The Directors of your Company are pleased to present the Eightieth Annual Reporttogether with the Audited Accounts of the Company for the Year ended 31stMarch 2019.
Summary of the financial results of the Company for the year under report are as under:
| || ||( Rs in lakhs) |
| ||Current Year ||Previous Year |
| ||2018-19 ||2017-18 |
|Net Sales ||32124 ||48422 |
|Other Income ||180 ||463 |
|PBIDT ||1509 ||5951 |
|Finance Cost ||10844 ||12739 |
|Depreciation ||4747 ||4476 |
|Profit/(Loss) before exceptional Items ||(14082) ||(11264) |
|Exceptional Item ||(3974) ||4071 |
|Profit/(Loss) before Tax ||(18056) ||(7193) |
|Deferred Tax ||43 ||84 |
|Net Profit / (Loss) ||(18013) ||(7109) |
|Other Comprehensive Income ||2 ||(4) |
|Total Comprehensive Income ||(18011) ||(7113) |
The paid up equity share capital as at 31st March 2019 is Rs293.52 Crores. During the period under review your Company has not issued any shares withdifferential rights sweat equity shares and equity shares under employees stock optionscheme. Your Company has also not bought back its own shares during the period underreview.
No Dividend is recommended in view of the loss during the year and non-availability ofany carry forward surplus.
During the year under review Company's plant viz Durga Cement Works (DCW) was inoperation and produced Clinker and Cement and the plant viz Visakha Cement Works (VCW)was operated till July 2018 and later the production was stopped due to operationalviability reasons. The Company has commissioned its 30 MW Captive Power Plant (CPP)situated at Durga Cement Works.
KEY FINANCIAL RATIOS
Pursuant to Reg. 34(3) and 53(1) and Schedule V (B) of SEBI (LODR) Regulations 2015the Key Financial Ratios for the year 2018-19 are given below:
|Sl. Particulars ||31.03.2019 ||31.03.2018 ||Formula adopted |
|1 Debtors Turnover Ratio (Days) ||26.44 ||20.47 ||365 Days/(Net Revenue/ Average Trade Receivables) |
|2 Inventory Turnover Ratio (Days) ||24.38 ||21.33 ||365 Days/ Net Reveue/Average Inventories) |
|3 Interest Coverage Ratio ||(0.67) ||0.44 ||(Profit before Tax +Interest)/(Interest + Interest Capitalised) |
|4 Current Ratio ||0.14 ||0.38 ||Current Assets/(Total Current Liabilities-Security Deposits payable on demand-Current maturities of Long Term Debt) |
|5 Debt-equity Ratio ||-* ||-* ||Total Debt/Total Equity |
|6 Operating Profit Margin Ratio ||(0.08) ||0.21 ||EBITDA/Net Revenue |
|7 Net Profit Margin Ratio ||(0.56) ||(0.15) ||Net Profit/Net Revenue |
|8 Return on Networth ||-** ||-** ||Total Comprehensive Income/Average Networth |
* Since Equity is negative ratio cannot be calculated. ** Since Networth is negativeratio cannot be calculated. a. EBITDA denotes Profit before Interest+Tax+Depreciation. b.Increase in Debtor Turnover Ratio is on account of reduction in sales. c. Reduction inInterest Coverage Ratio is due to reduction in Sales and Profit. d. Current Ratio isreduced as current liability has increased due to reduction in Sales and Profit.
During the year under review the diesel prices have increased by about 17%. Due tothis the cost of raw materials as well as cost of distribution of cement has increased.The relaxation by the Government of India rationalizing the axle load norms for the heavyvehicles has provided some relief in managing the distribution cost.
The price of pet coke and coal has increased significantly impacting the margins. Thecompany has taken steps to manage the increasing cost by using low cost fuels.
The Company has been continuously taking various measures in the areas of productionproductivity quality and cost reduction to mitigate the increase in the cost of rawmaterials power and transport.
As per the provisions of the Companies Act 2013 and Regulation 34 of LODR Companiesare required to prepare financial statements to be laid before the Annual General Meetingof the Company. Accordingly the financial statements along with the Auditors' Reportthereon form part of this Annual Report.
As per section 136(1) of the Companies Act 2013 the Financial Statements are availableat the Company's website i.e www. andhracements.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under report the following changes took place in the Board of theCompany:
1. Shri Pankaj Gaur and Shri Vijai Kumar Jain Directors would retire by rotation atthe ensuing Annual General Meeting and being eligible they offer themselves forre-appointment. Shri Naveen Kumar Singh Director was appointed as CEO of the Company dueto this appointment as CEO his status was changed as Whole-time Director. Ratification isbeing sought at the ensuing Annual General Meeting. Shri K.N. Bhandari Shri S.D.M.Nagpal Shri R.K. Pandey Shri R.K. Singh Independent Directors of the Company atained theage of 75 years. As per Reg. 17(1A) of SEBI (LODR) continuation beyond the age of 75 yearrequires Special Resolution and setout the same in the Notice.
