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The Ramco Cements

BSE: 500260|NSE: RAMCOCEM|ISIN: INE331A01037|SECTOR: Cement - Major
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Directors Report Year End : Mar '19    Mar 18

BOARD’S REPORT

The Directors have pleasure in presenting their 61st Annual Report and the Audited Accounts of the Company for the year ended 31st March 2019.

(Rs. in Crores)

FINANCIAL RESULTS

Separate Financials

Year ended 31-03-2019

Year ended 31-03-2018

Revenue (Net of Duties and Taxes)

5,174.71

4,443.00

Operating Profit: Profit before Interest, Depreciation and Tax (PBIDT)

1,064.97

1,136.07

Less: Interest

50.87

59.21

Profit before Depreciation and Tax (PBDT)

1,014.10

1,076.86

Less: Depreciation

298.52

292.20

Profit before tax

715.58

784.66

Less: Tax Expenses

Current Tax

189.44

204.54

Excess Tax Provision related to earlier years written back

(4.83)

(4.86)

Deferred Tax

10.97

22.02

Deferred Tax adjustment of earlier years

14.11

7.30

Profit After Tax

505.89

555.66

Other Comprehensive Income for the year {Net of Tax of Rs. (-1.53) crores [PY: Rs. 2.22 crores]}

(2.68)

(1.72)

Total Comprehensive Income for the year (TCI)

503.21

553.94

SHARE CAPITAL

The paid up capital of the Company is Rs. 23,55,76,780/- consisting of 23,55,76,780 shares of Rs. 1/- each. There has been no change in the Capital Structure of the Company during the year under review.

The Company does not have any Scheme for issue of sweat equity to the employees or Directors of the Company.

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs. 3/per share (300%) on the equity capital of the Company, as against Rs. 3/- per share for the previous year. The dividend distribution tax thereon is Rs.14.54 crores. The recommendation of the dividend by the Directors is in accordance with the “Dividend Distribution Policy” of the Company. The Policy is available on the website of the Company under the weblink http://ramcocements.net/ramcocements/pdffiles/ policies/DIVIDEND%20DISTRiBUTIQN%20PQLICY%202016.pdf

The Dividend Distribution Policy forms part of this Report.

TAXATION

An amount of Rs. 189.44 crores towards Current Tax and Rs. 10.97 crores towards Deferred Tax have been provided for the year under review.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

OVERVIEW OF THE INDUSTRY

During the year under review, the industry witnessed a double digit growth of 13.31% in cement production, compared to the previous year’s growth of 6%. During the year, the industry had produced 337 Million Tons of cement, compared to 298 Million Tons of cement in the previous year. The country had an installed capacity of 480 Million Tons.

Affordable housing project has gained momentum creating sustained demand for cement requirement. Infrastructure segment also witnessed continuous growth during the year, fuelling further demand for cement.

Though the country’s overall rainfall is said to be normal, the Southern part of the country, which is the Company’s core market had witnessed 45% deficit compared to the average rain fall received in the past three seasons.

CEMENT DIVISION

PRODUCTION

Particulars

April 2018 to March 2019

April 2017 to March 2018

Increase over previous year

(In Tons)

(In Tons)

(In Tons)

(In %)

Clinker

86,18,417

71,64,750

14,53,667

20

Cement

1,11,83,925

93,15,855

18,68,070

20

This is the first time in the history of the Company, the production has crossed 11 Million tons mark.

SALES

During the year, the Company had sold 111.24 lakh tons of cement, compared to 93.12 lakh tons of the previous year, showing an increase of 19%. For the first time in the Company’s history the sale volume also has crossed the 11 Million tons mark.

The company’s sales have grown substantially in the Eastern markets. The grinding units at Kolaghat and Vizag had enabled the Company to serve Eastern markets efficiently which has contributed to the increase in the market share in that region.

There has been pressure on the prices during the first three quarters of the year and from the fourth quarter onwards, the prices have come back to earlier levels.

During the year under review, the Company has exported 2.24 lakh tons as against 1.31 lakh tons during the previous year. The export turnover of the Company for the year was Rs. 112.48 crores as against Rs. 55.97 crores of the previous year.

KEY FINANCIAL RATIOS

Pursuant to Schedule V(B) of LODR, the Key Financial Ratios for the year 2018-19 are given below:

Sl. No.

Particulars

31-03-2019

31-03-2018

Formula adopted

1

Debtors Turnover Ratio (Days)

33

41

365 Days / (Net Revenue / Average Trade Receivables)

2

Inventory Turnover Ratio (Days)

40

47

365 Days / (Net Revenue / Average Inventories)

3

Interest Coverage Ratio

9.58

13.25

(Profit Before Tax Interest) / (Interest Interest Capitalised)

4

Current Ratio

1.07

1.13

Current Assets / (Total Current Liabilities - Security Deposits payable on demand - Current maturities of Long Term Debt)

5

Debt-Equity Ratio

0.36

8

CM

0.

