The Directors present the Fourteenth Annual Report together with the
Audited Accounts of your Company for the year ended 31st March, 2014.
Net Turnover 20,078 20,023
Profit before Depreciation,
Interest and Tax (PBDIT) 4,147 4,980
Depreciation 1,052 945
Profit before Interest and Tax (PBIT) 3,095 4,035
Interest 319 210
Profit before Tax (PBT) 2,776 3,825
Tax Expenses 631 1,170
Profit after Tax 2,144 2,655
OVERVIEW AND REVIEW OF OPERATIONS
The Indian cement industry was impacted by the developments in the
global and domestic economy. Although the year began with expectations
of the rise in demand for cement in the hope of government spending in
the run up to the general elections, demand remained sluggish. The
prolonged monsoon and low offtake from the infrastructure and housing
sectors, subdued the demand. This resulted in prices remaining under
pressure. On the supply side, overcapacity continued to hurt the
industry. The demand-supply mis-match is expected to stay on. Further,
logistics and raw material costs continued to rise, driven by the
increase in railway freight and high diesel prices.
Although the outlook in the short term continues to remain challenging,
demand growth in the long term is likely to be around 8%. Housing and
infrastructure spends as outlined in the 12th five year plan offer much
The performance of your Company during the year under review must
therefore be viewed against this backdrop.
Your Company produced 40.79 MMT of cement as against 40.13 MMT in the
previous year. The effective capacity utilisation was 79% as against
82%. The aggregate sales volume increased by 2% from 40.65 MMT to 41.47
Your Company''s net turnover stood at Rs. 20,078 crores vis-a-vis Rs. 20,023
crores achieved in the previous year. Profit before interest and tax
was at Rs. 3,095 crores as against Rs. 4,035 crores.
Your Directors recommend that dividend be maintained at Rs. 9/- per
equity share of Rs. 10/- each for the year ended 31st March, 2014. The
dividend distribution would result in a cash outgo of Rs. 289 crores
(including tax on dividend of Rs. 42 crores) which is identical to the
amount in the year 2012-13.
Your Company has commissioned –
- Clinkerisation plant of 3.30 MMTPA, 25 MMTPA and 1.45 MMTPA cement
plant at Rajashree Cement Works in Karnataka;
- 1.6 MMTPA cement mill at Jharsuguda Cement Works in Odisha;
- 25 MW TPP in Andhra Pradesh Cement Works;
- 30 MW TPP at Rawan Cement Works in Chhattisgarh; and
- 6.5 MW Waste Heat Recovery System at Awarpur Cement Works in
With these projects the cement capacity of your Company stands at 53.95
Your Company has earmarked around Rs. 10,000 crores to be incurred in
setting up the remaining
grinding units, clinkerisation plants, cement terminals and other capex
in the current round of expansions. These are likely to be commissioned
in a phased manner by 2015. A judicious mix of internal accruals and
borrowings has been used for funding the projects.
– Jaypee Cement Corporation Limited
During the year, the Board of Directors of your Company approved the
acquisition of the Gujarat Cement Unit of Jaypee Cement Corporation
Limited (“JCCL”), comprising of an integrated cement unit at Sewagram
and Grinding Unit at Wanakbori at an enterprise value of Rs. 3,800 crores
besides the actual net working capital at Closing (“the Unit”). JCCL is
a wholly-owned subsidiary of Jaiprakash Associates Limited (“JAL”).
The transaction is being carried out by way of a Scheme of Arrangement
in terms of the provisions of the Companies Act, 1956 (“the Act”)
between your Company, JCCL and their respective shareholders and
creditors (“the Scheme”). The Scheme has been approved by the
shareholders and creditors of both JCCL and your Company, the Hon''ble
Bombay High Court and the Hon''ble Allahabad High Court. The Competition
Commission of India has also approved the proposed combination. The
Scheme is now subject to the approval of the Securities and Exchange
Board of India (SEBI).
Upon its effectiveness, your Company will take over all the assets and
the liabilities of the Unit and the net amount of enterprise value less
liabilities taken over will be the consideration for the Scheme. Such
consideration will be discharged by allotment of equity shares of your
Company to the shareholders of JCCL, subject to a maximum value of such
equity shares being Rs. 150 crores.
