AND MANAGEMENT DISCUSSION AND ANALYSIS
It is our pleasure to present the Annual Report of the company for the year 2014.
1. INDIAN ECONOMY:
NEED FOR CHANGE MANAGEMENT GROWTH
Promoting reforms and policies key to economic revival.
Due to several factors the Indian economy witnessed sluggish growth in first half of2014. On the domestic front policy paralysis of the last couple of years continued rightup to the national elections in May 2014; added to that was a virtual stoppage of allinfrastructure projects both in the private and public sectors as well as throughpublic-private partnership. Also there were continuing inflationary pressures; interestrates remained far too high for financing long term projects. Nevertheless the currentaccount deficit while better than a year earlier was still in danger zone; andentrepreneurial Rs animal spirits Rs so essential for economic growth wereat their nadir. On the external front there were uncertainties regarding growth of theEuro Zone the conflict in Ukraine increasing militant activities in the Middle East andconcerns about the falling growth in China.
Thankfully the second half of 2014 showed signs of improvement. For one the Lok Sabhaelection results which brought the BJP-led National Democratic Alliance into power at thecentre with a comfortable majority in the Lok Sabha created its own optimism. After a longtime there was positive talk of growth; of infrastructure development; unblocking of coalmines; allocation of telecom spectrum; deregulation of diesel prices; and of the promisesof an ambitious Rs Make in India Rs campaign. For another the external economic frontbecame more benign. Crude oil prices which averaged USS 108 per barrel even in June 2014started moving south steadily reducing to under USS 50 per barrel. This in turnreduced the oil import bill as well as the cost of imported naphtha resulting in bothfiscal comfort and lesser pressure on the current account. Moreover inflation starteddropping creating hope for the easing of interest rates. Thus by early 2015 there weremany more positive drivers for growth both economic and political than those thatexisted in 2014. If anything there seems to be a sense that a better future awaits theIndian economy in 2015 and hopefully with it your company
GOVERNMENT SUPPORT ESSENTIAL FOR REVIVAL
Cement and cementitious materials are critical for meeting society Rs s needs ofhousing and basic infrastructure such as bridges roads water treatment facilitiesschools hospitals airports ports factories and many other facilities.
The operating environment for the cement industry was no different from that of themacro economy In the first half of 2014 the industry suffered due to muted demand andrising cost pressures on account of rising freight (-5%) and raw material costs (-8%). Itwas also affected by the shortage and ban of essential construction materials like sandbricks water and the like along with very heavy rains in most parts of the countryInfrastructure bottlenecks further added to the woes. Major infrastructure projects gotlog jammed in policy paralysis depressing demand.
However with the beginning of an economic turnaround and riding on the back ofmoderating inflation amidst gradually improving consumer sentiment industry showed somerecovery in consumption which was also reflected in improved despatch numbers.
Groundwork to expedite the growth prospects of all end-use segments of cement- housinginfrastructure commercial- are being worked upon by the Central Government. Concerns onenergy and land are being taken care via e-auction of coal blocks and the Land Ordinancesigned by the President of India. All these along with the policy push for good governanceaugur well for the future of the cement industry
2. FINANCIAL RESULTS 2014
AT A GLANCE (STAND-ALONE RESULTS):
Cement production increased by 2% to reach 21.43 million tonnes from 20.96 milliontonnes while clinker production increased to 14.84 million tonnes 4% up from 14.27million tonnes in year 2013.
Domestic cement sales volume recorded increase of 3% at 21.46 million tonnes from 20.94million tonnes in year 2013. Cement exports decreased to 0.08 million tonnes from 0.10million tonnes in year 2013. Clinker sales (including exports) were up at 0.61 milliontonnes from 0.56 million tonnes in 2013.
Net sales at Rs 9911 crores were 9% up than that of previous year Rs s Rs 9079crores. Average sales realisation increased by around 7% at Rs 4475 per tonne againstapprox Rs 4208 per tonne in 2013.
Total (operating) expenses for the year 2014 increased by 7% over thatofyear 2013.
The company achieved an absolute EBITDA of Rs 1928 crores. This is higher by 16% overthe corresponding Rs 1667 crores of the year 2013.
| || |
| ||Current Year 31.12.2014 ||Previous Year 31.12.2013 ||Current Year 31.12.2014 ||Previous ar 31.12.2013 |
|Sales (Net of excise duty) ||9910.70 ||9078.74 ||9930.54 ||9109.88 |
|Profit before interest and depreciation and exceptional item ||2357.42 ||2044.45 ||2352.60 ||2033.91 |
|Less: Finance Cost ||64.48 ||65.08 ||65-55 ||66.75 |
|Gross profit ||2292.94 ||1979-37 ||2287.05 ||1967.16 |
|Less: Depreciation and amortisation expense ||509-53 ||490.07 ||513.03 ||493.67 |
|Profit before Exceptional Items and Tax || ||1489.30 ||1774.02 ||1473-49 |
|Less / (Add): Exceptional items ||- ||(24.82) ||- ||(24.82) |
|Profit before tax ||- ||1514.12 ||1774.02 ||1498.31 |
|Less: Tax expense ||287.05 ||219.55 ||287.51 ||219.87 |
|Profit after tax but before minority Interest ||1496.36 ||1294.57 ||1486.51 ||1278.44 |
|Less: Minority interest ||- ||- ||(0.01) ||0.13 |
|Profit for the "Year ||1496.36 ||1294.57 ||1486.50 ||1278.57 |
|Add: Balance as per the last financial statements ||1230.69 ||737.01 ||1525-77 ||1048.09 |
|Profit available for appropriation ||2727.05 ||2031.58 ||3012.27 ||2326.66 |
|Appropriations: || || || || |
|General Reserve ||150.00 ||150.00 ||150.00 ||150.00 |
|Dividend on Equity Shares (including interim) ||774.61 ||556.34 ||774.61 ||556.34 |
|Corporate Dividend Tax ||146.51 ||94-55 ||146.51 ||94-55 |
|Tot al ||1071.12 ||800.89 ||1071.12 ||800.89 |
|Balance carried forward to Balance Sheet ||1655.93 ||1230.69 ||1941.15 ||i525-77 |
Profit before tax at Rs 1783 crores was up by 18% over corresponding figure of Rs1514 crores for the year 2013.
Net Profit at Rs 1496 crores was up by 16% over corresponding figure of Rs 1295crores for the year 2013.
The company paid an interim dividend of 90% ( Rs 1.80 per share) during the year. TheDirectors are pleased to recommend a final dividend of 160% ( Rs 3.20 per share). Thusthe aggregate dividend for the year 2014 is 250% ( Rs 5/- per share) and the total payoutwill be Rs 921.12 crores including dividend distribution tax of Rs 146.51 crores. Thisrepresents a payout ratio of 62%.
4. MARKET DEVELOPMENTS
The company Rs s domestic cement sales in 2014 grew by 2.5% to 21.46 million tonnesversus 20.94 million tonnes in 2013. Total cement sales (including exports) grew by 2.4%to 21.54 million tonnes compared to 21.04 million tonnes in 2013.
REGION WISE SALES VOLUME / GROWTH:
In the North region domestic cement sales of the company grew by 1.2% to 8.74 milliontonnes in 2014 compared to 8.64 million tonnes in 2013.
In the East region the company achieved sales of 4.45 million tonnes of cement in thedomestic market registering a growth of 6% over the previous year sales of 4.21 milliontonnes.
In the West & South region the company Rs s domestic cement sales in 2014 grew by2.2% to 8.27 million tonnes as compared to 8.09 million tonnes achieved in 2013.