Total Debt / Total Equity

6

Operating Profit Margin

21%

26%

EBITDA / Net Revenue

7

Net Profit Margin

10%

13%

Net Profit / Net Revenue

8

Return on Networth

12%

14%

Total Comprehensive Income / Average Net worth

9

Total Debt / EBITDA

1.52

8

0.

Total Debt / EBITDA

10

Return on Capital employed

10%

12%

(Total Comprehensive Income Interest) / (Average of Equity plus Total Debt)

11

Price Earnings Ratio

35

31

Market Price per share as at 31st March / Earnings per share

12

Blended EBITDA per Ton (In ‘)

957

1220

EBITDA / Sale Volume in tons

Notes:

a. For Sl. No. 3, 5 and 9, there have been significant change (i.e. 25% or more) in the ratios, compared to previous year. The same is due to Increase in debt for project financing.

b. EBITDA denotes Profit Before Tax Interest Depreciation

COST

During the year under review, the diesel prices have increased by about 17%. Due to this, the cost of raw materials as well as cost of distribution of cement have increased. The relaxation by the Government of India in rationalising the axle load norms for the heavy vehicles, has provided some relief in managing the distribution cost.

The prices of pet coke and coal have increased significantly impacting the margins. The company has taken steps to manage the increasing cost by using low cost fuels, such as, lignite during the year. From January 2019, the prices of pet coke and coal have started easing.

The Company has been continuously taking various measures in the areas of production, productivity, quality and cost reduction, to mitigate the increase in the cost of raw materials, power and transport cost.

READY MIX CONCRETE DIVISION

The Division has produced 36,960 cu.m of concrete during the year, accounting for a revenue of Rs. 15.97 crores (Net of duties and Taxes) as against 36,624 cu.m. of concrete accounting for a revenue of Rs. 15.55 crores (Net of duties and Taxes) during the previous year.

DRY MORTAR DIVISION

The Division has produced 40,493 tons of Dry Mortar during the year as against 39,290 tons produced during the previous year. The Division has sold 40,418 tons of Dry Mortar accounting for a revenue of Rs. 29.72 crores (Net of duties and Taxes) during the year as against 39,224 tons of Dry Mortar accounting for a revenue of Rs. 26.33 crores (Net of duties and Taxes) during the previous year.

WIND FARM DIVISION

The Division has generated 2,426 lakh units as compared to 2,624 lakh units in the previous year. Out of this, 2,344 lakh units were generated from the wind farms in Tamil Nadu and 82 lakh units from the wind farms in Karnataka. Out of the units generated in Tamil Nadu, 341 lakh units were meant for adjustment against the power consumed in our plants and balance 2,003 lakh units have been sold to Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) for a value of Rs. 59.94 crores.

Out of the 82 lakh units generated in Karnataka, 21 lakh units were consumed at our Mathodu Cement Plant. The balance 61 lakh units are kept in banking and would be billed to Bangalore Electricity Supply Company Limited (BESCOM).

The installed capacity of the wind farm of the company was 125.95 MW as on 31-03-2019 comprising of 108 Wind Electric Generators.

The income during the year from the Division was Rs. 61.75 crores as against Rs. 66.96 crores of the previous year.

POWER PLANTS

The Company’s thermal power plants aggregating to a capacity of 175 MW are located at its cement manufacturing plants. The power generated from the thermal power plants were used for self consumption in the cement manufacturing.

CAPITAL EXPENDITURE PROGRAMS - NEW PROJECTS

The Company is establishing a Line III at the existing Jayanthipuram Plant with a clinkerisation capacity of 1.5 Million Tonnes Per Annum (MTPA). The plant would be installed with a Waste Heat Recovery System to generate 27 MW of power. The cost of the project is Rs. 740 crores and is expected to be commissioned in the year 2020-2021.

The Company is establishing a cement grinding unit at Haridaspur in Jajpur District in the State of Odisha with a cement grinding capacity of 1 MTPA. The cost of the project is Rs. 515 crores and is expected to be commissioned in the year 2019-2020.

The Company is expanding its Vizag grinding unit by going in for another line with a grinding capacity of 1 MTPA. The cost of the project is Rs. 250 crores and is expected to be commissioned in the year 2019-2020.

The Company is expanding its Kolaghat grinding unit by going in for another line with a grinding capacity of 1 MTPA. The cost of the project is Rs. 425 crores and is expected to be commissioned in the year 2019-2020.

The clinker that would be manufactured from the Line III of Jayanthipuram would meet the requirements of the proposed grinding units.

The cement produced at the grinding units would help the Company to further expand its markets in the Coastal Districts of Andhra Pradesh and in the States of Odisha, Jharkhand and West Bengal.