2. During the year under report the Board Meet 4 times the details whereof are givenin Report on Corporate Governance. The meetings of Board of Directors were held on30.05.2018 11.08.2018 14.11.2018 and 11.02.2019.
3. All Independent Directors have given declaration that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16(1)(b) and 25(1) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
4. Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 the Board has carried out an annual performance evaluation of its own performancethe Directors individually as well as the evaluation of the Committees constituted by it.The manner in which the formal annual evaluation has been carried out has been explainedin the Report on Corporate Governance.
5. The Board has on the recommendation of the Nomination & Remuneration Committeeadopted a policy for selection and appointment of Directors Senior Management and theirremuneration. Brief features of the said Policy are: a) Nomination and RemunerationCommittee shall formulate the criteria for determining qualifications positive attributesand independence of Director; b) Nomination and Remuneration Committee shall identifypersons who are qualified to become Director and persons who may be appointed in KeyManagerial and Senior Management Position; c) While selecting Independent Directors theNomination and Remuneration Committee shall identify persons of integrity who possessrelevant expertise and experience required for the position; d) Non-executive/IndependentDirector may receive remuneration by way of sitting fees for attending meetings of Boardor Committee thereof as amount as may be approved by the Board of Directors within thelimits prescribed under the Companies Act 2013 and the rules made thereunder providedthat the amount of such fees shall not exceed Rs. One lakh per meeting of the Board orCommittee or such amount as may be prescribed by the Central Government from time to time.The sitting fee for Independent Directors and Women Directors shall not be less than thesitting fee payable to other Directors; e) An Independent Director shall not be entitledto any stock option of the Company; f) Other employees of the Company shall be paidremuneration as per the Company's HR policies. The breakup of the pay scale and quantum ofperquisites including employer's contribution to PF pension scheme medical expensesetc. shall be as per the Company's HR Policy.
The Company shall reimburse actual expenditure incurred by the Directors in theperformance of their duties as per the rules and policies of the Company.
Remuneration of other employees shall be reviewed/decided on an annual basis or earlierif deemed necessary based on performance appraisal of individual employees taking intoaccount several factors such as job profile qualifications seniority experiencecommitment including time commitment performance and their roles and duties in theorganization. g) The age term of appointment and retirement of ManagingDirector/Whole-time Director shall be determined in accordance with the provisions ofCompanies Act 2013 read with Rules made thereunder; h) Managing Director/Whole-timeDirector and Key Managerial Personnel shall be paid the remuneration within the overalllimit prescribed under the Companies Act 2013 and the Rules made thereunder asrecommended by the Nomination and Remuneration Committee subject to the approval of theBoard; i) The Company shall provide suitable training to Independent Directors tofamiliarize them with the Company their roles rights responsibilities in the Companynature of the Industry in which the company operates business model of the Company etc;The Company has received necessary declarations from all the Independent Directors underSection 149(7) of the Companies Act 2013 that they meet the criteria of independence asprovided in Section 149 (6) of the Companies Act 2013. Independent Directors havecomplied with the Code for Independent Directors prescribed in Schedule IV of theCompanies Act 2013. As required under Regulation 25(7) of LODR the Company hasprogrammes for familiarization for the Independent Directors.
Board Evaluation: Pursuant to Section 134(3) (p) of the Companies Act 2013 andRegulation 25(4) of LODR Independent Directors have evaluated the quality quantity andtimeliness of the flow of information between the management and the board performance ofthe Board as a whole and its Members and other required matters. Pursuant to Regulation17(10) of LODR Board of Directors have evaluated the performance of Independent Directorsand observed the same to be satisfactory and their deliberations beneficial inBoard/Committee Meetings.
The Company had formulated a code of conduct for the Directors and Senior Managementpersonnel and the same has been complied.
All Related Party Transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. During the year theCompany had not entered into any contract/ arrangement/transaction with related partieswhich could be considered material in accordance with the policy of the Company onmateriality of related party transaction. The policy on materiality of Related PartyTransactions and dealing with Related Party Transactions as approved by the Board may beaccessed on the Company's website at www.andhracemens.com.
The details of Related Party Transactions as required under IND AS-24 are provided inthe accompanying financial statements forming part of this Annual Report. Form AOC- 2pursuant to Section 134 (3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is set out as "Annexure-A" to thisReport.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.
