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UltraTech Cement Directors Report, UltraTechCement Reports by Directors
UltraTech Cement
BSE: 532538|NSE: ULTRACEMCO|ISIN: INE481G01011|SECTOR: Cement - Major
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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
Dear Shareholders,
 The Directors present the Thirteenth Annual Report together with the
 Audited Accounts of your Company for the year ended 31st March, 2013.
                                                        (Rs. in Crores)
                                                      2012-13    2011-12
 Net Turnover                                          20,018     18,158
 Profit before Depreciation, Interest and Tax (PBDIT)   4,980      4,519
 Less: Depreciation                                       945        903
 Profit before Interest and Tax (PBIT)                  4,035      3,617
 Interest                                                 210        224
 Profit before Tax (PBT)                                3,825      3,393
 Tax Expenses                                           1,170        947
 Profit after tax                                       2,655      2,446
 The Indian cement industry witnessed challenging times as a result of
 low growth led by issues such as high fiscal deficit, high inflation
 and worsening current account balance. The slowdown in the global
 growth aggravated the sluggishness in the economy. The industry
 recorded a growth of approximately 5.6% in FY13 as against 7% in FY12.
 Apart from the unfavorable demand-supply scenario, the industry has
 been also reeling under the pressure of rising input costs. The prices
 of key raw materials have soared. The rise in domestic coal prices and
 non-availability of low cost linkage coal has hiked the power and fuel
 cost for cement manufacturers. Though imported coal has seen some
 easing in cost pressures due to the decline in the price of imported
 coal, the benefit of declining prices has been offset to some extent by
 rupee depreciation. Nonetheless, the government''s focus on
 infrastructure development, the robust growth potential in rural
 housing and softening interest rates augur well for the cement
 Against this background, your Company has produced 40.13 MMT of cement
 as against 39.43 MMT in the previous year. The effective capacity
 utilisation was 84% as against 83%.
 The aggregate sales volume remained flat at 40.7 MMT, while for white
 cement it was 5.66 LMT (5.55 LMT).
 Your Company''s net turnover stood at Rs. 20,018 crores vis a vis Rs.
 18,158 crores achieved in the previous year. Profit before interest and
 tax was at Rs. 4,035 crores as against Rs. 3,617 crores.
 Your Directors have recommended a dividend of Rs. 9/- per equity share
 (Rs. 8/- per equity share) of Rs. 10/- each for the year ended 31st
 March, 2013.  The dividend distribution would result in a cash outgo of
 Rs. 289 crores (including tax on dividend of Rs. 42 crores) compared to
 Rs. 255 crores (including tax on dividend of Rs. 36 crores) paid for
 the year 2011-12.
 Your Company has commissioned its clinkerisation unit of 3.30 MMTPA at
 Rawan in the State of Chhattisgarh and a grinding unit of 1.55 MMTPA at
 Hotgi in the State of Maharashtra. Further, your Company has increased
 the capacity of its unit in Gujarat by 0.60 MMTPA. Consequently, your
 Company''s cement capacity stands augumented to 50.90 MMTPA from 48.75
 MMTPA. The Clinkerisation unit at Malkhed, Karnataka is likely to be
 commissioned in Q1FY14.
 The Cement grinding facility of 4.45 MMTPA is at an advanced stage of
 commissioning and expected to go on stream by first half of FY14. Your
 Company''s capex includes expansion of capacity of Aditya Cement in the
 state of Rajasthan by 2.9 MMTPA and setting up of two grindings units,
 excepted to be completed by March, 2015.
 Your Company has commissioned its Wall Care Putty manufacturing unit at
 Katni in the state of Madhya Pradesh and a Bulk Terminal at Kochi in
 the State of Kerala.
 The total expenditure for these capex is around Rs. 11,400 crores.
 The Competition Commission of India (CCI) passed an order dated 20th
 June, 2012 imposing penalties on some cement companies including your
 Company. The CCI order is in relation to a complaint filed by the
 Builders Association of India for alleged contravention of the
 provisions of the Competition Act. The penalty imposed on your Company
 amounts to Rs. 1,175.49 crores.