The proposal to establish the grinding units near fly ash/slag availability areas and major cement consumption areas would enable the Company to economise its transportation costs and serve the markets in a better way.

The Company is establishing a new cement plant at Kalavatala Village, Kolimigundla Mandal, Andhra Pradesh with clinkerisation capacity of 2.25 MTPA and cement manufacturing capacity of 1 MTPA. It is proposed to have waste heat recovery power plant and Thermal power plant for an aggregate capacity of 25 MW, so that the cement plant will be self-reliant on power. The Plant will also have railway siding to provide flexibility in logistics. The cost of the project is Rs. 1,600 crores and is expected to be commissioned in the year 2020-2021.

TURNOVER AND PROFITABILITY

The total revenue (net of duties and taxes) for the year was Rs. 5,174.71 crores as against Rs. 4,443.00 crores for the previous year, showing an increase of 16%.

The operating profit and profit after tax for the year had decreased to Rs. 1,064.97 crores and Rs. 505.89 crores as against Rs. 1,136.07 crores and Rs. 555.66 crores respectively of the previous year. The lower Operating Profit and Net Profit compared to previous year was mainly due to lower realisation. The growth in the volume has partly off-set the lower realisation for the year, compared to the previous year.

The Total Comprehensive Income for the year under review is Rs. 503.21 crores as against Rs. 553.94 crores of the previous year. After appropriations, a sum of Rs. 200 crores has been kept as retained earnings of the Company and the remaining amount has been transferred to General Reserve.

SUBSIDIARY COMPANIES

The Company has two subsidiaries, viz. Ramco Windfarms Limited and Ramco Industrial and Technology Services Limited.

Ramco Windfarms Limited

The Share Capital of Ramco Windfarms Limited is Rs. 1 crore, out of which 71.50% is held by our Company. The rest of the share capital is held by Ramco Group of Companies.

The installed capacity of the Ramco Windfarms Limited was 39.835 MW as on 31-03-2019 comprising of 127 Wind Electric Generators. The Company had generated 371.26 lakh units of power as compared to 435.66 lakh units of power during the previous year. The lower generation was due to delayed onset of the wind season by about 2 months.

The revenue and profit after tax for the Company for the year ended 31-03-2019 were Rs. 14.92 crores and Rs. 2.70 crores compared to Rs. 17.45 crores and Rs. 4.54 crores respectively of the previous year.

Ramco Industrial and Technology Services Limited

Subsequent to investment of Rs. 4.50 crores in the share capital of Ramco Industrial and Technology Services Limited, it has become our Subsidiary Company on 21-03-2019.

The Share Capital of Ramco Industrial and Technology Services Limited is now Rs. 4.78 crores, out of which 94.11% is held by our Company. The rest of the share capital is held by Ramco Group of Companies.

The Company provides Transport services, Manpower services and Information Technology related services, mainly involving Software Implementation services.

The revenue of the Company for year ended 31-03-2019 was Rs. 35.85 crores as against Rs. 38.88 crores for the previous year. The company had incurred a loss of Rs. 1.29 crores as against the profit after tax of Rs. 0.31 crores for the previous year. The loss for the year was mainly due to, expenses incurred for diversification into Information Technology related services.

In accordance with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the Financial Statements of the Subsidiaries and Associates is attached in Form AOC-1 as Annexure - 1.

The Company has no material subsidiaries.

CONSOLIDATED FINANCIAL STATEMENTS

During the year under review, Sri Vishnu Shankar Mill Limited has ceased to be an Associate Company consequent to review based on existence of voting power and significant influence.

The Company has 5 Associate Companies, viz. Rajapalayam Mills Limited, Ramco Industries Limited, Ramco Systems Limited, Lynks Logistics Limited and Madurai Trans Carrier Limited.

As per provisions of Section 129(3) of the Companies Act, 2013 and Regulation 34 of LODR, Companies are required to prepare consolidated financial statements of its Subsidiaries and Associates to be laid before the Annual General Meeting of the Company. Accordingly, the consolidated financial statements incorporating the accounts of Subsidiary Companies and Associate Companies, along with the Auditors’ Report thereon, forms part of this Annual Report.

As per Section 136(1) of the Companies Act, 2013 the financial statements including consolidated financial statements are available at the Company’s website at the following link at http://www. ramcocements.in/financial-performance.aspx Separate audited accounts in respect of the subsidiary companies are also made available at the Company’s website. The Company shall provide a copy of separate audited financial statements in respect of its Subsidiary Companies to any shareholder of the Company who asks for it.

The consolidated net profit after tax of the company amounted to Rs. 510.72 crores for the year ended 31st March 2019 as compared to Rs. 564.18 crores of the previous year.

The Consolidated Total Comprehensive Income for the year under review is Rs. 509.64 crores as against Rs. 563.32 crores of the previous year.