Cement exports were reduced to 0.08 million tonnes in 2014 as compared to 0.10 milliontonnes in 2013.
Our product range is marketed through a countrywide network of sales units areaoffices and warehouses. This is backed by a distribution network of over 8700 dealers and29000 retailers. Their reach and penetration helps the company to cater to rural andsemi-urban markets. This coupled with the strong brand equity and efficient channelmanagement helped the company withstand severe price and volume competition. The companyRs s network of ports bulk cement terminals and captive ships on the west coast hassupported a sustainable and strong market position in Mumbai Surat and Cochin. Similarlythe Mangalore Bulk Cement Terminal with its commercial operations has helped in expandingthe company Rs s footprints in the southern region.
CREATING VALUE THROUGH OUR SYSTEMS
Preserving our most valued resource- knowledge.
To live by its Rs I CAN Rs spirit Ambuja started with Rs Foundations Rs - a knowledgeinitiative called Ambuja Knowledge Centre (AKC) for all from the constructionfraternities. AKC aspires to create a holistic resource base on the subject of cement andconcrete. It stems from Ambuja Rs s belief in the continuous evolution of architectureengineering and construction industries thereby offering its professionals variousplatforms for information inspiration and interaction.
Raising our own high standards.
The company has also embarked upon a Customer Excellence programme (CE) (its erstwhileMarketing and Commercial Excellence) to sharpen its marketing sales and distributionfunctions. CE has now become a way of life at Ambuja. Excellence is what we seek and whatwe strive for in every aspect under Marketing and Sales. Since all along we have hadcustomer centricity in our DNA it is imperative that we reiterate our commitment andcontinue to walk the talk! This is also in line with the global strategy of Holcim- thevision of Holcim CE to be the most customer focused company with the highest customerloyalty in our industry thus creating more value for our customers.
5. COST DEVELOPMENTS
Upward movement in costs led to increased cost of production. The company Rs s costoptimisation initiatives partly mitigated inflationary pressures and restricted overallcost increases.
MAJOR COST MOVEMENTS:-
i) Cost of major raw materials fly ash and gypsum increased by 2% on per tonne basis.During the year royalty on limestone was hiked by 27% from Rs 63 to Rs 80 per tonne.Overall the raw material cost per tonne increased by approximately 13% over the previousyear.
ii) Power and fuel costs account for approximately 26% of the total operating cost ofthe company Coal cost for kiln and captive power plants increased by 4% and 10%respectively mainly due to higher cost of imported coal. However substitution of highcost coal by pet coke usage helped restricting the overall cost increase. Besides therewas increased usage of alternate fuels by 5% over the usage for the year 2013. Usage ofalternate fuels accounted for 4% of total thermal energy consumption in 2014.
The cost of grid power remained stable on a per unit basis. However cost of captivepower increased by 10% in 2014 mainly due to higher coalprices. Captive power generationcontributed 67% of the total power requirements.
Overall power and fuel cost increasedby 7% on per tonne basis as compared to the year2013.
iii) Freight and forwarding cost works out to 28% of total operating costs. On pertonne basis cost increase was restricted to 4% due to positive impact of various logisticoptimisation efforts and declining diesel prices during latter part of the year.
iv) The cost of packing bags went up by around 7% driven by increase in PP granuleprices. Declining prices of PP granule in latter part of the year helped restrictingoverall price increase.
COST MITIGATION MEASURES / EFFICIENCY IMPROVEMENT INITIATIVES:
i) Keeping in line with the company Rs s philosophy of Sustainable Operation focus onproduction of fly ash based PPC was maintained and several initiatives were taken up toenhance fly ash consumption in PPC with quality
ii) The company worked on fuel flexibility to mitigate risk associated with dynamicfuel market and developing the abilities to switch to most economical fuel mix.
iii) The Rs GEO 20 Rs project is a part of the efforts by the company for creating acost efficient fuel mix. It is in operation now and will be stabilised by Qi 2015. Hereas a result of handling storing and processing of waste materials the company will beable to ensure more usage of greener fuels thereby reducing energy cost.
iv) The revision of load lines for captive ships will lead to handling of higher cargoin environment friendly mode of sea transportation with savings in coastal freight cost.
v) Replacement of MP turbine with HP turbine at Maratha Cement should help to improveefficiency of captive thermal power plant and lower power generation cost. The company hasalso replaced most of major drives with VVFDs which will help to get lower powerconsumption thereby reducing energy cost.
vi) With the introduction of the SCOPE (Supply Chain Optimisation Project forExcellence) a supply chain excellence initiative the company is expected to deriveoperational efficiencies in logistics. This is targeted by improvisation in directdespatches to customers by undertaking fleet optimisation and route optimisation mode(rail/ road/ sea) among others.
6. EXPANSION PROJECTS AND NEW INVESTMENTS
MOVING FORWARD RESPONSIBLY The company took up several projects to serve its customersin a more efficient cost-effective reliable and environment-friendly manner whilebolstering its market position in the industry
CAPACITY EXPANSION DURING THE YEAR The new Roller Press commissioning at Rabriyawaswill help to increase grinding capacity by 0.8 Mio T and also result in reduction inenergy consumption. One additional silo will also be constructed by 2015 which will helpin diversifying product portfolio.
Getting better at being the best.
The company focused on consolidation and optimisation of its existing capacities in allthe three regions. Capital investments kept flowing in during the year to ensure thehighest standards of safety in order to meet the company policies of Rs Zero Harm Rs clean and energy efficient infrastructure cost efficient and environment friendlymaterial handling systems process optimisation and sustainability initiatives.
Increasing productivity one major step at a time.
i) A Waste Heat Recovery (WHR) plant at Rabriyawas in Rajasthan with an investment ofRs 92 crores is in progress to bring efficiency in fuel utilisation optimise power costsand meet our renewable power targets.
ii) We have completed the Geocycle platform projects at four integrated plants whichwill help increase the co-processing of waste. With
a total investment of over Rs 240 crores on these platforms this showcases ourcommitment for sustainable and environment friendly operations.
iii) We have successfully completed the ambitious fast return projects that the companyhad taken up in 2013 to optimise and enhance efficiency The company has already startedbenefitting from these initiatives.
UPCOMING CAPACITIES AND INVESTMENTS
i) Significant cement capacity addition of approximately 4.50 million tonnes withassociated clinkerisation capacity of 2.70 million tonnes is expected at the proposedintegrated plant at Marwar Mundwa Nagaur district in Rajasthan with cement capacity of1.5 MTPA; and with similar capacity grinding units at Osara (M.P.) and Dadri (U.P.).Thetotal project cost is estimated at Rs 4000 crores.
Environmental clearances for the project were acquired but kept in abeyance for MarwarMundwa by the MoEF. Part of the mining land is already in possession and the rest is underan advanced stage of acquisition. The company is also in the process of tying-up watersources required for construction and operations. Full- fledged construction work isexpected to commence in the later part of 2015.
ii) The new brown-field expansion project of Roller Press with master packer and autowagon loading is in full swing at Sankrail and will be completed during 2015. This willhelp increase grinding capacity by 0.8 million tonnes and also result in reduction inenergy consumption. New packer and auto loaders will improve despatch capacity.
iii) To mitigate the increase in logistic cost the Rabariyawas unit in the State ofRajasthan is constructing a railway line to connect the plant location with the nearestrailway junction. It is likely to get operational in the year 2016.
The year 2015 will see capital expenditure worth Rs 523 crores. The entire proposedexpenditure would be financed by internal accruals.
TANGIBLE POLICY ACTIONS TO FACILITATE ECONOMIC GROWTH
The bigger picture is looking favourable.