 Your Company filed an appeal alongwith a stay application against the
 order before the Competition Appellate Tribunal (COMPAT).  COMPAT by
 its order dated 17th May, 2013 granted stay against the CCI order on
 condition that your Company deposit 10% of the penalty amount within
 one month of the passing of the order and posted the matter for further
 hearing. Your Company filed an appeal in the Supreme Court against the
 COMPAT order. The Supreme Court declined to interfere with the COMPAT
 order at this stage and directed that 10% of the penalty amount be
 Your Company, backed by legal opinion, continuous to believe that it
 has a good case and accordingly no provision has been made in the
 The Ministry of Coal (MoC), Government of India had allotted a coal
 block in the State of Chhattisgarh to Grasim Industries Limited
 (Grasim) and Electrotherm (India) Limited (Electrotherm) for the
 purpose of mining coal for captive consumption. In terms of the
 allocation letter, a joint venture company viz. Bhaskarpara Coal
 Company Limited was incorporated with Grasim holding 47.37% of the
 equity and the remaining being held by Electrotherm. Consequent to the
 demerger of Grasim''s cement business into Samruddhi Cement Limited
 (Samruddhi) and the amalgamation of Samruddhi with your Company, your
 Company was substituted as the joint venture partner in place of
 The JV Company was in the process of achieving various milestones in
 line with the terms of allocation letter. However, during the year, the
 MoC, based on the recommendation of Inter- Ministerial Group (IMG),
 issued an order for de- allocation of Bhaskarpara Coal Block alleging
 delay in achieving the milestones. Your Company has filed a writ
 petition against the order before the Hon''ble High Court of
 Chhattisgarh at Bilaspur and obtained an interim stay. The appeal is
 pending before the Hon''ble High Court. Your Company is committed to
 implementation of this project and has been taking necessary steps
 towards the same. The delay, if any, in achieving the milestones, is
 for reasons beyond the control of your Company as well as the joint
 venture company.
 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.
 During the year 7,890 stock options were granted and 15,101 were vested
 in eligible employees.  The ESOS Compensation Committee allotted
 114,601 equity shares of Rs. 10/- each of your Company upon exercise of
 stock options by the employees.
 The disclosure, under Clause 12 of Securities and Exchange Board of
 India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999 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 Scheme will be placed at the ensuing
 Annual General Meeting for inspection by the Members.
 ESOS - 2013
 At a meeting held on 13th June, 2013, the Board of Directors approved
 the formulation of a new Employee Stock Option Scheme viz. UltraTech
 Employee Stock Option Scheme - 2013 (ESOS - 2013) in terms of the SEBI
 Guidelines.  The Board mandated the existing ESOS Compensation
 Committee to implement and administer the ESOS - 2013.
 Items seeking your approval for introduction and implementation of ESOS
 - 2013 and granting such number of Stock Options exercisable into not
 more than 4,69,000 equity shares of Rs. 10/- each to permanent
 employees, including any Managing or Whole-time Director(s), of your
 Company and its holding and/or subsidiary companies are included in the
 Notice convening the Annual General Meeting together with the
 Explanatory Statement.
 Your Company was the recipient of the following awards during the year:
 - Dun and Bradstreet Award for the best cement Company in India
 - Top Exporter Award from CAPEXIL for the 16th consecutive year.
 - IMC Ramkrishna Bajaj National Quality Award -  Performance
 Excellence Trophy 2012 for Birla White.
 - Greentech Environment Excellence Award 2012 from Greentech for
 Gujarat Cement Works.
 - ''Subh Karan Sarawagi Environment Award'' from the Federation of
 Indian Mineral Industries for Rajashree Cement Works.
 - National Award for excellence in Energy Management 2012 Energy
 Efficient Unit from CII for Reddipalayam Cement Works.
 - National Energy Conservation Award 2012 from Ministry of Power,
 New Delhi for Vikram Cement Works.
 Your Company''s Research and Development (R&D) activities are expanding
 and are focused on development of new products and processes that
 create value for customers. Your Company is committed to sustainable
 development and looks at new ways to preserve the environment and
 non-renewable resources, as well as managing resources responsibily.
 Towards this end, your Company has developed several products that aid
 in resource conservation, result in energy savings, and ensure
 durability. Your Company continues to maximise use of industrial waste,
 alternative sources of fuel and chemical and mineral evaluation of
 captive limestone reserves.
 Your Company is closely 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 expert scientists and engineers who lead
 fundamental and applied research projects.
 Your Company believes that Human Resources play a very critical role in
 its growth. Your management has infused a lot of rigor and intensity in
 its people development processes and in honing skill sets. Various
 initiatives have been launched to provide growth opportunities to
 employees and stem attrition. For the development of the employees,
 your Company has created a structured training framework to ensure
 their ongoing education.
 The Group''s Corporate Human Resources function has played and continues
 to play an integral role in your Company''s Talent Management Process.
 Several innovative people - focused initiatives have been instituted at
 the Group level, and these are translated into action at all the Group
 Companies.  Your Company''s basic objective is to ensure that a robust
 talent pipeline and a high-performance culture, centred around
 accountability is in place.  Your Company feels this is critical to
 enable it retain its competitive edge.