DIRECTORS

Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules, 2014, it is reported that, there have been no changes in the Directors and Key Managerial Personnel during the year under review and after the end of the year and upto the date of the report.

Shri.PR.Venketrama Raja, Chairman and Managing Director, retires at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment.

Vide Board Resolution dated 20-03-2015 and Members’ Resolution dated 06-08-2015, Smt. Justice Chitra Venkataraman (Retd.) was appointed as Independent Director for a period of 5 years from 20-03-2015 to 19-03-2020.

She is eligible for reappointment for another period of 5 years as Independent Director from 20-03-2020 to 19-03-2025. In accordance with Section 149(10) of the Companies Act, 2013, her reappointment has been proposed in the Notice convening the Annual General Meeting as Special Resolution. Her profile and rationale for reappointment have been provided in the Statement pursuant to Section 102 of the Companies Act, 2013, attached to the Notice convening the Annual General Meeting.

The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

The Company had formulated a Code of Conduct for the Directors and Senior Management personnel and the same has been complied with.

The Company has a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and other employees duly approved by the Board of Directors, based upon the recommendation of Nomination and Remuneration Committee, in accordance with Section 178(3) of the Companies Act, 2013.

As per Proviso to Section 178(4) of the Companies Act, 2013, the salient features of the Nomination and Remuneration Policy should be disclosed in the Board’s Report. Accordingly the following disclosures are given:

Salient Features of the Nomination and Remuneration Policy:

The objective of the Policy is to ensure that

(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

(b) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(c) remuneration to directors, key managerial personnel and senior management shall be appropriate to the working of the company and its goals.

(d) To carry out any other function as is mandated by the Board from time to time and / or enforced by any statutory notification, amendment or modification, as may be applicable.

The Nomination and Remuneration Committee and this Policy are in compliance with the Companies Act, 2013 and LODR. During the year under review, there has been no change in the policy. The web address of the Policy is -

http://ramcocements.net/ramcocements/pdffiles/policies/

NOMINATION%20AND%20REMUNERATION%20POLICY.pdf

As required under Regulation 25(7) of LODR, the Company has programmes for familiarisation for the Independent Directors about the nature of the industry, business model, roles, rights and responsibilities of Independent Directors and other relevant information. As required under Regulation 46(2)(i) of LODR, the details of the Familiarisation Programme for Independent Directors are available at the Company’s website, at the following link -https://ramcocements.net/ramcocements/pdffiles/DIRECTORS%20 FAMILIARISATION%20PROGRAMME.pdf

The details of familiarisation programme are explained in the Corporate Governance Report also.

BOARD EVALUATION

Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Regulation 25(4) of LODR, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, performance of the Board as a whole and its Members and other required matters.

Pursuant to Schedule II, Part D of LODR, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board and Committee Meetings, which shall be taken into account at the time of reappointment of Independent Director.

Pursuant to Regulation 17(10) of LODR, the Board of Directors have evaluated the performance of Independent Directors and observed the same to be satisfactory and their deliberations beneficial in Board / Committee meetings.

Pursuant to Regulation 4(f)(2)(ii) of LODR, the Board of Directors have reviewed and observed that the evaluation framework of the Board of Directors was adequate and effective.

The Board’s observations on the evaluations for the year under review were similar to their observations for the previous year. No specific actions have been warranted based on current year observations. The Company would continue to familiarise its Directors on the industry, technological and statutory developments, which have a bearing on the Company and the industry, so that Directors would be effective in discharging their expected duties.

MEETINGS

During the year six Board Meetings were held. The details of the number and dates of Meetings of the Board and Committees held during the financial year indicating the number of Meetings attended by each Director are given in the Corporate Governance Report.

SECRETARIAL STANDARDS

As required under Clause 9 of Secretarial Standard 1, the Board of Directors confirm that the company has complied with both mandatory as well as non-mandatory Secretarial Standards.

PUBLIC DEPOSITS

a. The Company has decided not to accept deposits from 01-04-2014.

b. Deposits remaining unclaimed as at the end of the year amounted to Rs. 0.54 lakhs aggregating to 3 numbers.

c. During the year, there has been no default in repayment of deposits or payment of interest thereon.

No deposit has been claimed from 01-04-2019 till the date of this report.

ORDERS PASSED BY REGULATORS

Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, impacting the going concern status and Company’s operations in future.

INTERNAL FINANCIAL CONTROLS

In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls by means of Policies and Procedures commensurate with the size & nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Pursuant to Section 186(4) of the Companies Act, 2013, the details of loans, guarantees and investments along with the purposes are provided under Notes No. 12, 13, 20 and 48 of Notes to the Separate financial statements.