To facilitate rapid economic growth it will be necessary to see big ticket structuralreforms faster approvals on the supply side with major support of fiscal and monetarypolicy on the demand side. After nine months plus of the new government in the Centretangible policy actions are required to facilitate investment and sustained growth.
Medium to long-term economic growth depends on ensuring macroeconomic stability and oncreating an enabling environment for the private sector to invest. Fundamentally India Rss medium-term growth prospects looks to be promising and a medium-term trend rate ofgrowth of about 7% to 8% should be within reach in view of favourable tailwinds bothdomestic and external supported by active policy push in all three areas of goodgovernance fiscal and monetary management. Despite headwinds of a global slowdown in someparts of the world India has the ability to grow faster and be a leading growth engine inthe near to medium-term.
GROWTH PROSPECTS FOR THE CEMENT INDUSTRY
A positive trickle-down effect.
Investment in infrastructure and housing segments are most likely to propel demand forthe cement industry in which road sector would act as major end user segment. Housingwill continue to remain key end-user segment for cement demand and grow at 5-7% over thenext few years.
The Government of India is starting to make efforts to provide conducive environmentfor the industry by bringing out key policy measures on ease of doing business energyrelated reforms fiscal consolidation and the like which along with reasonablyaccommodative monetary policy ought to open up growth opportunities for the cementindustry
Cement demand growth bears a strong correlation with GDP growth particularlygovernment revenue expenditure. As GDP growth revives we believe growth in governmentspending (which has been curtailed for some time to arrest fiscal deficit) will alsoimprove leading to a higher cement demand. We factor-7% growth in demand for year 2015.
8. RISKS AND AREAS OF CONCERN
Staying one step ahead of risk.
The company has laid down a well-defined risk management mechanism covering the riskmapping and trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitoring ofboth business and non-business risks. The Board periodically reviews the risks andsuggests steps to be taken to control and mitigate the same through a properly definedframework.
In line with the new regulatory requirements the company has formally framed a RiskManagement Policy to identify and assess the key risk areas monitor and report complianceand effectiveness of the policy and procedure. A Risk Management Committee under theChairmanship of Mr. Rajendra Chitale Independent Director has also been constituted tooversee the risk management process in the company. Based on the detailed review thefollowing key risks have been identified.
New laws bring new hope.
Restrictions on buying land under a law championed by the previous Government wereamong barriers holding up projects worth almost U.S.D. $300 billion or nearly Rs 20 lakhcrores in infrastructure industrial and housing sectors. The present Governmentrealising the flaws has been working on the subject and has come up with a new landacquisition Bill to kick-start pending projects. With this Bill not being taken up in theprevious session of the Rajya Sabha the President of India signed an ordinance on landacquisition on 7th January 2015 which aims at easing land acquisition rules to kick-starthundreds of billions of dollars in stalled projects. This land ordinance protects theinterests of farmers and lifts curbs on five categories of projects including defencenational security rural infrastructure and low-cost housing. We hope that the Bill willsoon become law and land can again be acquired for economic growth.
Ambuja Cement has appointed a dedicated function at the corporate level to look intorisks relating to the land which will help in improved land acquisition and management.
Moving beyond coal.
Depleting coal linkages and volatility in the Indian rupee is escalating concernsregarding coal. The company is constantly working on efficiency improvement measures byplugging heat loss at every possible stage of coal consumption looking at cost- effectivefuel mixes and also increasing the usage of alternative fuels and pet coke.
As a long term solution to energy security the company has invested in projectGeocycle under the banner of Rs Geo2o Rs . Waste Heat Recovery (WHR) systems that improvefuel utilisation by tapping renewable energy sources are top priorities. New AFRpre-processing platforms are running at our plant location to increase the usage of theAFR.
Taxation / Administrative Burden
Resolving the taxing problems of the cement industry.
Cement along with steel forms an important raw material for the infrastructure andreal estate sectors. However steel being included under the category of Rs Goods ofSpecial Importance Rs attracts a lower tax rate at 4%. Even other raw materials such asclay bricks fly ash bricks attract sales taxes ranging from 4% to 6%. Unfortunatelycement attracts a high rate of tax ranging from 12.5% to 15% in the various states whichmakes it subject to higher tax in comparison with other building materials.
A solution to this lies in rolling out a uniform tax regime through the implementationof Goods and Services Tax (GST). So far the Government has taken some positive steps bygetting the Cabinet approval. The central implementation of GST will play a critical rolein next level of growth and truly realise the country Rs s potential.
De-allocation of Coal Blocks
On 25th August 2014 the Supreme Court had ruled that the allotment of captive coalblocks since 1993 was done with an "ad-hoc and casual" approach "withoutthe application of mind". The ruling further added that "common good and publicinterest suffered heavily in the unfair distribution of the national wealth coal". The Supreme Court termed the allocation of these coal blocks as arbitrary andillegal and cancelled 214 of the 218 blocks. Some 40 companies were asked to pay a fine ofRs 295 per tonne and surrender their coal blocks.
The Government is now addressing the issue and to this effect has cleared a Bill oncoal block auctions to replace an ordinance that was promulgated to begin auction of coalmines that were cancelled by the Supreme Court. This move will boost investor confidencedue to transparency in the process and reduce fuel availability risks. The e-auction ofcoal mines will be open to private companies while state- run companies would be allocatedmines directly In Phase I the cancelled blocks will be opened for e-auction to three endusers: steel power and cement.
ORDER OF THE COMPETITION COMMISSION OF INDIA
On 20th June 2012 the Competition Commission of India (CCI) passed an order imposingunprecedented penalties of more than Rs 6300 crores against some cement manufactures ofthe country including the company in the matter of a complaint filed by the BuildersAssociation of India for the alleged contravention of the Competition Law. Following thepenalty imposed on the company of Rs 1164 crores the company filed an Appeal before theCompetition Appellate Tribunal (COMPAT) against the order and for granting a stay againstdeposit of penalty The matter is pending before COMP AT and the next hearing is scheduledin February 2015. The management backed by legal opinion from the external legal counselstrongly believes that the company has a good case to succeed before COMPAT andaccordingly no provision has been made in the books of accounts. However the amount ofpenalty has been considered as contingent liability.
9. HUMAN RESOURCES
SUSTAINABLE TALENT MANAGEMENT Human resources (HR) at Ambuja plays a vital role inrealising business objectives by leading organisational change fostering innovation andeffectively mobilising talent to sustain the organisation Rs s competitive edge.
The HR strategy is aimed at integrating HR processes to result in overallorganisational effectiveness which consequently affects the business growth. HR in linewith business clarifies the business direction performance expectations and activelycontributes to decide what tactics are required for managing talent to achieve businessgoals.
How do we maintain our competitive edge Rs
By honing our talent.
HR at Ambuja has been driving various Talent Management initiatives. Talent Managementplays a vital role in combination with other business processes in not only drivingshareholder value but also in managing developing and retaining superior talent thatdefines the prime source of competitive advantage.
Structured talent reviews across levels supported by individualised development plansand crossfunctional and cross-location assignments have helped develop wholesomeleadership skills. All the development efforts are showing good results with more and moresenior positions being filled internally while maintaining a healthy external talentintake. Thus succession planning has helped create a talent pipeline for key positions anda strong growth avenue for our developing leaders.
Carving out leaders from the best talent.