1. Statutory Auditors
As the members are aware in accordance with the provisions of Section 139 of theCompanies Act 2013 and the Rules made there under M/s. Chaturvedi & PartnersChartered Accountants (Firm Registration No. 307068E) were appointed as StatutoryAuditors of the Company in the 75th Annual General Meeting (AGM) for aperiod of Five consecutive years till the conclusion of 80th AGM of theCompany to be held in the year 2019. The appointment of present Statutory Auditors termwill be completed at the conclusion of the 80th AGM. Hence NewStatutory Auditor is to be appointed. The M/s Dass Gupta & Associates CharteredAccountants being eligible offer themselves for appointment as Statutory Auditors forthe Financial Year 2019-20. The Company has obtained a written consent and a certificatefrom the Statutory Auditors to the effect that their appointment if ratified would be inaccordance with the conditions as prescribed and they fulfill the criteria laid down inSection 141 of the Companies Act 2013.
Based on the recommendations of the Audit Committee the Board has recommended theratification of appointment of M/s. Dass Gupta & Associates Chartered Accountants asStatutory Auditors of the Company for the Financial Year 2019-20 and to hold office tillthe conclusion of the 85th Annual General Meeting to be held in the year2024 subject to ratification of their appointment in every AGM.
2. Cost Auditors
For the Financial Year 2019-20 the Board of Directors of the Company have on therecommendation of Audit Committee appointed M/s. J.K. Kabra & Associates CostAccountants (Firm Regn No. 00009) Cost Auditors of the Company for auditing the CostRecords relating to the product Cement'. In this regard they have submitted acertificate certifying their independence and their arms length relationship with theCompany. The Resolution for ratification of their remuneration has been included in theNotice for ensuing Annual General Meeting.
3. Secretarial Auditor
Secretarial Audit Report for the financial year ended on 31st March2019 issued by M/s. Savita Jyoti Associates Company Secretaries in form MR-3 forms partof this report and marked as "Annexure-B".
The said report does not contain any qualification or observation requiring explanationor comments from Board under section 134(3)(f)(ii) of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 onrecommendations of the Audit Committee the Board has appointed M/s. Savita JyotiAssociates a firm of Company Secretaries in Practice to undertake the Secretarial Auditof the Company for the financial year ended 31st March 2020.
The Directors of the Company wish to state that the Statutory Auditors of the Companyhas given modified opinion on the Financial Statements of the Company for the year ended31st March 2019. The qualification in the Financial Statement andmanagement response to the aforesaid qualification is given under:
|Auditors Qualification ||Management's Reply |
|We refer to Note 35 to the financial statements in respect of preparation of financial statements of the Company on going concern basis for the reasons stated therein. During the financial year ended March 31 2019 the Company has incurred losses of Rs 18011.42 lakhs resulting into accumulated losses of Rs 70156.70 lakhs and erosion of net worth as at March 31 2019. The Company has obligation towards fund based borrowings aggregating to Rs 101064.49 lakhs as on March 31 2019 including working capital loans and interest accrued thereon. The Company's current liabilities have exceeded current assets as on March 31 2019. These matters require the Company to ||The management has approached the financial institutions/banks for restructuring of the debts which is under consideration by major lenders. Further the Cement market has started improving and company is hopeful to achieve the profitable operations and is on the view that the company will continue as a going concern. |
|Auditors Qualification ||Management's Reply |
|generate additional cash flow to fund the operations as well as payments to lenders creditors statutory dues and other obligations. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the company's ability to continue as going concern and therefore the company may be unable to realize its assets and discharge its liabilities in the normal course of business. Accordingly we are unable to comment on the consequential impact if any on the accompanying financial statements. || |
Note: The Auditors have also drawn attention to some items under Emphasis of matter intheir report. However they have not modified their opinion in respect of the saidmatters.
EXTRACT OF ANNUAL RETURN
In accordance with Section 92(3) of the Companies Act 2013 an extract of the AnnualReturn in Form MGT-9 for the year ended 31st March 2019 is attached as "Annexure-C"which forms part of this Report.
In accordance with Clause 22 of Secretarial Standard on Report of the Board ofDirectors (SS4) a copy of Annual Return for the year ended 31st March2019 has been placed on the website of the Company.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
During the year under review there were no Loans Guarantees and Investmentsmade/given as per the provisions of Section 186 of the Companies Act 2013.
The Company has formulated a Risk Management Policy. The Risk Management Policy whichinter-alia:
a) define framework for identification assessment monitoring mitigation andreporting of risks.
b) ensures that all the current and future material risk exposures of the Company areidentified assessed quantified appropriately mitigated minimized and managed i.e toensure adequate systems for risk management.