AUDITS

STATUTORY AUDIT

M/s. Ramakrishna Raja And Co., Chartered Accountants, (FRN:005333S) and M/s. SRSV & Associates, Chartered Accountants, (FRN:015041S), who have been appointed as the Statutory Auditors of the company at the 59th Annual General Meeting would be the Auditors of the Company, till the conclusion of the 64th Annual General Meeting of the Company to be held in the year 2022.

The report of the Statutory Auditors for the year ended 31 st March 2019 does not contain any qualification, reservation or adverse remark. No fraud has been reported by the Company’s Auditors.

COST AUDIT

As per Rule 3 of Companies (Cost Records and Audit) Rules, 2014 our company is required to maintain cost records and accordingly such records and accounts are made and maintained.

The Board of Directors had approved the appointment of M/s.Geeyes & Co., Cost Accountants as the Cost Auditors of the Company to audit the Company’s Cost Records for the year 2019-20 at a remuneration of Rs. 4.50 lakhs exclusive of GST and out-of pocket expenses.

The remuneration of the cost auditor is required to be ratified by the members in accordance with the provisions of Section 148(3) of the Companies Act, 2013 and Rule 14 of Companies (Audit and Auditors) Rules, 2014. Accordingly, the matter relating to their remuneration had been included in the Notice convening the 61st Annual General Meeting scheduled to be held on 08-08-2019, for ratification by the Members.

The Cost Audit Report for the financial year 2017-18 due to be filed with Ministry of Corporate Affairs by 01-09-2018, had been filed on 20-08-2018. The Cost Audit Report for the financial year 2018-19 due to be submitted by the Cost Auditor within 180 days from the closure of the financial year will be filed with the Ministry of Corporate Affairs, within 30 days thereof.

SECRETARIAL AUDIT

M/s.S.Krishnamurthy & Co., Company Secretaries, have been appointed to conduct the Secretarial Audit of the Company. Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report submitted by the Secretarial Auditors for the year ended 31st March 2019 is attached as Annexure - 2. The report does not contain any qualification, reservation or adverse remark.

ANNUAL RETURN

In accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT-9 for the year ended 31st March 2019 is attached herewith as Annexure - 3.

In accordance with Clause 22 of Secretarial Standard on Report of the Board of Directors (SS 4), a copy of the Annual Return for the year ended 31st March 2018 has been placed on the website of the Company and the web link of such Annual Return is -http://ramcocements.net/ramcocements/pdffiles/ANNUAL%20 RETURN%2031032018.pdf

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in LODR. As required under Schedule V(C) of LODR, a Report on Corporate Governance being followed by the Company is attached as Annexure - 4.

The statement and disclosures pertaining to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, are available at Point No: 10(l) of Corporate Governance Report.

As required under Schedule V(E) of LODR, a Certificate from the Secretarial Auditors confirming compliance of conditions of Corporate Governance is also attached as Annexure - 5.

CORPORATE SOCIAL RESPONSIBILITY

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy which is based on the philosophy that “As the Organisation grows, the Society and Community around it also grows”

The Company has undertaken various projects in the areas of education, health, rural development, water and sanitation, promotion and development of traditional arts, protection of national heritage, livelihood enhancement projects, etc. largely in accordance with Schedule VII of the Companies Act, 2013.

The CSR obligations pursuant to Section 135(5) of the Companies Act, 2013, for the year 2018-19 is Rs. 15.42 crores. As against this, the Company had spent Rs. 17.97 crores on CSR. The Company had spent a sum of Rs. 2.55 crores on CSR, over and above the requirement for the year 2018-19.

Also, the company had spent a sum of Rs. 5.49 crores on other social causes and projects, which do not qualify as CSR expenditure under the classifications listed out in Schedule VII of the Companies Act, 2013. The details of this expenditure are given below:

Particulars

Rs. in crores

Contribution to Chief Minister’s Relief Fund - Kerala

2.00

Contribution to Chief Minister’s Relief Fund - Tamil Nadu

1.20

Contribution to Robert H Lurie Comprehensive Cancer Centre of Northwestern University, Chicago - For exceptional basic science research to clinical treatments for cancer

1.09

Others

1.20

Total

5.49

The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - 6.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of LODR, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The Policy provides the mechanism for the receipt, retention and treatment of complaints and to protect the confidentiality and anonymity of the stakeholders. The complaints can be made in writing to be dropped into the Whistle Blower Drop Boxes or through E-Mail to dedicated mail IDs. The Corporate Ombudsman shall have the sole access to these. The Policy provides to the complainant access to the Chairman of the Audit Committee. The web link for the Vigil Mechanism is disclosed in the Corporate Governance Report.