The core values of the organisation also emphasised the need to develop and buildleaders that will take the organisation to the path of high performance. Keeping this inmind along with the other Talent Management initiatives the STEP (Sustainable Talent forEnhanced Performance) programme was institutionalised in 2012. The prime objective of STEP(Sustainable Talent for Enhanced Performance) is to develop a sustainable pool of leadersequipping them with essential leadership skills and competencies and enhancing theircoaching skill capacity to be internal coaches. The first batch of 96 managers who werepart of the STEP journey have successfully completed the programme.
Our people strategy systems and processes are aimed towards making us an employer ofchoice with sustainable talent and concrete action plans to enhance employee engagement.The employee engagement survey administered this year saw 98% employee participation withan improvement in the engagement score.
We also continued in our efforts to provide a congenial work environment innovativerecruitment and retention practices and continuous learning opportunities to employees(management and nonmanagement staff) for their future growth and development. As part ofthe Workforce Development initiative- a key initiative to build the capability andcompetence of workmen and to ensure safety productivity and quality trainingopportunities have been provided to 70% of our workmen.
These efforts have led to a significant increase in manpower productivity Efforts havealso been made to design progressive and empower HR policies and other welfare measures.
10. SUSTAINABILITY AND ENVIRONMENT
Making the Earth a better place.
We are committed to the path of corporate sustainability with a legacy of aresponsible and ethical organisation. It is driven by our senior management in asustainability framework comprising of our sustainability committees with the mandate toassess sustainability risks and opportunities at corporate and unit levels to monitor anddrive sustainability initiatives. Sustainability is a regular item in our board meetings.The company sustainability initiatives are aimed inter-alia at low carbon emissions waterpositivity and use of biomass / industrial wastes as alternative fuels as well as fly ashas blending material.
Gaining recognition for staying light on our feet.
We improved our sustainability performance over the previous years. This has beenrecognised by independent audits and the company won the prestigious CII SustainabilityAward 2013 for Rs Significant Achievement on the Journey towards Sustainable DevelopmentRs . This is the fourth time in a row Ambuja Cements has received this award. In additionfor Domain Excellence our Bhatapara unit was conferred the CII Sustainability Award forRs Commendation for Significant Achievement in CSR Rs . Furthermore this year we won theYES BANK- Saevus Natural Capital Awards 2014 as the Rs Eco-Corporate of the "Year-Manufacturing Rs for the commendable work towards environmental sustainability
We have been ranked amongst the top 10 participants of the Carbon Disclosure LeadershipIndex (CDLI) the highest in the Cement Sector under the Carbon Disclosure Project (CDP)in their recently released CDP India 200 Report.
The year 2014 saw us achieving sustainability product certification Rs Pro-Sustain Rsfor cement production (PPC) from our Darlaghat plant from an independent third partyDNV-GL. The product Stewardship Standard of Pro-Sustain certification is aligned with theobjective and principle of internationally recognised standard encompassing environmentalsocial and economic aspects of our operations and product traceability.
A new way to equate our self-worth. And our worth to the world.
To further strengthen our commitment to build competitiveness through sustainabilitywe launched the True Value Project a unique initiative that takes into account the valueof environmental and social impacts in monetary terms along with financial parameters.This makes Ambuja Cement the first Indian company to carry out such an elaborate exerciseof assessment.
We are glad to report that in our journey to Water Positivity we achieved the waterpositive factor of Rs 4 Rs in 2014 by way of meticulous accounting of our waterconsumption (debit) and water harvesting or recharges (credit) taking place from rainwater harvesting structures at our plants colony mines and community We give back tonature four times what we draw.
We are frequently reported. By ourselves.
Carbon Conscious Growth- The company monitors and reports its Carbon emissions as perthe World Business Council for Sustainable Development Rs s (WBCSD) Rs s CementSustainability Initiative (CSI) protocol. We reduced our Green House Gas (GHG) emissionsby around 28% in 2013 from the 1990 level. To further reduce the use of natural resourcesand consequently our carbon emissions our focus remained on the fly ash based cement(PPC) as our major product. A 6.5 MW Waste Heat Recovery (WHR) based power generationsystem is under installation at our Rabriyawas plant at Rajasthan which will furtherlessen our carbon footprint.
Environment Management- The company ensured availability of Continuous EmissionMonitoring Systems (CEMS) at all the kiln stacks with above 95% availability round theyear for online monitoring of all vital pollution parameters.
As a part of our consistent effort to ensure sustainable ecology by way of biodiversityconservation a Biodiversity Action Plan (BAP) has been prepared for our Ambujanagar sitein Gujarat. A Wildlife Conservation Plan has also been prepared for our Darlaghat plant atHimachal Pradesh. We have completed the installation of water meters in all the plants asper the Holcim Water Protocol.
During the year one more integrated plant and one grinding unit attained the EnergyManagement System as per ISO 50001 certification adding up to total two integratedplants and four grinding units to be certified. The company has taken steps to meet itscommitments under the PAT scheme and RPO- REC obligations. Further we are taking allnecessary actions to monitor and control our emissions to ensure that we comply with therequirement of New Emission Standards as notified in 2014.
Partnering the environment.
Collaboration with Global Community- ACL is one of the active co-chairs of WorldBusiness Council for Sustainable Development (WBCSD) CSI India for implementation of theIndia specific Rs Low Carbon Technology Road Map for Cement Industry Rs .
We have been partnering with WBCSD for the development of India Water Tool (IWT) since2012. The tool will help companies to understand and respond to their growing challengesof managing water effectively and identify water risk areas.
We actively collaborate with Leader for Nature (LFN) Initiative of International Unionfor Conservation of Nature (IUCN) and the CII Rs s India Business and BiodiversityInitiative (IBBI) on Policy dialogue and capacity building on Biodiversity Conservation.
Sustainability Awareness & Reporting- Train the Trainer (ToT) training was impartedduring the year covering all the plants. Various training and awareness programmes wereconducted on environment and sustainability topics emission / environment monitoringbiodiversity management and water management to build capacities for environmentallyresponsible operations.
Read all about it: our sustainability efforts.
We released our 71h Annual Corporate Sustainability Report presenting our effortstowards sustainable development for the year 2013 the report also provided the glimpsesof Rs True Value Project Rs . The report is aligned with Global Reporting Initiative (GRI)G3 guidelines for A+ Level of reporting having been Rs assured Rs by an independentcertifying agency We have responded to the Metal and Mining Sector Supplement of the GRIwhile reporting on our sustainability performance to our stakeholders. As in the previousyear the report has been accorded the Rs GRI Check Rs to enhance credibility by GlobalReporting Initiative (GRI) Netherlands. The company has been issuing BusinessResponsibility Report (BRR) as a part of its Annual Reports since 2012.
11. CORPORATE SOCIAL RESPONSIBILITY (CSR)
At Ambuja the CSR has been an integral part of the way in which we have been doingbusiness since inception. The founders of the company always believed it imperative forsurrounding communities and stakeholders to progress with the company This vision wastranslated into the establishment of the Ambuja Cement Foundation (ACF) which is the CSRarm of the company
The ACF operates in 12 states and 22 locations reaching out to more than 14 lakhpeople over 860 villages. ACF programmes are in line with its mission statement- RsEnergise involve and enable communities to realise their potential Rs .
IMPROVING LIVES THROUGH INVOLVEMENT.
At Ambuja stakeholder engagement is the key to implement CSR programmes and severaltools and processes have been established to aid this objective. To integrate business andcommunity needs Community Engagement Plans (CEP) are prepared in close engagement withthe community and then the unit. The Community Advisory Panels consists of communitymembers and members from the company to deliberate upon programmes and decide for thefuture. The Social Engagement Scorecard assesses the work done in communities. The SiteSpecific Impact Assessment (SSIA) captures perceptions and feelings of all stakeholders atsites and enables the Foundation to address potential risks. These processes ensure thatprogrammes introduced are relevant and dynamic in nature. Based on assessment of needsthe ACF works in thrust areas namely- water resource management agro- based and skill-based livelihoods and socio-economic development.