The Risk Management policy of the Company is available at the Company's website.
CORPORATE SOCIAL RESPONSIBILITY
In view of absence of required profit/net worth/turnover the provisions of theCompanies Act 2013 relating to Corporate Social Responsibility are not applicable to theCompany.
MATERIAL CHANGES AND COMMITMENTS
In terms of Section 134(3) (i) of the Companies Act 2013 except as disclosedelsewhere in this report no material changes and commitments which could affect theCompany's financial position have occurred between the end of the year and date of thisreport.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A Report on Corporate Governance as stipulated by Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this AnnualReport along with the required Certificate from the Practicing Company Secretaryconfirming compliance with conditions of Corporate Governance.
As required under Regulation 34(2)(c) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Management Discussion & Analysis Report onoperations and financial position of the Company has been provided in a separate sectionwhich forms part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act 2013 the Directorsbased on the representation received from the operating management certification by CEOand CFO to the Board of Directors and after due enquiry confirm that in respect of theAudited Annual Accounts for the year ended 31st March 2019 that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and that there were no material departures;
b) the Directors had in consultation with the Statutory Auditors selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company for the year ended 31st March 2019 and the loss of theCompany for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors had prepared the annual accounts on a going concern basis; e) theDirectors had laid proper internal financial controls to be followed and that suchinternal financial controls were adequate and were operating effectively; and
f) Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws that such systems were adequate and operating effectively.
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Company has in terms of the provisions of Section 177(9) of the Companies Act 2013read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules 2014 andRegulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 formulated Whistle Blower Policy and Vigil Mechanism for Directors and employeesunder which protected disclosures can be made by a whistle blower. (www.andhracements.com)
INT ERNAL FINANCIAL CONTROL
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Internal Auditors of the Company forinsufficiency or inadequacy of such controls.
The information about internal financial controls is set out in the ManagementDiscussion & Analysis Report which forms part of this Report.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 ("the Act") read with theCompanies (Acceptance of Deposit) Rules 2014 during the year under review. Hence thedetails relating to deposits as also requirement for furnishing of details of depositswhich are not in compliance with Chapter V of the Act is not applicable.
However In accordance with the Modified Rehabilitation Scheme (MS-08) the Company issettling the claims lodged by fixed deposit holders. As per the provisions of Section 125of the Companies Act 2013 the company is in the process to transfer the Unclaimed Amountto the Investor Education and Protection Fund'.
REDEMPTION OF PREFERENCE SHARES
The payments against these shares are being made as and when claimed by the holders. Ithas not been possible to locate the addresses of the shareholders despite notices beingpublished in daily newspapers. No claims were received during the year. There is noliability for dividend on these shares.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said Rules forms part of this Annual Report and isprovided as "Annexure- D" in this report.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided as "Annexure- D" to thisReport.
PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGSAND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Second Amendment Rules 2015 (as per the notificationdated 4th September 2015) is annexed herewith as "Annexure-E".
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. During the year under review no complaints were received by the Company.
GDP growth for the year 2019-20 was originally projected at 7.4% which is now revisedto 7.2%. However there are several uncertainities which can have an impact in theprojected GDP. The outlook of oil prices continue to be hazy both on upside and downside.It is expected that the demand for cement would grow at around 8% for the financial year2019-20. Our plants are fully equipped and supported with grinding units at strategiclocations. Our company will be able to take full advantage of the economic momentum in thecoming years.
The Sanctions imposed on countries from where India is imposing maximum crude wouldadversely affect the fuel price which would have negative impact on our manufacturing andtransportation cost. The Mines and Minerals (Development & Regulation) Amendment Act2015 (MMDR) has made the Limestone as a notified mineral. Pursuant to the amendment actgrant of mining lease for all notified minerals shall be through public auction process bythe respective State Governments. Since several State Governments do not have therequired geological data of availability of the reserves and they are not able to proceedwith the auction. This is delaying the process of getting fresh mining leases allotted.
The Company's products have always been perceived to possess superior quality standardsin the market and the company has been enjoying a high level customer satisfaction index.Hence products will be sold at higher profitability and revenue. The Company is planningto introduce products catering to specific customers to meet their customized applicationsand requirements.
The Board places on record its sincere appreciation and gratitude to variousDepartments and Undertakings of the Central Government and State Governments FinancialInstitutions Banks and other authorities for their continued co-operation and support tothe Company. The Board sincerely acknowledges the faith and confidence reposed by theShareholders in the Company.
| ||For and on behalf of the Board |
| ||K.N. BHANDARI |
|Place: New Delhi ||Chairman |
|Date: 29th May 2019 ||[DIN: 00026078] |