RISK MANAGEMENT POLICY

Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Regulation 17(9) of LODR, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and strategies to mitigate / minimisation of risk thereof. The Risk Management Policy of the Company is available at the Company’s website, at the following weblink -

http://ramcocements.net/ramcocements/pdffiles/policies/RISK%20%20MANAGEMENT%20POLICY.pdf

RELATED PARTY TRANSACTIONS

Prior approval / omnibus approval is obtained from the Audit Committee for all Related Party Transactions and the transactions are also periodically placed before the Audit Committee for its approval. The particulars of contracts entered into by the Company during the year as per Form AOC-2 is enclosed as Annexure - 7. No transaction with the related party is material in nature, in accordance with Company’s “Related Party Transaction Policy” and Regulation 23 of LODR. In accordance with Ind AS-24, the details of transactions with the related parties are set out in the Disclosures forming part of Financial Statements.

As required under Regulation 46(2)(g) of LODR, the Related Party Transaction Policy is disclosed in the Company’s website and its weblink is -http://ramcocements.net/ramcocements/pdffiles/policies/

RELATED%20PARTY%20TRANSACTION%20POLICY%202015.pdf

As required under 46(2)(h) of LODR, the Company’s Material Subsidiary Policy is disclosed in the Company’s website and its weblink is -http://ramcocements.net/ramcocements/pdffiles/policies/MATERIAL%20SUBSIDIARY%20POLICY%202015.pdf

FUTURE OUTLOOK

GDP growth for the year 2019-20 was originally projected at 7.4%, which is now revised to 7.2%. However, there are several uncertainties which can have an impact in the projected GDP The outlook of oil prices continue to be hazy both on the upside and downside.

It is expected that the demand for cement would grow at around 8% for the financial year 2019-20.

As all our plants are fully equipped with railway siding, stand-by power back up facility and are supported with grinding units at strategic locations, our Company will be able to take full advantage of the economic momentum in the coming years. The proposed capacity additions expected to be commissioned in the coming years would help the Company to make use of the growth in the demand for cement.

EXTERNAL ENVIRONMENT THREATS

The Honourable Supreme Court of India, vide its Order dated 17-11-2017, had ruled that pet coke should not be used in captive thermal power plants. Prior to the ruling, we had been using pet coke, which was a more economic option. Subsequent to the order, we have stopped using pet coke and have resorted to use of imported coal, which is a costlier option.

The sanctions imposed on countries from where India is importing maximum crude would adversely affect the fuel price, which would have negative impact on our manufacturing and transportation cost.

The Mines and Minerals (Development & Regulation) Amendment Act, 2015, (MMDR) has made the Limestone as a notified mineral. Under the amended act, grant of mining lease for all notified minerals shall be through public auction process, by the respective state governments. Since, several state governments do not have the required geological data of availability of the reserves, they are not able to proceed with the auction. This is delaying the process of getting fresh mining leases allotted.

After the amendment of MMDR, 106 mineral blocks were notified by State Governments for conduct of auction. However, only 54 blocks had been auctioned, of which only 24 blocks relate to limestone mines and the remaining blocks pertain to other notified minerals. Out of the total auctioned blocks, only 4/5 blocks have reportedly come to the stage of production till now.

Because of this process, the cement companies are depleting their existing mining reserves faster and consequently, shortening the life span of the mines. We are co-ordinating closely with the respective state government authorities for exploring and expediting the auctioning the limestone blocks.

OPPORTUNITIES

The Company’s products have always been perceived to possess superior quality standards in the market and the company has been enjoying a high level of customer satisfaction index. Hence, in addition to the routine OPC and PPC, the Company is focussing on premium products for higher profitability and revenue.

The Company has also drawn plans to introduce niche products catering to specific customers to meet their customised application requirements.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as Annexure - 8.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1), (2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration, are provided in Annexure - 9.

INDUSTRIAL RELATIONS & PERSONNEL

The Company has 3,188 employees as on 31-03-2019. 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.

EMPLOYEE STOCK OPTION SCHEME

The Company had instituted the Employee Stock Option Schemes for the benefit of employees.

At the Annual General Meeting held on 03-08-2018, the Members had approved the following Employee Stock Option Schemes.

- Employee Stock Option Scheme 2018 - Plan A (ESOS 2018 -PLAN A)

- Employee Stock Option Scheme 2018 - Plan B (ESOS 2018 -PLAN B)

The above schemes are in compliance with the SEBI Regulations. The Company had obtained In-Principle approval for the schemes from National Stock Exchange of India Limited and BSE Limited, where the company’s shares are listed. During the year under review, no changes were made in the above said schemes.

Details regarding the above mentioned schemes along with their status are given below:

Name of the Scheme

Total No of Options

Exercise

Price

No of Options Granted

No of Options Vested

No of Options Exercised

No of Options Lapsed

No. of Options in force

ESOS 2018 -Plan A

5,00,000

Rs. 1/per share

NIL

NIL

NIL

NIL

5,00,000

ESOS 2018 -Plan B

7,00,000

100/

per

share

NIL

NIL

NIL

NIL

7,00,000

The disclosure required to be made under SEBI (Share Based Employee Benefits) Regulations, 2014 is available in the Company’s website at the following link - http://www.ramcocements.in/ shareholder-information.aspx

CREDIT RATING

The ratings for the Company’s borrowing are available in Corporate Governance Report.