WATER RESOURCE MANAGEMENT The ACF Rs s work on water resource management has ensuredaccess to quality water in its neighbouring communities. The work was initiated insalinity ingress areas of Kodinar which has now spread to the dry arid territories ofRajasthan and hilly regions of Darlaghat. Programme adaptability according to thetopography of the region has increased ground water table and better water availabilityin farms. Micro irrigation has ensured optimum utilisation of water and is being widelyadopted by farmers. Continued water management programmes undertaken by the ACF havecontributed significantly for the company to be four times water positive.
AGRO BASED LIVELIHOOD
Supporting the backbone of the nation Rs s economy.
Assured availability of quality water has enabled farmers to grow more than one crop ontheir fragmented lands impacting the economic status of their families. The farmers havealso benefitted from the numerous training programmes conducted by the ACF. For instancethe Foundation manages the Krishi Vigyan Kendra at Ambujanagar a one-stop-shop for latestand best agriculture technologies in the region and has reached out to 265 villagesthrough training programmes and fairs. The ACF also works with farmers to promote animalcare by organising regular camps. In Darlaghat the Pashu Swasthya Sevika (PSS) have beentrained by the Foundation to ensure animal care.
Based on geographical suitability programmes like organic farming in the north andSystemic Rice Intensification (SRI) in the east have enhanced agricultural practices. TheBetter Cotton Initiative (BCI) a global initiative for sustainable cotton productionreaches out to over 17200 farmers. Implementing BCI practices has guaranteed work ethicson farms ensured soil health and better profit margins coupled with safe environmentpractices. In 2014 70565 tonnes of cotton was produced by our farmers all licensed asRs Better Cotton Rs .
The ACF has also partnered with farmers through establishment of Producer Companies toprovide biomass to the company to be used as Alternate Fuel Resource (AFR). It is hopedthat this supply chain will appear as an inclusive business model in the near future.
Ensuring talent doesn Rs t go wasted.
Skill training through the ACF Rs s 16 Skill and Entrepreneurship Development Institute(SEDI) has changed the social and economic dynamics through assured jobs and by addressingthe industry demand of skilled personnel. In Kodinar young girls contribute to theirfamily income after training in bedside attendant course. In Chandrapur unemployed youthhave gained jobs in industries or have gained construction assignments in nearby villagesafter being trained as masons. In 2014 SEDI also provided supplementary skills trainingand valid certification to the company Rs s workers. SEDI not only imparts training in 45different trades but complements these by providing training in computer English and softskills. A number of courses at SEDI are government affiliated. Till date SEDIs havereached out to more than 20000 youth with a placement rate of 76%.
SOCIO ECONOMIC DEVELOPMENT
Building stronger communities.
The ACF ensures holistic development of its communities by focusing on healtheducation and women development. Clinical health care is met through Mobile MedicareUnits Community Health Clinics Diagnostic Centres and specialised health camps. Thetraining of village health functionaries (Sakhis) has ensured maternal and child care forwomen and 24 x 7 health access at their doorstep. The Sakhi has also developed relevantlinkages with government to ensure services for her village. ACF trained Sakhis are muchsought after as much as the ASHAs of the government cadre. Till date 337 Sakhis have beentrained of which 110 have been absorbed as ASHA workers.
The Sakhi has also become the forerunner to initiate other programmes like tobaccocontrol nutrition programme and child development for villages.
The ACF has been working rigorously to ensure complete sanitation in its hostcommunities. The programme is being run in a campaign mode and till date 11 villages havereceived the Nirmal Gram Puraskar. The ACF has facilitated construction of over 12000individual and community toilets apart from soak pits and drains.
HIV and AIDS prevention programme at Ambuja reaches out to truckers in the plant andcommunities through counselling sessions street plays camps etc. The ACF implements iotargeted intervention projects in collaboration with state-level AIDS Control Societiesand four health care centres at truck halt points neighbouring our sites.
Looking out for the next generation.
The company promotes education in the five integrated plants through Ambuja VidyaNiketan Trust (AVNT). The ACF also conducts programmes in nearby government schoolsthrough teacher training programmes. The methodologies introduced in schools have madesubjects interesting and easier to understand. ACF-trained Balmitra supports children inunderstanding mathematics and science. ACF also provides infrastructural support toschools like the establishment of science centres and libraries.
The Ambuja Manovikas Kendra (AMK) is a special school for mentally challenged childrenin Ropar. A range of activities and programmes like therapies sports and culturalactivities etc. at the AMK help them grow as independent and productive individuals. Thechildren have won awards at the state-level Olympics Championship since the past nineyears and at the World Special Olympics. The school also extends its services to childrenwho cannot travel to school through its Home-based Rehabilitation Programme.
Women Rs s Empowerment is a part of the ACF Rs s DNA and is interwoven in all itsprogrammes. Assured access to water developing a cadre of women to ensure health andeducation and relevant skills training provide an opportunity to women to showcase theirleadership. Access to finance and knowledge of running small businesses has also boostedthe confidence of many women. In Kodinar and Chandrapur women have federated from smallself-help groups of 15-20 members to form a federation consisting of 2000-3000 women.The Sorat Mahila Mandal in Kodinar Gujarat has opened its retail outlet and runs astitching course for its members. The government reached out to the group for itsinsurance scheme giving it the much needed recognition. The federation extends its supportto members in times of emergencies as well. These initiatives have played a critical rolein ensuring an elevated status of women. Since the process has been participatory thechanges brought forth are irreversible and have become a permanent feature.
PURSUING CSR AS A PASSION INSTEAD OF A MANDATE.
CSR has been an integral part at Ambuja Cements much before the passing of CompaniesAct 2013. The company has made conscious efforts to involve communities in itsdevelopment journey with a spending of more than 2% since manyyears. Continuous andmeaningful community engagement since 22 years has made the company the Rs neighbour ofchoice Rs . Rs Ambuja Cements Rs has received appreciations from the government as wellas other stakeholders which makes us feel a sense of pride and an encouragement tocontinue our resolve further and better.
Pursuant to Section 135 of the Companies Act 2013 and the relevant rules the Boardhas constituted the Corporate Social Responsibility (CSR) Committee under the Chairmanshipof the Board Chairman Mr. N. S. Sekhsaria. The other members of the Committee are Mr.Nasser Munjee Mr. Rajendra Chitale Mr. Bernard Terver Mr. B.L. Taparia and Mr. AjayKapur. A detailed CSR Policy has also been framed which is placed on the company Rs swebsite. Other details of the CSR activities as required under Section 135 of theCompanies Act 2013 are given in the CSR Report at Annexurel.
12. OCCUPATIONAL HEALTH & SAFETY (OH&S)
After a disappointing OH&S performance in 2013 we had a very deep introspectionand detailed management review. Based on this we kick-started the Rs We Care Rsinitiative to transform our OH&S culture.
Although we did significant work in establishing good OH&S standards andorganisation over the last 5-6 years we found significant gaps in real implementation onground. We have significant complexity of having 17 operating sites some 15000 people ofwhich most are not adequately literate and have a culturally poor OH&S mind set. Wethought that the best way to deal with this was to engage our people emotionally and makethem very much the building blocks of Ambuja Rs s OH&S transformation journey whileat the same time working with subject experts to prioritise and address all issuesrelated to both unsafe conditions and unsafe acts.