– Madanpur (North) Coal Block
Your Company alongwith seven other allottees was allotted a coal block
in Madanpura North, Chhattisgarh. In terms of the allocation letter, a
joint venture company viz. Madanpur (North) Coal Company Private
Limited was incorporated with your Company holding around 11% of the
equity. The joint venture Company was in the process of achieving the
milestones in terms of the letter of allocation. However, during the
year, the Ministry of Coal, Government of India based on the
recommendation of the Inter-Ministerial Group issued an order for
de-allocation of the coal block. The joint venture company
incorporated by the allottees for mining coal has filed a petition
against the de-allocation order in the Delhi High court. The Court has
ordered maintaining status-quo after the de-allocation and has also
directed the government not to re-allocate the same coal block nor
create any third party interest therein till further orders.
- Competition Commission of India
The Competition Commission of India (CCI) upheld the complaint of
alleged cartelisation against certain cement manufacturing companies
including your Company. The CCI has imposed a penalty of Rs. 1,175.49
crores on your Company. Your Company has filed an appeal against the
Order before the Competition Appellate Tribunal (COMPAT).
COMPAT has granted stay on the CCI order on condition that your Company
deposit 10% of the penalty, amounting to Rs. 117.55 crores, which has
Your Company, backed by a legal opinion, continues to believe that it
has a good case and accordingly no provision has been made in the
Your Directors reaffirm their continued commitment to good corporate
governance practices. During the year under review, your Company was in
compliance with the provisions of Clause 49 of the Listing Agreement
with the stock exchanges relating to corporate governance.
The compliance report is provided in the Corporate Governance section
of the Annual Report. The auditor''s certificate on compliance with the
provisions of Clause 49 of the Listing Agreement is given in Annexure I
to this Report.
EMPLOYEE STOCK OPTION SCHEME ESOS - 2006
During the year 15,440 Stock Options were vested in eligible employees.
The ESOS Compensation Committee allotted 61,470 equity shares of Rs. 10/-
each of your Company upon exercise of Stock Options by the employees.
ESOS - 2013
The Board of Directors of your Company had approved the formulation of
a new Stock Option
Scheme viz. ESOS - 2013 in terms of the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999(“SEBI Guidelines”) and had mandated the
existing ESOS Compensation Committee to implement and administer ESOS -
2013. At the Annual General Meeting held on 29th July, 2013, the
shareholders of your Company approved the formulation of ESOS - 2013.
In terms of ESOS - 2013, the ESOS Compensation Committee has approved a
grant of 237,953 Stock Options at an exercise price of Rs. 1,965/- per
Stock Option exercisable into the same number of equity shares of Rs.
10/- each and 84,056 Restricted Stock Units at an exercise price of Rs.
10/- each to the eligible employees of your Company. The Disclosures,
under Clause 12 of the SEBI Guidelines is set out in Annexure II to
this Report. A certificate from the Statutory Auditor on the
implementation of your Company''s Employees Stock Option Schemes will be
placed at the ensuing Annual General Meeting for inspection by the
Your Company was the recipient of the following
Safety Award 2013 (2013-14) UNNATHA SURAKSHA PURASKARA AWARD from
National Safety Council, Karnataka Chapter for Rajashree Cement Works
(RC); 3 Star Rating in appreciation towards Safety Practice for the
year 2013 (2013-14) from Confederation of Indian Industry (CII) for RC;
National Award for Excellence in Energy Management - 2013 Cement
Plant from CII for Kotputli Cement Works; Golden Peacock Innovation
Management Award (2013) for Birla White; Energy Conservation and
Efficiency Award (2012-13) from the New And Renewable Energy
Development Corporation of Andhra Pradesh Ltd. for Andhra Pradesh
Cement Works; National Energy Award 2013 (for Power Plant) from CII
for Hirmi Cement Works. IMC Ramakrishna Bajaj National Quality
Performance Excellence Trophy 2013 in Manufacturing Category for
Vikram Cement Works;
Top Exporter Award from CAPEXIL for the 17th consecutive year.
RESEARCH AND DEVELOPMENT
Your Company''s Research & Development (R&D) activities have been
progressively increasing as an intellectual resource centre to support
sustained growth of business. Continuous product customisation and
process upgradation is its main forte, aimed at creating greater
The R&D activities of your Company are engaged in basic and applied
research, material characterisation and mutual compatibility, mineral
securitisation and process debottlenecking. Your Company is focused on
sustainable development and strives to unearth new techniques for
conservation of non-renewable resources, upkeep of environment and
waste utilisation, use of alternative fuel and optimal consumption of
captive limestone reserves. These have resulted in preservation of
natural and non-renewable resources, conservation of energy and
improved durability features of the product.