AWARDS RECEIVED DURING THE YEAR

INDIA GREEN MANUFACTURING CHALLENGE - 2018

Our Ariyalur Unit had won “Gold Medal” at India Green Manufacturing Challenge - 2018. The award has been instituted by International Research Institute for Manufacturing, India and was awarded on 22-03-2019.

The Ariyalur Unit is the only unit in whole of South India to have been awarded Gold Medal with the Green Manufacturing Barometer Score of 691.7 on a scale of 200 to 800.

The Barometers on which the performance was assessed are given below:

- Workforce Health & Safety

- Employee Training, Development and Welfare

- Community Support and Care

- Non-renewable content

- Restricted substances management

- Re-used / Re-cycled content

- Water Conservation

- Energy Optimisation

- GHG Intensity

- Land Management

- Pollution Control

- Product Safety

- Green Innovation

- Environment Impact during use

- Environment Impact during disposal.

Our Company’s Ramasamy Raja Nagar, Jayanthipuram and Alathiyur Units have also won “Silver Medals” at the India Green Manufacturing Challenge - 2018.

GREEN PRODUCT CERTIFICATION

Green Products and Services Council of Confederation of Indian Industry has renewed the GreenPro Certification for our Company’s flagship product - RAMCO SUPERGRADE, the Portland Pozzolana Cement and confirmed it as a Green Product. This Certification is valid till December 2020. Ramco was one of the earliest cement companies to have obtained the GreenPro Certification for its product, RAMCO SUPERGRADE, which was first awarded to it in October 2016.

The product was evaluated on the following criteria, to meet the norms of Green Product.

1. Product Design

2. Raw Materials

3. CO2 Emission per tonne of Clinker

4. Manufacturing Process

5. Life Cycle Approach

6. Product Stewardship

7. Innovation

Based on such evaluation, the GreenPro Certification has been awarded.

ENERGY EFFICIENCY AWARDS

Ramasamy Raja Nagar, Alathiyur and Ariyalur units had been awarded “Excellent Energy Efficient Unit” at the national level competition for National Awards for Excellence in Energy Management - 2018 (Energy Efficiency Summit) organised by Confederation of Indian Industry at Hyderabad. As all the three units had received the “Excellent Energy Efficient Unit” award for three consecutive years, they had also been given “National Energy Leader” award.

The Alathiyur unit had been awarded “Golden Peacock Award for Energy Efficiency” instituted by The Institute of Directors, New Delhi, at the 20th World Congress on Environment Management and Climate Change. The award was presented by Justice (Dr.) Arijit Pasayat, Co-Chairman, The Institute of Directors and Former Judge of Supreme Court of India.

ENVIRONMENT, HEALTH AND SAFETY AWARDS

Ramasamy Raja Nagar, Alathiyur and Ariyalur units had received Environment, Health and Safety Excellence awards from Confederation of Indian Industry. This is a 4 Star Rating Award.

National Safety Council of India, Tamil Nadu Chapter, has given “Appreciation Award” for Health and Safety to Alathiyur unit for the year 2016. The Chapter has also given “Star Award” for Health and Safety, to our Chengalpattu Grinding unit.

Alathiyur unit had been awarded “Green Tech Gold Award and Certificate of Merit for Safety Management” in cement sector organised by Greentech Foundation, New Delhi. The award was presented by Greentech Foundation at Goa on 25-02-2019.

Alathiyur unit had been accredited with the “5S Excellence Level Certification (Renewal)” from ABK - AOTS DOSOKAI, Tamil Nadu Chapter, Chennai for complying with the world class workplace organising system excellence level standards specified by ABK -AOTS DOSOKAI, Tamil Nadu Chapter, Chennai.

Alathiyur unit had won Platinum Award at the 3rd National Convention on Innovative QC Competition Teams (NCIQCT - 2019) organised by ABK - AOTS DOSOKAI, Tamil Nadu Centre, AOTS Alumini Society Delhi, AOTS Alumini Society of Central India, Pune, supported by Federation of AOTS Alumini Association of India (FAAAI) on 10-032019 at Chennai.

Ariyalur unit had won the Gold Award for Best Safety practices at the 2nd Edition of 17th Annual Greentech Safety Awards 2018 organised by Greentech Foundation, New Delhi. The award was presented by Greentech Foundation on 25-02-2019.

Ariyalur unit had been awarded for its Best Environmental Sustainability Practice (For Water Conservation within the plant premises and in the neighbouring villages). This award was presented by Economic Times Now on 18-02-2019.