Rs We Care Rs is a big change management programme. The primary objective of thisinitiative is to achieve our OH&S ambitions by making it a People Rs s Movement. Webelieved that this could be possible only when we connected and engaged with 100% peopleentering our sites; reinforced that OH&S is primarily a line accountability; achieveda right balance between people aspects engineering solutions and OH&S systems; andcreated the right organisation and processes to achieve our OH&S ambitions.
In our Rs We Care Rs programme each plant was divided into total manageable zones;each Zone owner was supported by 7- 9 Safety Ambassadors. We trained some 250 Zone Ownersand 1600 Safety Ambassadors to implement the programme and directly connected to 100% ofour workforce (approximately 15000 people) through 4-6 hours of sensitisation and ideageneration workshops. We introduced a companywide reward and recognition programme toencourage safe behaviour and exceptional contribution to safety
Safety results show when nothing happens.
The result was very evident with a significant improvement in OH&S performance withno onsite fatality for 10 months and very visible change in the safety behaviour of ourpeople at all levels.
For 2015 we have prepared a clear strategy and implementation plan to keep themomentum and drive the next level of Initiatives to further strengthen Rs We Care Rs .This year we will have a very intensive focus on Workmen Capability building effectiveimplementation of Fatality Prevention Elements & Contractor Safety Managementdirectives simplifying procedures to achieve scale and speed and are in the process ofpreparing a structure to address Occupational Health related issues proactively
We will again directly connect to all our people entering our sites to update themabout the progress plan for 2015 and listen to them so that we can collectively transformour OH&S culture.
13. PURCHASE OF SHARES IN HOLCIM INDIA PVT. LTD. (HIPL) AND AMALGAMATION OF HIPL WITHTHE COMPANY
The Members may be aware that the company had proposed to acquire 24% equity shares ofHIPL from Holderind Investment Limited Mauritius and subsequently amalgamating HIPL withthe company under the Scheme of Amalgamation.
The Scheme of Amalgamation has been approved by the requisite majority of the Membersand has also received ascent from the Hon Rs ble High Courts at Gujarat and Delhi.However the scheme will be effective upon receipt of approval from the Foreign InvestmentPromotion Board Government of India which is yet to be received.
On the Scheme being effective the company will hold 50.01% equity shares in ACCLimited and consequently ACC Limited and all its subsidiaries will become the subsidiaryof the company
14. EMPLOYEE STOCK OPTION SCHEME
During the year the company has not granted any fresh stock option to its employees.
The particulars as on 31st December 2014 as required to be disclosed pursuant toClause 12 of the SEBI (Employee Stock Option Scheme) Guidelines 1999 in respect of pastESOS are as below:
|Nature of disclosure ||Particulars |
|a. Options granted ||37776800 |
|b. The pricing formula ||2007 tO 2010 |
The exercise price was determined by averaging the daily closing price of the Company Rs s equity shares during 7 (seven) days on the National Stock Exchange immediately preceding the grant.
| ||2004-05 & 2005-06 |
The exercise price was determined by averaging the daily closing price of the Company Rs s equity shares during 15 (fifteen) days on the National Stock Exchange immediately preceding the grant.
| ||2003-2004 |
The exercise price was determined by averaging two weeks Rs High and Low price of the Company Rs s equity shares on the National Stock Exchange immediately preceding the grant.
| ||1999-2000 to 2002-2003 |
The exercise price was the average of the daily closing price of equity shares of the Company on the Stock Exchange Mumbai during the period of 30 (thirty) days immediately preceding the date on which the options were granted.
|c. Options vested ||32586650 |
|d. Options exercised ||30242250 |
|e. The total number of shares arising as a result of exercise of options ||Total number of shares arising as a result of exercise of options shall be 59418032 shares of t2 each |
|f. Options lapsed / surrendered ||5190150 |
|g. Variation of terms of option ||- |
|h. Money realised by exercise of options ||^383.26 crores |
|i. Total number of options in force ||2344400 |
|j. Details of options granted/exercised ||No. of options granted ||No. of options exercised |
| ||24300 ||23300 |
|Any other employee who received a grant in any one year of 5% or more of options granted during that year ||NIL ||NIL |
|k. Employees who were granted options during any one year equal to or exceeding 1% of the issued capital of the Company at the time of grant ||NIL |
|1. Diluted earning per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard AS-20 ||19.66 |
| ||2003-04 ||2004-05 ||2005-06 ||2007 ||2008 ||2009 ||2010 |
|m. Weighted average exercise price of options in ^ Weighted average fair value of options in ^ ||310* |
* Options related to Equity Shares of the face value of Rs 10/-.
** Options related to equity shares of the face value of Rs 2/-.
As required under SEBI guidelines on ESOS the information disclosed in respect of item(m) is for grants made after June 30 2003.
15. DISCLOSURES UNDER THE COMPANIES ACT 2013
i) Extract of Annual Return:
The details forming part of the extract of the annual return is enclosed in AnnexureII.
ii) Number of Board Meetings:
The Board of Directors met 5 (five) times in the year 2014. The details of the boardmeetings and the attendance of the Directors are provided in the Corporate GovernanceReport.
iii) Changes in Share Capital:
During the year under review your company allotted 3885500 equity shares of the facevalue of Rs 2/- each upon exercise of stock options under various Employee Stock OptionSchemes. Consequently the equity share capital has increased from Rs 3091720572/-divided into 1545860286 equity shares of Rs 2/- each to Rs 3099491572/- divided intoi549745786 equity shares of Rs 2/- each.
iv) Composition of Audit Committee:
The Board has constituted the Audit Committee which comprises of Mr. Rajendra Chitaleas the Chairman and Dr. Omkar Goswami Mr. Nasser Munjee and Mr. Bernard Terver as themembers. More details on the committee are given in the Corporate Governance Report.
v) Related Party Transactions:
All the related party transactions are entered on arm Rs s length basis and are incompliance with the applicable provisions of the Act and the Listing Agreement. There areno materially significant related party transactions made by the company with PromotersDirectors or Key Managerial Personnel etc. which may have potential conflict with theinterest of the company at large. During the year the Board reviewed the Technology andKnow-how (TKH) Agreement and decided that the rate of TKH Fees be maintained at 1% of theNet Sales of the company for the remaining three years period commencing from 1st January2015. This disclosure is being made as a matter of prudence.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions. The statement is supported by the certificate from the MD & CEO andthe CFO.
The Related Party Transactions Policy as approved by the Board is uploaded on thecompany Rs s website at the web link:
h ttp ://www. a mbujacem ent.c om/wp-cont ent /uploads/20i4/n/Related-Party-Policy30.10.20 14 i-.pdf.
The details of the transactions with Related Party are provided in the accompanyingfinancial statements.
16. CORPORATE GOVERNANCE
The company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the listing agreement with the stock exchanges. Aseparate section on corporate governance under the Listing Agreement along with acertificate from the auditors confirming the compliance is annexed and forms part of theAnnual Report.
17. BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report for the year ended 31st December 2014 as stipulatedunder clause 55 of the Listing Agreement is annexed and forms part of the Annual Report.
18. INTERNAL CONTROL SYSTEM
A strong internal control culture is pervasive in the company: The company hasdocumented a robust and comprehensive internal control system for all the major processesto ensure reliability of financial reporting timely feedback on achievement ofoperational and strategic goals compliance with policies procedures laws andregulations safeguarding of assets and economical and efficient use of resources. Theformalised systems of control facilitate effective compliance as per Clause 49 of theListing Agreement and article 728 (a) of the Swiss Code of Obligations applicable to theHolcim Group. The company also has well documented Standard Operating Procedures (SOPs)for various processes which is periodically reviewed for changes warranted due to businessneeds. The Internal Audit department continuously monitors the efficacy of internalcontrols / compliance with SOPs with the objective of providing to the Audit Committee andthe Board of Directors an independent objective and reasonable assurance on the adequacyand effectiveness of the organisation Rs s risk management control and governanceprocesses.
