,490 cu.m. of concrete during the year
 accounting a revenue of Rs.18.04 Crores as against 62,518 cu.m. of
 concrete for a revenue of Rs.16.32 Crores during the previous year.
 
 WIND FARM DIVISION
 
 The Division has generated 1426 Lac Kwh as compared to 657 Lac Kwh of
 the previous year. The income during the year from the Division was
 Rs.48.16 Crores as against Rs.24.43 Crores of the previous year. During
 the year, 67 Wind Energy generators for an aggregate capacity of 72 MW
 were erected and commissioned. With this, the capacity of the Wind
 Farms situated at Muppandal, Poolavadi, Oothumalai and Mathodu has
 risen to 136 MW, comprising of 215 Wind Energy generators. The
 Companys investment in Wind Farm Division as on 31 -03-2008 stands at
 Rs.716.38 crores.
 
 DRY MORTAR DIVISION
 
 The Division has produced 37,537 tonnes of Dry Mortar during the year
 as against 28,656 tonnes produced during the previous year. The
 Division has sold 37,327 tonnes of Dry Mortar accounting for Rs.14.30
 Crores during the year as against 28,555 tonnes of Dry Mortar
 accounting for Rs.8.32 Crores during the previous year.
 
 PROJECTS
 
 A) EXPANSION AT JAYANTHIPURAM
 
 In the Annual Report for the year 2006 - 2007, it was informed that the
 Company was establishing additional clinkering facility by installing a
 4000 TPD kiln. The project was commissioned in January 2008 as against
 September 2007, as informed in the said Annual Report. The clinkering
 process had been integrated with the existing production facilities,
 leading to an increase of cement manufacturing capacity by 2 Million
 TPA.
 
 B) NEW PROJECT AT ARIYALUR
 
 The new cement project near Ariyalur with a capacity of 2 Million TPA
 is under implementation. The estimated project cost has increased from
 Rs.967 crores to Rs.1082 crores. This is due to installation of Wind
 Electric Generators for an aggregate capacity of 74 MW as against 56.70
 MW originally planned, besides escalation in Civil and Steel cost The
 project is expected to be commissioned in November 2008.
 
 C) EXPANSION AT RR NAGAR
 
 The existing 1200 TPD kiln commissioned in 1977 is proposed to be
 replaced by a new kiln of 1600 TPD capacity. The new kiln will have
 latest design with better specific heat consumption and specific power
 consumption. The project is expected to be commissioned in November
 2009.  With this, the cement manufacturing capacity of the Company
 would increase to 11 MTPA.
 
 D) GRINDING UNITS
 
 The Company is establishing grinding units at the following locations:
 
 i.  Kolaghat, East Midnapore District in West Bengal.
 
 ii. Valapadi, Salem District in Tamil Nadu.
 
 iii. Kattuputhur, Chenglepet District in Tamil Nadu.
 
 Establishment of grinding units near the fly ash availability
 areas/major cement consumption areas will help the Company in
 economizing transportation costs and better servicing of markets.
 
 PROSPECTS FOR 2008-2009
 
 Demand for cement is expected to grow at 10% in the coming year due to
 the fillips given for the infrastructure projects. The Company expects
 to sustain and improve the output levels of all the four units during
 the year. Also, the Company will have the benefit of increased
 production from its new projects, which will enable the Company to meet
 the increased market demand for cement. The Company continues its
 endeavour for the sale of Blended Cement. The Company also continues to
 concentrate on cost reduction measures in all areas of production and
 distribution to protect and improve its profitability.
 
 CHANGES IN STATUTORY LEVIES
 
 A) The excise duty for bulk cement and for the cement sold in packed
 condition without MRP (i.e) meant for industrial customers, was Rs.400/
 PMT. With effect from 01.03.2008, it was revised to 14% on the basic
 value or Rs.400/- PMT, whichever was higher.
 
 B) The excise duty on cement where the retail sale price exceeded
 Rs.250/- per bag of 50 kg was Rs.600/-PMT. With effect from 10.05.2008,
 it had been changed to 12% on retail sale price.
 
 C) The excise duty on clinker was Rs.350/- PMT. With effect from
 01.03.2008, it had been increased to Rs.450/- PMT.
 
 D) With effect from 01.03.2008, on all commodities, the excise duty was
 reduced from 16% to 14%. Accordingly, the excise duty applicable to Dry
 Mix Products had come down from 16% to 14%.
 
 E) With effect from 01.06.2008, the Central Sales Tax (CST) rates had
 been reduced from 3% to 2%.
 
 CONSERVATION OF ENERGY, ETC.,
 
 The Company continues to take keen interest in conservation of energy
 and the information required under Section 217(1 )(e) of the Companies
 Act, 1956 read with the relevant Rules, with regard to Conservation of
 Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
 are set out in Annexure I to this report.
 
 INDUSTRIAL RELATIONS & PERSONNEL
 
 The Company has 2260 employees as on 31.03.2008. Industrial relations
 in all the Units continue to be cordial and healthy. Employees at all
 levels are extending their full support and are actively participating
 in the various programmes for energy conservation and cost reduction.
 There is a special thrust on Human Resources Development with a view to
 promoting creative and Group effort.
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Annexure to the Directors Report. However, as per
 the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual
 Report excluding the aforesaid information is being sent to all the
 Members of the Company and others entitled thereto. Member who is
 interested in obtaining such particulars may write to the Company
 Secretary.
 
 AWARDS
 
 The Companys Units secured many Awards during the year in Mines Safety
 and Quality Circles.
 