Your Company is engaged with Aditya Birla Science and Technology
Company Limited (ABSTCL), which is the corporate research and
development centre for the Aditya Birla Group.
ABSTCL supports the broad diversity of the Group''s businesses through
multi-disciplinary teams of experts, scientists and engineers who lead
fundamental and applied research projects.
Your Company strives to foster a culture of high performance. Ongoing
learning, aligning HR systems in line with global benchmarks, aligning
rewards and recognitions with performance have enabled your Company
sustain its reputation of being a meritocratic organisation.
The Group''s Corporate Human Resources function continues to play an
integral role in your Company''s talent management programme.
Your Company is committed to safety of its employees, contractors,
vendors, customers and the people residing in proximity of its
operations. The continuous focus on safety has not only positively
impacted people''s behaviour but is also building confidence about your
Company being a safety oriented organisation. Your Company continues
its engagement with DuPont Sustainable Solution team on its Safety
The year witnessed high level of people involvement across the
hierarchy in safety improvement processes and has resulted in
significant upgradation of safety practices and performance.
The Apex Safety Committee, headed by the Whole-time Director and the
six strategic subcommittees and Site level Safety Apex Committees, have
taken several measures to strengthen the safety management system.
These include, among others, development and implementation of safety
standards in its mines and marine operations, finalising policy and
facilitating implementation to improve people''s behaviour outside
workplace including family involvement.
A new program to engage front level employees in safety improvement
process through self and peers correction under the “Employee Action in
Improving Safety (EAIS)” program has also been started. To obtain high
level of safety commitment from contractors, your Company has
strengthened contracting process by integrating pre, periodic and post
job contractor''s performance evaluation. Corporate Safety Audits are
conducted at regular intervals to validate enforcement of safety
standard in the manufacturing Units.
These actions have resulted in your Company improving on the Lost Time
Injury Frequency Rate (LTIFR) which at 0.67 is 32% lower as compared to
the previous year''s performance of 0.99.
The annual accounts of your Company''s subsidiaries viz. Dakshin Cements
Limited, Harish Cement Limited, Gotan Lime Stone Khanij Udyog Private
Limited, Bhagwati Lime Stone Company Private Limited, UltraTech Cement
Middle East Investments Limited, UltraTech Cement Lanka (Pvt) Limited,
PT UltraTech Mining Indonesia and PT UltraTech Investments Indonesia
and the related detailed information shall be made available to
shareholders of your Company and its subsidiaries, upon receipt of a
request from them. They will also be kept open for inspection at the
Registered Office of your Company and its subsidiaries during business
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared in accordance
with the applicable Accounting Standards and the provisions of the
Listing Agreement with the stock exchanges and forms part of the Annual
Your Company has adequate liquidity and a strong balance sheet. CRISIL
has re-affirmed the “CRISIL AAA/Stable and CRISIL A1 ” rating for your
Company''s long term borrowings and bank loan facilities respectively.
Your Company has a debt outstanding of Rs. 5,199 crores, treasury
investments of Rs. 4,841 crores and net debt of Rs. 358 crores.
Your Company has raised long term borrowings of Rs. 571 crores by way of
External Commercial Borrowings (ECBs). These are being utilised for
financing the various projects of your Company. All Foreign Currency
borrowings outstanding are hedged.
Your Company has repaid Long Term borrowings (Non-Convertible
Debentures and External Commercial Borrowings) amounting to Rs. 510
crores during the year.
Your Company has not accepted any fixed deposits and, as such, no
amount of principal or interest on fixed deposit was outstanding as of
the balance sheet date.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy, technology absorption and
foreign exchange earnings and outgo, required to be disclosed pursuant
to Section 217(1)(e) of the Act read with the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 is
given in Annexure III to this Report
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Act read
with the Companies (Particulars of Employees) Rules, 1975, the names
and other particulars of employees are to be set out in the Directors''
Report, as an addendum thereto. However, in line with the provisions of
Section 219(1)(b)(iv) of the Act, the Report and Accounts as set out
therein, are being sent to all Members of your Company excluding the
aforesaid information about the employees. Any Member, who is
interested in obtaining these particulars about employees, may write to
the Company Secretary at the Registered Office of your Company.