The scope and authority of the Internal Audit activity are well defined in the InternalAudit Charter approved by the Audit Committee. Internal Audit department develops a riskbased annual audit plan with inputs from business risk management prominent stack holdersand previous audit reports. The Internal audit plan is approved by the Audit Committee.During the year the Audit Committee met regularly to review reports submitted by theInternal Audit department. All significant audit observations and follow-up actionsthereon were reported to the Audit Committee. The Audit Committee also met the company Rss Statutory Auditors to ascertain their views on the financial statements including thefinancial reporting system compliance to accounting policies and procedures the adequacyand effectiveness of the internal controls and systems followed by the company
The Internal Audit department also assesses opportunities for improvement in businessprocesses systems and controls provides recommendations designed to add value to theorganisation and follows up on the implementation of corrective actions and improvementsin business processes after review by the Audit Committee.
19. MANAGING THE RISKS OF FRAUD CORRUPTION AND UNETHICAL BUSINESS PRACTICES
i) Vigil Mechanism / Whistle Blower Policy
Fraud-free and corruption-free work culture has been core to the company In view of thepotential risk of fraud and corruption due to rapid growth and geographical spread ofoperations the company has put an even greater emphasis to address this risk.
To meet this objective a comprehensive Fraud Risk Management (FRM) Policy akin tovigil mechanism or the whistleblower policy has been laid down. More details about the FRMPolicy are given in the Corporate Governance Report which forms part of this AnnualReport.
ii) Anti Bribery and Corruption Directives (ABCD)
In furtherance to the company Rs s philosophy of conducting business in an honesttransparent and ethical manner the Board has laid down ABCD as part of the company Rs sCode of Business Conduct and Ethics. As a company we take a zero-tolerance approach tobribery and corruption and are committed to act professionally and fairly in all ourbusiness dealings.
To spread awareness about the company Rs s commitment to conduct businessprofessionally fairly and free from bribery and corruption training and awarenessworkshops were extended to select vendors of the company based on their risk profile andbusiness relationship with the company.
As part of continuous education on ABCD to the employees a mandatory on-line trainingthrough a web-based application tool was undertaken during 2014 by approximately 4000employees.
The above policies and its implementation are closely monitored by the Audit andCompliance Committees of Directors and periodically reviewed by the Board.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Onne van derWeijde (DIN 00009181) Managing Director decided to return to theparent company Holcim and accordingly resigned from the Board w.e.f. 25th April 2014. Mr.Onne joined the Board in January 2009 and in May 2010 was appointed as the ManagingDirector of the company
The Board placed on record its appreciation for the valuable services rendered by Mr.Onne van der Weijde.
II. RETIREMENT BY ROTATION
In accordance with the provisions of Section 152(6) and Article 147 of the Articles ofAssociation of the company (i) Mr. Ajay Kapur (DIN 03096416) and
(ii) Mr. B. L. Taparia (DIN 00016551) will retire by rotation at the ensuing AnnualGeneral Meeting of the company and being eligible offer themselves for re-appointment.The Board recommends their re-appointment.
Mr. Ajay Kapur (DIN 03096416)
Mr. Ajay Kapur who was holding the position of the Dy Managing Director & CEO ofthe company since August 2013 was appointed as the Managing Director & CEO we.f.25th April 2014 for a period of five years.
Ms. Usha Sangwan (DIN 02609263)
Ms. Usha Sangwan has been appointed as an Additional Director (Non Independent) underSection 161 of the Companies Act 2013 w.e.f. 24th April 2014.
Ms. Usha Sangwan is the Managing Director of Life Insurance Corporation of India andholds a Master Rs s Degree in Economics and a Post Graduate Diploma in Human ResourceManagement. She joined LIC as Direct Recruit Officer in 1981. She has worked in almost allcore areas of life insurance including Marketing Personnel Operations Housing
Finance Group Business Direct Marketing International Operations and CorporateCommunications. She has been awarded the Rs Women Leadership Award Rs in BFSI sector byInstitute of Public Enterprise and Rs Brand Slam Leadership Award Rs by CMO Asia.
As an Additional Director Ms Sangwan shall hold office up to the date of the ensuingAnnual General Meeting. The company has received a notice as per the provisions of Section160(1) the Companies Act 2013 from a member proposing her appointment as Director. TheBoard of Directors recommends her appointment.
Further details about the above directors are given in the Corporate Governance Reportas well as in the Notice of the ensuing Annual General Meeting being sent to theshareholders along with the Annual Report.
IV. APPOINTMENT OF INDEPENDENT DIRECTORS With coming into the force of the CompaniesAct 2013 the Board appointed all the existing Independent Directors viz. Mr. NasserMunjee Mr. Rajendra Chitale Mr. Shailesh Haribhakti Dr. Omkar Goswami and Mr. HaigrieveKhaitan as Independent Directors under section 149 of the Companies Act 2013 for a termup to 31st March 2019. The shareholders at their Extra Ordinary General Meeting held onnth September 2014 approved their appointment.
The Independent Directors have submitted the Declaration of Independence as requiredpursuant to section 149(7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in sub-section (6). The profile of the Independent Directorsforms part of the Corporate Governance Report.
V. EVALUATION OF THE BOARD Rs S PERFORMANCE In compliance with the Companies Act 2013and Clause 49 of the Listing Agreement the performance evaluation of the Board wascarried out during the year under review. More details on the same is given in theCorporate Governance Report.
VI. REMUNERATION POLICY
The company follows a policy on remuneration of Directors and Senior ManagementEmployees. The policy is approved by the Nomination & Remuneration Committee and theBoard. More details on the same is given in the Corporate Governance Report.
21. DIRECTORS Rs RESPONSIBILITY
Pursuant to Section 217 (2AA) of the Companies Act 1956 as amended the Directorsconfirm that:
i) In the preparation of the financial statements the applicable accounting standardshave been followed along with proper explanations relating to material departures.
ii) Appropriate accounting policies have been selected and applied consistently exceptfor the change in accounting policies stated in notes to the accounts and judgments andestimates made are reasonable and prudent so as to give a true and fair view of the stateof affairs of the company as on 31st December 2014 and of the statement of profit andloss and cash flow of the company for the period ended 31st December 2014.
iii) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
iv) The financial statements have been prepared on a going concern basis.
I. AUDITORS AND THEIR REPORT:- M/s SRBC & Co. LLP (ICAI Lirm RegistrationN0.324982E) the Statutory Auditors of the company will hold office until the conclusionof the ensuing Annual General Meeting and are eligible for re-appointment as per Section139 of the Companies Act 2013.
M/s SRBC & Co. LLP have expressed their willingness to get re-appointed as theStatutory Auditors of the company and has furnished a certificate of their eligibility andconsent under Section 141 of the Companies Act 2013 and the rules framed thereunder.Interms of the Listing Agreement the Auditors have confirmed vide their letter dated 22ndJanuary 2015 that they hold a valid certificate issued by the Peer Review Board of theICAI. The Board based on the recommendation of the Audit Committee recommends theappointment of M/s SRBC & Co. LLP as the Statutory Auditors of the company.