 In line with your Company''s commitment to achieve best in class safety
 practices and performance, it continued its association with M/s DuPont
 Safety Resources. The Apex Safety Council called Safety Board headed
 by the Whole- time Director has taken various measures to strengthen
 your Company''s Safety Management System. These include development and
 implementation of critical safety standards across the Units and
 Project sites, establishing processes for training need identification
 at each level of employee, introduction of Life Saving Rule and
 Progressive Consequence Management system among them. Corporate
 Safety Audits are also conducted to validate the measures taken towards
 ensuring safety.
 All these initiatives have resulted in achieving the lowest ever Lost
 Time Injury Frequency Rate (LTIFR) of 0.99 as compared to 1.57 in the
 previous year, which is lower by 37%.
 The annual accounts of your Company''s subsidiaries viz. Dakshin Cements
 Limited, Harish Cement Limited, Gotan Lime Stone Khanij Udyog Private
 Limited, UltraTech Cement Middle East Investments Limited, UltraTech
 Cement Lanka (Pvt) Limited and PT UltraTech Mining 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 hours.
 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 raised long term borrowing of Rs. 1,050 crores by way
 of issuing Non-Convertible Debentures and External Commercial
 Borrowings.  All foreign currency borrowings outstanding are fully
 hedged. These are being utilised for financing the various capex
 initiatives of your Company.
 Your Company has repaid Long Term borrowings (Non-Convertible
 Debentures and External Commercial Borrowings) amounting to Rs. 157
 crores during the year.
 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 adequate liquidity and a strong balance
 sheet. CARE has also re-affirmed the CAREAAA rating of the Non-
 Convertible Debentures of Rs. 500 crores transferred from erstwhile
 Samruddhi upon its amalgamation with your Company.
 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.
 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.
 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, may write to the Company
 Secretary at the Registered Office of your Company.
 In terms of Clause 55 of the Listing Agreement executed with stock
 exchanges, a Business Responsibility Report forms part of the Annual
 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, 2013 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
 concern basis.
 Mr. V. T. Moorthy resigned from the Board of your Company with effect
 from 26th April, 2013. The Board places on record its deep appreciation
 for the services rendered by Mr. Moorthy during his tenure as Member of
 the Board.
 Mr. Rajiv Dube was appointed Additional Director on the Board of your
 Company with effect from 29th April, 2013. Mr. Dube holds office upto
 the date of the ensuing Annual General Meeting.  Notice pursuant to
 Section 257 of the Act has been received from a Member proposing Mr.
 Dube for appointment as Director of your Company.
 Mrs. Rajashree Birla, Mr. R. C. Bhargava and Mr. S. Rajgopal retire
 from office by rotation and being eligible, offer themselves for
 The Board recommends these appointment/ re-appointments.
 Items seeking your approval on the above are included in the Notice
 convening the Annual General Meeting together with a brief resume of
 the Directors being appointed / re-appointed.
 M/s. Deloitte Haskins & Sells, 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
 Annual General Meeting until the conclusion of the ensuing Annual
 General Meeting. Being eligible, they offer themselves for
 re-appointment as auditors of your Company.
 The Board proposes the re-appointment of M/s. Deloitte Haskins & Sells,
 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 Annual General Meeting until the conclusion
 of the next Annual General Meeting.
 The Board also proposes the re-appointment of M/s. Haribhakti & Co.,
 Chartered Accountants, Mumbai as the Branch Auditor of your Company''s
 Unit''s 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 Annual General Meeting
 until the conclusion of the next Annual General Meeting. In terms of
 the provisions of the Act, the Board also seeks your approval for the
 appointment of Branch Auditors in consultation with your Company''s
 Statutory Auditor''s for any other Branch/Unit/Division of your Company,
 which may be opened/acquired/installed in future in India or abroad.
 Resolutions seeking your approval on these items are included in the
 Notice convening the Annual General Meeting.
 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 Act.
 In terms of the provisions of Section 233B of the Act, 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, 2014, subject to the approval of the Central
 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 Cost Audit (Report) Rules, 2001, the due
 date for filing the Cost Audit Report in XBRL for the financial year
 ended 31st March, 2012 was 31st December, 2012 and the same was filed
 on 27th December, 2012 vide SRN No. S19591148 with the Ministry of
 Corporate Affairs, New Delhi.
 Your Directors express their deep sense of gratitude to the banks,
 financial institutions, stakeholders, business associates, Central and
 State Governments for their co-operation and support and look forward
 to their continued support in future.
 We very warmly thank all of our employees for their contribution to
 your Company''s performance.  We applaud them for their superior levels
 of competence, dedication and commitment to your Company.
                                 For and on behalf of the Board
                                           Kumar Mangalam Birla
 Mumbai, 13th June, 2013                               Chairman
Source : Dion Global Solutions Limited
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