BUSINESS RESPONSIBILITY REPORT
In terms of Clause 55 of the Listing Agreement executed with stock
exchanges, a Business Responsibility Report forms part of the Annual
DIRECTOR''S RESPONSIBILITY STATEMENT
The Audited Accounts for the year under review are in conformity with
the requirements of the Act and the Accounting Standards. The financial
statements reflect fairly the form and substance of transactions
carried out during the year under review and reasonably present your
Company''s financial condition and results of operations.
Your Directors confirm that:
i. in the preparation of the Annual Accounts, applicable accounting
standards have been followed along with proper explanations relating to
material departures, if any;
ii. the accounting policies selected have been applied consistently and
judgments and estimates are made that are reasonable and prudent so as
to give a true and fair view of the state of affairs of your Company as
at 31st March, 2014 and of the profit of your Company for the year
ended on that date;
iii. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of your Company and for preventing and
detecting frauds and other irregularities;
iv. the Annual Accounts of your Company have been prepared on a going
Mr. Arun Adhikari was appointed Additional Director on the Board of
your Company with effect
from 3rd December, 2013. Mr. Adhikari holds office upto the date of the
ensuing Annual General Meeting (AGM). Notice pursuant to Section 160 of
the Companies Act, 2013 has been received from a Member proposing Mr.
Adhikari for appointment as Director of your Company.
Mr. D. D. Rathi retires from office by rotation and being eligible,
offers himself for re-appointment.
The Board recommends these appointment / re-appointment.
Items seeking your approval on the above are included in the Notice
convening the AGM together with a brief resume of the Directors being
appointed / re-appointed.
Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai and M/s.
G.P. Kapadia & Co., Chartered Accountants, Mumbai were appointed Joint
Statutory Auditors of your Company from the conclusion of the previous
AGM until the conclusion of the ensuing AGM. Being eligible, they offer
themselves for re-appointment as auditors of your Company.
The Board proposes the re-appointment of Deloitte Haskins & Sells LLP,
Chartered Accountants, Mumbai and M/s. G.P. Kapadia & Co., Chartered
Accountants, Mumbai, as Joint Statutory Auditors of your Company based
on the recommendation of the Audit Committee, to hold office from the
conclusion of the ensuing AGM until the conclusion of the next AGM.
The Board also proposes the re-appointment of M/s. Haribhakti & Co.,
Chartered Accountants, Mumbai as the Branch Auditor of your Company''s
Units at Jafrabad and Magdalla in Gujarat and Ratnagiri in Maharashtra,
based on the recommendation of the Audit Committee, to hold office from
the conclusion of the ensuing AGM until the conclusion of the next AGM.
Resolutions seeking your approval on these items are included in the
Notice convening the AGM.
The observation made in the Auditor''s Report are self-explanatory and
therefore, do not call for any further comments under Section 217(3) of
The Board of Directors of your Company have on the recommendation of
the Audit Committee, appointed M/s. N.I. Mehta & Co., Cost Accountants,
Mumbai and M/s. N. D. Birla & Co., Cost Accountants, Ahmedabad, as Cost
Auditors, to conduct the cost audit of your Company for the financial
year ending 31st March, 2015, at a remuneration as mentioned in the
Notice convening the AGM, subject to ratification of the remuneration
by the Members of your Company.
The Audit Committee has received a Certificate from the Cost Auditors
certifying their independence and arm''s length relationship with your
Company. In accordance with the Companies (Cost Audit Report) Rules,
2011, the due date for filing the Cost Audit Report in XBRL for the
financial year ended 31st March, 2013 was 30th September, 2013 and the
same was filed on 23rd August, 2013 vide SRN No. S21929849 with the
Ministry of Corporate Affairs, New Delhi.
Your Directors place on record their appreciation of the contribution
made by employees at all levels. We applaud them for their superior
levels of competence, dedication and commitment to your Company.
Your Directors also express their deep sense of gratitude to the
Central and State Governments, banks, financial institutions,
stakeholders and business associates for their co-operation and support
and look forward to their continued support in future.
For and on behalf of the Board
Kumar Mangalam Birla
Mumbai, 23rd April, 2014