The members are requested to appoint M/s SRBC & Co. LLP Chartered Accountants asAuditors from the conclusion of the ensuing annual general meeting till the conclusion ofthe next Annual General Meeting in 2016 and to authorise the Board to fix theirremuneration for the year 2015.
The Auditors Rs Report to the Shareholders for the year under review does not containany qualification.
II. COST AUDITOR AND COST AUDIT REPORT
Pursuant to section 148 of the Companies Act 2013 the Board of Directors on therecommendation of the Audit Committee appointedM/s P.M. Nanabhoy & Co. CostAccountants as the Cost Auditors ofthe company for the Linancial Year 2015 and hasrecommended their renumeration to the Shareholders for their ratification at the ensuingAnnual General Meeting. M/s P.M. Nanabhoy & Co. have confirmed that their appointmentis within the limits of the Section 224 (iB) of the Companies Act 1956 and have alsocertified that they are free from any disqualifications specified under Section 233B (5)read with Section 224 sub-section (3) or sub-section (4) of Section 226 ofthe CompaniesAct 1956.
The Audit Committee has also received a certificate from the Cost Auditor certifyingtheir independence and arm Rs s length relationship with the company. Pursuant to CostAudit (Report) Rules 2001 the Cost Audit Report for the financial year 2013 was filed on28th April 2014 vide SRN N0.Q31060932 on the Ministry of Corporate Affairs website.
III. SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
The Board had appointed M/s Rathi & Associates Company Secretaries in Whole-timePractice to carry out Secretarial Audit under the provisions of Section 204 of theCompanies Act 2013 for the financial year 2014. The report of the Secretarial Auditor isannexed to this report as Annexure III. The report does not contain any qualification.
23. TRANSFERTO INVESTOR EDUCATION AND PROTECTION FUND
The company has transferred a sum of Rs 207.88 lakh during the financial year 2014 tothe Investor Education and Protection Fund established by the Central Government incompliance with Section 205C of the Companies Act 1956. The said amount representsunclaimed dividends which were lying with the company for a period of seven years fromtheir respective due dates of payment. Prior to transferring the aforesaid sum thecompany has sent reminders to the shareholders for submitting their claims for unclaimeddividend.
24. ENERGY TECHNOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy technology absorption foreign exchange earningsand out go is required to be given pursuant to provision of Section 134 of the CompaniesAct 20i3read with the Companies (Accounts) Rules 2014 is annexed here to markedAnnexure IV and forms part of this report.
25. PARTICULARS OF EMPLOYEES
The information required under Section 217 (2A) of the Companies Act 1956 ("theold Act") and corresponding Section 197 of the Companies Act 2013 ("the newAct") and the rules thereunder forms part of this Report. However in terms ofSection 2i9(i)(b)(iv) of the old Act and Section 136(1) of the new Act the Report andAccounts are being sent to the members and others entitled there to excluding theStatement of Particulars of Employees. The Annexure is available for inspection by themembers at the Registered Office of the company during business hours on working days upto the date of the ensuing Annual General Meeting. If any member is interested inobtaining a copy there of such member may write to the Company Secretary whereupon acopy would be sent.
26. SUBSIDIARY COMPANIES
Pursuant to the circular dated 8th February 2011 issued by the Ministry of CorporateAffairs Government of India and Section 136 of the Companies Act 2013 which hasexempted companies from attaching the Annual Reports and other particulars of itssubsidiary companies along with the Annual Report of the company the Annual Reports ofthe subsidiary companies viz. (1) Chemical Limes Mundwa Pvt. Ltd. (2) M.G.T. Cements Pvt.Ltd. (3) Kakinada Cements Ltd. (4) Dang Cement Industries Pvt. Ltd. and (5) Dirk IndiaPvt. Ltd. are not attached with this Annual Report. However a statement giving certaininformation as required vide aforesaid circular is placed along with the ConsolidatedAccounts.
The financial statements of the subsidiary Companies are kept for inspection by theshareholders at the Registered Office of the company The company shall provide free ofcost the copy of the financial statements of its subsidiary companies to the shareholdersupon their request. The statements are also available on the website of the companywww.ambujacement.com
27. CONSOLIDATED FINANCIAL STATEMENTS
As stipulated by Clause 32 of the listing agreement with the stock exchanges theconsolidated financial statements have been prepared by the company in accordance with theapplicable Accounting Standards. The audited consolidated financial statements togetherwith Auditors Rs Report form part of the Annual Report.
The consolidated net profit of the company and its subsidiaries amounted to Rs 1486.50crores for the corporate financial year ended on 31st December 2014 as compared to Rs1496.36 crores on a standalone basis.
28. EQUAL OPPORTUNITY EMPLOYER
The company has always provided a congenial atmosphere for work to all employees thatis free from discrimination and harassment including sexual harassment. It has providedequal opportunities of employment to all without regard to their caste religion colourmarital status and sex. The company has also framed a policy on Rs Prevention of SexualHarassment Rs at the workplace. There were no cases reported during the year under reviewunder the said Policy
29. AWARDS AND ACCOLADES
ACF Darlaghat bags NABARD Rs s Best Partnership Award.
Ambuja bags CII-ITC Sustainability Award- 2014.
Roorkee Grinding Unit has been awarded with the Rs CERTIFICATE of MERIT Rs forRs Energy Conservation in Cement Sector for the year 2013 Rs .
Ambuja Cement Foundation- Chirawa has won the UNESCO supported Water DigestWater Award 2013-14.
Ambuja Cement bags Bronze at the Flame Awards 2013 for Rural MarketingInitiative.
Ambuja Cement bagged the 1st runner up award at the ASSOCHAM CSR Excellenceaward during the 6th Global Corporate Social Responsibility Summit held in Delhi.
ACEs Rabriyawas Unit won the 14th Annual Greentech Environment award in the GoldCategory
Greentech Environmental Excellence Gold Award 2013.
Ambuja Cements- Rabriyawas Plant won Productivity Excellence Award 2011-12presented by Rajasthan State Productivity Council.
Ambuja Cement Foundation- Bathinda won the NABARD Rs Partnership ExcellenceAward Rs in the category of Rs Improving productivity of crops Rs .
30. CAUTIONARY STATEMENT
Statements in the Directors Rs Report and the Management Discussion and Analysisdescribing the company Rs s objectives expectations or predictions may be forwardlooking within the meaning of applicable securities laws and regulations. Actual resultsmay differ materially from those expressed in the statement. Important factors that couldinfluence the company Rs s operations include: global and domestic demand and supplyconditions affecting selling prices new capacity additions availability of criticalmaterials and their cost changes in government policies and tax laws economicdevelopment of the country and other factors which are material to the businessoperations of the company
The Ministry of Corporate Affairs vide Circular No. 08/2014 dated 4th April 2014clarified that the financial statements and the documents required to be attached theretothe Auditor Rs s and Directors Rs report in respect of the financial year under referenceshall continue to be governed by the relevant provisions of the Companies Act 1956schedules and rules made there under. However the company has made efforts to provide theinformation in the Directors Rs Report and the Corporate Governance Report as per theCompanies Act 2013 to the extent possible as a matter of prudence and good governance.
Your Directors take this opportunity to express their deep sense of gratitude to thebanks Central and State governments and their departments and the local authorities fortheir continued guidance and support.
We would also like to place on record our sincere appreciation for the commitmentdedication and hard work put in by every member of the Ambuja family. To them goes thecredit for the company Rs s achievements. And to you our shareholders we are deeplygrateful for the confidence and faith that you have always reposed in us.
For and on behalf of the Board of
Ambuja Cements Limited
N. S. Sekhsaria
Mumbai 18 February 2015