QUALITY CIRCLE AWARDS

The Jayanthipuram Unit had been awarded “Best Supporting Organisation for Quality Circle Movement for the year 2017” at the Hyderabad Chapter Quality Circle Convention. The unit is receiving such an award for the 9th consecutive time. A total of 21 teams from the unit had participated and all the 21 teams had won “Gold Award”.

In the Quality Circle Convention conducted by Quality Circle Forum of India, Visakhapatnam Chapter, a total of 6 teams had participated and all the 6 teams had won “Gold Award”.

The Quality Circle Forum of India had awarded Par Excellence Award for 5S Implementation and Kaizen Presentation.

Quality Circle Forum of India had bestowed Quality Leadership Award in Private Sector for the year 2018 to our Chairman & Managing Director, Shri.PR.Venketrama Raja, on the occasion of 32nd National Convention on Quality Circles held at Gwalior.

The Ariyalur Unit had been awarded “Best Supporting Organisation for Quality Circle Movement” at the Coimbatore Chapter Quality Circle Convention. A total of 9 teams had participated and all the 9 teams had won “Gold Award”.

In the Quality Circle Convention conducted by Quality Circle Forum of India, Coimbatore Chapter, a total of 4 teams had participated from our Chengalpattu Grinding Unit and all the 4 teams had won “Gold Award”.

INDUSTRIAL RELATIONS

The Ramasamy Raja Nagar unit had won First Prize in Good Industrial Relations for the year 2015 and Second Prize for the year 2016. The awards were presented by Dr.Nilofer Kafeel, Minister for Labour and Employment on 11-02-2019.

CSR AWARDS

The Ariyalur unit had been awarded Innovation in Corporate Social Responsibility Practice for its 5S implementation in Government Higher Secondary School at Govindapuram, Ariyalur and its performance and track record.

The Company was presented “Excellent Corporate Governance Award” by International Research Institute for Manufacturing, India in India Green Manufacturing Challenge - 2018.

SHARES

The Company’s shares are listed in BSE Limited and National Stock Exchange of India Limited.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Dividend amount of Rs. 22,01,149 remaining unclaimed/unpaid for a period of over 7 years was transferred to IEPF on 30-08-2018.

71,836 shares corresponding to the said dividend were transferred to IEPF on 01-11-2018 and 29-11-2018. The company had transferred a dividend Rs. 32,08,995 to IEPF for the 10,69,665 shares already transferred to IEPF

An amount of Rs. 12,000 being the matured deposit along with interest accrued thereon amounting to Rs. 3,117 was transferred to IEPF on 10-08-2018.

An amount of Rs. 10,000 being the matured deposit along with interest accrued thereon amounting to Rs. 700 was transferred to IEPF on 11-03-2019.

Year wise amount of unpaid /unclaimed dividend lying in the unpaid account and corresponding shares, which are liable to be transferred to IEPF and due dates for such transfer, are tabled below:

Year

Type of Dividend

Date of Declaration of Dividend

Last Date for Claiming Unpaid Dividend

Due Date for Transfer to IEP Fund

No. of Shares of Rs. 1/- each

Amount of Unclaimed / Unpaid Dividend as on 31-03-2019 - ‘

2011-12

Final Dividend

02-08-2012

01-08-2019

30-08-2019

26,70,243

13,35,121

2012-13

1st Interim Dividend

05-11-2012

04-11-2019

02-12-2019

26,64,903

26,64,903

2nd Interim Dividend

13-02-2013

12-02-2020

12-03-2020

25,62,236

25,62,236

Final Dividend

29-07-2013

28-07-2020

26-08-2020

24,88,499

24,88,499

2013-14

Dividend

28-07-2014

27-07-2021

25-08-2021

25,96,323

25,96,323

2014-15

Dividend

06-08-2015

05-08-2022

01-09-2022

22,76,012

34,14,018

2015-16

Dividend

11-03-2016

10-03-2023

08-04-2023

21,21,235

63,63,705

2016-17

Dividend

04-08-2017

03-08-2024

01-09-2024

23,07,239

69,21,717

2017-18

Dividend

03-08-2018

02-08-2025

31-08-2025

14,15,216

42,45,648

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that

(a) they had followed the applicable accounting standards along with proper explanation relating to material departures, if any, in the preparation of the annual accounts for the year ended 31st March 2019;

(b) they had selected such accounting policies and applied them consistently and 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 as on 31st March 2019 and of the profit of the company for the year ended on that date;

(c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they had prepared the annual accounts on a going concern basis;

(e) they had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors,

For THE RAMCO CEMENTS LIMITED,

Chennai P.R.VENKETRAMA RAJA

22-05-2019 Chairman & Managing Director

Source : Dion Global Solutions Limited
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