 The Alathiyur Unit has won the National Award for the Best Electrical
 Energy Performance for the years 2005-2006 and 2006-2007 and the
 National Award for Best Thermal Energy Performance for the years
 2005-2006 and 2006-2007, instituted by National Council for Cement and
 Building Materials (NCCBM).
 
 The Alathiyur unit has also won Excellent Energy Efficiency Unit
 award from Confederation of Indian Industry (CM) for the year
 2006-2007. This is the 9th successive year, the unit is getting this
 award.
 
 DIRECTORS
 
 The Government of Tamil Nadu appointed Shri.Rajeev Ranjan, I.A.S.,
 Industries Commissioner and Director of Industries and Commerce, as
 their Nominee Director on the Companys Board with effect from
 22,08.2007 in the place of Shri.M.Raman, I.A.S.
 
 The Directors wish to place on record the valuable guidance and
 services rendered by Shri.M.Raman, I.A.S., during the tenure of his
 office as Nominee Director on the Companys Board.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Companys Articles of Association, Shri.R.S.Agarwal retires by rotation
 and is eligible for re-election.
 
 PUBLIC DEPOSITS
 
 The total deposits from the public outstanding with the Company as on
 31st March 2008 were Rs.5.48 Crores including the deposits renewed in
 accordance with Section 58A of the Companies Act, 1956. This also
 includes 87 deposits aggregating to Rs.22.51 lacs which had fallen due
 on or before 31.03.2008 but not claimed by the depositors. Reminders
 have been sent to these depositors for disposal instructions. On the
 date of this report, Rs.5.09 lacs thereof have been claimed and
 refunded/renewed in respect of 29 depositors.
 
 SHARES
 
 The Companys shares are listed in Madras Stock Exchange Limited,
 Bombay Stock Exchange Limited and National Stock Exchange of India
 Limited. The Companys application for de-listing from Calcutta Stock
 Exchange is under process.
 
 AUDITORS
 
 M/s.M.S.Jagannathan & N.Krishnaswami, Chartered Accountants and
 M/s.CNGSN & Associates, Chartered Accountants, Auditors of the Company
 retire at the end of the 50* Annual General Meeting and are eligible
 for reappointment.
 
 COST AUDITOR
 
 The Government has approved the Companys proposal to appoint
 M/s.Geeyes & Co., Cost Accountants, Chennai for audit of Companys cost
 accounts for the year ended 31.03.2008 on a remuneration of Rs.75,000/-
 exclusive of out-of-pocket expenses. As per Central Governments
 direction, cost audit will be done every year.
 
 CORPORATE GOVERNANCE
 
 The Company has complied with the requirements regarding Corporate
 Governance as stipulated in Clause 49 of the Listing Agreement with the
 Stock Exchanges. A Report on Corporate Governance followed by the
 Company together with a Certificate from the Statutory Auditors
 confirming compliance is set out in Annexure 11 to this Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 The Directors confirm that
 
 - In the preparation of the annual accounts for the year ended 31st
 March 2008, the applicable accounting standards had been followed;
 
 - The selected accounting policies were applied consistently and
 judgments and estimates that are reasonable and prudent were made so as
 to give a true and fair view of the state of affairs of the Company at
 the end of the financial year and of the profit of the Company for that
 period;
 
 - Proper and sufficient care for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act had been
 taken for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 - The Annual Accounts were prepared on a going concern basis.
 
 GOLDEN JUBILEE
 
 The Company has entered into its Golden Jubilee year. Looking back, the
 Directors wish to record the following major milestones, crossed by the
 Company during its journey of 50 years.
 
 The Company commissioned its
 
 - First plant at RR Nagar in Tamil Nadu in the year 1961.
 
 - Second plant at Jayanthipuram in Andhra Pradesh in the year 1986.
 
 - Third plantat Alathryur in Tamil Nadu in the year 1997.
 
 - Acquired its Fourth plant at Mathodu in Karnataka in the year 2000.
 
 Coinciding with the Golden Jubilee year, it is establishing its Fifth
 plant in Ariyalur in Tamil Nadu for the Company to reach a capacity of
 110 lac tonnes per annum from a humble beginning of 0.66 lac tonnes per
 annum.
 
 This has been made possible through
 
 - The Central and State Governments, who have always encouraged the
 Companys initiatives.
 
 - The Financial Institutions and Banks, viz. IDBI, IFCI, UTI, LIC,
 SIPCOT, Oriental Fire and General Insurance Company Limited, New India
 Assurance Company Limited and United India Group of Insurers, Indian
 Bank and other banks, who have sanctioned term loans, participated in
 the share capital of the Company, extended underwriting facilities and
 provided various fund based & non-fund based assistance during the
 initial phases of the Company and consistently thereafter.
 
 - The employees who have exhibited unstinted co-operation and
 dedication in discharging their duties.
 
 - The business associates, viz. Skoda, L & T, Loesche, FL Smidth,
 Petron, Aumund, EEL India, Enexco, Ramco Systems, Vestas, Enercon and
 other vendors and transport contractors who have remained loyal with
 the Company in a spirit of mutual benefit.
 
 - The Customers who have supported the products, which has enabled the
 Company to grow and create an enterprise of a lasting value.
 
 The Directors in this Golden Jubilee year take this opportunity to
 record their appreciation and express their sincere thanks to those
 mentioned supra for making the Company for what it is today.
 
                                 On behalf of the Board of Directors,
                                              For MADRAS CEMENTS LTD.
 
 Chennai                                  P.R.RAMASUBRAHMANEYA RAJHA
 30-06-2008                             Chairman & Managing Director